This Note will address the salience of a simple analogy: will privacy law be for the information age what consumer protection law was for the industrial age? At the height of industrialization, the market faced instability caused by a lack of consumer competence, lack of disclosure about product defects, and advancements in technology that exacerbated the market’s flaws. As this Note will show, these same causes of market failure are stirring in today’s economy as well. The modern economy is not one of goods but of information, and although consumers have long been aware that their personal information may have marketing value, the internet has fundamentally changed the scope and depth of information collection, exposing more consumers than ever to injuries that require not just a more comprehensive remedy, but a wholesale change in the level of care for the information industry. Just as the mass-production economy precipitated a wave of reforms in consumer protection, in part thanks to a kick-start by author Upton Sinclair, so too must the mass-information economy adapt. After demonstrating the parallels between the problems of today with those of yesterday, this Note will propose parallel solutions, particularly a consolidation of regulatory power and a new tort for breach of information privacy, the latter of which draws its inspiration from general products liability. These proposals show that rather than reinvent the wheel, modern lawmakers can (and should) answer today’s problems with lessons from the last century.
Issue 1
A Fourth Amendment Metamorphosis: How the Fourth Amendment Remedies and Regulations Facilitated the Expansion of the Threshold Inquiry
United States v. Bond and United States v. Kyllo significantly departed from the Supreme Court’s prior Fourth Amendment jurisprudence. The definition of a Fourth Amendment search now captures a broader universe of law enforcement conduct. While this enlargement of the Fourth Amendment search inquiry has heretofore puzzled scholars, this Note argues that this enlargement may be consistent with the dynamic relationship that exists between rights and remedies. The erosion of Fourth Amendment remedial scheme “by making the exclusionary rule less available” has facilitated an expansion of the Fourth Amendment right.
This Note further argues that the dynamic between rights and remedies does not fully explain Bond and Kyllo. A second dynamic is in place that helps explain why the expansion of the Fourth Amendment right targeted the scope of conduct the Fourth Amendment is understood to regulate rather than the protections that attach when conduct is captured by the threshold inquiry. The Note argues that the rigor (or lack thereof) of these protections helps shape and define the threshold inquiry much the way constitutional remedies help shape and define constitutional rights. The corrosion of such protections in recent jurisprudence enabled the expansion of the threshold inquiry evidenced in Bond and Kyllo.
The Space Between Markets and Hierarchies
The decision to pool production within a firm raises a fundamental tension for corporate law scholars. On the one hand, channeling activity into a centralized entity can economize on transaction costs by replacing the hassles of arms-length contracting with managerial discretion. Instead of attempting to write a complete contract to insulate against counterparty opportunism, firm managers retain the control necessary to make optimal decisions later—if and when a potential contingency arises. On the other hand, agency costs and production costs may be somewhat higher when business is conducted within a firm—because the activity is walled off from the relentless pricing pressure that comes with well-functioning markets. Recent work in the legal academy also shows how intra-firm activity can result in suboptimal capital structures for a given collection of assets. As the story goes, the precise location of a firm’s borders at any point in time will be the result of a mindful balancing between these competing effects.
Yet this account has always been somewhat misleading: there is space between markets and hierarchies. Business alliances, joint ventures, franchise agreements, and other structures offer firms a middle path between market exchange and unconditional firm control. Furthermore, the recent rise in business outsourcing transactions presents another intriguing context for studying hybrid organizational structures. Under many of these arrangements, assets (both physical and intangible) are legally owned by an offshore vendor, but the use of these assets is subject to partial control rights retained by the operational client.
This Article explores the growth of business outsourcing, how it works, and why two firms might logically enter into an outsourcing arrangement not only to cut production costs—but also to craft a sensible governance compromise. It also asks, more generally, whether increased diversity of organizational structures is starting to provide firms with a richer menu of strategies for sharing operational risk—in the same way that recent innovations in corporate finance and capital markets are dramatically altering ownership strategies on the right side of the balance sheet.