InnerChange Litigation

Thu Dec 6 07:22:30 PST 2007

I must admit that I am with Professor Lund on this.

1.  The question of 'State actor' is extremely difficult to define in cases of hybrid functions and delegation, but pfm cannot (in the wildest sense) be deemed a private actor.  If they are, so will be hospitals, homeless shelters etc.

2.  Whilst a third party has an interest in the lawful use of public funds; the recovery of funds expended (in good faith) from a private actor is extremely problematic.  It is politically charged and a great opportunity to 'hurt' those recipients of public funds who one is opposed to.  The Ohio State must be held culpable.

3.  Has anyone thought of the prisoner First Amendment rights!  What is prisoners are so willing to find a new life and answer to their problems,- that they want to volunteer for the pfm programme and request the Ohio State to facilitate (not endorse) their rights.  What is the interest of the State in denying such a request?

Paul Diamond, barrister.

  ----- Original Message ----- 
  From: Vance R. Koven 
  To: Law & Religion issues for Law Academics 
  Sent: Wednesday, December 05, 2007 2:03 PM
  Subject: Re: InnerChange Litigation

  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 

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