Transactionalism Costs

Modern civil litigation is organized around the “transaction or occurrence,” a simple and fluid concept that brings together logically related claims in one lawsuit. It was a brilliant innovation a century ago, but its time has passed. Two inherent defects always lurked within transactionalism, but modern litigation realities have exacerbated them. First, transactionalism represents a crude estimate about the most efficient structure of a lawsuit. Often that estimate turns out to be wrong. Second, the goals of transactionalism are in tension. To function properly, the transactional approach must be simultaneously flexible (when structuring a lawsuit at the beginning of litigation) and predictable (when enforcing preclusion doctrine on the back end of litigation). But frequently it is neither.

I propose abandoning the transactional approach in favor of one that actually achieves transactionalism’s goals. In essence, the parties must put forward all of their claims and then, with the court, negotiate the appropriate structure of the lawsuit. Preclusion will apply only to the claims that the parties and the court choose to include in the litigation package (and that the parties failed to plead initially). The proposal will achieve three main goals. First, it will give parties and courts true flexibility to determine the most efficient structure of their specific lawsuit. Second, it will give parties new autonomy—the power to shape preclusion doctrine. Finally, it will offer certainty and predictability that parties never have had before—knowing exactly how broadly preclusion will apply.

Offsetting Benefits

There are numerous areas of the law in which the victim of a wrongdoing has the right to obtain damages that compensate her for harm. When the wrongdoing also creates a benefit—either for the same victim or for a third party—a question arises as to whether the damages should be reduced to reflect that benefit. The law is unclear, and courts frequently act inconsistently. We argue that courts should deduct the benefit when it is not offset by another harm to a third party, and would not have existed but for the wrongdoing. We also argue that courts need to take into account the effect of deductions on victims’ and beneficiaries’ incentives to take care, and that measurement difficulties and other complex causal issues provide a basis for denying deductions in many cases.

Reforming (and Saving) the IRS by Respecting the Public’s Right to Know

The current controversy involving possible political targeting by the IRS in administering the exempt organization (“EO”) tax laws is simply the latest in a long succession of similar allegations spanning at least five decades. This Article proposes to address the problem through increased transparency of the IRS’s administrative actions involving EOs. Greater transparency responds directly to the public’s frustration in not being able to monitor the agency and gain confidence that the laws are being applied in an even-handed manner.

Proposals to increase the transparency of government commonly confront some claimed governmental interest in secrecy, such as a national security or law enforcement concern. Transparency of the government’s tax decisions, however, encounters the further problem that it violates the privacy rights of taxpayers. This latter clash arises because the government’s tax administration decisions generally turn on the information it has extracted under compulsion from taxpayers. Thus, meaningful transparency of one (the government’s tax decisions) almost necessarily requires meaningful transparency of the other (taxpayer tax return information). Fortunately, Congress has long recognized good policy reasons to make public a substantial amount of EO tax return information. Thus, slight liberalizations of the existing disclosure rules for such information may allow sufficient government transparency to satisfy the public’s right to know in the precise area of the law that has generated the most controversy. Opening up more EO tax return information and IRS EO decision making to public scrutiny would tend to deter IRS misbehavior, reduce suspicions of such misconduct, and promote fuller communication both to establish any impropriety and avert false charges against the agency.