Issue 5

The Moving Property Problem in Fourth Amendment Law

Introduction

Imagine you are carrying a bag that the police want to search. The Fourth Amendment rules for searching your bag depend on where it is. If the bag is inside your home, the government needs a warrant to enter the home and search it.1 1.See Silverman v. United States, 365 U.S. 505, 512 (1961) (holding that physical entry requires a warrant). The Supreme Court first expressly so held in Agnello v. United States, 269 U.S. 20, 31–33 (1925), although the point had “always been assumed.” Id. at 32.Show More If the bag is in your car, however, probable cause is enough, and no warrant is needed.2 2.See California v. Acevedo, 500 U.S. 565, 579–80 (1991) (holding that a search of property placed in a car requires probable cause but not a warrant).Show More If the police arrest you while you’re carrying the bag, they can search the bag without any cause.3 3.See United States v. Robinson, 414 U.S. 218, 236 (1973) (allowing the search of property on a person based on lawful arrest alone without requiring additional cause).Show More If the bag is more than a few feet from you at the time of your arrest, however, the government needs a warrant again.4 4.See Chimel v. California, 395 U.S. 752, 763 (1969) (holding that a search incident to arrest only extends to the area of immediate control around the person arrested).Show More As these examples suggest, Fourth Amendment protection is fundamentally place-based. The government’s search power depends on where items to be searched are located.

The place-based nature of Fourth Amendment rules raises a question: If property is moved to a new place, does moving the property change its constitutional protection? In other words, are search and seizure protections fixed using an item’s prior location, or do those protections vary when the item is brought somewhere new? This question comes up often in Fourth Amendment cases. Consider a few examples drawn from recent decisions:

An officer orders a passenger out of a car during a traffic stop. The passenger exits, taking her purse with her. Searching a purse outside a car requires a warrant, but searching a purse inside a car does not. Is a warrant needed to search the purse after the passenger has removed it from the car?5 5.See State v. Lang, 942 N.W.2d 388, 400 (Neb. 2020), discussed in Section I.B.Show More

The federal government has broad power to search at the border. Border agents seize a suspect’s computer at the border, but they lack the expertise to search it. Agents bring the computer to a forensics expert, located hundreds of miles from the border, who searches it at his office. Does the forensic expert’s search count as a border search?6 6.See United States v. Cotterman, 709 F.3d 952, 961–62 (9th Cir. 2013) (en banc), discussed in Section I.D.Show More

Officers want to arrest a suspect at his home, but they lack the warrant needed to enter the home to arrest him inside. From their position outside, officers point their guns at the suspect inside and order him to leave his house. He complies with the order, and officers arrest him outside. Was a warrant needed?7 7.See United States v. Maez, 872 F.2d 1444, 1450–51 (10th Cir. 1989), discussed in Section I.C.Show More

Police arrest a man wearing a fanny pack. For their own safety, officers remove the fanny pack and place it twenty feet away. The Fourth Amendment permits a warrantless search of property on the person incident to his arrest, but it does not allow a search of property more than a few feet away. Can the police still search the fanny pack without a warrant?8 8.See, e.g., Jean v. State, 369 So. 3d 1235, 1237–38 (Fla. Dist. Ct. App. 2023). This scenario is discussed in Section I.B.Show More

Investigators have a warrant to search a house, but they lack the cause needed to detain and interrogate a particular suspect who lives there. They know, however, that Fourth Amendment law allows the government to detain anyone present when a warrant is executed. Hoping to interrogate the suspect, investigators contact the suspect and pretend that his house has been robbed and that he should come home to assess the damage. When the man arrives, officers detain and interrogate him. Was this lawful?9 9.See United States v. Ramirez, 976 F.3d 946, 949–50 (9th Cir. 2020), discussed in Section I.C.Show More

The driver of a car consents to its search. An officer orders everyone out of the car, and a passenger takes her purse with her. The officer orders the passenger to put her purse back in the car so it can be searched. Case law allows the government to search anything in the car with the driver’s consent but requires a warrant to search a purse outside the car. Can officers search the purse?10 10.See State v. Boyd, 64 P.3d 419, 427 (Kan. 2003), discussed in Section I.C.Show More

In each of these cases, something or someone was moved from one place governed by one rule to a new place governed by a different rule. Sometimes the government moved the relevant thing or person. Sometimes a private party did. And sometimes the government caused the private party to move it. Each case raises the same question: Does moving the item to a new place change its constitutional protection?

I call this the moving property problem.11 11.By the phrase “moving property,” I mean anything that can be moved and that can later be searched, whether or not it counts as property in a technical legal sense. In most cases, the moving property will be containers such as bags, purses, briefcases, and fanny packs. In some cases, the item moved is a person, who is moved away from their containers or who is moved to a different location and then searched. I consider all of these examples of the moving property problem.The label “moving property problem” might call to mind the automobile exception to the warrant requirement, under which searching a car does not require a warrant in part because cars are readily movable. See, e.g., California v. Carney, 471 U.S. 386, 390–91 (1985). My concern in this Article is not with whether property should receive different protection because it can move, however, but whether protections should change when items are moved from a place governed by one rule to a place governed by a different rule. Some moving property cases involve the automobile exception, as property is readily placed into or taken out of cars. But the moving property problem is about the clash of rules between two places—akin to a conflict of law problem—not the rules of any one place.Show More Despite how often it surfaces, neither courts nor scholars have recognized it.12 12.My research has uncovered no prior articles on the moving property problem. The most relevant scholarship appears to be several articles on one specific application—whether and when officers can make warrantless doorway arrests by moving arrestees out of the home. There is a narrow literature on that question. See, e.g., Jack E. Call, The Constitutionality of Warrantless Doorway Arrests, 19 Miss. Coll. L. Rev. 333, 334–36 (1999) (discussing the cases); Steven B. Dow, “Step Outside, Please”: Warrantless Doorway Arrests and the Problem of Constructive Entry, 45 New Eng. L. Rev. 7, 18–23 (2010) (same). See generally 3 Wayne R. LaFave, Search and Seizure § 6.1(e) (6th ed. 2020) (“Location of the arrestee: ‘at,’ ‘on’ and past the threshold.”). For a discussion of the relevant cases, see infra Section I.C.Show More The moving property problem is particularly rich because the ex ante incentives are obvious. Government agents want to expand their search power, just as targets of searches want that authority narrowed.13 13.The two sides are not equal in the likelihood that they intend to use the Fourth Amendment’s rules to their advantage. The police are trained in the rules, and the cases show them intentionally seeking to manipulate the rules in their favor. In contrast, few individuals will have the knowledge and foresight to know and use the rules.Show More If Fourth Amendment case law allows it, the police will move property or suspects to a place where officers have greater power to search—and then search under the relaxed rules of the new place. On the flip side, private parties who know the law may want to move their property to a place where their privacy rights are greatest—impeding investigations, if they can, by triggering the more restrictive rules of the new location. Ex post litigation incentives are clear, too. Each side has reason to argue that the other’s moving of property works in reverse. When a suspect happens to move his property to a place where rights are weaker, the government will argue that rules of the new location apply. And defendants will make the mirror-image argument when police move property to a place where rights are stronger.14 14.See infra Part I.Show More

This Article offers a comprehensive study of the moving property problem in Fourth Amendment law. It has two goals, one descriptive and one normative. The descriptive goal is to show that a large set of cases, not previously linked, all raise this common dynamic. Cataloging the many moving property cases reveals a taxonomy with variations on a theme.15 15.See infra Part I.Show More It also shows that Supreme Court decisions rarely answer how to resolve moving property questions. In the absence of high court guidance, lower courts have struggled for answers. They have treated each case in isolation, and they have often disagreed on the correct approach. The lower court disagreement results from a failure to see and appreciate the moving property problem.

The second goal of this Article is to offer a normative framework for solving the moving property problem. It has two steps. The first step is to recognize why Fourth Amendment rules are spatially based in the first place. The Fourth Amendment’s text, history, and case law seek to protect particular spaces in particular ways.16 16.See infra Section II.A.Show More The rules recognize how different interests compete differently in different areas. This understanding prompts an initial answer to moving property problems. To decide whether movement changes the level of protection, courts should answer whether the movement aligns with the justifications for the Fourth Amendment’s location-based rules. Courts must look doctrine-by-doctrine, focusing on the reasons for the space-based rules in play and the role of movement in supporting or defeating those reasons.17 17.See infra Section II.B.Show More

The second step is realizing that some moving property cases raise two questions instead of one. When the government causes movement, either directly or by creating pressures on private parties to act, a second question must also be considered: Was the government-induced movement itself illegal, apart from the subsequent search? Government agents can be endlessly creative in devising new ways to get property to places where government search powers are greatest.18 18.Cf. Johnson v. United States, 333 U.S. 10, 14 (1948) (Jackson, J.) (noting that the Fourth Amendment generally requires that “those inferences be drawn by a neutral and detached magistrate instead of being judged by the officer engaged in the often competitive enterprise of ferreting out crime”).Show More In many of these cases, the legal limits in moving property cases should come not from the legal rule for searching at the old or new place but from recognizing the illegality of steps taken to trigger the movement itself.19 19.See infra Section II.E.Show More

The Article proceeds in two parts. Part I offers a taxonomy of existing cases. It lays out the four basic kinds of moving property cases, explaining the scenarios and surveying how courts have so far resolved them. Part II proposes answers, developing a framework for solving the moving property problem and providing rules that courts can adopt to address them.

  1.  See Silverman v. United States, 365 U.S. 505, 512 (1961) (holding that physical entry requires a warrant). The Supreme Court first expressly so held in Agnello v. United States, 269 U.S. 20, 31–33 (1925), although the point had “always been assumed.” Id. at 32. ↑
  2.  See California v. Acevedo, 500 U.S. 565, 579–80 (1991) (holding that a search of property placed in a car requires probable cause but not a warrant). ↑
  3.  See United States v. Robinson, 414 U.S. 218, 236 (1973) (allowing the search of property on a person based on lawful arrest alone without requiring additional cause). ↑
  4.  See Chimel v. California, 395 U.S. 752, 763 (1969) (holding that a search incident to arrest only extends to the area of immediate control around the person arrested). ↑
  5.  See State v. Lang, 942 N.W.2d 388, 400 (Neb. 2020), discussed in Section I.B. ↑
  6.  See United States v. Cotterman, 709 F.3d 952, 961–62 (9th Cir. 2013) (en banc), discussed in Section I.D. ↑
  7.  See United States v. Maez, 872 F.2d 1444, 1450–51 (10th Cir. 1989), discussed in Section I.C. ↑
  8.  See, e.g., Jean v. State, 369 So. 3d 1235, 1237–38 (Fla. Dist. Ct. App. 2023). This scenario is discussed in Section I.B. ↑
  9.  See United States v. Ramirez, 976 F.3d 946, 949–50 (9th Cir. 2020), discussed in Section I.C. ↑
  10.  See State v. Boyd, 64 P.3d 419, 427 (Kan. 2003), discussed in Section I.C. ↑
  11.  By the phrase “moving property,” I mean anything that can be moved and that can later be searched, whether or not it counts as property in a technical legal sense. In most cases, the moving property will be containers such as bags, purses, briefcases, and fanny packs. In some cases, the item moved is a person, who is moved away from their containers or who is moved to a different location and then searched. I consider all of these examples of the moving property problem.

    The label “moving property problem” might call to mind the automobile exception to the warrant requirement, under which searching a car does not require a warrant in part because cars are readily movable. See, e.g., California v. Carney, 471 U.S. 386, 390–91 (1985). My concern in this Article is not with whether property should receive different protection because it can move, however, but whether protections should change when items are moved from a place governed by one rule to a place governed by a different rule. Some moving property cases involve the automobile exception, as property is readily placed into or taken out of cars. But the moving property problem is about the clash of rules between two places—akin to a conflict of law problem—not the rules of any one place. ↑

  12.  My research has uncovered no prior articles on the moving property problem. The most relevant scholarship appears to be several articles on one specific application—whether and when officers can make warrantless doorway arrests by moving arrestees out of the home. There is a narrow literature on that question. See, e.g., Jack E. Call, The Constitutionality of Warrantless Doorway Arrests, 19 Miss. Coll. L. Rev. 333, 334–36 (1999) (discussing the cases); Steven B. Dow, “Step Outside, Please”: Warrantless Doorway Arrests and the Problem of Constructive Entry, 45 New Eng. L. Rev. 7, 18–23 (2010) (same). See generally 3 Wayne R. LaFave, Search and Seizure § 6.1(e) (6th ed. 2020) (“Location of the arrestee: ‘at,’ ‘on’ and past the threshold.”). For a discussion of the relevant cases, see infra Section I.C. ↑
  13.  The two sides are not equal in the likelihood that they intend to use the Fourth Amendment’s rules to their advantage. The police are trained in the rules, and the cases show them intentionally seeking to manipulate the rules in their favor. In contrast, few individuals will have the knowledge and foresight to know and use the rules. ↑
  14.  See infra Part I. ↑
  15.  See infra Part I. ↑
  16.  See infra Section II.A. ↑
  17.  See infra Section II.B. ↑
  18.  Cf. Johnson v. United States, 333 U.S. 10, 14 (1948) (Jackson, J.) (noting that the Fourth Amendment generally requires that “those inferences be drawn by a neutral and detached magistrate instead of being judged by the officer engaged in the often competitive enterprise of ferreting out crime”). ↑

  19.  See infra Section II.E. ↑

Free Speech, Breathing Space, and Liability Insurance

An important piece of the “speech-tort” picture has been almost completely missing from doctrinal and policy analysis: the role played by liability insurance in protecting speech. In New York Times Co. v. Sullivan, the Supreme Court began adopting First Amendment restrictions on liability for defamation and the other speech torts—false light, intentional infliction of emotional distress, and public disclosure of private information. The Court’s purpose was to create “breathing space” for valuable speech by precluding liability for some speech that has no constitutional value in itself.

However, there is a little-known but highly important liability insurance regime that also affords breathing space, more broadly than the constitutional rules, by insuring against liability for unprotected speech and the costs of defending virtually all speech-tort suits, regardless of their validity. There have been decades of extensive legal scholarship about the First Amendment’s restrictions on speech-tort liability. Yet this scholarship has largely ignored the fact that all the liability for the speech torts that the First Amendment does permit can be, and often is, covered by liability insurance. In addition, Supreme Court Justices Thomas and Gorsuch recently have separately criticized existing constitutional limitations on liability for defamation as too broad without any mention of the widespread existence and availability of insurance protecting against liability for defamation. The Justices’ criticisms of defamation law have garnered a lot of attention and a barrage of responses, which have also omitted any reference to the possible relevance and significance of liability insurance to the debate about the proper scope of liability for defamation.

This Article takes insurance against speech-tort liability out of the shadows, bringing First Amendment theory and doctrine into the orbit of thinking about liability insurance and its operation in practice. The Article identifies and analyzes the sources and scope of the coverage that insurance provides against speech-tort liability, combining insights about the complex and intertwined consequences of the threat of speech-tort liability with what we know about how liability insurance both creates breathing space and attempts to mitigate excess risk-taking by those who are insured. The Article argues that, whether the end result is to change the law or simply to provide a firmer and more knowledgeable foundation for maintaining the law as it now stands, proponents of reform should either invoke the availability of liability insurance in support of their position or explain why their analyses ignore it. And opponents of reform should explain why they maintain their support of the status quo in spite of the availability of liability insurance. Finally, the Article considers the relevance of liability insurance to different theories of tort liability and analyzes the principal possible alternative to the current constitutional limits on liability, a negligence standard, concluding that such a standard would have considerable deficiencies.

Introduction

The proper scope of liability for defamation—impugning the reputation of an individual or organization—has become a salient public issue. The First Amendment provides considerable protection against liability for defamation (and certain other speech-related torts)1 1.As I explain below, these torts are false light, intentional infliction of emotional distress (“IIED”), and public disclosure of private facts. See infra Section II.A.Show More in order to provide “breathing space”2 2.See infra Section II.B.Show More—an extra margin of protection designed to ensure that free speech is not unduly deterred by the threat of liability.3 3.See Leslie Kendrick, Speech, Intent, and the Chilling Effect, 54 Wm. & Mary L.Rev. 1633, 1636–37 (2013) (explaining that protecting negligent false statements from liability provides constitutional “breathing space”); Frederick Schauer, Fear, Risk and the First Amendment: Unraveling the “Chilling Effect,” 58 B.U. L. Rev. 685, 710–18 (1978) (describing the role of a constitutional “buffer zone” in minimizing the chilling of protected activities).Show More Regardless of these protections, there are still suits for defamation, brought not only by private individuals, but also by, and against, public officials and public figures.4 4.See, e.g., US Dominion, Inc. v. Fox News Network, LLC, 293 A.3d 1002 (Del. Super. Ct. 2023) (voting machine manufacturer against a television broadcaster based on conduct of various news anchors). The parties later reached a settlement for $787.5 million. David Folkenflik & Mary Yang, Fox News Settles Blockbuster Defamation Lawsuit with Dominion Voting Systems, NPR (Apr. 18, 2023, 4:35 PM), https://www.npr.org/2023/04/18/117033911‌4/fox-news-settles-blockbuster-defamation-lawsuit-with-dominion-voting-systems [https://p‌erma.cc/DTD5-TLCE]. See generally Freeman v. Giuliani, 691 F. Supp. 3d 32 (D.D.C. 2023) (election workers against a media personality), judgment entered, No. 21-cv-03354, 2023 WL 9783148 (D.D.C. Dec. 18, 2023), appeal dismissed, No. 24-7021, 2025 WL 634800 (D.C. Cir. Feb. 26, 2025); Carroll v. Trump (Carroll I), No. 20-cv-07311, 2024 WL 97359 (S.D.N.Y. Jan. 9, 2024) (writer against Donald Trump); Carroll v. Trump (Carroll II), No. 22-cv-10016, 2023 WL 3000562 (S.D.N.Y. Mar. 20, 2023) (same); Depp v. Heard, No. CL-2019-0002911, 2022 WL 2342058 (Va. Cir. June 24, 2022) (actor against another actor).Show More These suits receive high-profile attention. Such suits often not only seek personal vindication and compensation for reputational harm, but today, they also figure in the political process; they are moves in a larger set of thrusts and parries occurring outside the direct confines of tort litigation. But the law of defamation should be a law for all seasons, not one bent to suit transient political passions.

Into this picture have come two Justices of the Supreme Court. In judicial opinions, Justice Thomas and Justice Gorsuch have separately criticized existing constitutional limitations on liability for defamation as too broad, Justice Thomas on originalist grounds5 5.McKee v. Cosby, 139 S. Ct. 675, 675–76 (2019) (Thomas, J., concurring in the denial of certiorari).Show More and Justice Gorsuch because of the quick and easy harm to reputation that can occur in the world of digital media.6 6.Berisha v. Lawson, 141 S. Ct. 2424, 2427–28 (2021) (Gorsuch, J., dissenting from the denial of certiorari).Show More Both Justices contend, in effect, that the Constitution should authorize more liability for defamation than it currently permits. In response, a number of established First Amendment scholars have defended existing precedent,7 7.See, e.g., Matthew L. Schafer, In Defense: New York Times v. Sullivan, 82 La. L. Rev. 81, 96–97, 158–60 (2021) (critiquing Justice Thomas’s and Justice Gorsuch’s historical analyses and arguing that overturning Sullivan would have a chilling effect on the speech of news organizations); Lili Levi, Disinformation and the Defamation Renaissance: A Misleading Promise of “Truth,” 57 U. Rich. L. Rev. 1235, 1285–87 (2023) (arguing that Justice Thomas’s historical justification for dispensing with Sullivan is inadequate and that Justice Gorsuch’s concerns about disinformation online are narrow compared to the sweeping effects that reconsidering Sullivan could have on free speech); Matthew L. Schafer & Jeff Kosseff, Protecting Free Speech in a Post-Sullivan World, 75 Fed. Commc’ns L.J. 1, 35–36 (2022) (questioning Justice Thomas’s use of the “PizzaGate” conspiracy theory as an example in favor of loosening liability standards, noting that the theory was spread by anonymous posters on message boards, actors for whom there would likely be little effective legal consequence); Lyrissa Lidsky, Untangling Defamation Law: Guideposts for Reform, 88 Mo. L. Rev. 663, 676 (2023) (arguing that reconsidering Sullivan would likely not have a substantial effect on the disinformation Justice Gorsuch is most concerned with, which does not usually come from mainstream news organizations).Show More and one of the country’s leading organizations supporting media rights has issued a 196-page white paper seeking to demonstrate that reform of existing limits on liability is unnecessary and ill-advised.8 8.See generally Media L. Res. Ctr., New York Times v. Sullivan: The Case for Preserving an Essential Precedent (2022) [hereinafter MLRC], https://medialaw.org/wp-content/uploads/20‌23/01/nytsullivanwhitepaper.pdf [https://perma.cc/B7L4-UH3T].Show More

The two Supreme Court Justices, as well as the First Amendment scholars and media-support organizations opposing them, however, are guilty of a significant analytical and practical omission. They have failed to recognize that the media, other kinds of organizations, and most individuals have, or can obtain,9 9.It is probably the case that some small media organizations cannot easily obtain, or cannot easily afford, Media Liability insurance, although I have found no quantitative data confirming this. See, e.g., Christina Koningisor & Lyrissa Lidsky, First Amendment Disequilibrium, 110 Va. L. Rev. 1, 29–31 (2024) (discussing the financial pressures that media organizations face); Elise Czajkowski, Why Media Liability Insurance Is Key to Making Sure Your Newsroom Continues to Exist, Inst. for Nonprofit News, https://inn.org/research/case-studies/why-media‌-liability-insurance-is-key-to-making-sure-your-newsroom-continues-to-exist/ [https://perma‌.cc/5D47-K9Z9] (last visited Apr. 3, 2025) (recounting difficulties and costs small media organizations face in connection with defamation suits and insurance).Show More insurance against liability for defamation and other speech-related torts.10 10.The MLRC white paper does include a half-sentence reference to “rising libel insurance rates.” Richard Tofel & Jeremy Kutner, A Response to Justice Gorsuch, in MLRC, supra note 8, at 79, 83.Show More Alongside the constitutional regime affording breathing space for the exercise of protected free-speech rights, then, there is a little-known liability insurance regime that also affords breathing space for speech and provides broader protection than what the Constitution provides. It does so by indemnifying speakers against liability not only for harm caused by unprotected speech but also for the cost of defending against suits alleging liability for speech that turns out to have been protected or not to have been tortious.11 11.See infra Section II.A.Show More That is, liability insurance provides protection against liability that the First Amendment permits, as well as the cost of defending against alleged liability. It also supplements the protection the Constitution provides by covering the legal costs that speakers would otherwise incur when they are sued and the speakers win.

What if you analyzed the impact of tort liability on the quality of medical care without taking into account the fact that health care providers typically are protected against liability by malpractice insurance?12 12.For work that addresses this issue, see generally Tom Baker, The Medical Malpractice Myth (2005); Frank A. Sloan, Randall R. Bovbjerg & Penny B. Githens, Insuring Medical Malpractice (1991); Paul C. Weiler et al., A Measure of Malpractice: Medical Injury, Malpractice Litigation, and Patient Compensation (1993).Show More What if you analyzed how the threat of liability for causing an automobile accident affects driving behavior without ever considering that liability insurance pays for virtually all individuals’ automobile liability?13 13.See Kenneth S. Abraham, The Liability Century: Insurance and Tort Law from the Progressive Era to 9/11, at 102–03 (2008) (illustrating how the ubiquity of automobile insurance has slowed automobile liability reform);Tom Baker, Liability Insurance as Tort Regulation: Six Ways That Liability Insurance Shapes Tort Law in Action,12 Conn. Ins. L.J. 1, 11–12 (2005) (explaining the role of liability insurance in shaping tort doctrine); Nora Freeman Engstrom,Sunlight and Settlement Mills, 86 N.Y.U. L. Rev. 805, 815–16 (2011) (discussing how no-fault liability insurance could reshape tort law).Show More You would properly be thought to have ignored an important ingredient of any sensible analysis.14 14.See Kenneth S. Abraham & Catherine M. Sharkey, The Glaring Gap in Tort Theory, 133 Yale L.J. 2165, 2169 (2024).Show More

Yet the constitutional theory of breathing space takes no account of the role that insurance against liability for defamation and other speech-related torts plays in the operation of free speech in theory and in practice. In fact, there have been decades of extensive legal scholarship and constitutional litigation about the First Amendment’s restrictions on speech-tort liability. Most of this scholarship, and the courts, have wholly ignored the fact that all of the liability for the speech torts that the First Amendment does permit can be and often is covered by liability insurance.15 15.There have been at most a few dozen passing references to libel insurance in the law review literature over the decades, but almost no actual discussion of its significance. It would take too much detail to systematically prove this negative. A glance at two of the major First Amendment law casebooks, however, provides some confirmation. There is nothing in the table of contents or the index of either that refers to “insurance” or “liability insurance,” and nothing in the text of either that I can find that mentions these subjects. See generally Noah R. Feldman & Kathleen M. Sullivan, First Amendment Law (8th ed. 2023); Geoffrey R. Stone, Louis M. Seidman, Cass R. Sunstein, Mark V. Tushnet & Pamela S. Karlan, The First Amendment (4th ed. 2012). I have been able to find only two brief but actual discussions of defamation liability insurance in the law review literature, the most recent of them more than thirty years old. See Frederick Schauer, Uncoupling Free Speech, 92 Colum. L. Rev. 1321, 1339–43 (1992); Marc A. Franklin, Good Names and Bad Law: A Critique of Libel Law and a Proposal, 18 U.S.F. L. Rev. 1, 18–22 (1983). And roughly thirty-five years ago, part of one chapter in a book of essays made reference to and analyzed “trends in insurance premiums.” See Henry R. Kaufman, Trends in Damage Awards, Insurance Premiums, and the Cost of Media Libel Litigation, in The Cost of Libel: Economic and Policy Implications 1, 11–15 (Everette E. Dennis & Eli M. Noam eds., 1989).Show More As we will see below, how this all takes place is not an entirely simple matter, but it is not rocket science either. Courts and commentators should be able to understand it. In any event, its technicality and complexity are not a justification for ignoring it.

Whether the existing constitutional limits on liability for defamation and the other speech torts should be maintained is a multilayered issue that I do not claim, or even aim, to definitively resolve here.16 16.For a recent argument that the protections provided to public figures should be reduced, see generally G. Edward White, Reconsidering the Legacy of New York Times v. Sullivan, 23 First Amend. L. Rev. 1 (2024).Show More The principal purpose of this Article is to give analysts and policymakers more sophisticated tools to employ in addressing that issue, though I also make some points regarding the difficulties that would be encountered if liability based on negligence were permitted across the board. My contention is not that the newly realized availability of liability insurance should necessarily make a difference in speech-tort law at the retail level, doctrine by doctrine. Rather, I contend that the invocation of breathing-space concerns in constitutional law, in common law adjudication, and in public debate should be influenced by the recognition that not only constitutional protections against liability, but also liability insurance, provide breathing space for speech.

My message, then, is that those who subscribe to Justice Gorsuch’s position that proving actual malice, in practice, is too high a hurdle for defamation plaintiffs to overcome should either be invoking the availability of liability insurance in favor of their position or explaining why they are not doing so. And those who oppose that position and favor maintaining current First Amendment protections against liability should be explaining why they take this position, notwithstanding the breathing space that liability insurance provides.

In short, in light of the findings about liability insurance that I set out below, it seems clear that any analysis of First Amendment or tort liability issues that turns at least in part on breathing-space concerns should take the operation of liability insurance into account. I show how that can be done. Although liability insurance does not provide blanket protection, it is still a source of substantial breathing space. In addition, I explain why, at this point, we could use a much more complete understanding of the quantitative side of the issues that are relevant to the kind of analysis I am proposing. But we should not wait for perfect information about the incidence of insurance protection against speech-tort liability before taking the availability of this insurance into account. We should go with what data we have now. That is what I do here.

Part I identifies and analyzes the sources and scope of the coverage that insurance provides against speech-tort liability. Such insurance may be known to exist by a few judges and First Amendment scholars, but based on my own informal surveys, the availability, scope, and distribution of such insurance are only dimly understood at most. Perhaps even more surprising, insurance law scholars themselves (again, based on my own informal surveys) also have little awareness or understanding of the scope of speech-tort liability insurance. It is little wonder that there has been no scholarship integrating the two fields; the subject is largely opaque to most scholars in both.

Part II briefly identifies the elements of the traditional common law rules governing four speech torts—defamation, the main such tort, as well as false light, intentional infliction of emotional distress (“IIED”), and public disclosure of private facts—and also examines the particular restrictions on the scope of these liabilities that the Supreme Court has ruled apply to them as a matter of First Amendment law. The focus of this Part is not only the two sets of liability rules, but also what we know (and do not know) about suits and outcomes in speech-tort litigation, for most suits do not go all the way to verdict and judgment. This Part delineates the forms of speech-tort liability that are now precluded and those that remain constitutionally valid, which is an important step in the analysis, because the distinction between the two categories marks the boundary between the domains of constitutional protection from speech-tort liability and potential liability insurance indemnity against speech-tort liability.

Part III constitutes an effort to intervene in the two fields by combining insights about the complex and intertwined consequences of the threat of speech-tort liability with what we know about how liability insurance both creates moral hazard and attempts to neutralize it. This Part thereby identifies for the first time the critical issues for the integrated field. The results can be considered a benchmark in the development of an integrated theory of the relation between free speech, breathing space, and liability insurance. It also provides a sharpened understanding of the manner in which these fields operate together in practice.

Finally, now that liability insurance has come out of the shadows, Part IV first considers the normative relevance of liability insurance to analysis of the speech torts. This Part argues that, regardless of the other debates in torts scholarship about “rights theory” versus consequentialism, in the field of speech torts, the consequentialist conception must prevail. This is because ensuring breathing space for speech is the most consequentialist of purposes. Second, this Part takes a look at what standard could then replace actual malice. It turns out that the alternatives—especially a negligence standard—have significant disadvantages. This insight suggests that evaluating the full mix of considerations relevant to the issue, including the availability of liability insurance, does not lead to a definitive conclusion, but only to a more sophisticated analysis of the advantages and disadvantages of the approach that has now been in place for over fifty years.

  1.  As I explain below, these torts are false light, intentional infliction of emotional distress (“IIED”), and public disclosure of private facts. See infra Section II.A. ↑
  2.  See infra Section II.B. ↑
  3.  See Leslie Kendrick, Speech, Intent, and the Chilling Effect, 54 Wm. & Mary L.

    Rev. 1633, 1636–37 (2013) (explaining that protecting negligent false statements from liability provides constitutional “breathing space”); Frederick Schauer, Fear, Risk and the First Amendment: Unraveling the “Chilling Effect,” 58 B.U. L. Rev. 685, 710–18 (1978) (describing the role of a constitutional “buffer zone” in minimizing the chilling of protected activities). ↑

  4.  See, e.g., US Dominion, Inc. v. Fox News Network, LLC, 293 A.3d 1002 (Del. Super. Ct. 2023) (voting machine manufacturer against a television broadcaster based on conduct of various news anchors). The parties later reached a settlement for $787.5 million. David Folkenflik & Mary Yang, Fox News Settles Blockbuster Defamation Lawsuit with Dominion Voting Systems, NPR (Apr. 18, 2023, 4:35 PM), https://www.npr.org/2023/04/18/117033911‌4/fox-news-settles-blockbuster-defamation-lawsuit-with-dominion-voting-systems [https://p‌erma.cc/DTD5-TLCE]. See generally Freeman v. Giuliani, 691 F. Supp. 3d 32 (D.D.C. 2023) (election workers against a media personality), judgment entered, No. 21-cv-03354, 2023 WL 9783148 (D.D.C. Dec. 18, 2023), appeal dismissed, No. 24-7021, 2025 WL 634800 (D.C. Cir. Feb. 26, 2025); Carroll v. Trump (Carroll I), No. 20-cv-07311, 2024 WL 97359 (S.D.N.Y. Jan. 9, 2024) (writer against Donald Trump); Carroll v. Trump (Carroll II), No. 22-cv-10016, 2023 WL 3000562 (S.D.N.Y. Mar. 20, 2023) (same); Depp v. Heard, No. CL-2019-0002911, 2022 WL 2342058 (Va. Cir. June 24, 2022) (actor against another actor). ↑
  5.  McKee v. Cosby, 139 S. Ct. 675, 675–76 (2019) (Thomas, J., concurring in the denial of certiorari). ↑
  6.  Berisha v. Lawson, 141 S. Ct. 2424, 2427–28 (2021) (Gorsuch, J., dissenting from the denial of certiorari). ↑
  7.  See, e.g., Matthew L. Schafer, In Defense: New York Times v. Sullivan, 82 La. L. Rev. 81, 96–97, 158–60 (2021) (critiquing Justice Thomas’s and Justice Gorsuch’s historical analyses and arguing that overturning Sullivan would have a chilling effect on the speech of news organizations); Lili Levi, Disinformation and the Defamation Renaissance: A Misleading Promise of “Truth,” 57 U. Rich. L. Rev. 1235, 1285–87 (2023) (arguing that Justice Thomas’s historical justification for dispensing with Sullivan is inadequate and that Justice Gorsuch’s concerns about disinformation online are narrow compared to the sweeping effects that reconsidering Sullivan could have on free speech); Matthew L. Schafer & Jeff Kosseff, Protecting Free Speech in a Post-Sullivan World, 75 Fed. Commc’ns L.J. 1, 35–36 (2022) (questioning Justice Thomas’s use of the “PizzaGate” conspiracy theory as an example in favor of loosening liability standards, noting that the theory was spread by anonymous posters on message boards, actors for whom there would likely be little effective legal consequence); Lyrissa Lidsky, Untangling Defamation Law: Guideposts for Reform, 88 Mo. L. Rev. 663, 676 (2023) (arguing that reconsidering Sullivan would likely not have a substantial effect on the disinformation Justice Gorsuch is most concerned with, which does not usually come from mainstream news organizations). ↑
  8.  See generally Media L. Res. Ctr., New York Times v. Sullivan: The Case for Preserving an Essential Precedent (2022) [hereinafter MLRC], https://medialaw.org/wp-content/uploads/20‌23/01/nytsullivanwhitepaper.pdf [https://perma.cc/B7L4-UH3T]. ↑
  9.  It is probably the case that some small media organizations cannot easily obtain, or cannot easily afford, Media Liability insurance, although I have found no quantitative data confirming this. See, e.g., Christina Koningisor & Lyrissa Lidsky, First Amendment Disequilibrium, 110 Va. L. Rev. 1, 29–31 (2024) (discussing the financial pressures that media organizations face); Elise Czajkowski, Why Media Liability Insurance Is Key to Making Sure Your Newsroom Continues to Exist, Inst. for Nonprofit News, https://inn.org/research/case-studies/why-media‌-liability-insurance-is-key-to-making-sure-your-newsroom-continues-to-exist/ [https://perma‌.cc/5D47-K9Z9] (last visited Apr. 3, 2025) (recounting difficulties and costs small media organizations face in connection with defamation suits and insurance). ↑
  10.  The MLRC white paper does include a half-sentence reference to “rising libel insurance rates.” Richard Tofel & Jeremy Kutner, A Response to Justice Gorsuch, in MLRC, supra note 8, at 79, 83. ↑
  11.  See infra Section II.A. ↑
  12.  For work that addresses this issue, see generally Tom Baker, The Medical Malpractice Myth (2005); Frank A. Sloan, Randall R. Bovbjerg & Penny B. Githens, Insuring Medical Malpractice (1991); Paul C. Weiler et al., A Measure of Malpractice: Medical Injury, Malpractice Litigation, and Patient Compensation (1993). ↑
  13.  See Kenneth S. Abraham, The Liability Century: Insurance and Tort Law from the Progressive Era to 9/11, at 102–03 (2008) (illustrating how the ubiquity of automobile insurance has slowed automobile liability reform); Tom Baker, Liability Insurance as Tort Regulation: Six Ways That Liability Insurance Shapes Tort Law in Action, 12 Conn. Ins. L.J. 1, 11–12 (2005) (explaining the role of liability insurance in shaping tort doctrine); Nora Freeman Engstrom, Sunlight and Settlement Mills, 86 N.Y.U. L. Rev. 805, 815–16 (2011) (discussing how no-fault liability insurance could reshape tort law). ↑
  14.  See Kenneth S. Abraham & Catherine M. Sharkey, The Glaring Gap in Tort Theory, 133 Yale L.J. 2165, 2169 (2024). ↑
  15.  There have been at most a few dozen passing references to libel insurance in the law review literature over the decades, but almost no actual discussion of its significance. It would take too much detail to systematically prove this negative. A glance at two of the major First Amendment law casebooks, however, provides some confirmation. There is nothing in the table of contents or the index of either that refers to “insurance” or “liability insurance,” and nothing in the text of either that I can find that mentions these subjects. See generally Noah R. Feldman & Kathleen M. Sullivan, First Amendment Law (8th ed. 2023); Geoffrey R. Stone, Louis M. Seidman, Cass R. Sunstein, Mark V. Tushnet & Pamela S. Karlan, The First Amendment (4th ed. 2012). I have been able to find only two brief but actual discussions of defamation liability insurance in the law review literature, the most recent of them more than thirty years old. See Frederick Schauer, Uncoupling Free Speech, 92 Colum. L. Rev. 1321, 1339–43 (1992); Marc A. Franklin, Good Names and Bad Law: A Critique of Libel Law and a Proposal, 18 U.S.F. L. Rev. 1, 18–22 (1983). And roughly thirty-five years ago, part of one chapter in a book of essays made reference to and analyzed “trends in insurance premiums.” See Henry R. Kaufman, Trends in Damage Awards, Insurance Premiums, and the Cost of Media Libel Litigation, in The Cost of Libel: Economic and Policy Implications 1, 11–15 (Everette E. Dennis & Eli M. Noam eds., 1989). ↑
  16.  For a recent argument that the protections provided to public figures should be reduced, see generally G. Edward White, Reconsidering the Legacy of New York Times v. Sullivan, 23 First Amend. L. Rev. 1 (2024). ↑

Deterring Unenforceable Terms

Contract law doesn’t work the way most people—that is, most nonlawyers—think it works. People think that if they agree to a contract, they are bound by its terms—no matter if those terms are unfair or legally unenforceable. But that’s not correct. Although there is a default presumption that the law will enforce terms that parties agree to, courts can and do decline to enforce terms when they are contrary to statute, regulation, or common law.

This is a bad arrangement. Because people do not understand how enforceability works, contract drafters can include unenforceable terms and benefit from them even when they are contrary to law. Clearly unenforceable terms are used in a wide range of cases, and those terms impose costs on consumers and employees despite being formally toothless.

This Article argues for a change. The problems of unenforceable terms arise from the burden of determining whether a contractual provision is enforceable. The current law makes little effort to allocate or mitigate that burden. But in a common scenario—where a sophisticated actor drafts mass contracts for many unsophisticated counterparties—the drafter is much better positioned to determine the contract’s enforceability. The law should therefore penalize such drafters for including clearly unenforceable terms in their contracts. This Article describes the basic normative case for such a penalty, considers how it might best be designed, and assesses the opportunities and limitations in existing law for applying a penalty to deter the use of unenforceable terms in mass contracts.

Introduction

Contract law has a process problem.

The law governing contracts is full of protections for the people who are party to a contract. Over the centuries, judges at common law have determined that a variety of potential provisions are too unfair to permit. In the modern era, legislators have passed statutes that prohibit a wide range of terms. And regulators have promulgated rules to limit what companies can put in a contract.

But to enforce these protections, contract law often relies on a flawed procedure. The background norm in contract law is that a provision that is contrary to law will not be enforced in court. And that makes sense—where the terms of an agreement violate doctrine or public policy, there is a strong argument that the state should not enforce those terms. But, other than nonenforcement, there is no general default penalty for using unenforceable terms. Individual statutes or regulations may attach a penalty for using a particular term, such as when a statute creates a penalty for including contractual provisions purporting to waive the statute’s protections.1 1.See, e.g., 15 U.S.C. §§ 1693l, 1693m.Show More But absent such a specific regulation, the law does not penalize a party’s choice to include an unenforceable term in their contracts.

The problem is that this arrangement does little to prevent the use of unenforceable terms in the first place.2 2.See Margaret Jane Radin, Boilerplate: The Fine Print, Vanishing Rights, and the Rule of Law 147 (2013).Show More Most contracts do not get litigated. Most people, meanwhile, take the terms of the contracts they sign at face value, not realizing that a term may be unenforceable and carry no legal weight.3 3.See infra Section I.B.Show More As a result, a sophisticated drafter who puts unenforceable terms in their contracts may reap the benefit of those terms by influencing their counterparties’ behavior.4 4.Radin, supra note 2.Show More An employee who thinks they are bound by an unenforceable noncompete clause may decline to look for a better job; a consumer who thinks they are bound by an unenforceable liability waiver may not file a lawsuit even when they are entitled to damages.

And if the contract does end up in litigation, the term at issue is just rendered a nullity, making the drafter no worse off than if the term had not been included. On balance, then, contract drafters often are incentivized to include unenforceable terms and try to get whatever value out of them that they can, short of relying on them in court.5 5.Id.Show More

This arrangement is the result of a legal system that typically does not recognize a particular type of burden: the burden of learning what the law is and how it applies in a given context. To the contrary, courts embrace a clear legal fiction: that parties to a contract “are presumed to know the law.”6 6.E.g., R.L. Polk Printing Co. v. Smedley, 118 N.W. 984, 984 (Mich. 1908); BPP069, LLC v. Lindfield Holdings, LLC, 816 S.E.2d 755, 761 (Ga. Ct. App. 2018) (“[A]ll persons are presumed to know the law and therefore cannot be deceived by erroneous statements of law.” (quoting Lakeside Invs. Grp., Inc. v. Allen, 559 S.E.2d 491, 493 (Ga. Ct. App. 2002))).Show More As a result, although the law puts the onus on a contract drafter to write clear and intelligible terms,7 7.See, e.g., David Horton, Flipping the Script: Contra Proferentem and Standard Form Contracts, 80 U. Colo. L. Rev. 431, 437–38 (2009) (noting that the contra proferentem doctrine “deters imprecision” and describing its deterrent effects in the context of standard form contracts).Show More it does not typically penalize a drafter for writing unenforceable terms. The burden of understanding the enforceability of a term “lies where it falls,”8 8.Cf. Filosa v. Courtois Sand & Gravel Co., 590 A.2d 100, 102 (R.I. 1991) (“[W]here there is no negligence, the aggrieved party is no longer a plaintiff but is a victim of accidental misfortune, and one of the clearest and probably most draconian principles to evolve out of centuries of tort law is that accidental harm lies where it falls.” (citing Brown v. Kendall, 60 Mass. (6 Cush.) 292, 298 (1850))).Show More and if a tenant or an employee mistakenly thinks they are bound by a term, they generally just bear the cost of compliance.

But most people do not know the law. Contracts mediate huge portions of our lives, from our employment and our housing, to our communications and correspondence, to our leisure and entertainment. And the law makes little to no effort to ensure that those contracts’ terms actually create enforceable obligations. Instead, the law leaves it up to everyone to figure out for themselves what parts of their contracts they must listen to and what parts they can ignore. And what’s more, access to those who can help figure that out—i.e., lawyers—is incredibly unequal, with marginalized groups much less able to access legal assistance than those with more resources.9 9.See infra Section II.C.Show More

This arrangement should change. This Article contends that in the contemporary world of mass contracting, the law should reallocate the burden of learning and applying the law. In many private-law contexts, the law plays a role both in the efficient allocation of costs and in the protection of less sophisticated parties. But, I argue, in the world of mass contracting, the burdens of unenforceable terms are not efficiently allocated, and the result is harm to everyday consumers and employees who sign mass contracts.

The problematic incentives posed by unenforceable terms have long been recognized.10 10.See, e.g., Radin, supra note 2; Lee A. Pizzimenti, Prohibiting Lawyers from Assisting in Unconscionable Transactions: Using an Overt Tool, 72 Marq. L. Rev. 151, 158 (1989); Bailey Kuklin, On the Knowing Inclusion of Unenforceable Contract and Lease Terms, 56 U. Cin. L. Rev. 845, 846–47 (1988); Warren Mueller, Residential Tenants and Their Leases: An Empirical Study, 69 Mich. L. Rev. 247, 248 (1970).Show More But the time is ripe for a reconsideration of this basic feature of how our legal system handles contracts. Over the last decade, new empirical research has illustrated the breadth and depth of the problem of unenforceable terms—a problem that remained mostly anecdotal until recently.11 11.See infra Part I. On the lack of robust evidence before the last decade or so, see Meirav Furth-Matzkin, On the Unexpected Use of Unenforceable Contract Terms: Evidence from the Residential Rental Market, 9 J. Legal Analysis 1, 5 (2017) [hereinafter Furth-Matzkin, Unexpected Use] (“[T]here has been so far very little empirical investigation into the prevalence of unenforceable terms in consumer contracts.”).Show More Unenforceable terms are widespread, with studies confirming their ubiquity across economic sectors including housing,12 12.David A. Hoffman & Anton Strezhnev, Leases as Forms, 19 J. Empirical Legal Stud. 90, 90–91 (2022); see also Furth-Matzkin, Unexpected Use, supra note 11, at 17–23 (detailing contract provisions in lease housing contracts that courts have found to be unenforceable or that are prohibited by state statutes).Show More employment,13 13.Evan P. Starr, J.J. Prescott & Norman D. Bishara, Noncompete Agreements in the US Labor Force, 64 J.L. & Econ. 53, 60, 81 (2021) [hereinafter Starr et al., Noncompete Agreements].Show More and recreation.14 14.Edward K. Cheng, Ehud Guttel & Yuval Procaccia, Unenforceable Waivers, 76 Vand. L. Rev. 571, 577 (2023).Show More And new empirical research also demonstrates the effect of those terms.15 15.See Tess Wilkinson-Ryan, The Perverse Consequences of Disclosing Standard Terms, 103 Cornell L. Rev. 117, 139–49, 139 nn.105–10 (2017) (surveying research); Meirav Furth-Matzkin & Roseanna Sommers, Consumer Psychology and the Problem of Fine-Print Fraud, 72 Stan. L. Rev. 503, 516 (2020) (explaining that laypeople may be discouraged from breaking a contract, even if they suspect the contract is unfair, because they assume written contracts are binding); Meirav Furth-Matzkin, The Harmful Effects of Unenforceable Contract Terms: Experimental Evidence, 70 Ala. L. Rev. 1031, 1044–51, 1053–56 (2019) [hereinafter Furth-Matzkin, Harmful Effects] (showing through experiments that unenforceable terms adversely affect tenants’ behavioral intentions and legal predictions); Evan Starr, J.J. Prescott & Norman Bishara, The Behavioral Effects of (Unenforceable) Contracts, 36 J.L. Econ. & Org. 633, 651–55, 659–66 (2020) [hereinafter Starr et al., Behavioral Effects] (suggesting that noncompetes have an effect on behavior regardless of their enforceability, and that noncompetes are associated with longer employee tenure and reduced likelihood of leaving for a competitor). For examples of older evidence in this vein, see also Dennis P. Stolle & Andrew J. Slain, Standard Form Contracts and Contract Schemas: A Preliminary Investigation of the Effects of Exculpatory Clauses on Consumers’ Propensity to Sue, 15 Behav. Scis. & L. 83, 91–93 (1997) (finding that consumers tend to believe that all contract terms are enforceable and that exculpatory language in form contracts appears to deter consumers’ propensity to seek compensation); Curtis J. Berger, Hard Leases Make Bad Law, 74 Colum. L. Rev. 791, 815–16 (1974) (explaining that “[u]ninformed or misinformed parties to a contract are easily terrorized or disarmed into foregoing their rights and remedies”); Mueller, supra note 10, at 248, 272–74 (suggesting that “the bulk of tenants [do] not appear to question the validity of terms found in their leases”).Show More Both consumers and employees are likely to feel bound by contract terms that they have assented to, regardless of those terms’ legality, and even if they have not read the terms before signing.16 16.See infra Part I (surveying research).Show More There is thus now an established, increasingly robust literature documenting that unenforceable terms pose a real problem, and one that is common in the contemporary economy.

Unenforceable terms have also been highlighted by the recent actions of agencies and advocates.17 17.See infra Section I.C.Show More Terms that are frequently unenforceable, like noncompete agreements and liability waivers, are at the center of recent actions by the White House,18 18.Exec. Order No. 14036, 86 Fed. Reg. 36987, 36987, 36992 (July 9, 2021) (discussing noncompete agreements).Show More Federal Trade Commission (“FTC”),19 19.Non-Compete Clause Rule, 89 Fed. Reg. 38342, 38342 (May 7, 2024) (to be codified at 16 C.F.R. pts. 910, 912). But see Ryan, LLC v. Fed. Trade Comm’n, 746 F. Supp. 3d 369, 390 (N.D. Tex. 2024) (“The [Non-Compete] Rule shall not be enforced or otherwise take effect on its effective date of September 4, 2024, or thereafter.”), appeal docketed, No. 24-10951 (5th Cir. Oct. 24, 2024).Show More National Labor Relations Board (“NLRB”),20 20.Memorandum GC 23-08 from Jennifer A. Abruzzo, Gen. Couns., Nat’l Lab. Rels. Bd., to All Reg’l Dirs., Officers-in-Charge, and Resident Officers, Nat’l Lab. Rels. Bd. (May 30, 2023), https://nlrbresearch.com/pdfs/09031d4583a87168.pdf [https://perma.cc/D6QA-2‌RPG].Show More and Consumer Financial Protection Bureau (“CFPB”).21 21.Registry of Supervised Nonbanks That Use Form Contracts to Impose Terms and Conditions That Seek to Waive or Limit Consumer Legal Protections, 88 Fed. Reg. 6906, 6906 (proposed Feb. 1, 2023) [hereinafter Registry of Supervised Nonbanks That Use Form Contracts].Show More And significantly, policymakers and advocates are beginning to focus not only on rendering bad contract terms unenforceable, but also on penalizing drafters for including those provisions in the contracts to begin with.22 22.See infra Section I.C.Show More

Between this empirical work and recent policy developments, unenforceable terms are now in the spotlight. But that spotlight’s focus has often been somewhat granular, examining one particular term or context rather than the problem of unenforceable terms writ large.23 23.The FTC’s recent policy actions, for instance, focus only on noncompetes in employment contracts, while the CFPB’s actions focus on waivers in consumer finance. CompareNon-Compete Clause Rule, 89 Fed. Reg. at 38342 (providing that it is an unfair method of competition to enter into noncompete clauses with workers after the Rule’s effective date), with Registry of Supervised Nonbanks That Use Form Contracts, supra note 21 (proposing that nonbanks be required to register with the CFPB if they use contract terms designed to waive consumers’ legal protections or limit how consumers enforce their rights).Show More The idea of a general penalty for using unenforceable terms, meanwhile, has come up before, but typically only in passing.24 24.See, e.g., Furth-Matzkin & Sommers, supra note 15, at 544–45 (suggesting “statutory damages for fine-print fraud” as part of a set of policy solutions); Radin, supra note 2, at 147–48 (mentioning the possibility of fines as a component of a public regulatory regime for boilerplate terms). A more thorough consideration of an affirmative cause of action can be found in Brady Williams’s Unconscionability as a Sword: The Case for an Affirmative Cause of Action, 107 Calif. L. Rev. 2015, 2041, 2043–45, 2047 (2019), which argues for developing an affirmative remedy in the context of unconscionable contract provisions.Show More

This Article picks up where those conversations leave off and considers the merits of a penalty for using unenforceable terms in mass contracts of adhesion. It argues for a general, affirmative prohibition on clearly unenforceable terms in contracts offered by a sophisticated drafter to large numbers of unsophisticated counterparties.

In doing so, the Article brings to bear normative concerns from both within and outside of traditional private-law theory. In particular, the problem of unenforceable terms implicates both the traditional private-law goal of cost minimization as well as the public-law goal of access to justice. That is because the question of how to approach unenforceable terms can be thought of as a question of how the law ought to distribute the costs of acquiring and applying legal knowledge. The law under the status quo makes no effort to allocate these costs, which is why there is a problem: the signers of mass adhesive contracts are unlikely to know that unenforceable terms carry no legal weight, and so may change their behavior to accommodate those terms even if doing so causes them loss or injury.

There are two basic paths that could address that problem: the signers of mass contracts can acquire and apply the legal knowledge necessary to understand terms’ enforceability, or the drafters of those contracts can acquire and apply the legal knowledge necessary to prevent unenforceable terms from being included in the first place. Comparing those options, it is clear that the party who can more cheaply manage the costs of legal knowledge is the drafter. The drafter in this scenario is both a sophisticated actor (who likely already has counsel) and one who is able to amortize the cost of legal analysis over many transactions.

Placing the burden on the drafter to issue only binding, valid terms also mitigates serious inequities under the status quo. Access to legal knowledge and legal institutions in the United States is not equally distributed.25 25.See infra Part II.Show More Marginalized groups in the United States face the double bind of higher-than-average legal needs and lower-than-average income and wealth to use to manage those needs.26 26.See infra Part II.Show More The inequities that these individuals and communities experience when it comes to the civil justice system both reflect and reinforce racial and gender inequality.27 27.See, e.g., Kathryn A. Sabbeth & Jessica K. Steinberg, The Gender of Gideon, 69 UCLA L. Rev. 1130, 1143–48, 1150–61 (2023); Tonya L. Brito, Kathryn A. Sabbeth, Jessica K. Steinberg & Lauren Sudeall, Racial Capitalism in the Civil Courts, 122 Colum. L. Rev. 1243, 1268–77 (2022).Show More These legal problems will often center around transactions and relationships that are mediated by contract and involve a power imbalance—with a landlord, employer, or health care provider, for instance—and so may implicate many substantive contract law doctrines that are designed to protect less powerful individuals.28 28.See infra Part II.Show More Restricting unenforceable terms thus avoids compounding injustice, in which a person’s existing marginalization prevents them from obtaining the assistance necessary to prevent further injury.

A general penalty for unenforceable terms is the natural development of the “contract as thing” perspective introduced by Arthur Leff more than fifty years ago.29 29.See Arthur Allen Leff, Contract as Thing, 19 Am. U. L. Rev. 131, 131–32, 147–52, 155 (1970); see also Douglas G. Baird, The Boilerplate Puzzle, 104 Mich. L. Rev. 933, 933–37 (2006) (comparing the legal treatment of boilerplate and fine print contract terms to “hidden” attributes of products).Show More Mass contracts of adhesion, ubiquitous in the modern world, are more like off-the-shelf purchased products than the bespoke negotiated instruments that contract doctrine developed around. As Leff wrote, “[i]f . . . a particular contract is a mass-produced inalterable thing, then the words that make it up are just elements of the thing, like wheels and carburetors.”30 30.Leff, supra note 29, at 153.Show More But the doctrine of unenforceability does not treat unenforceable words like wheels or carburetors, or even like other words that a company may utter about its products. A sports equipment company may face liability if its advertisement falsely touts “the highest-rated safety features on the market,” but if its contract says “the company is not liable for any damages resulting from your use of our products,” the standard approach of non-enforceability provides no penalty—even if that statement is, legally speaking, false.

In this way, the world of unenforceable contract terms is one of the last vestiges of the “caveat emptor” doctrine that has long been excised from many other areas of the law.31 31.See infra Part II.Show More Faced with unenforceable terms in a contract, consumers are simply left to their own recognizance. Affirmatively prohibiting clearly unenforceable terms in mass contracts would allow signers to rely on the bindingness of the terms they assent to without being lawyers—just as we can rely on the functionality of the cars we buy without being engineers or the safety of the medicines we purchase without being physicians.

The Article proceeds as follows. First, Part I surveys the research regarding the use of unenforceable terms and their effects on the general public. Part II then builds out the normative argument for penalizing the use of unenforceable terms in mass contracts. Part III considers questions of how such a penalty would be designed, such as how to construct a liability rule and which parties it should cover. Part IV then considers resources in existing law that could be used to combat unenforceable terms short of passing new legislation.

  1.  See, e.g., 15 U.S.C. §§ 1693l, 1693m. ↑
  2.  See Margaret Jane Radin, Boilerplate: The Fine Print, Vanishing Rights, and the Rule of Law 147 (2013). ↑
  3.  See infra Section I.B. ↑
  4.  Radin, supra note 2. ↑
  5.  Id. ↑
  6.  E.g., R.L. Polk Printing Co. v. Smedley, 118 N.W. 984, 984 (Mich. 1908); BPP069, LLC v. Lindfield Holdings, LLC, 816 S.E.2d 755, 761 (Ga. Ct. App. 2018) (“[A]ll persons are presumed to know the law and therefore cannot be deceived by erroneous statements of law.” (quoting Lakeside Invs. Grp., Inc. v. Allen, 559 S.E.2d 491, 493 (Ga. Ct. App. 2002))). ↑
  7.  See, e.g., David Horton, Flipping the Script: Contra Proferentem and Standard Form Contracts, 80 U. Colo. L. Rev. 431, 437–38 (2009) (noting that the contra proferentem doctrine “deters imprecision” and describing its deterrent effects in the context of standard form contracts). ↑
  8.  Cf. Filosa v. Courtois Sand & Gravel Co., 590 A.2d 100, 102 (R.I. 1991) (“[W]here there is no negligence, the aggrieved party is no longer a plaintiff but is a victim of accidental misfortune, and one of the clearest and probably most draconian principles to evolve out of centuries of tort law is that accidental harm lies where it falls.” (citing Brown v. Kendall, 60 Mass. (6 Cush.) 292, 298 (1850))). ↑
  9.  See infra Section II.C. ↑
  10.  See, e.g., Radin, supra note 2; Lee A. Pizzimenti, Prohibiting Lawyers from Assisting in Unconscionable Transactions: Using an Overt Tool, 72 Marq. L. Rev. 151, 158 (1989); Bailey Kuklin, On the Knowing Inclusion of Unenforceable Contract and Lease Terms, 56 U. Cin. L. Rev. 845, 846–47 (1988); Warren Mueller, Residential Tenants and Their Leases: An Empirical Study, 69 Mich. L. Rev. 247, 248 (1970). ↑
  11.  See infra Part I. On the lack of robust evidence before the last decade or so, see Meirav Furth-Matzkin, On the Unexpected Use of Unenforceable Contract Terms: Evidence from the Residential Rental Market, 9 J. Legal Analysis 1, 5 (2017) [hereinafter Furth-Matzkin, Unexpected Use] (“[T]here has been so far very little empirical investigation into the prevalence of unenforceable terms in consumer contracts.”). ↑
  12.  David A. Hoffman & Anton Strezhnev, Leases as Forms, 19 J. Empirical Legal Stud. 90, 90–91 (2022); see also Furth-Matzkin, Unexpected Use, supra note 11, at 17–23 (detailing contract provisions in lease housing contracts that courts have found to be unenforceable or that are prohibited by state statutes). ↑
  13.  Evan P. Starr, J.J. Prescott & Norman D. Bishara, Noncompete Agreements in the US Labor Force, 64 J.L. & Econ. 53, 60, 81 (2021) [hereinafter Starr et al., Noncompete Agreements]. ↑
  14.  Edward K. Cheng, Ehud Guttel & Yuval Procaccia, Unenforceable Waivers, 76 Vand. L. Rev. 571, 577 (2023). ↑
  15.  See Tess Wilkinson-Ryan, The Perverse Consequences of Disclosing Standard Terms, 103 Cornell L. Rev. 117, 139–49, 139 nn.105–10 (2017) (surveying research); Meirav Furth-Matzkin & Roseanna Sommers, Consumer Psychology and the Problem of Fine-Print Fraud, 72 Stan. L. Rev. 503, 516 (2020) (explaining that laypeople may be discouraged from breaking a contract, even if they suspect the contract is unfair, because they assume written contracts are binding); Meirav Furth-Matzkin, The Harmful Effects of Unenforceable Contract Terms: Experimental Evidence, 70 Ala. L. Rev. 1031, 1044–51, 1053–56 (2019) [hereinafter Furth-Matzkin, Harmful Effects] (showing through experiments that unenforceable terms adversely affect tenants’ behavioral intentions and legal predictions); Evan Starr, J.J. Prescott & Norman Bishara, The Behavioral Effects of (Unenforceable) Contracts, 36 J.L. Econ. & Org. 633, 651–55, 659–66 (2020) [hereinafter Starr et al., Behavioral Effects] (suggesting that noncompetes have an effect on behavior regardless of their enforceability, and that noncompetes are associated with longer employee tenure and reduced likelihood of leaving for a competitor). For examples of older evidence in this vein, see also Dennis P. Stolle & Andrew J. Slain, Standard Form Contracts and Contract Schemas: A Preliminary Investigation of the Effects of Exculpatory Clauses on Consumers’ Propensity to Sue, 15 Behav. Scis. & L. 83, 91–93 (1997) (finding that consumers tend to believe that all contract terms are enforceable and that exculpatory language in form contracts appears to deter consumers’ propensity to seek compensation); Curtis J. Berger, Hard Leases Make Bad Law, 74 Colum. L. Rev. 791, 815–16 (1974) (explaining that “[u]ninformed or misinformed parties to a contract are easily terrorized or disarmed into foregoing their rights and remedies”); Mueller, supra note 10, at 248, 272–74 (suggesting that “the bulk of tenants [do] not appear to question the validity of terms found in their leases”). ↑
  16.  See infra Part I (surveying research). ↑
  17.  See infra Section I.C. ↑
  18.  Exec. Order No. 14036, 86 Fed. Reg. 36987, 36987, 36992 (July 9, 2021) (discussing noncompete agreements). ↑
  19.  Non-Compete Clause Rule, 89 Fed. Reg. 38342, 38342 (May 7, 2024) (to be codified at 16 C.F.R. pts. 910, 912). But see Ryan, LLC v. Fed. Trade Comm’n, 746 F. Supp. 3d 369, 390 (N.D. Tex. 2024) (“The [Non-Compete] Rule shall not be enforced or otherwise take effect on its effective date of September 4, 2024, or thereafter.”), appeal docketed, No. 24-10951 (5th Cir. Oct. 24, 2024). ↑
  20.  Memorandum GC 23-08 from Jennifer A. Abruzzo, Gen. Couns., Nat’l Lab. Rels. Bd., to All Reg’l Dirs., Officers-in-Charge, and Resident Officers, Nat’l Lab. Rels. Bd. (May 30, 2023), https://nlrbresearch.com/pdfs/09031d4583a87168.pdf [https://perma.cc/D6QA-2‌RPG]. ↑
  21.  Registry of Supervised Nonbanks That Use Form Contracts to Impose Terms and Conditions That Seek to Waive or Limit Consumer Legal Protections, 88 Fed. Reg. 6906, 6906 (proposed Feb. 1, 2023) [hereinafter Registry of Supervised Nonbanks That Use Form Contracts]. ↑
  22.  See infra Section I.C. ↑
  23.  The FTC’s recent policy actions, for instance, focus only on noncompetes in employment contracts, while the CFPB’s actions focus on waivers in consumer finance. Compare Non-Compete Clause Rule, 89 Fed. Reg. at 38342 (providing that it is an unfair method of competition to enter into noncompete clauses with workers after the Rule’s effective date), with Registry of Supervised Nonbanks That Use Form Contracts, supra note 21 (proposing that nonbanks be required to register with the CFPB if they use contract terms designed to waive consumers’ legal protections or limit how consumers enforce their rights). ↑
  24.  See, e.g., Furth-Matzkin & Sommers, supra note 15, at 544–45 (suggesting “statutory damages for fine-print fraud” as part of a set of policy solutions); Radin, supra note 2, at 147–48 (mentioning the possibility of fines as a component of a public regulatory regime for boilerplate terms). A more thorough consideration of an affirmative cause of action can be found in Brady Williams’s Unconscionability as a Sword: The Case for an Affirmative Cause of Action, 107 Calif. L. Rev. 2015, 2041, 2043–45, 2047 (2019), which argues for developing an affirmative remedy in the context of unconscionable contract provisions. ↑
  25.  See infra Part II. ↑
  26.  See infra Part II. ↑
  27.  See, e.g., Kathryn A. Sabbeth & Jessica K. Steinberg, The Gender of Gideon, 69 UCLA L. Rev. 1130, 1143–48, 1150–61 (2023); Tonya L. Brito, Kathryn A. Sabbeth, Jessica K. Steinberg & Lauren Sudeall, Racial Capitalism in the Civil Courts, 122 Colum. L. Rev. 1243, 1268–77 (2022). ↑
  28.  See infra Part II. ↑
  29.  See Arthur Allen Leff, Contract as Thing,
    19

    Am. U. L. Rev. 131, 131–32, 147–52, 155 (1970); see also Douglas G. Baird, The Boilerplate Puzzle, 104 Mich. L. Rev. 933, 933–37 (2006) (comparing the legal treatment of boilerplate and fine print contract terms to “hidden” attributes of products). ↑

  30.  Leff, supra note 29, at 153. ↑
  31.  See infra Part II. ↑
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