Claiming intellectual property is an act of communication, but as with all communication not everything can be spelled out with exactitude all the time—far from it. By drawing out an additional distinction between modes of claiming, Jeanne Fromer advances our understanding of claiming in intellectual property.¹ To the familiar distinction between central and peripheral claiming she adds the contrasting modes of claiming by exemplar and claiming by characteristic. She very usefully applies these two axes not just to patent law, where the issue of central versus peripheral claiming originates, but also to copyright. The possibility of mixing and combining the four different modes of claiming—peripheral by characteristic, peripheral by exemplar, central by characteristic, and central by exemplar—in different areas opens up not only a new lens for looking at the hybrid nature of existing patent and copyright law but also suggests a framework for thinking about improvements to claiming in these two, and other, areas of intellectual property. In this Response I argue that although these two axes can be regarded as distinct, they do share something in common—a differential reliance on formalism versus contextual interpretation—and that the degree of formalism is relevant to the conclusions we can draw from Fromer’s framework.

In peripheral claiming, which is familiar as the main method in current patent law, the would-be patentee claims the invention by describing its outer boundaries, in a process that is sometimes analogized to a metes and bounds description in the law of real property. If something is infringing it must fall within the claim; otherwise there is no infringement. By contrast, in central claiming, which was more characteristic of early nineteenth-century patent law and which lives on in the doctrine of equivalents and means-plus-function claims, the claim sets forth some central or paradigmatic members of the claimed set and then one relies on some notion of similarity to figure out membership of the full set. In Fromer’s fork example, there are four ways to claim.² In peripheral claiming one can either describe the set of forks by characteristic or by pointing out (more on this later). In central claiming, one can either set out a description of a central case of a fork or point to a central exemplar of one, and rely on a notion of relevant similarity to extend the set outward to the full set of claimed forks. This latter determination of similarity in central claiming is typically left for ex post decisionmaking, which allows for more flexibility but at the cost (so it is conventionally thought) of less ex ante certainty.

To this distinction between central and peripheral claiming familiar from patent law, Fromer adds claiming by characteristic versus claiming by exemplar. Patent law typically employs claiming by characteristic, paired with peripheral claiming. This leads to the familiar highly regimented style of claiming in which a single sentence is used to delineate the outer bound of the invention space claimed by the inventor. By contrast, claiming by exemplar involves setting out examples. This fits naturally with central claiming, as in copyright, in which central members of the set are set forth and similarity is judged ex post. But peripheral claiming by exemplar is also possible. Fromer assumes that it would involve listing the members of the claimed set, as is done in so-called Markush claims.⁴ Generally, as we will see, it will not be feasible to literally “point to” every fork that is being claimed (that is, purely by exemplar), and there must be a procedure for inferring from what is pointed out to the entire claimed set. The feasibility of such a procedure and the form it could take would depend in turn on who the relevant interpretive community is; the general public, inventors, and patent attorneys will all bring different background knowledge to bear. ⁵

Even more generally, what Fromer’s framework (implicitly) raises is the question of what types of information should be made explicit and which are best left implicit under different conditions for claiming. Different audiences, different informational resources, and different dynamics of innovation and age of industries can all influence how easy or difficult it is to leave information implicit and conversely how much reliance on formalism is needed.

For many purposes, a simple definition of formalism is helpful. An instance of communication is formal to the extent that its interpretation is invariant to context.⁶ The language of first-order logic, for example, is formal because its semantic rules are highly worked out and thus do not rely much on context, compared with more informal everyday mathematical notation. Natural languages (of which English and Chinese are examples) on this definition are less formal than the language of mathematics, but language in different situations can be more or less formal. Legal language tends to be formal because drafters are wary of reliance on context. For example, legal language in contracts and statutes is notorious for the repetition of noun phrases (as in “the party of the first part agrees with the party of the second part that the party of the first part,” and so on) as opposed to the use of pronouns which do require context for their interpretation. The more that the speaker and hearer are socially close, can rely on common knowledge, and are trying to cooperate, the less formal language needs to be. Thus, saying, “It’s cold in here” is a shorter way of saying, “Because you are closer to the window, please close the window.” But the looser formulation that relies on pragmatic inference relies on a lot of background knowledge and coincidence of communicative interest in order to succeed. In the absence of these factors, the more formal approach would be warranted—possibly including a description of what a window is and how it works. Sociolinguistic studies have shown that individual speakers employ more informal variants with socially closer audiences.⁷

No useful system of communication is perfectly formal in the sense of being absolutely invariant to context, but some communications and systems of communication are more invariant to context than others. I have argued elsewhere that formalism is a matter of degree, and that differential formalism depends largely on the nature of the audience for the communication. Communication is subject to an informational tradeoff. At the same cost one can communicate intensively with a small, socially close, knowledgeable audience or one can communicate in a more stripped-down, formal, and explicit way with a larger, more heterogeneous, and more anonymous audience.⁸ Formalism, which is a matter of degree, should correlate with the breadth and heterogeneity of the audience. The basic distinction between the use of language in contracts and property reflects this tradeoff: communicating an in rem right to “the world” requires a more formal and more regimented style of language and forms, including the standardization supplied by the numerus clausus.¹⁰—but in the examples given here, there is a lot of implicit context-based reasoning going on under the table, which makes claiming by exemplar fall towards the informal end of the spectrum.

To the extent that the costs and benefits of formality and contextuality along different dimensions go together, we might expect to find the formal and informal poles of these spectrums to line up: peripheral claiming will tend to be done by characteristic, and central claiming will tend to rely on exemplars. And the broad contours of patent and copyright do line up this way.¹¹ In this sense the two axes share a lot more in common than Fromer lets on. But Fromer is right to point out that each area uses a hybrid of the types of claiming, and we should ask what factors at this more detailed level push toward or away from the different modes of claiming.

What I suggest here is that the formality versus contextuality of claims—their differential formalism—will emerge as an important lens when trying to apply Fromer’s categories to the problems of claiming in patent, copyright, and other areas of intellectual property. Formalism implicates the costs and benefits of delineation depending on the audience’s background knowledge, the degree of cooperativeness of the communication, and the nature of the informational resource.

The audience for the delineation of rights matters when it comes to the costs and benefits of delineation, as Fromer recognizes. In general, patent law is directed more to expert audiences and much, though not all, of copyright can implicate the activities of nonexperts.¹² Thus, more expert knowledge can generally be presumed in patent law. Delineation in patent law can use technical terms and rely on knowledge in the field that copyright law cannot. But which area of law can rely more on implicit (less formal) means of communication? The role of audiences suggests that different types of implicitness can be employed in patent and copyright. Patent attorneys or agents (including those working for industrial competitors) versed in the relevant art can be expected to fill in certain kinds of information, and potential copyright violators different kinds of information. Possibly the latter kind of background information is closer to everyday knowledge. There are areas of copyright that do involve expertise of an artistic sort, but with a few exceptions expert knowledge (other than possibly legal knowledge) does not seem to feature as much in filling in informal delineation in copyright law as in patent law. Thus the nature of the audience points to the possibility of leaving different information implicit in the two areas. Correspondingly, patent and copyright rely differently on formalism when this reliance on background information is not reasonable.

Claiming intellectual property is an example of noncooperative communication which generally cuts in favor of formal communication. In a cooperative setting, one can assume that the audience will fill in information and draw inferences in a charitable fashion. At the center of the study of the “logic of conversation” is Grice’s Cooperative Principle: “Make your conversational contribution such as is required, at the stage at which it occurs, by the accepted purpose or direction of the talk exchange in which you are engaged.”
¹³ That is, the interpreter will interpret in accordance with the assumption that the speaker is trying to be helpful. Thus, in the Gricean example where Person A says “I’m out of gas” and Person B says there is a gas station around the corner, we and Person A can safely conclude that it is open, because otherwise Person B would be violating the Cooperative Principle and the maxims of conversation.

But legal interpretation is not like this. Disingenuousness of speaker and audience is almost to be presumed. The “logic of legal conversation” diverges from the ordinary conversation studied by Grice. Reliance on central claiming and claiming by exemplar requires context to be filled in and inferences to be drawn. In an adversarial context, it is difficult to converge on the relevant context and these pragmatic inferences, because each party—patentee and alleged infringer, say—has different incentives as to how to fill these items. The noncooperative nature of much of legal communication probably accounts for some of its formality. And legal language in general often relies on a more rigid analogue of pragmatic-style inference. The linguistic study of pragmatics focuses on language meaning in context, as distinct from the study of more formal meaning in semantics. In legal language a lot of what would be loose pragmatics is regimented into the semantics.

Whether to rely on formal or context-dependent modes of communication should depend on the nature of the resource. Do certain kinds of information require greater formality in delineation? One difference between patent and copyright is in how “close” a claimed contribution is to what another might wish to use or develop. In copyright, delineation can be left somewhat unclear when two copyrighted works are not likely to be close. Thus, copyright can allow a defense of independent creation without as much conflict as patent law would have if it provided the same defense (which it does not).¹⁴ Apart from low-authorship works like maps and charts, it is unlikely that two works will be identical without one creator having had access to the other work.¹⁵ But, as Fromer points out, derivative works present a special situation in copyright, where the notion of fortuitous resemblance is a greater possibility.¹⁶ I would say that the right to prepare derivative works is different from the rest of copyright and, for better or worse, comes closer to patent law or even the law of ideas.¹⁷here is a point in this series of abstractions where they are no longer protected, since otherwise the playwright could prevent the use of his ‘ideas,’ to which, apart from their expression, his property is never extended. Nobody has ever been able to fix that boundary, and nobody ever can.”) (citations omitted).] In patent law, particularly in well-established areas of technology, there is a high likelihood of two claims being close or even contiguous in invention space. (Indeed claims can overlap.) Take for example the field of tennis rackets. Many rackets have different “splayed” patterns of strings, with the ends of the strings attached alternately above and below the central plane of the racket frame at different distances from each other, such that in a patent claim, infringement can turn on whether “varies between” requires three or more distances between the strings.¹⁸
In a less crowded field, the potential ambiguity in “varies between” would not matter so much.

Finally, the question of the best degree of formalism in claiming potentially interacts with the psychological evidence that Fromer adduces.¹⁹ This evidence suggests that people use characteristics when learning broad categories and early on in the process of learning categories of all kinds and that they use exemplars for narrower categories and later in the general learning process. This might suggest that claiming by characteristic would be more suited to exclusion strategies and exemplars would be used more in governance strategies, when picking out special uses. As Fromer acknowledges, this evidence is to be taken cautiously, because the conditions in the experimental studies may differ relevantly from the situation of those faced with intellectual property claims. It would be a worthwhile subject for further study whether leaving information implicit (as in central claiming and claiming by exemplar) inhibits learning more or less depending on the level of expertise of the audience and on the nature of the category to be learned. Whether the two kinds of implicitness show the same or different learning effects would be relevant to the question of how formal claiming should be with different audiences in view.

In sum, Fromer’s addition of the distinction between claiming by characteristic and claiming by exemplar to the more familiar central versus peripheral claiming dichotomy is a real advance, which provides a lens for more detailed evaluation of hybrid claiming methods and their variation within areas of intellectual property law. But like central versus peripheral claiming, the exemplar-characteristic claiming distinction also crucially relies on a spectrum of how much information is spelled out formally and how much is left implicitly to be filled in by reference to context. This differential formalism will be important to further development of Fromer’s very fruitful framework.

Acknowledgments:

Copyright © 2010 University of Chicago Law Review.

Henry E. Smith is a Professor of Law at Harvard Law School.
For helpful comments I would like to thank John Golden and Oskar Liivak. All errors are mine.

We thank Richard Epstein for commenting on our online Article. He brings a unique perspective to the field of employment discrimination and pushes other scholars to think carefully about their additions and amendments to the existing regulatory landscape. We have some fundamental disagreements with Epstein, but a careful reading of our full Article easily addresses most of his criticisms. By way of quick summary, let us remind the reader of our original premise:

What we term “passive discrimination” involves the employer’s use of wage and benefits packages that exploit observed, systematic group-level preference heterogeneity to induce workers to sort themselves ex ante such that members of a disfavored group view the job opportunity as being less attractive than members of other groups. . . . We note that some employers hold a discriminatory intent when designing such terms and conditions, while others might be simply unaware or neutral as to when their design of such packages will induce segregation based on membership in a disfavored group.¹

While we three disagree as to Title VII’s ultimate desirability and utility, Epstein unfairly characterizes our original Article as unabashed Title VII expansionism. A look at the Article shows our careful acknowledgement of Title VII’s limitations and our embrace of creative, nonregulatory solutions to the problem of passive discrimination.

I.
Protecting Choice while Avoiding Liability

Epstein’s hostility to our Article’s recommendations is misplaced. He mistakenly contends that we discourage menu options and argues,

One of the most common practices for fringe benefits today is for firms to offer workers an allowance that they can use to make purchases from a menu of items, in exchange for a reduction in their base pay. . . . This ability to make the optimal choice thus counts as an implicit wage boost for all employers, regardless of race or sex. . . . [T]he employer practice should be sheltered by the doctrine announced in EEOC v Sears, Roebuck & Co, because we have the most explicit declaration of unconstrained worker preferences that we can imagine. . . . The widespread use of these menu options is not consistent with employers engaging in covert forms of discrimination.  The menu strategy is an effective way to attract a diverse workforce because it does not shoehorn the benefits package into a one-size-fits-all straightjacket.  GKW should praise employer ingenuity for maximizing the welfare of their employees under competition, not seek ways to expose them to additional liabilities.³ For instance, we state, “For most of the problems identified in this Article, figuring out ways to enhance employee choice should help reduce benefits discrimination for those with atypical preferences. . . . Such choice allows employees to select a package that best matches their expectations and preferences.”⁴ We affirmatively encourage specific possibilities as compensation menus for sales positions as well as urge the EEOC to develop gold standard programs to get employers to think creatively about the provision of equally valued fringe-benefit packages.⁵ An employer who provides such choice in fringe benefits or compensation packages would most assuredly not be subject to liability under even our most far-reaching proposals to amend Title VII. Thus, Epstein is clearly mistaken in his assertion that “every case will have either formal or impact discrimination.”⁶ Though a firm that “picked a mandatory insurance benefit which it then deliberately mispriced to drive women applicants from the roost”⁷ would be held liable under our expanded notion of Title VII, a firm that offers a variety of health insurance policies, only some of which are priced to account for women’s lower risks of death, would not face liability.

Similarly, we think Epstein misunderstands our argument when he notes, “The widespread use of [ ] menu options is not consistent with employers engaging in covert forms of discrimination,” and that we “should praise employer ingenuity for maximizing the welfare of its employees under competition, not seek ways to expose employers to additional liabilities.”⁸ As we explain more fully below, a firm offering compensation menus, where each item on the menu imposes the same cost on the firm, cannot be engaging in passive discrimination. Allowing workers to choose compensation form vitiates any screening function of compensation packages. Thus, when Epstein writes that “[t]he widespread use of these menu options is not consistent with employers engaging in covert forms of discrimination,” he has our—and our model’s—full-throated agreement. Rather than disproving our argument, this admonition of Epstein’s is one of our model’s primary conclusions. We are thus pleased to agree with Epstein on this crucial point of ours.

II.
Passive Discrimination: Pervasive or Possible?

While Epstein suggests that most employers avoid passive discrimination by offering menus, we make no claim that intentional or even unintentional passive discrimination is widespread. Epstein further notes that he is “not aware of any evidence that points to a conclusion that any affirmative action employer has ever engaged in this tactic, either deliberately or inadvertently.” We are also unaware of any intentional affirmative action passive discrimination,⁹ which is consistent with his point that aggressive recruitment of minorities is unlikely to be punished by Title VII and thus minority-seeking employers need not pursue such a strategy. Stipulating for discussion’s sake only that courts treat affirmative action benevolently, Epstein’s argument proves too much: passive discrimination is likely to be a one-way ratchet for animus-based discriminators. This observation, if true, is consistent with what we argue in our original Article that “recent class actions suggest much of legal academia and the public underestimate the prevalence of basic animus- or stereotype-driven discrimination,” and thus, it “should be unsurprising if litigation-savvy employers might deliberately craft compensation structures and packages to exclude certain types of workers.”¹⁰ In other words, academics like Epstein may be too sanguine about the existence of animus- and stereotype-based discrimination. Passive discrimination is just one particularly litigation-savvy strategy of many possible options to discourage disfavored individuals from joining or staying in a particular workplace.

While we are not aware of sufficiently detailed publicly available datasets that would allow us to test for the existence of passive discrimination, ¹¹ we do think that our model provides insight into the selection effects (by race, gender, and so on) that exist across industries that have been consistently documented in the labor economics literature.  While labor economists generally take these selection effects as given, our framework holds the promise of explaining why such selection effects arise.

We do not definitively identify any examples of intentional passive discrimination, because without conducting a rigorous case study, we cannot confidently distinguish between intentional and unintentional passive discrimination. Of course, as we note in our Article, this difficulty is part of the problem. Without a smoking gun, scholars and courts will find differentiating between intentional and unintentional passive discrimination quite cumbersome. Yet our Article identifies several examples that likely support our hypothesis. For instance, one example we describe in the Article is Chick-fil-A and its Sundays-off policies. Chick-fil-A may have multiple motives for its Sundays-off policies, but given its frequent embroilment in Title VII suits for religious discrimination,¹² we would be unsurprised if it used its Sundays-off policies as part of a larger strategy to screen out non-Christian franchise owners and employees. Other Chick-fil-A hiring practices, such as a year-long vetting process with multiple interviews for key positions, support this hypothesis.¹³ says the company works hard to select people like Yokum, who “fit.” “We want operators who support the values here,” [he] says. Emily Schmall, The Cult of Chick-fil-A (cited in note 15).]

II.
Theoretical and Empirical Economic Issues

We also wish to address a variety of economic points that Epstein raises. These include Epstein’s discussion of pensions and social security, his recommendation to repeal employment discrimination laws but for a very narrow monopoly exception,¹⁴ust repeal the employment discrimination laws in their entirety, except as they apply to monopoly situations, of which there are virtually none in private unregulated markets.” Epstein, Protect Us, Lord, from Title VII (cited in note 3).] and the contention that the economic viability of passive discrimination requires identical compensation demands across races and homogeneous preferences within race.¹⁵ We also seek to deal with his related claims that we fail to provide evidence suggesting “that the position of African-American workers lags behind that of whites, controlling for the usual key differences in education and work experience and the like,”¹⁶ and Epstein’s contention about the “persistent finding[] [ ] that wage gaps between blacks and whites prove significant for men, but not for women.”¹⁷ Epstein claims that “[t]he explanations for that disparity are likely to prove complex, but invidious discrimination on racial grounds does not look to be one of them.”¹⁸

Before we address these issues specifically, we will review some basic methodological facts concerning the theoretical stability of labor market discrimination. Consider first the case of an employer operating in a perfectly competitive labor market and a perfectly competitive output market with free entry. Perfect competition in the labor market means that workers must be paid at least their marginal revenue products—the sales value to employers of the output that workers produce. An employer who wishes to ensure that she can hire only favored types of workers will have to pay a premium, marking up the favored employees’ wages above marginal revenue product. In a competitive output market, such an employer will necessarily lose money and ultimately go out of business.¹⁹ This is the standard economic argument against the long-run necessity of antidiscrimination laws: competitive markets chase out bigots.

Traditionally, economists have recognized three important counterexamples in which discrimination in long run equilibrium is possible given laissez faire policies. In these cases, antidiscrimination laws might be necessary to eliminate discrimination. Epstein himself raises the first case, one in which employers have labor market power that is somehow protected from another employer’s entry into the labor market. In this case, employers can pick and choose the workers they want, at least up to a point. In such monopsony cases, workers’ marginal revenue product is above the wage.²⁰ Moreover, workers’ only recourse against a monopsonist who refuses to hire them is to work in some other industry, which presumably entails a loss of welfare. Even when the monopsonist must sell on a competitive output market, it earns economic rents from its labor market power. One way to spend some of those rents is to discriminate in choosing workers, and no amount of output-side competition will eliminate this option.

The second case in which equilibrium discrimination is possible under laissez faire occurs when employers have pricing power on their output markets, regardless of whether they have pricing power in the labor market. If entry is limited, then economic rents will not be totally competed away. Once again, the employer can spend some of her economic rents on wage premia that induce the favored mix of workers.

The third case in which equilibrium discrimination is possible under laissez faire involves not market power, but consumer preferences. Suppose consumers prefer to buy from firms that discriminate against disfavored workers. Given equal marginal productivity of workers, any firm that employs disfavored workers must operate at a competitive disadvantage vis-à-vis firms that do not. As a result, nondiscriminating firms will go broke, and only discriminating employers will remain in business. If consumers are willing to pay to avoid disfavored workers, no purely competitive mechanism exists to stop them from doing so.

Our model’s methodological contribution is to establish a fourth counterexample. We show that discrimination is possible, in the form of workplace segregation, when (a) all markets are perfectly competitive, and (b) consumer preferences are nondiscriminatory. What drives our result is the correlation between worker type and worker preferences for amenities. This correlation allows firms to design limited compensation packages that will lead to equilibrium segregation of the workplace, and this is the practice that we have termed passive discrimination. Our main economic methodological contribution is thus to point out a gap in the previous understanding of the conditions that allow persistence of employment discrimination.

A.     Pensions and Social Security

Epstein suggests that pension systems are unlikely to function as screening devices, since “for many jobs the pension element has little or no traction insofar as the . . . social security system covers most of the pension obligation.”²¹ This is an unusual characterization of Social Security’s role—one we believe contradicts decades of public policy. Consider this discussion, from the Social Security Administration Historian’s Office:²³ ruling that an employer may not deduct more from women’s pay to cover their pensions even though, as an actuarial matter, women as a class are likely to draw on pension benefits longer. We do not disagree with Epstein’s argument that women’s longer longevity makes such practices economically reasonable. But we also do not see the relevance of this conclusion, either to the possible existence of passive discrimination or to our policy suggestions.

B.     Epstein’s market Power Point Proves Too Much

Epstein supports antidiscrimination employment laws only when perfect monopsony power exists. As our discussion above suggests, the obvious economic justification for this position is that no competitive forces will prevent a perfect monopsonist from sustained use of discrimination. The discussion above notes that equilibrium discrimination can occur when there is output market monopoly, or competitive markets with bigoted consumers. The economic argument behind our model shows that the combination of bigoted employers and type-correlated worker preferences is a fourth case allowing equilibrium discrimination, even in competitive markets. Epstein’s position that only the first of these four cases justifies antidiscrimination laws cannot be supported on economic grounds. If antidiscrimination laws make sense for any of these cases, we believe they make sense for the others.²⁴

C.     Epstein Contradicts Himself on Reservation Wages

Epstein also contends that intentional and unintentional passive discrimination will not appear if disfavored groups such as African-Americans have lower reservation wages. But for employers operating as price takers on both the labor and output markets, nothing substantive in our conclusions hinges on this question. Epstein’s suggestion to the contrary relies on the surprising, if implicit, assumption that the labor market does not operate to drive wages toward marginal revenue product. Epstein writes:

Nor is there any reason to think that GKW’s strategy for racial discrimination is likely to yield any forbidden fruits if put into play.  In order for this to work, there has to be an assumption that the compensation demands across races are identical for both African-American and white workers.  But suppose that they are not, and that on average the African-American workers have lower reservation wages than white workers, perhaps because of the discrimination in the general market.  At this point, the pension-heavy strategy may well reduce the attractiveness of the compensation package somewhat. But that result is consistent with a loss in consumer surplus, and does not require us to assume that there will be much of a change in rate at which African-Americans accept job offers.²⁵

Epstein’s suggestion here is that lower reservation wages among African-Americans will prevent firms from screening them out by converting some cash compensation to fringe benefits that African-Americans value less than whites. On this argument, the effect of such screening would be to reduce the surplus received by African-American workers, but not to change the mix of employees hired.

But Epstein’s argument hinges critically on the implicit assumption that competition in the labor market will fail to show up for work. According to the basic logic of competition, any employer who pays African-Americans in a way that does not, as Epstein phrases it, “maximiz[e] the welfare of its employees under competition,”²⁶ will soon be searching for a new employee willing to forgo welfare maximization. A worker paid less than the value of her marginal product by her present employer will make an attractive hire from some other firm’s perspective. Therefore, her wage will be bid up to her marginal revenue product.²⁷ Nowhere in this discussion do reservation wages play a role, except insofar as they are so high that a worker would choose to exit employment altogether—and that is the opposite of Epstein’s hypothesis.

Thus, Epstein’s point requires one to suspend belief in the forces of market competition. This is a curious position, given Epstein’s reliance on the beneficial forces of market competition in his campaign to “repeal the employment discrimination laws in their entirety, except as they apply to monopoly situations.”
²⁸ In sum, Epstein’s suggestion that anything important hinges on the question of whether African-Americans have lower reservation wages appears to stand in significant tension with his later suggestion that buyer-side labor market power is nonexistent in private, unregulated labor markets.

Epstein also emphasizes preference variation within worker type: “We know in addition that even if there is a variation in preferences across groups, there is also a variation in preferences within groups.”²⁹ While this statement is surely correct, it is just as surely beside the point. All that is required for the economic viability of passive discrimination is that amenity preferences be correlated with worker type—not that they be uniform within type. At the cost of much more notation and more equations, we could easily have written up a much more general version of our model that allows for any finite number of groups, each having its own nondegenerate preference distribution. Within-group preference uniformity is simply a modeling assumption that keeps the analysis wieldy, which is good practice in economic exposition.

D.     Empirical Evidence on the Black-White Gap in Labor Market Positions

Epstein criticizes us on the grounds that we

do not offer any aggregate statistics that indicate that the position of African-American workers lags behind that of whites, controlling for the  usual key differences in education and work experience and the like. That literature is of course enormously complex, and among its most persistent findings are that wage gaps between blacks and whites prove significant for men, but not for women. The explanations for that disparity are likely to prove complex, but invidious discrimination on racial grounds does not look to be one of them.³⁰

Leaving aside the problems with the study Epstein cites,³¹ he rightly notes that we did not offer detailed empirical evidence on the relative position of black and white workers. Of course, such evidence was neither the focus of our argument, nor necessary to any of our conclusions. However, we now happily take this opportunity to briefly discuss some interesting evidence from this literature.

The econometric study likely most friendly to Epstein’s conclusion argues emphatically against controlling for what Epstein calls “key differences in education and work experience and the like.” In that study,³² Derek Neal and William Johnson use a sample of blacks and whites born between 1957 and 1964. They find that essentially all of the black-white wage gap among women, and about 70 percent of the gap among men, disappears when one (a) controls for scores achieved on a test administered before most sample members had entered the labor market, but (b) does not control for Epstein’s “key differences in education and work experience and the like.”³³

While Neal and Johnson offer an economic argument in favor of this approach to estimating the black-white wage gap, labor economists disagree on this point. For example, after extensive theoretical and empirical investigation, including a reanalysis of Neal and Johnson’s data, Kevin Lang and Michael Manove³⁴ conclude that “there are good grounds for believing that at least some of the black-white wage differential reflects differential treatment in the labor market.”³⁵ Consider also Joseph G. Altonji and Rebecca M. Blank’s widely cited Handbook of Labor Economics chapter.³⁶ Among their “key conclusions” concerning differentials in wages and labor force participation, Altonji and Blank offer that

[e]ven controlling for occupation, industry, and job characteristics, there remain significant differentials between white males and other workers. Some of this may be due to incompletely specified models. . . . Some of it almost surely represents ongoing constraints in the labor market for women and minorities.³⁷

Having discussed such evidence, we note two reasons why Epstein’s concentration on wage gaps seems misplaced. First, in our model’s segregated equilibria, favored workers receive some of their compensation in the form of fringe benefits, whereas disfavored workers receive all of their compensation in cash. Competition forces firms to spend the same amount to employ each type of worker. It follows that disfavored workers will be paid more in cash than equally productive favored workers. A more powerful empirical critique of our model than Epstein’s would thus seem to be that in the real world, employers generally do not pay African-Americans more cash compensation than they pay whites. However, a valid empirical test of our model would require overcoming two empirical hurdles: getting data on worker-specific marginal productivity; and dealing appropriately with difficult econometric issues related to workers’ job choices, which is the key mechanism through which passive discrimination would operate. We leave the interesting problem of solving these nontrivial econometric problems for future research.

More important for our Article, Epstein’s focus on wage gaps is misplaced, as our primary focus is on workplace segregation, not on wage discrimination. For evidence on workplace segregation, consider recent research by Judith Hellerstein and David Neumark,³⁸ who study “segregation in the labor market—that is, the extent to which members of different groups tend to work with coworkers who are more like themselves than would be predicted by random allocation of workers to establishments.”³⁹ Hellerstein and Neumark write that available empirical evidence prior to their study suggests the presence of systematic job segregation along the lines of sex, race, and ethnicity. One study finds that “job cell segregation by race accounts for about half of the black-white wage gap.”⁴⁰ This finding suggests there is ample room for passive discrimination to operate, though certainly specific evidence would be necessary to conclude that it does in fact operate.

Using high-quality, restricted-use, matched employer-employee data from the 1990 US Census, Hellerstein and Neumark write that “[o]ur results point to workplace segregation by education and race. . . . We find, however, that education plays very little role in generating workplace segregation by race.”⁴¹ This result suggests that at least one of Epstein’s “key differences” likely has little to do with racial job segregation, whatever association it has with racial wage gaps. Hellerstein and Neumark’s is of course just one study, and to our knowledge, an empirical study of the kind of segregation to be expected from passive discrimination has not been done. Nevertheless, we do not believe the possibility of workplace segregation as induced by passive discrimination is far-fetched.

As a final source of empirical evidence, consider a recent audit study conducted by Marianne Bertrand and Sendhil Mullainathan,⁴² who sent fake resumes to real employers who advertised jobs for new employees. Pairs of resumes were identical except for one feature: the authors “experimentally manipulate perception of race via the name of the fictitious job applicant . . . [by] randomly assign[ing] very White-sounding names . . . to half the resumes and very African-American-sounding names . . . to the other half.”⁴³ They found “large racial differences in callback rates.”⁴⁴ They note white-named applicants need to send about ten resumes per callback, whereas African-American-named applicants must send about fifteen resumes. They conclude, “This 50-percent gap in callback is statistically significant. A White name yields as many more callbacks as an additional eight years of experience on a resume. Since applicants’ names are randomly assigned, this gap can only be attributed to the name manipulation.”⁴⁵ In sum, we believe the empirical evidence on racial gaps in the labor market points to a less sanguine conclusion than Epstein’s. We agree with him that explanations for racial “disparity are likely to prove complex,” but we do not believe that the available evidence supports his blanket claim that “invidious discrimination on racial grounds does not look to be one of them.”
⁴⁶

Conclusion

In conclusion, while we are grateful to Professor Epstein for taking the time to comment on our Article, we will have to agree to disagree about a number of the premises upon which many of his arguments are based. As for Epstein’s larger complaints about the existence and effects of Title VII, for brevity’s sake, we defer to the wider employment discrimination literature which we feel adequately addresses these claims.

Acknowledgments:

Copyright © 2010 University of Chicago Law Review.

Jonah Gelbach is Associate Professor of Economics at the University of Arizona.
Jonathan Klick is a Professor of Law at the University of Pennsylvania Law School.
Lesley Wexler is an Assistant Professor at Florida State University School of Law.

This hypothetical claiming system looks like that of patent law, under which an invention’s bounds must be demarcated as a prerequisite to patent protection.  But envision for a moment that patent claiming would look more like that of copyright law.  Alexander Graham Bell would receive a patent for his invention of the telephone³ after having fixed (or perhaps commercialized) it in some form.  Assuming the invention complies with the threshold requirements of patent law, the set of protected embodiments would include all substantially similar implementations—a cordless telephone? a fax machine? Internet telephony?—a set to be enumerated on a case-by-case basis in any future infringement litigation, rather than at the time of patenting.  This determination would require courts to ascertain the essential properties of a patented invention.

This thought experiment seems to indicate that claiming the set of protected embodiments under patent law looks very different than copyright law.  And in a sense, it does.  Patent law has adopted a system of peripheral claiming, requiring patentees to articulate by the time of the patent grant their invention’s bounds,⁴ usually by listing its necessary and sufficient characteristics.  And copyright law has implicitly adopted a system of central claiming⁵ by exemplar, requiring the articulation only of a prototypical member of the set of protected works—namely, the copyrightable work itself fixed in a tangible form.⁶ Copyright protection then extends beyond the exemplar to substantially similar works,⁷ a set of works to be enumerated only down the road in case-by-case infringement litigation.

Investigating the claiming practices of patent and copyright law side by side thus illuminates two salient axes for claiming the set of works protected by an intellectual-property right: peripheral versus central and characteristic versus exemplar.  Peripheral claimants must delineate to the public the set’s bounds so that a third party could determine whether any particular embodiment is a set member, thus protected by the right.  By contrast, central claimants must describe only some central members of the set, which are clearly protected under the right and are used to determine whether other items are similar enough to the enumerated members to also fall within the same right.  Central and peripheral claiming might be seen as two points on a spectrum of how many members of the set must be described by the claim, with peripheral claims describing more members than central ones.  Either peripheral or central claiming can be done by exemplar or by characteristic.  Claiming by exemplar entails enumerating particular members of the set.⁸ In the case of peripheral claiming by exemplar, one would enumerate each set member, while for central claiming by exemplar, one would catalog only some set members.  Claiming by characteristic, on the other hand, requires a description of the essential properties of the set’s members.  For peripheral claiming by characteristic, one would describe the necessary and sufficient features common to all members of the set of protected embodiments.  And for central claiming by characteristic, one would express the features common to at least some central members of the set.  Claiming by exemplar and by characteristic can be seen as opposing points on a spectrum of how much distillation of the actual works’ characteristics is necessary.  The table illustrates how the fork might be claimed under each of the four claiming types.  Though scholarship mentions patent law’s peripheral claims⁹ and Clarisa Long and Henry Smith discuss patent law’s claiming requirements and copyright law’s lack thereof,¹⁰ until now these dual claiming dimensions have not been expressly appreciated.

¹¹¹²

The method of ascertaining the extent of the set of protected embodiments, for evaluating validity or infringement, depends on the claiming type.  For peripheral claiming by exemplar, one can determine whether a particular embodiment is protected by observing whether the embodiment matches any claimed exemplar.  Does the fork in question match a fork in the pictured set?  For peripheral claiming by characteristic, one must decide whether the embodiment possesses the claimed features.  Central claiming by exemplar requires divination of the essential features of each claimed exemplar, followed by a determination whether the embodiment is sufficiently similar in those features to a claimed exemplar.  And with central claiming by characteristic, one must decide whether the embodiment is sufficiently similar in its features to those claimed.

Despite patent law’s typical peripheral claims by characteristic, in practice, patent claiming is heterogeneous.  Patent law retains some vestiges of central claiming under which it used to operate,¹³ through the doctrine of equivalents, means-plus-function limitations, and dependent claims.  With some exceptions, the doctrine of equivalents allows a patentee to “claim those insubstantial alterations that were not captured in drafting the original patent claim but which could be created through trivial changes.”¹⁴ Means-plus-function limitations in claims permit a patentee to describe his invention in terms of the functions it typically performs rather than the parts of the invention that carry out those functions.¹⁵ With these claims, protection is statutorily extended beyond the inventions described in the patent’s specification that carry out the claimed function to any equivalents of those inventions.¹⁶ And a dependent claim—which incorporates an independent claim in the patent further limiting the independent claim¹⁷—has no “central claim”-like legal effect of extending protection beyond the described characteristics, but nonetheless has a “central claim”-like communicative effect of highlighting prototypes of the associated independent claim.  Moreover, patent law encourages some claiming by exemplar through its best-mode requirement and Markush claims.  Markush claims allow the grouping of exemplars in otherwise characteristic claims so long as they possess a “community of . . . characteristics which justify their inclusion in a common group.”¹⁸ And to fulfill the best-mode requirement, the inventor must disclose the best embodiment subjectively conceived by the time the patent application was filed,¹⁹ thereby effectively claiming one superior exemplar of the invention.

Just as patent claiming practice can be varied, so can copyright claiming.  By design, copyright law institutes central claims by exemplar; but through the approved use of licenses to permit others to make substantially similar works, copyright in operation involves expression of the bounds of works permissibly created under such licenses and delineation of characteristic features of the set of protected works.  In one striking example, NBC Universal recently licensed a French television company the right to create a French version of the criminal procedural television series, Law & Order: Criminal Intent, and this license incorporated the creator’s thousand-page manual detailing essential characteristics of a Law & Order production that must be followed, such as how many of the show’s characteristic “ching-ching” sounds could be used per act.²⁰ These expressions in legally binding contracts bring forms of peripheral claiming and claiming by characteristic into copyright law.

This description of patent and copyright claiming raises the question of which sorts of claiming work best for each.  The Constitution sets forth the goal of intellectual property laws: “To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.”²¹ Each of the four types of claiming can affect the costs of drafting claims, efficacy of content notice to the public of the set of protected embodiments,²² ascertainment of protectability, breadth of the set of protected works, and the protection of works grounded in after-developed technologies (technologies postdating claiming).

As to costs of claim drafting, keeping them low is important when the law seeks to encourage easy protection of intellectual property and high otherwise.  Drafting is costlier for peripheral than for central claims and for peripheral claims by exemplar than by characteristic because of the foresight needed. It is also costlier for central claims by characteristic than by exemplar if an embodiment, which could otherwise serve as a central claim by exemplar, already needs to be produced.

Clear content notice to the public of the set of protected embodiments is valuable so that the public can avoid improper use of the set’s members without permission and can, concomitantly, understand what is free for the taking, thereby furthering innovation.²³ The established view is that peripheral claiming provides better content notice than central claiming.²⁴ This view has rightfully come under attack because, among other things, ambiguities inherent in language can render claim construction unpredictable²⁵ and peripheral claims tend to contain highly abstract formulations, rather than colloquial terms, to ensure that a broader set of embodiments is protected.  As Doug Lichtman observes, a reader “might find it easier to read simple, concrete claim language (‘shoelace’) rather than more abstract expressions (‘mechanism by which to bind tightly around the foot’) that are in fact technically superior.”²⁶

Research in cognitive science also suggests that the established view might fail to account for how people process, comprehend, and construct categories and neglect the other dimension of claiming (exemplar or characteristic).  According to this research, people’s categories are formed and comprehended not with a list of necessary and sufficient criteria to test for membership, as the classical Aristotelian view would suggest,²⁷ but rather with prototypes against which to compare potential category members for sufficient similarity.²⁸ Though these studies were done in other contexts, they are valuable in suggesting how to communicate categorical information successfully.  To the extent this research generalizes to categories of inventions or artistic creations in intellectual property law, the necessary and sufficient features set forth by peripheral claiming by characteristic do not accord with the way people learn categories.  Content notice might be better—or just as good—with (well-constructed) central claims conveying prototypes or exemplars, or even peripheral claims by exemplar.  Even if central claims do not provide perfect content notice of categorical boundaries, the evidence indicates that they might do a good job at communicating the crux of the protected embodiments.  There might also be differences in the effectiveness of content notice depending on whether claiming by exemplar or characteristic is used.  Recent experiments suggest that when it comes to learning larger, more differentiated categories, learning by characteristic is prevalent early in the learning process but slowly gives way to exemplar learning.²⁹ By contrast, in learning smaller, less differentiated categories, learning by exemplar is dominant.³⁰ To the extent this research applies to intellectual-property categories—as intuition would suggest—when intellectual property law is protecting a small, poorly differentiated category, claiming by exemplar would be appropriate.  But claiming by characteristic would be more suitable for larger, better differentiated categories, and claiming by exemplar might also play a role in teaching categorical boundaries.

In addition to the varying degrees of difficulty and cost associated with claim drafting and content notice, the claiming systems differ in the ease of assessing whether the claimed set of embodiments is protectable.  This factor is closely related to content notice because the assessor—typically a government actor—needs to understand the set’s scope to ascertain protectability by the relevant intellectual property laws.  Notwithstanding their content-notice problems, peripheral claims are thought to enable the examiner to assess the novel or original features of the claimed set because the full extent of the set is expressly set out by the creator.  For central claims by characteristic, protectability of those set members not literally described by the central claim might not be assessed during examination.  And for central claims by exemplar, assessment of protectability of the full set is more difficult, as the examiner must deduce the essential features of the exemplar.  Of course, embodiments not literally encompassed by the central claim but falling within the set of protected embodiments will be adjudged separately down the line for protectability, if at all.

Another aspect one might think affected by the choice of claiming system is the breadth of the set of protected works.  Though one asks very different questions under each type of claiming to enumerate the corresponding set of protected embodiments, the interpreter does not necessarily arrive at significantly different breadths.  In construing peripheral claims, one can assign claim terms either narrow or broad meaning.³¹ In construing central claims, one can limit or broaden the set of embodiments that are sufficiently similar to the centrally claimed prototype.³² And just as with central and peripheral claims, there is elasticity in construing both characteristic and exemplar claims.  Of course, concern lies not only with the true breadth of the set, as determined by government officials, but with its operational breadth.  Given that there is uncertainty of the extent of the set of protected embodiments under peripheral or central claiming and characteristic or exemplar claiming, aversion to the risk of liability attracts licensees.³³ Licenses will be taken sometimes even when unnecessary—when a patent or copyright is invalid or the valid claims do not cover the licensed activity.  Operationally, such licensing leads to a set of protected embodiments broader than the law would otherwise allow.  Therefore, the better the content notice provided by the claims, as discussed above, the less broad the set of protected embodiments will tend to be operationally relative to actual breadth.

There is one likely exception to the notion that claiming choice does not per se affect the actual breadth of the set of protected embodiments, namely the extent to which works grounded in after-developed technologies are protected.  A peripheral claimant must think well beyond the manifestation of his invention to the future set of manifestations likely to be valuable enough to prevent others from using, even if not presently practicable.³⁴ A central claimant, on the other hand, can defer delineation of the full set of protected embodiments at the outset until the future when, by virtue of time’s passage, the unfolding of related innovation has become clearer.³⁵ Central claims, then, more easily allow for an expansion of protection beyond the claimed core in light of future innovation.

That the choice of claiming systems implicates the foregoing factors—factors essential to calibrating intellectual-property law to stimulate innovation—in different ways underscores the importance of choosing a claiming system with care.

Though previous scholarship principally defends the typical claiming forms for each patent and copyright law,³⁶ I undertake a thought experiment to analyze whether they are ideal for either type of intellectual property.  This task, in fact, is suggested by patent law’s incorporation of not insignificant elements of central and exemplar claiming and copyright practice’s use of peripheral and characteristic claiming.  I explore whether claiming in copyright and patent law can learn from one another.

Though patent law admirably incorporates all four types of claiming flexibly, it can be tweaked to stimulate innovation by adding claiming elements more reminiscent of copyright law.  I suggest that patent law’s typical peripheral claims by characteristic, adopted principally to provide content notice of the set of embodiments protected by a patent, do not provide sufficient content notice, which negatively affects the public’s ability to know what is in and out of the public domain, assessments of protectability (particularly when an issued patent is accorded a presumption of validity³⁷), and the operational breadth of the set of protected works.  To ameliorate these and other concerns, I propose—contrary to conventional wisdom³⁸—that ex ante patent-claim drafting be modified to include central claiming by characteristic.  And claiming by exemplar ought to serve a role in patent law.  Claims by characteristic can be supplemented by requiring the registration of certain exemplars—all commercial implementations, if any, by the patentee or licensee—claimed to be within the set of protected embodiments.  Exemplar registration, which would be available to the public and linked to the associated patent, would help sharpen the understanding of the bounds of the set of protected embodiments.  And it would occur in the situations in which exemplars are most useful, when the patented invention is commercialized and is therefore likely to be valuable—when content notice is important.  These modifications to patent claiming would better serve patent law’s purpose to stimulate innovation by making it easier for the public to identify that which must be licensed to be used and that which can be used freely for follow-up innovation.

Claiming in copyright law is more complicated.  Current claiming practice in copyright law is rigid, and it suffers from various defects, all tied to the poor content notice effected by the central claims by exemplar.  Those defects might suggest that copyright claiming ought to co-opt claiming by characteristic from patent law. But the structure and theory of copyright accentuate significant—perhaps insurmountable—barriers to making changes to the current claiming system.

As it stands, copyright’s central claims by exemplar provide little content notice to the public, leading risk-averse third parties either to take licenses even as to works not protected by copyright or avoid them completely, a situation that grants too heavy a copyright reward at the expense of generating further creativity.  From this vantage point, it would seem far more productive to require or at least provide significant incentive to copyright claimants ex ante to claim their works centrally by characteristic.  This claiming would merely entail, at insubstantial cost, a succinctly expressed pattern of the work at issue.  Such claims might provide significantly better ex ante notice in two ways.  First, the enablement of feature-by-feature comparisons would help indicate those works that would be considered substantially similar to the created work and thus protected under the copyright.  Second, such claims would help explicate which substantially similar works would nonetheless be permissible uses under the doctrine of fair use³⁹ by encouraging determinations of works that borrow from the copyrighted work in ways that do not implicate too many of the claimed features or transform it significantly.  These effects, on the view of one concerned with copyright’s poor notice, would increase overall production of creative works by providing the incentive to create copyrighted works and by encouraging creation by third parties beyond the copyright.

But that is far from the complete analysis.  Viewing the copyright system as a whole through a wider lens identifies significant, and perhaps insurmountable, theoretical and practical concerns with central claiming by characteristic.  First, there is a concern that requiring copyright holders to claim their works by characteristic, even if centrally, might cause copyright law to contravene the First Amendment by granting protection to ideas, rather than the expression copyright seeks to protect.⁴⁰ A second concern lies in whether artistic creators will feel at ease demarcating the essential pattern of their creation.  A related third concern is whether the described characteristics could capture the artistic essence of the work.  Consider the likely claim for a Jackson Pollock painting: a painting comprising varied colors of dripped, flung, or spattered paint.⁴¹ That description does not capture—and arguably cheapens—the artistic essence and effect of Pollock’s paintings.  Fourth, there is apprehension about the cost and viability of the administrative and legal support necessary to institute central claims by characteristic, due to the ex ante examination claims by characteristic might require, the number of claims to be written, and the legal support necessary to assist copyright holders.

All in all, I suggest that there has been a severe underinvestigation of claiming practice in intellectual property and that the handful of explorations of the topic have overlooked some of the important aspects of the taxonomical, descriptive, and normative features of intellectual property claims. To maximize innovation, it is imperative that claiming practice, a key factor of intellectual property systems, be explored and optimized.

Acknowledgments:

Copyright © 2010 University of Chicago Law Review.

Jeanne C. Fromer is an Associate Professor at Fordham Law School.

A substantial body of psychological evidence suggests that there is no strong link between money and happiness.¹ For example, one longitudinal study tracked people over a period of nine years, comparing the happiness of those who lost at least half a standard deviation of their annual income to those whose incomes increased or stayed constant.² Not only was the former group not unhappier, it was actually happier (although not statistically significantly so).³ Taking a criminal’s money via a monetary fine therefore is likely to inflict less harm than would be the case absent people’s ability to adapt to such changed financial circumstances.  Moreover, because such adaptation is not anticipated,⁴ fines presumably inflict less harm than is expected by either criminals or policymakers.  Increasing the amount of a fine thus may not meaningfully increase the degree of harm imposed.

The effects of adaptation on imprisonment are more complicated.  Inmates do adapt to being in prison in much the same way that people adapt to disabilities,⁵ so lengthening a prison term does not increase the harm imposed by as large an amount as is expected.⁶ However, spending any time in prison has negative effects on life after prison that are not similarly mitigated by adaptation.  Released inmates are more likely to be unemployed than they were before going to prison,⁷ are more likely to lose social ties to family and friends,⁸ and are more likely to contract a number of serious, chronic diseases.⁹ Unlike monetary losses and incarceration itself, unemployment and loss of social ties create persistent decreases in happiness that are not adaptable.¹⁰ Even a short prison term, therefore, has severe negative effects on happiness that may persist long after the inmate has been released.

These findings curtail our ability to make a punishment more or less severe by adjusting the size of a fine or the length of a prison term.  Larger fines may well fail to inflict a meaningfully larger degree of harm than do smaller fines.  And although longer prison sentences are presumably worse for the offender than shorter ones, they seem not to be as much worse as is believed: our capacity to adapt to some things but not to others makes being in prison less bad, and being released from prison less good, than we expect.

The penal system relies principally on adjustments in the size of fines and the length of prison sentences to tailor punishments to crimes.  And all major theories of criminal punishment consider some sort of proportional tailoring to be necessary.  A standard utilitarian approach, for example, is to impose the least amount of punishment necessary to achieve a desired level of deterrence.¹¹ Imposing greater punishment than that would decrease utility both by harming the criminal more and by passing along to taxpayers the cost of, for example, keeping an inmate incarcerated.  In addition, if prison is less painful than expected but post-prison life is worse, the punitive distinction between varying sentence lengths begins to diminish: a ten-year sentence is not even close to five times worse than a two-year sentence.  This can greatly complicate efforts to achieve marginal deterrence by punishing worse crimes more harshly than minor crimes.  More generally, if our primary means of adjusting the severity of punishment is less effective than it is thought to be, that restricts our ability to meet the goals of utilitarian punishment theory.

Retributive punishment theory also relies on proportionality.  It demands that only the guilty may be punished, that excessive punishment of the guilty is tantamount to punishment of the innocent, and that more serious crimes deserve and require more severe punishments than less serious crimes.¹² These demands, like the goals of utilitarian theories, are rendered more difficult to meet if we are less capable than expected of adjusting the severity of punishments by the traditional means of changing the size of fines and the length of incarcerations.

The foregoing discussion has associated the severity of punishment with the amount of harm imposed on an offender.¹³ Although harm is not the only way to measure the severity of a punishment, it is at the very least an important consideration.  If we were insensitive to the harm imposed on offenders, then we would be less troubled by torture or by punishments whose severity seems radically out of step with that of the crime (for example, life imprisonment for loitering).  So long as we do care about the suffering visited upon offenders by punishment, we must take account of the unanticipated effects on that suffering of hedonic adaptation.

Acknowledgments:

Copyright © 2009 The University of Chicago Law Review.

John Bronsteen is Associate Professor at Loyola University Chicago School of Law.
Christopher Buccafusco is Assistant Professor at Chicago-Kent College of Law.
Jonathan Masur is Assistant Professor at The University of Chicago Law School.

This is Legal Workshop Editorial is based on the following full-length Article: John Bronsteen, Christopher Buccafusco, & Jonathan Masur, Happiness and Punishment, 76 U Chi L Rev 1037 (2009).

Professor Mitchell’s main argument, though, is that in many of its capital punishment and substantive due process decisions, the Court is not responding to trends in public opinion but is instead just indulging its own ideological preferences or policy views. This argument, I think, raises some complicated issues. It may be worth distinguishing two questions. The first is: to what extent is the Court ruling according to the law, as opposed to ruling simply according to the justices’ views? In controversial cases, that will often be quite a difficult question to answer, for both empirical and conceptual reasons. The second question is: to whatever extent the justices are ruling according to the law (and not their policy views), where are they getting the law from? Are they getting it from the Framers’ understandings, or precedent, or tradition, or something else?

My objective in my Article on modernization was to answer the second question. My claim was that increasingly, in the areas I discussed, the Court is looking less to sources from the past and more to what it perceives as the current climate, or trend, in public opinion. That does not mean that the Court simply tries to implement public opinion. If the Court were assigned that task, it would either have to develop a conception of public opinion as something different from what the elected branches of government decide-how would it do that?-or else get out of the business of judicial review more or less completely. Probably the best way to understand modernization is that the Court treats trends in public opinion roughly in the way common law courts treat precedents. They limit the Court’s freedom of action and point it in certain directions, but usually there is a significant degree of flexibility and selectivity. Some trends, like some precedents, will be pushed further; others will be honored, but only in a narrow way. Where there is an arguable conflict (among precedents or among trends), the judges will, inevitably, choose the ones that seem better, to them, as a matter of fairness or good policy.

Take Lawrence v Texas,⁷ for example. It would certainly not be surprising to learn that most of the justices in the majority disapproved of the Texas law as a matter of policy (as did Justice Clarence Thomas, in dissent).⁸ But it is also hard to believe that they would have ruled the way they did had attitudes toward gays not developed as they did in the last generation. That is the sense in which their freedom of action is limited by public opinion. Of course, as political scientists have been saying for at least half a century, it is no accident that the justices’ own views corresponded with the more general views of the society in which they live.⁹ But that just means that modernization will come naturally to them (maybe too naturally, as I suggest at the end of the Article).¹⁰ The point is that they look to current trends and understandings-rather than some historically based principles-for validation.

By the same token, it is likely that several members of the Court believe that same-sex marriage should be allowed, or that capital punishment should be abolished. None of them will cast a vote for those things now, because the kind of “evolving understanding” that Lawrence described would not support such a vote. A decade from now, the climate of opinion might change to the point where we might see such votes from the justices. I think Professor Mitchell’s response would be that all this shows is that the Court is imposing its own policy views to the extent it believes it can get away with doing so. But one could also characterize common law judging (as described in, for example, Cardozo’s The Nature of the Judicial Process)¹¹ as a matter of judges’ advancing their policy views to the extent that precedent allows them to get away with it. The justices will go only so far not because they fear they will be impeached, or instantly delegitimated, but because they believe that going any further would be inconsistent with the proper judicial role (and perhaps have long-term repercussions for their legitimacy-as would also be true of common law courts). What is distinctive about modernization is that the limits of the judicial role are created by current popular understandings.

Near the end of his comment, Professor Mitchell suggests that modernization presents two particular risks. One is that modernization will provide insufficient protection for national minorities. I think he is right about that; as I tried to say in my original Article, modernization may (and arguably has) caused the Court to drift away from a more principled and appropriate judicial role, such as the protection of minorities that otherwise do not get a fair shake from the political process. (Of course, identifying those minorities, and deciding what constitutes a fair shake, are controversial and problematic tasks.) But Professor Mitchell also raises the possibility that because modernization may undermine the structural protections that the Constitution provides to national minorities, it presents a distinctively great threat of “undermin[ing] the rule of law.” The result, Professor Mitchell says, is that minorities that lose out to supposedly modernizing decisions may seize the opportunity, when they are in power, to manipulate the Constitution for their own political objectives.

Here again I think it is useful to distinguish the two questions I tried to separate at the beginning of this response. I am not sure that modernization-compared to, say, originalism, or precedent-based constitutional interpretation-presents an especially great danger of the kind of problem that Professor Mitchell identifies. The Court’s decisions about, for example, the role of women, or the rights of gays, are pretty obviously efforts to adjust constitutional rights to current understandings-and also, maybe just as obviously even to people who don’t spend their time studying constitutional law, hopelessly at odds with original understandings. But I do not think those decisions are especially likely to precipitate the kind of response that Professor Mitchell describes. Similarly, Brown v Board of Education¹² came to be accepted as fully legitimate-an icon, even-because of a recognition that American society needed to move into a new era of race relations. It was accepted because it was in line with popular understandings, not because it came to be seen as consistent with original understandings, or the text of the Constitution, or some other backward-looking source of law.

What creates the kind of danger that Professor Mitchell identifies so well is instead, I think, the perception that the Supreme Court is not “doing law” at all-that it is simply imposing its policy views and manipulating the law to conform to them. That accusation can be leveled at an originalist court, or a Carolene Products¹³ court, or a common law constitutional court, or a modernizing court. Once it becomes the accepted view among a political or ideological group that the other side does not do law but just does what it wants, then the downward spiral that Professor Mitchell warns against-when we get our turn, we’ll do the same thing-becomes all too probable. The cure for that-and on this point, I am sure that Professor Mitchell and I agree-is to avoid a toxic climate in which measured and responsible criticism (Professor Mitchell’s comment provides a great example) is drowned out by reckless accusations of lawlessness. There are lawless Supreme Court decisions, and we all have our favorite candidates. But it ought to be possible to engage in vigorous criticism, on the merits, of methods, approaches, or normative views, without impugning the other side’s commitment to the rule of law.

Acknowledgments:

Copyright © 2009 University of Chicago Law Review.

David A. Strauss is Gerald Ratner Distinguished Service Professor of Law at The University of Chicago Law School.

This Legal Workshop Editorial is a response to the following piece:   Jonathan F. Mitchell, Modernization, Moderation, and Political Minorities: A Response to Professor Strauss, LEGAL WORKSHOP (U. CHI. L. REV., May 3, 2009).

I am grateful to Jonathan Mitchell both for his comment on my original Article and for his help with this response.

We first discuss some basic background details of the model, focusing on the production technology, competitive labor and goods markets, and the (assumed) systematic differences in preferences of two worker types: Deltas and Omegas. Then we introduce the possibility of compensation plans that involve both cash wages and fringe benefits, considering first the case where firms face the same amenity price as do their workers. In such cases, a no-fringe-benefits equilibrium exists. This equilibrium is integrated. However, at least one cash-and-fringe compensation plan¹ allows prejudiced firms to hire only Deltas in equilibrium. The resulting equilibrium is segregated, in the sense that at least some firms may (a) deliberately avoid hiring Omegas, and (b) stay in business. Interestingly, the Omegas’ utility is no lower in this equilibrium than it would be in the cash wage-only equilibrium. This result follows because of the competitive nature of the labor market, which ensures that other firms will hire Omegas and pay them their marginal product.² If discrimination is regarded as socially or individually harmful in ways that do not show up in consumption-based utility, then Omegas may still be worse off in a segregated equilibrium.

We also consider the case where firms have a price advantage in purchasing amenities, perhaps because of economies of scale. In this case, no integrated equilibrium exists. Any equilibrium necessarily involves cash-and-fringe compensation plans used to pay Deltas and a cash-only plan used to pay Omegas. Banning fringe benefits would (a) eliminate segregation, (b) reduce Deltas’ utility compared to the segregated equilibrium, and (c) have no impact on the Omegas’ utility compared to the segregated equilibrium. We note that this condition for equilibrium would hold even when employers harbor no animus toward Omegas. If discrimination is regarded as socially or individually harmful in ways that do not show up in consumption-based utility, then Omegas’ welfare may be improved by a policy of banning fringe benefits.

 
I.
Model Details

Suppose two types of workers, Deltas and Omegas, exist. Every member of each group is identical to all other members of that group in terms of tastes. Preferences of Deltas and Omegas are given by

(1) U_Δ = x^α b^1-α – c × W                                                    

(2) U_Ω = x – c × W

where x is the number of units of a generic consumption good a person consumes, b is the number of units of an amenity good (mnemonically, think of this good as “beer”), c is the disutility of working, W equals one if the person works for pay and zero otherwise, and α is a preference parameter for Deltas and lies between zero and one.³

            We assume that all jobs in the economy involve the same type of labor, all workers have one unit of labor to offer, and all workers are equally productive. Firms can hire as many workers as they like. If hired by a firm, each worker can produce Q units of the generic good with her one unit of labor. We normalize the price of a unit of the generic consumption good to be one,⁴ and we assume that the price of the amenity good is fixed at level p_b.

 
A.     Optimal Consumption and Labor Supply Decisions

Let Y_Δ be the income a Delta worker receives if she works; assuming for simplicity that she has zero income otherwise, her income equals W × Y_Δ. Her utility-maximizing choice of consumption in terms of x and b will then be given by whatever choice of (x, b) maximizes U_Δ subject to the constraint that

(3) x + p_b × b = W × Y_Δ

Equation (3) is known as the budget constraint. Each unit of x costs one unit of income, and each unit of b costs p_b, so altogether the Delta’s total expenditure is x plus p_b × b. In our static, one-period model, individuals lack a reason to save any income, and thus people will want to spend all their income. Similarly, individuals lack an opportunity to borrow, so people’s spending will be limited to their income.

The form of preferences we have assumed for Deltas implies that their optimal consumption choice is to spend the fraction α of income on the generic consumption good and the remainder on the amenity. Thus, optimal consumption levels for a Delta are given by

(4) x* = α × Y_Δ     and      b* = (1 – α) × Y_Δ / p_b

if she works for pay, and zero otherwise.⁵ If the Delta works, then her utility will be

(5) U_Δ,work = [α^α(1 - α)^1-αp_b^α-1] × Y_Δ – c

(6) = v_α(p_b) × Y_Δ - c

where the first term on the right hand side of (5) is the result of plugging in the optimal consumption levels in (4) to the utility function in (1). The function v_α(p_b) collects the part of U_Δ,work that varies with the preference parameter and the amenity price. The important thing to notice is that this function, and thus the highest possible value of utility, U_Δ,work, is a decreasing function of the amenity price.

The above assumptions imply that if a Delta forgoes work, then her utility will be zero.⁶ Thus, she will work for pay if and only if the right-hand side of (6) is non-negative. In other words, inducing Deltas to work requires that firms pay them at least enough income, Y_Δ, to allow them to realize c units of consumption utility.

Next, consider the simpler case of Omegas. Let Y_Ω be an Omega’s income if she works for pay, and again assume zero income for nonworkers. Omegas have very simple consumption plans based on (2): they consume all their income by purchasing the generic good and spend nothing on the amenity good. Since each unit of the generic good costs one unit of income, this means that Omegas will consume Y_Ω units of the generic good. Utility for working Omegas is thus

(7) U_Ω,work = Y_Ω – c

As with Deltas, Omegas will work if and only if this utility level is at least zero, since that is their utility if they do not work. Thus, an Omega worker will be willing to work if and only if she is paid at least Y_Ω. We assume that each worker’s productivity, Q, is greater than the maximum of (Y_Ω – c) and (v_α(p_b)× Y_Δ – c). This assumption ensures that the labor market equilibria described below exist.

 
B.     Labor Market Equilibrium with Fringe Benefits

We allow for firms to pay both fringe benefits and cash wages. Firms will provide compensation by giving fringe-receiving workers some number of units of the amenity good. We assume that workers cannot resell these fringe benefits.⁷ Since Omegas place no value on the amenity good, intuition suggests that employers should be able to design a combination of wages and amenities compensation that will (a) attract Deltas, and (b) repel Omegas. This intuition is correct, as we now show.

1.   Firms Face Amenity Price p_b

Consider a firm that wishes to hire only Deltas. Suppose this firm offers a cash-wage amount, Y_f, less than the labor disutility, c, together with some positive number, b_f, of units of the amenity good. We refer to this compensation plan as F = (Y_f, b_f). Omegas place no value on the amenity goods, and we have assumed away the possibility of resale. Therefore, the value of this compensation to an Omega is simply the Y_f units of the generic good that the Omega can purchase with the cash wage. Since Y_f  < c by assumption, an Omega would rather have zero income than work for this compensation plan.

Will compensation plan F attract Deltas? Suppose that b_f  = b* from equation (4). This will cost the firm p_b × b* = (1 – α) × Q. Suppose the firm combines this fringe-benefit level with the cash wage Y_f = α × Q. This compensation plan costs the firm exactly Q dollars, which is the break-even worker cost that allows firms to produce in competitive equilibrium as explained above. Thus, this compensation plan is feasible from the firm’s point of view. The compensation plan also allows a Delta to attain exactly the consumption bundle she would have chosen for herself had she been paid Q dollars in cash and nothing in fringe benefits. Since we assumed previously that α and the amenity price p_b were such that Deltas would choose to work when offered the wage Q, they will also choose to work when offered the compensation plan F just described.

We conclude that there exists a segregated equilibrium in which some firms—those that screen out Omegas, which we call screening firms—offer compensation plan F only, and other firms offer a cash wage of Q together with no fringe benefits. In this equilibrium: (a) only Deltas work for the screening firms, (b) Omegas work only for cash-only firms, and (c) some Deltas may work for cash-only firms.⁸ In fact, when Deltas strictly prefer to work when offered a no-fringe wage of Q, firms can design a variety of compensation plans that generate segregated equilibria with fringe benefits.⁹ It can be shown that all equilibria require that the cost of a screening firm’s compensation plan equal Q. Any firm that pays less than that will face competition for its workers, as before. Finally, we note when no prejudiced firm owners exist, both the segregated and the integrated equilibria described above continue to exist, with firm owners being indifferent between them. We have thus shown that when firms face the same amenity price as consumers, they can design a compensation plan that both repels Omegas and attracts Deltas and allows the firm to stay in business in competitive equilibrium.

2.   Firms Face Amenity Price p_bf < p_b

Next, we consider the case when firms have a price advantage relative to consumers in purchasing the amenity, so that the per-unit price for the amenity that firms must pay is p_bf  < p_b. An example is group purchase of insurance plans, but many other examples exist. In equilibrium, this price advantage means that Deltas must always be paid a compensation plan that involves fringe benefits. The reason is simple: any firm that pays a Delta only in cash is providing less than the maximum possible utility that can be provided at that cost. Another firm could come along and offer to pay the Delta slightly less in cash together with some fringe benefits. Because firms acquire the fringe benefits more cheaply than Deltas, the second firm could provide greater utility to the Delta than the first, while paying less to do so. The Delta would switch jobs and the second firm would earn a greater profit than the first. Thus no competitive equilibrium exists in which any Delta is paid only in cash.

In fact, firms’ advantage in purchasing the amenity means that Deltas will want their employers to purchase all units of the amenity that the Deltas consume. As in the models above, equilibrium requires that firms pay Q for each worker, whether Delta or Omega; if a firm paid less than that, our familiar compensation-competition story would apply. Thus, Deltas will be paid a cash-and-fringe compensation plan that costs Q dollars, while Omegas will once again be paid Q dollars in cash. To find the utility level for Deltas in equilibrium, we need only act as if the Deltas themselves faced the firms’ amenity price, p_bf, rather than the higher price of p_b. Thus, we simply plug p_bf into equation (6) above, yielding

(8) U_Δ,f = v_α(p_bf) × Q – c

Now, it is easy to show that when p_bf  < p_b, it must be true that

(9) v_α(p_bf) > v_α(p_b)

and this implies that

(10) U_Δ,f > U_{Δ,cash only} = v_α(p_b) × Q – c

We have thus shown that when firms have an amenity-price advantage relative to consumers, Deltas’ utility is strictly greater in the with-fringe equilibrium than it would be if fringe benefits were banned. This equilibrium, which is unique under the argument above, is segregated. However, since Omegas continue to receive cash compensation in the amount of Q dollars, their equilibrium utility is unaffected by the existence of fringe compensation: banning fringe compensation plans would not increase Omegas’ utility. A fringe ban in the presence of an amenity-price advantage on the part of firms would simply cause deadweight loss by forcing Deltas to purchase amenities at an unnecessarily high price, while giving nothing extra to Omegas. Notice that if firms must provide only one compensation plan, workers will be segregated in equilibrium even if no employers harbor animus toward Omegas: the fact that employers have a cost advantage in providing the amenity, while worker type is perfectly correlated with amenity preference, ensures full separation of workers. If firms can offer compensation menus, however, then unprejudiced employers can avoid segregation by offering workers their choice of plan F or all-cash compensation of Q dollars.

 
II.
Conclusion and Extensions

When firms possess no cost advantages for amenities, multiple equilibria exist, including a nonsegregated one in which employers pay every worker in wages only. When firms possess an amenity cost advantage and cannot offer workers a choice between compensation plans, a unique equilibrium exists, and it is segregated. Interestingly, Omegas are just as well-off economically; they would not benefit economically from eliminating fringe-induced segregation. However, Deltas are strictly better off in the segregated equilibrium than in the no-fringe equilibrium when firms have a cost advantage. Hence, banning segregation-inducing fringe compensation would (a) eliminate segregation, (b) not improve the economic welfare of Omegas, and (c) economically harm Deltas.

Some firms may possess market power in either the labor or product markets, which would allow economically harmful discrimination to persist. Fringe-generated segregation might be especially troublesome in such market-power cases because employers could use it to skirt easily monitored disparate-treatment proscriptions. Banning fringe benefits would still harm Deltas if firms have an amenity-price advantage, though with market power, such a ban could also help Omegas. Fringe-based discrimination could be prevented in this model without harming Deltas by mandating that firms offering fringe benefits also offer a cash-only compensation plan whose wage/salary equals the cost to the firm of the cash-and-fringe compensation plan.¹⁰

It is, of course, also possible that segregation is undesirable in its own right because stereotypes break down in integrated workplaces, because individuals incur psychic costs in experiencing discrimination even if they voluntarily sort themselves into segregated workplaces, or because the individuals that do not sort themselves out may incur psychic costs in a segregated workplace.¹¹ In such situations, reducing the net pecuniary compensation received by Deltas might be worthwhile in order to bring about an integrated economy. Dealing with either of these extensions would markedly change the welfare implications of the segregated result, and we do not mean to discount the relevance of either case. However, in terms of consumption utility, segregation induced by fringe compensation does not harm the group that is “segregated against,” given perfect competition.

Acknowledgments:

Copyright © 2009 University of Chicago Law Review.

Jonah Gelbach is Associate Professor of Economics at University of Arizona.
Jonathan Klick is Professor of Law at University of Pennsylvania Law School.
Lesley Wexler is Assistant Professor of Law at Florida State University College of Law.

This Editorial is a companion to the following previous Legal Workshop Editorial: Jonah Gelbach, Jonathan Klick & Lesley Wexler, Passive Discrimination, LEGAL WORKSHOP (U. CHI. L. REV. June 22, 2009).

The following is a Response by Richard Epstein to this series of Editorials: Richard A. Epstein, Protect Us, Lord, from Title VII: A Response to Gelbach, Klick, and Wexler, LEGAL WORKSHOP (U. CHI. L. REV., June 22, 2009).

In their example of how this process works, GKW rely on economic evidence indicating African-American individuals have steeper discount rates than white individuals to suggest that any offer of a salary with a fixed pension benefit will be of more value to the white applicant than to the African-American applicant,³ so that the employer can shift the distribution of his workforce in ways that advance discrimination. Armed with this knowledge, an employer could alter the racial composition of its workforce.

Assuming that this mechanism has its intended effect, it could work in both directions. An employer therefore could engage in race-based affirmative action under the radar screen by front-loading the employee’s wages and reducing their pensions in order to attract a higher fraction of African-American workers. I am not aware of any evidence that points to a conclusion that any affirmative action employer has ever engaged in this tactic, either deliberately or inadvertently. The usual way to run affirmative action programs is through aggressive recruitment, all of which takes place above the radar, given the one-sided application of Title VII: disparate impact theories are available for use by black applicants,⁴ while affirmative action practices are looked upon with real benevolence.⁵ In addition, it is instructive to note that for many jobs the pension element has little or no traction insofar as the (now discriminatory) social security system covers most of the pension obligation. Yet I hope that GKW lack the courage of their convictions and would not suggest that social security (and Medicare) be unraveled because of its implicit racial skew, or that benefits paid to African-American workers be grossed up to reflect the perceived difference in the discount rates by the median member of the respective groups.

Nor do I believe that this approach has much to commend it, even for a firm that wanted to practice race or sex discrimination under the radar. The simplest objection is that it is not likely to be effective. The initial point is that an employer would have to offer the now-suspect pension feature of the employment practice in constant proportions to all workers in order for the system to work at all. But that is not the way in which most employers want to deal with their employees. One of the most common practices for fringe benefits today is for firms to offer workers an allowance that they can use to make purchases from a menu of items, in exchange for a reduction in their base pay. This menu approach sets out an implicit indifference curve for the employer: the employee can pick any combination of items that he or she finds ideal, and thereby maximize the nonsalary portion of his or her compensation package. Single individuals do not have to buy life insurance; sicker individuals may stock up on health insurance, and so on down the line.

This ability to make the optimal choice thus counts as an implicit wage boost for all employers, regardless of race or sex. If the evidence offered in GKW is indeed correct, we should expect to find that different individuals, by race or sex, will choose different benefit packages. At that point the employer practice should be sheltered by the doctrine announced in EEOC v Sears, Roebuck & Co,⁶ because we have the most explicit declaration of unconstrained worker preferences that we can imagine. Commentators have, wrongly, attacked Sears on the ground that the female workers who opted for store commission jobs were conditioned wrongly by their social settings. But even if that strained interpretation made sense, it is hard to identify any external constraints on choice that fetter employee preferences in this situation. The widespread use of these menu options is not consistent with employers engaging in covert forms of discrimination. The menu strategy is an effective way to attract a diverse workforce because it does not shoehorn the benefits package into a one-size-fits-all straightjacket. GKW should praise employer ingenuity for maximizing the welfare of its employees under competition, not seek ways to expose employers to additional liabilities.

Nor is there any reason to think that GKW’s strategy for racial discrimination is likely to yield any forbidden fruits if put into play. In order for this to work, there has to be an assumption that the compensation demands across races are identical for both African-American and white workers. But suppose that they are not, and that on average the African-American workers have lower reservation wages than white workers, perhaps because of the discrimination in the general market. At this point, the pension-heavy strategy may well reduce the attractiveness of the compensation package somewhat. But that result is consistent with a loss in consumer surplus, and does not require us to assume that there will be much of a change in the rate at which African-Americans accept job offers. We know in addition that even if there is a variation in preferences across groups, there is also a variation in preferences within groups. At this point, one can ask just what the likely shift in workforce compensation is likely to be. My view is that it would be quite small, and for what end if it turns out that it makes it more difficult to recruit workers up and down the line. There does not seem to be much of a future in this practice.

There is, moreover, a real risk that the relentless effort to root out race and sex discrimination has serious adverse consequences of its own. In their article, GKW discuss briefly the Supreme Court’s most conspicuous effort into the field of sex discrimination in pensions, City of Los Angeles, Department of Water and Power v Manhart,⁷ where the City of Los Angeles followed standard actuarial practices by withdrawing more money from women’s salaries to cover its pension obligations than it did from men’s salaries. The statistical reason for this decision was that women lived longer than men and thus needed large amounts of money to fund their monthly payments, which were of the same magnitude as given to men. To put the point in a different fashion, the women paid into the pension plan the exact amount of money that they would have paid if there were no men at all in the employment pool. The men of course did the same.

The key point here is that the program adopted by Los Angeles should be regarded as the epitome of sound gender discrimination policy insofar as it prevented an illicit wealth transfer between the sexes. Stated otherwise, the present value of the entire benefit package was identical for men and women. Men got the additional benefit of a higher monthly payment. Women got the benefit of a longer expected life. Manhart thus showed the capacity for the employment discrimination law to disrupt the rational behavior of both public and private institutions, by using the antidiscrimination law to create an undeserved cross subsidy between men and women, which was a consequence of the rigid formalism of the United States Supreme Court.

Yet note these flexible notions of discrimination could put employers into an impossible bind. Thus, suppose that attention shifts to employer life insurance policies. Under the menu approach set out above, the correct response is to offer the best competitive rates for men and women, and these will show that women receive better offers as a consequence of their lower risk of death in any given period. But now suppose that the City of Los Angeles decided that consistency required it to use the same formal approach for life insurance that the Supreme Court in Manhart forced upon it for pensions. At this point, the women workers could rely on the theories of GKW to demonstrate that they were the victims of employer discrimination. The firm picked a mandatory insurance benefit which it then deliberately mispriced to drive women applicants from the roost. So we now have a new theory of inevitable discrimination. Women, but not men, and African-Americans, not whites, get to pick whether the economic or the formal conception of discrimination governs the case. Since every case will have either formal or impact discrimination, no employment practice is safe.

There are two conclusions that I draw from this general saga. The more modest one is that we should give new theories of employment discrimination a well-deserved vacation on the grounds that they are likely to spawn more discrimination than they prevent and to do so at a public and private cost that makes everyone worse off. My more aggressive conclusion tracks that which I have argued for since I wrote Forbidden Grounds: The Case against Employment Discrimination Laws. Just repeal the employment discrimination laws in their entirety, except as they apply to monopoly situations, of which there are virtually none in private unregulated markets.⁸ One of the reasons for this position is that it frees up any and all affirmative action programs from the legal limbo in which they are rightly placed under the current law. The text of Title VII is perfectly neutral on race and sex, for it applies to “any individual” as a conscious effort to introduce a color- and sex-blind regime into the law.⁹

The tortured interpretation of the text to allow affirmative action on the one side and to impose disparate impact liability on the other¹⁰ has had two serious dysfunctional consequences. The first is to abandon all principled rules of statutory construction in order to adopt a highly race-conscious endeavor. What could be done in the one case can be done in the next, which imposes a serious crimp on all rule-of-law values. The second is to create the need to develop some ad hoc public justification for affirmative action programs in the private and public sector, which in turn gives all institutions a strong incentive to develop narrative accounts that overstate the level of discrimination, especially in recent times, in order to lend legitimacy to these programs. In the private sector, at least, the principle of freedom of association allows the programs to go forward without needing to tarnish the reputation of other individuals. And for public institutions the correct test, I continue to believe, is to allow them in employment contexts to mirror the voluntary practices that dominate private institutions, which in turn permits the same kind of employment practices in both markets. And this freedom in labor markets comes at a much lower cost than the current suffocating regime.

And to what end? GKW do not offer any aggregate statistics that indicate that the position of African-American workers lags behind that of whites, controlling for the usual key differences in education and work experience and the like. That literature is of course enormously complex, and among its most persistent findings are that wage gaps between blacks and whites prove significant for men, but not for women.¹¹ The explanations for that disparity are likely to prove complex, but invidious discrimination on racial grounds does not look to be one of them.

The situation on the ground, moreover, is quite different from what it was some years ago. When I started teaching in 1968, the faculties were pretty much white and male. My first Dean, Dorothy Nelson, was a real pioneer.  The composition of every university and every business has been transformed in the interim. I do not think that this is in response to legal pressures, but in response to real perceived demands inside the organizations in question. The high level of support for affirmative action cannot be squared with a covert racial or sexual animus on the part of white men who now occupy a shrinking proportion of the dominant positions. Abigail Thernstrom was quite right to attack the Attorney General, Eric Holder, for his dismal account of race relations in his February 18, 2009 speech.¹² It does not help matters today to make bald assertions that “in things racial we have always been and continue to be, in too many ways, essentially a nation of cowards.”¹³

That broad denunciation denigrates the brave work and large sacrifices of too many honorable people. There is no reason to get smug on questions of progress on matters of race and sex, but the thought that any tightening of the anti-discrimination laws can help improve the current situation should be put firmly to one side. Yet Congress does not seem to be listening. Recently, it adopted the Lilly Ledbetter Fair Pay Act, which included an unexplained one-sentence finding about the “reality of wage discrimination” in American life.¹⁴ It is therefore not too much to note the recent statistical information that the unemployment rates for men is higher in all relevant categories than for women.¹⁵ There are doubtless many possible explanations for this turn of events. But the one point that does seem clear is that on matters of race and sex discrimination our first order of business should be to give it a rest, not to embrace new theories of liability under a statute that has already outlived its usefulness.
 

Acknowledgments:

Copyright © 2009 The University of Chicago Law Review.

Richard A. Epstein is James Parker Hall Distinguished Service Professor of Law, The University of Chicago Law School; Peter and Kirsten Bedford Senior Fellow, The Hoover Institution; and a visiting law professor at New York University Law School.

This Editorial is a Response to the following Legal Workshop Editorial: Jonah Gelbach, Jonathan Klick & Lesley Wexler, Passive Discrimination, LEGAL WORKSHOP (U. CHI. L. REV. June 22, 2009).

By way of illustration, imagine that individuals from two groups, Deltas and Omegas, comprise the labor pool from which employees may be hired.  While their work productivity is drawn from the same distribution, a given employer dislikes Omegas for reasons unrelated to their job qualifications.  Because Omegas have suffered discrimination historically, legislation explicitly protects Omegas from employment discrimination.  Further, while Deltas and Omegas have similar reservation wages,¹ Deltas, on average, more highly value some nontransferable good that the employer can procure (or produce) at a cost equal to or lower than the Deltas’ average valuation of the good.  To make the illustration more concrete, assume the employer is a brewery and offers free beer at lunchtime.

While the employer prefers to hire only Deltas, federal legislation limits the employer’s ability to do so. Yet we contend that employers may advertise the job broadly and make hiring decisions in a seemingly nondiscriminatory fashion, avoiding lawsuits, and still achieve an ultimate workforce that is predominantly (if not exclusively) composed of Deltas.  Specifically, if the employer offers a compensation package composed of a submarket wage as well as access to free lunchtime beer, Omegas will find such a job unattractive, while Deltas will still gladly accept the job offers.  Ultimately, according to the firm, due to no misconduct on its part, Omegas lacked interest in working for the brewery.

While scholars have touched on this phenomenon,² no one has examined these employment practices in a systematic way.³ Such discrimination is presented as an ancillary effect of employment policies or conditions. Yet recent class actions suggest that basic animus- or stereotype-driven discrimination is still quite prevalent. So it should be unsurprising that litigation-savvy employers might deliberately craft compensation structures to exclude certain types of workers.

In this online Article, we provide an illustration of group-level preference heterogeneity that could generate passive discrimination in an occupational setting. We next discuss how current antidiscrimination law applies and conclude with a brief discussion of how we might better address passive discrimination.

I.
Illustration

In this Part, we first describe the conditions necessary to create the segregated equilibria described above. We then provide an example where these conditions may apply. In the case of intentional passive discrimination, the employer must be able to identify a good that satisfies two conditions: (1) the disfavored group values the good on average less than the average valuation placed on the good by other groups of potential employees, and the employer knows this; and (2) the good is nontransferable. A third condition under which the employer can ensure that she attracts the favored type of employee is satisfied when the employer can provide the good for a cost below that paid by workers outside of the employment relationship.

While we have focused on intentional passive discrimination, the phenomenon could also arise as an accidental byproduct.  For example, a brewery whose owners are indifferent regarding employing Deltas and Omegas might still offer free beer during lunch because it believes doing so promotes product knowledge.  In such a case, even if the brewery starts out offering this benefit plus a market wage, Deltas who do not secure positions will offer to work for a lower wage given their valuation of the free beer.  Eventually, this group valuation will lead to a workforce composed of Deltas, to the exclusion of Omegas.

One example of potentially discriminatory screening practices relates to subjective discount rates and pay structures that include a deferred compensation component, such as a pension.⁴ To begin with, a person’s subjective discount rate captures her willingness to delay current consumption for the prospect of increased future consumption.  While everyone exhibits some positive subjective discount rate, individual-to-individual heterogeneity exists in those subjective discount rates.⁵

While individual-level heterogeneity is prevalent, labor economists have noted that systematic differences in individual discount rates across racial groups may also exist.⁶ A natural experiment provides the most interesting supporting evidence in the finding of large inter-race heterogeneity in discount rates.⁷ Specifically, conditional on a large number of other effects,⁸ black military enlistees and officers exhibited significantly higher subjective discount rates than other minorities and whites.⁹ This result is robust with blacks exhibiting, on average, discount rates on the order of five to nine times as great as whites.

Assuming this empirical regularity holds,¹⁰ an employer wishing to passively exclude blacks could offer a low current wage coupled with generous deferred compensation benefits, such as a large pension. Such a package would attract individuals with relatively low subjective discount rates and repel those with higher subjective discount rates. Note further that this could also represent a situation in which a nondiscriminatory employer might engage in unintentional passive discrimination, as employers may possess numerous other reasons to include a generous retirement component in its compensation package.

II.
Applying Title VII

In determining the legality of passive discrimination, we begin with Title VII. Congress enacted this statute “to assure equality of employment opportunities and to eliminate those discriminatory practices and devices which have fostered [ ] stratified job environments to the disadvantage of minority [or other protected] citizens.”¹¹ Congress did not ban all forms of workplace segregation, but rather forecasted that integration would be a beneficial byproduct of ending active discrimination. Thus, Title VII makes it an unlawful employment practice for an employer to “fail or refuse to hire . . . or otherwise to discriminate against any individual with respect to his compensation, terms, conditions, or privileges of employment, because of such individual’s race, color, religion, sex or national origin.”¹²

A.     Disparate Treatment

Title VII jurisprudence allows plaintiffs to choose among disparate treatment and disparate impact claims. Under disparate treatment, an employer treats some individuals worse than others because of a protected characteristic. “Proof of discriminatory motive is critical, although it can . . . be inferred from the mere fact of differences in treatment.”¹³ In individual disparate treatment claims, each plaintiff must prove that she was treated less favorably than others similarly situated and that this disparate treatment was “because of” the plaintiff’s race, color, sex, national origin, or religion. The plaintiff must provide either direct or circumstantial evidence to demonstrate the employer’s discriminatory intent. While these claims may evidence a concern about segregation, courts link this concern to the elimination of discriminatory practices which deprive individuals of employment opportunities.¹⁴

In pattern or practice cases, another type of disparate treatment claim, the plaintiff can satisfy the prima facie case with “statistical evidence demonstrating substantial disparities in the application of employment actions as to minorities and the unprotected group.”¹⁵ These plaintiffs need not present individual victim testimony to support a finding of intentional discrimination—courts may rely purely on evidence of gross statistical disparity,¹⁶ which raises an inference of discriminatory intent.

Under disparate treatment claims, Title VII prohibits the employer from using group-based characteristics, preferences, or stereotypes to treat individuals differently even if such stereotypes are largely accurate. In City of Los Angeles, Department of Water and Power v Manhart,¹⁷ the Supreme Court ruled that an employer may not deduct more from women’s pay to cover their pensions even though as an actuarial matter, women as a class are likely to draw more pension benefits.¹⁸ The Supreme Court reasoned that any individual woman may not draw benefits longer than any individual man, her employers may not condition her pay on her sex.¹⁹

Easy disparate treatment cases include those instances in which an employee offers a potential plaintiff a facially different wage than others similarly situated. For example, an employer may not offer Caucasian bus drivers comprehensive health insurance and fail to offer African-American drivers the same insurance package. If, on the other hand, the employer offers all bus drivers lower wages and higher pension benefits than other area employers, individual employees cannot successfully lodge a disparate treatment claim. Even if empirical evidence indicates that, as a group, African-American drivers have a higher discount rate and place a lower value on such pensions, the employer has treated each individual African-American driver the same as all its other drivers. So we contend no individual disparate treatment claim could succeed.

Under pattern-and-practice claims, however, if employers devised a very successful sorting mechanism, plaintiffs might be able to satisfy the prima facie showing of gross statistical disparity. For instance, in International Brotherhood of Teamsters v United States,²⁰ the Court suggested that the complete, or very nearly complete, absence of members of a protected class in a particular job can compel an inference of discrimination.²¹ So if the high pension, low wage strategy resulted in a workforce with no or very few African-American drivers, employers could face a Title VII problem. Yet plaintiffs rarely prevail in such cases without testimony about individual acts of disparate treatment.²²

Only if the employer foolishly allowed the discovery of direct evidence of discriminatory intent would the employer face real difficulty in providing nondiscriminatory explanations for the disparity. Even then, the plaintiffs might not prevail. Such a memorandum would reveal an intent to achieve a segregated workplace, but a plaintiff would still bear the burden of proving the occurrence of discrimination as defined by Title VII. Here, the employer has relied on preferences that tend to be correlated with protected characteristics, but has offered each individual the same package.

Title VII clearly prohibits employers from treating individuals differently because of discriminatory animus or outmoded stereotypes or even seemingly rational group-based stereotypes. Yet, as currently conceived, disparate treatment claims seemingly do not prohibit the employer from using group-based characteristics, preferences, or stereotypes to treat individuals similarly in hopes that such treatment will encourage applicants from disfavored groups to sort themselves out of a job based on their own preferences. As any individual applicant may defy the stereotype and elect into the job, no disparate treatment has occurred even if an employer succeeds in achieving a segregated workplace.

B.     Disparate Impact

Disparate impact claims allow plaintiffs to prevail if they identify a particular employment practice with a significant adverse impact on a protected class, and the defendant fails to demonstrate that the challenged employment practice is “job related  . . .  and consistent with business necessity.”²³ If the challenged practice significantly serves the employer’s legitimate employment goals,²⁴ the plaintiff can still prevail if she proves that a less discriminatory alternative employment practice equally serves the defendant’s goals.²⁵

Passive discrimination seemingly fits better under this analysis, as employers devise facially neutral compensation packages that may result in only a few individuals from a disfavored group in their workplace. Yet the Supreme Court has cast doubt as to whether fringe benefits and compensation packages are subject to disparate impact analysis.²⁶ In Manhart, described above, the Court stated in dicta:

Even under Title VII itself—assuming disparate-impact analysis applies to fringe benefits—the male employees would not prevail. Even a completely neutral practice will inevitably have some disproportionate impact on one group or another. [Griggs v Duke Power Co, 401 US 424 (1971)] does not imply, and this Court has never held, that discrimination must always be inferred from such consequences.²⁷

Likely as a result of this language, few cases have grappled with compensation and fringe benefits under disparate impact analysis. In Finnegan v Trans World Airlines, Inc,²⁸ the Seventh Circuit held that across-the-board cuts in fringe benefits were not eligible for disparate impact analysis under the Age Discrimination in Employment Act.²⁹ Judge Richard Posner rejected even a prima facie case of disparate impact for such cuts, as the focus of disparate impact should be on the exclusion of individuals from certain opportunities.³⁰ But passive discrimination does not exclude anyone from an opportunity; it just makes the opportunity less desirable.

C.     Lack of Interest

The so-called “lack of interest defense,”³¹ available in both disparate treatment³² and disparate impact cases, is particularly relevant to the causation questions raised by passive discrimination. Lack of interest is a nondiscriminatory explanation for statistical disparities,³³ and rebuts the plaintiff’s prima facie case.³⁴ Under this “defense,” employers dispute the causal chain by showing that employees’ voluntary choice, rather than a particular employment practice, causes workplace inequality or segregation.³⁵ If the employer succeeds in showing that individual preferences cause a disparate impact, then it need not reach the question of whether the practice is job related and consistent with business necessity.³⁶

This Article suggests that labor market conditions that shape individuals’ interest in particular jobs may include more than the substance of the job, but also the terms, conditions, and privileges of employment, such as the compensation structure. Yet employers and courts seem to view these packages as mostly within the employers’ discretion to design and the employees’ discretion to take or leave. Passive discrimination suggests that courts’ acceptance of such preferences under the lack of interest doctrine may allow employers to use such preferences with impunity.

III.
Conclusion

This Article fits within a larger debate about the appropriate framework from which to address workplace discrimination and segregation. If one were concerned about workplace segregation or the effect that group-based preferences have on individuals, some judicial and legislative actions might be taken.³⁷ Title VII reform provides one obvious approach. Courts could apply disparate impact doctrine to the structure of compensation and to the provision of fringe benefits. Interest groups may push for stand-alone legislation to address particular mechanisms of passive discrimination. Independent legislation may bypass litigation hurdles associated with Title VII if it does not rely on individual claimants. More innovative approaches include standalone legislation, education initiatives, and incentivized employer restructuring through an enhanced range of employee choice in compensation options, which are more fully fleshed out in our full article.
 

Acknowledgments:

Copyright © 2009 The University of Chicago Law Review.

Jonah Gelbach is Associate Professor of Economics, University of Arizona; Jonathan Klick is Professor of Law, University of Pennsylvania Law School; and Lesley Wexler is Assistant Professor of Law, Florida State University College of Law.

The following is a companion to this Editorial: Jonah Gelbach, Jonathan Klick & Lesley Wexler, A Formal Model of Passive Discrimination, LEGAL WORKSHOP (U. CHI. L. REV. Aug. 10, 2009).

The following is a Response by Richard Epstein to this series of Editorials: Richard A. Epstein, Protect Us, Lord, from Title VII: A Response to Gelbach, Klick, and Wexler, LEGAL WORKSHOP (U. CHI. L. REV., June 22, 2009).

In The Modernizing Mission of Judicial Review,² Professor Strauss argues that the Supreme Court’s decisions in these areas are efforts to “modernize” the law by facilitating and accommodating developments in popular opinion, rather than actions that merely entrench the justices’ ideological viewpoints or personal whims. A modernizing court decision must satisfy two conditions. First, it invalidates a law only if it “no longer reflects popular opinion” or if “trends in popular opinion are running against it.”³ Second, the Court “must be prepared to change course” if “popular sentiment has moved in a different direction from what the court anticipated.”⁴ In one sense, the Supreme Court is always prepared to respond to developments in popular opinion, because the president and the Senate will use their appointment prerogatives to bring the Court into line. But Professor Strauss describes something different from these external constraints on judicial decisionmaking. A modernizing court itself designs principles and doctrines that are responsive to future developments in popular opinion.

No one can deny that the justices’ beliefs regarding future popular opinion are factors in the Court’s decisionmaking. Justices care about their legacies and future reputations; they would prefer to be remembered as a prescient jurist, such as the first Justice Harlan,⁵ rather than as Roger Taney.⁶ And these forward-looking influences have undoubtedly produced some Supreme Court decisions that fit within the modernizing paradigm that Professor Strauss describes.

But it is hard to accept Professor Strauss’s descriptive claim that modernization is the Court’s “dominant” or “central” approach in its capital-punishment and modern substantive-due-process jurisprudence.⁷ His analysis overstates the Supreme Court’s willingness and ability to accommodate future public opinion at the expense of judicial preferences; the Supreme Court simply has not displayed the level of modesty, or the respect for popular opinion, that Professor Strauss seeks to attribute to it. Nor can the modernization framework reconcile the Court’s capital-punishment and substantive-due-process cases with principles of democratic government. On the normative side, there are reasons to object to modernization as a theory of judicial review in addition to those that Professor Strauss identifies.

 
I.
Capital Punishment

Professor Strauss invokes the Supreme Court’s refusal to declare capital punishment unconstitutional per se in Gregg v Georgia⁸ as evidence of its “willingness to retreat” from its earlier decision in Furman v Georgia.⁹ Furman had declared capital punishment (as then practiced) to be unconstitutional, and prompted thirty-five states to reenact legislation authorizing the death penalty. But Gregg is only a small part of the Court’s post-Furman capital-sentencing jurisprudence. After Gregg, the Court continued to impede capital punishment by allowing multiple rounds of habeas corpus review,¹⁰ and imposing new procedural requirements that hinder prosecutors’ efforts to secure death sentences.¹¹ The Court eventually established contradictory constitutional requirements that states eliminate arbitrariness while giving sentencers unfettered discretion to dispense mercy;¹² this empowered lawyers to mount credible constitutional challenges to any capital-sentencing regime. And the same Court that decided Gregg invalidated mandatory capital-punishment regimes in North Carolina and Louisiana, which the legislatures had enacted only two years earlier in direct response to Furman.¹³ It is hard to characterize these post-Furman obstacles to capital punishment as “modernizing”; popular support for capital punishment grew steadily from 1972 through 1994, and exceeded 60 percent in every Gallup poll taken since 1976.¹⁴ And few, if any, of these rulings suggest that the justices relied on an honest but mistaken belief that popular support for capital punishment was waning, or that the sentencing procedures that they invalidated were “outliers” or relics of a bygone era.¹⁵ Yet the Court continues to impose heavy costs on states with capital-punishment regimes, which allow only a fraction of condemned inmates to be punished in accordance with popular opinion.¹⁶ When one considers the Court’s death-penalty jurisprudence as a whole, the decision in Gregg looks less like an effort to accommodate the popular backlash to Furman and more like a strategy shift by the justices to undermine capital punishment through more subtle, underhanded means.

Atkins v Virginia,¹⁷ which prohibited executions of mentally retarded inmates, is another decision that appears to support Professor Strauss’s modernization thesis. Crucially, Atkins left the task of defining “mental retardation” to legislatures,¹⁸ which established a clear mechanism for the Court to accommodate political-branch pushback. If future popular opinion turns against Atkins, legislatures can establish high (or insurmountable) thresholds for “mental retardation.” This will enable prosecutors to seek capital punishment against mentally retarded defendants, and the justices can reconsider their stance if the condemned inmates challenge their death sentences in court.

Thompson v Oklahoma¹⁹ also appears to be a modernizing decision. The petitioner in Thompson was a fifteen-year-old murderer who argued that his death sentence violated the Eighth Amendment. Four justices wanted to impose a constitutional ban on capital punishment for those who were under sixteen years of age when they committed their crime. But Justice O’Connor refused to join their opinion, and opted for a narrower holding that prohibited fifteen-year-old offenders from being executed pursuant to a capital-punishment statute that fails to specify a minimum age. This allowed future legislatures to respond by explicitly authorizing capital punishment for fifteen-year-old murderers, in the event that the Court’s decision had misconstrued the “evolving standards of decency” in American society. Like Atkins, Justice O’Connor’s approach in Thompson provided a mechanism to accommodate political-branch pushback in the near or distant future.

Yet Atkins and Thompson show that Roper v Simmons²⁰ and Kennedy v Louisiana²¹ cannot possibly fit within the modernization framework that Professor Strauss describes. In those cases, the Court decreed an end to executing juveniles and child rapists, but left no mechanism for future cases that could test the Court’s “willingness to retreat.” Even if a large number of legislatures defied the Court and enacted statutes authorizing the death penalty for juveniles and child rapists, every trial-court judge, bound to follow the Supreme Court’s rulings,²² would bar prosecutors from seeking capital punishment in those cases. Without the ability to secure a death sentence against a juvenile or a child rapist at trial, there would never be an Article III “case” that would enable the Supreme Court to reconsider Roper or Kennedy. Even if the justices are “willing to retreat” from these decisions in the future, they would be unable to do so.

If the Roper and Kennedy Courts were truly engaged in modernization, they would have adopted the approach that Justice O’Connor used in Thompson: invalidate the existing death-penalty statutes, but leave the door open for legislatures to reauthorize capital punishment for juveniles and child rapists. The justices were aware that this was an available option, there was Court precedent to support it, yet they chose not to use it. One can only conclude that the purpose and effect of these decisions were to entrench the justices’ ideological preferences, rather than to accommodate present or future popular opinion.²³

 
II.
Substantive Due Process

Here, too, Professor Strauss is too quick to characterize the Court as willing to accommodate political pushback. Although Lawrence v Texas²⁴ disclaims any ruling on same-sex marriage, or other gay-rights issues, it also contains broad, sweeping language that could easily be read to support more expansive constitutional rights for homosexuals.²⁵ Professor Strauss predicts that this “open-ended” opinion will enable the Court to decide future gay-rights controversies in accordance with evolving trends in popular opinion. He interprets the Court’s abortion jurisprudence in a similar manner. Despite Roe v Wade’s²⁶ rigidity, Professor Strauss believes that Planned Parenthood v Casey’s²⁷ “undue burden” test is a device to accommodate future developments in public opinion.

But one could just as easily surmise that the vague language in Lawrence and Casey is designed to accommodate judicial preferences at the expense of future popular opinion. Applications of loose standards, or open-ended opinions, are impossible to falsify. This empowers the justices to decide cases in accordance with their own preferences, as they can invoke Court precedents to support almost any result. And they need not spell out the full range of their ambitions until later, which avoids the public backlash that a more transparent or rule-like decision might provoke.

We have at least one data point that corroborates this view of the Court’s substantive-due-process jurisprudence. After Casey established the undue-burden regime, thirty-one states enacted laws against the procedure known as “partial-birth abortion,” and refused to allow broad exceptions when the mother’s health was endangered. Indeed, more states had outlawed partial-birth abortion than the juvenile death penalty. Yet Stenberg v Carhart²⁸ invalidated these statutes, disproving any notion that the vague “undue-burden” test was meant to accommodate future trends in popular opinion. Instead, the vagueness empowered the Court to impose its own preferences against the political branches. As for “willingness to retreat,” the Court later upheld a federal statute banning the procedure,²⁹ but that was only after the Court’s membership had changed. And the dissenters in Gonzales v Carhart,³⁰ far from showing a “willingness to retreat” in the face of this federal statute, threatened to overrule the majority’s decision at the earliest opportunity, without any regard for how future public opinion might evolve.³¹ None of this is “modernization”; the justices are voting according to their own views without any regard to trends in popular opinion. If “modernization” were driving the Supreme Court’s substantive-due-process decisions, then one would expect the Court to have invalidated Florida’s unique-in-the-nation ban on adoptions by homosexual parents,³² rather than the partial-birth abortion bans that thirty-one states had enacted.

 
III.
Should Courts Modernize?

Professor Strauss expresses some doubts as to whether modernization is a normatively desirable role for the Court to play.³³ There are additional reasons to look askance at modernization as a theory of judicial review.

First, a modernizing court discourages compromise, moderation, and nuance in the political branches. Consider moderate conservatives who oppose same-sex marriage, yet support (or at least tolerate) other legal reforms, such as civil unions, that give some legal recognition to same-sex couples. These individuals must confront the very real possibility that a modernizing court will use their toleration for civil unions as evidence to support a constitutional right to same-sex marriage. Similar quandaries exist for moderates who support capital punishment but want it used sparingly. The rarity of juvenile executions led to their extinction by court decree; capital punishment might suffer a similar fate if elected officials allow the execution rate to fall. Former Attorney General John Ashcroft was criticized for pursuing death sentences in federal prosecutions against the recommendation of US attorneys.³⁴ Yet such behavior is rational in a world where the Supreme Court anticipates trends in public opinion and entrenches them as constitutional law, even if it produces wasted government resources and gratuitous loss of life.

Modernization forces politicians, interest groups, and informed citizens to extremes. It induces them to oppose beneficial reforms solely out of fear that such reforms might cause a modernizing Court to impose a more radical solution that they oppose.³⁵ “Slippery slope” concerns, so often contrived or exaggerated in political discourse,³⁶ become real and salient with a modernizing court. Interest groups will fight with even more ferocity when they know the Supreme Court will use a political compromise as evidence that the country is ready for more radical change—because yielding an inch today may surrender a mile tomorrow. None of this is conducive to rational policymaking.

Modernizing courts also erode the protections that the Constitution confers on political minorities. The Constitution does not establish rule by national political majorities (much less emerging majorities); it establishes a federal republic that provides extensive protections to political minorities. The federal government’s powers are confined to the enumerated provisions in Article I; this enables national political minorities to migrate to local jurisdictions with more agreeable laws. Article I’s bicameralism-and-presentment requirements effectively create supermajoritarian requirements for national political majorities that seek to impose their will. And Article V’s amendment process establishes an extraordinary supermajority hurdle before a political majority can constitutionalize its preferences and remove issues from the normal political process. All of these provisions are designed to protect political minorities, empowering them to block majoritarian initiatives, or to insist on compromise in exchange for their assent.

The modernization theory enables the Supreme Court to circumvent these protections from national-majority rule by constitutionalizing emerging trends in popular opinion, in the guise of interpreting vague constitutional language such as “cruel and unusual punishments” or “due process of law.”³⁷ This not only leads to the “bias toward centralization”³⁸ that Professor Strauss describes, it also threatens to undermine the rule of law. Almost everyone acknowledges that constitutional text, at the very least, serves as a “focal point” that enables a diverse society to agree on what qualifies as law.³⁹ Today’s national majorities accept the Constitution’s limits on national-majority rule on the understanding that those limits will protect them if they become a national minority in the future. But when the Supreme Court uses loose construction to subvert the explicit constitutional limits on national-majority rule (or emerging-majority rule), then a national majority’s decision to accept constitutional limits on its power begins to seem less like a social contract and more like an act of unilateral disarmament. There is far less risk of this happening when courts use judicial review merely to correct defects that undermine the lawmaking processes that the Constitution establishes,⁴⁰ to enforce established and accepted understandings of constitutional provisions, or to adopt a plausible (even if disputed) interpretation of the Constitution’s original meaning. Indeed, many, though not all, of the modernizing cases that Professor Strauss describes can be defended on such grounds.⁴¹ It is quite another matter, however, when the Supreme Court transparently circumvents the explicit constitutional limits on emerging-majority rule and the Constitution’s criteria for creating or changing federal law. The danger is that those who find themselves on the losing end of such modernizing court decisions will be less willing to uphold their end of the bargain by adhering to the Constitution’s limits on emerging-majority rule when they control one of the other branches of government.⁴² Indeed, one need only read the Bush Administration’s legal memoranda to see how the executive branch, just like the Supreme Court, can use loose interpretation to erode the Constitution’s limits on emerging-majority rule and its procedures for enacting or amending federal law.⁴³ One should expect the constitutional focal points that protect political minorities from national-majority rule to further unravel if the public tolerates, or if academic elites rationalize, the notion that “modernization” is a proper or legitimate role for the Supreme Court to play.

Acknowledgments:

Copyright © 2009 University of Chicago Law Review.

Jonathan F. Mitchell is Assistant Professor of Law, George Mason University School of Law.

Thanks to Richard Epstein, Ashley Keller, Adam Mortara, David Schleicher, and David Strauss for comments.

This approach, which might be called modernization, has not been fully avowed by the Supreme Court, and it does not characterize every area of constitutional law. But it is the dominant approach in many important areas. Modernization is an especially useful way of understanding the Supreme Court’s substantive due process decisions of the last half-century—decisions concerning reproductive freedom and intimate relationships—and of seeing why those decisions are, contrary to widespread belief, fundamentally different from the substantive due process decisions of the early twentieth century. Modernization is also central to the interpretation of the Eighth Amendment’s prohibition on cruel and unusual punishment and to the decisions, interpreting the Equal Protection Clause, that impose limits on gender discrimination. In many other areas—other aspects of the Equal Protection Clause, the Commerce Clause, the religion clauses, constitutional criminal procedure—modernization is an important part of the story.

Modernization has two components. The first is that the courts will strike down a statute if they believe it no longer reflects popular opinion or if the trends in popular opinion are running against it. Modernization tries to anticipate developments in the law, invalidating laws that would not be enacted today or that will soon lose popular support. Second, as an important corollary, a modernizing court must be prepared to change course—and uphold a statute that the court previously struck down—if it becomes apparent that popular sentiment has moved in a different direction from what the court anticipated.

Modernization is, I believe, an instinctive, defensive response by the courts to the persistent criticism that judicial review cannot be reconciled with the core principles of democratic government. Whether modernization is a good development, all things considered, is uncertain; I have my doubts. But whatever its faults, there is reason to believe that the modernizing approach to judicial review is, today, central to constitutional law.

 
I.
Modernization in Action

A.     Cruel and Unusual Punishment

The most overt adoption of the modernization approach has occurred in cases interpreting the Cruel and Unusual Punishment Clause of the Eighth Amendment. In a series of decisions over the last twenty years concerning the constitutionality of the death penalty, the Supreme Court has considered the critical question to be whether the challenged form of punishment was losing support in public opinion. The Court has considered, for example, whether the states that allowed the death penalty in certain circumstances were outliers; whether that form of punishment had fallen into disuse in practice; and whether the trend was to disapprove of it.¹

The other component of modernization—the willingness to back down if the political process pushes back—is implicit in these opinions, and it was dramatically illustrated in an earlier Eighth Amendment episode. In 1972, in Furman v Georgia,² the Court declared that capital punishment, as then practiced in the United States, was administered so arbitrarily and unpredictably that it was “cruel and unusual” and therefore unconstitutional.³ At the time, the Court had reason to believe that popular support for capital punishment in the United States was diminishing; that view was reflected in the Furman opinions and, even more explicitly, in the private papers of some of the justices.⁴ Capital punishment, the Court suggested, had so little support that its imposition was basically a matter of happenstance.⁵

Within four years, thirty-five states had reenacted death penalty statutes drafted specifically to address the concern about excessive discretion and arbitrariness.⁶ In 1976, the Court upheld some of these statutes, effectively reinstating capital punishment in the United States.⁷ The Court’s treatment of capital punishment—its emphasis on trends in the law, coupled with a willingness to retreat—illustrates both aspects of the modernization paradigm.

 
B.     Sex Discrimination and the Equal Protection Clause

Modernization has also—less obviously—become the governing approach to laws that discriminate on the basis of sex. The black-letter standard for judging sex classifications under the Equal Protection Clause requires that such a classification be “substantially related” to “important governmental objectives.”⁸ But sex classifications are sometimes unconstitutional even if they do seem to have a substantial relationship to an important objective. The Supreme Court has, for example, twice invalidated statutes that presumed that widows, but not widowers, were dependent on the earnings of their deceased spouses.⁹ But that presumption was statistically correct, and the classification does have a substantial relationship to an important objective—the objective of protecting dependent surviving spouses without either incurring large administrative costs or spending money on spouses who are not dependent.

The more plausible reason for the unconstitutionality of these sex-based classifications is suggested by some of the other things that the Court has said—that the statutes rest on generalizations that, while they may be statistically true, embody “archaic,” “traditional,” or “stereotyped” views about men’s and women’s roles, or “old notions” that are inconsistent with “contemporary reality.”¹⁰ These terms reveal that what’s actually going on is modernization. The problem with the sex-based classifications that the Court struck down was not that they failed to promote important objectives; the problem was that those classifications were the product of a bygone era and were no longer in keeping with current views—”contemporary reality”—about sex roles. By the same token, when the Supreme Court has upheld sex classifications, it has sometimes suggested that it was doing so because it had confidence that the classification was the product of a present-day decision.¹¹

In its most important sex discrimination case—United States v Virginia,¹² which declared unconstitutional the Virginia Military Institute’s exclusion of women students—the Court emphasized both VMI’s outlier status (there was only one other all-male public college in the country¹³) and the fact that VMI’s single-sex policy had been adopted at a time when women were routinely considered unfit for many occupations.¹⁴ At first glance, that latter point seems to assume a kind of guilt by historical association. The people who thought women were unfit to be lawyers, for example, were wrong; but it does not follow that the people who thought that women could not be accommodated in a certain kind of military training were also wrong. The modernization approach, though, makes sense of the Court’s emphasis on this point. The problem with the exclusion of women from VMI was not that it was based on mistaken factual claims about the effect that the admission of women would have on military education—the courts, in reality, are not well equipped to evaluate those claims—but rather that the decision to exclude women from VMI was made in an era when attitudes were so different from what they are today.¹⁵

The Court’s opinion in Virginia also carefully left open the possibility that the Court would allow sex segregation in education in certain circumstances—a rough parallel to what the Court did in the capital punishment cases, where it left the door open for state legislation that addressed the Court’s concerns.¹⁶ The Court’s concern in Virginia was not with the justifiability of sex-segregated education per se, but with whether a policy of sex-segregated education was modernized—whether it was the product of current ways of thinking and not a holdover from earlier times.

 
C.     Substantive Due Process

Modernization is the central unifying theme of the substantive due process cases that have been decided in the last forty years. These cases have concerned subjects—reproductive freedom and intimate relationships—that, like sex roles (and, the Furman Court mistakenly thought, capital punishment), have been the subject of rapidly changing attitudes. When the Court has struck down a law, it has been either an outlier,¹⁷ a law that was seldom enforced and unrepresentative of national trends,¹⁸ or all of those things.¹⁹ On the other side of the coin, when Washington v Glucksberg²⁰ rejected a claim that there is a substantive due process right to physician-assisted suicide, the opinion emphasized all the ways in which the statute forbidding assisted suicide did not need to be modernized: it had recently been reenacted; many states were in the process of reconsidering physician-assisted suicide laws; and nearly every state had reaffirmed its prohibition against physician-assisted suicide.²¹

Because these decisions referred to current trends in the law, they left open the possibility that the Court might revisit these issues if it had miscalculated and the political process pushed back. Lawrence is especially revealing in this respect. The opinion in Lawrence was, conspicuously, written in an open-ended fashion that allowed the Court to wait and see what the reaction would be. The opinion allows for future expansion of the right that the Court established, to strike down other forms of discrimination against gays, including prohibitions against gay marriage. But the opinion would also allow the Court to confine the holding narrowly to the relatively uncontroversial case of laws forbidding same-sex sodomy.

 
II.
Should Courts Modernize?

Modernization, like every other approach to constitutional interpretation, is not “value-free.” A judge engaged in modernization will make judgments, not just about whether a law is out of date, but also about whether it ought to be modernized. That is, the question is not just what the trend in the law is, but whether it is a good trend that should be furthered. In the capital punishment cases, the Court has been explicit in saying that it is relying not just on its perception of the direction in which the law is moving but also, in part, on its own judgment about whether the laws are sensible and fair. It is not hard to see similar judgments beneath the surface in the other modernizing cases.

For this reason, among others, it would be a mistake to think that “modernization” is always a good thing; the term is perhaps misleading in that respect. If the trends in the law are bad, judges may be unwilling to resist them; or they may even approve of the bad trends. The Civil Rights Cases²² of 1883, which struck down important post-Civil War civil rights laws, were modernizing decisions: the nation’s interest in protecting the rights of the newly freed ex-slaves was rapidly receding, and the Court ratified that trend.²³

The question remains, though, whether modernization is an acceptable institutional role for the courts to play. On this issue, the modernizing approach to judicial review can be criticized on at least two grounds. The first is that it is absurd for unelected judges to do the quintessential work of elected politicians—discerning trends in public opinion. There is something to this criticism, but less than meets the eye. It has long been understood that common law courts shape their holdings in accordance with the trends they perceive in the law. A common law decision, of course, can be overturned by statute; but that difference between common law and constitutional law diminishes when a modernizing court is willing to retreat if it is wrong about popular opinion.

The problems with modernization are more subtle. One problem is that a modernizing decision can be either self-validating or self-nullifying: self-validating if it gives insuperable advantages of inertia and legitimacy to one side of a contested issue; self-nullifying if it precipitates a backlash by making salient an issue that the politicians had successfully obscured.

The more far-reaching question, though, is whether the modernization approach is too tempting and causes the courts to be too willing to sway with the political winds. The two most famous cases of modern times—Brown v Board of Education²⁴ and Roe v Wade,²⁵ both modernizing decisions—illustrate this point. Roe was decided at a time when the trend in the nation was toward liberalizing abortion laws, and the statute invalidated in Roe—which allowed abortions only to save the life of the mother—was relatively restrictive; at the time nearly half the states in the country allowed abortions when necessary to protect the mother’s health, not just her life. Of course, the opinion in Roe swept more broadly, and it did not seem to allow for pushback from the political process. But as the controversy over abortion continued, the Court modified Roe and allowed various other kinds of restrictions on abortions, ultimately establishing a regime that is a plausible political compromise but arguably does not reflect a sufficiently coherent or principled view.

Brown, also, was a modernizing decision in important respects. Popular sentiment against racial segregation had been building for decades, and the justices regarded segregation as an anachronism. The Court’s second Brown decision²⁶—famous for saying that desegregation should be accomplished only “with all deliberate speed”—reflected the sensitivity to political reaction that is characteristic of modernization. Again, the questions are whether the Court was too sensitive, and whether desegregation might have proceeded more smoothly if the Court had not signaled a willingness to slow down when confronted.

The courts will, inevitably, respond to movements in public opinion; that is a staple of the political science literature on the courts, and the appointments process, among other things, makes that result inevitable. But it does not follow that the courts best serve the country when, as the modernization approach prescribes, they make it their mission to anticipate and facilitate—rather than correct—the operations of democracy.

Acknowledgments:

Copyright © 2009 University of Chicago Law Review.

David A. Strauss is Gerald Ratner Distinguished Service Professor of Law, University of Chicago Law School.