UCLA Law Review Volume 59, Issue 1

Affirmative Action as Government Speech

This Article seeks to transform how we think about affirmative action. The U.S. Supreme Court’s jurisprudence on the subject may appear to be a seamless whole, but closer examination reveals crucial differences between the cases broadly characterized as involving affirmative action. The government sometimes acts in a race-conscious manner by granting a tangible benefit to members of a minority group for remedial or diversifying purposes. But the government may also undertake remedial or diversifying race-conscious action without it resulting in unequal treatment or disadvantage to nonminorities. Under the Court’s current equal protection doctrine, both situations are presumptively unconstitutional. Race consciousness itself has become a constitutional harm, regardless of its tangible effects.

This Article breaks new ground by arguing that, functionally, the Court has come to view race-conscious government action as a form of prohibited government speech. The Court’s colorblindness doctrine, which is premised on expressive harm, is fundamentally inconsistent with the rationales for the government speech doctrine under the First Amendment. As the government speech doctrine recognizes, disagreement with the message sent by government action is not alone sufficient to state a constitutional claim. Rather, such disagreement is best addressed through the political process. This Article argues that the Court should use government speech principles to inform its equal protection analysis in cases in which the alleged harm is primarily expressive in nature.

Taxing Founders’ Stock

Founders of a start-up usually take common stock as a large portion of their compensation for current and future labor efforts. By electing to pay a nominal amount of ordinary income tax on the speculative value of the stock when it is received, founders pay tax on any appreciation at the long-term capital gains rate.

This Article argues that the preferential tax treatment of founders’ stock is not normatively justified. The economic efficiency case for a tax preference for founders’ stock is weak: Tax has a limited effect on entrepreneurial entry. Geographic, cultural, and business factors are far more important, as are nontax legal factors like bankruptcy, employment law, immigration policy, and securities law. Tax is a blunt policy instrument, and given the problems associated with direct government subsidies, the optimal level of government subsidy of entrepreneurship may be zero.

The case for reform is compelling. Taxing founders at a low rate is a conspicuous loophole in the fabric of our progressive income tax system, uniquely undermining our shared commitment to equal opportunity and distributive justice. Founders’ stock is often bequeathed to heirs who receive a step up in basis, leaving a legacy of dynastic wealth that is exempt from the income tax and subject only to the rather dodgy application of the estate tax.

While it would be normatively desirable to tax gains from founders’ stock at the same rate as labor income, fixing the problem is not administratively feasible within our current tax system. I offer solutions that policymakers might consider as part of a broader tax reform and deficit reduction effort.

Administrative Change

For nearly three decades, the U.S. Supreme Court has struggled with the proper treatment of administrative action that departs from agency precedent. Moving toward a stronger theoretical account of administrative change requires exploring an underappreciated feature of all administrative action: the agency’s chosen mode of reasoning. Agencies sometimes execute their regulatory mandates by weighing evidence, utilizing technical expertise, and making value judgments in a process reflecting what we refer to as prescriptive reasoning. At other times, agencies employ a more expository form of reasoning grounded in analysis of congressional intent or the constraints imposed by relevant judicial opinions. While prescriptive reasoning yields conclusions about optimal and responsive policy, expository reasoning exhibits a driving concern with what the law is. That distinction, combined with modern administrative agencies’ powers to render official pronouncements about the meaning of legal texts, activates fundamental rule-of-law interests that should limit an agency’s discretion to deviate from precedent by invoking expository arguments—in other words, by declaring that a legal pronouncement which meant X yesterday means Y today. This Article proposes a new theory and doctrine of administrative change that affords substantial deference where change is driven by prescriptive reasoning, but requires de novo scrutiny of reversals grounded in expository reasoning. The proposal strikes an appropriate balance between the need for agency flexibility and the paramount importance of a stalwart, vibrant rule of law.

Alternative Elements

The U.S. Constitution provides a criminal defendant with a right to trial by jury, and most states and the federal government require criminal juries to agree unanimously before a defendant may be convicted. But what exactly must a jury agree upon unanimously? Well-established doctrine, pursuant to In re Winship, provides that the jury must agree that the prosecution has proven every element of the offense beyond a reasonable doubt. Yet what the elements of any given offense are is not as clear as one might expect. Frequently, criminal statutes—especially federal statutes—describe an array of prohibited conduct, leaving ambiguous whether a particular statute sets forth (1) a single offense with alternative means of commission or (2) several different crimes. Under current doctrine, pursuant to Schad v. Arizona, this distinction is a significant one. If the statutory alternatives are determined to be alternative means of committing a single offense—or, more precisely, alternative means of establishing a particular element of a single crime—then a jury need not agree on any of the alternatives before it can convict. By contrast, if the alternatives represent discrete elements, signifying discrete offenses, then the jury must agree unanimously on at least one of the alternatives before it can convict. This Article argues that the ambiguity surrounding “alternative elements” has negative consequences throughout the criminal justice system, not the least of which is that it undermines the proof beyond a reasonable doubt standard. Drawing upon some of the insights set forth in Apprendi v. New Jersey and its progeny, this Article draws out the tensions between Apprendi and Schad and suggests a new approach to “alternative elements” that could strengthen the jury’s constitutional role and be a force for greater clarity in our criminal laws.

Mitigating Arbitration’s Externalities: A Call for Tailored Judicial Review

Arbitration has changed dramatically since Congress enacted the Federal Arbitration Act in 1925. Increasingly, unsophisticated parties are asked to enter into binding arbitration agreements before any dispute has arisen. As a result, mandatory laws are frequently interpreted and enforced by arbitrators rather than judges. Nonetheless, judicial review of arbitration awards is still largely limited to determining whether the arbitrator made procedural errors, rather than substantive errors.

As the law of arbitration has fallen behind arbitration practice, four negative externalities have developed. First, legally inaccurate arbitration awards, if left uncorrected, may allow for ongoing legal violations that harm third parties. Second, inaccurate awards undermine enforcement and may thereby reduce the law’s deterrent effect. Third, unreasoned or inaccurate awards create uncertainty about the legal rights and obligations of third parties. Finally, arbitration can elicit public controversy if outside observers believe victims are being denied their day in court.

Mitigating these externalities requires tailoring judicial review of arbitration awards based on the timing of the agreement to arbitrate, the types of claims involved, and the relative sophistication of the parties. Unequal bargaining power at the contracting stage must be addressed without unduly limiting parties’ freedom to avoid the costs of litigation. This Comment argues that the proper balance can be struck by drawing on federal securities law. Rule 144A of the Securities Act of 1933 classifies certain investors as qualified institutional buyers who may enter into transactions without the additional protections otherwise afforded by the law. This Comment explains how the principles behind Rule 144A can be extended to arbitration, allowing what I call qualified arbitration participants greater control over the level of substantive judicial review applicable to their arbitration awards without sacrificing safeguards for less sophisticated parties.