Legal RealismLegal Realism

Jerome FrankJerome Frank

The story begins with the following The story begins with the following facts.facts.

The Jones family owns the Blue and The Jones family owns the Blue and Gray Taxi Company (BG) Gray Taxi Company (BG) (incorporated in Kentucky).(incorporated in Kentucky).

BG had an exclusive contract with BG had an exclusive contract with the A & B Railroad to get customers the A & B Railroad to get customers next to the depot.next to the depot.

A rival taxi company, Purple Taxi A rival taxi company, Purple Taxi (PT), started to ignore that (PT), started to ignore that exclusive right.exclusive right.

The Purple taxi had its taxis located The Purple taxi had its taxis located in areas already assigned to the in areas already assigned to the Blue and Gray company.Blue and Gray company.

This created a conflict as PT tried to This created a conflict as PT tried to attracted business away from BG.attracted business away from BG.

The loss in profit from BG caused The loss in profit from BG caused the Jones family to seek legal help.the Jones family to seek legal help.

The lawyer said that the contract is The lawyer said that the contract is not legally valid, because such an not legally valid, because such an agreement constitutes a monopoly agreement constitutes a monopoly according to several decisions of the according to several decisions of the highest court of Kentucky.highest court of Kentucky.

The lawyer thought about the matter and The lawyer thought about the matter and figured out how to get the contract to work figured out how to get the contract to work in Kentucky.in Kentucky.

In the majority of other states than In the majority of other states than Kentucky (and a few like it), one can have Kentucky (and a few like it), one can have an exclusive agreement to solicit business. an exclusive agreement to solicit business. If the case can be tried in federal court, If the case can be tried in federal court, then the judges will follow the “majority then the judges will follow the “majority rules” principle and rule in your favor.rules” principle and rule in your favor.

The lawyer proposed that BG open up and The lawyer proposed that BG open up and register as a Tennessee company. register as a Tennessee company.

The railroad issued a new exclusive The railroad issued a new exclusive contract to BG.contract to BG.

The legal system now would consider BG The legal system now would consider BG as a citizen of Tennessee and the PT and as a citizen of Tennessee and the PT and the railroad as citizens of Kentucky.the railroad as citizens of Kentucky.

BG would be able to bring suit in federal BG would be able to bring suit in federal court against PT.court against PT.

Federal court has jurisdiction over Federal court has jurisdiction over lawsuits of citizens from different lawsuits of citizens from different states.states.

The lawyer is not 100% sure the plan The lawyer is not 100% sure the plan will work because there is no will work because there is no precedent set involving lawsuits with precedent set involving lawsuits with the exact details as this case.the exact details as this case.

Did the plan work?Did the plan work?

The court ruled that a suit was The court ruled that a suit was legitimate and that the contract was legitimate and that the contract was valid. The Federal Circuit Court of valid. The Federal Circuit Court of Appeals affirmed the decision of the Appeals affirmed the decision of the lower court.lower court.

The case was appealed all the way The case was appealed all the way up to the Supreme Court of the up to the Supreme Court of the United States.United States.

The Supreme Court ruled 6 to 3 in The Supreme Court ruled 6 to 3 in favor of BG and the Jones won.favor of BG and the Jones won.

What is the LAW for the Jones and What is the LAW for the Jones and PT?PT?

Answer: it depends on the date: Answer: it depends on the date: before the Tennessee-based BG was before the Tennessee-based BG was formed or after ?formed or after ?

Before BG moved to Tennessee the Before BG moved to Tennessee the law was that exclusive contracts to law was that exclusive contracts to solicit business constitute solicit business constitute monopolies and are therefore, illegal.monopolies and are therefore, illegal.

After BG moved to Tennessee, such After BG moved to Tennessee, such contracts are valid and not contracts are valid and not monopolies.monopolies.

The law at any time before the The law at any time before the Supreme Court decides an issue is Supreme Court decides an issue is unsettled. unsettled.

For any particular lay person, the law, with For any particular lay person, the law, with respect to any particular set of facts, is a decision respect to any particular set of facts, is a decision of a court with respect to those facts so far as of a court with respect to those facts so far as that decision affects that particular person. Until that decision affects that particular person. Until a court has passed on those facts no law on that a court has passed on those facts no law on that subject is yet insubject is yet in

existence. Prior to such a decision, the only law existence. Prior to such a decision, the only law available is the opinion of lawyers as toavailable is the opinion of lawyers as to

the law relating to that person and to those facts. the law relating to that person and to those facts. Such opinion is not actually law butSuch opinion is not actually law but

only a guess as to what a court will decide. only a guess as to what a court will decide.

Or more formally…Or more formally…

Law, then, as to any given situation Law, then, as to any given situation is either (a) actual law, i.e., a specific is either (a) actual law, i.e., a specific past decision, as to that situation,' or past decision, as to that situation,' or (b) probable law, i.e., a guess as to a (b) probable law, i.e., a guess as to a specific future decision.specific future decision.

Frank says ask these questions to Frank says ask these questions to your lawyer and….your lawyer and….

"Have I a right, as a stockholder of the "Have I a right, as a stockholder of the American Taffy Company of Indiana, American Taffy Company of Indiana, to look at the corporate books?" Or, to look at the corporate books?" Or, "Do I have to pay an inheritance tax "Do I have to pay an inheritance tax to the State of New York on bonds to the State of New York on bonds left me by my deceased wife, if our left me by my deceased wife, if our residence was in Ohio, but the bonds, residence was in Ohio, but the bonds, at the time of her death, were in a at the time of her death, were in a safety deposit box in New York'!"safety deposit box in New York'!"

The answers (although they may run The answers (although they may run "There is such a right," "The law is "There is such a right," "The law is that the property is not taxable," that the property is not taxable," "Such picketing is unlawful," "The "Such picketing is unlawful," "The agreement is not legally binding") agreement is not legally binding") are are in fact prophecies or predictionsin fact prophecies or predictions of judicial actionof judicial action. It is from this point . It is from this point of view that the practice of law has of view that the practice of law has been aptly been aptly termed an art of termed an art of prediction.prediction.

Legal FormalismLegal Formalism

A theory that legal rules stand separate A theory that legal rules stand separate from other social and political institutions. from other social and political institutions.  According to this theory, once lawmakers  According to this theory, once lawmakers produce rules, judges apply them to the produce rules, judges apply them to the facts of a case without regard to social facts of a case without regard to social interests and public policy.  In this respect, interests and public policy.  In this respect, legal formalism differs from legal formalism differs from legal realismlegal realism. .  Either theory can be understood in a  Either theory can be understood in a descriptive way, prescriptive way, or both descriptive way, prescriptive way, or both ways at once. ways at once.

Source: http://www.law.cornell.edu/wex/legal_formalismSource: http://www.law.cornell.edu/wex/legal_formalism

Legal RealismLegal Realism

A perspective that legal rules are to benefit the A perspective that legal rules are to benefit the larger society and public policy based on judicial larger society and public policy based on judicial decisions. Neither dogma or supernatural decisions. Neither dogma or supernatural authority applies. A court is expected to authority applies. A court is expected to determine ‘legal rights’ and ‘legal duties’. In the determine ‘legal rights’ and ‘legal duties’. In the extreme, a judge considering rights of an extreme, a judge considering rights of an accused, is in fact deciding what rights this judge accused, is in fact deciding what rights this judge is going to is going to let the accused havelet the accused have. It is an . It is an absurdity, where the law is not applied.absurdity, where the law is not applied.

Source: Black’s Law Dictionary: http://thelawdictionary.org/legal-Source: Black’s Law Dictionary: http://thelawdictionary.org/legal-realism/#ixzz2sNQCx2ilrealism/#ixzz2sNQCx2il