In memoriam: Meir Shamgar

Meir Shamgar as a detainee in Eritrea, 1946

Friday saw the passing of one of the greats of Israeli law, former Justice and President of the Supreme Court Meir Shamgar. Shamgar has been eulogized elsewhere, mainly with regard to his many important contributions to constitutional law and public law in general, but I'd like to shine a light on an important decision of his in an environmental nuisance case, about which I've written (in Hebrew). (I hope the case will be translated into English soon.)

Ata v Schwartz (1976) is an Israeli classic. Briefly put, Schwartz sued a neighboring textile factory, the largest in Israel at the time; asking for an injunction against the noise emitted by its cooling and ventilation systems. Despite the factory's warning that granting the injunction would lead to the layoff of thousands of workers, the trial court as well as the two appeals courts that considered the case upheld Schwartz's right to an injunction, noting that the relevant statute rejected a "balance of the equities" test for permanent injunctions, and emphasizing the importance of every person's right to live free of harsh disturbances.

What makes the case a chestnut for teaching, beyond the stark facts and bold result, is Justice Shamgar's discussion in his decision for the Supreme Court of the then-new economic approach to law. Unbidden by the parties, Shamgar linked the defendants' claim that an injunction should be granted only if the balance of the equities was in the plaintiff's favor (i.e. that the harm eliminated by the injunction would be greater than the cost of complying with it) to classic arguments by Ronald Coase, Richard Posner, and Guido Calabresi (with Douglas Melamed), arguing for wealth- or utility-maximization as the guiding principle of nuisance law. I write "classic arguments", but Shamgar's decision was really the first (in the world) to discuss the works of these authors at any length. Why "the law and economics movement" received its first substantial treatment in an Israeli, and not an American, court is a subject for another time.

Nuisance injunctions

The Journal of Environmental Law has a review by Patrick Bishop of Ben Pontin's Nuisance and Environmental Protection - A Study of Nuisance Injunctions in Practice (Lawtext, 2013) (Ben blogged here about the book and his related work last summer.) Bishop writes:

This book’s aim is succinctly stated from the outset, namely to examine: ‘what nuisance law is with reference to what it does in practice, in circumstances where a claimant is awarded an injunction to restrain ongoing pollution’ (p 1). Pontin posits various nomenclatures to describe his methodology, ‘realist’, ‘law-in-action’ or ‘law-in-context’ (p 3), but in essence the approach adopted is contextual.... The intention is to elucidate the socio-economic and environmental impact of nuisance injunctions by the study of materials extraneous to the law reports; in summary this book intends to broaden and enhance our understanding of nuisance by considering ‘what happened next’.

...the introduction provides a discussion of the main theories relating to the effect of the grant of an injunction. The author identifies four hypotheses gleaned from the literature. First, the idea that the grant of an injunction is likely to result in the closure of the defendant’s polluting exercise (the closure theory). Secondly, it will simulate thinking and investment into new modes of business in a manner which eliminates or at least reduces pollution to acceptable (non-actionable) levels (the clean-up theory). Thirdly, there is the possibility that an injunction might force the defendant to relocate its place of business to an alternative area where the nature of the locality is such that the polluting activity would not constitute an actionable nuisance (relocation theory). Finally, the parties might enter into a post injunction bargain, whereby the claimant is paid to move on or waive their legal rights as suggested by Ronald Coase in his ground-breaking work, ‘The Problem of Social Cost’, (Coase theorem). Thus, while it is Pontin’s intention to produce a text of practical significance, useful to potential litigants as well as lawyers and academics, the discussion of each of the four cases is grounded in theory and the outcome of each case study is judged against the four hypotheses identified. 

*****

Across the cases, the emphasis of the contextual discussion varies considerably; the chapter discussing Attorney General v Birmingham Corporation (1858–1895) focuses on the life and career of the claimant, Sir Charles Adderley. While he has faded into relative obscurity, Adderley is described by Pontin as a figure comparable to Rachel Carson and Gro Harlem Brundtland for his contribution to the enactment of the Public Health Act 1875 (p 59). In contrast, the claimant in Halsey v Esso Petroleum Ltd (1961–1972) is given scant attention and instead the background discussion is concentrated on national economic policy. The focus of each chapter is presumably shaped by the available archival material: it is safe to assume that the life of a former parliamentarian and cabinet minister (Adderley) has been recorded in considerably more depth than that of a Fulham van driver (Halsey). Regardless of the differing emphasis of each chapter, the contextual discussion is fascinating and more importantly, it is always enlightening.

The conclusion to each case study returns to the four hypotheses identified in the introduction. Of these, only the closure theory is discredited; the post-injunction investigation reveals that in none of the four cases was the defendant forced out of business. There is evidence, to a greater or lesser extent, to support the clean-up theory (Birmingham and Halsey), the relocation theory (Tipping v St Helens Smelting Co Ltd (1863-1884) and eventually Halsey) and in Farnworth v Manchester Corporation (1928–1930), the parties entered into a Coasian bargain, albeit that an agreement was reached after 40 years of negotiation! Significantly, in each case the injunction was suspended, thereby providing the defendant with the necessary time to find an alternative to outright closure. As Pontin notes: ‘The costs to industry were bearable, and indeed in each case the defendant had a choice as to compliance. Thus, the law afforded them a measure of flexibility’ (p 167). 

The rise of law and economics

As I've written before, the law and economics movement is of cardinal importance in the legal-environmental history of the last half century. US Intellectual History Blog recently hosted a guest post by Sara Mayeux, "Three Ways of Explaining the Rise of 'Law and Economics,' and Also, One Way". Mayeux discusses "three recent accounts, each emphasizing a different causal mechanism: the two chapters on law and economics in Steven Teles’s book The Rise of the Conservative Legal Movement; the discussion of law and economics in [Daniel] Rodgers’s Age of Fracture; and Brad Snyder’s recent article 'The Former Clerks Who Nearly Killed Judicial Restraint.'” All resonate with the history of economic analysis in environmental law. Some highlights:

Richard Posner

Like most accounts of law and economics, Teles’s narrative begins with the University of Chicago Law School’s strong core of economics-oriented faculty going back to the 1930s and then proceeds to Richard Posner’s tenure at Chicago beginning in 1969. Teles quotes the legal scholar Douglas Baird, who explains how Posner’s prolific and eclectic output diffused law and economics to just about every doctrinal subfield: “In the early seventies, people like Posner would come in and spend six weeks studying family law, and they’d write a couple of articles explaining why everything everyone was saying in family law was 100 percent wrong. And then the replies would be, ‘No, we were only 80 percent wrong.’ And Posner never got things exactly right, but he always turned everything upside down, and people talked about law differently” (Douglas Baird quoted in Teles, 99-100).

*****

In contrast to Teles’s emphasis on particular personalities and institutions, Daniel Rodgers paints law and economics as one detail in a larger panorama. Law, in his account, is one of many ships on the sea of the 1980s, all buffeted in the same direction by the same storm: “the chaotic economic turmoil of the 1970s” (44). In the chapter of Age of Fracture entitled “The Rediscovery of the Market,” Rodgers describes the 1980s as a moment of widespread cultural “enchantment” with the word “market” and all that it represented (41), borne of a collective longing to understand and, perhaps, control the turbulent economic forces that were remaking America in so many confusing ways. He subsumes law and economics into this larger cultural turn, offering it as just one more discipline-specific example among many: “In the universities, the analytical tools of microeconomics were employed to extend models of utility-maximizing behavior into virtually every quirk and cranny of human life. Lawyers talked knowingly of Pareto optimality and the Coase theorem; philosophers and political theorists debated analytical models of rational choice. In more and more contexts and in answer to a broader and broader range of questions, one heard now that ‘the market decides’” (42). 

RIP Ronald Coase

Nobel Prize-winning economist and law school professor Ronald Coase passed away earlier this month at the age of 102.

Coase's 1960 article, "The Problem of Social Cost", the most-cited law review article of all time, had an immense effect on both the study of environmental law and its design, providing intellectual backing for two prominent trends in environmental law of the last few decades: market-based policies and cost-benefit analysis. As Cass Sunstein explains:

His target was the great British economist Arthur Cecil Pigou, who contended that if a polluter is emitting smoke, and thus causing injury, the best response is to make the factory owner pay for the injury or to impose a corrective tax.

Coase said Pigou failed to see “the reciprocal nature of the problem.” Suppose that a very noisy factory is causing legal injury to a doctor operating next door. Under Pigou’s approach, the factory should be required to pay damages to the doctor. But Coase pointed out that we could also make the doctor bear the cost. His central insight was that if people can bargain with one another, and if it isn’t costly for them to do so, it just doesn’t matter who is required to pay: People will negotiate their way to the efficient solution. This is the Coase theorem in a nutshell.