InnerChange Litigation

[Douglas Laycock]

  I am traveling and have not read the opinion.  But I have assumed
that the theory here was not damages, but restitution of unjust
enrichment.  There was a similar theory in Lemon v. Kurtzman,
rejected on reliance grounds in Lemon II in 1973.  Much less to rely
on today than in the late 60s when Lemon arose.  There is a change of
position defense in restitution; it's true that PFM took in a lot of
money, but presumably they have spent it all.  So the unjust
enrichment theory also has problems.  But it raises a different set
of questions than think of this as damages to the state or as
contribution between joint tortfeasors.

  Quoting "Vance R. Koven" <vrkoven at gmail.com>:

> There are several ways of looking at how PFM might or might not be
liable
> for money damages here. The first thing that leapt to mind was as
an agent
> for an undisclosed principal--since had it been known PFM was
acting on
> behalf of the state, which was under a prohibition, then its acts
would be
> immediately perceived as wrongful. However, the liability of an
agent in
> this case is, so far as I know, limited to those with whom it
transacts
> downstream.
>
> A taxpayer suit might be analogous to a derivative action by
shareholders,
> in which the shareholders act in the name of the corporation to
recover
> damages caused by the wrongful acts of corporate fiduciaries and
agents. As
> others have pointed out, PFM, though, did not do anything
inherently
> wrongful, they were only wrongful because committed willy-nilly in
the name
> of the state; the inherently wrongful acts were committed by
*other* state
> agents who appointed PFM to undertake its activities in the
prisons. It
> would be highly salutary, though as far as I know it is
unprecedented (other
> than by specific statute), for state officials to be personally
liable to
> taxpayers for waste/misuse of state funds pursuing unlawful
objectives; but
> that's not PFM's problem. If you take the old hoary approach of
tracing the
> duties of the different parties, it seems as though the only party
with any
> duty to taxpayers/citizens is the state itself. The state officials
owe
> duties to the state to act within the scope of their engagement,
and you can
> say the same for PFM, but its scope is radically different from
theirs, and
> nobody has suggested (at least in this discussion) that PFM did not
comply
> with its (ultimately invalid) mandate.
>
> Another route might be the doctrine of ultra vires, since plainly
the state
> had no authority to appoint PFM as its agent to do what the state
could not
> do directly. Modern corporate law has essentially eliminated
actions on the
> ultra vires theory, but if I remember correctly, contracts ultra
vires are
> void, not just voidable. On that theory PFM might have to give the
money
> back, but I confess this is just theory-spinning on my part without
> examining any cases. It's been a *long* time since I needed to know
this,
> either for teaching or practicing!
>
> Vance
>
> On Dec 5, 2007 12:45 AM, Christopher Lund <lund at mc.edu> wrote:
>
>> The points by Profesors Lupu, Green & Lederman make a lot of
sense, and
>> I'll check out Brentwood Academy, which sounds helpful.  Maybe
it's just
>> recoupment here that I have trouble understanding.  Recoupment
seems to
>> have little value here except as a way of punishing PFM. 
Recoupment
>> means that PFM now has to pay Iowa for the constitutional
violation they
>> committed together.  I don't think that makes much sense.  Maybe
PFM is
>> as culpable as Iowa -- but is there really an argument that PFM is
more
>> culpable, that the Establishment Clause applies more to PFM than
it does
>> to Iowa?  By virtue of the taxpayer theory, Iowa suddenly gets to
flip
>> sides in the litigation.  It doesn't have to pay the plaintiffs. 
It
>> instead gets to become the plaintiffs and take PFM's money back on
their
>> alleged behalf.
>>
>> Now I understand the theory -- that the injury was taxpayer
dollars
>> going to PFM, that the remedy, if there is to be one, means the
money
>> has to go back, and that Iowa this time could spend it on
something
>> constitutional.  But it seems like the remedy of recoupment means
we've
>> moved full circle from (1) Iowa being responsible, to (2) Iowa and
PFM
>> being jointly responsible, to (3) PFM being chiefly (or even
solely)
>> responsible.  Maybe I'm missing something, but I find this
problematic.
>>
>> Best,
>> Chris
>>
>>
>> Christopher C. Lund
>> Assistant Professor of Law
>> Mississippi College School of Law
>> 151 E. Griffith St.
>> Jackson, MS  39201
>> (601) 925-7141 (office)
>> (601) 925-7113 (fax)
>>
>
>
> --
> Vance R. Koven
> Boston, MA USA
> vrkoven at world.std.com
>

Douglas Laycock
Yale Kamisar Collegiate Professor of Law
University of Michigan Law School
625 S. State St.
Ann Arbor, MI  48109-1215
  734-647-9713
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