Why not some good news for a change? Here are some court developments on issues of property, contract, and liability that have gone in the right direction lately.
* Last year, as part of the general expropriation of landlord rights that went on under cover of the pandemic, New York City passed a law unilaterally extinguishing owners’ right to enforce personal-guaranty clauses to collect unpaid commercial rents. Now two of three judges on a Second Circuit panel have ruled, in Melendez v. City of New York, that the measure is open to constitutional challenge under the Constitution’s Contracts Clause: “The law effectively repudiates those guarantor debts rendering them permanently and completely unenforceable. This is certainly a substantial impairment of contract.” That’s potentially big news because the Contracts Clause has gone widely unenforced for decades in the federal courts. The decision was written by Judge Reena Raggi and joined by Judge Jose Cabranes, while Judge Susan Carney penned a partial dissent.
* It took more than two years, but the Oklahoma Supreme Court finally overturned a rogue district judge’s $465 million verdict against Johnson & Johnson based on the premise that the drugmaker had unlawfully created a public nuisance by marketing opioid products. The state’s lawsuit was a demagogic move to distort the bounds of public nuisance law beyond all historical recognition, as I warned at the time. See also this Cato podcast and Jeffrey Singer post, and this paper by Mike Davis for Oklahoma’s 1889 Institute.
* Judges are mostly resisting attempts to stretch the language of business-interruption insurance policies to cover pandemic-related losses, writes Randy Maniloff at the Wall Street Journal. That’s the correct legal outcome, as I wrote last year: this category of risk has been widely grasped for a long time, and insurers took care to exclude it.
* Delaware’s grabby practices on declaring financial assets to be unclaimed property and therefore forfeit to the state (escheat) have met with another judicial rebuke, this time from a Third Circuit panel in Siemens v. Geisenberger. I’ve previously noted that Justices Samuel Alito and Clarence Thomas appear ready to apply closer due process scrutiny to state practices in this area.
