Common Law Disclosure Duties and the Sin of Omission: Testing the Meta-theories

Since ancient times, legal scholars have explored the vexing question of when and what a contracting party must disclose to her counterparty, even in the absence of explicit misleading statements. This fascination has culminated in a set of claims regarding which factors drive courts to impose disclosure duties on informed parties. Most of these claims are based on analysis of a small number of non-randomly selected cases and have not been tested systematically. This article represents the first attempt to systematically test a number of these claims using data coded from 466 case decisions spanning over a wide array of jurisdictions and covering over 200 years. 

The results are mixed. In some cases it appears that conventional wisdom is correct. For example, our data support the claim that courts are more likely to require disclosure of latent, as opposed to patent, defects. In addition, courts are more likely to require full disclosure between parties in a fiduciary or confidential relationship. On the other hand, our results cast doubt on much of the conventional wisdom regarding the law of fraudulent silence. Indeed, our results challenge ten of the most prominent theories that have been asserted to explain when courts will require disclosure. We find that courts are no more likely to impose disclosure duties when the information is casually acquired as opposed to deliberately acquired and that unequal access to information by the contracting parties is not a significant factor that drives courts to require disclosure. We do find, however, that when these two factors are present simultaneously courts are significantly more likely to force disclosure. Perhaps most interestingly, although it is generally understood that courts have become more likely to impose disclosure duties over time, we find that courts actually have become less likely to require disclosure over time.  

Administrative Reconsideration

The United States Code and Code of Federal Regulations are replete with detailed provisions granting agencies engaged in adjudication the power to reopen their own final judgments. The question addressed in this paper is whether federal agencies can and should have the power to reconsider their final decisions in the absence of an express grant of authority in a statute or regulation. Federal courts have generally said that federal agencies do possess the “inherent” power to reconsider in most circumstances. Part I of this paper provides the first comprehensive overview of the doctrine of administrative reconsideration and shows where federal courts are more or less likely to find that the presumption of inherent power holds. Part I concludes with a brief overview of state law in this area, with particular focus on the division among state courts over whether state agencies possess an inherent power to reconsider. Part II considers whether the inherent power to reconsider is justified for federal agencies and presents three arguments to show that it is not. First, and most importantly, while various Supreme Court precedents have been marshaled in support of an inherent power to reconsider, a more thorough reading of these cases indicates that they may in fact foreclose it. Second, Congress and agencies have pervasively regulated in the area of administrative reconsideration to such an extent that an inherent power to reconsider should be heavily disfavored. Third, an inherent power to reconsider is normatively unattractive because it fosters considerable procedural uncertainty. The paper concludes by setting out a more appropriate yet modest rule: Federal administrative agencies should only have the power to reconsider adjudications when that power has been expressly granted by Congress, or when an agency has promulgated a valid reconsideration provision pursuant to its rulemaking processes.

A Simple Proposal to Halve Litigation Costs

This essay discusses a simple proposal that could reduce litigation costs in the country by about half, yet without compromising the functioning of the liability system in a significant way. Under the proposal (1) only half the cases brought before a court would be randomly chosen for litigation, and (2) damages would be doubled in cases accepted for litigation. The first element of the proposal saves litigation costs and the second preserves deterrence of undesirable behavior. The effect of the proposal on settlement is emphasized, one important implication of which is that settlement is likely to occur before cases are filed (and possibly randomly eliminated), in which event plaintiffs will definitely be compensated.