Foundations of Law: Lecture II

Next week there is a 2-page ungraded argument exercise.

The exam will be 2-3 hours. Date is 2/24 (afternoon). The exam will be some short answer/essay
questions, and some multiple choice. Fail, low pass, and pass. If you do the reading and come to
class, you will be fine. This should be a low stress event.
Next class, there will be a magical exam-anxiety cure.
Felix Cohen Reading: Well go through his basic arguments, discuss his criticisms and give
questions, and then discuss background and examples from class. Next week, you will receive a
10-page guide to legal argumentation.
The Cohen article was written in 1935. Cohen was fascinating. The legal realists had been
around earlier (since the early 1900s). Holmes was both a classicist and a realist as his approach
changed over time. But this article is particularly valuable because Cohen is trying to sum up a
change that needs to happen in both the law and law schools.
What are Cohens criticisms?
What is transcendental nonsense: the abstract, circular, legal reasoning a court can employ to
reach a chosen decision in a case. It doesnt rely on facts or empirical evidence. Cohen wants
decisions more based on the actual world, outside of legal context. For instance, when a court
was determining whether a corporation was subject to a states jurisdiction, the court would ask
whether the corporation had entered the state. That makes no sense in laymans terms;
corporations are entirely legal entities. It is also not falsifiable. A court may mention some facts
(how many offices are in the state, how much merchandise, etc.), but the courts ultimate
decision is whether the corporation has entered the state.
Cohens vision is that legal reasoning takes legal constructs and creates other legal constructs and
doctrines. It is divorced from both values and facts on the ground. Another example of a circular
argument: We protect trademarks because they are valuable. They are valuable because the law
protects them. Otherwise they would be worthless. The value is the result of the laws protection,
not the cause of it.
Cohen believes we need to ask: should we say the corporation is subject to suit here? And should
we protect trademarks? Cohen says the circular, legal reasoning ignores these value judgments. A
better alternative would be to say: we protect this trademark because it is efficient to consumers
who want a particular product, and it inspires and encourages innovation.
His argument is also that the purpose or reason for the rule will yield the contours of the rule. It
will tell you the appropriate limits. For instance, you can use the name New Kids on the Block
when you write a newspaper article about them, even though it is trademarked, because your use
of the name is not infringing upon the rationales for why we value and need trademark law.

Why do courts use transcendental nonsense instead of value judgments, like perhaps a legislature
might? Cohens arguments seem to be the kinds of arguments that get made in other branches, so
one criticism is that those judgments may not be acceptable for courts. Another critique is that if
you base judicial decisions on values, you may open yourself up to a debate over those values.
And thats just a food fight, with little legitimacy.
Cohen claims that when the court says, the corporation has entered the state, it increases the
courts legitimacy and makes the decision seem less contentious.
But is Cohen correct? Are these arguments actually circular? For instance, when does something
violate due process? When deciding these cases, courts consider past precedent, which seems
like they are just saying the same thing again and again, instead of weighing either values or
empirical social facts.
These critiques seem pretty straightforward, but suppose that your legal writing memo had been:
Tell me whether the corporation has entered the state based on current precedents. The
approach Cohen describes it makes the analysis seem like a shell game: completely wide open.
But does the transcendental approach lend some predictability and consistency to the process?
In your memos, you could likely say with a fairly high degree of accuracy whether a corporation
had entered a state.
For Cohens argument to really work, the common law/classicist vision would have to fail to
provide determinacy, consistency, and predictability. He says there really isnt a binding force of
precedent. But if people really do feel that the law is binding and operate according to it, then
you only really sacrifice transparency with the classicist vision. (But you are still sacrificing
transparency.)
A lot of people say the realists wanted to get rid of formal law and open it up to policy
arguments. The realists say that policy argument were already being made, but were obscured by
transcendental nonsense. There are two possibilities for realists: judges cant see through the veil
or are obscuring their value judgments on purpose.
Cohen goes on to argue for a functionalist approach: More facts and value judgments. More
clarity. But he doesnt address the fact that people really disagree on values. They are seriously
disputed. So that undermines him. Also: how do you create a legal realists hornbook? It would
need a lot of facts and values. It would yield something like: This is what is reasonable amount
of time for delivery in New Jersey, because they value... This may not be particularly useful and
certainly isnt what we use today.
The realists did write the UCC. They wanted it more rooted in custom/trade, and made it more
fact-intensive, and more legitimate to industry.
The realists thought that legal language obscured the value judgments that actually motivate the
decisions. They didnt think that the active role for judges in their vision was a problem in the
context of a common law system (constantly revising itself). They thought they were describing
a system that had existed and did exist. They just wanted it to be clear.

Some contributions from the realists: often it is not useful to go back to first principles on every
occasion. It is good to have certain rules of thumb.
What if Cohen came to law school today?
Are his criticisms still valid? There are certainly some examples of decisions and judges that do
seem Cohen-esque. But it is more complicated than that. Justice Scalia, for instance, can be both
originalist/more classicist, and yet also use social facts and values as certain times.
Things Cohen would be angry about: possibly consideration in the contract arena. That element
of creating a contract seems formalistic. But professors do continually ask students why a court
decided what it did (which is a source of constant frustration to 1Ls). These professors are
implicitly suggesting that if you want to know rule, you should look at rationale, because the
boundaries of the rule will be set by social purposes. (Thus, if you dont know policies you will
fail to understand other cases.)
Maybe some of this depends on both the classes and professors. What about constitutional law
and civil procedure?
What about judges whose opinions reappear in casebooks? For instance, Posner draws on law
and economics and pulls social values from the law frequently. He often looks to both empirical
facts and underlying values in order to determine the definition of certain words or phrases. So
Cohen might like him.
Tension between formalist and purposive analysis:
Formalism is not just classicism. It has existed in every time period. It decides cases by looking
at words of rules taken out of purposive inquiry. If the rule says no vehicles in the park, then the
formalists looks up the definition of vehicle, determine whether that covers the issue, and then
makes a decision. The purposive approach looks at why you dont want vehicles in the park? If
you put a Humvee in the park as a monument, is that okay? If you lose your ring on a beach, did
you litter, if statute says personal property left on beach is littering?
Formalist is not a contextual inquiry. Purposive is more contextual.
The three judges hypothetical:
In the US in most states, services are subject to a negligence standard for tort liability: youre
only liable if you breach your duty of care. Products are typically strict liability: if the snacks you
eat are laced with cyanide, even if it is undetectable and impossible for the manufacturer to
know, you can still win.
Hypothetical: A new disease develops for which there are no tests (HIV). The disease is
transferable by blood. Many people receive blood transfusions and get it and die. Is a blood
transfusion a service or a good/product? That determination entirely changes the outcome.

Judge one: determines that goods are generally separate, discreet items that come in bags and are
sold to you (like blood). Or he/she determines that services are like electricity, water, gas, and
they all flow along tubes (like tubes). This judge could come out either way, but their reasoning
is to think about the definition or ordinary usage of good or service and try to determine how
blood fits within that.
Judge two: determines that the issue is very complicated, and therefore we need a multi-factor
analysis (usually pulled from thin-air and typically balanced). What preponderates? Thats how
this judge determines whether good or service.
Judge three: considers that we have negligence because strict liability can have a chilling effect
on certain activities, and certainly has the potential to stop the delivery of valuable services,
which are not fungible and involve a lot of judgment calls. Conversely, this judge considers that
we have strict liability because we think the provider/manufacturer of the good is best cost
avoider, loss spreader, or compensator. What are the economics of the blood industry, then?
(How is the blood sold or transported to the hospital, used at the hospital, etc?) If it seems like
strict liability would produce the desired result, then we should call it a good. If negligence
would be better because of the potential chilling effect, then we should call it a service. This
judge uses overt policy arguments.
How many of these types of judges have you encountered? Is judge three inappropriate? Just
basing what he or she wants on policy decisions. Cohen would say everyone is making that
choice, but judge three is actually dealing in reality. Are all the judges making law? Cohen would
probably say yes.
Are there areas of law where judge three would be more at home? Which judge is better for the
defense of personal liberties? Formalism can both protect (everyone over 18 can vote, no matter
what) and deny (separate but equal) personal liberties.
At different times people have different intuitions. Compare the liberal response to Roe v. Wade
(it is binding precedent), with Heller (it is a bad decision that should be overruled as soon as
possible).
Recently, formalism has experience a resurgence based on an efficiency rationale. The theory is
that hard rules are good because people can efficiently contract around them.
And there are problems with economic analyses: you choose what variables to include, and then
determine what value you want to assign to them. Also, if the analysis is too unclear, then that
undermines the efficiency of the approach.
But realists may disagree that formalism is more predictable and consistent. For instance, no one
may know the rules, or they may change frequently or be applied inconsistently. If you really
want predictability, the realists say, go with standards that people actually follow. Often, business
people deal through standards and completely ignore the law, for instance when they are
constantly renegotiating contracts. The realists believe that the law should follow that model and
not lay down a rigid set of rules.

One thing is certain, however: judge three is pretty much the model in antitrust law. Judges in
that setting simply apply what maximizes consumer efficiency, and the rules are crystallizations
of economic principles. At the court of appeals level in intellectual property, judge three has a lot
of control there as well.
Another example: copyright laws dont prohibit reading a book in a bookstore, or control what
you do with book after you buy it. But what happens when that is applied to computer code?
Every time you load your screen it copies itself. Is that a copy? Your right to load and copy the
program is typically part of a license that you buy. If you make actual copies, you violate
copyright and go to jail (in theory). Some judges say well call it a copy if it further social values
that we use copyright for. Others say a copy is a copy.
Cohen would probably agree with some judges, but he would also likely see a lot of stuff that he
thinks is transcendental nonsense.
Brief review on classicists:
Formalism goes beyond classicism. Classicists were keen on formal definitions, but they also did
other stuff.
1) They understood legal relationships as absolute spheres of power. (Federal government,
citizens, state, etc.) And that each entitys power was absolute within its sphere, with clear lines
between them. (Judge two would not function in this world.) For example, if you are causing
even a minor nuisance to a neighbor, thats still a nuisance, so youre liable. Consider also
Lochner: it is either in the power of the state or federal government, but not both. These were
absolutist decisions, and the job of the legal classicists was to draw the line.
2) They also believed that all relationships were analogous to one another. (This doesnt survive
as much today.) Fed to state, state to citizen, and citizen to citizen: each could be used to
analogize between the others. For instance, you can use the states ability to regulate a fishery in
order to justify what a private person might do with his or her river.
This does shares some core features with libertarianism. Libertarianism imagines a world in
which the state does not have to make difficult value judgments regarding personal liberties. It is
a clear version: dont cause harm to others. The problem is, as the realists pointed out, you still
need a working definition of harm. And that definition will depend on a certain, subjective
judgments. For example, if Im upstream from you, can I take all the water and keep you from
watering your crops? Every time I use water I interfere with your rights. Every time you prevent
me from using water you interfere with my rights. So the line is really blurry. Other examples:
what if I build a hotel that blocks sunlight to your hotel, and will cause financial ruin to your
hotel, unless you have a right to sunlight? Also: what if a candy maker operates a candy-machine
that creates vibrations on the first floor and theres a meticulous eye surgeon on the second floor?
The legal realist says you have to decide between their interests. There is no clean answer.

3) Legal classicists also believed you could logically derive (without policy) all of contract, tort,
and property law.
In response, the realists say the law is unconsciously choosing the institutions it protects. For
instance, the realist says you are constructing the market. Every set of rules creates different
markets. If labor unions are legal, thats a different market than if they are illegal. If yellow dog
contracts are legal, thats a different market than if they are illegal. Those markets are the result
of regulation. (With the New Deal, the realists believed that the law could shape the institutions
of the economy consciously.)
Is realism liberal or conservative? Thats a difficult question. It is more a way of looking at
things, rather than a certain ideological position.