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Author: kovens

Washington and Lee Law Review - kovens

Article

by Niloufer Selvadurai

Tantamount with the increasing application of blockchain technologies around the world, the use of blockchain-based smart contracts has rapidly risen. In a “smart contract,” computer protocols automatically facilitate, verify, and enforce arrangements made between parties on a blockchain. Such smart contracts offer a variety of commercial benefits, notably immutability and increased efficiency facilitated by removing the need for a trusted intermediary. However, as discussed in recent legal scholarship, it is difficult for smart contracts to uphold certain fundamental principles of contract law. Translating concepts of individual intention and responsibility into the decentralized space of blockchain is problematic. Aggregating such individual intention into the combined will and intention of the blockchain entity is at best challenging, and at worst unfeasible. Further, while traditional contracts accommodate change and allow for the amendment of terms in response to evolving circumstances, blockchain smart contracts do not. As the difficulties of blockchain smart contracts become apparent, attention is turning to hybrid smart contracts.

“Hybrid” smart contracts are commonly described in legal discourse as arrangements that consist of both a traditional contract (natural language) and a blockchain-based smart contract (formal computer code) component. In comparison, computer science scholarship provides a more complex and nuanced articulation, framing hybrid smart contracts as arrangements that combine code running inside the blockchain (on-chain) with data and computations from outside the blockchain (off-chain). The link between these on-chain and off-chain operations is created through a decentralized oracle network. Such hybrid contracts maintain the immutability of blockchain, and the trustless contracting this facilitates, with the flexibility that comes from connecting to real-world, real-time data sources.

In such a context, the objective of this Essay is to examine the nature and operation of hybrid smart contracts, integrating both legal and computer science discourse, and to critically analyze whether such arrangements have the potential to mitigate some of the legal challenges that have been identified with respect to fully on-chain smart contracts.

Article

by Young Ran (Christine) Kim

FTX’s recent collapse highlights the overall instability that blockchain assets and digital financial markets face. While the use of blockchain technology and crypto assets is widely prevalent, the associated market is still largely unregulated, and the future of digital asset regulation is also unclear. The lack of clarity and regulation has led to public distrust and has called for more dedicated regulation of digital assets. Among those regulatory efforts, tax policy plays an important role. This Essay introduces comprehensive regulatory frameworks for blockchain-based assets that have been introduced globally and domestically, and it shows that tax reporting is the key element of those regulatory frameworks.

Furthermore, this Essay argues that tax reporting and transparency requirements can significantly stabilize the digital financial market and provide additional funding for much-needed regulatory programs through increased tax compliance. Tax reporting requirements have been effective tools in traditional financial markets. By replicating such policies in the digital financial market, the market would significantly improve. These requirements would help combat money laundering and tax evasion. Also, reporting requirements that target both financial institutions and taxpayers would increase tax compliance and lower administrative burdens. The requirements also have the potential to generate revenue, which can fund additional regulatory developments. For these reasons, tax reporting requirements could be an important tool whose utilization would bring much needed stability to digital assets and the market.

Article

by Matthew R. McGuire

Global connectivity is at an all-time high, and sovereign state law has not fully caught up with the technological innovations enabling that connectivity. TCP/IP—the communications protocol allowing computers on different networks to speak with each other—wasn’t adopted by ARPANET and the Defense Data Network until January 1983. That’s only forty years ago. And the World Wide Web wasn’t released to the general public until August 1991, less than thirty-five years ago. The first Bitcoin block was mined on January 3, 2009, less than fifteen years ago.

Legal doctrine doesn’t develop that fast, especially in legal systems heavily based around judicial precedent like the United States. The disconnect between the global, instant connectivity that internet-based technology makes possible and traditional legal and State regulatory actors has never been more apparent. In the past year, the United States, through its administrative agencies controlled by the Executive branch, has brought numerous enforcement actions against Web3 and crypto projects. Some of these projects and their members have been based in the United States, and others have, at best, limited connections to the United States’s territorial borders.

This Essay calls attention to the way the Internet, and Web3 in particular, has raised constitutional concerns about how United States agencies approach personal jurisdiction. Understanding these constitutional limits is critical for anyone considering forming or participating in a Decentralized Autonomous Organization (“DAO”). Intentional, thoughtful consideration of the issues presented here will ensure that DAOs and their members take on legal obligations in the United States knowingly and responsibly. A corollary is also true: DAOs and their members should fully consider their possible defenses and rights when confronted with the next overreaching enforcement action.

Note

by Laura Carrier

When adjusted to reflect inflation, the federal minimum wage is almost 40 percent lower than it was in 1970. The Biden Administration tried and failed to legislatively raise the minimum wage, and political deadlock will continue to kill legislative change. The shareholder proposal, a nonbinding recommendation to management that shareholders can submit for a vote at a public corporation’s annual meeting, presents a path for improving the wages of many workers in the absence of federal legislation. This Note analyzes the best approach to crafting a shareholder proposal on minimum wage that will prompt an effective increase in the minimum wages paid to workers. It evaluates the barriers to success and concludes that the right team of actors can overcome the barriers to raise the minimum wages paid to workers at large corporations through shareholder proposals.

Note

by Christian Sanchez Leon

This Note could be read as another Note addressing Congress’s power to strip jurisdiction from Article III courts. Yet, when this power is exercised in the immigration context, its impact extends far beyond the realm of checks and balances. Instead, this Note is about the insulation of the Board of Immigration Appeals (“BIA”) and its unfettered ability to create, interpret, and adjudicate its own laws. Not allowing courts to review BIA decisions leaves mixed-status families vulnerable to the harsh consequences of inherently arbitrary decisions made by executive officers.

These practices go against the established common law principles of family unity. For nearly a century, our judiciary has emphasized the importance of maintaining the family nucleus and parental autonomy. The courts have explained that it is central to our nation’s history and culture that parents have the right to be present in their child’s upbringing, enacting safeguards such as procedural protections for parents against the intrusion of the State. However, when it comes to mixed-status families, these judicial protections do not extend to immigration proceedings. When a child is born in the United States to undocumented parents, they are forced to decide between complete family separation and the forced removal of a citizen child from the country.

Stripping jurisdiction from courts to hear immigration proceedings of mixed-status families prevents the courts from addressing the violations of the fundamental right to family unity. While Congress does have the power to limit the jurisdiction of Article III courts, Congress cannot withhold judicial relief from people seeking to protect their rights to life, liberty, or property. Judicial recognition of the fundamental right to family unity, in the context of mixed-status families, would be a first step in enabling federal courts to preserve the constitutionality of our immigration system.

Tribute

by Alan M. Trammell, Joan M. Shaughnessy, Mary Z. Natkin, Brian C. Murchison, Mark H. Grunewald, Barry Sullivan, and Michelle L. Drumbl

A tribute to Professor Joan Shaughnessy, who served on the faculty of the Washington and Lee University School of Law from 1983 to 2022. A recognized scholar and teacher in areas of civil procedure, federal courts, evidence, family law, and poverty law, Shaun was appointed as W&L’s inaugural Roger D. Groot Professor of Law in 2012.

Article

by Tom Lininger

Building on my recent article in the Minnesota Law Review proposing reforms of evidentiary privilege law, this Article focuses on the unique context of communication about abortion. There is an urgent need to protect such communication in the wake of the Supreme Court’s decision in Dobbs v. Jackson Women’s Health Organization, which allowed states to recriminalize abortion. Now abortion seekers, providers, and third parties who aid and abet abortion could face significant exposure to both criminal penalties and civil suits in many states. Those states are attempting to extend the reach of their bans by sanctioning out-of-state travel and third-party aid to the traveler if the purpose of the travel is to abort a pregnancy. Advocates for reproductive freedom recognize the need to establish an “underground railroad” akin to the surreptitious assistance of fugitive slaves fleeing the Antebellum South. A stricter evidentiary privilege for abortion-related communication is crucial to protect those who seek to defy the draconian new regime.

In this Article, I offer a model rule that legislatures and judges should adopt. I also propose a comprehensive set of related reforms including changes to the crime-fraud exception in privilege law, changes to attorneys’ ethical rules, and changes to regulations governing data privacy.

The benefits of this Article’s proposals could be significant. For those who need to terminate their pregnancies but live in states that have criminalized abortion—a population consisting largely of low-income people of color—the new privilege could be the difference between privacy or prison. The proposals in this Article would improve access to abortion, reduce exposure to reprisals in court after an abortion, and limit the surveillance that could otherwise plague people of childbearing age.

From a conceptual standpoint, this Article’s proposals would make privilege law more egalitarian by shifting the focus from the professional credentials of the audience to the subject matter of the conversation—a long-overdue reorientation. Evidentiary privilege should not be coextensive with economic privilege.

Article

by Viva R. Moffat

People in prison produce vast amounts of creative and expressive work—from paintings and sculptures to essays, novels, music, and NFTs—but they are rarely described as artists and their work is often not described as “art.” Prisoners also do not regularly take advantage of copyright law, the primary form of protection for creative works. They should.

Copyright provides a strong set of rights that combines strains of free expression values with elements of property rights. Copyright confers dignitary and expressive benefits and, for some creators, financial rewards. As such, copyright can be a tool to help prisoners improve their lives, both while they are incarcerated and after they are released. In the prison context, copyright should be thought of as akin to a civil right and a part of the movement to reform the U.S. carceral system, empowering those who create. Moreover, because copyright is a right in intangibles, there is no reason that prisoners cannot or should not advance and vindicate their copyright interests just as they would if they were not incarcerated. In other words, copyright behind bars should not operate any differently than copyright in the free world.

This Article first describes the enormous range of artistic work created by those who are imprisoned, as well as the prison system’s regular attempts to deter and suppress such work. The Article then explains how copyright law protects virtually all of these works and why copyright is valuable to prisoners and should become part of the carceral reform project. Finally, the Article argues that there is no reason to limit the exercise of copyright by those who are incarcerated and no justification for impinging on prisoners’ ability to create, disseminate, and profit from their expressive and artistic works.

Article

by Kathleen DeLaney Thomas and Erin Scharff

The public misunderstands many aspects of the tax system. For example, people frequently misunderstand how marginal tax rates work, misperceive their own average tax rates, and believe they benefit from tax deductions for which they are ineligible. Such confusion is understandable given the complexity of our tax laws. Unfortunately, research suggests these misconceptions shape voter preferences about tax policy which, in turn, impact the policies themselves.

That people are easily confused by taxes is nothing new. With the rise of social media platforms, however, the speed at which misinformation campaigns can now move to shape public opinion is far faster. The past five years have seen a dramatic shift in the landscape of false information and scholars in a variety of disciplines, from law to psychology to journalism, have explored the increasing influence of fake news.

Building on this burgeoning literature, this Article is the first to examine the incidence and impact of fake news on tax law. We analyze a unique dataset of tax stories flagged as “false” or “untrue” by reputable, third-party news sources. We use this dataset to explore common themes in fake tax news, as well as the ways tax laws’ complexity contributes to spreading false information. We then offer recommendations for how tax administrators and policymakers can combat these misinformation efforts. Specifically, we argue that insights from the literature on fake news can and should inform how administrators disseminate true tax information to the public. Further, understanding what types of tax laws are easily misunderstood or subject to manipulation should inform substantive tax policy design.

Article

by Larry J. Pittman

In 1925, Congress, to provide for the enforcement of certain arbitration agreements, enacted the Federal Arbitration Act (“FAA”) as a procedural law to be applicable only in federal courts. However, the United States Supreme Court, seemingly for the purpose of reducing federal courts’ caseloads, co-opted the FAA by disregarding Congress’s intent that the FAA be applicable only in federal courts. And in furtherance of its own Court-created “federal policy in favor of arbitration,” the Court created precedents that limit state regulation of arbitration agreements, including that states cannot exempt disputes from forced or mandatory arbitration agreements or otherwise regulate the enforcement of arbitration agreements in a manner that is inconsistent with the FAA. The Court’s precedents have left a regulatory gap where states cannot prevent some of the dangers that arbitration poses to litigants in many areas of the law, including in consumer and employment contracts. Recently, however, Congress has reentered the arbitration field to reassert its authority over arbitration. In 2022, it enacted the Ending Forced Arbitration of Sexual Abuse and Sexual Harassment Act to exclude these types of claims from forced or mandatory arbitration. This Article asserts that Congress, having reentered the field, should continue its reforms of the FAA to recalibrate the balance of power between the Court and Congress. This would include Congress clearly stating whether Section 2 of the FAA should be applicable only in federal courts; should not be applicable to adhesion arbitration agreements; and should not be applicable to federal statutory claims, as well as whether the lack of diversity in arbitrators should be one of the justifications for not enforcing predispute arbitration agreements. This Articles discusses these topics and offers suggestions on how Congress should resolve these issues.

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