Of Gingerbread Lattes

Picking your battles is a very good idea. Which arguments do you need to have, which points are worth dropping, and what is the ultimate outcome that you need to achieve?

This is what I was thinking about after I had a stand up argument with a Starbucks barista. (Barista has always struck me as a very impressive sounding name for someone who foams milk.) I had ordered a latte with gingerbread syrup and whipped cream (I know, not exactly a cutting edge hipster coffee choice). He put it through his till as a gingerbread latte, and tried to charge me accordingly.

Now, the problem is that a gingerbread latte costs more than the sum of its parts. If you take an ordinary latte and add supplements for syrup and cream it costs 20p less (for a tall latte) than a “gingerbread latte”. I pointed this out to barista-man. He told me I was trying to be clever.  I would like to think that when I try and be clever, gingerbread lattes are not key players.  We had an argument and eventually, reluctantly, he worked some magic such that a till, that hitherto was completely incapable of putting through my order as I’d ordered it, was finally able to deal with the complex concept that I had shared with its operator.

I don’t think I was being clever; I think Starbucks was being cheeky. There is a good rule of thumb in business ethics that your customer should understand what’s going on – that you, as a business, can explain frankly and openly how you operate and make money. To have a surcharge attached to a name is pretty hard to explain.

I know Starbucks have a pretty poor corporate governance profile, and the Battle of the Gingerbread Latte is probably not the key one. But it really does not help Starbucks’ image. 

Being a City lawyer: Jurisprudence

Recently, I was having lunch with some other trainees. Something came up in the course of a pretty normal, non-legal conversation which reminded me of something vaguely jurisprudential – Hart’s primary and secondary laws, Finnis’ central case of law, or something. And so I said as much. And one fellow said “Oh, don’t bring jurisprudence into it”.

Now, I can see that lunch breaks are not always the time to delve too deeply into tricky philosophical riddles. I can see that no one likes to have Rawls quoted at them when they were just trying to decide whether to have a pudding or not. But I was a little worried that just the very mention of legal philosophy was enough to exasperate a colleague.

Is jurisprudence relevant to my day job? Not immediately. Proof reading contracts doesn't need Dworkin (thank goodness), research memos don’t need me to identify rules of recognition. But I like to think that jurisprudence is part of the fundamental grounding of legal practice. To be au fait with some of the theory of the common law, or how and why principles of certainty and fairness should be balanced, or what judges do when they interpret contracts are relevant in a high-level way.

*metaphor alert*

You can probably build an engine with some basic mechanical knowledge. You can understand (and build) it better by knowing more of the physics and chemistry behind it. Equally, any lawyer will know what a contract does, but ought he not think about why they matter, how they’re justified, and what role a court has in them?

Given that jurisprudence might be a ‘silent prologue’[1] to aspects of legal practice,  maybe a lunch break is a good time to give it some air time.

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[1] Ronald Dworkin, in "Law's Empire"

Parent Company Liability (nothing to do with vicarious liability)

Dear old Mr. Droog works for Fyodor Ltd in the 1960s. Fyodor Ltd was a bit bad, and exposed Mr. Droog to batemanium, a chemical that caused Mr. Droog to go blind in his later life. By the time Mr. Droog suffers his loss, realises the cause, and wants to sue, Fyodor Ltd is history. It was wound up. Can Mr. Droog sue the extant parent company, Dostoevsky Plc?

By Chandler v Cape [2012] EWCA Civ 525, he can. The Court of Appeal agreed with the judge at first instance, and upheld the imposition of parent company liability. This was because the parent had assumed responsibility for the safety of its subsidiary’s employees.

What I find interesting about this case is the fact that it has no relation whatsoever with vicarious liability. Arden LJ made passing reference to the fact that the first instance judge had not found liability on “any form of vicarious liability”. That’s the only mention it gets, and no vicarious liability cases were cited in argument. Google “chandler cape vicarious”, and you get the square root of hee-haw.

Given that it was accepted by the parent in Chandler v Cape that the subsidiary would have been liable, it seems surprising that there was no argument at all regarding whether the parent ought to be liable vicariously. If vicarious liability were to apply to parents and subsidiaries, the parental liability would be a slam-dunk success.  Instead, counsel for the claimant argued for the direct liability of the parent. It is worth noting that counsel’s approach was breaking new legal ground, in that the idea of ‘parent company liability’ is new. Although the approach taken is a far less iconoclastic approach than arguing for vicarious liability. All the court had to do was accept that the normal rules of assumption of responsibility in the tort of negligence could apply to the parent company, and did indeed apply on the facts of the case.

I think the reason why vicarious liability was left to one side can be explained in this quote:

“69  I would emphatically reject any suggestion that this court is in any way concerned with what is usually referred to as piercing the corporate veil. A subsidiary and its company are separate entities. There is no imposition or assumption of responsibility [read, liability] by reason only that a company is the parent company of another company.”

This concern is fair enough. If we are to have “limited liability” companies, and the bundles of legal risk are supposed to be capable of being parcelled up and apportioned amongst a corporate group, vicarious liability might be the wrong approach.

But let's apply this logic to natural beings. Why should it be that we (as individuals or companies) be liable on one set of terms for the acts of natural persons we employ (vicarious liability is expressly fault free) but a different set for the actions of legal persons we own (where normal tort rules apply)?   Is the commercial uncertainty caused by a raggedy corporate veil a better reason to keep liability separate than the moral oddness of being responsible for the vulgar, deliberate and secret acts of your employees?

Put another way, if the correct way to decide if a parent is liable to its subsidiaries employees, or Borstal guards are liable to terrorised residents[1] is through the application of a general tortious test that incorporates an element of fairness, why is that different for companies and employees? Given that vicarious liability is dogged by uncertain theoretical foundations, ought it ignore the more stable reasoning afforded by the general law of negligence? Abandoning vicarious liability in favour of the general test would replace strict liability with fault based liability, and import a measure of fairness. Vicarious liability cases could be re-theorised to fit that model. The role of control would be more central. And in those cases where the employer is truly blame free, they would not be saddled with a tort liability they could have done nothing to avoid. 

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[1] I’m referring to the Dorset Yacht Co Ltd v Home Office [1970] AC 1004 

Minimum Alcohol Pricing in Scotland 3: A Decision

I have blogged about minimum pricing before; both on its possible illegality, and on the SWA’s approach. Now a Scottish court has heldthat there is no problem in law with the proposals, and so it would appear minimum pricing will become a reality. (Except that other EU states are challenging the measure at a higher level, as reported here).

I don’t propose to go through all the aspects of the judgment, which is here, at any length. I am more interested in the free movement of goods (FMG) issue, which I discussed before. This was, as I understand, the main argument of the SWA. Other arguments, including ones based on the Scotland/England Acts of Union hardly passed a smell-test.

On the FMG point, it was held that the Scottish measure did impinge on free movement, but was justified on the basis of the protection of the life and health of humans (Art 36 TFEU). This is a treaty-enshrined basis that allows derogation from strict free movement of goods. Lord Doherty held that there was a legitimate aim, and that the measure was proportionate to that aim.

[55] There is overwhelming evidence of grave health, social, economic and public order consequences caused in Scotland as a result of excessive alcohol consumption. Such consumption by harmful and hazardous drinkers is particularly concerning, and is harmful to those drinkers and to others. On the basis of the material placed before me I am in no doubt that reduction of alcohol consumption generally, and reduction of consumption by hazardous and harmful drinkers in particular, are both legitimate aims in terms of Article 36.

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[64] If … alternative measures would be just as effective as minimum pricing in achieving the legitimate aims being pursued, the contention that they would be less of an obstacle to freedom of movement of goods would appear, at least prima facie, to be logical and have force…

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[73] The petitioners [argue] that excise duty on alcohol can be increased as much as is necessary to raise the prices of cheaper products to desired levels. Such an approach would not affect, or target, drinkers of cheaper products only: but it could subject them to price increases of at least the same order as under minimum pricing. … In those circumstances [an excise duty] would be no less effective in reducing the consumption of cheap alcohol or the consumption of alcohol by hazardous and harmful drinkers.

…

[77] That argument would have been more persuasive if the legitimate aims of the measures had been to reduce consumption, including consumption by hazardous and harmful drinkers, to the maximum extent possible regardless of possible economic or social consequences. However, those are not the aims of the measures. Rather, the relevant aims are [ [54][striking] a reasonable balance between, on the one hand, public health and social benefits, and, on the other, intervention in the market … The Parliament and the Ministers recognised that many people have "a balanced, positive and enjoyable relationship with alcohol": such drinkers are not the target of the measures. The major problem is excessive consumption of cheap alcohol. The measures seek to address this by increasing the price of such alcohol.]

This is proportionality doing what proportionality does worst. Proportionality, as a concept, is primarily found in EU law. If measure is tied to a legitimate aim, and goes no further than necessary to achieve that aim, it is proportionate. On this occasion, that has the net result of blowing an FMG argument out the water.

But note the judicial sleight of hand. We have defined the aim of the measure such that there is much less scope for an alternative, less-FMG-infringing measure. An excise duty would raise all prices, and that is not the aim. The aim is to increase prices of cheaper products only. But it is precisely the increase at the lower end that means there is an FMG issue – a foreign drinks company now can’t compete on pricing. By defining the aim of the measure with such tight reference to the measure made the proportionality hurdle a much lower one for the Scottish Ministers to clear.

Being a City lawyer: Pro Bono

Here’s the thing, kid. Corporate lawyers aren’t into charity work. Or at least, they aren’t as part of their day-to-day. Some of them are excellent people who do marvellous charitable things, but it can’t be allowed to get in the way of the job.

I’ve been to a couple of graduate recruitment events, and students ask about the extent of pro bono work at my firm. Truthfully, if you want to be helping people with landlord disputes, benefits and immigration issues, don’t come to the City.

City firms often have a pro bono commitment. You can do a set number of hours on business time of pro bono work, take days off to do charitable things, give ad hoc advice at drop-in legal clinics. The theory behind this is a bit odd, I think. It is supposed to show clients that the firm is committed to doing good deeds, and this is supposed to make clients want to use the firm. Frankly, everyone knows that both the firm and the client exist to make money, and therefore, to my mind, the idea of impressing clients with these efforts is backward. If a firm spends firm time on charity, it basically needs to charge more to cover those costs (or, certainly, it will make sure any pro bono work achieves a net positive financial result). The client is then (in theory) paying more so that the firm can spend it (given time = money) on someone else. Cut out the middleman, chaps. Let the clients give direct.

The problem too is that City firms aren’t really cut out to give the pro bono advice that is most needed. Commercial property lawyers don’t know about residential tenancy rules. Those who advise on complex international construction disputes aren’t really your first choice consumer litigation advisers. Maybe they’d be better providing services (books, facilities, trainee resource) to those lawyers who can do those things.

Ronald Dworkin, Tom Bingham and the Rule of Law

Modern jurisprudence has lost one of its most renowned intellectual heavyweights. Ronald Dworkin was the legal philosopher who really challenged HLA Hart’s “Concept of Law”, and in so doing, shaped many theoretical debates from the 1970s onwards.

As an undergraduate, I did not subscribe to Dworkin’s beliefs. I must confess that it may well have been largely due to my inability to really grasp his arguments, and nail down how his views changed over the years. This is not a flaw in his writing; I am not sure I could promise I read his books with anything like the requisite diligence. As a full time working chap, I was delighted to come across this piece, which outlines the Hart v Dworkin debate; although I would caution that I think Shapiro’s proselytising at the end may go so far as to his view on what the debate is, not just his view in the debate.

Dworkin believed moral principles were part of the law and any theory of law had to account for them. Sometimes law runs out, and morality plugs the gaps. I hope I’ve not simplified too brutally.

I prefer, where possible, to keep law and morals separate (not in my day job, of course). As I’ve discussed before, what is legal and what is good form are not one and the same. I do not know how helpful it is to get bogged down in typographical issues of what can therefore be ‘law’ or (as Finnis would have it) the central case of law. I prefer to identify law, and then decide if it’s any good.

Which reminds me of a book by another legal superstar, Lord Bingham. In The Rule of Law, Bingham argues for a ‘thick’ ‘Rule of Law’. The rule of law, or the principle of legality, is a nebulous concept that many different authors have ascribed many different meanings. At its core, it’s about all people being subject to clear rules, applied by an independent judiciary. In this thin meaning, it is a sword that can cut both ways. It is feasible to have malicious, discriminatory laws that conform to the definition[1]. Bingham argues for a ‘thick’ definition, that includes the substantive protection of Human Rights.

For all that I disagree, I have sympathy with his view. Bingham had such an enormous impact on human rights protection in the UK, and if I were him, I’d include ‘human rights protection’ as part of my definition of ‘breakfast cereal’, never mind ‘the rule of law’. My point remains, however, that as the bare legality principle can be conceptually distinguished from the substantive protection of human rights, it should be. In legal theory, I don’t want catch-all handles. The more elements to a definition, the more utopian and inapplicable the definition becomes.

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[1] And this is what Joseph Raz would tell you the Rule of Law is.