Volume 116, Issue 2, Fall 2011 Penn State Law Review Online Companion Penn State Law Review

Volume 116, Issue 2, Fall 2011

Volume 116, Issue 2

Articles

Governmental Data Mining and its Alternatives

By Tal Z. Zarsky. 116 Penn St. L. Rev. 285.

Governments face new and serious risks when striving to protect their citizens. Of the various information technology tools discussed in the political and legal sphere, data mining applications for the analysis of personal information have probably generated the greatest interest. Data mining has captured the imagination as a tool which can potentially close the intelligence gap constantly deepening between governments and their targets. Data mining initiatives are popping up everywhere. The reaction to the data mining of personal information by governmental entities came to life in a flurry of reports, discussions, and academic papers. The general notion in these sources is that of fear and even awe. As this discourse unfolds, something is still missing. An important methodological step must be part of every one of these inquires mentioned abovethe adequate consideration of alternatives. This article is devoted to bringing this step to the attention of academics and policymakers.

The article begins by explaining the term “data mining,” its unique traits, and the roles of humans and machines. It then maps out, with a very broad brush, the various concerns raised by these practices. Thereafter, it introduces four central alternative strategies to achieve the governmental objectives of security and law enforcement without engaging in extensive data mining and an additional strategy which applies some data mining while striving to minimize several concerns. The article sharpens the distinctions between the central alternatives to promote a full understanding of their advantages and shortcomings. Finally, the article briefly demonstrates how an analysis that takes alternative measures into account can be carried out in two contexts. First, it addresses a legal perspective, while considering the detriments of data mining and other alternatives as overreaching “searches.” Second, it tests the political process set in motion when contemplating these measures. This final analysis leads to an interesting conclusiondata mining (as opposed to other options) might indeed be disfavored by the public, but mandates the least scrutiny by courts. In addition, the majority’s aversion from the use of data mining might result from the fact that data mining refrains from shifting risk and costs to weaker groups. This is yet one of the ways the methodology of examining alternatives can illuminate our understanding of data mining and its effects.

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Convictions Based on Lies: Defining Due Process Protection

By Anne Bowen Poulin. 116 Penn St. L. Rev. 331

The corrupting impact of false testimony on the justice system is profound and corrosive. The Supreme Court has long-since held that the due process clause protects against convictions based on testimony that the prosecutor knew or should have known was false.

Despite this precedent, courts have undermined that constitutional protection by imposing demanding requirements of prosecution knowledge, narrowing the definition of false testimony, and holding defendants to an inappropriate standard of materiality. As a result, the law does not provide adequate protection from conviction based on lies.

Courts must reinvigorate this area of the law. To provide appropriate protection, the requirements a defendant must meet to receive relief based on the use of false testimony must be clarified in the following ways. First, the prosecution should be deemed to have knowledge of the falsity not only if an individual prosecutor had actual knowledge, but also if the prosecution did not meet its duty to discover that the testimony was false or if the prosecution had knowledge of contrary information possessed by other government actors and therefore imputed to the prosecution. Second, the false testimony need not rise to the level of perjury. Third, the courts should apply the more lenient standard of materiality defined for false testimony cases by asking how the revelation that the witness had testified falsely would have influenced the jury in the initial trial rather than asking what would have occurred had the witness simply given truthful testimony.

In addition, the courts should revisit the law that applies when a defendant discovers that the prosecution unknowingly presented false testimony. If the falsity was material, the courts should conclude that the conviction violates due process despite the lack of prosecution knowledge. Even if the courts do not extend due process protection to the unknowing use of false testimony, they should grant the defendant a new trial more readily than with other types of newly discovered evidence. The corrupting impact of false testimony calls for at least this level of protection.

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Government Prediction Markets: Why, Who, and How

By Tom W. Bell. 116 Penn St. L. Rev. 403

This paper describes how prediction markets can make governments smarter, cheaper, and more responsive to changing conditions. A prediction market resembles a stock exchange where traders buy and sell not shares of companies, but claims about various future events. Academic and commercial use of prediction markets indicates that they offer a useful tool for encouraging, collecting, and quantifying widely scattered expertise. Government administrators have begun experimenting with prediction markets, too. Many questions remain, however, about the proper way to implement government prediction markets. This paper opens with a brief survey of the costs and benefits of government prediction markets. It then turns to ironing out the statutory and regulatory wrinkles occasioned by government prediction markets in general, and by federal executive prediction markets in particular. The paper begins by asking who should run government prediction markets and who should trade on them. The short answers: Government agencies should outsource the provision of prediction markets and let employees and outside contractors trade on them. The paper then turns to mitigating the legal risks raised by government prediction markets—especially those offering cash or other valuable consideration—and advocates such prophylactics as hosting spot transactions in negotiable conditional notes, offering traders seed funding, and contractually mandating a minimum level of trading. The paper concludes by describing a three-step plan for putting prediction markets to work for the United States government and, through it, the People.

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Improving the Culture of Ethical Behavior in the Financial Sector: Time to Expressly Provide for Private Enforcement Against Aiders and Abettors of Securities Fraud

By Mark Klock. 116 Penn St. L. Rev. 437

Financial markets do not function well when fraud is pervasive. It has been well documented that financial fraud has increased following changes in securities law that occurred in the 1990’s. Also around September of 2009, the investigations into the SEC examinations of Bernard Madoff Investment Securities, LLC were completed and released to the public. The simple facts reveal an alarming level of incompetence and lack of financial literacy on the part of the guardians of the integrity of our financial markets. I suggest two important tools for addressing these problems. One is to supplement enforcement of anti-fraud rules with more private attorney generals by expressly creating a private right of action for aiding and abetting violations of securities laws. This will foster a stronger culture of integrity and ethical conduct in the auditing profession. An additional tool is to increase financial literacy in our law schools which supply the regulators of our markets.

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Comments

Roll Sushi, Roll: Defining “Sushi Grade” for the Consumer and the Sushi Bar

By Brandt T. Bowman. 116 Penn St. L. Rev. 495

Behind the glass partition of the sushi counter, a young sushi chef meticulously slices a fresh piece of Bluefin tuna, carefully molds it around a ball of vinegared rice, and artfully arranges it for service. The young chef exercises ancient precision, but such a display is neither for the swanky hipster at the table across the room nor for the self-indulgent businessman seated at the bar. Instead, the young chef exhibits such craftsmanship with honor because his ancestors have taught him to; he is the modern-day samurai.

The honor ends at the sushi counter however; globalization and capitalism have diluted the ancient art in exchange for mass production and profit margin. This departure from tradition does more than diminish sushi’s cultural significance: it creates new risks when ancient techniques are honored no longer and requires regulation where capitalists abused sushi demand.

A 28-year-old male from New York recently told his story about the violent illness he suffered a day after consuming an upscale sushi meal. The investment banker believed the cause of his illness was the raw fish, but, nevertheless, he declared his intention to return to the restaurant because “[i]t was so good.” Health risks have been shown on a larger scale as well. In 2008, the New York Times published an article wherein the writers tested sushi from 20 Manhattan stores. The tests’ findings were astounding: “A regular diet of six pieces of sushi a week would exceed the levels [of mercury] considered acceptable by the Environmental Protection Agency.” The tests included an even more alarming aspect: the owners of the sushi stores did not know that the fish posed a risk to consumers. One owner said: “I’m startled by this. Anything that might endanger any customer of ours, we’d be inclined to take off the menu immediately and get to the bottom of it.”

* * *

This Comment addresses the need for a uniform, governmentally enforced definition of “sushi grade” to reduce consumers’ misunderstanding of the faux grading and curb health risks associated with the consumption of raw fish. Ultimately, this Comment will propose a working definition of “sushi grade” through a synthesis of federal regulations and optional code provisions.

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Guardianships on Life-Support: How In re D.L.H. Impacts Surrogate Decision Making in Pennsylvania

By Jonathan L. DeWald. 116 Penn St. L. Rev. 525

At 2:47 A.M., Nancy’s breathing stopped. Joe reached his hand to Nancy’s face and pulled her eyelids closed. Uncle George looked back into the room and saw the end had come. He walked down to the nursing station and said, “I think it’s over.”
Although the final moments of Nancy Cruzan’s life were calm, the prior seven years represented a difficult struggle for her husband, parents, and close friends.

An unfortunate car accident left Nancy Cruzan in a persistent vegetative state. Nancy’s parents requested that her feeding tube be removed after it became apparent that her condition would not improve; however, the hospital refused to comply with their request without first receiving court authorization. Ultimately, Nancy Cruzan’s feeding tube was removed but not before the United States Supreme Court issued a landmark decision regarding the authority of surrogate decision makers in matters involving life-sustaining treatment.

Now, assume that the parents of the incapacitated individual, acting as co-guardians, want to refuse medical treatment; yet, instead of being able to reference the statements made by the ward prior to his or her incompetency to support their decision, no such statements exist because the ward has been incompetent since birth. Such facts recently confronted the Pennsylvania Supreme Court in In re D.L.H.

David L. Hockenberry (David) suffered from profound mental retardation since birth and had limited capacities of expression. He resided in the Ebensburg Center, one of six centers operated by Pennsylvania’s Office of Mental Retardation, for over forty-five years. In 2002, the Orphans’ Court appointed his parents, Myrl and Vada Hockenberry, as joint plenary guardians of the person and plenary guardians of the estate for David.

On December 21, 2007, David swallowed a hairpin and grew ill with aspiration pneumonia. The Ebensburg Center transferred David to Memorial Hospital in Johnstown, Pennsylvania, for treatment, and the hospital placed David on a mechanical ventilator. David’s parents attempted to refuse the ventilator treatment, but the hospital asserted that the parents, as plenary guardians of the person, did not have authority to refuse such treatment.

David’s parents filed a petition with the Orphans’ Court to be appointed as David’s health care agents. The Orphans’ Court denied David’s parents’ petition. The Superior Court affirmed the Orphans’ Court’s decision, and the parents appealed to the Pennsylvania Supreme Court. The Pennsylvania Supreme Court upheld the decision using a plain language interpretation of the state’s Health Care Agents and Representatives Act (the Act).

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Help Me Help You: An Answer to the Circuit Split Over the Delegation of Post-Sentence Judicial Authority to Probation Officers

By David Kelch. 116 Penn St. L. Rev. 553

Our criminal system routinely deals with such matters as the life and death and intertwined fates of criminals and their victims. Other than lawyers, judges, and the defendants and victims themselves, there is perhaps no one more intimate with the application of criminal justice than the probation officer. These “eyes and ears of the court” are given considerable responsibility in two phases of the criminal justice process. First, they are utilized between conviction and sentencing to conduct a pre-sentence investigation that, almost exclusively, is relied on by the court to determine the appropriate sentence for the defendant. Next, the probation officer is responsible, among other things, for “aid[ing] [the] probationer . . . to bring about improvements in his conduct and condition.” Other than the judges and juries, is there anyone so bound up with the fate of defendants than the probation officer?

Currently, a split among the circuit courts of appeals exists regarding the appropriate degree of delegable “judicial authority” to a probation officer during the post-sentence time-period. Probation officers could be given limitless discretion to modify the offender’s sentence in light of changing circumstances. Conversely, officers could be given no authority to modify, change, or adapt the sentence, leaving no option but to apply for court-ordered modification. Of course, as this Comment proposes, the proper amount of authority that should be delegated lies between these extremes.

This issue has grown and will continue to grow in importance to the courts because the correctional population is getting significantly larger. Between 1980 and 2007, the total estimated correctional population increased by 297%, from 1,840,400 to 7,300,000, most of which were on probation or parole. In light of the increasing number of probationers and the already overworked judiciary, probation officers should be given the greatest permissible flexibility to respond to the needs of the offender and the needs of the community for which the officer serves. Moreover, for probation officers to fulfill their duty to facilitate the offender’s post-incarceration sentence, they must know and understand the parameters of their authority. It is important, therefore, that courts be clear and unambiguous when they delegate authority to probation officers. This clarity will enable probation officers to satisfy the needs of the probationer and the safety needs of the community.

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Disclosure of Free Cash Flow Projections in a Merger or Tender Offer

By Jacob M. Mattinson. 116 Penn St. L. Rev. 577.

In what is unlikely to be the last in a long line of hotly debated cases, spanning at least the last decade, the Delaware Court of Chancery recently held that management’s free cash flow projections are not material. By way of illustration, Company A, the acquiring corporation, is interested in acquiring Company T, the target corporation. The acquiring corporation negotiates with the target corporation and the companies agree to a first-step tender offer for all of the target corporation’s shares, followed by a second-step merger. The target corporation chooses to disclose certain information to its shareholders, in anticipation of a shareholder vote on the merger, so that the shareholders can decide how to vote and whether to tender their shares. The target corporation’s shareholders have an important decision to make: whether to accept the consideration offered in the tender offer in exchange for tendering their shares or to decline to tender their shares and either later accept the merger consideration as part of the proposed second-step merger or seek appraisal rights after the consummation of the merger. For the target corporation’s shareholders, certain information they wish for the target corporation to disclose as they make their decision is material and thus required to be disclosed. Other information is simply helpful and thus not required to be disclosed.

This Comment will address the issue of what disclosures Delaware law requires a company to make to its shareholders in a merger proxy or consensual tender offer situation and whether a target company’s internal free cash flow projections rise to the level of materiality. Chancellor Chandler of the Delaware Court of Chancery recently concluded that projected free cash flow estimates are not material and disclosure of a target company’s projected free cash flows are not necessary. Additionally, Chancellor Chandler offered to sign an order certifying an interlocutory appeal to the Delaware Supreme Court on the issue of whether free cash flows are material and should always be disclosed as a per se rule. The plaintiff in that case, however, decided not to pursue the interlocutory appeal.

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