Chapter 4

COMMON LAW, STATUTORY LAW,

AND ADMINISTRATIVE LAW
Solution Manual for Cengage Advantage Books
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Suggested Additional Assignments

Evolution of the Common Law
Ask students to summarize the common law principles of the bystander cases in the text and then create
their own bystander examples. First, students should write a two- or three-sentence summary of the law
given in each of these cases: Union Pacific Railway Co. v. Cappier, Carey v. Davis, Osterlind v. Hill,
Tarasoff v. Regents of the University of California, and Parra v. Tarasco. Then students should create their
own modern hypothetical bystander situation and provide brief arguments for and against liability. This
should help them see the gradual evolution of the law, and anticipate future changes in this doctrine.

Research: Legislative Process

Have students find a newspaper article on a bill that is working its way through Congress. They should
report on the bill's exact status: which house it is in, which committee is responsible for it, who favors and
opposes it, what interests are at stake, and what lobbyists have an interest in it. If the article makes no
mention of lobbyists, which ones would the students expect to be involved? What is their view of the
proposed legislation? Students may want to supplement the text by reading How Our Laws Are Made on
the Library of Congress’ THOMAS website (http://thomas.loc.gov/home/lawsmade.toc.html).

Research: Campaign Finance

Have students research campaign contributions made in a recent U.S. House or Senate campaign. Campaign
finance reports and data are available at the Federal Election Commission website at
http://www.fec.gov/disclosure.shtml. Students can track how much money each candidate received, the
identity of major contributors, which organizations spent money on electioneering communications, and
how much they spent.

1
2 Unit 1 The Legal Environment

Agency Law
Students should write one-paragraph descriptions of three federal or state agency regulatory programs that
affect their lives in some way. For example, a student could discuss airline regulation, food safety
inspection, automobile recalls, and so forth. Students should identify the agency involved, summarize the
regulatory scheme, and briefly explain how those regulations affect them.

Research: Regulated Industries

Ask students to identify what industry they intend to enter upon graduation. For example, banking, financial
planning, accounting, insurance, advertising, etc. Then ask students to research the various federal and state
regulations that apply to that industry and report to the class.

Chapter Overview
Chapter Theme
Law is complex. Law becomes less baffling when we understand the different types of law and how law is
made. This chapter examines Common Law, Statutory Law, and Administrative Law.

Common Law
The common law is judge-made law. It is the sum total of all the cases decided by appellate courts.

Stare Decisis
Stare decisis means “let the decision stand.” Once a court has decided a particular issue, the court
establishes precedent, and the court will generally apply the same rule in similar cases in the future.

A desire for predictability created the doctrine of stare decisis. Yet, there must also be flexibility in the law.
There must be some means to respond to new problems and a changing social climate.

Bystander Cases
The “bystander rule” is an example of the conflict between the need for predictability and for flexibility in
the law.

Historically, the common law rule about a bystander’s obligation was that a bystander had no duty to assist
someone in peril unless the bystander created the danger. Often criticized as harsh and cruel, courts
nonetheless followed this rule under the doctrine of stare decisis. The common law with respect to
bystander cases changed slowly, however, as courts over time found small exceptions to the rule.

Case: Tarasoff v. Regents of the University of California1

Facts: Prosenjit Poddar killed Tatiana Tarasoff. Tatiana's parents claimed that two months earlier Poddar
had confided his intention to kill Tatiana to Dr. Lawrence Moore, a psychologist employed by the
University of California at Berkeley. They sued the university, claiming that Dr. Moore should have warned
Tatiana and/or should have arranged for Poddar's confinement.
Issue: Did Dr. Moore have a duty to Tatiana Tarasoff? If so, did he breach that duty?

1
17 Cal. 3d 425, 551 P.2d 334, 131 Cal. Rptr. 14 Supreme Court of California, 1976.
Chapter 4 Common Law, Statutory Law, and Administrative Law 3

Decision: Yes, Dr. Moore had a duty to Tatiana Tarasoff.

Reasoning: Under the common law, one person generally owes no duty to control the conduct of another
or to warn anyone who is in danger. However, courts make an exception when the defendant has a special
relationship to a dangerous person or potential victim. A therapist is someone who has just such a special
relationship with a patient.
It is very difficult to predict whether a patient presents a serious danger of violence, and no one can be
expected to do a perfect job. A therapist must exercise only the reasonable degree of skill, knowledge, and
care ordinarily possessed by others in the field. In this case, however, there is no dispute about whether Dr.
Moore could have foreseen violence or predicted that Poddar would kill Tatiana. Once a therapist
determines, or reasonably should determine, that a patient poses a serious danger of violence to someone,
he must make reasonable efforts to protect the potential victim. The Tarasoffs have stated a legitimate claim
against Dr. Moore.
Question: After the Tarasoff case, do people generally have a duty to come to the aid of someone in
danger?
Answer: No. The case merely carves one small exception in the general rule.
Question: What is the exception that this decision creates?
Answer: Once a therapist determines, or should have determined, that a patient poses a serious danger
of violence to others, he must act reasonably to protect the potential victim.
Question: Therapists hear patients' anger all day long. How can a therapist know for sure whether a
patient is serious in making a threat?
Answer: The therapist need not do a perfect job. He must analyze a patient the way a reasonable
professional therapist would. If he concludes that the patient poses a serious threat, he must act.

Additional Case: Hardingham v. United Counseling Service of Bennington County, Inc.2

Hardingham was a recovering alcoholic. Defendant United Counseling Service (UCS) gave him a job as an
emergency services counselor. Halpin, UCS's executive director, learned that Hardingham was again
drinking. Halpin and other UCS employees went to Hardingham's home, where they found him inebriated.
They saw him attempt to drink from a bottle apparently filled with windshield wiper fluid. They took the
bottle away and took Hardingham to the local emergency room. Hardingham refused to take a blood test
and the UCS employees neglected to tell the hospital that he had evidently been drinking wiper fluid.
Because Hardingham refused to cooperate with hospital employees, the police took him to a correctional
center. Overnight, Hardingham suffered severe distress and the police returned him to the hospital. Tests
revealed methyl alcohol in his blood, apparently from the wiper fluid. The substance left Hardingham with
permanent injuries, including blindness. He sued UCS and its employees under 12 V.S. A. §519.
Question: Had his rescuers spent a few moments advising emergency room personnel that Hardingham
had drunk windshield washer fluid, they might have saved him from blindness and other serious
injuries. Why doesn’t the court hold them liable for their failure to perform such a simple act?
Answer: The Vermont Good Samaritan statute3 states that a bystander who provides assistance to one
in distress is only liable if he commits gross negligence. The majority of the Vermont Supreme Court
ruled that no reasonable juror could find this to be gross negligence because the rescuers, after all,
probably saved Hardingham’s life.

2
672 A.2d 480, 1995 Vt. LEXIS 129 Vermont Supreme Court 1995
3
12 V.S.A. §519 (requires a bystander to become involved in an emergency).
4 Unit 1 The Legal Environment

Additional Case: Pehle v Farm Bureau Life Insurance Company, Inc.4

Facts: When they applied for life insurance from Farm Bureau Life Insurance Company ("Farm Bureau")
in 1999 Wyoming resident Gary Pehle and his wife, Renna, did not know they were infected with the
Human Immunodeficiency Virus ("HIV"). Farm Bureau collected the initial premium and arranged for the
Pehles to obtain blood tests as part of the application process. Farm Bureau forwarded the blood samples
for analysis to LabOne, an independent laboratory, which reported the Pehle’s HIV-status to the insurance
company. Farm Bureau then rejected the Pehle’s application and advised them that it would disclose the
reason for their rejection to their physician if they desired. The Pehle’s did not follow up to learn the reason
for the rejection.
Two years later Renna Pehle was diagnosed with AIDS. They looked into their medical records and learned
that Farm Bureau had known of their HIV-positive status when it rejected their life insurance application.
The Pehles sued Farm Bureau, LabOne, and LabOne’s medical director, Dr. J. Alexander Lowden, for
negligence, for failing to tell them they were HIV-positive. The District Court found that Wyoming law
recognized no duty running from a life insurance company to its applicants or from a laboratory hired by
the life insurance company to its applicants. The court granted summary judgment in favor of all three
defendants. The Pehles appealed.
Issue: Did Farm Bureau, LabOne, and Dr. Lowden have a duty to notify the Pehles of their HIV-positive
status?
Holding: The Circuit Court of Appeals affirmed the trial court’s grant of summary judgment in favor of
LabOne and Dr. Lowden and reversed its judgment in favor of Farm Bureau. The court concluded “that if
an insurance company, through independent investigation by it or a third party for purposes of determining
policy eligibility, discovers that an applicant is infected with HIV, the company has a duty to disclose to
the applicant information sufficient to cause a reasonable applicant to inquire further.” The Pehle’s
relationship with LabOne and its medical director was attenuated but they had “a good deal of contact” with
Farm Bureau. Wyoming law had not directly addressed this issue, so the court made “an Erie-guess as to
how the Wyoming Supreme Court would rule.”
Farm Bureau argued that there is a legal distinction between a duty arising from misfeasance—acting
wrongfully—and nonfeasance—failing to act. It argued that its failure to notify the Pehles was nonfeasance
and put it in the same position under common law as a rescuer with no duty to help. The court did not agree
for two reasons. First, it believed Farm Bureau’s actions could be characterized as either misfeasance or
nonfeasance so any legal distinction between the two was not useful: “[p]utting HIV-positive applicants on
notice of their infection could be considered a normal part of testing for HIV...” Second, “it is not clear
whether Wyoming accepts the binary act/omission distinction in tort.” Whether Farm Bureau had a duty to
notify the Pehles of their HIV-status depends on whether the law implies the existence of a confidential
relationship “of trust and confidence:”
By encouraging the Pehles to purchase life insurance through them, Farm Bureau purported to act with the
Pehles' best interests in mind. In submitting to a procedure for extraction and consenting to an examination
of their blood, the Pehles demonstrated that Farm Bureau had gained their confidence. We do not think that
insurance companies must exist to treat or diagnose HIV in order for a duty to arise that necessitates that
applicants be properly put on notice to inquire further.
Because there was a genuine issue of material fact as to whether Farm Bureau disclosed to the Pehles
“information sufficient to cause a reasonable applicant to inquire further” the trial court incorrectly granted
summary judgment in favor of Farm Bureau.
Question: What is summary judgment?
Answer: A court may enter summary judgment in favor of one party when the parties do not dispute
important facts and the law requires that, on those undisputed facts, only one party can win.

4
397 F.3d 897, 2005 U.S. App. LEXIS 2051 Tenth Circuit Court of Appeals. 2005.
Chapter 4 Common Law, Statutory Law, and Administrative Law 5

Question: Why did Farm Bureau distinguish between misfeasance—acting wrongfully—and

nonfeasance—failing to act?
Answer: Farm Bureau characterized its failure to notify the Pehles as nonfeasance and said it was
analogous to the situation in the bystander cases, in which Farm Bureau as a bystander to the Pehles
had no duty to help them.
Question: Did the court agree?
Answer: No—the court said the distinction was not useful under Wyoming law.
Question: It appears that the Pehles never asked Farm Bureau why it rejected their application. If they
had shown the slightest curiosity about the reason isn’t it likely that they would have learned then of
their HIV-status?
Answer: Perhaps. The court cannot speculate on what might have happened. At trial, the court would
consider whether Farm Bureau’s denial of coverage would have caused a reasonable person to question
the reasons for the denial.
Question: Doesn’t this case create a troubling precedent for life insurance companies? How can they
know which medical conditions uncovered during blood work will impose on the company a duty to
notify the applicant?
Answer: The court’s ruling is narrow—it applies only to discovery that an insurance applicant is HIV-
positive.
Question: But couldn’t a future plaintiff use this case as precedent if an insurance company failed to
notify the plaintiff that it discovered some other serious disease during a blood test?
Answer: A future plaintiff in such a case would undoubtedly rely on this case as precedent but the
principle of stare decisis would not require a court to follow it unless the future case involved HIV-
status. A future court could chose to distinguish the facts of such later case from this one.

Statutory Law
Statutory law consists of statutes passed by legislative bodies. More law is created by statute than by the
courts.

Bills
A bill is a proposed statute. To become law, a bill must be voted on and approved by both houses of
Congress (the House of Representatives and the Senate). Once Congress passes a bill, the bill will be sent
to the President. If the President signs the bill, it becomes law and is then a statute. If the President opposes
the bill, he will veto it, in which case it is not law. Congress can pass the over the President’s veto with a
two-thirds majority in each house

Statutory Interpretation
Courts interpret a statute by using the plain meaning rule; then, if necessary, legislative history and intent;
and finally, if necessary, public policy.

Landmark Case: Griggs v. Duke Power Co.5

Facts: Duke Power used a high school completion requirement and an intelligence test in hiring and
promotion. The result was that fewer minority applicants qualified for jobs at Duke Power. Griggs sued
under Title VII.
Issue: Did Title VII of the 1964 Civil Rights Act require that employment tests be job-related?

5
401 U.S. 424, 91 S. Ct. 849, 1971 U.S. LEXIS 134 United States Supreme Court, 1971.
6 Unit 1 The Legal Environment

Decision: Yes, employment tests must be job-related.

Reasoning: Congress's goal in enacting Title VII is plain from its language: to achieve equality of
opportunity and remove barriers that have favored whites. An employer may not use any practice,
procedure, or test that perpetuates discrimination. This is true not only for overtly discriminatory behavior
but also for conduct that appears fair yet has a discriminatory effect. The key is business necessity. An
employment test or restriction that excludes blacks is prohibited unless it is required to do the particular
job. In this case, neither the high school completion requirement nor the general intelligence test is related
to job performance, and therefore neither is permissible.
Question: What is the important issue that the Griggs case resolved?
Answer: Whether an employment practice that was neutral on its face could still violate Title VII.
Question: May such a practice violate Title VII?
Answer: Yes.
Question: Why did the court rule as it did?
Answer: The court said that Congress enacted Title VII to achieve equality of employment opportunity
and remove barriers that had operated in the past to favor whites. If an employment practice, neutral on
its face, continued to favor whites, it violated the purpose of the law.

Administrative Law
Administrative Law consists of regulations, orders, rules, and decisions promulgated by administrative
agencies in order to perform powers and duties delegated to such agencies.

Agencies exist at the federal, state, and local level. Some federal agencies are part of the executive branch,
while others are independent agencies. The President has much greater control of executive agencies than
of independent agencies.

Rulemaking
Agencies may promulgate legislative rules, which generally have the effect of statutes, or interpretive rules,
which merely interpret existing statutes.

Investigation
Agencies have broad investigatory powers and may use subpoenas and, in some cases, warrantless searches
to obtain information. A subpoena is an order to appear at a particular time and place to provide evidence.

Adjudication
Agencies adjudicate cases, meaning that they hold hearings and decide issues. Adjudication generally
begins with a hearing before an Administrative Law Judge and may involve an appeal to the full agency or
ultimately to federal court.

Ubiquitous Agencies
It is ironic that the effect on our lives of administrative regulations is so pervasive, yet the process by which
administrative agencies create their regulations is rarely before us. What was the last movie or television
drama in which the protagonist delivered an impassioned speech to a regulatory board? Law and Order:
FTC has not made it to the airwaves. One can argue, however, that we experience the work of administrative
agencies more often than other law-making bodies.
Chapter 4 Common Law, Statutory Law, and Administrative Law 7

Landmark Case: United States v. Biswell6

Facts: Biswell operated a pawnshop and had a license to sell "sporting weapons." Treasury agents
demanded to inspect Biswell's locked storeroom without a warrant, claiming that the Gun Control Act of
1968 gave them that right. Under this law, Treasury agents had permission to inspect firearm dealers’
business records, firearms and ammunition during business hours.
Biswell voluntarily opened the storeroom, and the agent found two sawed-off rifles inside. The guns
did not remotely meet the definition of "sporting weapons," and Biswell was convicted on firearms charges.
The appellate court found that, because the search violated the Fourth Amendment, the rifles could not
be admitted as evidence. It reversed the conviction, and the government appealed to the Supreme Court.
Issue: Did the agent’s warrantless search violate the Constitution?
Decision: No, the agent had a right to search the firearm dealer’s premises without a warrant.
Reasoning: The Gun Control Act of 1968 was a valid statute aimed at regulating firearms and preventing
violent crime. As part of this effort, it gave the Treasury agents the right to perform frequent and
unannounced inspections of firearm dealers’ premises. What good is a firearm inspection that is announced
ahead of time? A warrant requirement would certainly frustrate the statute’s purpose of controlling illegal
guns.

Warrants protect an individual’s expectation of privacy. Biswell had no justifiable expectation of privacy
in his storeroom, since he, like all firearms dealers, knew that his business records, firearms and ammunition
were subject to inspection. Biswell accepted these rules when he obtained his license. In addition, he
received annual reminders.

Since inspections furthered the Gun Control Act’s important purpose and Biswell could not reasonably
expect his storeroom to be private, the seizure of the sawed-off rifles was permissible. They should have
been admitted into evidence.
Question: Why should this case be evaluated under the Power of Agencies?
Answer: Both because it is a retail operation, governed by the Treasury, and because it is a firearms
store, which must comply with the Gun Control Act of 1968.
Question: Should a Treasury agent be allowed to conduct a surprise search? Why or why not?
Answer: Yes, to ensure that business owners like Biswell comply with the law. Advance notification
of a search would give a business owner to hide any evidence of wrongdoing.
Question: Did the agent’s warrantless search violate the Constitution?
Answer: The court said that the search was reasonable and that Biswell had been informed that this
type of search was possible; thus, it did not violate the Constitution.

Additional Case: Doe v. Maryland Board of Social Works7

Facts: “Mrs. F” was a licensed social worker in Maryland. One of her clients, “John Doe,” was convicted
of child abuse and sex offenses involving his minor granddaughter. The Board of Social Work Examiners,
an administrative agency, learned that Mrs. F. had likely violated the law by failing to report the abuse. The
agency began an investigation and issued a subpoena duces tecum to Mrs. F., demanding all treatment
records for John Doe and his wife Jane Doe, for the year in which the abuse occurred.
The Does (“Petitioners”) sued, asking the court to quash the subpoena. They claimed that a social worker-
client privilege prohibited disclosure of their records. The intermediate Court of Appeals declared the
subpoena valid. The Does appealed to the state’s highest court.

6
406 U.S. 311, SUPREME COURT OF THE UNITED STATES (1972).
7
384 Md.161, 862 A.2d 996 Maryland Court of Appeals, 2004.
8 Unit 1 The Legal Environment

Issue: Was the subpoena valid?

Holding: Validity of subpoena affirmed. It wrote:
A state statute affords social workers and their clients similar protections that have long been applicable
to other relationships where privacy issues and the need for open communication are of paramount
importance, e.g., marital privilege, attorney—client privilege, psychiatrist/psychologist—patient
privilege, clergyman—communicant privilege, etc. We consider the information contained in those
treatment records to be both confidential and privileged. Therefore, we must examine the Board's claim
that its subpoena power and obligation to oversee the conduct of the licensed social workers of this
State provides an exception to petitioners' privilege and confidentiality rights as provided by law.
The Board’s interests in obtaining Ms. F’s treatment records are clearly compelling. The legislature
established the Board to protect the public by setting and maintaining high professional standards for
social work. As the Court of Special Appeals stated: "To deny the Board access to patient files is to
deny it the ability to carry out its legislative mandate.”
Neither the social worker—client privilege nor any claim concerning petitioners' constitutional right to
privacy automatically prevents the Board from subpoenaing petitioners' treatment records. While the
Board is required by law to protect the petitioners' treatment records from further disclosure, the Board
must be allowed to have access to those treatment records in order to fulfill its statutory mandate to
protect the public by conducting a full investigation and, where appropriate, disciplining those licensed
social workers who are found to be in violation of the [law].
Question: Did the Does move to quash the subpoena only because they sought to block the
investigation?
Answer: They had a valid basis for their claim. The court acknowledged that the Does’
communications with Mrs. F were confidential and privileged, and thus merited legal protection.
Question: If those communications were confidential, than why may the Board of Social Work
abrogate the Does’ privilege?
Answer: The Board must balance competing interests. It must balance the policies served by the Does’
privilege with its statutory mandate to protect the public. The Does’ cannot automatically block access
to their records just by asserting that they are privileged. In reviewing the validity of the subpoena, the
court must engage in similar balancing analysis.
Question: What facts support abrogating the privilege in this case?
Answer: Mrs. F, the Does’ social worker, may have violated her legal duty to report Mr. Doe’s abuse
of his minor granddaughter. One responsibility of the Board of Social Work is to investigate whether a
social worker has performed her duties consistently with professional standards and legal requirements.
The Board could not satisfy its responsibility without obtaining and examining Mrs. F’s records of her
treatment sessions with the Does.
General Question: If in reviewing the records, the Board discovered evidence that the Does had
committed other crimes, could the Board act on its knowledge?
Answer: Agency subpoenas occasionally unearth evidence that may form the basis for a referral to the
Department of Justice for criminal prosecution.

Additional Case: Leonard R. Friedman v. Board of Registration in Medicine8

Facts: The patient first saw Friedman, a board-certified forensic psychiatrist, at his office in 1980. She
continued to visit him at least monthly until the summer of 1982. During a board hearing, the board found
that during one or more of three office visits some form of sexual activity took place between Friedman
and the patient. The board's decision recounts patient’s testimony regarding what happened on these
occasions, but it does not make explicit findings about what occurred.

8 408 Mass. 474, Supreme Judicial Court of Massachusetts, Suffolk.

Chapter 4 Common Law, Statutory Law, and Administrative Law 9

The board should not have simply recited the patient's testimony. It should have made findings of fact based
on, or in rejection of, her testimony. It is clear, however, that the board disbelieved Friedman's denials and
rejected his claim that the patient was out to get even with him. The board found that Friedman had exploited
the patient sexually. Psychiatrist appealed.
Among the substantial evidence was testimony concerning a telephone conversation between the patient
and Friedman. Patient’s son listened to the conversation on an extension line. In that conversation, the
patient accused Friedman of sexual exploitation. Friedman did not deny the accusation.
Neither during the telephone conversation nor at the hearing did Friedman admit to the truthfulness of the
patient's statements. He testified that it would have been inappropriate in the circumstances if he had called
her a liar during the telephone conversation.
Issue: Did the hearing officer err when he found that Dr. Friedman had sexually exploited his patient even
the hearing officer failed to make findings about what had occurred?
Holding: The Board finds that there was no error. The Board of Registration in Medicine revoked the
registration of a forensic psychiatrist to practice medicine on the ground that the psychiatrist, who
participated in sexual conduct with a patient during one or more office visits, had engaged in gross
misconduct in the practice of medicine.
Question: What does it mean for the Board to make findings about the testimony?
Answer: A finding is a decision or verdict based on facts or evidence presented during a trial. Findings
of fact are used in formulating a judgment.
Question: Why is that an issue here?
Answer: Mere recitation of facts cannot justify a judgment. A judge must decide the case based on a
logical consistency to justify the conclusion. Without that, it is possible to strip the doctor of his license
without justifying why. The Board corrected that error, but affirmed the decision.

Limits on Agency Power

The four most important limitations on the power of federal agencies are statutory control in the enabling
legislation and the Administrative Procedure Act; political control by Congress and the President; judicial
review; and the informational control created by the Freedom of Information Act and the Privacy Act.

Students should understand that control can often be affected by means other than lawsuits and legislation.
Students should pay particular attention to the amount of deference courts employ in reviewing
administrative decisions, which is discussed in the text.

Case: Fox Television Stations, Inc. v. Federal Communications Commission9

Facts: “People have been telling me I’m on the way out every year, right? So f*** ’em,” said Cher, on a
televised Billboard Music Awards ceremony. A year later, on the same program, Nicole Richie asked,
“Have you ever tried to get cow s*** out of a Prada purse? It’s not so f****** simple.”
U.S. law bans the broadcast of “any obscene, indecent, or profane language.” The Federal Communications
Commission (FCC), which regulates the broadcast industry, had issued guidelines indicating that the
utterance of an isolated vulgarity was acceptable so long as it was not repeated at length. After Nicole
Richie explained the difficulties of cleaning a Prada purse, the FCC declared a more stringent indecency
policy. This stricter standard made a single fleeting expletive punishable if the word was "patently
offensive". But the FCC failed to give a clear definition of the term, and it enforced the new rule unevenly.
For example, it allowed bad language during news interviews and films, but condemned the same words in
other contexts.

9
613 F.3d 317, 2d Circuit Court of Appeals, 2010.
10 Unit 1 The Legal Environment

When the FCC found that Fox had violated the agency’s standards by broadcasting Cher and Nicole
Richie’s three words, Fox argued that the new policy was too vague and arbitrary. The Appeals Court
agreed with Fox. The Supreme Court granted certiorari.
Issue: Was the FCC’s indecency policy unacceptably vague and arbitrary?
Decision: Yes, the FCC had failed to give broadcasters fair notice of what kind of conduct could be
punished. And it did not apply the rules equally to everyone.
Reasoning: The FCC has the right to set and change its policies. However, laws must provide a person of
ordinary intelligence with reasonable notice of what behavior is prohibited. How could Fox have known
that a fleeting F-word on live TV was forbidden when at other times such words were not? It could not and
it did not.
Clear rules also ensure that government agencies do not act in an arbitrary or discriminatory fashion. To be
fair, they must treat the same behavior in the same way. Never before had the FCC penalized this conduct.
In fact, even after its stricter indecency standard was set, the FCC allowed the utterance of the F-word in
other contexts. The FCC cannot penalize Fox if it then ignores the same behavior in others.
Question: Does the court’s ruling mean that it agrees with the networks and fleeting use of expletives
in broadcasts is legitimate?
Answer: No. The court does not consider that issue on its merits. Instead, the court asks whether the
FCC decision to change its policy was well-reasoned.
Question: Why did the court decide that the FCC decision was not well-reasoned?
Answer: The court decided that the FCC’s decision was not well-reasoned because many of the
justifications for the change in policy offered by the FCC are contrary to the agency’s practice. For
example, the “first blow” theory offered by the FCC does not actually reflect what they practice because
the agency actually does allow some use of profanity such as during a “bona fide news interview.”
According to the FCC, even deliberate use of profanity would be allowed if such use were “integral”
to the work.
Question: Doesn’t it seem to be a good public policy to prohibit expletives on network broadcasts
when children could be watching or listening? Why doesn’t the court exercise its power to ban such
language?
Answer: Even if the court agreed with the FCC, it must make sure the FCC operates within its authority
and follows the proper process for making regulations and establishing policy.

Freedom of Information Act (FOIA)

Congress passed the landmark Freedom of Information Act (known as “FOIA”) in 1966. It is designed to
give all of us, citizens, businesses, and organizations alike, access to the information that federal agencies
are using. The idea is to avoid government by secrecy.

Additional Case: Perlman v United States Department of Justice10

Facts: Perlman filed a request under FOIA with the Department of Justice ("DOJ") seeking the release of
a 143-page Report of Investigation ("ROI") by DOJ's Office of the Inspector General. The ROI discussed
allegations of impropriety on the part of Immigration and Naturalization Service (“INS”) officials in
running the EB-5 Investor Visa Program ("EB-5"), created in 1990 to offer special American visas to
wealthy foreigners who invested between $500,000 and $1 million in business ventures employing at least
ten American workers. The INS approved for inclusion in the EB-5 program the use of limited partnerships
to which foreign investors contributed cash in an amount less than $500,000 and pledged promissory notes
to meet the minimum investment required by the EB-5 program. Participating investors could thus obtain
a green card without having to put up the remaining money.

10
312 F.3d 100; 2002 U.S. App. LEXIS 24070 U.S. Court of Appeals for the Second Circuit 2002.
Chapter 4 Common Law, Statutory Law, and Administrative Law 11

Allegations surfaced that former INS officials who were involved with these partnerships received improper
preferential treatment from current INS employees. The DOJ's Inspector General investigated the
allegations, particularly the role of Paul Virtue, former INS deputy general counsel and produced the ROI.
The ROI consists of (1) a synopsis, (2) a subject of investigation form, containing basic information on
Virtue, (3) a list of the 40 memoranda of investigation ("MOIs"), and (4) the MOIs.
The DOJ's Office of Inspector General denied Perlman's FOIA request, relying on two FOIA exemptions:
Exemption 6, concerning personnel and similar files, and Exemption 7(C), concerning reports compiled for
law enforcement purposes. Perlman administratively appealed the denial. In response to Perlman's
administrative appeal DOJ's Office of Information and Privacy ordered the disclosure of 49 report pages,
most redacted in some respect, but otherwise upheld the prior denial. Perlman filed a lawsuit challenging
the agency’s failure to release the entire ROI. After the DOJ moved for summary judgment the trial court
conducted in camera review of the entire ROI and granted DOJ's motion in part and denied it in part. It
found the ROI was compiled for law enforcement purposes because it investigated possible violations of
law by Virtue and was covered by Exemption 7(C). It also determined that the ROI was a "similar file"
because it contained private information similar to that contained in personnel files, bringing it within
Exemption 6. The District Court further found Virtue's privacy interests in withholding the ROI outweighed
the public's interest in disclosure.
Issue: Did Exemptions 7(C) and 6 exempt the ROI from disclosure under FOIA?
Holding: The court agreed with the trial court that Exemption 7(C) applied to the ROI prepared by the
DOJ’s Inspector General. Perlman argued that Exemption 7(C) did not apply because the ROI concerned
an investigation of the EB-5 program as a whole, not Virtue personally. Review of a claim under Exemption
7(C) involves two steps: "a document must first be shown to have been compiled for a law enforcement
purpose, and if so, the agency must also demonstrate that release of the material would result in one of the...
harms specified in the [FOIA]." An Inspector General of a federal agency engages in law enforcement
activities for purposes of FOIA. The court’s in camera review of the ROI led it to conclude that it was
prepared for law enforcement purposes and thus within the scope of Exemption 7(C).
The court also disagreed with Perlman’s argument that Exemption 6 did not apply because “the ROI was
similar to a personnel file because (1) the ROI did not involve a disciplinary proceeding; and (2) the ROI
responded to specific allegations, not routine record keeping requirements.” Exemption 6 allows an agency
to withhold "personnel and medical files and similar files." The term “similar files” is to be construed
broadly. The ROI contains personal information about Virtue and his alleged misconduct and qualifies as
a similar file under Exemption 6.
These conclusions did not end the court’s analysis. Perlman argued that the public’s interest in disclosure
of the investigation into the EB-5 program outweighed the privacy interests of those mentioned in the ROI.
The court disagreed with Perlman as to the privacy interests of witnesses and third parties, but concluded
“that the public's interest in disclosure of the ROI, with limited exceptions, substantially outweighs Virtue's
privacy interests.” With respect to Virtue the court considered
“(1) the government employee's rank; (2) the degree of wrongdoing and strength of evidence against
the employee; (3) whether there are other ways to obtain the information; (4) whether the information
sought sheds light on a government activity; and (5) whether the information sought is related to job
function or is of a personal nature. The factors are not all inclusive and no one factor is dispositive.”
Virtue’s status as former INS deputy general counsel, role as administrator of the EB-5 program and
overseer of the investor limited partnerships, and the investigation’s focus on the manner in which
government employees discharged their duties, all weighed in favor of disclosure. The court remanded the
matter for further proceedings consistent with its opinion.
Question: The Court of Appeals concluded that the ROI fell within Exemptions 7(C) and 6. Why didn’t
that end the court’s analysis?
Answer: The FOIA also required a court to balance the privacy interests of those mentioned in the ROI
and the public’s interest in disclosure.
Question: The court concluded that disclosure was warranted with respect to Virtue. How can that be
accomplished while protecting the privacy interests of witnesses and third parties?
12 Unit 1 The Legal Environment

Answer: The INS can redact the report before releasing it, i.e. remove from the body of the report those
sections that should remain private.

Privacy Act
This 1974 statute prohibits federal agencies from giving information about an individual to other agencies
or organizations without written.

Multiple Choice Questions

1. A bill is vetoed by ________________.
(a) The Speaker of the House
(b) A majority of the voting members of the Senate
(c) The President
(d) The Supreme Court
Answer: C.

2. If a bill is vetoed, it may still become law if it is approved by __________________.

(a) 2/3 of the Supreme Court
(b) 2/3 of registered voters
(c) 2/3 of the Congress
(d) The President
(e) An independent government agency
Answer: C.

3. Which of the following Presidents was most influential in the passing of the Civil Rights Act?
(a) Franklin D. Roosevelt
(b) Ronald Reagan
(c) Abraham Lincoln
(d) John F. Kennedy
(e) George W. Bush
Answer: D.

4. Under the Freedom of Information Act, any citizen may demand information about
(a) How an agency operates
(b) How an agency spends its money
(c) Files an agency has collected on the citizen herself
(d) All of the above
Answer: D.
Chapter 4 Common Law, Statutory Law, and Administrative Law 13

5. If information requested under the Freedom of Information Act is not exempt, an agency has _________
to comply with the request.
(a) 10 days
(b) 30 days
(c) 3 months
(d) 6 months
Answer: A.

Essay Questions
1. Until recently, every state had a statute outlawing the burning of American flags. But in Texas v. Johnson,
the Supreme Court declared such statutes unconstitutional, saying that flag burning is symbolic speech,
protected by the First Amendment. Does Congress have the power to overrule the Court’s decision?
Answer: No. When the Supreme Court declares that the Constitution protects an activity, such as flag
burning, that is the final word. This is different from the Griggs-Wards Cove dispute. There, the Court
was simply interpreting a statute, the 1964 Civil Rights Act. Whenever Congress believes that the Court
has misinterpreted a statute, it is free to pass a law correcting the interpretation. But Congress has no
power to overrule the Court on a matter of constitutional rights.

2. In 1988, terrorists bombed Pan Am Flight 103 over Lockerbie, Scotland, killing all passengers on board.
Congress sought to remedy security shortcomings by passing the Aviation Security Improvement Act
of 1990, which, among other things, ordered the Federal Aviation Authority (FAA) to prescribe
minimum training requirements and staffing levels for airport security. The FAA promulgated rules
according to the informal rulemaking process. However, the FAA refused to disclose certain rules,
concerning training at specific airports. A public interest group called Public Citizen, Inc., along with
family members of those who had died at Lockerbie, wanted to know the details of airport security.
What steps should they take to obtain the information? Are they entitled to obtain it?
Answer: The groups should, and did, file an “FOIA request”–i.e., a request for documents pursuant to
the Freedom of Information Act. Most agency information must be made available to the public. But
certain information may be exempt. The FOIA exempts matters pertaining to national security. In
addition, the Aviation Security Improvement Act of 1990 added additional documents that can be
exempt–namely, those pertaining to airport security.

3. The Aviation Security Improvement Act (ASIA) states that the FAA can refuse to divulge information
about airport security. The FAA interprets this to mean that it can withhold data in spite of the FOIA.
Public Citizen and the Lockerbie family members interpret FOIA as being the controlling statute,
requiring disclosure. Is the FAA interpretation binding?
Answer: No. Pursuant to the Chevron case, a court will look to see if there is clear congressional intent.
If there is, it must be followed. If there is not, then the agency's interpretation will be followed if it is
“permissible,” meaning reasonable. In Public Citizen, Inc. v. FAA, 988 F.2d 186, 1993 U.S. App.
LEXIS 6024 (D.C. Cir. 1993), the court found that there was a clear congressional intent: to permit the
ASIA to exempt additional information from public disclosure for purposes of airport security. The
agency's view became irrelevant, but plaintiffs lost anyway.

4. An off-duty, out-of-uniform police officer and his son purchased some food from a 7-Eleven store and
were still in the parking lot when a carload of teenagers became rowdy. The officer went to speak to
14 Unit 1 The Legal Environment

them and the teenagers assaulted him. The officer shouted to his son to get the 7-Eleven clerk to call
for help. The son entered the store, told the clerk that a police officer needed help, and instructed the
clerk to call the police. He returned 30 seconds later and repeated the request, urging the clerk to say it
was a Code 13. The son claimed that the clerk laughed at him and refused to do it. The policeman sued
the store. Argument for the Store: We sympathize with the policeman and his family, but the store
has no liability. A bystander is not obligated to come to the aid of anyone in distress unless the bystander
created the peril, and obviously, the store did not do so. The policeman should sue those who attacked
him. Argument for the Police Officer: We agree that in general a bystander has no obligation to come
to the aid of one in distress. However, when a business that is open to the public receives an urgent
request to call the police, the business should either make the call or permit someone else to do it.
Answer: The Maryland high court established another exception to the bystander rule. “It is
evident...that a shopkeeper has a legal duty to come to the assistance of an endangered business visitor
if there is no risk of harm to the proprietor or its employees.” The police officer was a business invitee
because he had bought food, and the clerk was obligated to take reasonable affirmative steps to protect
him. Southland Corp. v. Griffith, 332 Md. 704, 633 A.2d 84 (1993).

5. Federal antitrust statutes are complex, but the basic goal is straightforward: to prevent a major industry
from being so dominated by a small group of corporations that they destroy competition and injure
consumers. Does Major League Baseball violate the antitrust laws? Many observers say that it does. A
small group of owners not only dominate the industry, but actually own it, controlling the entry of new
owners into the game. This issue went to the United States Supreme Court in 1922. Justice Holmes
ruled, perhaps surprisingly, that baseball is exempt from the antitrust laws, holding that baseball is not
“trade or commerce.” Suppose that members of Congress dislike this ruling and the current condition
of baseball. What can they do?
Answer: The congressmen could introduce a bill overruling the Supreme Court's interpretation of
federal antitrust statutes. The bill would specify that baseball is part of trade and commerce, and that
Congress intends that it be subject to the antitrust laws, the same as any other nationwide industry.

Discussion Questions
1. Courts generally follow precedent, but in the Tarasoff and Soldano (Chapter 1) cases discussed early in
this chapter, they did not. Consider the opening scenario at the Old Abandoned Mill. Should the hiker
bear any legal responsibility for Gary's untimely end? Or, should a court follow precedent and hold the
lazy hiker blameless?
Answer: Answers will vary.

2. Revisit the Fox Television Stations case. Do you agree with the opinion? What would a sensible broadcast
obscenity policy contain? When, if ever, should a network face fines for airing bad language?
Answer: Answers will vary.

3. Revisit United States v. Biswell. Do you agree with the Court’s decision? Is it reasonable that government
agencies can conduct searches more freely if a business is in an industry that is comprehensively
regulated? Should a pawnshop face more searches than other kinds of enterprises, or should the rules
be the same for all companies?
Answer: Answers will vary.
Chapter 4 Common Law, Statutory Law, and Administrative Law 15

4. FOIA applies to government agencies, but it exempts Congress. Should top lawmakers be obligated to
comply with FOIA requests, or would that create more problems than it would solve?
Answer: Answers will vary.

5. Suppose you were on a state Supreme Court and faced with a restaurant-choking case. Should you require
restaurant employees to know and employ the Heimlich maneuver to assist a choking victim? If they
do a bad job, they could cause additional injury. Should you permit them to do nothing at all? Is there
a compromise position? What social policies are most important?
Answer: Answers will vary.