Hello everyone,

 I just wanted to give a quick update about our upcoming Summer Candidacy Program (also know as the “SCP” or the “write-on”).  We have not finalized the program starting date with 100% certainty because we are waiting for confirmation about when class ranks will be released.  Initially we planned to start the program on July 5th.  However, if class ranks will be released in time, we would like to start the program on July 1st.  Either way, the program will end on July 19th.  Everything will be electronic, so if you are out of the area during those days you can still participate.

 Check back on this page within the next week to 10 days for more information, as well as the confirmed start date and an advance copy of the program instructions.

We will be holding an informational session sometime late next week that is open for any prospective candidates to get information about the law review and the SCP.  A post (and hopefully a school-wide email) will follow with the specifics of that meeting as well.

Thanks!

Andrew M. Jung

Executive Notes and Comments Editor

The Introduction and articles on Governance from this symposium can be found in Part I, located in the previous issue (85 Chi.-Kent L. Rev 469 (2010)).

Wendy C. Gerzog, The Times They Are Not A-Changin’: Reforming the Charitable Split Interest Rules (Again), 85 Chi.-Kent L. Rev 849 (2010).

This article will review the history of the tax treatment of charitable split interest gifts, explain the inequities that Congress both cured and generated in its 1969 reforms, and propose solutions that are consistent with the goals of the 1969 legislation. The article discusses variations in the 1969 definition of a charitable split interest, which, because of the enacted statutory language, applies in instances where there is no abuse potential. The inequity produced by that definition penalizes the donor and flouts the rationale behind the 1969 legislation. By contrast, the creation of some required statutory forms of charitable split interests in trust, enacted to prevent abuse, have themselves created new opportunities for donors to evade taxes in ways unanticipated by the 1969 Act. In the spirit of the 1969 law, the article makes several recommendations, including proposals: (1) to modify the statutory definition of charitable split interest to provide an exception from the statutory requirements where there is no statutory mandate to calculate value by means of the actuarial tables under section 7520 and no abuse potential; and (2) to eliminate (or to restrict the tax avoidance aspects of) some of the charitable split interest in trust devices created in the 1969 legislation.

Terri Lynn Helge, The Taxation of Cause-Related Marketing, 85 Chi.-Kent L. Rev 883 (2010).

With the economy in turmoil, charitable organizations are looking to nontraditional sources of financing to supplement contributions and fee-based revenues. One potentially lucrative source of revenue stems from cause-related marketing. Cause-related marketing is the public association of a for-profit company with a charitable organization to promote the company’s product or service in order to raise money for the charitable organization. Introduced almost twenty-five years ago, cause-related marketing has now become a $1 billion a year industry. Cause-related marketing has evolved beyond mere use of a charitable organization’s name to an apparent union for the purpose of promoting products that carry the charitable organization’s brand or message. While the academic literature discusses whether cause-related marketing alliances are ethically and socially desirable, it does not address whether the application of the federal income tax rules to cause-related marketing alliances adequately captures what we accept as valid charitable activities. Despite the widespread success of cause-related marketing, the IRS has issued little guidance on acceptable practices by charitable organizations engaged in cause-related marketing. An analysis of the application of the unrelated business income tax regime and the prohibition on private benefit to cause-related marketing alliances reveals that modifications to existing Internal Revenue Service guidance should be made based on social, economic and tax theory. This analysis concludes with a proposal for a framework within which such guidance should be considered.

Ray D. Madoff, What Leona Helmsley Can Teach Us About the Charitable Deduction, 85 Chi.-Kent L. Rev 957 (2010).

Leona Helmsley named a number of beneficiaries under her will (both human and canine), but among the unnamed beneficiaries are scholars interested in studying the role of philanthropy in the United States. By directing that an estimated $8 billion be used for the benefit of dogs, Mrs. Helmsley brought in to high relief policy issues regarding the appropriateness of the unlimited charitable deduction. I argue that these concerns are equally applicable, albeit less obvious, when it comes to more traditional charitable bequests. In this paper I will discuss the appropriateness of the unlimited estate tax deduction (particularly in light of the broad definition of what constitutes charitable) and the issues raised by perpetual private foundations.

Susan N. Gary, The Problems with Donor Intent: Interpretation, Enforcement, and Doing the Right Thing, 85 Chi.-Kent L. Rev 977 (2010).

In a number of recent controversies, the way the charities involved handled restricted gifts resulted in unhappy donors, negative publicity, and costly litigation. This paper examines several of these cases and then argues that donor intent is often more difficult to divine that many people have stated.

The law requires that a charity give effect to a restriction imposed by a donor. This paper examines the legal rules that govern donor-restricted gifts and considers the other reasons a charity will, in most cases, follow the donor’s intent. The paper then describes several circumstances in which donor intent may not be clear or easy to determine. A donor’s intent may be stated in general terms or the meaning of the ideas the donor had may have changed over time. If the donor is no longer alive, family members may remember the donor’s intentions in ways that conflict with the charity’s understanding of the gift. The passage of time not only makes the intent of the original donor more difficult to ascertain, but may also make changes in the original restrictions appropriate.

This paper makes suggestions for donors, charities, and the lawyers representing both in connection with restricted gifts. A donor’s intent may not be as clear as either party thinks, and trying to pin down a donor’s intent with respect to a particular gift may be more difficult – and less sensible – than an advisor may at first imagine. The paper makes specific suggestions for ways to address donor intent in a gift agreement and suggests that by working collaboratively donors and charities may better accomplish the worthy goals they all have in mind.

Joshua C. Tate, Should Charitable Trust Enforcement Rights Be Assignable?, 85 Chi.-Kent L. Rev 1045 (2010).

In recent years, scholars have given much attention to the problem of charitable trust enforcement. Departing from the common law, section 405(c) of the Uniform Trust Code provides that “[t]he settlor of a charitable trust, among others, may maintain a proceeding to enforce the trust.” Joshua Tate’s paper will address the question of whether, and to what extent, a settlor’s right to enforce a charitable trust should be assignable to third parties. Should the law permit the settlor of a charitable trust to assign her enforcement rights after the creation of the trust, or should assignments be recognized only if they are spelled out in the trust instrument? How many potential assignees may the settlor properly select? Once the right has been assigned to a third party, should that third party also retain the right of assignment, so that the right can potentially be passed from one individual to the next in perpetuity? What would be the ramifications of granting a right of assignment to the settlor’s personal representative? Any resolution of these issues must protect the interests of charitable beneficiaries, but also be fair to trustees and not overwhelm the courts with frivolous litigation.

Douglas R. Garmager, Discrimination Outside of the Office: Where to Draw the Walls of the Workplace for a “Hostile Work Environment” Claim Under Title VII, 85 Chi.-Kent L. Rev 1075 (2010).

Title VII of the Civil Rights Act of 1964 makes it “an unlawful employment practice for an employer . . . to discriminate against any individual” on the basis of sex. Accordingly, in Meritor Savings Bank, FSB v. Vinson, the Supreme Court recognized that sex discrimination in employment can give rise to a hostile work environment claim under Title VII. The scope of a hostile work environment claim has not been interpreted uniformly by the lower courts, however, as a circuit split exists today over whether conduct occurring outside the workplace is relevant to a hostile work environment claim. This note examines Title VII’s legislative history, Supreme Court opinions, cases on both sides of the circuit split, and other materials, arguing that conduct outside the workplace is relevant to a hostile work environment claim and that the current liability standards for employers sufficiently protect their interests without unduly interfering with Title VII’s remedial purpose.

Victoria Hayes, Human Trafficking for Sexual Exploitation at World Sporting Events, 85 Chi.-Kent L. Rev 1105 (2010).

Many members of the international community fear that world sporting events, such as the Olympics and the World Cup, create surges in human trafficking for sexual exploitation, causing women and girls to be exploited for commercial sex while the rest of the world celebrates athleticism and sport. These fears have sparked heated debate about the measures hosting countries should take to prevent human trafficking at these events and the role prostitution policies play in combating human trafficking. In the lead-up to the 2010 Olympics in Canada and the 2010 World Cup in South Africa, politicians in both countries proposed legalizing prostitution as a means of combating human trafficking at the events. This Note explores the connection between prostitution laws and sex trafficking, as well as the link between world sporting events and sex trafficking, with specific reference to preparations for the recently completed 2010 Olympics and the upcoming World Cup. Drawing on research about human trafficking at the 2004 Olympics in Athens, the 2006 World Cup in Germany, and the 2008 Olympics in Beijing, this Note argues that specific anti-trafficking efforts are more effective than prostitution policy reform in combating human trafficking. Finally, this Note critiques Canada’s anti-trafficking related preparations for the 2010 Olympics and provides general recommendations for strengthening South Africa’s anti-trafficking efforts before the 2010 World Cup.

Brian S. Kaunelis, Securing Global Trademark Exceptions: Why the United States Should Negotiate Mandatory Exceptions into Future International Bilateral Agreements, 85 Chi.-Kent L. Rev 1147 (2010).

In December 2007, the European Union and the CARIFORUM States concluded a bilateral economic partnership agreement that included a mandatory fair use exception to trademark owners’ rights. The EC-CARIFORUM Agreement is the first agreement that mandates the inclusion of Article 17 of the World Trade Organization’s Agreement on Trade-Related Intellectual Property Rights and requires an exception to trademark rights. The push to balance international trademark owners’ rights has begun, and this Note will detail why the United States should follow the European Union’s lead and negotiate mandatory trademark exceptions into future bilateral agreements.

Vincent M. Smolczynski, “Willful Patent Filing”: A Criminal Procedure Protecting Traditional Knowledge, 85 Chi.-Kent L. Rev 1171 (2010).

This article explores the interaction between current intellectual property regimes and traditional knowledge and concludes that national laws currently in place inadequately protect traditional knowledge holders. When property rights are granted on traditional knowledge, the effects can extend not only to the indigenous communities, but to the surrounding ecosystems and the global market. Commercialization and increased demand leads to shortages in natural resources and increased prices. Therefore, in order to ensure that patent applicants are deterred from acquiring property rights in traditional knowledge, as well that traditional knowledge holders receive proper benefits for their labor and knowledge, this article advocates for an addition to the TRIPS Agreement under Article 61. The amendment would mandate that signatory nations implement criminal procedures and penalties to be applied in cases where a patent is knowingly obtained, or an application for patent is knowingly filed, for subject matter that is not novel or non-obvious based on the prior use of traditional knowledge. To ensure that traditional knowledge may be made available to the public, the amendment would further recognize a quais-right of the traditional knowledge holders which permits the community to grant to consent to access and use in return for shared benefits arrangements.

Carolyn E. Sorock, Closing the Gap Legislatively: Consequences of the Lilly Ledbetter Fair Pay Act, 85 Chi.-Kent L. Rev 1199 (2010).

With the Lilly Ledbetter Fair Pay Act of 2009, Congress both reversed the result of the widely criticized Ledbetter Supreme Court case and expanded the statute of limitations for all employment discrimination claims relating to compensation. Under the Act, a compensation-based employment discrimination claim’s statute of limitations period of three hundred days begins to run whenever an employee is “affected” by a discriminatory practice. The language of the Act is far-reaching, but just five months after the Act was signed into law, the Supreme Court stepped in again to narrow the Act’s application to pension benefits in AT&T Corp. v. Hulteen. This note examines the Lilly Ledbetter Fair Pay Act and analyzes its potential legal implications, in light of its judicial precedent in the Ledbetter and Morgan cases and subsequent narrowing in the Supreme Court’s Hulteen case, as well as its possible economic implications for employers and employees.

Below is a table of contents for Volume 85, Number 2 of the Chicago-Kent Law Review. Eventually, we will be placing this table of contents, along with copies of each paper, in the archives.

Anne-Marie Rhodes, The Law of Philanthropy in the Twenty-First Century: An Introduction to the Symposium, 85 Chi.-Kent L. Rev. 469 (2010)

Lloyd Hitoshi Mayer & Brendan M. Wilson, Regulating Charities in the Twenty-First Century: An Institutional Choice Analysis, 85 Chi.-Kent L. Rev. 479 (2010)

For more than fifty years scholars, practitioners, and government officials have debated whether the federal government, the state governments, or the charitable sector itself can best ensure that charity leaders fulfill their fiduciary duties. The dramatic growth of this sector, recent highly publicized governance scandals, and a push in Congress and the IRS for more federal involvement in this area have now brought this issue to a head. This article lays a foundation for resolving the dispute by developing an institutional choice framework for considering and comparing the various available options. Applying that framework, the article concludes that the best regulators of charity governance would most likely be state-level government agencies that work with but have a limited degree of independence from the state attorneys general. The article also determines that the best way to ensure adoption of this institutional choice—and limit potential weaknesses—is for the federal government to provide dedicated funding for such agencies, which could be obtained through the already existing private foundation investment income tax.

Melanie B. Leslie, Helping Nonprofits Police Themselves: What Trust Law Can Teach Us About Conflicts of Interest, 85 Chi.-Kent L. Rev. 551 (2010)

Fiduciary duty law seeks to minimize agency costs that occur when the interests of the agent and principal diverge. That law is context specific: the substance depends upon the objectives of the fiduciary relationship and the degree to which other forces, such as markets and social norms, help align the incentives of principal and fiduciary.

Trust law has no business judgment rule, and prohibits even “fair” conflict of interest transactions unless they are approved by fully informed beneficiaries. Strict rules bolster norms against self-dealing and compensate for trust beneficiaries’ poor monitoring abilities and inability to exit or diversify. Corporate fiduciary duty law is more relaxed, and does not require the board to obtain advance approval prior to engaging in “fair” transactions with board members. The standard is more generous because diversified shareholders want to encourage risk, and because market forces pressure corporate directors to avoid conflicts that are not in the corporation’s best interests.

Neither monitors nor markets exert meaningful pressure on nonprofit fiduciaries. When nonprofit corporations function effectively it is because the most vocal directors have internalized fiduciary duties as social norms. Fiduciary duty law in the nonprofit context should therefore seek to support and reinforce fiduciary duties as social norms.

Trust law teaches that clear rules are superior tools for generating and supporting social norms. That lesson has been lost on policy makers, who have transplanted fuzzy corporate law fiduciary duty standards to the nonprofit context. The result has been the erosion of the fiduciary duty of loyalty.

Evelyn Brody & John Tyler, Respecting Foundation and Charity Autonomy: How Public is Private Philanthropy?, 85 Chi.-Kent L. Rev. 571 (2010)

Recent years have seen a disturbing increase in legal proposals by the public and government officials to interfere with the governance, missions, strategies, and decision-making of foundations and other charities. Underlying much of these debates is the premise—stated or merely presumed—that foundation and charity assets are “public money” and that such entities therefore are subject to various public mandates or standards about their structure, operations, and policies. The authors’ experiences and research reveal three “myths” that, singly or collectively, underlie claims that charitable assets are public money. The first myth conceives of charities as shadow governments due to the requirement that they have public purposes and are subject to attorney general parens patriae oversight. The second myth asserts that, because philanthropies exist under state charters, they are government agencies, “state actors,” or quasi-public bodies subject to constitutional constraints or accountable to the public in the same way as is government. The third myth asserts that revenue forgone on deductible charitable contributions and the tax exemption are a contribution from the state that entitles the state to a say in nonprofit governance structure, operations, and decision-making. In debunking these myths, this paper demonstrates the lack of legal support for the “public money” view of charitable assets.

Dana Brakman Reiser, Governing and Financing Blended Enterprise, 85 Chi.-Kent L. Rev. 619 (2010)

The image of nonprofit and for-profit as dual and exclusive categories is misleadingly simple. This blurring of the boundary between for-profit and nonprofit has gone on for years and appears only to be gaining steam. Yet, traditionally, the law has put to organizations a choice of either the nonprofit or for-profit form of organization. In the first decade of this century, organizational law is beginning to catch up with the boundary-blurring trend. In the United States and abroad, legislatures are creating new forms for blended enterprise, including several U.S. states’ low-profit limited liability company (the “L3C”) and the community interest company (the “CIC “) in England and Wales. Along with these more formal efforts, at least one self-regulatory scheme provides a framework to fashion a blended form (the “B Corporation”) under traditional state for-profit corporation law. This article will describe and compare these forms and evaluate whether they can enhance the governance and finance of blended enterprise.

Mark Sidel, Recent Developments in Community Foundation Law: The Quest for Endowment Building, 85 Chi.-Kent L. Rev. 657 (2010)

Using legal and judicial means to build community foundation assets are the focus of some of the more interesting recent developments in community foundation law. This article discusses a recent state supreme court case that pitted a community foundation against a trustee bank for control over the management and investment of a trust for the benefit of the community foundation; state incentive programs for community foundations, including tax credits and the use of gambling revenues to build community foundation assets; the growth of community foundation self-regulation; and other new developments that converge on a key issue—building endowment—that faces the vast majority of America’s under-funded, under-endowed community foundations in a time of growing community and social needs.

Articles on Tax and Donor Intent from this symposium can be found in Part II, located in the next issue, Volume 85, Number 3.

Richard B. Freeman, Reforming the US Economic Model After the Failure of Unfettered Financial Capitalism, 85 Chi.-Kent L. Rev. 685 (2010)

This Article is based on the 2009 Kenneth M. Piper Lecture at the Chicago-Kent College of Law. The 2008–2009 financial meltdown and ensuing economic developments have shown three things about modern capitalism: First, that unfettered financial markets remain the Achilles heel of capitalism with the capability of destroying economic stability and bringing misery to all. Second, that high-powered incentives paid to “talent” in finance are a fundamental cause of the excessive risk-taking, chicanery, and financial fraud that contributes to instability. Without a new compensation system that rewards banking and finance for contributing to sustainable economic progress rather than for economic rent-seeking and a renewed regulatory system that punishes chicanery and financial crime and near-crime, there is unlikely to be any change in the behavior of the financial world. And finally, that in the wake of the implosion of laissez faire finance, labor and allied groups have to participate in rewriting the rules and regulations governing banking and finance so that finance serves the real economy rather than the reverse. Accordingly, if Wall Street insiders continue to make the key policy decisions alone, banking and finance will remain a loose cannon on the good ship Capitalism, sure to crash the ship yet again.

Jessica A. Bejerea, It is Not Too Late for the Health Savings Account, 85 Chi.-Kent L. Rev. 721 (2010)

The Health Savings Account (HSA), a tax-advantaged savings vehicle for paying medical expenses, paired with the high deductible health plan, has become a popular means of controlling health care costs and insurance premiums. Recently Congress attempted to increase the attractiveness of the HSA and the high deductible health plan when it amended HSA law in 2006. This note examines these recent changes and argues that certain provisions of the amendments, along with IRS guidance, have instead complicated the rules for HSAs and have neglected to resolve at least one important issue.

Michael Borella, Food Allergies in Public Schools: Toward a Model Code, 85 Chi.-Kent L. Rev. 761 (2010)

Sufferers of food allergies can experience anaphylactic shock, and even death, within minutes of exposure to allergens such as peanuts, soy, wheat, eggs, milk, and fish. This causes unique problems when the food allergy sufferers are children in public schools. The widespread availability of these allergens in school lunchrooms and classrooms places children with food allergies in danger while they are entrusted to the government’s care. Since these children, especially young children, cannot be relied upon to be able to avoid allergens on their own, reasonable and logical laws should be in place to ensure that children are safe while in school. However, such laws do not exist. Accordingly, this note provides an overview of the insufficiency of today’s disparate federal and state laws, and proposes a model code that is designed to protect children with food allergies.

Jocelyn Floyd, The Power of the Parental Trump Card: How and Why Frazier v. Winn Got It Right, 85 Chi.-Kent L. Rev. 791 (2010)

When two fundamental rights are in conflict, such that the protection of one requires the infringement of the other, courts must weigh those rights against each other to determine which is ultimately greater. In Frazier v. Winn, the Eleventh Circuit dealt with precisely such an issue: specifically, the rights of parents pitted against those of their children. This note explores the history of both parental rights and student’s rights in school to show why the court appropriately affirmed that children’s right to free speech is only as expansive as their parents allow, justified by the parents’ fundamental right to rear their children as they see fit.

Tess Slattery, Freedom From Compulsion, 85 Chi.-Kent L. Rev. 819 (2010)

A recent Eleventh Circuit case, Frazier ex rel. Frazier v. Winn, upheld as facially constitutional a Florida statute that requires a student to obtain parental permission before abstaining from participation in the Pledge of Allegiance. This note argues that the court reached the wrong conclusion because it failed to properly weigh the students’ right to free speech against the parents’ right to control the upbringing of their children. This note argues that Justice Breyer’s framework for balancing conflicting rights should be adopted for use in this context. By applying Justice Breyer’s balancing test, the Florida statute should be found to be unconstitutional because the requirement of parental permission to refrain from participation in the Pledge of Allegiance is a substantial interference with a student’s First Amendment rights while there is minimal interference with parental control by allowing students to choose for themselves whether or not to participate in the Pledge of Allegiance.

The Chicago-Kent Law Review is proud to announce that one of our student notes published earlier this year, Don’t Bet On It:  Casino’s Contractual Duty to Stop Compulsive Gamblers from Gambling, 85 Chicago-Kent L. Rev. 369 (2010) by Chicago-Kent alumnus Irina Slavina, has been judged one of the best law review articles published within the last year in the fields of entertainment, publishing and the arts.   As such, it has been selected for inclusion in the 2010 edition of the Entertainment, Publishing and the Arts Handbook, published annually by Thomson Reuters (West).  This Handbook provides in-depth treatment and comprehensive coverage of the latest issues, regulations, legislation, and case law affecting the entertainment and publishing industries and the arts.

Congratulations to Irina and all of our staff!

Hello CK Law Review Community,

My name is Brian Langs, and I will be replacing David Freedman as the Editor-in-Chief of the Chicago-Kent Law Review for the upcoming 2010-2011 academic year.  First off, I want to thank this year’s current executive board, the entire law review staff, and especially David for doing a phenomenal job with Volume 85.  Also, special thanks to Mike Borella for taking the time to create our vastly improved CK Law Review website this past year. 

From what I hear, we will be publishing 85:2 and 85:3 very soon, congratulations on a job well done!  I wish the best of luck to all of our departing 3L and 4L members, wherever post-law school life may take you.   

As for the upcoming academic year, we are already getting the ball rolling.  I am excited to announce that Volume 86:1 – Symposium on Energy Law is in the works.  Professor Fred Bosselman, of our own Chicago-Kent College of Law, will be the Symposium Editor.  We are extremely lucky to have someone so established and recognized in the field on board.     

For all the CK Law Review alumni out there, we have a goal to put together a CK Law Review Alumni Directory this year.  Hopefully, it is something that will be able to be accessed on our brand new website.  If any alumni are interested in joining the directory or participating in CK Law Review networking/social events, please send an email to: cklrexecs@gmail.com.

For those CK law students interested in participating in the Summer Candidacy Program this summer, stay tuned.  We should be posting more information on that in the next month or so.

Finally, I would invite anyone interested in supporting the CK Law Review to join or “like” our CK Law Review Facebook page and follow the CK Law Review on Twitter and on our RSS feed. 

Again, a huge thanks to David and the entire 2009-2010 CK Law Review Staff.  What a success!  I hope everyone is as excited as I am to pick up where they left off.

Best,

Brian Langs

In addition to the four student papers accepted earlier, the papers below were also accepted for publication in volume 86 of the Chicago-Kent Law Review. Congratulations to these authors and thanks to all students who submitted papers for review.