Some Economic Rights-Related Good News from the Courtrooms

For a change, how about some positive news? Here are several recent court decisions that have gone in the correct way on problems of property, contract, and responsibility.

*New York City approved a statute unilaterally abolishing owners' power to pursue personal guaranty terms to recover unpaid commercial rents last year, as part of the wider seizure of landlord rights that occurred under the cover of the epidemic. Now two of three judges on a Second Circuit panel have ruled, in Melendez v. City of New York, that the measure is open to constitutional challenge under the Constitution’s Contracts Clause: “The law effectively repudiates those guarantor debts rendering them permanently and completely unenforceable. This is certainly a substantial impairment of contract.” That’s potentially big news because the Contracts Clause has gone widely unenforced for decades in the federal courts. The decision was written by Judge Reena Raggi and joined by Judge Jose Cabranes, while Judge Susan Carney penned a partial dissent.

* The Oklahoma Supreme Court eventually overturned a rogue district judge's $465 million judgement against Johnson & Johnson, which was predicated on the notion that the manufacturer had unlawfully created a public nuisance by promoting opioid medications, after more than two years. The state’s lawsuit was a demagogic move to distort the bounds of public nuisance law beyond all historical recognition, as I warned at the time. See also this Cato podcast and Jeffrey Singer post, and this paper by Mike Davis for Oklahoma’s 1889 Institute.

* Judges are mostly resisting attempts to stretch the language of business‐​interruption insurance policies to cover pandemic‐​related losses, writes Randy Maniloff at the Wall Street Journal. That’s the correct legal outcome, as I wrote last year: this category of risk has been widely grasped for a long time, and insurers took care to exclude it.

* Delaware’s grabby practices on declaring financial assets to be unclaimed property and therefore forfeit to the state (escheat) have met with another judicial rebuke, this time from a Third Circuit panel in Siemens v. Geisenberger. I’ve previously noted that Justices Samuel Alito and Clarence Thomas appear ready to apply closer due process scrutiny to state practices in this area.

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