Genetic Information,Privacy and Insolvency

Rothstein M. A. , “Genetic Privacy and Confidentiality: Why They Are So Hard to Protect,” Journal of Law, Medicine, & Ethics 26, no. 3 (1998): 198–204 (“If a third party has enough leverage and economic power, it can go to an individual and require him/her to execute a release that authorizes a physician to release the medical records to a third party.”); Anderlick M. R. and Rothstein M. A. , “Privacy and Confidentiality of Genetic Information: What rules for the New Science?” Annual Review of Genomics and Genetics (2001–2): 401–33.

For a discussion of the effects of bankruptcy on privacy, see Janger E. J. , “Muddy Property: Generating and Protecting Information Privacy Norms in Bankruptcy,” William SI Mary Law Review 44 (2003): 1801–1881; see also Janger E. J. , “Privacy Property, Information Costs and the Anticommons,” Hastings Law Review 54 (2003): 899–929

LoPucki L. M. , “The Death of Liability,” Yale Law Journal 106 (1996): 1–91, at 3. LoPucki analogizes the liability-based enforcement of rights to a card game:

Think of the liability system as a poker game…Players risk their chips, that is, their wealth, by tossing them into the pot, that is, investing them in liability-generating economic activity. Chips contributed to the pot are at risk of loss; the system can take them to satisfy liability. Chips withheld are not at risk.

The focus of regulation in healthcare is often phrased in terms of “informed consent.” Schuck P. H. , “Rethinking Informed Consent,” Yale Law Journal 103 (1994): 899–959; Rothstein , “Genetic Privacy,” supra note 1: (“I believe less emphasis should be placed on regulating procedures for disclosure of information by physicians and other holders of medical records and more detailed focus placed on the circumstances surrounding the acquisition of the information by third parties. Who are these third parties? What need do they have for the information?”)

As I will discuss below, “property” regimes can operate either as a “veto” on transfer, or as an encumbrance that runs with the item.

Janger , “Muddy Property,” supra note 2, at 1852: (“Property rule or liability rule, the result is the same. Customers give their information away for free.”).

Janger , “Anticommons,” supra note 2: at 921–22.

Calabresi G. and Melamed A. D. , “Property Rules, Liability Rules, and Inalienability: One View of the Cathedral,” Harvard Law Review 85 (1972): 1089–1128, at 1089.

Hansmann H. and Kraakman R. , “Property, Contract, and Verification: The Numerous Clauses Problem and the Divisibility of Rights,” Journal of Legal Studies 31 (2002): 373–420, at 378.

Restatement (Second) of Contracts § 344 (1979) (“Judicial remedies [for breach of contract] serve to protect…his ‘expectation interest,’ which is his interest in having the benefit of his bargain by being put in as good a position as he would have been in had the contract been performed….”). In the absence of a statute allowing for statutory or punitive damages, or a separate tort cause of action, the financial incentives associated with a liability regime are likely to understate the actual harm caused by a sale of data. See Stern v. Delphi Internet Services Corp., 626 N.Y.S.2d. 694 (N.Y. Sup. Ct. 1995) (detailing an unsuccessful attempt to use misappropriation theory to sue electronic bulletin board); Dobbs D. B. , The Law of Torts (West: Saint Paul, 2000): 1198–1200.

Restatement (Second) of Contracts § 359 (“Specific performance…will not be ordered if damages would be adequate to protect the expectation interest of the injured party.”).

Janger , “Muddy Property,” supra note 2, at 1832–35.

Janger , “Anticommons,” supra note 2, at 1823. See also Miller W. W. Jr. and O'Rourke M. A. , “Bankruptcy Law v. Privacy Rights: Which Holds the Trump Card?” Houston Law Review 38 (2001): 777–854, at 799–807 (noting that while privacy policies maybe enforceable as contracts, the damages are likely to be difficult to calculate).

15 U.S.C. § 45(a)(1)(2000).

In re Toysmart.com, LLC, No. 00-13995-CJK (Bankr. D. Mass. filed June 9, 2000). Stipulation and [Proposed] Order Establishing Conditions on Sale of Customer Information, presented by Toysmart.com, LLC and the Federal Trade Commission, reprinted Workouts & Bankruptcies in the E-commerce Economy 247, Samet J. and Murray Walshe J. eds. (New York: Practicing Law Institute, 2001) (reproducing a stipulation and proposed order placing conditions on the sale of customer information by Toysmart.com).

Texas Business and Commerce code § 17.50(b) (2004).

45 C.F.R. Parts 160, 164.

Shavell S. , “The Judgment Proof Problem,” International Review of Law & Economics 6 (1986): 45–58, at 45 (“An injurer will treat liability that exceeds his assets as imposing an effective financial penalty only equal to his assets….”).

11 U.S.C. § 362.

11 U.S.C. § 524.

11 U.S.C. § 502 (allowed unsecured claims), 726 (distribution of estate property).

11 U.S.C. § 365.

Countryman V. , “Executory Contracts in Bankruptcy: Part I,” Minnesota Law Review 57 (1973): 439–491, at 465, 471 n. 121; Westbrook J.L. , “A Functional Analysis of Executory Contracts,” Minnesota Law Review 74 (1989): 227–337, at 255. Michael Andrew reaches a similar result by a slightly different route. Under his approach, executory contracts are not binding upon the estate until assumed. According to Professor Andrew: [T]he supposed “rule” that there is no specific performance in bankruptcy is actually just a consequence of the fact that the estate itself is not, absent assumption, bound by the debtor's contracts. Not only is there no right of specific performance of an unassumed contract against the estate, there is likewise no right to recover damages against the estate itself-i.e., administratively. The estate is simply not a party to the contract.

Andrew M. T. , “Executory Contracts in Bankruptcy: Understanding ‘Rejection,’” University of Colorado Law Review 59 (1988): 845–932, 920–21.

Westbrook J. L. , “A Functional Analysis of Executory Contracts,” Minnesota Law Review 74 (1989): 227–337, at 246 (“The first concrete consequence of the equality principle is that the trustee can breach (reject) a contract profitably far more often than can other contract parties because the trustee pays only a fraction of contract damages rather than the full amount of the Other Party's breach loss. From that simple proposition flows most of the economic “magic” associated with bankruptcy contract doctrine”) See also, Andrew M. T. , “Executory Contracts Revisited: A Reply to Professor Westbrook,” University of Colorado Law Review 62 (1991): 1–35 (“But while unnecessary, rejection is also harmless: It does not make the contract obligation somehow vanish, and its ‘breach’ consequence does nothing more than create a claim. Thus, whether the contract is ‘executory’ or not, the result is the same: The non-debtor party has a claim”).

11 U.S.C. § 506.

11 U.S.C. § 724.

11 U.S.C. § 363(f).

11 U.S.C. § 363(e).

See Gouveia v. Tazbir, 37 F.3d 295, 299 (7th Cir. 1994) (holding that debtor is unable to sell land free and clear of restrictive covenants).

362 F.3d 603 (9th Cir. 2003).

322 F.3d 283 (3rd Cir. 2003).

327 F.3d 537 (7th Cir. 2003).

For an extreme example, see Precision Industries, Inc. v. Qualitech SBQ, LLC, 327 F.3d 537 (7th Cir., 2003), reh'g denied, 2003 U.S. App. LEXIS 10626 (7th Cir., May 7, 2003), where a debtor was allowed to sell leases under section 363(f) without formally assuming or assignint them under section 365.

11 U.S.C. § 362(b)(4).

1 U.S.C. § 510(c).

Canterbury v. Spence, 464 F.2d 772 (1972). For a discussion of informed consent in healthcare settings, see Schneider C. E. , The Practice of Autonomy: Patients, Doctors, and Medical Decisions, (New York: Oxford University Press, 1998), 87–92; Goldstein J. , “For Harold Lasswell: Some Reflections on Human Dignity, Entrapment, Informed Consent and the Plea Bargain,” Yale Law Journal 84 (1975): 683–703, at 690–94; Schuck P.H. , “Rethinking Informed Consent,” Yale Law Journal 103 (1994): 899–959, at 902–04; Twerski A. D. and Cohen N. B. , “The Second Revolution in Informed Consent,” Northwestern University Law Review 94(1999):1–49, 2–5.

See Radin M. J. , “Humans, Computers and Binding Commitment” Indiana Law Journal 75 (2000): 1125–1162, at 1148–49. Professor Radin explains:

Market-emergent schemes of uniform contracts, on the other hand, have to some courts and commentators looked like a property scheme imposed by private companies for their own interests instead of by the government for the interest of all. In other words, in public choice rhetoric, the traditional view has been that legislative enactment is presumptively efficiency-enhancing, and market emergence is presumptively rent-seeking. Because market-emergent sets of terms are dictated by one party rather than arrived at by negotiation between the parties, they have been dubbed contracts of adhesion, or take-it-or-leave-it contracts.

See generally Rakoff T. D. , “Contracts of Adhesion: An Essay in Reconstruction,” Harvard Law Review 96 (1983): 1173–1284 (arguing that contracts of adhesion should be presumed to be unenforceable).

Janger , “Muddy Property,” supra note 2 (“Property rule or liability rule, the result is the same. Customers give their information away for free”).

Janger “Anticommons,” supra note 2.

Heller M. A. , “The Boundaries of Private Property,” Yale Law Journal 108 (1999): 1163–1223, at 1173–74; Heller M. A. , “The Tragedy of the Anticommons: Property in the Transition from Marx to Markets,” Harvard Law Review 111 (1998): 621–688, at 665–67.

Schwartz P. M. , “Property, Privacy, and Personal Data,” Harvard Law Review 117 (2004): 2055–2128.

Janger , “Anticommons,” supra note 2 at 922–26.

The Leahy Amendment can be found in sections 231 and 232 of the conference report to the Bankruptcy Abuse Prevention and Consumer Protection Act of 2002. See H.R. CONE REP. No. 107-617, at 51–52 (2002).

Janger , “Anticommons,” supra note 2 at 928–29. Janger , “Muddy Property,” supra note 2 at 1873–75.

As a remedy, I have recommended the use of mandatory set of defaults tailored to particular contexts and based on Fair Information Practices, or “FIPS.”