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Volume 38 No. 1 2005 


JUL 1 2005 



"You Have the Right to Remain Silent": 
A Case for the Use of Silence as Substantive Proof of the Criminal Defendant's Guilt 

David S. Romantz 

Government Power Unleashed: Using Eminent Domain to Acquire a Public Utility 

or Other Ongoing Enterprise 
Shelley Ross Saxer 

National Ingratitude: The Egregious Deficiencies of the United States' Housing 
Programs for Veterans and the "Public Scandal" of Veterans' Homelessness 

Florence Wagman Roisman 

The Descendants of Fassihi: A Comparative Analysis of Recent Cases Addressing the 

Fiduciary Claims of Disgruntled Stakeholders Against Attorneys 

Representing Closely-Held Entities 

Matthew J. Rossman 


Global Positioning System Implants: Must Consumer Privacy Be Lost in 

Order for People to Be Found? 

Kristen E. Edmundson 

The Day the Music Died: The RIAA Sues Its Consumers 
Andrew C. Humes 

The End of Time for Equal Time?: Revealing the Statutory Myth of 
Fair Election Coverage 
Anne Kramer Ricchiuto 

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Indiana Law Review 

Volume 38 


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Indiana Law Review 

Volume 38 2005 Number 1 

Copyright © 2005 by the Trustees of Indiana University 



" You Have the Right to Remain Silent " : 

A Case for the Use of Silence as Substantive Proof 

of the Criminal Defendant's Guilt ........... David S. Romantz 1 

Government Power Unleashed: Using Eminent 
Domain to Acquire a Public Utility 
or Other Ongoing Enterprise Shelley Ross Saxer 55 

National Ingratitude: The Egregious Deficiencies of the 
United States' Housing Programs for Veterans 
and the "Public Scandal" of 
Veterans' Homelessness Florence Wagman Roisman 103 

The Descendants of Fa55//i/: A Comparative Analysis of 
Recent Cases Addressing the Fiduciary Claims of 
Disgruntled Stakeholders Against Attorneys 
Representing Closely-Held Entities Matthew J. Rossman 111 


Global Positioning System Implants: Must Consumer 
Privacy Be Lost in Order for People to 
Be Found? Kristen E. Edmundson 207 

The Day the Music Died: The RIAA Sues 

Its Consumers Andrew C. Humes 239 

The End of Time for Equal Time?: Revealing 
the Statutory Myth of Fair 
Election Coverage Anne Kramer Ricchiuto 267 

Volume 38 Number 1 

Indiana Law Review 

Volume 38 2005 Number 1 


''You Have the Right to Remain Silent'': 

A Case for the Use of Silence as Substantive Proof 

OF THE Criminal Defendant's Guilt 

David S. ROMANTZ* 
The cruellest lies are often told in silence} 


A fundamental canon of criminal justice demands that the government 
produce evidence against the accused "by its own independent labors, rather than 
by the cruel, simple expedient of compelling it from his own mouth."^ To 
effectuate this promise, the Fifth Amendment's Self-incrimination Clause 
provides that, "[n]o person shall ... be compelled in any criminal case to be a 
witness against himself."^ The core protection guaranteed by this clause 
prohibits the government from compelling a defendant to bear witness against 
himself at his own criminal trial."^ The criminal trial, and not the government's 
investigation of crime, is the bailiwick of the clause's proscriptions. To perfect 
the protection afforded by the Fifth Amendment, however, the Court has allowed 
a person to invoke the privilege against self-incrimination before his criminal 
trial, but only when his answers in response to official questions might 

* Assistant Professor of Law, The University of Memphis, Cecil C. Humphreys School of 
Law. B.A. 1987, The University of Michigan; J.D., with honors, 1995, Suffolk University Law 
School. The author is grateful to Albert Chollet for his excellent research assistance and to the 
University of Memphis for providing financial support. 

1. Robert Louis Stevenson, Virginibus Puerisque 31 (J.M. Dent & Sons, Ltd. 1963) 

2. Miranda v. Arizona, 384 U.S. 436, 460 (1966) (citing Chambers v. Florida, 309 U.S. 227, 
235-38 (1940)). 

3. U.S. Const, amend. V. The Due Process Clause of the Fourteenth Amendment protects 
defendants in state proceedings against compulsory self-incrimination to the same extent as it 
protects defendants in federal proceedings. See Malloy v. Hogan, 378 U.S. 1,11 (1964) (holding 
that, under the Fourteenth Amendment Due Process Clause, the admissibility of inculpatory 
statements in a state criminal prosecution is tested by the same standard applied in federal criminal 

4. See Griffin v. California, 380 U.S. 609, 614-15 (1965) (holding the Fifth Amendment 
prohibits the government from commenting on the defendant's decision not to testify); see also 
infra note 115 and accompanying text (discussing Griffin v. California). 


incriminate him in future criminal proceedings.^ This rule stems from the 
observation that "an inability to protect the right at one stage of a proceeding may 
make its invocation useless at a later stage."^ 

The Supreme Court's seminal opinion in Miranda v. Arizona again extended 
the Fifth Amendment's privilege against self-incrimination to include 
incriminating statements made in the course of a custodial interrogation during 
the investigation of crime.'' Generally, Miranda announced that when a 
defendant is subjected to custodial interrogation, his statements are inadmissible 
as substantive proof of his guilt unless he voluntarily and knowingly waives his 
rights after the police (or other government official) first apprise him of the now- 
famous Miranda warnings.^ These warnings remind a defendant 

that he has the right to remain silent, that anything he says can be used 
against him in a court of law, that he has the right to the presence of an 
attorney, and that if he cannot afford an attorney one will be appointed 
for him prior to any questioning if he so desires.^ 

A defendant who remains silent after receiving the warnings is presumed to have 
invoked his right to remain silent. 

Since Miranda, the Court has tempered its prophylactic rule and allowed the 
government to use a defendant's pre-Miranda silence to impeach his credibility, 
largely relying on the idea that a defendant's pre-Miranda silence is not linked 
to the warning's implicit assurance that silence would carry no penalty, and the 
idea that silence, absent official compulsion, simply does not raise a 
constitutional concern.'^ These ideas have allowed some federal courts to permit 
the government to use a defendant's pre-arrest and pre-Miranda silence against 
him not only to impeach his credibility, but also to prove his guilt. ^^ Other 
federal circuits, however, have read broadly Miranda and its progeny to prohibit 
the use of a defendant' s pre-Miranda silence in the government' s case-in-chief . '^ 

5. See Minnesota v. Murphy, 465 U.S. 420, 426 (1984) (stating that the Fifth Amendment 
protects a person before his criminal trial); see also Lefkowitz v. Turiey, 414 U.S. 70, 77 (1973). 
The Lefkowitz Court would allow a person to invoke his privilege against self-incrimination in any 
"proceeding, civil or criminal, formal or informal." Lefkowitz, 414 U.S. at 77. To prevent the 
government from compromising his rights, the Self-incrimination Clause also bars the government 
from commenting on the defendant' s exercise of his right not to testify. See Chapman v. California, 
386 U.S. 18, 25-26 (1967) (holding the government may not comment on defendant's failure to 

6. Michigan v. Tucker, 417 U.S. 433, 440-441 (1974). 

7. See infra Part II (discussing Miranda v. Arizona). 

8. See infra Part II (discussing Miranda v. Arizona). 

9. Mirandav. Arizona, 384 U.S. 436,479(1966). 

1 0. See infra notes 1 22-26 and accompanying text (discussing the use of pre-Miranda silence 
to impeach a defendant). 

11. See generally infra Part IV (discussing the split in federal circuits over the use of a 
defendant's pre-Miranda silence in the government's case-in-chief). 

12. See generally infra Part IV. A (discussing federal circuits that bar, on constitutional 


Still other circuits bar the use of a defendant's pre-Miranda silence in the 
government's case-in-chief, but on evidentiary grounds, not on constitutional 
grounds.'^ Thus, despite the Court's steady effort since Miranda to plug the 
doctrinal holes in its original opinion, the question remains whether the Fifth 
Amendment's Self-incrimination Clause reaches a defendant's prc-Miranda or 
pre-arrest silence thereby barring its use in the government's case-in-chief, or 
whether the warnings themselves trigger the defendant's constitutional right to 
remain silent thereby allowing the government to use his pre-Miranda. silence as 
substantive proof of his guilt J"^ 

This Article will examine the use of a defendant's pre-M/ran^ia silence in the 
government's case-in-chief. First, the Article will explore briefly the history and 
the use of a defendant's silence before the Court decided Miranda v. Arizona. 
Second, the Article will discuss the Miranda opinion — the rules it announced and 
the rules it did not announce. Third, this Article will examine Miranda's 
progeny, focusing on the Court's treatment of silence in its impeachment cases. 
Fourth, the Article will examine the split in the federal circuit courts of appeal 
on the issue of whether the government's use of a defendant's pre-Miranda 
silence to prove his guilt violates the Constitution. Finally, this Article posits 
that neither Miranda nor the Constitution bar the use of a defendant's pre-arrest 
or pvt-Miranda silence in the government's case-in-chief. 

I. The Use OF Silence Before M//MA^DA 

In 1926, the United States Supreme Court determined that a criminal 
defendant who elects to testify on his own behalf may be impeached by his own 
prior silence. ^^ In Raffel v. United States, the petitioner was indicted and twice 
tried for conspiring to sell alcoholic beverages in violation of the National 
Prohibition Act.*^ At his first trial, the petitioner did not offer himself as a 

grounds, the use of a defendant's silence in the government's case-in-chief). 

1 3 . See generally infra Part IV. B (discussing federal circuits that do not bar on constitutional 
grounds the use of a defendant's silence in the government's case-in-chief). 

14. In fact, the United States Supreme Court recently considered no less than four cases 
construing Miranda v. Arizona in its 2003-2004 term alone. See United States v. Patane, 124 S. 
Ct. 2620, 2630 (2004) (holding that police officer's failure to recite the Miranda warning does not 
require suppression of physical evidence discovered through defendant's unwarned but voluntary 
statements); Missouri v. Siebert, 124 S. Ct. 2601, 2604-05 (2004) (holding that a defendant's post- 
Miranda-'waming confession made after an unwarned confession was inadmissible at trial); Hiibel 
V. District Court, 124 S. Ct. 2451, 2460-61 (2004) (holding that a defendant's refusal to identify 
himself to police did not violate his Fifth Amendment right against self-incrimination); Yarborough 
V. Alvarado, 124 S. Ct. 2140, 215 1-52 (2004) (holding that state court properly applied federal law 
when it determined that juvenile defendant was not in custody for Miranda purposes). 

15. Raffel v. United States, 271 U.S. 494, 498-99 (1926). The Raffel Court did not address 
whether evidence of a defendant's prior silence could be used in the prosecution's case-in chief; 
the Court only ruled on the use of silence to impeach a defendant who testifies on his own behalf 

16. /^. at 495. 


witness, but the jury heard incriminating testimony from a prohibition agent that 
Raff el had admitted he owned an illegal drinking establishment.'^ The jury 
deadlocked.'^ At the second trial, the petitioner, now aware of the prosecutor's 
case against him, took the stand in his own defense and denied making any 
statements of ownership to the prohibition officer.'^ This admission prompted 
the court to question the petitioner about his prior silence and to ask him why he 
chose to remain silent at the first trial.^^ Raff el objected to this line of 
questioning, arguing that his prior invocation of his right to remain silent 
survived to the second trial, despite the fact that he chose to testify on his own 
behalf. The petitioner contended that the Constitution allowed him to waive 
partially his right to remain silent, while allowing him to preserve the right to 
answer some questions, but not others.^' 

The United States Supreme Court disagreed with the petitioner.^^ It held that 
a defendant who offers himself as a witness in his own defense completely 
waives his Fifth Amendment immunity .^^ Justice Stone, writing for a unanimous 
Court, determined that "having once cast aside the cloak of immunity, [a 
defendant] may not resume it at will."^'' The Court continued that when a 
defendant takes the stand in his own defense, he does so as any other witness; 
and he may be cross-examined about his prior silence if that inquiry is relevant 
and probative to his credibility.^^ Clearly hostile to Raffel's notion that the 
Constitution allows a defendant to pick-and-choose when to remain silent after 
he decides to testify in his own behalf, the Court ruled that the Fifth Amendment 
is reserved for "those who do not wish to become witnesses in their own behalf, 

17. Id. 

18. Id. 

19. Id. 

20. Id. The trial transcript reported the following exchange between the court and Raffel: 
"Q: Did you go on the stand and contradict anything [the prosecution] said? 

A: I did not. 
Q: Why didn't you? 

A: I did not see enough evidence to convict me." 
/^. at495n.l. 

21. Mat 497. 

22. /t/. at 499. 

23. Id. at 497. The Court noted a split among the states on the question of whether a court 
errs when it requires a defendant to disclose that he had not testified at an earlier proceeding. Id. 
at 496. The Court noted that the issue has arisen not only when a defendant is questioned about 
silence in a prior trial, but also when a defendant is questioned about prior silence in a previous 
preliminary examination, habeas corpus hearing, or bail application. Id. By implication, the 
Court's holding is applicable to any proceeding or hearing and is not limited to prior trials. 

24. /J. at 497. 

25. Id. The Court determined that the admissibility of statements regarding a defendant- 
witness's prior silence rests on evidentiary rules, not the Constitution. Id. If the prosecution's 
inquiry is logical, relevant, and competent within the scope of evidentiary rules, then the inquiry 
(and its response) is admissible. Id. 


and not for those who do."^^ The Court explained that when a defendant chooses 
to take the stand in his own defense, he waives completely his constitutional 
privileges against self-incrimination; he testifies as any other witness, and thus 
he is subject to cross-examination as to any fact in issue so long as the 
examination complies with relevant evidentiary rules. ^^ The Court implicitly 
recognized that the privilege to remain silent survives only so long as a defendant 
continues to cloak himself in its protection. 

Seventeen years later, in Johnson v. United States, the United States Supreme 
Court again considered the admissibility of a defendant's silence.^^ In Johnson, 
the defendant waived his right against self-incrimination and testified on his own 
behalf.^^ On cross-examination, the government asked the defendant about an 
offense that was not raised in the defendant's testimony and was different from 
the one charged in the indictment. ^^ The defendant objected and the court 
overruled the objection, determining that the question and answer bore on the 
defendant's credibility and was thus admissible.^' When the government asked 
again about the offense, the defendant claimed his right against self- 
incrimination.^^ The trial court granted the defendant's claim.^^ The 
government, in its closing speech to the jury, commented at length about the 
defendant's assertion of his right to remain silent.^"^ 

26. Id. at 499. While the Court conceded that allowing the government to comment on a 
defendant's prior invocation of his right to remain silent in a second trial may pressure a defendant 
to take the stand in his first trial (lest his silence be used against him at a second trial), or pressure 
him to remain silent at his second trial to preserve his silence at the first trial, it determined that 
these concerns "are without real substance." Id. at 498-99. The Court opined that a defendant is 
always under some pressure to testify, whether or not he is afforded some partial immunity for his 
prior silence. Id. at 499. 

27. The Rajfel Court' s rule that the prosecution may impeach a defendant with his own prior 
silence, was reaffirmed in 1980. See Jenkins v. Anderson, 447 U.S. 231 (1980). Justice Stevens, 
however, in his concurring opinion questioned the continued validity oi Rajfel. Id. at 241 n.2 
(Stevens, J., concurring) (citing Grunewald v. United States, 353 U.S. 391 (1957); Johnson v. 
United States, 318 U.S. 189 (1943)). 

28. 7o/in5ow, 318U.S. atl89. 

29. /J. at 191. Johnson was charged with income tax evasion. Id. at 190. 

30. /^. at 191. 

31. Id. at 192. 

32. Id. 

33. Id. When the defendant was asked the incriminating question in cross-examination, the 
defendant claimed his privilege. The trial court, in response, mistakenly ruled that the defendant 
may decline to answer. Id. See Jenkins v. Anderson, 447 U.S. 231, 240 n.6 (1980) (noting that 
Johnson trial court mistakenly ruled that defendant could claim the privilege). The trial court 
should have applied Raffel and ruled that once a defendant takes the stand in his own defense, he 
completely waives his Fifth Amendment privileges. 

34. Johnson, 318 U.S. at 193-94. The trial court offered the jury a curative instruction which 
asked the jury to consider the defendant's invocation of his constitutional right only to assess his 
credibility. Id. at 194-95. 


Justice Douglas, writing for a majority of the United States Supreme Court, 
held that the trial court erred when it allowed the government to comment on the 
defendant's claim of silence.^^ The Court noted that "where the claim of 
privilege is asserted and unqualifiedly granted, the requirements of fair trial may 
preclude any comment [by the government]."^^ The Court opined that once a 
trial court grants a defendant the protections of the Fifth Amendment, it could not 
allow any inference to be drawn from that claim without offending the 
Constitution.^^ While the Court was concerned with the substance and meaning 
of the privilege against self-incrimination, it was more troubled by the abuse of 
a trial court assuring a defendant that his silence would not be used against him 
and then using his silence against him.^^ 

While Johnson seemingly limited or even overruled RajfeV s holding that the 
accused completely waives his privilege if he takes the stand in his own defense, 
the Court merely suggested that when a trial court expressly grants a defendant's 
request to remain silent, even if that defendant makes the request during his own 
cross-examination, it must honor its own grant.^^ Rajfel stood for the proposition 
that a defendant completely waives his Fifth Amendment rights once he chooses 
to testify in his own defense; Johnson carved out a narrow exception only when 
the trial court expressly grants a defendant's request for protection under the 

35. Id. at 196. The Court noted that if the trial court had refused the defendant's assertion 
of his Fifth Amendment privilege on the ground that the value of his answer bore on his credibility, 
then no error could be assigned. Id. 

36. Id. The Court analogized the case where a defendant takes the stand, waiving his Fifth 
Amendment privilege, but later invokes his right with the trial court's approval, to the case where 
the defendant never took the stand in his own defense. Id. at 197. In both cases, the defendant was 
given assurances that his silence would not be used against him. 

37. Id. at 196-97 (citing Phelan v. Kinderdine, 20 Pa. 354, 363 (1853)). 

38. Id. at 199. The Court stated that 

the responsibility for misuse of the grant of the claim of privilege is the court's. . . . 
When it grants the claim of privilege but allows it to be used against the accused to his 
prejudice, we cannot disregard the matter. That procedure has such potentialities of 
oppressive use that we will not sanction its use. 

39. Id. The Court noted with approval the notion "that when the accused took the stand 
'without claiming his constitutional privilege, it was too late for him to halt at that point which 
suited his own convenience.'" Id. (citing State v. Ober, 52 N.H. 459, 465 (1873)). By implication, 
had the trial court not expressly granted Johnson's request for the privilege, or ruled that his answer 
was admissible as to his credibility, then the Rajfel rule would have likely applied. 

Justice Stevens, in his concurring opinion in Jenkins v. Anderson, questioned the vitality of 
Rajfel in light oi Johnson suggesting that Johnson prohibited federal courts from granting a claim 
of privilege only to allow later its use against the defendant. See Jenkins v. Anderson, 447 U.S. 
231, 241 n.2 (1980) (Stevens, J., concurring) (questioning the validity oi Rajfel). Johnson, 
however, neither overruled nor mentioned Raffel, and, Johnson is better read as a narrow exception 
to the Rajfel rule rather than the wholesale abandonment of it. See Jenkins, AAl U.S. at 237 n.4 
(noting that no court has challenged the rule in Rajfel). 


Fifth Amendment after he waives his right and testifies in his own defense. 
Notably, the notion that the Fifth Amendment's right to remain silent in the face 
of official compulsion is firmer when that privilege is guaranteed by a 
government official found resonance some twenty-three years later in Miranda 
V. Arizona ^^ 

The idea that the government may comment on a defendant's assertion of his 
right to remain silent was raised again in the 1957 case of Grunewald v. United 
States ^^ In that case, the petitioner contended that the trial court improperly 
allowed the government to impeach him through his prior assertion of his Fifth 
Amendment right to remain silent at a grand jury investigation."^^ The trial court, 
relying on Raffel v. United States, "^^ determined that when a defendant waives his 
Fifth Amendment privilege at trial, the government may comment on a 
defendant's prior invocation of his right to remain silent at an earlier proceeding 
to impugn the credibility of his exculpatory admissions at trial. "^"^ The petitioner 
argued on appeal that the trial court erred when it allowed the government to 
comment on his prior claim of privilege, suggesting that Johnson overruled 

The Grunewald Court concluded that the trial court erred, but not because 
it violated the petitioner's constitutional rights."^^ Instead, the Court relied on 
Raffel and held that the probative value of the government's cross examination 
of the petitioner "was so negligible as to be far outweighed by its possible 
impermissible impact on the jury.'"*^ The Court determined that while Raffel 

40. See infra Part II (discussing Miranda v. Arizona, 384 U.S. 436 (1966)). 

41. Grunewald v. United States, 353 U.S. 391, 394 (1957). 

42. M at 415. The defendants were indicted for conspiring to defraud the United States by 
'fixing' tax fraud cases through bribes and the use of improper influence. Id. at 394-95. Max 
Halperin, one of three Grunewald petitioners, was subpoenaed to appear before a grand jury 
charged with investigating corruption in the Bureau of Internal Revenue. Id. at 416. At the grand 
jury investigation, Halperin pleaded the Fifth Amendment in response to incriminating questions 
from the government. Id. at 417. At trial, Halperin took the stand in his own defense and answered 
the same questions he refused to answer before the grand jury. Id. Halperin' s responses on direct 
examination corroborated his claims of innocence. Id. at 416-17. During its cross examination, 
the government asked Halperin why he refused to answer the same questions that he answered on 
the witness stand; inquiring as to defendant's prior invocation of his right to remain silent. Id. 
When the defense rested, the trial court warned the jury that it could only consider Halperin' s prior 
invocation of his right to silence to assess his credibility. Id. 

43. 271 U.S. 494 (1926). 

44. Grunewald, 353 V.S. at 41S. 

45. Id. Although the Grunewald opinion fails to flesh out the petitioner's argument, it can 
be inferred that Halperin relied on Johnson for the proposition that a trial court cannot allow 
comment on a defendant's prior claim of privilege under the Fifth Amendment even after a 
defendant later waives it, overruling RajfeVs holding that once a defendant invokes his right to 
silence, it survives despite the fact that the defendant later waives it. 

46. Id at 42\. 

47. Id at 420. 


allows the government to comment on a defendant's prior invocation of his right 
to silence if that defendant later waives the right, Rajfel did not abandon the 
imperative of the trial court to examine first whether the contested cross 
examination was admissible."^^ Once a defendant waives his right to silence, 
Grunewald ruled, the trial court must treat him like any other witness, and the 
government may inquire about a defendant's prior claim of silence to impeach 
his credibility only when the court determines that the answer is more probative 
than prejudicial."^^ 

Rajfel and Grunewald concluded that once a defendant surrenders the 
protection of the Fifth Amendment by testifying on his own behalf, he can be 
treated as any other witness and can be impeached by his own prior silence.^^ 
Both Courts implied that had the defendant not waived his right, the government 
could not have commented on his prior silence without undermining his Fifth 
Amendment rights. Johnson allowed the defendant to retain his privilege, even 
after he waived it, only when the trial court granted anew his right to not 
incriminate himself.^ ^ And while Grunewald allowed the government to 
comment on a defendant's prior invocation of his right to silence to impeach his 
credibility after he surrenders the right, the Court affirmed that the government 
could never use a defendant's invocation of the Fifth Amendment right to infer 
guilt even after he waived it.^^ 

Rajfel, Johnson, and Grunewald involved a defendant's express invocation 
of his right to remain silent — a defendant must invoke the right to enjoy its 
protections, and a defendant may surrender its privileges. Once invoked, the 
government may not comment on a defendant's silence in its case-in-chief even 

48. /^. at 419-21. 

49. See also Grunewald, 353 U.S. at 420; Raffel v. United States, 271 U.S. 494, 497 (1926). 
The Grunewald Court decided not to reach the issue of whether Johnson impliedly overruled Rajfel, 
instead it treated Rajfel as controlling precedent and framed the question in Grunewald as an 
evidentiary error, not a constitutional error. Grunewald, 353 U.S. at 421. Four justices concurred 
with the result of the Grunewald majority, but disagreed with its reasoning. See id. at 425 (Black, 
J., concurring). Justice Black, writing for the concurrence, failed to see how the trial court could 
allow the use of a constitutional privilege to discredit or convict a person and predicted that "[t]he 
value of constitutional privileges is largely destroyed if persons can be penalized for relying on 
them." Id. Justice Black found it incongruous that a privilege enumerated in the Constitution could 
be used against the party asserting it. Id. at 425-26. Justice Black, however, assumed that the 
privilege survives its own waiver and that it is broad enough to protect statements not used to 
incriminate, but to test the credibility of its holder. 

50. See supra note 49 and accompanying text (discussing Grunewald v. United States). 

51. See supra note 36 and accompanying text (discussing Johnson v. United States). 

52. Grunewald, 353 U.S. at 422 (reiterating that the Constitution prohibits the government 
from using defendant's claim of silence under the Fifth Amendment to infer guilt of the crimes 
charged). The Court recognized that a basic function of the right to silence is '"to protect the 
innocent who otherwise might be ensnared by ambiguous circumstances.'" Id. at 421 (quoting 
Slochower V. Bd. of Higher Educ, 350 U.S. 551, 557-58 (1956)). 


if the defendant later waives his immunity. ^"^ The government, however, may use 
a defendant's prior silence to impeach his credibility as long as the probative 
value of the prior silence outweighs its prejudicial impact on a jury. 

Historically, federal courts have judged the admissibility of a defendant's 
confessions and other exculpatory expressions under a voluntariness test.^"^ This 
test was grounded in the Due Process Clause of the Fourteenth Amendment and 
required courts to consider the totality of all the circumstances surrounding the 
confession to determine whether a confession was voluntarily made.^^ Two 
decades later and by a slim majority, the Court decided Miranda v. Arizona.^^ 
Miranda determined that the admissibility of a suspect's statements made during 
a custodial interrogation is determined under the Fifth Amendment's privilege 
against self-incrimination and not under the Due Process Clause's voluntary- 
involuntary test.^^ It further held that the Fifth Amendment's privilege against 
self-incrimination exists regardless of whether it is expressly invoked, and it is 
only surrendered after the government warns us of the dangers of its waiver.^^ 
In practical terms, Miranda extended the Fifth Amendment's bar to the 
admissibility of involuntary statements made at trial or other adversary 
proceedings to include statements made in the course of a custodial interrogation, 
whether or not they were voluntarily made. But while Miranda sought to curtail 
abuses surrounding the interrogation of suspects to crime, its broad sweep and 
prophylactic application has allowed some opportunistic courts to extend further 
the once-qualified privilege against self-incrimination.^^ 

n. Miranda v. Arizona 

Miranda was concerned with abuses attendant to custodial police 
interrogation. ^° Chief Justice Warren, writing for the majority, announced that 

53. See supra note 52 and accompanying text (discussing Grunewald and the idea that the 
government may not use a defendant's silence to infer his guilt). 

54. See Dickerson v. United States, 530 U.S. 428, 432-33 (2000) (discussing the history of 
law governing admissibility of confessions); see also Oregon v. Elstad, 470 U.S. 298, 307-08 
(1985) (commenting on the "old" due process voluntariness test). 

55. See Brown v. Mississippi, 297 U.S. 278, 286 (1936) (holding Due Process Clause 
prohibited the admissibility of a confession obtained through physical coercion); see also Haynes 
V. Washington, 373 U.S. 503, 514 (1963) (applying totality test to evaluate admissibility of 

56. Miranda v. Arizona, 384 U.S. 436 (1966). The Miranda opinion was a consolidation of 
four state cases, each involving the admissibility of a defendant's confession made while in custody 
and while subjected to police interrogation. Id. at 440. Chief Justice Earl Warren, joined by four 
justices, wrote for the majority. 

57. /^. at 478-79. 

58. See infra Part II (discussing Miranda v. Arizona). 

59. See infra Part IV.A (noting federal courts prohibiting the use of pre-Miranda silence). 

60. Miranda, 384 U.S. at 444. The Court first recognized that its 1964 Escobedo opinion 
failed to resolve fully the admissibility of confessions won through custodial police interrogations. 

10 INDIANA LAW REVIEW [Vol. 38: 1 

in-custody police interrogation is so inherently coercive that any statement made 
by a suspect is protected by the Fifth Amendment and is thus inadmissible at trial 
unless the police first apprise the suspect of his constitutional right to remain 
silent and his right to counsel — the so-called Miranda warnings.^' In Miranda, 
the Court purported to clarify its ruling in Escobedo v. Illinois.^^ In Escobedo, 
the Court explained that incriminating statements made by a suspect who is 
subject to custodial interrogation are inadmissible under the Sixth Amendment 
unless the police first apprise the suspect of his right to counsel and his right to 
remain silent.^^ Justice Goldberg, writing for the majority in Escobedo, 
determined that the admission of statements into evidence made in the course of 
a custodial interrogation and made after a suspect had requested but was denied 
counsel was a violation of his right to counsel under the Sixth Amendment, even 
if the suspect voluntarily made the statements. ^"^ The Court, in Miranda v. 
Arizona, sought both to clarify and to extend Escobedo by deciding whether the 
Fifth Amendment's right to remain silent protects a suspect's in-custody 
statements to the same extent as the Sixth Amendment. Escobedo, however, left 
open two other important questions: first, whether a suspect in police custody 
who is subject to police interrogation can still voluntarily waive his right to 
silence absent the warnings; and second, when and to what extent do the 'new' 
constitutional safeguards under the Fifth and Sixth Amendments trump the 
traditional voluntary-involuntary test when determining the admissibility of a 
suspect's incriminating statements.^^ 

Id. at 440-41 (citing Escobedo v. Illinois, 378 U.S. 478, 484 (1964)) (noting that the application 
of Escobedo had been confused and varied). In Escobedo, the Court decided whether statements 
made by a suspect in police custody were admissible when the suspect repeatedly requested but was 
denied access to his lawyer. Escobedo, 378 U.S. at 484. The Court held that when a police 
investigation focuses on a particular suspect and that suspect is subjected to custodial interrogation 
by the police, then any incriminating statements made by the suspect are inadmissible against him 
if the police did not first apprise him of his constitutional right to counsel. Id. at 490-9 1 . Of note, 
the Escobedo Court did not care whether the petitioner voluntary waived his right to counsel (or 
his right to remain silent), but rather whether the police advised the suspect of his right to counsel 
(or his right to remain silent) during a custodial interrogation. 

61. Miranda, 384 U.S. at 467-69. The Court ruled that "if a person in custody is to be 
subjected to interrogation, he must first be informed in clear and unequivocal terms that he has the 
right to remain silent," id. at 467-68, and a person in custody "must be clearly informed that he has 
the right to consult with a lawyer and to have the lawyer with him during interrogation." Id. at 47 1 . 

62. Miranda, 384 U.S. at 440-41 ; see also supra note 60 (discussing Escobedo v. Illinois). 

63. Escobedo, 378 U.S. at 490-91. 

64. Id. In finding a constitutional bar to the admission of a suspect' s incriminating statements 
when the suspect made those statements before police first warned him of the dangers of waiver, 
the Court implicitly rejected the traditional voluntary-involuntary test found in the Fourteenth 
Amendment's due process clause. See id. at 496 (White, J., dissenting) (noting that the majority 
abandoned the voluntary-involuntary test). Testing admissibility under the Due Process Clause's 
voluntary test first began in 1936 with Brown v. Mississippi, 297 U.S. 278 (1936). 

65. Miranda, 384 U.S. at 441-42. The Court determined to clarify its ruling in Escobedo and 


Miranda determined that any statement made by a suspect who is subject to 
custodial interrogation is inadmissible under the Fifth Amendment unless the 
police forewarn him of his right to remain silent.^^ "[T]his warning," the Court 
concluded, "is an absolute prerequisite to interrogation. No amount of 
circumstantial evidence that the person may have been aware of this right will 
suffice to stand in its stead."^^ The warning, then, is also an absolute prerequisite 
for the admissibility of in-custody statements. A suspect in custody, the Court 
opined, can surrender his constitutional rights only if he voluntarily, knowingly, 
and intelligently waives them after first hearing them.^^ A suspect in custody and 
subject to interrogation cannot surrender his constitutional right — even if that 
waiver was voluntary, knowing, and intelligent — unless he is first apprised of 
those rights. ^^ The need for some objective safeguard, the Court noted, is "not 
lessened in the slightest" by the fact that a confession is voluntarily made.^^ 

stated its purpose was "to give concrete constitutional guidelines for law enforcement agencies and 
courts to follow." Id. Prior to Miranda, courts tested the admissibility of a suspect's confessions 
and other inculpatory statements under a voluntariness test. See Dickerson v. United States, 530 
U.S. 428, 432-33 (2000) (discussing the history of the law governing the admissibility of 
confessions). This test was largely grounded in the Due Process Clause of the Fouiteenth 
Amendment and considered the totality of all the circumstances surrounding the confession. See 
Brown, 297 U.S. at 286 (holding that the Due Process Clause prohibited the admissibility of a 
confession obtained through physical coercion); see also Haynes v. Washington, 373 U.S. 503, 514 
(1963) (applying the totality test to evaluate the admissibility of confession). Then, in 1964, the 
United States Supreme Court decided Malloy v. Hogan, which held that the Fifth Amendment's 
self-incrimination clause is incorporated in the Due Process Clause of the Fourteenth Amendment 
and thus applies to the states. 378 U.S. 1,6-11 (1964). Two years later, the Court decided Miranda 
and ruled that the Fifth Amendment's self-incrimination clause determines the admissibility of a 
suspect's confession obtained during custodial interrogation. See supra note 64 (discussing the 
Court's rejection of the voluntariness test). 

66. Miranda, 384 U.S. at 467-68. In recognizing an absolute constitutional ban on a 
suspect's voluntary but unwarned custodial statements, the Court rejected the Fourteenth 
Amendment' s voluntary-involuntary test that courts traditionally used to determine the admissibility 
of a suspect's incriminating statements. Id. at 471-72; see also id. at 502-03 (Clark, J., dissenting) 
(noting that the majority announced a new rule for admissibility). 

67. Id. at 47 1 -72. Under Miranda, whether a person in police custody voluntarily waives his 
right to silence under the Fifth Amendment is irrelevant when the police fail to first warn of the 
right and fail to warn of the consequence of waiving it. Implicitly rejecting the voluntary- 
involuntary test for the admissibility of custodial statements, the Court noted that "[o]nly through 
such a warning is there ascertainable assurance that the accused was aware of this right." Id. at 472. 

68. Id. Sit 444. 

69. /^. at 457-58. 

70. Id. at 457. Despite this, the Court stated that "no statement obtained from the defendant 
can truly be the product of his free choice." Id. at 458. Thus, the Court implicitly and broadly 
determined that no incriminating statement by a suspect in custody can be voluntary. Using rather 
circular reasoning, it made no difference to the Court that a custodial confession may have been 
voluntary, because no custodial confession could be voluntary if it is the product of official 

1 2 INDIANA LAW REVIEW [Vol. 38: 1 

The Miranda holding is limited to the custodial interrogation of a suspect.^' 
In his opinion, Chief Justice Warren specifically and exclusively targets over- 
zealous police practices with certain "salient features — incommunicado 
interrogation of individuals in a police-dominated atmosphere, resulting in self- 
incriminating statements without full warnings of constitutional rights. "^^ 
Relying largely on anecdotal evidence of abusive and malicious police tactics, 
Chief Justice Warren endeavored to prove that custodial interrogation inherently 
jeopardizes a suspect's constitutional rights, and that suspects must be protected 
from this evil.''^ Notably, after demonstrating the grave dangers of custodial 

interrogation. Later, the Court offers that "[v]olunteered statements of any kind are not barred by 
the Fifth Amendment," except when they are secured through interrogation. Id. at 478. The Court 
exempted from its ruling on-the-scene questioning, general investigative fact-finding, and any other 
statements made absent custodial interrogation. Id. at 477-78. 

71. /^. at 471. 

72. Id. at 445. The Court stated that the "nature and setting of . . . in-custody interrogation 
is essential to our decisions today." Id. The Miranda opinion resolved the admissibility of in- 
custody confessions in four separate cases: Miranda v. Arizona, Vignera v. New York, Westover 
V. United States, and Stewart v. California. Each case demonstrated the "evils" and abuse 
attendant to custodial interrogations. Id. at 456-57. In Miranda, the defendant confessed to 
kidnapping and rape after a two-hour custodial interrogation. Despite the fact that the defendant's 
written confession indicated that the confession was made "'with full knowledge of [his] legal 
rights,'" the Court held that the confession was inadmissible because the defendant was not 
apprised of his rights before he confessed. Id. at 491-92. In Vignera, the defendant made oral 
inculpatory statements to a police detective and an assistant district attorney. Id. at 493. The Court 
held that the defendant's statements were inadmissible because neither the detective nor the 
assistant district attorney apprised him of his constitutional rights before they interrogated him. Id. 
at 493-94. The defendant in Westover signed a confession after a two-hour interrogation by the 
F.B.I, which preceded lengthy interrogations by local authorities. While the statement indicated 
that the defendant was apprised of his rights, the Court found that the warnings came after a lengthy 
interrogation process, and thus the confession was inadmissible. Id. at 495-97. Lastly, in the 
Stewart case, police secured a confession after nine separate interrogations spanning five days. The 
record was silent on whether the defendant was ever apprised of his constitutional rights. The Court 
determined that the right to remain silent and the right to counsel cannot be assumed and held that 
the trial court's admission of the defendant's statements was constitutional error. Id. at 497-99. 

73. See id. at 458 (noting that safeguards must be employed "to dispel the compulsion 
inherent in custodial surroundings"). Chief Justice Warren, in an effort to persuade the Court of 
the evil that lurks within custodial interrogations, devoted roughly ten full pages of the opinion to 
assure his brothers on the bench that custodial interrogation is constitutionally dangerous. Id. at 
446-56. The Court pointed to "extensive factual studies" from the 1930s, opinions of the Court that 
evidence police brutality, and a report from the Commission on Civil Rights written in 1961. Id. 
at 445-46. The Court also cited various police practice and training manuals which describe the 
use of physical and mental coercion to obtain confessions through custodial interrogation. Id. at 
448-55. After the Court carefully described the prevalence of abusive police practices, it later 
concluded that, under the facts before it, police did not engage in the sort of abusive practices it 
sought to eradicate. Id. at 457. 


interrogation, the Court notes that the facts of Miranda and its companion cases 
"do not evince overt physical coercion or patent psychological ploys" — the very 
dangers the Court sought to remedy 7"^ Despite this, the Court believed that 
abusive police practices were popular enough and that custodial interrogations 
were invidious enough to require authorities to first warn suspects of the 
consequences of waiving constitutional rights — the Court determined that these 
warnings serve as an absolute prerequisite to admissibility.^^ In narrowing its 
ruling to statements made in the context of custodial interrogation, the Court 
recognized the "intimate connection between the privilege against self- 
incrimination and police custodial questioning."^^ 

The Court also purported to clarify the circumstances that trigger the 
requisite wamings.^^ In Escobedo v. Illinois, the precursor to Miranda, the Court 
explained that police must immediately warn suspects of their constitutional right 
to remain silent when a general police investigation begins to focus on a specific 
individual. ^^ Recognizing the latent ambiguity of this test, the Miranda Court 
specifically defined custodial interrogation as "questioning initiated by law 
enforcement officers after a person has been taken into custody or otherwise 
deprived of his freedom of action in any significant way."^^ Applying this 
standard to the facts before it, the Court further refined its definition of custodial 
interrogation as "incommunicado interrogation of individuals in a police- 
dominated atmosphere. "^^ Later in its opinion, the Court again narrowed its 

74. Id. 

75. The Court warned that "[a]n individual swept from familiar surroundings into police 
custody, surrounded by antagonistic forces, and subjected to the techniques of persuasion . . . 
cannot be otherwise than under compulsion to speak." Id. at 461. Later, the Court stated that "the 
compulsion to speak in the isolated setting of the police station may well be greater than in courts 
or other official investigations." Id. From these lines, and others, one readily can surmise that the 
Court was only concerned with the application of the privilege against self-incrimination to 
custodial interrogations. See id. at 460 (limiting the question before the Court to custodial 

76. Id. at 458. The Court also noted that the privilege against self-incrimination protects both 
inculpatory admissions and exculpatory statements when they are the product of custodial 
interrogation. Id. at 476-77. 

77. See id. at 444 n.4 (noting the Court' s effort to clarify Escobedo). In Escobedo, the Court 
held that when an "investigation is no longer a general inquiry into an unsolved crime but has 
begun to focus on a particular suspect," the police must warn the suspect of his right to remain 
silent. Escobedo v. Illinois, 378 U.S. 478, 490-91 (1964). 

78. Escobedo, 378 U.S. at 490-91. In his dissenting opinion in Escobedo, Justice Stewart 
criticized the majority for broadening constitutional protections to include voluntary statements 
made by suspects in the course of legitimate police investigations. Id. at 494 (Stewart, J., 
dissenting). Justice Stewart did not attack the applicability of the Fifth Amendment to a suspect's 
inculpatory statements, but rather he argued that the right to remain silent under the Constitution 
is triggered "only after the onset of formal prosecutorial proceedings." Id. 

79. Miranda, 384 U.S. at 444. 

80. /J. at 445. 


definition by examining the investigative intent of the questioning officers and 
the susceptibility of the suspect to the police-dominated atmosphere.^' Suspects 
must be warned of the consequences of waiving their constitutional rights when 
the "thrust of police interrogation . . . was to put the defendant in such an 
emotional state as to impair his capacity for rational judgment," and when "the 
compelling atmosphere of the in-custody interrogation, and not an independent 
decision on [the defendant's] part, caused the defendant to speak."^^ 

Alternatively, non-custodial police interrogations fall outside the sine qua 
non of the Miranda opinion. According to Chief Justice Warren, police officers 
need not warn suspects of the consequences of waiving their constitutional rights 
when they question suspects on-the-scene or question suspects who are not 
deprived of their freedom of action in any significant way.^^ Further, the 
admissibility of a person's non-custodial and voluntary statements is not affected 
by the mandates of Miranda}'^ A custodial interrogation — and only a custodial 
interrogation — triggers the warnings. By default, then, the traditional voluntary- 
involuntary test for the admissibility of confessions and incriminating statements 
survives intact for statements made outside of a custodial interrogation.^^ As 

81. Mat 465. 

82. Id. 

83. Id. at 477-78; see also Oregon v. Mathiason, 429 U.S. 492 (1977) (per curiam) (restating 
that Miranda applies only to custodial interrogation). In Oregon v. Mathiason, a per curiam 
opinion, the Court determined whether a person's exculpatory statements were admissible under 
Miranda when that person voluntarily went to a police station, and when police had not yet 
Mirandized him and had told him that he was not under arrest. Mathiason, 429 U.S. at 493-94. 
The Court held that the statements were admissible even though the defendant made them before 
police warned him of his constitutional rights, because while police did question the defendant in 
a police station, his freedom of movement was not curtailed in any significant way — he voluntarily 
went to the police. Id. at 495. The Mathiason Court noted that while the police interview with the 
defendant might have been coercive, "a noncustodial situation is not converted to one in which 
Miranda applies simply because a reviewing court concludes that, even in the absence of any formal 
arrest or restraint on freedom of movement, the questioning took place in a 'coercive 
environment.'" Id. 

84. Miranda, 384 U.S. at 478. 

85. Id. Three separate dissenting opinions criticized the majority's ruling, each noting that 
the majority seriously erred when it found a constitutional bar to in-custody interrogations under 
the Fifth Amendment. First, Justice Clark sharply disagreed with the majority and objected to the 
majority's 'either-or' constitutional ruling that absent warnings, a confession is never admissible 
and that once a suspect invokes his rights, all questioning must cease. Justice Clark noted that 
"[s]uch a strict constitutional specific inserted at the nerve center of crime detection may well kill 
the patient." Id. at 500 (Clark, J., dissenting). Justice Clark would continue to follow the 
traditional voluntary-involuntary test found in the Due Process Clause and still allow the 
government an opportunity to show, despite the absence of warnings, that the suspect voluntarily 
waived his rights. Id. at 503 (Clark, J., dissenting). The remaining dissenters. Justices Harlan, 
Stewart, and White, filed two separate dissents. First, Justice Harlan, with whom Justices Stewart 
and White joined, contended that the thrust of the majority's ruling is designed "to discourage any 


Justice White predicted in his prophetic dissent in Miranda v. Arizona, the 
"decision leaves open such questions as whether the accused was in custody, 
[and] whether his statements were ... the product of interrogation."^^ 

While the Miranda Court concerned itself with conventional interrogation — 
express questioning by police — the Court would later expand the definition of 
interrogation to include express questioning or its "functional equivalent."^^ 

confessicn at all," calling the new ruling "voluntariness with a vengeance." Id. at 505 (Harlan, J., 
dissenting). Harlan objected to the majority's constitutional bar to in-custody confessions found 
in the Fifth Amendment, when the Court's precedent consistently and successfully evaluated the 
admissibility of confessions under the Due Process Clause's voluntary-involuntary test. Id. at 507 
(Harlan, J., dissenting). Harlan favored the "elaborate, sophisticated, and sensitive approach to 
admissibility of confessions" under the traditional voluntary-involuntary test, noting the test's 
"ability to respond to the endless mutations of fact." Id. at 508 (Harlan, J., dissenting). Harlan 
noted that the Fifth Amendment only proscribes compelling a defendant in a criminal case to serve 
as a witness against himself and had never before been applied to protect suspects at the police 
station. Id. at 510 (Harlan, J., dissenting). Second, Justice White filed a dissenting opinion with 
whom Justices Harlan and Stewart joined. Id. at 526 (White, J., dissenting). The gist of White's 
dissent is that the plain language of the Fifth Amendment limits its application to only coerced 
statements made during criminal proceedings. Id. at 526-27 (White, J., dissenting). The majority 
opinion, according to Justice White, fabricated a constitutional rule when it concluded that all 
responses to custodial interrogations are coerced, thus prohibited by the Fifth Amendment. Id. at 
535-36 (White, J., dissenting). White concluded by noting that 

[t]oday's decision leaves open such questions as whether the accused was in custody, 
whether his statements were spontaneous or the product of interrogation, whether the 
accused has effectively waived his rights, and whether nontestimonial evidence 
introduced at trial is the fruit of statements made during a prohibited interrogation . . . 
[f]]or all these reasons ... a more flexible approach makes . . . more sense than the 
Court's constitutional straightjacket. 
Id. at 545 (White, J., dissenting). 

86. Id. (White, J., dissenting). 

87. See Rhode Island v. Innis, 446 U.S. 291, 300-01 (1980) (determining that Miranda 
prohibits express questioning by police or its functional equivalent once a person invokes his right 
to remain silent or his right to counsel). Fourteen years after Miranda, the United States Supreme 
Court decided Rhode Island v. Innis and expanded the meaning of interrogation first applied in 
Miranda. Id. In Innis, police arrested Thomas Innis for murder and read him his Miranda rights. 
Id. at 294. Innis invoked his rights, and the police stopped interrogating him. Id. En route to the 
police station, the officers who accompanied Innis spoke to each other about the danger of leaving 
a weapon in a neighborhood where children might find it and use it. Id. at 294-95. Innis 
interrupted this conversation and told police where the weapon could be found. Id. at 295. Justice 
Stewart, writing for the majority, ruled that Miranda bars the admissibility of statements made 
during a custodial interrogation or "its functional equivalent." Id. at 300-01. The functional 
equivalent of interrogation refers to "words or actions on the part of the police (other than those 
normally attendant to arrest and custody) that the police should know are reasonably likely to elicit 
an incriminating response." Id. at 301. As such, Miranda protects not only responses to express 
interrogation, but also any responses that the police should have known would call for a response. 

16 INDIANA LAW REVIEW [Vol. 38: 1 

According to Rhode Island v. Innis, Miranda protects not only a person's 
answers to express interrogation, but also protects his answers to questions, other 
than those inherent to arrest and custody, that the police should have reasonably 
known would call for an incriminating response.^^ In later cases, the Supreme 
Court would try twice to clarify its meaning of custody in Miranda}^ 

First, in California v. Beheler, the Court explained per curiam that a person 
is entitled to the full panoply of rights associated with Miranda only when a 
suspect's freedom of action is curtailed to "[a] degree associated with a formal 
arrest" — and not before.^^ The following year, the Court decided Berkemer v. 
McCarty, and ruled that Miranda rights are owed at least at the moment a person 
is formally placed under arrest — and not before.^' Both Beheler and Berkemer 
stand for the idea that while the coercive atmosphere of custodial interrogation 
is one reason for the constitutional safeguards first articulated in Miranda, a 
coercive environment by itself does not activate the need for a Miranda 
waming.^^ Only an arrest — or something very similar to an arrest — marks the 
beginning of custody for the purposes of determining the applicability of 

88. /^. at 300-01. 

89. See Berkemer v. McCarty, 468 U.S. 420, 438 (1984) (holding that a person questioned 
during a routine traffic stop was not in custody sufficient to warrant a Miranda-type warning); 
California v. Beheler, 463 U.S. 1 121, 1 125 (1983) (per curiam) (holding that a suspect was not in 
custody during his pre-arrest interview with police). 

90. Beheler, 463 U.S. at 1 1 25 (citations omitted). The question before the Court was whether 
police must recite the Miranda warning to a suspect who was not under arrest and who voluntarily 
accompanied police to the station house where he made incriminating statements. Id. at 1 121-22. 
Holding that the suspect was not owed a warning, the Court explained that Miranda only requires 
police to warn suspects who are in custody and that custody is either a formal arrest or the restraint 
of a suspect's freedom of movement to the degree associated with a formal arrest. Id. at 1 125. 

91 . Berkemer, 468 U.S. at 434-35. In Berkemer, the Court considered whether questioning 
of a motorist pursuant to a routine traffic stop is a custodial interrogation for the purposes of 
determining the admissibility of his statements under Miranda. Id. at 425. The motorist moved to 
exclude various incriminating statements he had made to police at the traffic stop. He argued that 
because the police had failed to inform him of his constitutional rights, the admission of those 
statements would violate the Fifth Amendment. Id. at 424. The Court sought to clarify that portion 
of Miranda which requires police to apprise a person of his constitutional rights when that person 
"has been taken into custody or otherwise deprived of his freedom of action in any significant way." 
Id. at 435 (quoting Miranda, 384 U.S. at 444). While conceding that a traffic stop does 
significantly curtail a person's freedom of action, the Court refused to broaden the application of 
Miranda to include a routine traffic stop, explaining that a traffic stop does not sufficiently impair 
a detainee's free exercise of his privilege against self-incrimination. Id. at 438-40. First, the Court 
noted that, unlike a stationhouse custodial interrogation, a traffic stop is temporary and brief Id. 
at 437. Second, the Court noted that the public nature of traffic stops mitigates the need to protect 
persons not subjected to Miranda-like back-door interrogations. Id. at 438-39. The Court 
explained that the brief and public nature of a traffic stop reduces the danger that a motorist will 
be made to incriminate himself. Id. at 438 n.27. 

92. Id. at 438-40; Berkemer, 463 U.S. at 1 124-25. 


Miranda and the admissibility of incriminating statements made in the course of 
an official interview.^^ 

Miranda also gave attention, although cursory, to the admissibility of silence 
as evidence of a waiver when a person is subjected to in-custody interrogation. 
The Court stated that "a valid waiver will not be presumed simply from the 
silence of the accused after warnings are given. "^"^ The record must show some 
evidence that the accused affirmatively waived his rights after police apprised 
him of them. The Court implicitly suggested that a suspect's silence during 
custodial interrogation is inadmissible unless he validly waives his right to 
silence, hi fact, this very silence could be used to show that the accused intends 
to exercise his right to remain silent.^^ 

When the dust settled after the Escobedo and Miranda decisions, the 
voluntary-involuntary test for the admissibility of statements under the Due 
Process Clause of the Fourteenth Amendment was largely superceded by fixed 
constitutional prophylactics found in the Fifth and Sixth Amendments. Even a 
hasty legislative attempt in 1968 to trump Miranda and reassert the voluntary- 
involuntary test failed.^^ In the wake of Miranda, a suspect now had an absolute 

93. Berkemer, 468 U.S. at 434-35; Beheler, 463 U.S. at 1 125. The Beheler Court noted "that 
'[a]ny interview of one suspected of a crime by a police officer will have coercive aspects to it, 
simply by virtue of the fact that the police officer is part of a law enforcement system.'" Beheler, 
463 U.S. at 1 124 (quoting Oregon v. Mathiason, 429 U.S. 492, 495 (1977)). The Court also noted 
that "a noncustodial situation is not converted to one in which Miranda applies simply because . 
. . the questioning took place in a 'coercive environment.'" Id. (quoting Mathiason, 429 U.S. at 

94. Miranda, 384 U.S. at 475. The Court, quoting Camley v. Cochran, 369 U.S. 506, 516 
(1962), wrote that '"[pjresuming waiver from a silent record is impermissible.'" Miranda, 384 U.S. 
at 475. 

95. Id. at A1?>-1A. After a suspect is warned of his rights, the Court stated, the suspect may 
invoke those rights "in any manner," id. at 474, which presumably includes his continued silence. 

96. See Dickerson v. United States, 530 U.S. 428, 432 (2000) (holding that Miranda may not 
be overruled by an Act of Congress). Two years after the Court decided Miranda, Congress enacted 
18 U.S.C. § 3501 (1968). Section 3501(a) of the Omnibus Crime Control and Safe Street Act 
stated in pertinent part that "[i]n any criminal prosecution ... a confession . , . shall be admissible 
in evidence if it is voluntary given." Id. § 3501(a). Section 3501(b) of the enactment required the 
trial judge to consider the totality of circumstances when he or she considers whether a defendant 
voluntarily confessed to crime. Id. § 3501(b). In short, Congress attempted to overrule Miranda 
and to resurrect the traditional voluntary-involuntary test for the admissibility of confessions. In 
Dickerson v. United States, the Court considered whether an Act of Congress could overrule its 
Miranda opinion. Dickerson, 530 U.S. at 432. The Court held that it could not. Id. First, Chief 
Justice Rehnquist, writing for the majority, determined that Miranda was a constitutional ruling and 
not merely a prophylactic guideline. Id. at 438. But see id. at 450-57 (Scalia, J., dissenting) 
(arguing Miranda opinion was prophylactic and not a constitutional decision). As such, Congress 
could not legislatively supercede a constitutional decision. Id. at 444. Second, the majority stated 
that stare decisis directed that the Court affirm its prior decision. Id. at 443. Not only did Miranda 
survive a legislative attack, but it was also ratified by the United States Supreme Court over three 

18 INDIANA LAW REVIEW [Vol. 38: 1 

right under the Fifth Amendment to remain silent and to have an attorney present 
prior to a custodial interrogation. Moreover, law enforcement officials are now 
charged with triggering these constitutional rights through their invocation of the 
Miranda warnings — the rights attach when police offer them. Important 
questions remained to be resolved, including whether or when Miranda protects 
a defendant's inculpatory silence. 

in. The Use of Silence After Miranda 

Well before it decided Miranda v. Arizona, the United States Supreme Court 
concluded that once a defendant surrenders the protection of the Fifth 
Amendment by testifying on his own behalf, he can be treated as any other 
witness and can be impeached by his own prior silence.^^ After Miranda, the 
question became whether the government could fairly impeach a defendant with 
his own silence if that silence was induced by a Miranda-iypt warning. The 
problem was determining when the assurances embodied in Miranda fully 
manifested and whether the Fifth Amendment protects pre-trial silence at all. 

Struggling to resolve the issue, the Court drew judicially-created lines 
between silence that occurred pre-arrest and pre-Miranda, silence that occurred 
post-arrest and prQ-Miranda, and silence that occurred post-arrest and post- 
Miranda^^ The Court has grappled with this issue seven times since 1966, 
ultimately determining that the Fourteenth Amendment — and not the Fifth 
Amendment — permits the government to impeach a defendant with his pre-arrest, 
pve-Miranda silence and his post-arrest and pre-Miranda silence, but it does not 
permit the government to impeach him with his post-arrest, posi-Miranda 
silence.^^ This fractured jurisprudence not only begs for the simplicity, 
flexibility, and efficiency of the pvQ-Miranda due process test for admissibility, 
but has also allowed some opportunistic courts to find a foothold for the idea that 
the government cannot use a defendant's prt-Miranda silence, or even his pre- 

decades after it was originally decided. 

97. See supra note 49 and accompanying text (discussing Rajfel and Grunewald). 

98. Compare Jenkins v. Anderson, 447 U.S. 231, 238 (1980) (holding that the government 
can use a defendant's pre-arrest and pre-Miranda silence to impeach him), with Fletcher v. Weir, 
455 U.S. 603, 606 (1982) (per curiam) (holding that the government can use a defendant's post- 
arrest but pre-Miranda silence to impeach him), and Doyle v. Ohio, 426 U.S. 610, 611 (1976) 
(holding that the government cannot use a defendant's post-arrest and post-Miranda silence to 
impeach him). 

99. See Brecht v. Abrahamson, 507 U.S. 619 (1993) (reaffirming Doyle); Greer v. Miller, 483 
U.S. 756, 764-65 (1987) (holding that the government's single mention of a defendant's post- 
Miranda silence, followed by a curative instruction, did not offend due process); Wainwright v. 
Greenfield, 474 U.S. 284 (1986) (reaffirming Doyle)\ Fletcher, 455 U.S. at 606 (holding that the 
government can use post-arrest but pre-Miranda silence to impeach a defendant); Jenkins, 447 U.S. 
at 238 (holding that the government can use pre-arrest silence to impeach a defendant); and Doyle, 
426 U.S. at 611 (holding that the government cannot use post-Miranda silence to impeach a 


arrest silence, in its case-in-chief J ^ 

The first case after Miranda to consider whether the government could use 
a defendant's silence against him was United States v. Hale}^^ In Hale, the 
Court considered whether the prosecution could impeach a defendant through 
questions that required him to testify to his prior silence during police 
interrogation /^^ The government argued that under Rajfel v. United States, a 
defendant who offers himself as a witness in his own defense completely waives 
his Fifth Amendment immunity. ^°^ The United States Supreme Court disagreed, 
but resolved the issue exercising its rules of evidence rather than the 
Constitution. '^"^ It reasoned that the defendant's silence in the face of police 
interrogation lacked significant probative value and that any reference to his 
silence was intolerably prejudicial to the defendant. ^°^ 

Although the Court left open the constitutional question in Hale, it resolved 
the question in Doyle v. Ohio the following year. In Doyle, the Court again 
considered whether the Constitution bars the use at trial of a defendant's prior 
silence. ^^^ The Doyle Court held that it was fundamentally unfair for the 
government to use a defendant's silence to impeach his testimony at trial when 
that silence was induced by the Miranda warnings. '°^ 

Relying on its prior decision in Miranda, the Doyle Court explained that a 
defendant's silence after his arrest and in the wake of Miranda warnings "may 
be nothing more than the arrestee's exercise of . . . Miranda rights."^^^ "Thus," 

100. See infra note 147 and accompanying text (discussing circuit courts of appeal that 
prohibit the use of a defendant's pre-arrest or prc-Miranda silence in the government's case-in- 

101. United States v. Hale, 422 U.S. 171 (1975). 

102. Id. at 173. In United States v. Hale, the defendant was arrested for a robbery, taken into 
custody, and read his Miranda rights. The defendant remained silent as police interrogated him 
about the crime. At his trial, the defendant testified in his own defense and offered an alibi and 
other exculpatory testimony. Id. at 174. To impeach the defendant's testimony, the prosecution 
asked him why he had not offered the information to the police at his arrest instead of remaining 
silent. Id. 

103. Id. at 175. See supra notes 15-17 and accompanying text (discussing Raffel v. United 
States, 271 U.S. 494 (1926)). 

1 04. See id. at 1 75 n.4 (noting that the opinion did not reach the constitutional claim); see also 
id. at 176-81 (analyzing the case under rules of evidence). 

105. /J. at 180. 

106. Doyle v. Ohio, 426 U.S. 610 (1976). 

107. Id. at 619. In Doyle, a consolidated case, police arrested two defendants on drug charges 
and read them the Miranda warnings. At trial, each defendant offered an exculpatory frame-up 
story for the first time at trial. Id. at 613. To impeach the defendants' testimony, the prosecution 
asked each defendant why he remained silent instead of telling the frame-up story to the arresting 
police officers. /J. at 612-14. 

108. Id. at 617. The prosecution argued that its use of the defendant's post-Miranda silence 
was limited to impeach the defendant's exculpatory story first raised at trial. Id. at 616. It relied 
on Supreme Court precedent that allowed the use of post-arrest statements, inadmissible as evidence 


the Court continued, "every post-arrest silence is insolubly ambiguous" because 
the trial court would be unable to discern whether a defendant's post-arrest 
silence was induced by Miranda warnings (and thus inadmissible) or induced by 
a defendant's intent to fabricate later an exculpatory story to use at trial (and thus 
arguably admissible) /^^ Doyle held that the use of a defendant's post-arrest 
silence would be fundamentally unfair, and thus deprive him of due process. ^^° 
The Miranda warnings, the Court concluded, implicitly assure a defendant that 
his silence, including his own prior inconsistent silence, cannot be used against 

of guilt under Miranda, to cross-examine a defendant who offered a contradictory explanation of 
events at trial. See id. at 617 (citing Harris v. New York, 401 U.S. 222 (1971), Oregon v. Mass, 420 
U.S. 714 (1975), and Walder v. United States, 347 U.S. 62 (1954) for the proposition that a 
defendant's post-arrest statements may be used to impeach his trial testimony). 

109. Id. at 617-19 n.8 (citing Hale, 422 U.S. at 177). 

110. Id. at 619. Notably, Doyle did not hold that Ohio had violated the defendants' Fifth 
Amendment privilege against self-incrimination when it asked the jury to draw an inference of guilt 
from the defendants' exercise of their right to remain silent. Thus, while the Fifth Amendment bars 
the government from commenting on a defendant's refusal to testify, the due process clause of the 
Fourteenth Amendment bars the government from commenting on a defendant's post-Miranda 
silence. Contra Griffin v. California, 380 U.S. 609, 613 (1965) (holding Fifth Amendment bars use 
of a defendant's refusal to testify at trial). 

Justice Stevens, writing for the dissent in Doyle, failed to see how the use of the defendant's 
silence following a M/ranJa warning violated due process. Id. at 625-26 (Stevens, J., dissenting). 
In his view, a trial court ought to allow a defendant to testify to the reasons inducing his silence; 
if he remained silent in the wake of a Miranda warning because of the implicit assurances of the 
warning, then due process demands that the court protect his silence. Id. at 623-26. If, however, 
the prosecution develops on cross-examination that the defendant did not remain silent because of 
the implicit assurances behind the warnings, but instead he remained silent to preserve his later 
manufactured exculpatory story, then his due process rights are not implicated because the 
defendant's silence was not induced by the warnings. Id. Silence, Justice Stevens concluded, is 
not insolubly ambiguous — the Miranda warnings were intended to assure a knowing and voluntary 
waiver of constitutional rights, and were not intended to provide a shield for perjury. Id. at 636. 
Relying on Raffel v. United States, 271 U.S. 494 (1926), Justice Stevens noted that the Fifth 
Amendment only prohibits the use of silence to infer guilt in the prosecutor' s case-in-chief and does 
not prohibit the prosecution from using silence to impeach a defendant's testimony after he waives 
his privilege by testifying in his own behalf. Doyle, 426 U.S. at 628, 632-33 n.l 1 (Stevens, J. 
dissenting). See also supra notes 15-26 (discussing Raffel v. United States). 

111. Doyle, 426 U.S. at 6 1 8, 620. Doyle, however, did not ban completely the government' s 
use of a defendant's post-Miranda silence. Id. at 620 n.l 1. The Court explained that "[i]t goes 
almost without saying that the fact of post-arrest silence could be used by the prosecution to 
contradict a defendant who testifies to an exculpatory version of events and claims to have told the 
police the same version upon arrest." Id. 

Prophetically, four years after Doyle, the Court considered this very issue. Anderson v. 
Charles, 447 U.S. 404 (1980) (per curiam). In Anderson v. Charles, the Court allowed the 
prosecution to comment on a defendant's failure after his arrest to assert the same version of events 


to which he testified at his trial. Id. at 408-09. In Anderson, the defendant told one version of his 
story after his arrest and after police read him the Miranda warning, then told an inconsistent 
version at trial. Id. at 405-06. The prosecution inquired about this inconsistency and about the 
defendant's failure to tell the arresting officers the same story he told at trial. Id. at 408. The 
defendant argued that Doyle barred the use of his failure to tell the arresting officers the same 
exculpatory story he told at trial. See Charles v. Anderson, 610 F.2d 417, 418 (6th Cir. 1979), 
rev'd, 447 U.S. 404 (1980). The Sixth Circuit, hearing the state case on a writ of habeas corpus, 
determined that portion of the prosecutor's cross examination that inquired about the defendant's 
inconsistent version of events was permissible because it bore on his credibility and not the truth 
of the exculpatory story. Id. at 42 1 . The Sixth Circuit, however, ruled that the prosecutor' s inquiry 
into why the defendant had not offered the same exculpatory story to the arresting officers 
amounted to a Doyle violation because the reasons behind the defendant's failure to tell the 
arresting officers the same story he told at trial were insolubly ambiguous, and thus violated his 
right to due process. Id. The United States Supreme Court, however, disagreed. See Anderson, 
447 U.S. at 409 (holding Doyle inapplicable to the case at bar). The Court determined that the 
prosecutor in this case did not comment on the defendant's post-Miranda silence, but rather on the 
defendant's inconsistent statements. Id. The prosecutor's questions, the Court concluded, did not 
burden impermissibly the defendant's right to remain silent, but rather sought to impeach the 
defendant's prior inconsistent version of events. Id. The Anderson Court opined that it refused to 
take such a formalistic understanding of silence, instead allowing the government to impeach a 
defendant with his post-Miranda silence when that silence was intertwined with an exculpatory, yet 
inconsistent, version of events. Id. at 408-09. 

Eleven years later, the Court again limited Doyle when it ruled that due process is not violated 
when the government's comment on a defendant's post-Miranda silence is quickly cured by the 
trial court so that the defendant's silence was never "used" to impeach him. Greer v. Miller, 483 
U.S. 756, 766 (1987). The defendant, Charles Miller, was tried for murder. Miller took the stand 
in his own defense and offered an exculpatory version of events. The government, in its cross- 
examination of the defendant, asked Miller why he had not told his version of events to the police 
at his arrest. Id. at 758-59. Miller's attorney objected immediately, the trial court sustained the 
objection and instructed the jury to disregard the question. Ajury found Miller guilty. Id. Miller 
appealed contending that the government's comment on his post-Miranda silence was a Doyle 
violation and that the trial court committed reversible error when it refused Miller a mistrial. Id. 
at 759-60. Justice Powell, writing for the majority in Greer, first decided that the issue on appeal 
is determined under Doyle v. Ohio because the government commented on the defendant's post- 
Miranda silence. Id. at 763. Injecting a formalistic approach into the Doyle analysis, the Court 
concluded that Doyle only prohibits the use of a defendant's post-Miranda silence, not its mention. 
Id. at 764. Because the trial court, by sustaining the defense's objection and offering an immediate 
curative instruction to the jury, did not allow the government to use Miller's silence, the 
government did not violate Doyle. Id. at 764-65. It seems, then, that the government may violate 
Doyle and comment on a defendant's post-Miranda silence so long as that error is harmless. 

In an interesting application of Doyle, the Supreme Court determined that the government's 
use of a defendant's post-arrest and post-Miranda silence to contradict his insanity plea violated 
due process. See Wainwright v. Greenfield, 474 U.S. 284, 295-96 (1986). In Wainright, the police 
arrested and Mirandized the defendant. In response, the defendant stated that he understood the 
warnings and requested an attorney. He was read the Miranda warnings twice again. Id. at 286. 

22 INDIANA LAW REVIEW [Vol. 38: 1 

Notably, the Doyle Court explained that the prosecutor' s use of a defendant' s 
post-Miranda silence was prohibited by the Fourteenth Amendment's Due 
Process Clause and not by the Fifth Amendment's privilege against self- 
incrimination, even though Miranda appears to be sympathetic to an outright 
constitutional ban on the use of silence.' ^^ In a footnote to its opinion, the 
Miranda Court wrote that the "prosecution may not . . . use at trial the fact that 
[the defendant] stood mute or claimed his privilege in the face of accusation."' '^ 
Although this absolute ban on the use of silence suggests that Miranda 
contemplated prohibiting the use of a defendant' s post-Miranda silence under the 
Fifth Amendment, the footnote relies chiefly on Griffin v. California, a United 
States Supreme Court opinion decided one year before Miranda}^"^ In Griffin, 
the Court determined that the Fifth Amendment prohibits comment on a 
defendant' s decision not to testify at his own trial. ' '^ Griffin did not contemplate 
the government's use of a defendant's silence at his arrest to impeach him. It 
merely explained that the Fifth Amendment bans comment on the defendant's 
failure to testify.''^ The Doyle Court, it seems, understood this distinction. 
Doyle determined that the prosecutor' s use of a defendant' s post-Miranda silence 
implicated the more flexible due process requirements under the Fourteenth 
Amendment, '''' perhaps because the defendants in Doyle neither stood mute nor 

Each time, the defendant requested to speak with an attorney. Id. In its closing argument, the 
prosecution commented on the defendant's silence on the theory that his post-Miranda silence and 
request for counsel demonstrated a degree of comprehension that was inconsistent with insanity. 
Id. at 287. Relying on Doyle and its progeny, the Court reaffirmed that the government is barred 
from using a defendant's post-Miranda silence when it induces that silence through the warnings. 
Id. at 290-91 . Use of such silence as evidence of the defendant's sanity, the Court concluded, is 
fundamentally unfair and thus violates the defendant's right to due process. Id. at 295. 

112. See Doyle, 426 U.S. at 619 (holding that use of post-Miranda silence to impeach violated 
due process); see also Miranda, 384 U.S. at 468 n.37 (contemplating absolute ban to the use of 

113. Miranda, 3S4 U.S. at 46Sn.31. 

1 14. See id. (citing Griffin v. California, 380 U.S. 609 (1965)). 

115. Griffin, 380 U.S. at 615. In Griffiin, both the trial court in its charge to the jury and the 
prosecution commented on the defendant's failure to testify. Id. at 610-11. Justice Douglas, 
writing for the majority, explained that comment on the accused's refusal to testify is outlawed by 
the Fifth Amendment because allowing such comment would force a defendant to either invoke his 
right only to suffer from that choice, or waive it. Id. at 614. This choice constitutionally burdens 
the privilege "by making its assertion costly." Id. 

116. /6f. at615. 

117. Doyle, 426 U.S. at 619. Justice Stevens, in his Doyle dissent, considered whether the 
defendants' Fifth Amendment privilege against self-incrimination was violated when the prosecutor 
commented on their post-Miranda silence. Id. at 626-27 (Stevens, J., dissenting). First, Justice 
Stevens noted that the defendants failed to invoke their right to remain silent, and one failed to 
remain silent, at their arrest. Id. at 627-28. Since the defendants failed to stand mute or claim the 
privilege, they cannot rely on footnote 37 in the Miranda opinion, which suggests a constitutional 


claimed their Fifth Amendment privilege at their arrest, and because the 
government's use of the defendants' pre-trial silence to impeach them avoided 
a direct Griffin-\ikc Fifth Amendment question. 

Reading Griffin, Miranda, and Doyle together, the Court constitutionally 
distinguishes pre-trial silence used to impeach a defendant, from trial silence 
used to infer his guilt. Under Griffin, any comment on the defendant's failure to 
testify at his own trial implicates directly the Fifth Amendment prohibition 
against compelled self-incrimination.''^ In Miranda, the Court perfected the 
defendant's Fifth Amendment right to silence by requiring police to first apprise 
him of his rights before they interrogate him — explaining that the coercive 
atmosphere of custodial interrogation burdens the defendant' s Fifth Amendment 
right to silence."^ And in Doyle, the Court determined that comment on the 
defendant's post-Miranda silence to impeach him at trial sounds in due process 
because of the implicit assurances embodied in the Miranda warning. '^^ 
Choosing to base its holding on the flexible requirements of due process and not 
the absolute proscription of the Fifth Amendment, the Doyle Court seemed 
purposefully to leave the door open for some use of silence not contemplated by 
its opinion. 

Four years after Doyle, the United States Supreme Court again considered 
whether the government could use a defendant's inconsistent silence to impeach 
him at trial. '^' In Jenkins v. Anderson, the Court held that the defendant's 
constitutional rights were not violated when the prosecution, in its cross- 
examination of the defendant, referred to his pre-arrest silence in an attempt to 
impeach his credibility. '^^ Indeed, the Court determined that the defendant failed 
to raise a constitutional claim. '^^ Relying on Raffel v. United States, the Court 

ban on the use of silence when a defendant stands mute or claims his privilege in the face of 
accusation. Id. at 627-28. More importantly, Justice Stevens noted that the Miranda footnote 
relied primarily on Griffin v. California, 380 U.S. 609 ( 1 965), which determined that a prosecutor' s 
comment on a defendant's failure to testify violates his Fifth Amendment rights. Id.; see also 
Griffiin, 380 U.S. at 615 (holding that Fifth Amendment forbids comment on the accused's silence 
when it is used to evidence guilt). Unlike Griffin, the prosecutor in Doyle did not comment on the 
defendants' failure to testify, but commented on their failure to tell the arresting officers their 
exculpatory story first heard at trial. Doyle, 426 U.S. at 613. As such, Dolye is best understood as 
a Raffel-type impeachment case, rather than a Griffin-type self-incrimination case. 

118. See supra note 115 and accompanying text (discussing Griffin v. California). 

1 19. See supra notes 56-59 and accompanying text (discussing Miranda v. Arizona). 

120. See supra note 107 and accompanying text (discussing Doyle v. Ohio). 

121. Jenkins v. Anderson, 447 U.S. 231 (1980). 

122. Id. at 240. The petitioner, Dennis Jenkins, confessed to murder two weeks after the 
crime, alleging that he killed in self defense. Id. at 232-33. At his trial, Jenkins testified in his own 
defense. The prosecution, in its cross-examination of Jenkins, asked him why he remained silent 
for two weeks after the crime, intending to raise an inference that Jenkins' silence was inconsistent 
with his later confession. Id. at 233-35. Jenkins argued that the prosecution violated his Fifth 
Amendment right to remain silent. Id. at 235. 

123. /J. at 238-39. 

24 INDIANA LAW REVIEW [Vol. 38: 1 

confirmed that a defendant waives his Fifth Amendment right to remain silent 
when he testifies in his own defense and the government attempts to use his prior 
silence to impeach his credibility.'^"^ Although the Jenkins Court subniitted, in 
arguendo, that its ruling may force a person to choose between invoking his right 
to remain silent thereby risking the use of his pre-arrest silence to impeach him 
and waiving his right to silence to prevent the government from using his pre- 
arrest silence to impeach him later, it opined that the "Constitution does not 
forbid 'every government-imposed choice in the criminal process that has the 
effect of discouraging the exercise of constitutional rights. '"'^^ The Court 
differentiated Jenkins from Doyle, where the government induced the defendant 
to remain silent because his silence followed the government's assurance that his 
silence would not be used against him.'^^ In Jenkins, the defendant never 
received a Miranda warning — nor was he entitled to one — and thus never 
received the government's assurance that his silence would not be used against 
him.'^^ Pre-arrest (and prt-Miranda) silence, then, can be used to impeach a 

124. Id. at 235. 

125. Id. at 236 (quoting Chaffin v. Stynchcombe, 412 U.S. 17, 30 (1973)). Determining 
whether a constitutional right has been impermissibly burdened, the Court stated that "[t]he 
'threshold question is whether compelling the election impairs to an appreciable extent any of the 
policies behind the rights involved.'" Id. (quoting Chajfin, 412 U.S. at 32). The Court also 
considered whether the challenged governmental practice (using a person's pre-arrest silence to 
impeach his credibility at trial) furthers other important purposes. Id. at 238. Weighing these 
policies, the Court concluded that the government's use of a person's pre-arrest silence does not 
appreciably impair the policies behind the Fifth Amendment and does further the important goal 
of enhancing the reliability of the criminal process. Id. at 236-38. 

126. Mat 239-40. 

1 27. Id. at 240. In his concurrence. Justice Stevens argued that the Fifth Amendment privilege 
against self-incrimination is irrelevant to a person's decision to remain silent when she is under no 
official compulsion to speak. Id. at 241 (Stevens, J., concurring). The admissibility of pre-arrest 
silence, then, turns on the rules of evidence and not the Constitution. Id. at 244. 

Justice Marshall, however, in his dissent, wrote that the majority's ruling has three defects. 
Id. at 246 (Marshall, J., dissenting). First, Justice Marshall would extend Doyle to prohibit the use 
of pre-arrest silence to impeach a defendant, because like post-arrest silence, pre-arrest silence "is 
so unlikely to be probabative of the falsity of the defendant's trial testimony that its use for 
impeachment purposes is contrary to the Due Process Clause of the Fourteenth Amendment." Id. 
(Marshall, J., dissenting); see also supra notes 106-08 (discussing use of post-arrest silence in 
Doyle). A defendant. Justice Marshall noted, may have decided to exercise his constitutional right 
to remain silent before his arrest — his silence is indeterminately ambiguous because it cannot be 
assumed that he is not aware of his constitutional rights, even prior to an official warning. Id. at 
247. Second, Justice Marshall argued that allowing the prosecution to draw a negative inference 
from a defendant's silence impermissibly penalizes the defendant's decision to exercise his 
privilege against self-incrimination under the Fifth Amendment. Id. at 246. To prevent the 
prosecution from drawing a negative inference from his pre-arrest silence, a defendant would be 
required to offer his potentially incriminating version of events to the police — replacing "the 
privilege against self-incrimination with a duty to incriminate oneself" Id. at 250 (Marshall, J. 


defendant's credibility when he waives his Fifth Amendment privilege by 
agreeing to testify at his own trial and in his own defense. The use of post-arrest 
(and posi-Miranda) silence, however, is fundamentally unfair and violates the 
due process guarantee of the Fourteenth Amendment because the government 
assured the defendant that his silence would not be used against himJ^^ 

The Miranda decision, however, addressed the constitutionality of the 
government's use of a defendant's confession obtained through a custodial 
interrogation. ^^^ That opinion did not consider the use of a defendant's 
statements (or silence) absent the coercive environment surrounding a police 
interrogation or its functional equivalent. Miranda's progeny, including both 
Doyle and Jenkins, ostensibly moved Miranda's constitutional trigger away from 
police interrogation, and the question became not whether the suspect was 
interrogated, but whether the government induced his silence. The problem was 
fixing when, and not whether, the government induced a defendant's silence. 

In the wake of Jenkins, some federal appellate courts determined that the 
arrest itself triggered a suspect's right to remain silent (and prohibited the 
government's use of his silence to impeach him), regardless of whether he was 
even read the Miranda warnings. '^° For example, in Weir v. Fletcher, the United 
States Court of Appeals for the Sixth Circuit determined that the government 
could not impeach a defendant with his post-arrest silence even if the police 

dissenting). To support this view. Justice Marshall concluded that the majority's reliance on Rqffel 
was misguided because Rqffel, although not expressly overruled, was no longer viable in the wake 
of Griffin. Id. at 252. Third, Justice Marshall further opined that allowing the prosecution to draw 
a negative inference from a defendant's pre-arrest silence would impermissibly burden the 
defendant's choice to testify in his own defense. Id. at 246 (Marshall, J. dissenting). In the 
paradigmatic case, a defendant would need to report his exculpatory story "at the first possible 
moment" to prevent the prosecution from later commenting on his pre-arrest silence to discredit his 
trial testimony should he choose to exercise his constitutional right to testify on his own behalf. 
Id. at 253. 

128. Notably, the Jenkins Court appears to reinforce an idea first articulated in Johnson v. 
United States, 318 U.S. 189 (1943). In that case, the Court determined that when a trial court 
expressly grants a defendant's request to remain silent, even if that defendant makes the request 
after he waives his right and during his own cross-examination, it must honor its own grant. See 
supra notes 28-39 and accompanying text (discussing Johnson v. United States). In Jenkins, the 
Court again suggested that a defendant who waives his privilege against self-incrimination and 
testifies in his own defense may still invoke his right to protect his post-Miranda silence because 
the government assured him that his silence will carry no penalty. See Jenkins v. Anderson, 447 
U.S. 231, 240 n.6 (1980). 

129. See supra notes 79-86 (discussing Miranda). 

130. Weir v. Fletcher, 658 F.2d 1126, 1131 (6th Cir. 1981), rev'd, 455 U.S. 603 (1982) 
(concluding that impeachment of defendant with post-arrest silence is unconstitutional); see also 
United States v. Curtis, 644 F.2d 263, 271 (3d Cir. 1981) (holding use of post-arrest silence 
constituted Doyle error without regard to Miranda warnings); United States v. Harrington, 636 F.2d 
1 182, 1 187 (9th Cir. 1980) (holding that the use of post-arrest silence to impeach unconstitutional 
without regard to Miranda warnings). 

26 Es[DIANA LAW REVffiW [Vol. 38: 1 

never read him the Miranda warnings. '^' Relying on both Doyle and Jenkins, the 
Sixth Circuit ruled that "an arrest, by itself, is governmental action which 
implicitly induces a defendant to remain silent." ^^^ Perhaps recognizing that its 
Miranda opinion was growing increasingly slippery, the United States Supreme 
Court accepted certiorari in Fletcher v. Weir and decided, per curiam, that the 
Miranda warnings, and not the arrest, determine whether the government can 
permissibly impeach a defendant with his own silence. '^^ 

In Fletcher, the defendant testified for the first time at his murder trial that 
he acted in self defense. '^"^ The government, in its cross examination of the 
defendant, asked him why he failed to offer his exculpatory story to the arresting 
officers both prior to and immediately after his arrest. '^^ The court noted that it 
could not determine whether the defendant had been read the Miranda warnings 
before his post-arrest silence. ^^^ Reversing the Sixth Circuit, the Court first 
concluded that a defendant's pre-arrest silence is admissible to impeach him 
because no government action (a Miranda warning) induced the defendant to 
remain silent before his arrest. '^^ Secondly, the Court determined that the 
government could use a defendant' s post-arrest yet pre-Miranda silence, because, 
absent the affirmative assurances embodied in a Miranda warning, the 
government's use of that silence to impeach him does not offend due process. ^^^ 

131. Weir, 65 8 F, 2d at 1 1 30. In Weir v. Fletcher, the defendant testified at his murder trial that 
he acted in self-defense. Id. at 1 127. The prosecutor, in his cross-examination of the defendant, 
asked the defendant why he had not disclosed his exculpatory story to the police at the time of his 
arrest. Id. at 1 128-29. The court held that the prosecutor's questions about the defendant's silence 
before his arrest were permissible. See id. at 1 129 (relying on Jenkins v. Anderson, 447 U.S. 231 
(1980)). The court also held that the prosecutor's questions about the defendant's post-arrest, yet 
pre-Miranda silence were impermissible. See id. (limiting Jenkins to pre-arrest silence). 

132. Id. at \13\. 

133. Fletcher v. Weir, 455 U.S. 603, 606 (1982) (per curiam). 

134. /^. at 603. 

135. /J. at604n.l. 

136. /cfat605. 

137. Id.at606. The Court relied first on Do^^ v. O/z/f?, 426 U.S. 6 10, 6 19 (1976), which held 
that the government could not use a defendant's post-arrest and post-Miranda silence to impeach 
him because the defendant's silence may have been induced by the government's assurances that 
his silence would not be used against him. See Fletcher, 455 U.S. at 605 (discussing Doyle v. 
Ohio). The Court then discussed its ruling in Jenkins v. Anderson, 447 U.S. 23 1 , 240 (1980), where 
it held that the government could impeach a defendant with his pre-arrest silence because the 
defendant had not yet received assurances that his silence would not be used against him. Fletcher, 
455 U.S. at 606 (discussing Jenkins v. Anderson). Finally, the Court relied on Anderson v. Charles, 
447 U.S. 404, 408 (1980), where it reasserted the idea that silence following a Miranda warning 
cannot be used to impeach a defendant because the warning assured the defendant that his silence 
would not be used later against him. See Fletcher, 455 U.S. at 606 (discussing Anderson v. 

138. Id. at 606-07. Instead, the Court concluded that the admissibility of a defendant's post- 
arrest, pre-Miranda silence is controlled by the rules of evidence, not the Constitution. Id. at 606. 


A defendant's right to remain silent, then, is triggered not by his arrest, but by the 
arresting officer's decision to Mirandize him. The constitutional trigger for the 
admissibility of exculpatory statements (or silence), once keyed to the dangers 
inherent to back-door interrogations, now rests in part on the speed at which an 
arresting officer can apprise a suspect of his rights. ^^^ And while the defendant's 
due process right is perfected when he relies on the assurances implicit in the 
warnings, the government has no obligation to Mirandize anyone absent 
custody. ^"^^ Even when a suspect is in custody, the government can still use his 
silence to impeach him if the police fail to Mirandize him immediately upon his 
arrest. '"^^ 

In the end, Miranda and its progeny both deepened and broadened a 
suspect's rights under the Constitution. The Fifth Amendment requires the 
government to first warn a suspect in custody of the dangers of waiving his 
constitutional rights. Although the government's use of a defendant's post- 
Miranda silence to impeach him may not infringe directly on his Fifth 
Amendment rights, it will violate his right to due process under the Fourteenth 
Amendment. In the paradigmatic case, the Fifth Amendment requires the 
government to warn a person in custody (or its functional equivalent) to the 
dangers of waiving Fifth Amendment rights. But, while the warnings are derived 

139. See supra note 73 (discussing custodial interrogation as the reason for the Miranda 

140. See supra notes 77-80 (discussing the requirement of custody). In 1983, the Supreme 
Court reasserted, in a per curiam opinion, that a suspect is entitled to a Miranda warning only when 
he is in custody and that custody begins with an arrest or something similar to an arrest. California 
V. Beheler, 463 U.S. 1121, 1 125 (1983) (per curiam). In Beheler, the defendant called the police 
shortly after his brother-in-law committed a murder. Id. at 1122. Later, Beheler voluntarily 
accompanied police to the station house where he agreed to talk about the murder. The police 
interviewed Beheler without first apprising him of his rights. At trial, the trial court admitted 
Beheler' s statements into evidence. Id. Weighing the totality of the circumstances surrounding the 
interview, the court of appeals determined that the government failed to meet its burden by showing 
that Beheler was not in custody during the interview. Id. at 1 123. Ultimately, the Supreme Court 
disagreed with the court of appeals' determination, stating that the government is required to give 
a Miranda warning only when it formally arrests a suspect or restricts his freedom of movement to 
a degree associated with formal arrest. Id. at 1 125. Because police in this case neither arrested 
Beheler nor restricted his movement in a significant way, he was not in custody during the 
interview — and thus was not entitled to a Miranda warning. Id. An arrest, or something analogous 
to an arrest, then, entitles a person to the warnings which, once given, assure a person that his 
silence cannot be used against him. 

141. The Supreme Court has stated that a custodial interrogation activates the need for 
Miranda warnings. See id. at 1122-23. The Miranda warning, however, determines the 
admissibility of a defendant's silence at trial. In a more recent test, the United States Supreme 
Court restated in Brecht v. Abrahamson, 507 U.S. 619, 628 (1993), that the government could 
comment on a defendant's prc-Miranda silence to impeach him, but that the government could not 
comment on a defendant's post-Miranda silence to impeach him without violating the defendant's 
due process rights. 

28 EsfDIANA LAW REVIEW [Vol. 38:1 

from the Fifth Amendment, the Constitution is only breached when the 
government compels a defendant to bear witness against himself. Once warned, 
a defendant may waive his right by either subjecting himself to police 
interrogation or by testifying on his own behalf at trial. Should the defendant 
choose to remain silent after he is warned, however, the government' s use of that 
silence, even to impeach, is barred not by the Fifth Amendment (because it only 
protects compelled statements), but rather by the Fourteenth Amendment 
(because due process demands that the government honor its promises to the 

The case law teaches that the government's use of a suspect's silence to 
impeach him may sound in the Fifth Amendment, but its admissibility at trial is 
determined under the Fourteenth Amendment. '"^^ And while the United States 
Supreme Court attended to the government's use of a defendant's silence to 
impeach his credibility after he waives his right to not incriminate himself, the 
lower courts struggled with the more precarious question of whether the 
government can use a defendant's pre-trial silence in its case-in-chief. The 
debate turns on the reach of the Fifth Amendment's prohibitions and whether the 
Fifth Amendment applies at all to pre-trial, yet arguably incriminating silence. 

IV. The Circuits Respond: The Use of Silence in the 
Government's Case-in-Chief 

Since Rajfel v. United States, the Supreme Court' s jurisprudence has evolved 
to permit the government's use of a suspect's pre-trial silence to impeach him 
only if that silence preceded the implied assurance embodied in Miranda that 
silence would carry no penalty. ^"^^ But for Miranda warnings, no government 
action induces a suspect to remain silent, so the use of that silence to impeach a 
defendant violates neither the Fifth Amendment's prohibition against self- 
incrimination nor the Fourteenth Amendment's fundamental fairness test under 
a due process analysis. ^"^"^ Some circuits have found that, because the 
Doyle/Jenkins analysis allows the government to use a defendant's prior silence 
against him at trial, no doctrinal basis exists to distinguish between the 
government's use of a defendant's silence to impeach him and the government's 
use of a defendant's silence to evidence his guilt. ^"^^ Other circuits, however, 

142. See supra notes 112-15 and accompanying text (discussing the application of the Fifth 
Amendment to the admissibility of a defendant's silence). 

143. See supra notes 106-11 and accompanying text (discussing Doyle v. Ohio and its 
progeny). Any comment on the defendant's silence at trial (when the government comments on his 
refusal to testify), however, is barred by the Fifth Amendment. See supra notes 115-16 and 
accompanying text (discussing Griffin v. California). 

144. See supra notes 127-28 and accompanying text (discussing the use of a defendant's pre- 
Miranda silence to impeach him). 

145. The Fifth, Ninth, and Eleventh Circuits have all held that the government may use pre- 
arrest silence in its case-in-chief United States v. Oplinger; 150 F.3d 1061, 1067 (9th Cir. 1998) 
(holding government may use pre-arrest silence in its case-in-chief); United States v. Zanabria, 74 




A. Federal Circuit Courts of Appeal Concluding That the Government 
May Not Use a Defendant's Silence in Its Case-in-Chief 

Seven circuits have considered whether the government could use a suspect' s 
pre-arrest or pre-Miranda silence to establish (or at least infer) the defendant's 
guilt and have determined that such use is prohibited by the Constitution.*'^^ For 
example, in Coppola v. Powell, the United States Court of Appeals for the First 
Circuit concluded that the government's use of a defendant's pre-arrest silence 
in its case-in-chief unconstitutionally burdened his Fifth Amendment privilege 
against self-incrimination.'"*^ In Coppola, the police, during a criminal 
investigation, questioned a suspect but had not yet arrested nor Mirandized 
him.*"*^ The suspect, when asked about the crime, replied *'if you think I'm going 
to confess to you, you're crazy." '^^ At trial in New Hampshire, the government 
successfully sought to admit the fact that the defendant refused to speak. *^* On 
appeal, the New Hampshire Supreme Court affirmed, agreeing with the trial court 
that the defendant had not invoked his Fifth Amendment right to silence. *^^ On 
appeal from a federal district court's denial of the defendant's writ of habeas 
corpus, the First Circuit disagreed with both the New Hampshire Supreme Court 
and the federal district court when it determined first that the suspect did invoke 
his Fifth Amendment privilege against self-incrimination when he refused to 
confess to police. *^^ Then, relying on Griffin v. California, the court explained 

F.3d 590 (5th Cir. 1996); United States v. Rivera, 944 F.2d 1563, 1568 (1 1th Cir. 1991). 

146. See Coppola v. Powell, 878 F.2d 1562, 1568 (1st Cir. 1989) (holding pre-arrest silence 
cannot be used in the government's case-in-chief); United States ex. rel. Savory v. Lane, 832 F.2d 
1011, 1018 (7th Cir. 1987) (holding government cannot use pre-arrest silence in its case-in-chief); 
United States v. Caro, 637 F.2d 869, 876 (2d Cir. 1981) (suggesting government cannot comment 
on a defendant's silence in its case-in-chief). 

147. See Combs v. Coyle, 205 F.3d 269 (6th Cir. 2000); United States v. Moore, 104 F.3d 377 
(D.C. Cir. 1997); United States v. Burson, 952 F.2d 1 196 (10th Cir. 1991); Coppola, 878 F.2d at 
1562; Savory, 832 F.2d at 1011; Caro, 637 F.2d at 869; Douglas v. Cupp, 578 F.2d 266 (9th Cir. 

148. Coppola, 878 F.2d at 1567-68. 

149. Mat 1563. 

150. Id. 

151. Mat 1564. 

152. See id. (citing State v. Coppola, 130 N.H. 148, 152-53 (1987)). The New Hampshire 
Supreme Court explained that the defendant failed to invoke any Fifth Amendment privilege against 
self-incrimination because he did not refuse to speak or remain silent (and therefore invoke his 
constitutional right), but rather refused to confess. Id. 

153. Id. at 1567. The court cited three reasons to support the idea that a defendant invokes his 
right to remain silent when he refiises to confess, rather than when he refuses to speak. Id. at 1564- 
1566. First, the court explained that the United States Supreme Court construes broadly a 
defendant's invocation of his right to remain silent. Id. at 1565. Second, the court determined that 

30 INDIANA LAW REVIEW [Vol. 38: 1 

that the Fifth Amendment bars comment on a person's exercise of his Fifth 
Amendment privilege against self-incrimination when he elects not to testify in 
his own defense. '^"^ Jenkins v. Anderson, the court continued, was inapplicable 
because that case considered whether the Fourteenth Amendment allows the 
government to impeach a defendant with his prt-Miranda silence and did not 
consider whether the Fifth Amendment prohibits comment on a defendant's 
claim of his Fifth Amendment right to remain silent (and his subsequent silence) 
before his arrest. '^^ Notably, the Coppola court did not consider whether the 
flexible requirements of the Fourteenth Amendment allow the government to 
comment on a defendant's pre-arrest or pre-Miranda silence, but rather focused 
on whether the defendant invoked his Fifth Amendment privilege during an 
investigatory proceeding, thereby barring the government from using his silence 
against him. In evaluating such claims, courts have first uncovered some 
indication that a defendant had invoked his rights under the Fifth Amendment 
and then simply barred that invocation together with any attendant silence as an 
unconstitutional burden on the Fifth Amendment. 

The Sixth Circuit unwittingly agreed with the First Circuit's rule in Coppola 
when it decided Combs v. Coyle^^^ In Combs, an Ohio trial court convicted the 
defendant, Ronald Combs, of murdering his former girlfriend and her mother. '^^ 
At trial, the prosecution used Combs' pre-arrest silence to establish that he 
intended to commit the crime charged. '^^ Of note. Combs told the investigating 
officer to "talk to [my] lawyer." '^^ Combs was neither under arrest, nor read the 
Miranda warnings at the time.'^^ The defendant appealed his conviction, arguing 
that the prosecution violated his right to due process under Doyle v. Ohio when 
it allowed the government to comment on his pre-arrest silence in its case-in- 

"a claim of the [Fifth Amendment privilege against self-incrimination] does not require any special 
combination of words." See id. (quoting Quinn v. United States, 349 U.S. 155, 162 (1955)). 
Finally, the court noted that the privilege is not limited to persons in custody or charged with a 
crime and applies to suspects under investigation of a crime. Id. at 1565-66. 

1 54. Id. at 1 568. The court noted that had the defendant surrendered his privilege against self- 
incrimination and testified in his own defense, then the rule of Rqffel v. United States would have 
allowed the prosecution to comment on his Fifth Amendment privilege. Id. at 1567-68. 

155. Id. at 1568. 

156. Combs v. Coyle, 205 F.3d 269, 283 (6th Cir. 2(X)0). 

157. /^. at 273. 

158. Id. at 278-79. At the defendant's trial, an officer who witnessed the murders testified that 
he asked the defendant what had happened, and the defendant replied "talk to my lawyer." Id. at 
279. The trial court immediately followed with an instruction to the jury reminding it that the 
defendant had a right to remain silent, but still allowed the jury to consider the testimony for the 
purpose of determining the defendant's intent. In its closing speech, the prosecutor again noted to 
the jury that the defendant chose not to answer the officer's question, instead asking for a lawyer. 
The Sixth Circuit determined that the defendant's request for his lawyer "is best understood as 
communicating a desire to remain silent outside the presence of an attorney." Id. 

159. Id. 

160. /J. at 280. 


chief. ^^' 

Although the Sixth Circuit disagreed with Combs' rehance on Doyle because 
he was never read the Miranda warnings and thus could not have relied on a 
government assurance that his silence would not be used against him, it did 
conclude that the Fifth Amendment bars the government from using a 
defendant's pre-arrest silence as substantive proof of guilt. ^^^ Notably, the court 
determined that "Combs clearly invoked the privilege against self-incrimination 
by telling the officer to talk to his lawyer." ^^^ The court also suggested that a 
person questioned in the course of a criminal investigation may assert his Fifth 
Amendment privilege against self-incrimination to the same extent as a person 
charged with a crime or in custody. ^^"^ Then, to hedge its bet, the court 
determined that even if the privilege does not apply in the pre-custody context. 
Combs was under arrest and in custody when he told the investigating officers 
to talk to his lawyer. *^^ The court reasoned that because Combs invoked his 
privilege at the outset of the police investigation, never waived his privilege 
during the criminal proceeding, and did not testify at his trial, the government 
could not comment on his silence without offending his Fifth Amendment 
privilege against self-incrimination.^^^ Like the First Circuit, the Sixth Circuit 
did not object explicitly to the government's use of a defendant's pre-arrest 
silence in its case-in-chief, but rather to the government's use of his silence after 
he invoked his right to remain silent and continued to benefit from its protection 
by choosing not to testify in his own defense. 

The Seventh Circuit appears to agree with this analysis. ^^^ In Savory v. Lane, 
the United States Court of Appeals for the Seventh Circuit concluded that the 
government may not use a defendant's pre-arrest silence in its case-in-chief. ^^^ 
In Savory, the prosecution introduced evidence that the defendant refused to 
make a statement when police initially interviewed him in connection with a 

161. Id. at219. 

162. See id. at 280, 286 (noting that Doyle rests on the theory that the Miranda warnings 
implicitly assure a defendant that his silence will not be penalized). 

163. /J. at 286. 

164. See id. at 283 (citing Coppola v. Powell, 878 F.2d 1562, 1565 (1st Cir. 1989)). 

165. Id. at 284-85. The court observed Justice Stevens's concurrence in Jenkins when he 
explained that the Fifth Amendment does not apply in the pre-custody context because without 
arrest or custody a person is under no official compulsion to speak or remain silent — so the Fifth 
Amendment's prohibition against compelled self-incrimination is inapplicable. Id. at 283 (citing 
Jenkins v. Anderson, 447 U.S. 231, 241 (1980) (Stevens, J., concurring)). The court, anxious that 
Justice Stevens may be right, wrote that "[e] ven assuming that the Fifth Amendment is inapplicable 
to precustody contexts, the privilege would still be applicable to Combs, for we agree . . . that 
Combs was in custody at the time he made the 'talk to my lawyer' statement." Id. at 284. 

166. /^. at 285. 

167. See United States ex rel. Savory v. Lane, 832 F.2d 101 1, 1017 (7th Cir. 1987) (holding 
use of defendant's pre-arrest silence violated the Fifth Amendment). 

168. See id. at 1018-19 (holding that although the Fifth Amendment bars the use of a 
defendant's pre-arrest silence in the government's case-in-chief, the error was harmless). 

32 INDIANA LAW REVIEW [Vol. 38: 1 

murder investigation.'^^ The defendant did not take the stand at his trial. '^^ The 
Seventh Circuit concluded that the government' s use of the defendant' s pre-arrest 
silence in its case-in-chief did not violate Doyle v. Ohio (because the prosecution 
was not attempting to impeach the defendant), but rather violated Griffin v. 
California (because the prosecution used the defendant's silence to suggest that 
he was guilty).'^' Explaining that the right to remain silent attaches before the 
institution of formal adversary proceedings, the court wrote "we believe Griffin 
remains unimpaired and applies equally to a defendant's silence before trial, and 
indeed, even before arrest." '^^ Although the court neglected to note in its 

169. /J. at 1015. 

170. Mat 1017. 

171. See id. (citing Doyle v. Ohio, 426 U.S. 610 (1976); Griffin v. California, 380 U.S. 609 

172. Id. at 1017. While Griffin involved the use of a defendant's refusal to testify in his own 
defense and not the use of a defendant's pre-arrest silence, the Seventh Circuit did not believe that 
such a distinction made a difference since the right to remain silent attaches before the institution 
of formal adversary proceedings. Id. 

Four years after Savory v. Lane, the Seventh Circuit in United States v. Davenport, 929 F.2d 
1 169 (7th Cir. 1991), appeared more sympathetic to the idea that a defendant's pre-arrest silence 
could be used in the government's case-in-chief. In Davenport, IRS agents interviewed two 
defendants in relation to a bank deposit structuring scheme that violated federal law. /J. at 1 171. 
Although the defendants were Mirandized, they were neither under arrest nor in custody. Id. at 

1 174. At the pre-arrest interview, one defendant answered some questions and refused to answer 
others. Id. at 1 173-74. Later, at trial, the government used the defendant's refusal to answer some 
of the I.R.S. agent's questions against her. Id. at 1 175. The Seventh Circuit wrote that despite the 
ruling in Savory, the use of the defendant' s pre-arrest silence may not have violated the Constitution 
in this case. Id. It distinguished Savory, noting in that case the defendant remained silent 
throughout the investigatory interview, while the defendants in Davenport did answer some 
questions. Id. at 1 174. To that end, the court suffered to explain that had the defendants remained 
silent for the entire interview, the government could not have commented on that silence. Id. at 

1 175. But, because the defendants answered some questions, they waived their privilege, and "all 
bets were off." Id. The court noted that absent custody, the prohibitions outlined in Miranda v. 
Arizona are not in play. Id. The fact that a defendant answers "some questions can properly be 
given greater weight in deciding whether that willingness [to answer some questions] should forfeit 
the right to object to comment on a refusal to answer a particular question." Id. Yet, despite the 
fact that the Davenport defendants were read the Miranda warnings (and thus implicitly assured 
that their silence would not be used against them) and despite the Seventh Circuit's holding in 
Savory v. Lane (prohibiting the use of silence in the government's case-in-chief), the court was 
willing to allow the government to use the defendants' pre-arrest silence against them. Not entirely 
confidant in its own ruling, however, the court finally determined that "if this is all wrong and there 
was error here, it was harmless." Id. Davenport can only then be read as an anomaly and a case 
of result-oriented jurisprudence. 

One year later, the Seventh Circuit resolved any ambiguity about the circuit's position on the 
use of pre-Miranda silence when it decided United States v. Hernandez, 948 F.2d 316 (7th Cir. 
1991). In Hernandez, the defendant objected to the prosecution's use of his post-arrest yet pre- 


reasoning that the defendant had in fact asserted his right to remain silent when 
he refused to give investigating officers a statement (arguably triggering his Fifth 
Amendment privilege against self-incrimination under Griffin), that fact was key 
to both the First and Sixth Circuits. '^^ Another federal circuit, then, appears to 
prohibit the use of pre-arrest silence in the government's case-in-chief when the 
defendant asserts his right to remain silent before he is owed the Miranda 
warnings and even before his arrest. 

The Tenth Circuit Court of Appeals also considered whether the government 
could use a defendant's pre-arrest silence in its case-in-chief and agreed with the 
First, Sixth, and Seventh Circuits when it concluded that the government may not 
comment on a defendant's pre-arrest silence without offending the Fifth 
Amendment. '^"^ In United States v. Bur son, the petitioner, Cecil Burson, was 
convicted for tax evasion. '^^ At trial, the prosecuting attorney produced two IRS 
criminal investigators who testified that Burson had not responded to their 
investigatory questions at his home and that "it was apparent that he would not 
cooperate or answer any . . . questions."^^^ The court concluded first that Burson 
had invoked his privilege against self-incrimination when he remained silent in 
the face of investigatory questioning by the IRS agents. '^^ Then, relying on a 
broad construction of Griffin v. California, it determined that once a defendant 
invokes his privilege against self-incrimination, the Fifth Amendment prohibits 
the prosecution from commenting on his protected silence. ^^^ Under the Tenth 
Circuit's analysis, silence alone may invoke a person's right to silence even in 
the absence of any official compulsion to speak. Once again, a federal circuit 
court of appeals was able to prevent the government from using a person's pre- 
arrest and prt-Miranda silence in its case-in-chief if that person first asserted (or 
even implied) his right to remain silent during an investigation of a crime. ^^^ 

Miranda silence in its case against him. Id. at 322. The trial court admitted the silence. Id. 
Relying on Savory v. Lane, the Seventh Circuit determined that the government cannot use a 
defendant's pre-Miranda silence as evidence of guilt in its case-in-chief. See id. at 322-23. 

173. Savory, 832 F.2d at 1015 (noting that defendant asserted his right to remain silent, but 
outside its analysis of the case); see also supra notes 148-66 and accompanying text (discussing the 
First and Sixth Circuits' focus on the defendant's assertion of the right to remain silent). 

174. United States v. Burson, 952 F.2d 1196, 1201 (10th Cir. 1991). 

175. /J. at 1198. 

176. Mat 1200. 

177. Id. at 1200-01. The court noted that Burson' s silence in the face of investigatory 
questions was sufficient to invoke his Fifth Amendment privilege against self-incrimination. Id. 
at 1200. 

178. Id. at 1201; see also supra notes 115-16 and accompanying text (discussing Griffin's 
prohibition against the use of a defendant's failure to testify at his trial, not before). 

179. Id. Ten years after its opinion in United States v. Burson, the Tenth Circuit again 
considered the admissibility of a defendant's pre-trial silence and concluded that, in some scenarios, 
the prosecution may comment on defendant's silence without offending the Constitution. United 
States V. Oliver, 278 F.3d 1035, 1039 (10th Cir. 2001). In Oliver, the prosecution, in its case-in- 
chief, asked its witness, the arresting officer, whether the defendant was read his Miranda rights. 

34 INDIANA LAW REVIEW [Vol. 38: 1 

Other federal circuits have barred the government's use of a suspect's pre- 
Miranda or pre-arrest silence in its case-in-chief even when a suspect fails to 
assert, or even imply, his right to remain silent.'^" For example, the Second 

The prosecuting attorney then inquired whether the defendant exercised his right to remain silent. 
The defendant objected to the question before the officer could answer it. Id. Relying on Greer 
V. Miller, 483 U.S. 756 (1987), the Tenth Circuit determined that the government did not "use" the 
defendant's assertion of his Miranda rights because the officer was not allowed to answer the 
prosecutor's question. Oliver, 278 F.3d at 1039-40. Further, the court concluded that the 
government commits a Doyle violation when it uses the defendant's right to remain silent against 
him. Id. at 1039. So, while Burson teaches that any silence after a defendant asserts his right to 
remain silent is barred by the Fifth Amendment, Oliver suggests that the Fourteenth Amendment, 
as applied in Doyle, does not prohibit comment on silence if that comment did not constitute a 
"use" of a defendant's right to remain silent. 

180. See infra notes 181-86 and accompanying text (discussing United States v. Caro, 637 
F.2d 869 (2d Cir. 1981)); see also United States v. Moore, 104 F.3d 377, 389-90 (D.C. Cir. 1997) 
(holding government may not use post-arrest silence in its case-in-chief, but concluding that error 
was harmless). In 1997, the United States Court of Appeals for the District of Columbia, in a 
plurality opinion, relied on Griffin v. California, 380 U.S. 609, 615 (1965), to conclude that the 
government may not comment on a defendant's post-arrest silence in its case-in-chief even when 
a defendant fails to invoke his right to remain silent. Moore, 104 F.3d at 385-86 (noting that police 
testified that defendant stood mute when contraband was found in his car). Judge Sentelle, writing 
for the majority, found first that the government commented on the defendant's silence when he was 
in custody, and not before. Id at 387. As such, the government was barred from using that silence 
in its case-in-chief Judge Sentelle explained that the Supreme Court's decisions in Doyle, Jenkins, 
and Fletcher serve as an exception to an exception to the general rule — the government may only 
use a defendant's post-custody (yet pve-Miranda) silence if the defendant waives his privilege 
against self-incrimination and testifies in his own defense, and the government uses the defendant's 
prior silence only to impeach his testimony. Id. Since the case fell outside the exception to the 
general rule barring the use of silence, Judge Sentelle wrote that the government may not 
constitutionally comment on the defendant's silence. Id. at 389. The court expressly refused to 
consider whether pre-arrest silence could be used in the government's case-in-chief, deciding that 
the facts before it precluded such a consideration. Id. at 388. 

Judge Silberman, in his concurring opinion, disagreed with Judge Sentelle' s Fifth Amendment 
analysis and accused the majority of "impermissible appellate factual finding." Id. at 391 
(Silberman, J., concurring). Judge Silberman took sharp exception to Judge Sentelle's finding that 
the defendant was in custody during his contested silence, writing that the circumstances 
surrounding the defendant's silence were not the product of compulsion required by the Fifth 
Amendment. Id. at 392-93 (noting that Miranda v. Arizona stated that the Fifth Amendment is 
triggered by the compulsion inherent in a custodial interrogation). Judge Silberman also suggested 
that the majority's reliance on Griffin v. California is misguided since that case barred the 
government from commenting on a defendant's reftisal to testify at trial — it did not broaden the 
Fifth Amendment to protect a defendant's pre-trial silence. Id. at 394. Finally, Judge Silberman 
noted that Doyle did not announce a Fifth Amendment prohibition to the use of a defendant's post- 
Miranda silence to impeach him, but rather a due process prohibition under the Fourteenth 
Amendment. Id. at 394-95. The logic of Doyle, which prohibited the use of silence only when the 


Circuit, in United States v. Caro, held that the government may not comment on 
a defendant's pre-arrest silence in its case-in-chief. ^^^ In Caro, the prosecuting 
attorney, in its direct case, elicited testimony from a customs inspector that the 
defendant stood mute while the inspector searched his suitcase and found 
counterfeit Federal Reserve notes in the course of a routine customs inspection. ^^^ 
The defendant later waived his Fifth Amendment privilege, denied on direct 
examination any knowledge of the counterfeit notes, and testified that he was 
shocked when he saw the inspector remove them from the suitcase. '^^ 
Concluding that the Fifth Amendment barred the use of the defendant' s pre-arrest 
and pre-Miranda silence, the Second Circuit chose not to analyze the case before 
it and instead relied on the want of federal precedent allowing the use of silence 
in the government's case-in-chief. '^'^ It noted that "we are not confident that 
Jenkins permits even evidence that a suspect remained silent before he was 
arrested or taken into custody to be used in the Government's case in chief." ^^^ 
A criminal suspect in the Second Circuit who stands mute in the face of a routine 
investigation, who fails to assert (or imply) his right to remain silent, who waives 
his right to silence by testifying in his own defense, and who offers an 
exculpatory version of events surrounding the initial investigation may still rely 
on the Constitution to protect his pre-arrest silence. ^^^ 

police first assure the defendant that his silence would not be used against him, ought to apply 
equally to the use of silence to impeach as to the use of silence to demonstrate guilt. Id. at 395. 
As such, Judge Silberman would have allowed the prosecution to comment on the defendant's pre- 
Miranda silence in its case-in-chief since that silence was not compelled by the police, was not 
induced by a Miranda warning, and was not barred by the Fifth or Fourteenth Amendments. Id. 

181. Cara, 637 F.2d at 876. 

182. Id. at 871. The court noted that the only substantial issue for trial was whether the 
defendant knew the suitcase contained counterfeit notes. In its direct case, the prosecution 
attempted to infer guilty knowledge from the defendant's reaction to the inspector's search of the 
suitcase. Id. 

183. Id. at 872. 

1 84. Id. at 876. The court stated it "found no decision permitting the use of silence, even the 
silence of a suspect who has been given no Miranda warnings and is entitled to none, as part of the 
Government's direct case." Id. 

185. Id. 

1 86. Id. The court did state that had the government commented on the defendant' s pre-arrest 
silence after the defendant offered an exculpatory version of events, then the government would be 
allowed to rebut the defendant's version of facts with his prior silence. Id. at 875. 

Interestingly, a few months after the Second Circuit decided Caro, a United States District 
Court in the Second Circuit concluded in United States v. Robinson, 523 F. Supp. 1006, 1012 
(1981), that the prosecution may comment on a defendant's pre-arrest silence in its case-in-chief 
In Robinson, a district court considered an appeal from a federal magistrate's finding, alleging that 
the defendant's Fifth Amendment right to remain silent was violated when the magistrate 
considered his pre-arrest silence to determine his guilt. Id. at 1009. In Robinson, the prosecutor 
introduced testimony that the defendant was silent when asked by a court cashier to give her some 
"real money" after he tried to pass counterfeit notes to pay a court fine. Id. at 1007. In its 

36 INDIANA LAW REVIEW [Vol. 38: 1 

Generally, the circuits that bar the government from using a defendant's 
silence in its case-in-chief advance three reasons to support their conclusions. 
First, these circuits have determined that a suspect may assert his Fifth 
Amendment right to remain silent well before trial and perhaps even before his 
arrest. This idea is based on a broad construction of the United States Supreme 
Court's opinion in Griffin v. California, which concluded that the Fifth 
Amendment only prohibits the government from commenting on a defendant's 
decision not to testify at his trial. ^^^ Second, at least one circuit read the Supreme 
Court's opinions in Doyle v. Ohio and Jenkins v. Anderson to limit their 
application only to the government's use of a defendant's silence to impeach his 
credibility.*^^ Third, these circuits drew distinctions between pre-custody and 
post-custody silence and pre-arrest and post-arrest silence when they determined 
whether or when the Fifth Amendment bars the government's use of silence in 
its case-in-chief. *^^ Other circuits, however, have looked at the same issue under 
the same or similar facts and have reached dramatically different conclusions. 

B. Federal Circuit Courts of Appeal Concluding That the Government 
May Use a Defendant's Silence in Its Case-in-Chief 

In 1991, the United States Court of Appeals for the Eleventh Circuit opined, 
in a case remarkably similar to United States v. Caro, that the government may 
comment on a defendant's pre-Miranda silence in its case-in-chief without 

summation before the magistrate, the government argued that the defendant's silence proved that 
he knowingly possessed counterfeit notes. Id. at 1008. The district court determined first that the 
defendant was not in custody during the transaction and therefore was not entitled to a Miranda 
warning. Id. at 1009. Next, the court discussed the United States Supreme Court case of Jenkins 
V. Anderson, 447 U.S. 231 (1980), focusing on Justice Stevens's concurring opinion which noted 
that "the privilege against compulsory self-incrimination is simply irrelevant to a citizen's decision 
to remain silent when he is under no official obligation to speak." See id. at 1010 (quoting Jenkins, 
447 U.S. at 241 (Stevens, J., concurring)). The court then concluded that absent any official 
compulsion to speak, the use of a defendant's pre-arrest and prc-Miranda silence in the 
government's case-in-chief turns on the rules of evidence and not the Constitution. See id. at 1011 
(noting that the court cashier was not a law enforcement officer and thus defendant was not 
compelled to respond). And despite its Caro opinion a few months earlier, the Second Circuit 
affirmed the district court's opinion in an unreported summary order. See United States v. 
Robinson, 685 F.2d 427 (1982) (granting summary order). In a footnote to its order, however, the 
Second Circuit notes that "a summary order is not citable as precedent." Id. 

187. See supra note 154 and accompanying text (discussing the use of Griffin v. California 
to bar the admission of a defendant's pre-trial silence). 

188. See supra notes 106-12, 1 17, 121-26 and accompanying text (discussing the idea that 
Doyle V. Ohio and Jenkins v. Anderson limited their holdings to the use of silence to impeach a 
defendant's credibility). 

189. See supra notes 145-84 and accompanying text (discussing courts that distinguish 
between pre- and post-custodial silence and pre- and post-arrest silence when deciding whether the 
government can use silence to prove guilt). 


offending the Constitution. ^^° In United States v. Rivera, the Eleventh Circuit 
considered whether the prosecution violated the petitioner' s constitutional rights 
when it commented in its case-in-chief on her silence at three different points 
during the initial investigation and her subsequent arrest. ^^^ First, the court 
considered whether the government violated the petitioner' s constitutional rights 
when it introduced testimony that she was "without any visible signs of agitation 
or nervousness about being singled out for questioning" by a customs inspector 
at an airport luggage carousel. ^^^ Second, the court considered whether the 
government violated the petitioner's constitutional rights when it introduced 
testimony that the petitioner failed to protest or react after a customs inspector 
discovered cocaine in her suitcase but before her arrest. ^^^ And third, the court 
considered whether the government violated the petitioner' s constitutional rights 
when it introduced testimony in its case-in-chief that the petitioner was not 
"physically upset" after the customs inspector placed her under arrest and read 
her the Miranda warning. ^^"^ 

Citing Jenkins v. Anderson, the Rivera court concluded that the government 
may comment on a defendant's silence in its case-in-chief when it occurs before 
her arrest and before she is read the Miranda warnings. ^^^ Then, citing Fletcher 
V. Weir, the court determined that the government may comment on a defendant' s 
post-arrest but ^it-Miranda silence, even if a defendant is in custody. ^^^ To 
support these conclusions, the court reasoned that because the petitioner had not 
yet received the Miranda warning, then "she had not yet received such 
affirmative assurances . . . [that] the government could unquestionably comment 
on her silence[]."^^^ The Miranda warning, and not the petitioner's arrest or 

190. United States v. Rivera, 944 F.2d 1563 (1 1th Cir. 1991); see also United States v. Caro, 
637 F.2d 869, 876 (2d Cir. 1981) (holding that the government cannot constitutionally use a 
defendant's silence in its case-in-chief). 

191. Rivera, 944 F.2d at 1567, 1569 n.20. 

192. Id. at 1567. The petitioner and two others arrived at Miami International Airport from 
Barranquilla, Colombia. Id. at 1565. A customs inspector approached the group at a luggage 
carousel and asked them questions related to the purpose and itinerary of their trip. Id. 

193. /6?. at 1 567 . After approaching the petitioner and her companions at the luggage carousel, 
the customs inspector decided to examine their luggage and escorted them to an inspection area. 
Id. at 1565. Finding a false bottom in petitioner's suitcase, the inspector discovered cocaine. Id. 

194. Id. at 1567. After the customs inspector discovered cocaine in the petitioner's luggage, 
she was taken to a separate room, read the Miranda warning, and placed under arrest. Id. The court 
also noted that the government, in its closing statement to the jury, asked the jury to infer that the 
petitioner was guilty because of her consistent indifference to the custom inspector. Id. at 1567. 

195. Id. at 1568 n.lO. The court assumed that even though the petitioner objected to the 
inspector's testimony about the petitioner's silent demeanor, and not specifically about her silence, 
the inspector's testimony could be construed as comments on the petitioner's silence. Id. at 1567- 

196. Mat 1568 n.ll. 

197. Id. at 1568 n.l2. The /?iV£ra court pointed to that part of F/^/c/z^r v. W^/r where the court 
explicitly rejected the idea that an arrest, by itself, induces a defendant to remain silent. See id. 

38 INDIANA LAW REVIEW [Vol. 38: 1 

custody, is the triggering mechanism that assures a defendant that his silence will 
not be used against him.'^^ Rivera stated that the government was "clearly 
entitled" to comment on the petitioner's prt-Miranda silence and that the 
government could argue that the petitioner's silence or silent demeanor was 
inconsistent with her claim of innocence. '^^ Notably, the Rivera court decided 
the case under the Fourteenth Amendment's due process restrictions first 
articulated in Doyle v. Ohio and despite the availability of Griffin v. California, 
it did not assert, or even imply, that the Fifth Amendment' s privilege against self- 
incrimination bore at all on the issue. 

The Fifth Amendment does, however, prohibit the prosecution from 
commenting on a defendant's post-Miranda silence.^^ In United States v. 
Tenorio, the Eleventh Circuit considered whether the government may comment 
on a defendant's posi-Miranda silence to establish proof of his guilt.^^^ Citing 

(citing Fletcher v. Wier, 455 U.S. 603, 606-07 (1982)). 

198. Id. at 1568. The Rivera court suggested that the government's use of the petitioner's 
silence after she was read the Miranda warnings may have been in error, but that the error was 
harmless. Id. at 1569. 

1 99. Id. The Eleventh Circuit first intimated that the prosecution could use a defendant' s pre- 
trial silence in its case-in-chief in United States v. Nabors, 707 F.2d 1294, 1299 (1 1th Cir. 1983). 
In Nabors, the prosecution presented evidence in its case-in-chief that the defendant failed to 
respond to an insurer's request for information about damage to an aircraft that was destroyed to 
cover up a drug smuggling operation. Id. at 1295-96, 1297. The appellant objected to this 
evidence, arguing that its admission violated his right to remain silent under the Fifth Amendment. 
Id. at 1298. Admitting that the issue before it was "difficult to decide" the court noted nonetheless 
that the case was unlike Doyle v. Ohio and Jenkins v. Anderson because the government here 
attempted to use silence to infer guilt, and not to impeach the defendant, and because the silence 
here was not in response to police interrogation, but to a private insurance company. Id. 
Undeterred by a lack of authority espousing the government's use of silence in its case-in-chief, the 
court determined that since the appellant never asserted his right to remain silent when he refused 
to respond to the insurer's request for information, he could not claim it at trial. Id. at 1299. The 
court noted that had the appellant said something to his insurer, the government could use that 
statement against him and it saw no reason why the same should not be true for the use of his 
silence. Id. 

The Eleventh Circuit reaffirmed its ruling in Rivera in United States v. Simon, 964 F.2d 1082 
(1 1th Cir. 1992). In Simon, the appellant objected to the government's use of his pre-arrest silence 
in its case-in-chief. Id. at 1086 n.*. The court rejected appellant's contention, citing to Rivera for 
the proposition that "silence is admissible in the absence of Miranda warnings." See id. (citing 
Rivera, 944 F.2d at 1568). More recently, the Eleventh Circuit had an opportunity to reconsider 
its Rivera decision when it decided United States v. Campbell, 223 F.3d 1286 (1 1th Cir. 2000) (per 
curiam). In Campbell, the appellant contended that the government impermissibly commented on 
his pre-Miranda silence in its case-in-chief and that Rivera was decided wrongly. Id. at 1290. The 
court, however, chose not to address the merit of appellant's objection, instead finding that even 
if the court erred, the error was not plain (and thus not reversible). Id. 

200. See United States v. Tenorio, 69 F.3d 1 103 (1 1th Cir. 1995). 

201 . Id. at 1 105-06. In Tenorio, a customs inspector at Miami International Airport searched 


Griffin v. California and Doyle v. Ohio, the court ruled that the trial court 
violated the Fifth and Fourteenth Amendments when it allowed the government 
to comment on the defendant's post-Miranda silence.^^^ First, the court 
determined that the government failed to draw time distinctions that would have 
allowed the jury to understand whether the prosecutor commented on the 
defendant' s pre- or posi-Miranda silence.^^^ Second, the court concluded that the 
jury could have convicted the defendant solely on the defendant's post-Miranda 
silence.^^"^ As such, the trial court violated the defendant's Fourteenth 
Amendment right to due process when it allowed the government to impeach him 
with his post-Miranda silence, and it violated the defendant's Fifth Amendment 
privilege against self-incrimination when it allowed the government to use his 
post-Miranda silence to prove his guilt.^^^ Notably, in a concurring opinion. 
Judge Edmondson endorsed the Rivera opinion when he wrote, "[t]he law of this 
circuit is settled that evidence of pre-Miranda silence is admissible in the 
government's case-in-chief as substantive proof of guilt."^^^ So while the 
government may not constitutionally comment on a defendant's silence after he 
has been assured that his silence will carry no penalty, the government may 
comment on his pit-Miranda silence, even in its case-in-chief, because the 
defendant was never promised that his silence would not be used against him. 
Both the Fourth and Fifth Circuits agree with the Eleventh Circuit that the 
prosecution may use a defendant's pTQ-Miranda silence if that silence is 
inconsistent with the defendant's innocence.^^^ For example, in United States v. 

the defendant's suitcase, discovered heroin, and apprised the defendant of his rights. Id. at 1 104- 
05. At trial, the inspector testified that the defendant was not surprised when heroin was found in 
his bag. Id. at 1 105. The defendant, after having waived his privilege against self-incrimination, 
testified that the suitcase was loaned to him, and that he did not tell the customs inspector this 
exculpatory story because he decided to exercise his right to remain silent. Id. The prosecution 
argued in its summation that the defendant's silence immediately after the inspector discovered 
heroin in his suitcase evidenced his guilt. Id. at 1 105. The trial court overruled the defendant's 
objection to the use of his silence, finding that the government was allowed to comment on the 
defendant's prQ-Miranda silence. Id. at 1106. 

202. See id. (citing Griffin v. California, 380 U.S. 609 (1965); Doyle v. Ohio, 426 U.S. 610 

203. Id. 

204. Id. 

205 . Id. The court concluded that the government violated the defendant' s right to due process 
because the Miranda warnings carry an implicit assurance "that silence will carry no penalty" and 
because silence has "low probative value." See id. (citing Doyle, 426 U.S. at 617-19). The court 
also concluded that the trial court violated the defendant's Fifth Amendment right presumably 
because the defendant's "silence was the touchstone of the government's case-in-chief." Id. at 

206. See id. at 1 108 (Edmondson, J., concurring). 

207. See United States v. Cain, No. 97-4059, 1998 WL 141205 (4th Cir. Mar. 27, 1998) (per 
curiam) (holding government may comment on defendant's prc-Miranda silence in its case-in- 
chief); United States v. Musquiz, 45 F.3d 927, 931 (5th Cir. 1995) (holding government may use 

40 INDIANA LAW REVIEW [Vol. 38: 1 

Cain, an unpublished opinion from the Fourth Circuit, the court considered per 
curiam whether a trial court erred when it allowed a witness for the prosecution 
to testify that the defendant ''really didn't want to answer any . . . questions" 
during a police search of his trailer.^^^ While the court was unable to determine 
whether or when the defendant was Mirandized, it did rule that the government 
could have commented on a defendant's silence so long as it occurred before 
Miranda warnings were given.^^^ Prior to Cain, the Fourth Circuit twice 
concluded that the government may comment on a defendant's pre-Miranda 
silence without offending the Constitution.^'^ First, in Folston v. Allsbrook, the 
Fourth Circuit ruled that the government may use a defendant's silence in its 
case-in-chief when that silence was not a result of police interrogation but instead 
was observed by an accomplice while both were held in the same jail cell.^^' 
Noting that the government had not yet induced the defendant's silence with a 
Miranda warning, the court concluded that "his silence was [not] so ambiguous 
and so without probative value as to be inadmissible."^'^ Later, in United States 
V. Love, the Fourth Circuit considered more directly whether the government may 
comment on a defendant' s pve-Miranda silence at his arrest in its case-in-chief.^'^ 
In Love, a witness for the prosecution, a police officer, testified that the 
defendants failed to explain their presence at the scene of a crime.^''* The 
defendants objected, presumably contending that the Constitution prohibits the 
government from using their silence to infer guilt. The court disagreed, 
explaining that the defendants had not received any Miranda warnings at the time 
the witness had observed their silence.^'^ Relying on Fletcher v. Weir, the court 
concluded that the Constitution does not bar the government from using a 

pre-Miranda silence in its case-in-chief if its probative value is high). 

208. Cain, 1998 WL 141205 at *6. 

209. See id. (citing United States v. Rivera, 944 F.2d 1563, 1568 (1 1th Cir. 1991)). 

210. United States v. Love, 767 F.2d 1052, 1063 (4th Cir. 1985); Folston v. Allsbrook, 691 
F.2dl84, 187 (4th Cir. 1982). 

211. Folston, 691 F.2d at 187. In Folston, an accomplice testified against the appellant to 
conversations he had with the appellant and a third accomplice while all three were held in a jail 
cell. Id. at 185. Over the appellant's objections, the accomplice testified that the appellant 
remained silent when he asked the appellant why he shot the victim. Id. at 187. 

212. Id. The Folston court relied on Fletcher v. Weir for the idea that ''Doyle is inapplicable 
when the record does not indicate that the defendant 'received any Miranda warnings during the 
period in which he remained silent immediately after his arrest.'" Id. (quoting Fletcher v. Weir, 455 
U.S. 603, 605 (1982)). Despite the fact that Doyle and Fletcher talked about the use of silence to 
impeach a defendant, the court made no analytical distinction between the use of silence to impeach 
a defendant's credibility and the use of silence to prove the defendant's guilt — both uses could 
survive a constitutional attack if the silence either preceded a Miranda warning or occurred outside 
a police interrogation and without a Miranda warning. Id. 

213. Love, 767 F.2d at 1063. 

214. Id. 

215. Id. The opinion does not indicate whether or when the defendants received a Miranda 


defendant's pre-Miranda silence against him.^'^ Both Folston v. Allsbrook and 
United States v. Love read Doyle and Fletcher to allow the government to 
comment on a defendant's pre-Miranda silence, despite the fact that the 
government was using the defendant's silence to prove his guilt and not just to 
impeach his credibility. Only when a defendant relies on the implicit promises 
of a Miranda warning will the Fourth Circuit prohibit the government from using 
his silence against him.^'^ 

While the Fifth Circuit initially prohibited the use of silence to evidence 
guilt, it has grown increasingly sympathetic to the idea that the use of silence, 
when that silence is not induced by any governmental action, is not 
constitutionally defective.^^^ In 1976, one month before the United States 
Supreme Court explained in Doyle v. Ohio that due process prohibits the 
government from using a defendant's post-Miranda silence to impeach him, the 
Fifth Circuit determined that the government may not comment on a defendant's 
silence — either pre- or post-Miranda — because such a use, when analyzed under 
evidentiary rules, is intolerably prejudicial.^ ^^ Relying largely on the Supreme 
Court's decision in United States v. Hale, the Fifth Circuit, in United States v. 
Impson, did not decide on constitutional grounds whether the trial court erred 
when it allowed the government to comment on the defendant's pre-Miranda 
silence in its case-in-chief, but rather relied on the rules of evidence. ^^° Since the 
court analyzed the case under evidentiary rules, and not the Constitution, it made 
little difference to the court whether the government used silence to impeach or 
to evidence guilt, or whether the silence was observed before or after a Miranda 
warning — the admissibility of silence turned on whether its probative value 
exceeded its prejudicial impact.^^* Impson reflects the Fifth Circuit's hostility 
toward the use of silence in any guise, implicitly broadening the reach of 
Miranda by refusing to distinguish between silence either before or after the 

216. Id. (citing Fletcher, 658 F.2d at 1 129). 

217. See supra notes 207-08 and accompanying text (discussing United States v. Cain, No. 97- 
4059, 1998 WL 141205 (4th Cir. Mar. 27, 1998)). 

218. Compare United States v. Impson, 531 F.2d 274, 279 (5th Cir. 1976) (holding use of pre- 
OT post-Miranda silence is intolerably prejudicial), with United States v. Zanabria, 74 F.3d 590, 593 
(5th Cir. 1996) (holding Fifth Amendment does not bar the use of silence that was not induced by 
the government). 

219. Impson, 53 1 F.2d at 279. In Impson, a police officer testified that the defendant remained 
silent following his arrest. Id. at 275. The defendant objected, arguing that he was not apprised of 
his right to remain silent and that the officer's testimony infringed on his right to remain silent. Id. 
at 276. 

220. Id. at 275-16. 

221. Id. at 276-78; see also United States v. Henderson, 565 F.2d 900, 905 (5th Cir. 1978) 
(holding that admissibility of silence turns on its probative value). The Impson court chose not to 
distinguish between pre- and post-Miranda silence in part because such a distinction might reward 
police for failing to inform a suspect immediately upon his arrest of his right to remain silent. 
Impson, 531 F.2d at 277. This argument assumes, of course, that police officers will willingly 
manipulate constitutional requisites to their advantage. 


Miranda warning. 

In the wake of Fletcher v. California, the Fifth Circuit conceded in United 
States V. Musquiz that the government can comment on a defendant's post-arrest 
yet pTQ-Miranda silence.^^^ After explaining that the Supreme Court had since 
narrowed the breadth of its Miranda decision, the court explained that the 
Constitution does not bar the government's use of a defendant's prc-Miranda 
silence to impeach his credibility .^^^ Furthermore, the court expressly recognized 
that silence not induced by a Miranda warning can have probative value and, 
citing to the Eleventh Circuit' s Rivera opinion, it appeared sympathetic to the use 
of pTQ-Miranda silence in the government's case-in-chief. ^^"^ Notably, the court 
acknowledged the circuit's recent hostility to the use of silence, writing that this 
"hostility seems to have flourished against the backdrop of an expansive vision 
of a defendant's rights under the Fifth Amendment" that can no longer be 
justified under the Constitution.^^^ 

Finally, in United States v. Zanabria, the Fifth Circuit expressly ruled that 
the Fifth Amendment does not protect a defendant's silence if that silence was 
not induced by government action.^^^ In Zanabria, the defendant argued that the 
government's use of his pre-arrest silence in its case-in-chief violated his right 
to remain silent under the Fifth Amendment.^^^ The court noted that "the silence 
at issue was neither induced by nor a response to any action by a government 
agent" and explained that the Fifth Amendment only protects against compelled 
self-incrimination and not every incriminating silence.^^^ While Zanabria did not 
explicitly rule that the Miranda warning itself serves as the triggering mechanism 
to determine whether police induced a defendant's silence, it recognized that the 
Fifth Amendment only protects an incriminating silence observed after the 
government either compelled it or assured the defendant that his silence would 
not be used against him. 

The Ninth Circuit, however, has determined that custody, and not the 
Miranda warnings, triggers the protections afforded by the Fifth Amendment — a 

222. United States v. Musquiz, 45 F.3d 927, 930-31 (5th Cir. 1995). In United States v. 
Musquiz, the defendant offered an exculpatory story for the first time at his trial. Id. at 930. The 
prosecution, in its cross-examination of the defendant, inquired why the defendant had not offered 
this explanation at the time of his arrest, but before he was read the Miranda warning. Id. 

223. Id. 

224. Mat 930-31. 

225. Mat 930. 

226. United States v. Zanabria, 74 F.3d 590, 593 (5th Cir. 1996). 

227. Id. In United States v. Zanabria, the defendant was tried for the unlawful possession, 
distribution, and importation of controlled substances. Id. at 591. While the defendant chose not 
to testify in his own defense, he argued that his actions were the product of duress. Id. at 592. In 
an attempt to rebut the defendant' s defense, the arresting customs officer testified that the defendant 
failed to make mention of any evidence pointing to duress before his arrest. Id. at 593. The 
government used this testimony in its closing remarks to rebut the defendant's duress defense. Id. 

228. Id. 


suspect's silence is fair game if it occurs before his arrest but not after.^^^ In 
1998, the Ninth Circuit concluded, in United States v. Oplinger, that the 
government may comment on a defendant's pre-arrest silence without offending 
either due process or the Fifth Amendment.^^® In Oplinger, the appellant 
appealed his conviction for bank fraud on the ground that the prosecution, in its 
direct case against him, violated his privilege against self-incrimination when it 
elicited testimony from his employer that he remained silent when questioned 
about a number of suspicious transactions.^^* The court disagreed.^^^ According 
to the unambiguous language of the Fifth Amendment, the court opined, the 
privilege against self-incrimination only comes into play when government 
compels silence.^^^ Here, the appellant's silence was observed by his employer, 
not the police — as such, the appellant failed to raise a valid constitutional 
claim.^^'* The Oplinger court explained that the "self-incrimination clause was 
intended as a 'limitation on the investigative techniques of government, not as an 
individual right against the world. '"^^^ The difficulty for the circuit, however, 
rested in determining when governmental techniques were compelling enough to 
trigger a suspect's Fifth Amendment right to remain silent. 

The Ninth Circuit resolved partially that question in 2000 when it decided 
United States v. WhiteheadP^ In Whitehead, the prosecution commented on the 
appellant's post-arrest but pre-Miranda silence in its case-in-chief. ^^^ The court 
held that the comment violated the appellant's right to remain silent under the 
Fifth Amendment, presumably because the appellant was in custody when police 
observed his silence.^^^ Notably, the Whitehead court suggests that because the 

229. See United States v. Velarde-Gomez, 269 F.3d 1023, 1029 (9th Cir. 2001) (holding 
government may not use defendant's post-arrest and prQ-Miranda silence in its case-in-chief); 
United States v. Oplinger, 150 F.3d 1061, 1067 (9th Cir. 1998) (holding government may use 
defendant's pre-arrest and pre-Miranda silence without offending the Constitution). 

230. Oplinger, 150 F.3d at 1067. 

231. Mat 1065-66. 

232. /^. at 1066. 

233. Id. at 1066-67. The court was highly persuaded by Justice Stevens's concurrence in 
Jenkins v. Anderson. Id. at 1066. The court cited with approval Justice Stevens's opinion that the 
privilege against self-incrimination is simply irrelevant to a person's decision to remain silent 
before he has any contact with the police. See id. (citing United States v. Jenkins, 447 U.S. 231, 
243-44 (1980) (Stevens, J. concurring)). 

234. /^. at 1067. 

235. Id. (quoting United States v. Gecas, 120 F.3d 1419, 1456 (1 1th Cir. 1997)). While the 
court notes that the First, Seventh, and Tenth Circuits disagree with its holding, it wrote that "the 
position those courts have endorsed is simply contrary to the unambiguous text of the Fifth 
Amendment, which plainly states that '[n]o person . . . shall be compelled in any criminal case to 
be a witness against himself.'" See id. at 1067 (citing U.S. CONST, amend. V (alteration in 

236. United States v. Whitehead, 200 F.3d 634 (9th Cir. 2000). 

237. /J. at 637. 

238. Id. at 639. The court explicitly stated that its holding does not conflict with United States 

44 INDIANA LAW REVIEW [Vol. 38: 1 

right to remain silent derives from the Constitution and not from the Miranda 
warnings, comment on a suspect's silence after his arrest violates the Fifth 
Amendment regardless of whether a suspect is MirandizedP^ This approach 
extended the reach oi Doyle v. Ohio to prohibit the government's use of silence 
even without a Miranda waming.^'^^ Under Whitehead, a suspect's Fifth 
Amendment right to remain silent attaches at his arrest or custody, before the 
government implicitly assures him that his silence will not be used against him 
and even before the police begin to interrogate him. And while pre-arrest silence 
is still fair game, an arrest or custody in the Ninth Circuit must be the type of 
"investigative technique" that triggers the Fifth Amendment, even though the 
court failed to explain how an arrest on its own compels suspects to remain 

In more recent cases, the Ninth Circuit has reaffirmed its rule that the right 
to remain silent attaches at the arrest, not when a suspect is read the Miranda 
warnings. Although the government may comment on a suspect's pre-arrest 
silence in its case-in-chief, it may not comment on a suspect's post- arrest silence, 
regardless of when or whether the suspect was Mirandized?"^^ For example, in 
United States v. Velarde -Gomez, the court considered whether evidence of a 

V. Oplinger because in that case the appellant was not in custody. Id. 

The Whitehead court relied on two Ninth Circuit decisions to support its holding. Id. at 638- 
39. First, it cited Douglas v. Cupp, 578 F.2d 266, 267 (9th Cir. 1978), which held that the 
prosecution may not comment on a defendant's post-arrest silence in its case-in-chief regardless of 
whether the Miranda warnings were given. Whitehead, 200 F.3d at 638-39; Douglas, 578 F.2d at 
267. Of note, Judge Carter, in his dissenting opinion to Douglas, stated that the Supreme Court has 
not established a "per se rule that under no circumstances can evidence of silence after an arrest be 
admitted without violating the Constitution." Id. at 268 (Carter, J. dissenting). In fact, the Supreme 
Court would soon rule that pre-Miranda silence could be used to impeach a defendant. See supra 
notes 131-38 and accompanying text (discussing Fletcher v. Weir and the use of prQ-Miranda 
silence). Second, the court cited United States v. Baker, 999 F.2d 412 (9th Cir. 1993). Whitehead, 
200 F.3d at 639. In Baker, the Ninth Circuit held that the government's use of a defendant's silence 
in its closing summary violated the defendant's due process rights, because the jury had no way of 
distinguishing whether the prosecutor was using the defendant' s silence before or after the Miranda 
warnings. Baker, 999 F.2d at 415. And while the Baker court implicitly suggested that the 
government can safely comment on pre-Miranda silence, the Whitehead court discounted this 
suggestion, explaining first that the statement was rank dicta, and second that it otherwise did not 
comport with the court's Douglas precedent. Whitehead, 200 F.3d at 639; Baker, 999 F.2d at 415. 

239. Whitehead, 200 F.3d at 638; see also United States v. Velarde-Gomez, 269 F.3d 1023, 
1 029 (9th Cir. 200 1 ) (noting Whitehead recognized that silence is protected regardless of a Miranda 
warnings because the right is derived from the Constitution and not from the warning itself). 

240. See United States v. Bushyhead, 270 F.3d 905, 912 (9th Cir. 2001) (noting that 
Whitehead broadened the reach of Doyle). 

241. See United States v. Beckman, 298 F.3d 788, 795 (9th Cir. 2002) (holding government 
may use defendant's pre-arrest silence in its case-in-chief); see also United States v. Velarde- 
Gomez, 269 F.3d 1023, 1033 (9th Cir. 2001) (holding government cannot use defendant's post- 
arrest yet pre-Miranda silence in its case-in-chief). 


defendant's silent demeanor after his arrest but before he was Mirandized 
violated his Fifth Amendment privilege against self-incrimination.^'^^ First, the 
court concluded that evidence of a suspect's silent demeanor is equivalent to 
evidence of silence.^"^^ The court then concluded that the government violated the 
appellant' s right to remain silent under the Fifth Amendment when it commented 
on his pre-Miranda silence in its case-in-chief, explaining that Doyle v. Ohio 
announced that the Fifth Amendment (and not the Miranda warnings) implicitly 
assures a person that his silence will carry no penalty.^"^"^ Since the Fifth 
Amendment's right to remain silent attached when the appellant was in custody, 
the "individual has a right to remain silent in the face of government questioning, 
regardless of whether the Miranda warnings are given."^^^ 

Unfortunately, the Velarde-Gomez court both misconstrued Doylt and the 
facts of its case when it concluded that the government violated the appellant's 
Fifth Amendment rights when it commented on the defendant's pre-M/ranJa but 
post-arrest silence. First, Doyle held that the Miranda warning itself implicitly 
promises a suspect that his silence will carry no penalty and that the use of post- 
Miranda silence violates the Fourteenth Amendment, not the Fifth 
Amendment. ^"^^ Second, the defendant's silent demeanor was observed when the 
customs inspector informed the appellant why he was being detained — it was not 
observed in response to a custodial interrogation.^"^^ Nonetheless, Velarde-Gomez 
reaffirmed that use of post-arrest but pre-Miranda silence violates the Fifth 

One week after the court filed its Velarde-Gomez opinion, the Ninth Circuit 
decided United States v. Bushyhead and this time ruled that the government may 
not constitutionally comment on a suspect's silence when that silence evidences 

242. Velarde-Gomez, 269 F.3d at 1025-26. In this case, the appellant-defendant moved the 
trial court to exclude evidence of his silence and silent demeanor both before and after he was 
Mirandized by customs inspectors. Id. at 1026. The trial court granted the motion, but later 
reconsidered its ruling and permitted the government to introduce evidence of the appellant's 
demeanor both before and after he was read the Miranda warnings. Id. at 1026-27. At trial, the 
government then elicited testimony from the customs inspector that the appellant was non- 
responsive before he was read the Miranda warnings. Id. at 1027. And again in its closing 
summary to the jury, the government commented on the appellant's calm, relaxed, and emotionless 
demeanor when customs inspectors discovered marijuana in his car. Id. at 1028. 

243. Id. 

244. Id. 

245. Id. at 1029. To support this analysis, the court cited United States v. Whitehead, which 
recognized "that because the right to remain silent derives from the Constitution and not from the 
Miranda warnings themselves, regardless of whether the warnings are given . . . comment on the 
defendant's exercise of his right to silence violates the Fifth Amendment." Id. (citing United States 
V. Whitehead, 200 F.3d 634, 638 (9th Cir. 2000)). Again, the court failed to explain how an arrest 
without interrogation compels a suspect to incriminate himself. 

246. See supra notes 106-17 and accompanying text (discussing Doyle v. Ohio). 

247. Velarde-Gomez, 269 F.3d at 1027-28. 

46 INDIANA LAW REVIEW [Vol. 38: 1 

the suspect's invocation of his right to remain silent.^"^^ In Bushyhead, the trial 
court admitted testimony during the government's case-in-chief that the 
appellant, after his arrest but before he was read the Miranda warning, stated to 
police "'I have nothing to say, I'm going to get the death penalty anyway. '"^'^^ 
Summarily ruling that the statement was not an unsolicited confession but rather 
an invocation of silence itself, the court first concluded that the testimony 
violated the appellant's Fifth Amendment right to remain silent.^^^ Like Velarde- 
Gomez, the court explained that its decision in United States v. Whitehead 
extended Doyle v. Ohio to protect pre-Miranda silence and statements that 
invoke silence.^^' The Ninth Circuit, then, prohibits comment on a defendant's 
post-arrest but pre-Miranda silence and statements that invoke his right to remain 
silent and supports this view with a liberal reading of Doyle v. Ohio. The 
government may, however, still comment in its case-in-chief on a defendant's 
silence so long as the silence was observed before his arrest.^^^ 

Generally, the circuits that permit the government to use a defendant's 
silence in its case-in-chief advance two reasons to support their conclusions. 
First, these circuits suggest that without the affirmative assurances embodied in 
the Miranda warnings that a suspect's silence will carry no penalty, the 
government may comment on a suspccV s prQ-Miranda silence without violating 
the Fourteenth Amendment's Due Process Clause.^^"^ For support, these circuits 
rely on the doctrinal underpinnings of Doyle v. Ohio to allow the government to 
use a defendant's silence not only to impeach his credibility but to infer guilt. 
Second, these circuits opine that without some element of official 
coercion — required by the plain language of the Fifth Amendment — that induces 
a suspect to remain silent, the Fifth Amendment is simply irrelevant.^^"^ Under 
the Ninth Circuit's analysis, only when the court treats an arrest itself as 
sufficiently coercive will the Fifth Amendment bar the use of a suspect's post- 
arrest silence.^^^ So while the circuits that prohibit the use of a suspect's silence 

248. United States v. Bushyhead, 270 F.3d 905, 913 (9th Cir. 2001). 

249. Id. at 911. 

250. /J. at 9 1 2- 1 3. Without analysis, the court determined that the appellant invoked his right 
to remain silent when he told police, "I have nothing to say, I'm going to get the death penalty 
anyway." Id. at 912. Presumably, the trial court allowed the statement as a voluntary confession 
to the crime. The court, however, fails to explain how the trial court abused its discretion. 

251. Id. 

252. See United States v. Beckman, 298 F.3d 788, 795 (9th Cir. 2002) (holding that the use 
of pre-arrest and prQ-Miranda silence to prove guilt is permissible); Johnson v. LaMarque, No. C- 
02-00394 CRB (PR), 2003 WL 17981 17, at *4 (N.D. Cal. Apr. 2, 2003) (holding government may 
use pre-arrest silence in its case-in-chief). 

253. See generally supra Part IV.B (discussing use of pre-Miranda silence under Fourteenth 

254. See generally supra Part IV.B (discussing use of pre-Miranda silence under Fifth 

255. See supra note 238 and accompanying text (discussing the Ninth Circuit's opinion that 
arrest is coercive enough to implicate a suspect's Fifth Amendment rights). 


in the government's case-in-chief advance a broad view of the Fifth 
Amendment' s reach and a textual (and narrow) view of the Court' s post-Miranda 
decisions, those circuits that allow silence advance a textual (and narrow) 
construction of the Fifth Amendment together with a broad view of the post- 
Miranda decisions. 

V. A Case for the Use of Silence in the Government's Case-in-Chief 

To resolve whether a trial court may constitutionally permit the government 
to comment on a defendant's silence to demonstrate proof of his guilt requires 
a two-step inquiry: first, whether the Miranda warnings (and not the arrest) serve 
as the triggering mechanism for the Fifth Amendment's privilege against 
compelled self-incrimination, thus protecting only post-Miranda silences; and 
second, whether the Fourteenth Amendment's Due Process Clause prohibits the 
use of pre-Miranda silence when that silence was neither induced nor compelled 
by the government. Despite the inconsistent results in the federal circuits, the 
United States Supreme Court's jurisprudence has resolved partially each of these 
issues, although without explicitly determining the constitutionality of the use of 
silence in the government's case-in-chief. When read together, these cases beg 
the conclusion that the Constitution simply does not bar the use of a defendant' s 
pTQ-Miranda silence in the government's case-in-chief. 

A. The Fifth Amendment Does Not Bar the Use of a Defendant's 
Silence in the Government's Case-in-Chief 

The Supreme Court teaches that the Miranda warnings themselves serve as 
the triggering mechanism for the Fifth Amendment' s privilege against compelled 
self-incrimination. The Fifth Amendment is simply not implicated before the 
government is required to recite the warnings because the Fifth Amendment does 
not reach beyond the custodial interrogation that first prompted the Miranda 
Court to expand the Fifth Amendment's protection. The Court, in Miranda v. 
Arizona, perfected a defendant's rights under the Fifth Amendment by requiring 
the government to first warn a suspect of his right to remain silent and his right 
to counsel before it begins a custodial interrogation.^^^ The coercive atmosphere 
of the station-house interview prompted the Court to move beyond the traditional 
due process test which required proof that, in the totality of the circumstances, 
a confession had to be voluntary to be admissible against the defendant.^^^ In 
linking its ruling to the dangers inherent to a custodial interrogation, the Court 
recognized the "intimate connection between the privilege against self- 
incrimination and police custodial questioning."^^^ The opinion, designed to 
protect the core rights found under the Fifth Amendment, announced a 
Constitution-based exclusionary rule that added to, but never supplanted. 

256. See supra Part II (discussing Miranda v, Arizona, 384 U.S. 436 (1966)). 

257. See supra Part II (discussing Miranda). 

258. See Miranda, 384 U.S. at 458 (narrowing its ruling to custodial interrogation); see also 
supra notes 65-77 and accompanying text (discussing Miranda). 


traditional Fifth Amendment jurisprudence.^^^ 

Since Miranda, the Court has affirmed that the Constitution does not demand 
the exclusion of a defendant's incriminating yet unwarned statements or silences. 
In Rhode Island v. Innis, the Court expanded the definition of "custodial 
interrogation" (and thus the reach of the Fifth Amendment's exclusionary rule) 
to include express questioning or its "functional equivalent."^^^ The Innis Court 
defined "functional equivalent" as "words or actions on the part of the police 
(other than those normally attendant to arrest and custody) that the police should 
know are reasonably likely to elicit an incriminating response."^^^ Thus, while 
the Court expanded the reach of Miranda, it affirmed that only responses to an 
interrogation or its equivalent are inadmissible under the Fifth Amendment's 
exclusionary rule since only then could a statement (or silence) be compelled. 
Furthermore, the Court in both California v. Beheler and Berkemer v. McCarty 
suggested that while custody (or an arrest) determines when a suspect is owed a 
Miranda warning, the warning itself determines the admissibility of 
incriminating responses in the course of an official interview.^^^ Justice 
Marshall, writing for the majority in Berkemer, succinctly noted that "we have 
frequently reaffirmed the central principle established by [Miranda]: if the 
police take a suspect into custody and then ask him questions without informing 
him of [his rights], his responses cannot be introduced into evidence to establish 
his guilt."^^^ The arrest or custody of a suspect only requires the police to warn 
him of his rights. Only when the government attempts to admit his incriminating 
statements or silences made in the course of a custodial interrogation (or its 
equivalent) will the Fifth Amendment's exclusionary rule prevent their 
admission. The Fifth Amendment is not triggered until a suspect is compelled 
to incriminate himself and a suspect is only compelled to incriminate himself 
when he is asked to respond to an official question after his arrest or custody. 
The failure to Mirandize a suspect in the course of a custodial interrogation 
creates a presumption of compulsion and demands the exclusion of incriminating 
responses even if those incriminating responses were voluntary.^^"^ 

This idea was reaffirmed in Oregon v. Elstad?^^ In Elstad, the Court 
considered whether an unwarned yet voluntary statement made in the course of 
a custodial interrogation rendered a later warned and voluntary confession 
inadmissible.^^^ While the Court was concerned with the admissibility of a 

259. See supra note 96 (discussing Dickerson v. United States, 530 U.S. 428, 432 (2000), 
which held that Miranda announced a constitutional ruling and not merely a constitutional 

260. See supra note 87 (discussing Rhode Island v. Innis, 446 U.S. 291 (1980)). 

261. Innis, 446 U.S. at 301; see supra notes 87-88 (discussing Innis, 446 U.S. at 291). 

262. See supra notes 89-95 and accompanying text (discussing Berkemer and Beheler). 

263. Berkemer v. McCarty, 468 U.S. 420, 429 (1984). 

264. See Oregon v. Elstad, 470 U.S. 298, 307 (1985) (discussing Miranda). 

265. Id. at 318 (holding that an unwarned response to police questioning does not prevent 
defendant from later waiving his rights and confessing). 

266. Id. at 300. In Elstad, the defendant made voluntary yet incriminating statements to police 


subsequent and fully- warned statement, its opinion reaffirmed the core principle 
of Miranda that "[t]he Fifth Amendment prohibits use by the prosecution in its 
case in chief only of compelled testimony. "^^^ Thus, the defendant's answers to 
police questioning while he was in custody and subjected to custodial 
interrogation were inadmissible under Miranda despite the fact that his responses 
were wholly voluntary and uncoerced.^^^ The Court concluded that "[wjhen 
police ask questions of a suspect in custody without administering the required 
warnings, Miranda dictates that the answers received be presumed compelled and 
that they be excluded from evidence at trial in the State's case in chief. "^^^ 
Because Miranda's presumption of compulsion is intrinsically tied to 
interrogation, logic dictates that without interrogation there can be no 
compulsion — and without compulsion, the constitutional prohibition against 
compelled self-incrimination does not apply. Silence, then, observed after an 
arrest but before the Miranda warning is not compelled unless it is in response 
to a question, and therefore its use is determined, not under the Fifth 
Amendment's privilege against self incrimination, but under the routine rules of 
evidence that ask whether the probative significance of that silence is greater 
than its prejudice to the defendant. 

Justice Stevens, in his concurrence in Jenkins v. Anderson, agrees with this 
analysis.^^^ In Jenkins, the Court held that the government can use a defendant's 
pre-arrest silence to impeach his credibility at trial without violating due process 
since no governmental action induced the defendant to remain silent.^^' Justice 
Stevens, while concurring with the majority' s result, wrote, "the privilege against 
compulsory self-incrimination is simply irrelevant to a citizen's decision to 
remain silent when he is under no official compulsion to speak. "^^^ The Justice 
continued, "[t]he fact that a citizen has a constitutional right to remain silent 
when he is questioned has no bearing on the probative significance of his silence 
before he has any contact with the police,"^^^ Justice Stevens warned, "[a] 
different view ignores the clear words of the Fifth Amendment."^^"^ So, while the 
Fifth Amendment may protect a defendant who submits to interrogation, it 

at his home without the benefit of a Miranda warning. Id. at 301 . Later, at the police station, the 
defendant was first Mirandized, waived his rights, and offered a full statement to the police. Id. 
The defendant argued that his first unwarned, and thus inadmissible, statements tainted his later 
warned statement as to render it too inadmissible. Id. at 302. 

267. M. at 306-07. 

268. Mat 307-08. 

269. Id. at 317 (emphasis added). 

270. See supra note 127 (discussing Justice Stevens's concurrence). 

271. See supra notes 122-26 and accompanying text (discussing /^Az/cm^). 

272. Jenkins, 447 U.S. at 241 , 243 (Stevens, J. concurring) (arguing that the Fifth Amendment 
does not apply in the pre-arrest context). 

273. Id. at 243 (emphasis added). 

274. Id. at 244. In the first footnote to his concurrence. Justice Stevens redacted the language 
of the Fifth Amendment, which reads "[n]o person . . . shall be compelled in any criminal case to 
be a witness against himself." Id. at 241 n.l. 

50 INDIANA LAW REVIEW [Vol. 38: 1 

simply has no play before he is owed a Miranda warning — and a suspect only is 
owed a warning incident to custodial interrogation. ^^^ 

Those federal circuits which bar the government from using a defendant's 
pre-Miranda silence in its case-in-chief rely primarily on a broad reading of 
Griffin v. Califomia?^^ Griffin concluded that the Fifth Amendment prohibits 
the prosecution from commenting on a defendant's decision not to testify at his 
trial.^^^ Some federal circuits, however, suggest that Griffiin permits the 
conclusion that the Fifth Amendment protects a defendant's utterances (and 
silences) well before his trial and even before his arrest.^^^ This view, however, 
is an unjustified extension of both Griffin and constitutional law. 

To illustrate, the Seventh Circuit, in Savory v. Lane, concluded that the 
government's use of the defendant's pre-arrest silence in its case-in-chief 
violated his rights under the Fifth Amendment because ''Griffin remains 
unimpaired and applies equally to a defendant's silence before trial, and indeed, 
even before arrest."^^^ Unfortunately, the court neglects to establish just how 
Griffin allows for the sweeping prohibition against the use of a defendant's 
silence before that silence is even compelled. Instead, it argued "that the right 
to remain silent . . . attaches before the institution of formal adversary 
proceedings" by noting that the language of the Fifth Amendment's privilege 
against self-incrimination speaks to all "persons" and not just "defendants. "^^° 
However, while the Court in Miranda v. Arizona did extend the Fifth 
Amendment to mitigate the coercion inherent to custodial interrogations, it 
limited its application to only compelled utterances (or silences).^^^ And while 
the Court in Griffin v. California did hold that the Fifth Amendment forbids 
comment on the defendant's silence, the issue before the Court was limited to 
whether comment on the defendant's failure to testify violated the Fifth 
Amendment's privilege against self-incrimination.^^^ Griffin simply did not 

275. See supra Part II (discussing when a suspect is owed a Miranda warning). 

276. See supra Part IV.A (discussing the federal circuits that ban the use of pre-Miranda 
silence to prove the defendant's guilt). 

277. See supra note 115 and accompanying text (discussing Griffin v. California). 

278. See supra note 115 and accompanying text (discussing Griffin v. California). 

279. Savory v. Lane, 832 F.2d 101 1, 1017 (7th Cir. 1987) (finding Griffin protects pre-arrest 
silence); see also supra notes 167-73 and accompanying text (discussing the Seventh Circuit's view 
on the use of silence to prove guilt). 

280. Savory, 832 F.2d at 1017. The court contrasted the right to counsel under the Sixth 
Amendment that attaches when the defendant becomes an "accused" with the language of the Fifth 
Amendment that reads, "[no] person shall." Id. (emphasis added). The Fifth Amendment, 
however, limits the application of the self-incrimination privilege only to persons "in any criminal 
case." U.S. Const. Amend. V. Presumably, the Seventh Circuit read "person" to mean any person 
who at any time can invoke the privilege. 

281. See supra notes 69-74 and accompanying text (discussing Miranda v. Arizona). 

282. See Griffin v. California, 380 U.S. 609, 61 1 (1965) (narrowing issue before the Court); 
see also supra note 115 and accompanying text (discussing Griffin v. California). Notably, Justice 
Stewart, in his dissenting opinion, did affirm that before determining whether the government is 


speak to the admissibility of silence before the start of adversarial proceedings; 
but even if it did, without the requisite compulsion, the case does not support the 
idea that a defendant's pre-Miranda silence is barred by the Constitution. 

B. The Due Process Clause of the Fourteenth Amendment Does Not Bar the 
Use of a Defendant's Pre-Miranda Silence in the Government's Case-in-Chief 

In Doyle v. Ohio, the Court considered whether comment on a defendant's 
post-Miranda silence violated his right to due process under the Fourteenth 
Amendment.^^^ In that case, the government used the defendants' silence, 
observed after they were read the Miranda warnings, to impeach exculpatory 
stories first offered at trial.^^"^ The Court held that the Due Process Clause of the 
Fourteenth Amendment forbade the use of the defendants' post-Miranda silence 
to impeach their credibility.^^^ The Court explained that silence in the wake of 
a Miranda warning is "insolubly ambiguous" since it could be viewed as a 
defendant's exercise of his right to remain silent.^^^ Because the warning 
implicitly assures the defendant that his silence will carry no penalty, the use of 
his silence against him breaches the government's promise to the defendant.^^^ 
That breach constitutes the foundation of a due process violation. 

A few years after Doyle, the Supreme Court decided in turn Jenkins v. 
Anderson and Fletcher v. Weir?^^ Jenkins considered whether comment on a 
defendant' s pre-arrest (and prt-Miranda) silence violated his right to due process 
under the Fourteenth Amendment.^^^ Relying on Doyle, the Court concluded that 
the use of a defendant's pre-arrest silence to impeach him did not violate due 
process, because the defendant had not yet been promised that his silence would 
not be used against him.^^° Instead, the Court directed each jurisdiction to 

precluded from commenting on a defendant's silence, the Court must first determine whether the 
defendant's silence was compelled. Griffin, 380 U.S. at 620 (Stewart, J, dissenting) (noting that 
since the defendant was not compelled to remain silent, his constitutional right to remain silent was 
not violated). 

283. See supra notes 106-1 1 and accompanying text (discussing Doyle v. Ohio). 

284. See supra notes 106-1 1 and accompanying text (discussing Doyle). 

285. Doyle v. Ohio, 426 U.S. 610, 619 (1976); see supra notes 106-1 1 (discussing Doyle). 

286. Doyle, 426 U.S. at 619; see supra note 1 10 and accompanying text (discussing reasons 
why the prosecution cannot use a defendant's post-Miranda silence to impeach him). 

287. See supra note 110 and accompanying text (discussing reasons why the prosecution 
cannot use a defendant's post-Miranda silence to impeach him). 

288. See supra notes 122-27, 130-38 and accompanying text (discussing Jenkins v. Anderson 
and Fletcher v. Weir). 

289. See supra notes 122-27 and accompanying text (discussing Jenkins v. Anderson). 

290. Jenkins v. Anderson, 447 U.S. 231, 238 (1980). The Court also concluded that the use 
of a defendant's pre-arrest silence to impeach him did not violate his rights under the Fifth 
Amendment. Id. At issue was whether the use of the defendant's pre-arrest silence impermissibly 
burdened his Fifth Amendment right to remain silent. Id. While the Court elected not to consider 
whether or under what circumstances pre-arrest silence is protected by the Fifth Amendment, it did 


resolve the issue under its own rules of evidence that weigh the probative value 
of the defendant's silence against any prejudice against the defendant which 
might result.^^^ The Court also noted that allowing the government to impeach 
a defendant's credibility with his prior silence "may enhance the reliability of the 
criminal process" and "advances the truthfinding function of the criminal 

Again, in Fletcher v. Weir, the Court held that use of a defendant's pre- 
Miranda silence to impeach him does not violate his due process rights under the 
Fourteenth Amendment because, in the absence of the affirmative assurances 
embodied in the Miranda warning, the defendant was never promised that his 
silence would not be used against him.^^^ While silence following a warning is 
normally so ambiguous as to have too little probative value to warrant its 
admission into evidence, silence preceding a warning carries no such 
impediment.^^"^ As such, Fletcher observed that "[a] State is entitled, in such 
situations, to leave to the judge and jury under its own rules of evidence the 
resolution of the extent to which post arrest silence may be deemed to impeach 
a criminal defendant's own testimony. "^^^ Fletcher confirmed that the use of a 
defendant's ipYQ-Miranda silence against him is determined under routine rules 
of evidence and such use does not involve the Due Process Clause of the 
Fourteenth Amendment. 

At least one federal court of appeals case that forbade the government to use 
a defendant's prt-Miranda silence in its case-in-chief argues that Jenkins (and 
presumably Doyle and Fletcher) only permits the use of silence to impeach a 
defendant who already waived his right to remain silent by choosing to testify in 
his own defense.^^^ In United States v. Caro, the Second Circuit concluded that 
"we are not confident that Jenkins permits even evidence that a suspect remained 
silent before he was arrested or taken into custody to be used in the 
Government's case in chief. "^^^ Caro seemed to consider dispositive how the 

conclude, relying on Rqffel v. United States, that the Fifth Amendment is not violated when the 
government uses a defendant's pre-arrest silence to impeach his credibility. Id. 

291. /^. at 239. 

292. Id. at 238. The Court noted that, under the Fifth Amendment, the use of a defendant's 
pre-arrest silence to impeach him is tied to his decision to testify at his trial and thus "cast aside his 
cloak of silence." Id. Quoting Harris v. New York, the Court wrote, "[h]aving voluntarily taken 
the stand, petitioner was under an obligation to speak truthfully and accurately." Id. (quoting Harris 
V. New York,401 U.S. 222, 225 (1971)). But, as Justice Stewart correctly notes in his concurrence, 
absent some element of compulsion, a defendant cannot hide under the Fifth Amendment for 
protection. Id. at 244 (Stewart, J., concurring). 

293. See supra notes 130-38 and accompanying text (discussing Fletcher v. Weir). 

294. See Fletcher v. Weir, 455 U.S. 603, 604-05 (1982) (per curiam) (contrasting the facts in 
Doyle with the case at bar). 

295. /^. at 607. 

296. See supra Part IV. A (discussing federal courts of appeal that forbid the use of silence in 
the government's case-in-chief) 

297. See United States v. Caro, 637 F.2d 869, 876 (2d Cir. 1981) (noting that Jenkins was 


government used a defendant's pre-arrest silence. 

Whether the government uses a defendant's prior silence to impeach his 
credibility or to prove his guilt is a distinction without a difference, at least when 
analyzing the issue under the Due Process Clause. In fact, both the Sixth and 
Seventh Circuits (which concluded that the government may not comment on a 
defendant's pre-arrest silence in its case-in-chief under the Fifth Amendment) 
agree that the use of a defendant's pre-arrest silence in the government's direct 
case cannot violate the defendant's due process rights because, in the pre-arrest 
(and pvQ-Miranda) context, the government has not yet assured a defendant that 
his silence would not be used against him.^^^ The same logic that drove the 
Jenkins Court to dismiss a due process attack on the use of a defendant's pre- 
arrest silence to impeach him applies with the same force to the use of silence to 
prove his guilt. 

The fundamental core of a Doyle violation lies in the government's 
assurances (or lack thereof) that silence will carry no penalty.^^^ To remain 
faithful to the constitutional principles articulated in Doyle and its progeny, no 
distinction logically can be drawn between how the government uses a 
defendant's pre-Miranda silence without extending the doctrinal foundations of 
the Due Process Clause well beyond its current applications. How the 
government uses a defendant's silence is simply unrelated to the threshold 
question that asks whether the government first assured the defendant that his 
silence would not be used against him. While silence may be "insolubly 
ambiguous," that determination is best left to the sound discretion of the trial 
court. The question is not whether the Due Process Clause prohibits the 
government' s use of a criminal defendant' s pre-Miranda silence, but whether the 
probative weight of that silence is greater than its prejudice to the defendant. 


Miranda v. Arizona extended the core Fifth Amendment privilege against 
self-incrimination beyond the trial to protect criminal defendants subjected to 
custodial interrogations. Since the Fifth Amendment bars trial courts from 
exercising their contempt power to compel defendants to testify against 
themselves, the Court believed that police pressure exacted during the course of 
an interrogation could exert the same sort of coercion that the Constitution 
sought to prevent. As such, the Court required the government to first apprise a 
suspect of his right to remain silent and his right to counsel before a trial court 

limited to the use of silence to impeach a defendant). Unfortunately, the Second Circuit fails to 
discuss why Jenkins appears to forbid the use of pre-arrest silence in the government's case-in- 

298. See supra Part IV.A (discussing Sixth Circuit and Seventh Circuit). The Fourth, Fifth, 
and Eleventh circuits agree that without the assurances embodied in the Miranda warning, the Due 
Process Clause does not forbid the government's use of a defendant's pre-Miranda silence in its 
case-in-chief. See supra Part IV. B (discussing the Fourth, Fifth, and Eleventh Circuits). 

299. See supra Part III (discussing Doyle, Jenkins, and Fletcher). 

54 INDIANA LAW REVIEW [Vol. 38: 1 

could conclude that his statements were made voluntarily and, thus, admissible 
against him. Miranda and its progeny, however, linked the admissibility of a 
defendant's inculpatory statements to the coercion inherent to an interrogation. 
A suspect's responses made outside the context of an official interview, even if 
they are made after his arrest, are immune from a Fifth Amendment challenge 
since they fall outside the coercive atmosphere inherent to a custodial 
interrogation. While Miranda shields a defendant's unwarned statements made 
in the course of a custodial interrogation, it simply does not limit the 
admissibility of his statements or silence before he is compelled to speak. The 
Fifth Amendment, then, does not bar the government's use of a defendant's pre- 
Miranda silence in its case-in-chief so long as the government did Mirandize him 
before it interrogated him. 

Doyle V. Ohio held that the government's use of a defendant's post-M/ranJ« 
silence to impeach him violated his rights under the Due Process Clause of the 
Fourteenth Amendment.^^ Doyle explained first that a defendant' s post-Miranda. 
silence is insolubly ambiguous, and thus its use is intolerably prejudicial.^^* 
Second, Doyle opined that a defendant is deprived due process when the 
government uses his silence against him after it assures him that his silence 
would carry no penalty .^^^ Logically, the government' s use of a defendant' s pre- 
Miranda silence cannot violate due process because his silence was not induced 
by the government. Moreover, ptQ-Miranda silence, while ambiguous, is not 
intolerably ambiguous, because a defendant's pvt-Miranda silence cannot be 
viewed necessarily as the defendant's assertion of his Miranda rights. The 
Fourteenth Amendment, then, does not bar the government' s use of a defendant' s 
pYC-Miranda silence in its case-in-chief. 

In conclusion, neither the Fifth nor the Fourteenth Amendments prohibit the 
government from using a defendant's pvt-Miranda silence in its direct case 
against him. Despite this, silence is ambiguous, perhaps intolerably so. But the 
admissibility of a defendant's silence ought to be left to the sound discretion of 
the trial court in its application of the routine rules of evidence — and, however 
rare, the probative value of a defendant's pre-Miranda silence may sometimes 
outweigh its prejudicial impact. The Constitution, however, simply does not 
afford the defendant redress. 

300. Doyle v. Ohio, 426 U.S. 610, 619 (1976). 

301. Id. 

302. Id. 

Government Power Unleashed: Using Eminent 

Domain to Acquire a Public Utility 

OR Other Ongoing Enterprise 

Shelley Ross Saxer' 


Ask most people what they think of a municipality using its eminent domain 
power to acquire a privately-owned utility company and the typical response is 
one of disbelief and sometimes, mild outrage. This power to convert public 
utilities from private to public ownership, however, has historically been 
available to state and municipal governments to secure lower power rates for 
local residents.^ The impetus for this Article was the City of Corona's exercise 
of eminent domain power to acquire Southern California Edison in order to 
provide less expensive rates and more reliable electricity service to residents. 
Although the City eventually settled with Edison, the issues remain. 
Municipalities across the United States are considering using eminent domain to 
acquire private utility companies. What then are the limits on using the eminent 
domain power to acquire ongoing enterprises in order to provide public goods or 
services? This Article identifies and discusses some of the issues and constraints 
involved in private enterprise condemnations, particularly those involving 
privately-owned public utilities. 

Government has long enjoyed the power to acquire property from unwilling 
property owners in order to further its citizens' public needs and interests. The 
source of this power stemmed from both historical and constitutional roots. 
From its beginnings, the United States adopted the English approach of requiring 
land owners to "return" property to the crown when needed for the public good. 
Then, with the addition of the Fifth Amendment Just Compensation Clause, the 
people were guaranteed that the government would compensate them for any 
private property taken to fulfill a public purpose. 

Now, in most states, the eminent domain power is delegated, along with the 
state's police power, to municipalities and other local government units. Local 
government power is constrained by state statute and constitution, but the degree 
of constraint varies widely by state. In reaction to situations such as the Enron 
mess and the electric power problems in California, municipalities recently began 

* Professor of Law, Pepperdine University School of Law. B.S., 1980, Pepperdine 
University; J.D., 1989, University of California at Los Angeles. The author thanks Grant Nelson, 
Brannon Denning, Patti Paniccia, and David Callies for their helpful comments and ideas. The 
author also thanks research assistants. Heather Burgess and Jennifer Monk, for their excellent 
editing assistance. 

1. See, e.g.. Pub. Serv. Co. of Colo. v. City of Loveland, 245 P. 493, 498 (Colo. 1926) 
(holding that the city ' s exercise of eminent domain to acquire a privately-owned electric utility plant 
was properly exercised based on a 1903 ordinance and the city's fundamental power to condemn 
property for a public use). See also 2 A JuLius L. Sackman, Nichols ON Eminent Domain § 
7.06[40] (3d ed. 2004) (discussing New York condemnation statute, N. Y. PUB. AUTH. Law § 1020- 
A , enacted "to facilitate conversion of a power company from private to public ownership"). 

56 INDIANA LAW REVIEW [Vol. 38:55 

exercising this power to acquire ongoing private utility businesses to bring 
supply and price stability to their citizens.^ Land owners generally realize that 
the government has the power to condemn their real property for such purposes 
as expanding a highway. Yet, few business owners suspect that this power of 
condemnation extends to allow the local government to force a sale of their 
private enterprise.^ 

This Article examines both state and local government's use of eminent 
domain to acquire an ongoing utility company. The focus is on utility companies 
since they have experienced both public ownership and regulation, and only 
recently "deregulated" to allow private owners to run them competitively. 
However, an overriding concern remains — what is the limitation on government 
power after a municipality or state condemns a private business it determines can 
be run more efficiently as a public function? 

Following this introduction, Part I discusses the history of industries that 
have been historically subject to public ownership or regulation and why state 
and local government officials have felt compelled to acquire these industries to 
respond to citizen needs. Part 11 outlines Fifth Amendment limitations and 
various state constitutional and statutory constraints on eminent domain power. 
Federal limitations such as the Dormant Commerce Clause, the Commerce 
Clause, the Tenth Amendment, the Supremacy Clause, antitrust laws, and the 
Contract Clause are explored in a forthcoming article."^ The Article concludes by 
suggesting that people can either limit or expand this government power through 
legislative action, and in some cases, state constitutional amendment. Social, 
economic, and political pressures will combine to either prevent or enable wide- 
scale nationalization and what some might refer to as "creeping statism"^ or 
"creeping economic socialism."^ 

2. Rich Saskal, The Far Reach of Enron Prompts Push for Public Power in Oregon, BOND 
Buyer, Sept. 26, 2003, at 1 (discussing Oregon's public power efforts and noting that in addition 
to several communities in California pursuing public utilities, the city of Great Falls, Montana, is 
attempting to create a municipal utility). 

3. See, ^.^., City of Oakland v. Oakland Raiders, 646 P.2d 835, 841 (Cal. 1982) (noting that 
"[n]o case anywhere of which we are aware has held that a municipality can acquire and operate 
a professional football team, although we are informed that the City of Visalia owns and operates 
a professional Class A baseball franchise in the California League; apparently, its right to do so 
never has been challenged in court"). 

4. Shelley Ross Saxer, Eminent Domain, Municipalization, and the Dormant Commerce 
Clause, 38 U.C. Davis L. Rev. (forthcoming June 2005). 

5. City of Oakland, 646 P.2d at 845-46 (Bird, C.J., concurring and dissenting); see also 
Richard F. Hirsh, Power Loss: The Origins of Deregulation and Reconstructing in the 
American Electric Utility System 41 (1999) ("In a series of advertisements run in the early 
1960s, moreover, utilities implied that government operation of such power systems constituted a 
step 'down the road to socialism.'") (citation omitted). 

6. David Schultz & David Jann, The Use of Eminent Domain and Contractually Implied 
Property Rights to Affect Business and Plant Closings, 16 Wm. Mftchell L. Rev. 383, 426-27 
(1990) (suggesting that municipalities use eminent domain to gain control of assets to prevent a 


I. The Compelling Case for Public Ownership and Government 


A. The City of Corona Responds to the California Energy Crisis 

The City of Corona ("Corona") in Riverside County, California, filed a 
Complaint in Eminent Domain against Southern California Edison Company 
("Edison") on December 3, 2002, to acquire Edison's integrated electric utility 
system to reduce its residents' power bills7 Edison had earlier rejected Corona' s 
offer to purchase the system, responding that its system was not for sale.^ 
Corona's Complaint in Eminent Domain alleged that in April 2001, Corona 
established a "municipally-owned electric, natural gas, telephone, and 
telecommunications utility" pursuant to its alleged authority as a municipal 
corporation under Article DC, Section 9(a) of the California Constitution.^ This 
section permits a municipality to "establish, purchase and operate public works 
to furnish its inhabitants with light, water, power, heat."^^ Corona's electric 
utility, authorized by the California Public Utilities Commission, already served 
some of Corona's businesses and certain Los Angeles Unified School District 
facilities. ^^ Corona claimed that the restructuring of California's electricity 
market in January 1998, "created significant disruptions of California's energy 
market, including higher rates, power outages, and rolling blackouts."^^ 
Additionally, Corona alleged that Edison' s excessive rates and failure to maintain 
a safe and reliable distribution system adversely impacted Corona's businesses 
and residents. ^^ 

Corona and Edison settled this litigation on May 14, 2003, leaving open the 
question of whether a municipality can use its eminent domain power to acquire 
a privately-owned utility and in turn "municipalize" the electric utility. ^"^ Corona 
indicated that pending state energy legislation might make it harder to take over 
the electric distribution system and that Edison's proposed rate reduction made 
the projected savings from municipal ownership less compelling. ^^ 

business from closing down or leaving a community). 

7. See Complaint, City of Corona v. So. Cal. Edison Co., No. 38555 1 (Cal. Sup. Ct., County 
of Riverside, Dec. 3, 2002) [hereinafter Complaint], available at http://www.discovercorona. 
org/depts/electric . 

8. See SoCal Ed. Fighting City of Corona's Efforts to Municipalize Distribution, POWER 
Markets Wk., Jan. 13, 2003, at 25. 

9. Complaint, supra note 7, at 4. 

10. Id. 

11. Id. 

12. Mat 3. 

13. Mat 6. 

14. Corona Decides to Stay with SoCal Ed, Will Drop Eminent Domain Lawsuit, ELECTRIC 
Util. Wk., May 19, 2003, at 19. 

15. Id. 

58 INDIANA LAW REVIEW [Vol. 38:55 

Other municipalities in Southern California effectively operate their own 
electric utilities, offering residents and businesses reasonable rates. *^ The City 
of Glendale, for example, received an Al rating from Moody's on its Electric 
Revenue Bonds because of its strong financial operations and generating 
capacity.'^ Even with the recent scandals plaguing the industry, an internal 
investigation of a Glendale agreement with Enron determined that "Glendale 
Water and Power had no improper involvement in the Enron trading ploys."^^ 
Despite this affirmation, both Glendale Water and Power and Los Angeles' city- 
run utility, the Department of Water and Power (DWP), are currently under 
investigation by federal regulators to determine whether they and other 
municipalities conspired to drive up power prices during "California's electricity 
meltdown in 2000-2001."^^ Although not free from criticism that municipal 
utilities took advantage of the situation, these city-run utilities managed to avoid 
blackouts and rate increases. Concerns still remain that the privately-owned 
energy companies and utilities were involved in schemes to manipulate 
California's electricity markets during the 2000-2001 energy crisis.^^ 

As one of the first states to embrace the market enterprise approach of the 
Public Utility Regulatory Policies Act ("PURPA") in the late 1970s, California 
welcomed new independent producers of power to meet the rising electricity 
demand not addressed by sufficient new power plant construction.^^ Following 
the passage of the Energy Policy Act of 1992, which encouraged competition, the 
California Public Utilities Commission began restructuring the state's utility 
system, including passing legislation that deregulated the electric utilities by 
1 998.^^ Other states watched California' s restructuring experience in anticipation 
of emulating the market enterprise approach of the Energy Policy Act.^^ By the 

16. See Complaint, supra note 7, at 6 (Corona alleged that the cities of Riverside and 
Anaheim offer lower rates and Riverside has used these lower rates to attract businesses to move 
from Corona to Riverside.). 

17. Press Release, Moody's Investor Serv., Moody's Assigns Al Rating to Electric Revenue 
Bonds of Glendale, California, (Jan. 21, 2003), available at 2003 WL 7902907. 

18. Kelly Yamanouchi, Los Angeles Glendale Finds No Impropriety in Its Enron Deal, L. A. 
Times, July 13, 2002, at B4. 

19. Richard Nemec, DWP Really Has A Lot of Explaining To Do, L.A. DAILY NEWS, Mar. 
11, 2003, at Nl 1. See also Rebecca Smith, Regulators Find "Epidemic" of Market Manipulation 
in California Energy Crisis, WALL ST. J., Mar. 27, 2003 at A3 (noting that "[fjederal energy 
regulators said they found 'epidemic' efforts to manipulate electricity and natural-gas markets 
during California's 18-month-long energy crisis" and that the Los Angeles Department of Water 
and Power is one of the companies included in the Federal Energy Regulatory Commission's staff 
recormnendation that "some big power suppliers explain why their behavior didn't constitute illegal 
manipulation of Western energy markets"). 

20. Mark Martin, State Hunts for Goods on Energy Firms; Lawyers Try to Show Market 
Manipulation, S.F. Chron., Jan. 20, 2003, at Al; Smith, supra note 19, at A3. 

21. HiRSH,5Mpra note 5, at 93-100. 

22. /^. at 239. 

23. Id. at 248 (noting that California's strong economy and the presence of large investor- 


end of 1996, "four states had passed restructuring laws, and all but a few states 
had launched legislative or regulatory investigations as preludes to introducing 
utility system reforms."^"^ 

Now recovering from the energy troubles of 2000-2001 , other states and their 
municipalities again are watching California' s newest power utility restructuring. 
What went wrong with the rapid deregulation of the electric utility system? Was 
there a market failure that prevented the market enterprise theory from 
succeeding in a competitive structure? As policymakers and the courts sort 
through the allegations of conspiracy and the evidence of market manipulation, 
municipalities across the nation, and even other nations, are attempting to 
determine whether private ownership, public ownership, regulation, or 
deregulation is the appropriate model for power utilities operations. 

The decision whether to "municipalize" or "privatize" a utility has 
historically perplexed policymakers, resulting in a variegated history of private 
ownership, public ownership, regulation, and deregulation or restructuring of the 
utilities. ^^ Deciding whether it makes fiscal sense for a municipality to acquire 
a private utility company through the eminent domain process requires careful 
study and analysis.^^ However, once a city can justify to its elected officials that 
operating the utility will significantly benefit its citizens, the municipality has a 
responsibility to act in the best interests of its citizens and respond as the City of 
Corona did, so long as state statutory and constitutional law allow such a 

It is not the purpose of this Article to advocate either public or private 
ownership of utilities or to opine regarding the efficacy of either regulating or 
restructuring certain industries. ^^ Individual states and municipalities must make 
this determination on a case-by-case basis using pasi history, economic theory, 

owned utility companies and non-utility energy producers made it a good candidate for a "workable 
competitive market"). 

24. Id. at 260. 

25. See, e.g., id. at 14 (discussing the municipalization model of the late 1800s and early 
1900s where "city governments purchased the assets of utility companies and operated them for the 
supposed benefit of the citizens"). 

26. See, e.g.. City of Corona, Feasibility Study (Nov. 2002), available at [hereinafter Feasibility Study] (the analysis performed 
by Corona prior to recommending action to the City Council). See also Schultz & Jann, supra note 
6, at 410 (observing that "each community will have to embark on a fairly sophisticated financial 
analysis of a business before making the decision whether to pursue ownership of that business 
through eminent domain"). 

27. See Feasibility Study, supra note 26, at 3 ("Corona's municipalization of the electric 
utility system can be physically and logistically accomplished, would be financially viable, and 
would result in significant overall savings to the City's ratepayers for all rate classes in all price 
scenarios under all options.") 

28. See Joseph D. Kearney & Thomas W. Merrill, The Great Transformation of Regulated 
Industries Law, 98 COLUM. L. Rev. 1323, 1400-03 (1998) (discussing the debate as to whether 
natural monopolies should be regulated). 

60 INDIANA LAW REVIEW [Vol. 38:55 

and political perspective. However, by exploring potential legal constraints on 
the government's eminent domain power and understanding the historical 
perspective of utility ownership and regulation, this Article will hopefully serve 
to guide municipalities, utilities, public officials, courts, and citizens in 
approaching these issues. 

B. The Regulatory History of Utilities and Other Regulated Industries 

Much is written about public utilities' regulation, deregulation, restructuring, 
and, indeed, there is a multitude of specialized legislation and case law, both 
federal and state, dealing with utilities.^^ In his 1887 essays, Henry Carter 
Adams identified three classes of industries, two of which were adequately 
controlled by competition and one of which required state control because the 
industry type was by nature a monopoly.^^ For many years, there was general 
agreement that industries considered to be "natural monopolies" included: the 
water supply industry; the transportation network of waterways, roads, and 
railroads; the petroleum pipelines; the light and power industries; the local transit 
industry; and the telecommunications industry.^^ Recently, however, 
commentators question whether utility companies are natural monopolies in light 
of technological innovation making market competition possible through small- 
scale generating equipment.^^ While the individual histories of these "natural 
monopoly" industries differ from one another in significant ways, there are some 
general trends common across these industries. ^^ 

First, as presumed natural monopolies, these industries have a history of 
public control and are subjected to regulation through common law remedies, 
charter, franchise and statutory limitations.^"^ This public control was initially 

29. See, e.g., Public Utility Regulatory Policies Act of 1978, Pub. L. No. 95-617, 92 Stat. 
3117 ("PURPA"); IDAHO CODE § 61-01 to 61-1508 (Michie 2002); HiRSH, supra note 5, at 2; 
Kearney & Merrill, supra note 28. 


(citing Henry Carter Adams, Relation ofthe State to Industrial Action ( 1 887), reprinted 
in Dorfman, Two Essays by Henry Carter Adams 57-133 (1954)). 

3 1 . See generally id. at 6-22; see also Kearney & Merrill, supra note 28, at 1327 (analyzing 
those industries included within the "classic definition of regulated industries" including "four 
'common carriers' — railroads, airlines, trucks, and telecommunications companies — and two 
'public utilities' — electricity and natural gas"). 

32. HiRSH, supra note 5, at 120 (observing that "[t]hough PURPA brought the issue of 
natural monopoly to a head in the 1980s, academic critics had questioned the value ofthe principle 
earlier"). See also Joseph P. Tomain, The Past and Future of Electricity Regulation, 32 Envtl. 
L. 435, 452 (2002) ("PURPA stimulated a deeper rethinking ofthe concept of natural monopoly."). 

33. See Tomain, supra note 32, at 443 (noting that "it is the degree of protection that 
distinguishes government treatment of some industries from the treatment of others" and "that the 
degree of government intervention changes over time"). 

34. Jones, supra note 30, at 22-3 1 (discussing common law rules applied to common earners 
and innkeepers and limitations on industries created by state charters, municipal franchises, and 


shared by state and municipal governments, which granted state charters and 
municipal franchises. These charters and franchises were the basis of the 
"regulatory contract" whereby the public's need for utility services was satisfied 
by private companies. The private companies built the infrastructure and 
supplied nondiscriminatory service in exchange for "the opportunity to earn a 
competitive retum."^^ By the late 1800s, control shifted to municipalities since 
much of the need for these utilities was generated by urbanization at the city level 
and required use of the city streets. ^^ However, once this "promotional stage" 
established service to the residents, cities and states discovered that the existing 
charters and franchises did not provide sufficient incentive for reduced rates and 
increased quality of service.^^ 

The next trend was a move toward "encouraging competition as a means of 
protecting the interests of the public."^^ For example, the electric industry at its 
beginning in the late 1800s "was an unregulated competitive industry. "^^ 
Although this trend occurred at different times for different industries, "most of 
the natural monopoly industries went through a second or 'competitive stage' in 
which charters and franchises were freely granted to all comers. '"^^ This 
competitive stage was not terribly successful as price wars resulted in 
deteriorated operations and service. Additionally, companies began either 
consolidating or fixing prices in violation of weak antitrust regulations."^^ It was 
at this juncture in the late 1800s and early 1900s, that both the municipalization 
model and the regulatory model were explored as alternatives to a free market 
because the franchises were subject to political corruption.'*^ A new approach 
was needed to respond to this corruption. Municipal power companies only 
constituted approximately "30 percent of the nation's electricity suppliers" by 
1907,"^^ but the regulatory model still prevailed as economists argued that these 
"natural monopolies" required governmental oversight. During this time, critics 

statutory restrictions). 

35. J. Gregory Sidak & Daniel F. Spulber, Deregulatory Takings and Breach of the 
Regulatory Contract, 71 N.Y.U. L. Rev. 851, 898 (1996). 

36. Jones, 5M/7ra note 30, at 31-32. 

37. /^. at33. 

38. Id. 

39. Tomain, supra note 32, at 444. 

40. Jones, supra note 30, at 33. 

41. /^. at33. 

The result of reliance upon competing companies was frequently (a) periods of price 
competition and instability in operations, followed by (b) suppression of competition 
by agreement among the parties, resulting in (c) higher prices than previously to provide 
coverage for the higher costs of multiple operations and duplicated investment, setting 
the stage for (d) further entry as the operations of the incumbents became profitable 
once more. 

42. HiRSH, supra note 5, at 14-15. 

43. /J. at 15. 

62 INDIANA LAW REVIEW [Vol. 38:55 

of municipal ownership feared corrupt political forces in city management and 
the end of free enterprise in favor of municipal socialism.'*'^ 

The third or "regulatory" trend resulted from the failure of the competitive 
stage to protect the public from abuses by the natural monopoly industries. "^^ The 
public utility regulation was based in contract law with the state or municipality 
allowing the private utility to earn a competitive rate of return in exchange for the 
utility submitting to regulatory restrictions."^^ The agreement, also called "the 
utility consensus," permitted investor-owned power companies to sell electricity 
without competition in exchange for supplying consumers with good service at 
good rates."*^ The Interstate Commerce Act, enacted in 1887, created an 
administrative agency to regulate private companies through close monitoring, 
regulated rates, and limitations on industry entry and exit."^^ This regulatory 
model, designed to ensure "just, reasonable, and non-discriminatory rates and 
practices," was subsequently imposed on the "shipping, stockyard, telephone, 
telegraph, trucking, electric, gas, and aviation industries. ""^^ The regulatory stage 
lasted for almost a century,^^ but in the last few decades a return to the 
competitive model has occurred in an effort to improve consumer welfare by 
again encouraging provider competition.^^ 

The transformation from regulation to "competition through regulation"^^ 
began in the 1960s when economic and political factors combined, creating a 

44. Id. at 15-26, 38, 40-41 (discussing fights in the early 1900s to prevent municipal 
ownership and attacks made by the power company publicists in advertising campaigns against 
supporters of government-run utilities, calling them "'Bolsheviks,' 'reds,' or 'parlor pinks'"). 

45. Jones, supra note 30, at 29. 

46. Sidak & Spulber, supra note 35, at 887 (explaining that these restrictions included "price 
regulations, quality-of-service requirements, and common-carrier regulations"). This article cites 
Charles River Bridge v. Warren Bridge, 36 U.S. (11 Pet.) 420 (1837) and Munn v. Illinois, 94 U.S. 
113, 124 (1877) as evidence that the concept of regulatory contract has a historical lineage in 
contract. Id. at 891. See also Tomain, supra note 32, at 446 (describing the regulatory compact 
as imposing obligations on both the utility and the government where "[i]n exchange for a 
government-protected monopoly, the utility lets government set its prices through ratemaking"). 

47. HiRSH, supra note 5, at 1. 

48. Kearney & Merrill, supra note 28, at 1325 (citing Interstate Commerce Act, 24 Stat. 379 

49. Id. at 1333-34 (internal citations omitted). 

50. Id. at 1329 (observing that the dominant model of regulation which began in the late 
nineteenth century has been dramatically changing in the last few decades to allow "consumer 
choice among multiple competing providers"). 

51. /J. at 1 325-26; see also Tomain, supra note 32, at 449-50 (noting that there are regulatory 
cycles where a competitive business consolidates to reduce competition, there is a competitive 
failure, the government regulates to correct the failure, there is a regulatory failure, and then 
policymakers return to the competitive model). 

52. Kearney & Merrill, supra note 28, at 1329 (describing the transformation from "the 
original paradigm of regulated industries law ... to a new paradigm emphasizing, to the maximum 
degree feasible, consumer choice among multiple competing providers"). 


background where critics questioned the efficacy of our traditional regulatory 
structures.^^ The three stresses of "technological stasis, the energy crisis, and the 
environmental movement"^'^ brought about the end of the relatively stable 
regulatory phase.^^ In response, the Public Utility Regulatory Policies Act 
(PURPA)^^ was enacted in 1978 as part of the National Energy Act^^ and 
encouraged market-based rates for conventional fuels. ^^ In the energy sector, the 
"utility consensus" was weakened as free market principles replaced the concept 
of natural monopoly power and traditional regulation was questioned.^^ 

First to reject the traditional regulatory structure in favor of a market 
approach was the airline industry with the enactment of the Airline Deregulation 
Act of 1978.^^ Airline industry deregulation was followed by railroad 
deregulation in 1980 with the enactment of the Railroad Revitalization and 
Regulatory Reform Act of 1976,^^ the Staggers Rail Act of 1980,^^ and finally the 
abolishment of the Interstate Commerce Commission in 1996.^^ 

By the 1980s, the telecommunications business transitioned to a competitive 
marketplace,^"^ and the natural gas industry was well on its way. The natural gas 
industry unbundled its services by taking advantage of open access to interstate 
pipelines to allow producers to compete for industrial end-users "using the 
interstate pipeline as a provider of transportation service only."^^ Producers 
could now sell natural gas without having to maintain their own pipelines. Under 

53. Tomain, supra note 32, at 450 (discussing regulation of the electric industry and the 
political and economic events leading to "unsettling the electric industry and its customers"). 

54. HiRSH, supra note 5, at 68-69 (describing the effects of these stresses as utility companies 
were unable to reduce prices as technological improvements were limited, the energy crisis created 
an unsettled market for power as consumers reduced consumption, and the growth of environmental 
legislation and regulation constrained the power of utility managers). 

55. See Andrew P. Morriss, Implications of Second- Best Theory for Administrative and 
Regulatory Law: A Case Study of Public Utility Regulation,13Cm.-¥iEKTL.REV. 135, 143 (1998) 
(referring to the period between World War II and 1970 as '"an era of stability' for both the 
regulators and regulated in the public utility field"). 

56. Public Utility Regulatory Policies Act of 1978, Pub. L. No. 95-617, 92 Stat. 3117 
(codified as amended in scattered sections of 15, 16, 26, 42, and 43 U.S.C.). 

57. Tomain, supra note 32, at 451. 

58. See id. 

59. HiRSH, supra note 5, at 71. 

60. Kearney & Merrill, supra note 28, at 1335; Airline Deregulation Act of 1978, Pub. L. No. 
95-504, 92 Stat. 1705 (codified as amended at 49 U.S.C. § 40101 (2000)). 

61. Id. (citing Pub. L. No. 94-210, § 202(b), (c)(i), 90 Stat. 31, 35 (1976) (codified as 
amended at 49 U.S.C. § 10709(c) (1994)). 

62. Id. at 1336 (citing Pub. L. No. 96-448, 94 Stat. 1895.) 

63. Id. (quoting the House Committee as stating "that 'the railroad industry has operated in 
an essentially deregulated environment' since 1980") (citing H.R. Rep. No. 104-311, at 90 (1995)). 

64. Id. at 1341-42 (discussing the unbundling of goods and services and separating long- 
distance services from local services). 

65. Mat 1345. 

64 INDIANA LAW REVIEW [Vol. 38:55 

this new model, the main function of the regulator "[was] to maximize 
competition among rival providers, in the expectation that competition will 
provide all the protection necessary for end-users" rather than to oversee the 
industry to protect consumers. ^^ In summarizing "the central tenets of the new 
paradigm in regulated industries law,"^^ Kearney and Merrill observed that "[i]n 
industries and segments where services have been bundled together through 
vertical and horizontal integration, this means that segments that can be provided 
competitively must be unbundled and opened to competition (long-distance 
telephony, natural gas production, electricity generation). "^^ 

Calling this new stage of deregulation the "great transformation," Kearney 
and Merrill proposed "that a wide-ranging transformation sharing many common 
features is taking place throughout regulated industries law."^^ They also 
suggested that this trend "is being driven by deep-seated economic and social 
forces"^^ including an increasing perception of regulatory failure and a 
decreasing perception of market failure.^' Hirsh noted, in his book on the history 
of the electric utility system, that "[b]y the 1990s, participants moved tentatively 
toward creation of a new consensus that sanctified the concept of competition 
and rejected the legitimacy of natural monopoly and regulation. "^^ Certainly, the 
push toward deregulation of electricity was preceded by the deregulation of 
airlines and natural gas along with a favorable economic and political perspective 
in the country regarding deregulation.^^ For the electricity industry, "[t]he 
cumulative failures of regulation, coupled with remarkable innovations rendering 
old technology inefficient or obsolete, suggested that new efficiencies could be 
realized by introducing competition to certain sectors of the electricity 
industry. "^"^ 

66. Mat 1361. 

67. Mat 1363. 

68. Id. at 1363-64 (also noting that where industries compete through market transactions, 
"the focus of the agencies necessarily turns to those market segments that have natural monopoly 

69. Mat 1383. 

70. Id. 

71. Mat 1399. 

72. HiRSH, supra note 5, at 2. See also Harold Demsetz, Why Regulate Utilities'!, 1 1 J.L. & 
ECON. 55, 55 n.*, 65 (1968) (concluding that "the rivalry of the open market place discipHnes more 
effectively than do the regulatory processes of the commission" and crediting R.H. Coase at the 
outset of the article "who was unconvinced by the natural monopoly argument long before this 
paper was written"). 

73. Fred Zalcman & David Nichols, Competition, Environment, and the Electric Industry: 
A Special Symposium on Restructuring at the Crossroads, 1 8 PaceEnvtl. L. Rev. 287, 288 (200 1 ). 

74. Jim Rossi, The Common Law "Duty to Serve" and Protection of Consumers in an Age 
of Competitive Retail Public Utility Restructuring, 51 Vand. L. Rev. 1233, 1277 (1998). 


C. Regulatory Reform or a Return to Public Ownership? 

By the end of 2000, "twenty-four states, including most of the larger states, 
had decided to deregulate electricity generation. "^^ However, in the face of 
serious problems with this deregulation of electric power,^^ policy makers must 
decide whether such restructuring should continue or whether we should return 
to government controlled regulatory safeguards'^ Perhaps market failures in a 
restructured utility industry will justify either regulation or municipalization as 
we once again face the decision of which model best addresses problems of 
corruption and abuse of power in a competitive environment.^^ Recent 
commentators conclude that "[t]he mistaken experiment in California and the 
gaffs of Enron notwithstanding, electricity restructuring is good policy and is one 
to which we should be committed for our energy future"^^ while attributing the 
Enron situation to failures of corporate, not regulatory law.^^ However, such 
recent events occurring with the electric utilities may change the public's 
perception about the advantages of deregulation. The public might well conclude 
that the corporate excesses resulting from competitive greed constitute a market 
failure justifying more public control of utilities. 

1. The Deregulation Failure and a Call for Regulation. — The deregulation 
of the electric utility industry involved unbundling electricity transmission from 
its generation.^^ This transformation from the state ownership or regulatory 
model of a "natural monopoly" to a privatized model of competing industry 

75. Zalcman & Nichols, supra note 73, at 288. See, e.g.. Me. Rev. Stat. Ann. tit. 35-A, § 
3204 (West 2001) (Maine enacted statute to force the divestiture of general assets and generation- 
related activities by investor-owned electric utilities); Mass. Gen. Laws Ann. ch. 40A, § 3 (2003); 
Act of Nov. 25, 1997, ch. 164, 1997 Mass. Acts § 1(f) (Massachusetts in its 1997 amending act for 
zoning powers stated that "the introduction of competition in the electric generation market will 
encourage innovation, efficiency, and improved service from all market participants, and will enable 
reductions in the cost of regulatory oversight."). 

76. Zalcman & Nichols, supra note 73, at 288-89 (discussing restructuring problems such 
as high unregulated generation prices, lack of consumer choice of non-utility power suppliers, and 
fear that environmental benefits of restructuring may not be realized). 

77. Jim Rossi, The Electric Deregulation Fiasco: Looking to Regulatory Federalism to 
Promote a Balance Between Markets and the Provision of Public Goods, 100 MiCH. L. Rev. 1768, 
1768-69 (2002) (observing that California as "the first state to deregulate retail power markets on 
a mass scale, saw repeated months of power interruptions"). 

78. See HiRSH, supra note 5, at 227 (discussing how market failure may justify governmental 
oversight under the public interest theory of regulation which holds that "the proper task of 
economic regulation is to intervene where competitive forces are too weak to defend the public 
interest unaided") (quoting Richard A. Posner, Theories of Economic Regulation, 5 BELL J. OF 
EcoNS. ofMgmt. Scl 155, 335-58 (1974)). 

79. Tomain, supra note 32, at 474. 

80. Rossi, supra note 77, at 1768. 

8 1 . Kearney & Merrill, supra note 28, at 1354-5 (quoting RICHARD J. PffiRCE, jR. & ERNEST 
Gellhorn, Regulated Industries 350 (3d ed. 1994)). 

66 INDIANA LAW REVIEW [Vol. 38:55 

components faced major issues. Pricing must encourage investment in every 
segment of the industry and transmission must allow for the easy movement of 
electricity to consumers.^^ Additionally, electric utilities must deal with the 
"stranded costs"^^ of capital investments originally made with the promise of 
maintaining a regulated monopoly .^"^ "It would breach the regulatory contract for 
the regulator to make unilateral changes in regulation that might prevent a utility 
from recovering the economic costs of investments that it made to discharge its 
regulatory obligations to serve."^^ These so-called stranded costs may result 
when regulated industries are required to provide open access of their facilities 
to competing producers, who have not made the same capital investments to 
support the infrastructure required for distribution. 

Although competition in energy production may have been a welcome 
development, appropriate and continuing investment in the delivery system is 
necessary to assure reliability and availability of electricity.^^ The need for state 
oversight or participation is also critical because of the nature of industry. 
Electricity cannot be stored so the consumer is dependent on the supplier and 
since "the industry depends overwhelmingly on public assets such as rivers, land 
accessibility, and mineral or petroleum resources ... it has far-reaching impact 
on the environment."^^ 

Why has a pioneering state such as California not achieved the proper mix 
of competitive enterprise and state oversight to successfully transition from a 
regulated industry to a market-driven utility company?^^ One expert concluded 

82. Tomain, supra note 32, at 469-70 (discussing how competition requires access to the 
transmission system, but that congestion of the transmission system may result if investments are 
made in the generation segment, but not in transmission capacity). 

83. Steven Ferrey, Exit Strategy: State Legal Discretion to Environmentally Sculpt the 
Deregulating Electric Environment, 26 Harv. Envtl. L. Rev. 109, 142 (2002) (proposing the use 
of exit and entrance fees to recover from electric consumer stranded costs, which are "the 
undepreciated book value of generating facilities not recovered in the price of their sale to new 
owners at the time of restructuring"). 

84. Sidak & Spulber, supra note 35, at 861 (discussing the problem of recovering stranded 
costs when transitioning from a monopoly to competition). 

85. Mat 884. 

86. Tomain, supra note 32, at 470. 

87. Francis N. Botchway, The Role of the State in the Context of Good Governance and 
Electricity Management: Comparative Antecedents and Current Trends, 21 U. PA. J. Int'lEcon. 
L. 781, 784-85 (2000); see Tomain, supra note 32, at 473-74 (concluding that regulatory oversight 
will be required to monitor a restructured electricity market to avoid market power concentrations 
and that restructuring may actually result in more rather than less regulation); see also Timothy P. 
Duane, Regulation's Rationale: Learning from the California Energy Crisis, 19 Yale J. ON REG. 
47 1 , 477 (2002) (noting that the "lack of storage capability increases the likelihood of both volatile 
prices and periodic shortages"). 

88. See Zalcman & Nichols, supra note 73, at 290 (noting that "[u]nexpected price increases 
in California, New York, and elsewhere are creating huge uncertainty about the impact of electric 
industry restructuring on consumer interests"). 


that when state, rather than federal, regulatory oversight is employed, "state 
politics is more likely to lead to dysfunctional markets than national approaches 
to restructuring."^^ Instead, "[t]he law of regulatory federalism — defined broadly 
to include federal preemption doctrine, the dormant commerce clause, and state 
action immunity to antitrust enforcement — should find ways to encourage 
desirable participation and discourage undesirable interest group capture of the 
state political process."^^ These federal doctrines are not within the scope of this 
Article, but can act as major constraints on state eminent domain power.^^ 

One of the most thoughtful articles addressing the California energy failure 
was written by Dr. Timothy P. Duane, while a law student at Boalt Hall. At the 
time, he was also an Associate Professor of Energy and Resources at University 
of California, Berkeley, and had served as a senior policy consultant to the 
Cahfomia Public Utilities Commission from 2000 to 2001. Duane analyzed 
California's experience and offered guidance, based upon this experience, to 
other states involved in efforts to restructure the electricity industry .^^ According 
to Duane, the key features of the California system design that contributed to the 
2000-2001 crisis were: 1) "a market design that required all purchases and sales 
to go through a single 'transparent' market"^^ that would discourage participants 
from monopoly abuse while allowing the benefits of competition but which in 
practice "seriously limited long-term contracts, and . . . was especially subject to 
gaming and market manipulation;"^"^ and 2) an attempt "to recover the so-called 
'stranded costs' of past investments by the investor-owned utilities,"^^ but 
without a provision to allow utilities to recover costs that exceeded an agreed 
upon rate cap and with inherent incentives to avoid long-term contracts in favor 
of less risky purchases through the spot market.^^ 

California's market system design flaws, growing demand, decreased power 
supply, a manipulation of natural gas prices, of physical withholding of energy 
generation, "decreased availability of air quality emission offsets in southern 
Calif omia,"^^ and the Federal Energy Regulatory Commission' s (FERC s) failure 
to "enforce the law and discipline the anti-competitive behavior driving the 

89. Rossi, supra note 77, at 1769-70 (relying on "three recent books on the history of 
regulated industries to address what went wrong in the turn toward deregulation of electric power," 
which include: CHARLES R. Geisst, MONOPOLIES IN AMERICA: EMPIRE Builders and Their 
Enemies from Jay Gould to Bell Gates (2000); Hirsh, supra note 5; PaulW. MacAvoy, The 
Natural Gas Market: Sdcty Years of Regulation and Deregulation (2000)). 

90. Rossi, supra note 77, at 1770. 

91. Saxer, supra note 4. 

92. Duane, 5M/7ra note 87, at 539-40. 

93. Mat 503. 

94. Id. at 499. 

95. M. at 501. 

96. Mat 503. 

97. Mat 515. 

68 INDIANA LAW REVIEW [Vol. 38:55 

[price] increases"^^ are all factors that contributed to the 2000-2001 crisis.^^ 
Unless these conditions are corrected, Duane concluded that this crisis might 
repeat itself in the future. ^^° 

Duane also pointed out that California is not alone in experiencing problems 
with restructuring.^^* He noted that other states such as Pennsylvania, New 
Jersey, Maryland, New York, and Texas also suffered recent price increases, 
physical capacity decreases, and even blackouts.'®^ In June 2000, New York 
experienced a dramatic price increase of 30% in the average wholesale price of 
electricity following New York's efforts to deregulate. *^^ The expectation that 
competition would lead to lower prices drove New York's move to deregulate, 
but policymakers also realized that issues such as stranded costs, environmental 
concerns, and consumer protection would need to be addressed. '^"^ Since 
deregulation efforts began in 1996 the electricity prices in New York have not 
declined. *^^ Despite not meeting the goal of lowering prices, at least one 
commentator observed that it is not necessarily the concept of deregulation that 
is the problem, but rather, perhaps, the design of this restructuring.*®^ Instead of 
full marketplace competition. New York's structure is one of "regulated 
deregulation" and as such may require more time to allow an evolution from 
regulatory control to supervision of a competitive market.*®^ 

There is a strong argument for a return to regulation. "[T]he concerns that 
led to regulation in the first place — monopoly power and the threat of market 
manipulation — are still real issues today." *®^ It is especially a concern for the 
electric industry, which "is too susceptible to abuse to be left free of regulatory 
oversight."*®^ The August 2003 shut down of a major power grid in the 
Northeast, Midwest, and Canada is a stinging reminder of the dependency of 

98. Mat 5 16. 

99. Mat 509-23. 

100. M. at 524. 

101. M. at 494. 

102. Id. 

103. Harry First, Regulated Deregulation: The New York Experience in Electric Utility 
Deregulation, 33 LOY. U. Chi. L.J. 911,912 (2002). 

104. M. at 914-15. 

105. M. at 923. 

106. Id. at 912, 924-30 (noting that New York has not really deregulated electric power 
companies, but has instead replaced it with a different regulatory system — one still under 
government control). 

107. Id. at 931 (warning that "[t]he critical challenge will be to resist efforts to move away 
from marketplace incentives and back towards more regulatory control"); see also Kearney & 
Merrill, supra note 28, at 1325 (noting that recent changes in the natural gas and electric industries 
do not end regulation, but instead transform the previous model of regulation, allowing competition 
through regulation). 

108. Duane, supra note 87, at 535 (quoting Paul Krugman, Enron Goes Overboard, N.Y. 
Times, Aug. 17, 2001, at A19). 

109. Mat 536. 


these systems on centralized equipment and the need to invest in the grid 
infrastructure to keep it in good operation."^ Following the blackout, FERC 
Chairman Pat Wood spoke in favor of continuing regional oversight of the U.S. 
transmission system and stressed the need to ensure adequate infrastructure.^ ^^ 
After this U.S. and Canadian blackout, even governments in Europe and Asia 
were re-evaluating their plans for deregulation in light of the possibility of 
widespread power outages. ^ ^^ 

Another solution to some of the recent restructuring problems is to 
nationalize the electric utilities even though ''we all 'know' that nationalizing 
industry is un-American and that governments can never run industries as cost- 
effectively as private enterprise."^ ^^ The eminent domain approach to 
nationalization may not have received serious consideration in 2001 by 
California's former Governor Gray Davis at the state level during the California 
energy crisis, but municipalities across the nation are now poised to seize utilities 
as a way to stabilize supply, increase reliability, and offer reasonable rates to 
their citizens. ^^"^ 

Municipalities throughout the United States are forming public utility 
districts and attempting to negotiate purchases of privately-owned utility 
companies, with the power of eminent domain supplying a fallback position if 

110. See David Hanners, Transfer of Power, XCEL Wants to Turn over Its Transmission Lines 
to a New Company, but Regulators Worry About Losing Control, ST. PAUL PIONEER PRESS, Aug. 
31,2003, at Dl (discussing concerns about the nation's electric grid following the blackout). 

HI. Rob Thormeyer & Kathy Fraser, Wood Commends Regional Grid Oversight, Says FERC 
Waiting for Congress to Act, INSIDE Energy/WITH FEDERAL LANDS, Aug. 25, 2003, at p. 10. 

112. Chip Cummins et al., A Global Journal Report: U.S. Blackout Prompts Others to 
Examine Power, WALL ST. J., Aug. 18, 2003, at A9. 

113. Duane, supra note 87, at 527-28 (explaining that California's then Governor Davis did 
not treat this solution as a viable option, although "Republican CPUC [California Public Utilities 
Commission] Commissioner Richard Bilas, who was appointed by Governor Pete Wilson and calls 
himself 'a free market economist' (with a Ph.D. in economics), concluded in January 2001 that 
condemnation was necessary when the CPUC was finally forced to raise retail rates"); see also 
Kearney & Merrill, supra note 28, at 1403-04 (suggesting as one of the "three ideal-typical 
trajectories for future evolution" of regulated industries a reversion of the legal system "toward a 
system that more closely approximates the original paradigm (or perhaps even sees state ownership 
of public utilities)"). 

1 14. See Duane, supra note 87, at 537 ("[T]he Governor should have seized the former utility 
power plants (all 'in-state' facilities owned by 'out-of-state' companies) under his emergency 
powers to stop the price gouging and rolling blackouts. If ever the use of 'police power' was 
warranted, this was it."); see also Kevin G. Glade, CP National Corp. v. Public Service 
Commission.- The Jurisdictional Ambiguity Surrounding Municipal Power Systems, 1982 UtahL, 
Rev. 913, 91 5- 16 (1982) (discussing advantages of municipal power including: citizen voice in 
utility management and local control of an essential community service; economic benefits for the 
community; and lower rates based on savings from financing through tax-exempt bonds, 
exemptions from income taxation, and preferred governmental status from federal facilities). 

70 INDIANA LAW REVIEW [Vol. 38:55 

negotiations fail.' ^^ Two distinct efforts are currently under way to municipalize 
Oregon's largest electric utility by a referendum action creating a public utility 
district with condemnation powers and by the City of Portland purchasing the 
privately-owned Portland General Electric company.' '^ These efforts were fueled 
by the Enron issues and both seek to fulfill the same goal of public ownership in 
order to lower rates and provide service reliability.''^ After experiencing 
problems with Montana's largest provider, North Western Energy, the city of 
Great Falls, Montana is also pursuing the idea of publicly owned power in order 
to provide its citizens with a stable supply of electricity at reasonable rates. "^ 
The city of Nashua in New Hampshire is negotiating with Pennichuck Corp., the 
owner of a local water company, to purchase the company and then transfer 
ownership of it to a regional water district created by neighboring New 
Hampshire communities."^ 

A final example of the current trend toward municipalization can be found 
in Massachusetts where cities are voting to support state law changes to clarify 
a town's right to municipalize.'^^ By passing a bill that '^explicitly states that the 
incumbent utility must sell its assets to the municipality, once a fair value has 
been established for the existing infrastructure" cities and towns are hoping to 
own their own electric companies and take over electricity distribution. '^' On the 
other hand, the privately-owned utility companies fear such government 
ownership '^^ and have resisted selling their assets to cities arguing that public 

115. See, e.g., Christina Boyle, State Waits to Grant $7.9 Million Loan, SANTA Fe New 
Mexican, July 9, 2003, at El, available at 2003 WL 57261856 (Eldorado Area Water and 
Sanitation District in New Mexico is attempting to purchase the water utility, but litigation which 
includes a claim by local developers that the district has no legal authority to condemn a public 
utility may make it difficult for the district to either purchase or condemn the utility); Kevin 
Leininger, Need for Vote on Utility is Challenged, A Referendum Isn 't Necessary to Buy Part of 
AquaSource, City Officials Argue, FORT WAYNE NEWS SENTINEL, May 9, 2003, at El (discussing 
attempt by City of Fort Wayne, Indiana, to purchase part of a private utility for water and sewer 
service and noting that city could use its eminent domain power if a settlement on purchase price 
is not reached). 

116. Saskal, 5M/7ra note 2, at 1 . 

117. Id. 

118. Id. (noting that the parent company North Western Corp. filed for Chapter 1 1 bankruptcy 
on September 14, 2003); see also Mike Dennison, Reaction to City Utility Proposal Mixed, Great 
Falls Trie., Aug. 22, 2003, at 5A (discussing Great Falls' attempt to create a city-owned electric 

119. James Vaznis, Water Company Purchase Talks Begin, BOSTON GLOBE, Sept. 1 1, 2003, 
at 5. 

120. Mairgread Gray, Oxford Selectmen Back Electric Plan, WORCESTER TELEGRAM & 
Gazette, Oct. 23, 2003, at B2. 

121. Id 

122. Christopher O'Leary, Picking Enron's Bones Clean: Could Upcoming Bankruptcy 
Auction Shake Up Proposed Purchases'?, INVESTMENT DEALERS DIGEST, Oct. 27, 2003, available 
at 2003 WL 7572518 (noting that Portland General Electric Corp., owned by Enron, is seeking a 


ownership will not provide the promised reliability, adequate customer service, 
and reduced prices. '^^ 

2. Using Eminent Domain to Take Control of Businesses for the Public 
Good. — As far back as 1848, the Supreme Court in West River Bridge Co. v. 
Dix^^"^ allowed the government to use its eminent domain power to acquire an 
ongoing franchise to operate a toll bridge. ^^^ The toll bridge story began in 1795 
when the Vermont state legislature granted to a private company the right to erect 
and operate a bridge. ^^^ However, in 1839 the legislature subjected this privilege 
to a town's eminent domain power and the franchise was terminated by the 
payment of compensation when the toll-bridge was converted to a free public 
highway. ^^^ The Court held that not only did the exercise of power not impair the 
obligation of contract in violation of the United States Constitution, ^^^ but also 
that the franchise grant to operate the toll bridge was property subject to 
condemnation. ^^^ 

One hundred years later in Kimball Laundry Co. v. United States, ^ ^^ the Court 
again allowed the use of eminent domain, this time by the United States, to 
temporarily condemn a private laundry plant to be used by the Army.^^^ As early 
as 1928, a California Law Review article discussed California's acquisition of 

buyer and that "its biggest fear is that it might wind up being state property"). 

1 23 . See, e.g. , Saskal, supra note 2, at 1 (Portland General Electric' s public relations materials 
opposing a public utility district state that "[n]ot only would the reliability of your electrical service 
be in doubt, your prices are likely to go up"); James Vaznis, Rebuffed, City Seeks To Seize 
Waterworks, BOSTON GLOBE, Mar. 30, 2003, at 6 (quoting Pennichuck's president and CEO as 
saying "I do not believe that the city or any political entity will be able to provide the level of 
customer service or meet the extensive capital and operational needs of such a system as 
successfully as Pennichuck has done over the decades"); see also Dennison, supra note 1 18, at 5 A 
(discussing Great Falls' attempt to create a city-owned electric utility and North Western's response 
that it "has no plans to sell any of its electric distribution system in Great Falls and would resist any 
attempt by the city to obtain it through condemnation"). 

124. 47 U.S. 507 (1848). 

125. Mat 536. 

126. Mat 530. 

127. Mat 530-31. 

128. Mat 532-33. 

It, then, being clear that the power in question not being within the purview of the 
restriction imposed by the tenth section of the first article of the Constitution, it remains 
with the States to the fiill extent in which it inheres in every sovereign government, to 
be exercised by them in that degree that shall by them be deemed commensurate with 
public necessity. 
M. at 531. 

129. Id. at 534 ("We are aware of nothing peculiar to a fi-anchise which can class it higher, or 
render it more sacred, than other property."). 

130. 338 U.S. 1 (1949). 

131. M. atl6. 

72 INDIANA LAW REVIEW [Vol. 38:55 

public utility property by municipal eminent domain power/^^ Specifically, the 
article addressed the issue of whether such a condemnation would be valid if the 
private utility also served citizens of a neighboring municipality who would be 
adversely impacted by the action. ^^^ 

A municipality's condemnation of a privately-owned power plant in order to 
achieve public ownership is a valid public use.*^"^ Utilities subject to such 
condemnation have received just compensation, including '"going concern' 
value."^^^ In City of Omaha v. Omaha Water Co., the Court recognized that 
under Nebraska's charter of 1897, the city "was given, among other things, 
'power to appropriate any waterworks system, plant, or property already 
constructed, to supply the city and the inhabitants thereof with water. '"^^^ Over 
the water company's objections, the City of Omaha acquired municipal 
ownership of the water supply system as required by the Nebraska legislature in 

Similarly, in 1963, the City of North Sacramento acquired a private water 
system using its eminent domain power under the California Public Utilities 
Code.^^^ In Citizens Utilities Co. of California, v. Superior Court of Santa Cruz 
County, ^^^ the California Supreme Court supported eminent domain action 
against utilities by holding that a privately-owned utility company may be 
compensated for involuntary and compulsory improvements made before an 

1 32. Thomas H. Breeze, Limitations on the Right of a Municipality in California to Condemn 
a Public Utility, 16 Cal. L. Rev. 105 (1928). 

133. Mat 107-10. 

134. 2 A Sackman, supra note 1, § 7.06[40], at 188 (citing Pub. Serv. Co. of Colo. v. City of 
Loveland, 245 P. 493 (Colo. 1926)). 

135. City of Denver v. Denver Union Water Co., 246 U.S. 178, 184 (1918) (discussing 
valuation of a water company and noting that allowance for "going concern" value was based "upon 
the ground that the company had 'an assembled and established plant doing business and earning 
money'"). See also City of Omaha v. Omaha Water Co., 218 U.S. 180, 202-03 (1910) (stating that 
"[t]he difference between a dead plant and a live one is a real value, and is independent of any 
franchise to go on, or any mere good will as between such a plant and its customers"); Pac. Gas & 
Elec. Co. V. Devlin, 203 P. 1058, 1059, 1063-64 (Cal. 1922) (reviewing the compensation to be 
paid to Pacific Gas and Electric Company by the city of Auburn for acquiring a water plant owned 
and operated by the private company); Marin Mun. Water Dist. v. Marin Water & Power Co., 173 
P. 469, 469 (Cal. 1918) (reviewing proceeding by which municipally-owned water company 
acquired property already devoted to a pubhc use by private company). See also 2 SACKMAN, supra 
note 1, § 5.03[6][h] ("When a business is directly taken over by the public, such as when the plant 
of a public service corporation is acquired by a city or town and is set to be operated under 
municipal control, the plant is valued as a going concern and the good-will, so far as it adds value 
to the franchise and other property, is included in the award of compensation."). 

136. 218 U.S. 180, 199 (1910) (quoting 1897 NEB. LAWS 27, ch. 10). 

137. Id. at 193. 

138. City of N. Sacramento v. Citizens Util. Co., 32 Cal. Rptr. 308, 310 (Ct. App. 1963) 
(citing Cal. Pub. Util. Code §§1401-1421). 

139. 382 P.2d 356 (Cal. 1963). 


eminent domain trial proceeding, but after the date of the condemnation action 
summons. '"^^ 

The state of New York, in a 1986 condemnation statute, legislatively 
encouraged the conversion of privately-owned power companies to public control 
to promote the economic well-being of the Long Island area by reducing power 
rates. ^"^^ In Oregon, the Oregon Supreme Court in Emerald People's Utility 
District v. Pacific Power & Light Co.}^^ limited a "people's utility district's" 
(PUD's) right to obtain special pricing benefits by determining it did not qualify 
under the legislation as a municipality or state. '"^^ However, it did uphold the 
public entity's right to acquire through eminent domain a privately-held 
hydroelectric facility, already producing energy for the public. ^"^ 

Some states have balked at municipal attempts to acquire utilities. ^"^^ The 
Utah Supreme Court, for example, upheld the dismissal of a condemnation action 
by a group of municipalities attempting to acquire an investor-owned power 
system. ^"^^ The court held that under the tJtah eminent domain statute, 
municipalities were allowed to condemn real property interests only and that 
"[t]he taking of an ongoing public utility business is more than the taking of real 
or even tangible personal property and is therefore, . . . not contemplated within" 
the state's eminent domain statute. ^"^^ There is additional controversy over 
whether condemnation power can be used to acquire property already serving a 
public purpose. ^"^^ Nevertheless, the preeminent eminent domain treatise clearly 

140. Mat 365. 

141. 2A Sackman, supra note 1, § 7.06[40] (citing N.Y. PUB. AUTH. LAW § 1020-A). 

142. 729 P.2d 552 (Or. 1986). 

143. Id. at 557 (upholding lower court's determination that "a PUD is not a 'municipality' 
under ORS 543.610 and thus could not receive the benefit of the pricing scheme of ORS 543.610"). 

144. Id. at 556-57. 

145. See, £.g.,CityofPryorCreekv.Pub. Serv.Co.ofOkla.,536P.2d343,346(Okla. 1975) 
(finding eminent domain power not broad enough to allow municipal condemnation of a utility 
already dedicated to public use); Lone Star Gas Co. v. City of Fort Worth, 98 S.W.2d 799, 805 
(Tex. Comm'n App. 1936) (holding that legislature did not intend to allow city to condemn an 
existing utility company). 

146. See Kevin G. Glade, CP National Corp. v. Public Service Commission; The Jurisdictional 
Ambiguity Surrounding Municipal Power Systems, 1982 UTAH L. REV. 913 (1982) (analyzing CP 
Nat'l Corp. v. Pub. Serv. Comm'n, 638 P.2d 519 (Utah 1981)). 

147. CP Nat'l Corp., 638 P.2d at 523 (citing the Interlocal Co-Operation Act, Utah Code 
Ann. § 78-34-1(3) (1953)). 

148. See, e.g.. City of Tacoma v. Taxpayers of Tacoma, 357 U.S. 320, 332 (1958) (citing a 
state court holding that "though the State Legislature has given the City the right to construct and 
operate facilities for the production and distribution of electric power and a general power of 
condemnation for those purposes, 'the legislature has (not) expressly authorized a municipal 
corporation to condemn state-owned land previously dedicated to a public use'") (quoting City of 
Tacoma v. Taxpayers of Tacoma, 307 P.2d 567, 577 (Wash. 1957)). But see Emerald People's Util. 
Dist. V. Pac. Power & Light Co., 729 P.2d 552, 556 (Or. 1986) (disagreeing with lower court's 
holding that public utility districts did not have "authority to condemn a private utility's 

74 INDIANA LAW REVIEW [Vol. 38:55 

states that so long as this condemnation power is expressly stated to apply to 
existing public uses, it may be used with respect to a property already dedicated 
to a public use.^"*^ 

Precedent for the use of eminent domain power to acquire a going concern 
is not limited to situations involving privately-owned public utilities. *^^ '*[I]nto 
the Nineteenth Century, because of local droughts, the importance of a specific 
local industry, or other needs, courts gave legislatures wide discretion to use 
eminent domain to promote a wide variety of economic projects that would 
stimulate commerce and the general welfare."^^^ More recently, one of the most 
notable cases where eminent domain was used to acquire an ongoing enterprise 
involved the move of the Raiders football team from Oakland, California, to Los 
Angeles in the early 1980s.^^^ In response to the City of Oakland's attempted 
acquisition of the team to keep the franchise from moving to Los Angeles, ^^^ the 
California Supreme Court concluded that acquiring and operating a sports 
franchise could be an "appropriate municipal function." ^^"^ Therefore, the City 
would have the authority under California's eminent domain statutes to acquire 

hydroelectric facility already devoted to public use"). 

149. lA Sackman, supra note 1, § 2.2. 

150. For other eminent domain decisions involving public utilities see for example: City of 
Stilwellv. Ozarks Rural Electric Cooperative Corp., 19¥ 3d 1038, 1046(10thCir. 1996) (deciding 
the municipality's attempt to use eminent domain to obtain a rural electric co-op is not preempted 
by the federal legislation, the Rural Electrification Act); City of Morgan City v. South Louisiana 
Electric Cooperative Ass % 3 1 F.3d 319, 324 (5th Cir. 1994) (holding "that the proposed state-law 
condemnation would frustrate the purpose" of the REA and therefore the municipalities' 
condemnation action is "preempted under the Supremacy Clause"); City of Madison v. Bear Creek 
Water Ass'n, 816 F.2d 1057, 1060-61 (5th Cir. 1987) (rejecting the municipality's condemnation 
of the water association financed by federal Farmers Home Administration (FmHA) loans as 
proscribed by congressional mandate forbidding such encroachment by local governments while 
an entity is indebted to FmHA); Public Utility District No. 1 of Franklin County v. Big Bend 
Electric Cooperative, Inc., 618 F.2d 601, 603 (9th Cir. 1980) (holding that the "[sjtate municipal 
public utility [can] not condemn property owned by a federally subsidized public utility where the 
condemnation would interfere with the federal purpose of the Rural Electrification Act"); Public 
Utility District No. 1 ofPend Oreille County v. United States, All F.2d 200, 202 (9th Cir. 1969) 
(finding the state's use of eminent domain frustrated the purpose of the federal Rural Electrification 
Act by stating the "state law so written that a state-favored utility can by its unilateral action 
interfere with the federal purpose cannot stand under the supremacy clause of the constitution of 
the United States"). 

151. 2 A Sackman, supra note 1, § 7. 07 [3]. 

152. City of Oakland v. Oakland Raiders, 646 P.2d 835 (Cal. 1982); see also David Kravets, 
Raiders Lead League in Lawsuits, DAILY NEWS (Los Angeles), Apr. 24, 2003, at 7 (noting that 
"[t]he Oakland Raiders led the NFL in offense last year and are No.l in the league in litigation"). 

153. Kravets, supra note 152, at 7 (The team agreed to move back to Oakland in 1995 "after 
its Los Angeles Memorial Coliseum Commission contract expired and after several scuttled deals 
to move elsewhere.") 

154. Oakland Raiders, 6A6V. Id dX%A3>. 


"any property necessary to accomplish that use."^^^ The Court noted that 
although "some statutes do explicitly prohibit the acquisition of an ongoing 
enterprise, there is no provision in present law which would preclude the taking 
contemplated by [sic] City."^^^ 

In addition to the well-reported ^^^ but unsuccessful ^^^ attempt by the City of 
Oakland to use eminent domain to keep the Raiders in Oakland, other cities have 
tried to keep sports franchises from relocating by using eminent domain or other 
tactics.*^^ In Mayor of Baltimore v. Baltimore Football Club, Inc.,^^^ the court 
recognized the Baltimore Colts NFL franchise as "intangible property [that] is 
properly the subject of condemnation proceedings." ^^^ However, deciding the 
case based on a jurisdictional issue, the court held that under Maryland law, 
Baltimore City did not have the power to condemn the team once the Colts had 
left the state. ^^^ 

Various government entities have attempted to use the eminent domain 
power for other public goals such as providing public housing^^^ or preventing 

155. Id. 

156. Id. 

157. Edward P. Lazarus, The Commerce Clause Limitation on the Power to Condemn a 
Relocation, 96 YALE L.J. 1343, 1345 (1987) (discussing local authorities' use of eminent domain, 
including the City of Oakland, to condemn businesses contemplating a relocation); Thomas W. 
Merrill, The Economics of Public Use, 72 CornellL. Rev. 61, 62 (1986) (noting that the Oakland 
Raiders case "sustained an even more unconventional exercise of eminent domain"); Charles Gray, 
Comment, Keeping the Home Team at Home, 74 Cal. L. Rev. 1329 (1986); Katherine C. Leone, 
Note, No Team, No Peace: Franchise Free Agency in the National Football League, 97 COLUM. 
L. Rev. 473, 506 (1997) (discussing Oakland's use of eminent domain to take title to the football 
team); Ellen Z. Mufson, Note, Jurisdictional Limitations on Intangible Property In Eminent 
Domain: Focus on the Indianapolis Colts, 60 IND. L.J. 389, 393 (1985) (reporting that in the 
Oakland Raiders case "the California Supreme Court did determine that, subject to requirements 
of public use, a sports franchise, as intangible property, is condemnable") (internal citation 
omitted); Lisa J. Tobin-Rubio, Casenote, Eminent Domain and the Commerce Clause Defense: City 
of Oakland v. Oakland Raiders, 41 U. Miami L. Rev. 1 185 (1987). 

158. City of Oakland v. Oakland Raiders, 220 Cal. Rptr. 153, 158 (Ct. App. 1985) (holding 
that "burden that would be imposed on interstate commerce outweighs the local interest in 
exercising statutory eminent domain authority over the Raiders franchise"). 

159. See, e.g.. Mayor of Bah. v. Bait. Football Club, Inc., 624 F. Supp. 278, 289 (D. Md. 
1986) (holding city was unable to condemn professional football franchise). See also Gray, supra 
note 157; Leone, supra note 157. 

160. 624 F. Supp. 278 (D. Md. 1985). 

161. Mat 282. 

162. Id. at 287 (resolving the dispute in favor of the football franchise as to the timing of the 
condemnation action and the location of the intangible property outside Maryland's jurisdiction at 
the time the power was exercised by the city). 

163. 2 A Sackman, supra note 1 , § 7.06[25] (explaining that eminent domain may be used to 
provide housing to eliminate slums, provide low-rent or senior citizen housing, emergency housing 
for war or veterans, and that in some cases "[cjourts have even upheld the power of the United 

76 INDIANA LAW REVIEW [Vol. 38:55 

local industrial plants from closing or relocating.'^"* Legal commentators have 
proposed that eminent domain be used to purchase *'avigation easements" over 
land surrounding airports in order to resolve the issue of noise sensitivity when 
residential developments are located within the "noise footprint" of a local 
airport. '^^ It has even been suggested that eminent domain power be used for 
acquiring cultural property from private owners to be returned to another nation 
making a claim for cultural repatriation.'^^ 

Finally, with the potential for terrorism and biochemical warfare in this 
country, municipalities may need to consider using eminent domain to acquire 
government ownership of sensitive uses such as the water or power supply. The 
United States federal government enacted the Pubhc Health Security and 
Bioterrorism Preparedness and Response Act of 2002 to protect the public from 
potential terrorism. '^^ Among other requirements, this legislation requires water 
districts to assess the vulnerability of water treatment systems and reservoirs to 
terrorist activity. '^^ In response to this act, some local water districts have taken 
serious steps to protect public water supplies from access by spending millions 
of dollars on fencing and security systems. '^^ 

States to take the title of existing mortgages ... so long as there is statutory authorization and just 
compensation is paid"). 

164. SeelAid. § 7.06[29] (discussing "Prevention ofPlant Facility Closings or Relocations"); 
8 A Patrick J. Rohan & Melvin A. Reskin, Nichols on Eminent Domain, § 22.02 (3d ed. 2004) 
("Expansion of the 'Public Use' Doctrine in Eminent Domain to Prevent Plant Closings or 
Relocations"); see also Michael H. Abbey, Note, State Plant Closing Legislation: A Modem 
Justification For the Use of the Dormant Commerce Clause As a Bulwark of National Free Trade, 
75 Va. L. Rev. 845 (1989); Lazarus, supra note 157; Kary L. Moss, The Privatizing of Public 
Wealth, 23 FoRDHAM Urb. L.J. 101, 138-39 (1995) (noting that if accompany refuses to repay 
subsidies granted by the city as an incentive to prevent relocation, "it could be subject to takeover 
proceedings using the theory of eminent domain"); Schultz & Jann, supra note 6, at 387-410. 

165. See Paul Stephen Dempsey, Local Airport Regulation: The Constitutional Tension 
Between Police Power, Preemption & Takings, 1 1 Penn St. Envtl. L. Rev. 1 , 4 1 -42 (2002) (citing 
J. Scott Hamilton, Allocation of Airspace as a Scarce National Resource, 22 Transp. L.J. 25 1 , 266 
(1994)); Scott Hamilton, Planning for Noise Compatibility, in AIRPORT REGULATION, LAW, & 
Public Poucy 85, 85-86 (Richard M. Hardaway ed., 1991); Luis G. Zambrano, Comment, 
Balancing the Rights of Landowners with the Needs of Airports: The Continuing Battle Over 
Noise, 66 J. AlR L. & COM. 445, 469 (2000)). 

166. Sean R. Odendahl, Note, Who Owns the Past in U.S. Museums? An Economic Analysis 
of Cultural Patrimony Ownership, 2001 U. ILL. L. REV. 475, 498 (2001) (suggesting that "the U.S. 
or state government can exercise its power of eminent domain and seize the cultural patrimony" to 
return an artifact to another nation based on a valid claim for repatriation). 

167. Public Health Security and Bioterrorism Preparedness and Response Act of 2002, Pub. 
L. No. 107-188, 116 Stat. 594 (codified as amended in scattered sections of 42 U.S.C). 

168. 42 U.S.C. § 300i-2 (Supp. I 2002). 

169. See, e.g. , Northern Kentucky Citizens for Open Reservoirs, Save the Reservoir: Petition 
of Northern Kentucky Citizens for Open Reservoirs to the Northern Kentucky Water Service 
District (n.d.) (requesting that "means other than fencing and restrictions to access" be used to 


Although these extreme actions may not be warranted, ^^° municipahties 
might justifiably be concerned about the security of privatized utility companies, 
which may be foreign-owned. Municipalities at some point may be compelled 
to use their eminent domain power to acquire key public utilities, such as a 
privately-held water company, if the utility is owned by a foreign company based 
in a country unfriendly to the United States. As the trend toward more 
international business connections develops, utilities such as electricity or water 
may be considered a national security concern requiring national policy guidance 
not only for assessment of risk,^ ''^ but for control of ownership. ^^^ 

If the above scenarios make sense as valid uses of government power, why 
then could not a state university system use its eminent domain power to acquire 
a privately-owned university if doing so would increase the educational 
opportunities available to its residents?^^^ Or why not allow the state to use its 
eminent domain power to acquire a car manufacturer to produce electric cars to 
assist the state in meeting its emission standards? Clearly, unless we are willing 
to unleash government power to control private enterprise for the public good, 
there must be conscious limits placed on the eminent domain power to prevent 
such overreaching. Although limiting the definition of what constitutes a public 
use may serve to restrain some government action, this is not a sufficient restraint 
since many of the above uses, such as supplying water, electricity, housing, or 
education, are unquestionably in the public good. Part 11 addresses several 
theories under which the government' s power to acquire private enterprise for the 
public good can be restrained. 

provide security in order to balance the "needs of the citizens to have access to an aesthetically 
pleasing green space and to preserve the quality of life and the property values in that part of the 
community, and the community as a whole") (on file with author). 

170. See, e.g.. Brock N. Meeks, U.S. Water Supply Vulnerable: Risks Were Known, But 
Ignored, Before Sept. 11 (Jan. 14, 2002), MSNBC, at 
("Experts agree that introducing a toxin into the raw water reservoir would have little impact owing 
to the dilution effect several million gallons of water would have on any biohazard."). 

171. See Public Health Security and Bioterrorism Preparedness and Response Act of 2002, 
Pub. L. No. 107-188, 116 Stat. 594 (codified as amended in scattered sections of 42 U.S.C). 

172. Botchway, supra note 87, at 826 (noting that "[a]n increasing emphasis on the 
international dimensions of the business is one of the new characteristics of the electricity 

173. This thought could not help but cross my mind as I sat in a recent Land Use Conference 
at Chapman School of Law and listened to Professor Tony Arnold joke about how his alma mater, 
Stanford, was referred to by one out-of-town visitor as the "University of California at Stanford." 
However, the idea did not seem quite so far-fetched when my research revealed that California 
Education Code section 92040 provides that "[t]he Regents of the University of California may 
acquire by eminent domain any property necessary to carry out any of the powers or functions of 
the University of California." Cal. Educ. CODE § 92040 (West 2002). 

78 INDIANA LAW REVIEW [Vol. 38:55 

n. The Eminent Domain Power & Its Constraints 

The eminent domain power in the United States has its roots in EngHsh law 
and although we are not sure of its precise origins, some argue that the concept 
dates back to the Romans. '^"^ The Fifth Amendment to the United States 
Constitution makes this power available to the federal government and to the 
states through the Fourteenth Amendment and in turn "as an inherent attribute of 
sovereignty, subject to limitations found in each state's constitution or statutory 
law."^^^ According to Richard Epstein, this power demonstrates the "social 
limitations upon the private rights of ownership. . . . [by authorizing] at the 
constitutional level the forced exchanges found in the laws of necessity and 
nuisance."*^^ However, if the sovereign controls these social limitations, the 
exercise of this power must be restrained by some public purpose requirement 
that finds its sources in either societal necessity or nuisance control. '^^ Part n of 
this Article examines the various ways by which the government's eminent 
domain power is currently constrained or can be controlled in the future. 

A. The Fifth Amendment 

The Fifth Amendment of the U.S. Constitution provides in part, "nor shall 
private property be taken for public use, without just compensation. "^^^ Although 
it is one of the most important constitutional protections of property rights, some 
feel that the protection of the Fifth Amendment has been greatly weakened by a 
"relaxed public use standard."*^^ One of the major constraints on the eminent 
domain power is that the government may only use its power to condemn 

1 74. Matthew P. Harrington, "Public Use " and the Original Understanding of the So-Called 
"Takings" Clause, 53 HASTINGS LJ. 1245, 1249 (2002). 

175. 2A Sackman, supra note 1, § 7.01 [1] (internal citation omitted). 

176. Richard A. Epstein, Takings: Private Property and the Power of Eminent Domain 
ix (1985). See also Timothy Sandefiir, A Natural Rights Perspective On Eminent Domain In 
California: A Rationale For Meaningful Judicial Scrutiny of "Public Use, " 32 Sw. U. L. REV. 569, 
584-85 (2003) (explaining that a natural rights view considers eminent domain to be "a collective 
state of necessity" as compared to "the case of an individual emergency" which would be called "a 
private necessity"). 

177. See Harrington, supra note 174, at 1252 (explaining that "courts and commentators have 
attempted to counter the obvious harshness" of allowing the sovereign's superior right to a citizen's 
property by "imposing a 'public purpose' limitation on the use of eminent domain"); see also City 
of Oakland v. Oakland Raiders, 646 P.2d 835, 846 (Cal. 1982) (Bird, C.J., concurring and 
dissenting) ("The power of eminent domain claimed by the City in this case is not only novel but 
virtually without limit."). 

178. U.S. Const, amend. V. 

179. Donald J. Kochan, "Public Use" and the Independent Judiciary: Condemnation in an 
Interest-Group Perspective, 3 Tex. Rev. L. & POL. 49, 51-52 (1998) (observing that "the 
beneficiaries of a relaxed public use standard are often powerful and wealthy special interests 
capable of convincing the state to use its power to displace residents from their homes and 


property that will be used to further a public purpose. ^^^ However, even with the 
"public purpose" limitation on the eminent domain power under the Fifth 
Amendment/^* the government in its judicial or legislative capacity determines 
what constitutes a public purpose and has interpreted this requirement quite 
broadly ^^^ to be "coterminous with the scope of a sovereign's police powers."^^^ 

The initial determination of what constitutes a public purpose is a legislative 
decision. However, the courts have the final authority to decide the extent of 
control over private property based on whether the legislative determination of 
public use is permitted. This final authority is exercised with great deference to 
the legislature, resulting in extensive legislative power to condemn private 
property for various purposes. ^^"^ Consistent with the U.S. Supreme Court's 
broad interpretation of what constitutes a public use in Berman v. Parker^^^ and 
Hawaii Housing Authority v. Midkiff,^^^ recent state court decisions have allowed 
the use of eminent domain "to support many types of urban renewal activities, 
including acquisition of private businesses ... as valid public uses."^^^ 
Generally, the courts will not interfere with the government's determination of 
public use and "the Fifth Amendment's public use clause provides little or no 
protection to property owners. 

Many have expressed concern that this broad interpretation of public use 
allows the government to abuse its power to take property without an owner's 

180. Harrington, supra note 174, at 1255 (quoting Senator Tracy's concurring opinion in 
Bloodgood V. Mohawk & Hudson R.R. Co., 18 Wend. 9, 56-62 (N.Y. 1837) that "the use of the 
phrase 'public use' in the Fifth Amendment was 'designed to be as well a limitation as a definition 
of the right of the [federal government] as sovereign ... to interfere with the otherwise absolute 
right of the citizen to the undisturbed possession and enjoyment of his own property'"). But see 
id. at 1300 (concluding that "the Fifth Amendment merely declares that the expropriations require 
compensation while other takings, such as tax levies or forfeitures, do not"). 

181. See id. at 1252 (noting that "the so-called 'public use' requirement is really a rather late 
innovation in the law of eminent domain and is found mainly in nineteenth and twentieth century 
American cases"). 

182. See, e.g.. Haw. Hous. Auth. v. Midkiff, 467 U.S. 229 (1984); Berman v. Parker, 348 U.S. 
26 (1954). 

183. 2A Sackman, supra note 1, § 7.01[1] (quoting Hawaii Hous. Auth., 467 U.S. at 240). 

184. 2A id. § 7.03[1 l][b]; see also Kochan, supra note 179, at 52 (expressing concern that 
special interest groups will not be constrained by constitutional doctrine because "[t]he judiciary 
has failed to take a guardianship role in relation to the Public Use Clause [and] [a] public use is 
now whatever the legislature says is public"); Merrill, supra note 157, at 63 (observing that "cases 
suggest that modem courts are exceedingly deferential to legislative definitions of a permissible 
public use"); Mufson, supra note 157, at 389 (noting that "[t]he Supreme Court has effectively 
eliminated public use as a check against condemnation by directing the judiciary to defer to the 
legislature on this issue"). 

185. 348 U.S. 26 (1954). 

186. 467 U.S. 229(1984). 

187. 8A Rohan & Reskin, supra note 164, § 22.02[3][c]. 

188. Sandefur, 5M/7ra note 176, at 595. 

80 INDIANA LAW REVIEW [Vol. 38:55 

consent and may "benefit the politically powerful at the expense of the 
underprivileged." ^^^ However, the eminent domain acquisition of privately- 
owned utilities for purposes of municipalization can easily be considered a valid 
public use, even without this broad interpretation.'^^ Condemning private 
property to benefit other private interests, such as with urban redevelopment, 
requires broad interpretation, while condemning private property so that the 
government may take it over and operate it keeps the property in the hands of the 
government for public use. Thus, restricting the public use definition would 
seemingly not have much impact on how eminent domain power may be used to 
acquire privately-owned utilities or businesses to convert them to municipal 
ownership and operation. Even if the government's power to use eminent 
domain to transfer condemned property to private developers is restricted, some 
argue that local governments might decide to own the shopping or office centers 
rather than turn the condemned property over to private developers.'^' 

Instead of using the public use definition to fight condemnation actions, 
property owners must look to other constitutional limitations to curb the 
government's eminent domain power. Within the Fifth Amendment itself, the 
definition of property can operate as a restraint on government power, depending 
upon the jurisdictional approach. '^^ Although some state statutory provisions 
require that the property subject to eminent domain be real property, '^^ many 
states interpret property broadly to include all types of both real and personal 
interests.'^'' Eminent domain power may also be limited by requiring the 
government to show necessity, either based upon a statutory requirement or by 
court interpretation of what constitutes a valid public use.'^^ Finally, some 

189. Mat 675. 

190. See Cottonwood Christian Ctr. v. Cypress Redev. Agency, 218 F. Supp. 2d 1203, 1231 
(CD. Cal. 2002) ("Public utility facilities such as power plants [and] water treatment facilities also 
have the traditional public use character, as does the construction of government buildings."). 

191. See Sam Staley, Wrecking Property Rights, REASON, Feb. 1, 2003, at 32 (citing Jeff 
Finkle, president of the International Economic Development Council). 

192. See infra Part II.B.3 (discussion of state issues). 

193. See infra Part II.B.5 (discussing the definition of property); see, e.g. , IND. CODE ANN. § 
32-24-4- 1(a) (West 2002) (authorized entity "may take, acquire, condemn, and appropriate land, 
real estate, or any interest in the /^[^(i^^rrea/^^rar^") (emphasis added); S.C. CODE Ann. § 28-2-60 
(Law Co-op 2002) (eminent domain power appears to be limited to real property based on statutory 
language that "condemnor may commence an action under this chapter for the acquisition of an 
interest in any real property necessary for any public purpose"). 

194. See, e.g., Cal. Civ. Proc. Code § 1235.170 (West 2003) (stating "'property' includes 
real and personal property and any interest therein"); City of Oakland v. Oakland Raiders, 646 P. 2d 
835, 840 (Cal. 1982) (stating "we conclude that our eminent domain law authorizes the taking of 
intangible property"). 

195. ^^em/ra Part II.B.4 (discussing necessity); 5ee, ^.g.,Steamsv. CityofBarre, 50A. 1086, 
1092 (Vt. 1901) ("The sovereign remains the judge of the necessity, but ultimately determines it 
through the judicial branch of its government, instead of the legislative branch."); Oakland Raiders, 
646 P.2d at 846 (Bird, C.J., concurring and dissenting). 


jurisdictions limit the government's condemnation authority where a privately- 
held property interest is already being devoted to a public purpose, such as is the 
case with many public utility functions. '^^ 

B. State Statutory and Constitutional Limitations 

The eminent domain power is available to the federal government through 
the Fifth Amendment and to the states "as an inherent attribute of sovereignty, 
subject to limitations found in each state's constitution or statutory law."*^^ 
Since the eminent domain power may be defined in either statutory or 
constitutional provisions, or both, these sources should be explored before state 
or municipal power is exercised to condemn privately-owned enterprises. "To 
establish that a state or municipality's eminent domain power may be used" for 
the proposed purpose, it must first be established that the "particular state's 
constitutional or statutory eminent domain provisions . . . permit broad legislative 
discretion within which eminent domain may be employed for a wide variety of 
'public uses.'"^^^ However, some "jurisdictions have interpreted their eminent 
domain authority as an inherent attribute of (state) sovereignty, subject only to 
constitutional limitation, and thus not requiring constitutional specif ication."^^^ 

196. See infra Part II.B.6 (discussing the prior public use doctrine); see, e.g.,'NEV. REV. STAT. 
§ 37.040(3) (2003) (before a judgment of condemnation is entered in Nevada, the court must first 
find that "[i]f the property is already appropriated to some public use, the public use to which it is 
to be appUed is a more necessary public use"). 

197. 2A Sackman, supra note 1, § 7.01 [1] (internal citation omitted). 

198. 8A Rohan &RESKiN,5Mpra note 164, § 22.01 [1] (acknowledging that the use of eminent 
domain to prevent plant closings or the relocation of an existing sports franchise is a valid public 

199. 8A id. § 22.02[3][c]; see also Gohld Realty Co. v. Hartford, 104 A.2d 365, 368 (Conn. 
1954) ("It is fundamental that, as an attribute of sovereignty, the state government or any properly 
designated agency thereof may take private property under its power of eminent domain if the 
taking is for a public use and if just compensation is paid therefor [sic]."); Dep't of Pub. Works & 
Bldgs. V. Kirkendall, 1 12 N.E.2d 611, 613 (111. 1953) ("The power and right of eminent domain is 
inherent in the sovereign State, existing independently of written constitutions or statutory laws 
thereof, regulated by appropriate legislation, limited only by the constitutional provision for 
compensation, and extending to every kind of property.") (citing South Park Comm'rs v. 
Montgomery Ward & Co., 93 N.E. 910 (111. 1911); Litchfield & Madison Ry. Co. v. Alton & So. 
R.R. Co., 137 N.E. 248 (111. 1922)); Riden v. Philadelphia, B. & W.R.R., 35 A.2d 99, 100 (Md. 
1943) ("It is a fundamental principle of constitutional law that the power of eminent domain is a 
prerogative of sovereignty and does not require the sanction of the Constitution for its existence in 
the State.") (citing Moale v. City of Bait., 5 Md. 314 (Ct. App. 1854); United States v. Jones, 109 
U.S. 513 (1883); 29 C.J.S., Eminent Domain, § 2); Town of Morganton v. Hutton & Bourbonnais 
Co., 112 S.E.2d 111, 113 (N.C. 1960) ("The power of eminent domain, that is, the right to take 
private property for public use, is inherent in sovereignty. Our Constitution, art. I, sec. 17, requires 
payment of fair compensation for the property so taken. This is the only limitation imposed on 
sovereignty with respect to taking."). But see Harwell v. Ga. Power Co., 267 S.E.2d 769, 774 (Ga. 

82 INDIANA LAW REVIEW [Vol. 38:55 

Therefore, eminent domain power can be used to acquire a private business for 
a public use unless such a use has been expressly precluded.^^^ The remainder 
of this section will examine state and municipal constitutional and statutory 
authority to acquire an ongoing business enterprise by condemnation. 

1. Delegation of Power. — As is done with state police power to regulate for 
the health, safety, welfare, and morals of its citizens, a state may delegate its 
eminent domain power to local governmental entities. This delegation is 
accomplished through express legislation granting power to municipalities and 
public services corporations, such as privately-owned utility companies which 
provide services or products to the community .^^^ For example, legislation in 
Delaware declares that municipal operation of electric utility systems is in the 
public interest and that such municipal ownership will promote the welfare of 
state residents.^^^ 

In addition to allowing government condemnation, state statutory provisions 
may authorize property condemnation by a privately-owned public utility to serve 
"a specific provable public need,"^^^ such as erecting an electric power line to 
supply electricity to a community.^^"^ A prime example of delegating this 
authority to a public service corporation is the eminent domain power given to 
the railroads. Eminent domain power was delegated to allow the corporate 
railroads to obtain rail beds for the establishment of a railroad.^^^ Thus private 
companies may possess eminent domain power through legislative delegation to 
condemn private property for a use that benefits the public. 

State constitutions may also specifically authorize delegation of the eminent 
domain power. In some states, the state constitution will "authorize the taking 
of property for purposes not ordinarily considered public. "^^^ For example, 
Michigan's constitution provides that "[t]he Regents of the University of 

Ct. App. 1980), ajfd, 269 S.E.2d 464 (Ga. 1984) ("The power of eminent domain is inherent in the 
sovereign state, but lies dormant until granted by act of the legislature.")- 

200. 8 A Rohan & Reskin, supra note 164, § 22.02[3]. See also Hendershott v. Rogers, 21 1 
N.W. 905, 905 (Mich. 1927) ("The power of eminent domain is inherent in sovereignty. It is in the 
state without recognition in the Constitution, but its exercise is subject to any restrictions or 
limitations found therein.") (citing Loomis v. Hartz, 131 N.W. 85 (Mich. 1911)). 

201. 2A Sackman, supra note 1, § 7.01[1]. 

202. Del. Code Ann. tit. 22, § 1301 (2002). 

203. 2A Sackman, supra note 1, § 7.04[l][b] (discussing the parameters for condemnation 
by a public service corporation). 

204. 2A id. § 7.05[4][a]. See, e.g., MiCH. COMP. LAWS § 486.254 (West 2002) (Michigan 
gives corporations involved in the gas and electric business as a public utility "the right to condemn 
private property"); Wis. Stat. § 66.0825(6) (2002) ("The general powers of an electric company 
include the power to . . . [e]xercise the powers of eminent domain granted to public utility 
corporations under ch. 32."). 

205. 2 A Sackman, supra note 1, § 7.05 [3]. 

206. 2 A id. § 7.03 [ 10] [c] (listing several state constitutional provisions specifically authorizing 
condemnation for things such as diverting "the unappropriated water of any natural stream to 
beneficial uses"). 


Michigan shall have the power to take private property for the use of the 
university, in the manner prescribed by law."^^^ Although this provision was 
probably intended to allow the university to acquire real property for campus 
development, an attempt by the Regents to condemn an ongoing private 
enterprise — for example, a privately-owned campus food service operation — 
might test the extent of this power.^^^ 

The state legislature may determine that the eminent domain power should 
be used to acquire an ongoing business in order to serve the public good. 
Explicit statutory authorization for use of such power encourages and facilitates 
the condemnation process. For example, in the Baltimore Colts case mentioned 
above,^^^ the Maryland state legislature enacted an emergency bill to authorize 
Baltimore City to condemn the Colts, a professional football franchise, to keep 
it from relocating.^ ^° Although this legislation authorized the city to use eminent 
domain over a sports franchise, Baltimore's attempt to exercise this power was 
procedurally defeated. A federal court determined that Baltimore did not have 
the jurisdiction to use this power since the franchise relocated outside the city 
limits prior to the city's fiHng of the condemnation action.^^^ 

2. Home Rule Cities. — The home rule concept was created to recognize local 
government autonomy and came into being in 1875 when St. Louis, Missouri, 
became the first city to receive home rule power based on an amendment to the 
Missouri Constitution.^ ^^ This amendment allowed the city to establish its own 
government document or charter and define its own powers.^^^ Professor David 
Barron, in discussing the historical background of the different approaches to 
home rule and municipal reform, points out that "[s]ocial home rulers also sought 
to implement a program of municipalization to free cities from their long 
dependence upon private businessmen for services" such as the provision of gas 
and electricity and even streetcars, bathhouses, and newspapers. ^^"^ This 
particular view of home rule argued for giving cities local control over taxing 
rather than limiting their tax authority in order to allow them to finance projects 
such as municipal utilities.^^^ 

Professor Barron explained that the social city home rulers "advanced their 
general view that the city was a vanguard site for social interdependence in 

207. 2A id. § 7. 03 [ 10] [c] (quoting MiCH. CONST, art. XIII, § 4). 

208. 8 A Rohan & Reskin, supra note 164, § 22.02[3][c] ("Unless explicitly expressed, state 
eminent [sic] authority does not preclude the acquisition of a private business, even in cases to 
prevent their closing or relocation.") (internal citation omitted). 

209. See supra notes 157-60 and accompanying text. 

210. Mayor of Bait. v. Bait. Football Club Inc., 624 F. Supp. 278, 280-81 (D. Md. 1986) 
(noting that the condemnation power was also authorized by an emergency ordinance enacted by 
the Mayor and City Council of Baltimore). 

211. M. at 284. 

212. David J. Barron, Reclaiming Home Rule, 1 16 Harv. L. Rev. 2255, 2289-90 (2003). 

213. /^. at 2290. 

214. Mat 2315-16. 

215. W. at 2313. 

84 INDIANA LAW REVIEW [Vol. 38:55 

support of the quite specific view that cities should have the right to pursue 
municipal ownership."^ '^ This view encouraged states to allow an expanded 
local condemnation power in order to enable cities to achieve city planning 
through actual purchase of privately-held land, not just by exercise of zoning 
power.^'^ Observing that "[n]o single home rule vision won a clear victory"^'^ 
in the historical development of the home rule concept, Professor Barron 
recognizes that these visions are traceable in some form in our modem local 
government model.^'^ 

Today, under a majority of state constitutional schemes, home rule cities are 
traditionally given the power to legislate matters of local concern without the 
need for specific state legislative authority or delegation. ^^° So long as the home 
rule city is legislating a local concern, any conflicting state statute will be 
superseded by the home rule provision.^^^ Determining what constitutes a "local 
concern," however, may be troublesome when a municipalization effort affects 
surrounding communities or even a state or federal interest such as a power 
distribution system within an electrical grid.^^^ Home rule cities, not otherwise 
constrained by state legislative power, may be thwarted in their efforts to 
municipalize through condemnation by a strict construction of the phrase "local 
concern." Home rule also provides that when a municipality is dealing with a 
mixed local and state concern, any conflict between a state and local provision 
will be resolved in favor of the state. ^.^^ 

A home rule city's attempt to municipalize an ongoing enterprise through 
eminent domain will be restrained by state legislation if the targeted enterprise 
is determined to involve a matter of mixed local and state concem^^"^ or if it is not 
sufficiently "local" in nature, based on a strict construction of what constitutes 
a "local" concern. Thus, if a state wishes to limit the local authority of home rule 
cities to municipalize, this may be achieved judicially through the interpretation 
of what constitutes a "local" concern. Otherwise, a state constitutional 
amendment will be required to override local authority to prevent local 
condemnation actions authorized under a home rule grant. Such a constitutional 
amendment might also be necessary if a state wishes to promote municipalization 

216. Id. at 2317 (citing Delos F. Wilcox, Fundamental Planks in a Public Utility Program, 
57 Annals Am. Acad. Pol. & Soc. So. 8, 18 (1915)). 

217. /cf. at 2318-19. 

218. Mat 2322. 

219. Id. 

220. DANffiL R. Mandelker, Land Use Law § 4.24 (5th ed. 2003). 

221. See, e.g., U.S. WEST Communications, Inc. v. City of Longmont, 948 P.2d 509, 515 
(Colo. 1997). 

222. See Barron, supra note 212, at 2350-52 (discussing how urban sprawl may not be 
considered a purely "local" concern and thus home rule grants may actually be construed to limit 
local efforts to combat this sprawl). 

223. U.S. WEST Communications, Inc., 948 P. 2d at 515. 

224. See /J. at 5 1 5- 1 8 (discussing how to determine whether the issue regarding relocation of 
utility facilities was a matter of mixed local and state concern). 


efforts through the use of eminent domain by home rule cities since conflicting 
state legislation would not override "local" concern authority by home rule 

3. Public Use. — As in Fifth Amendment jurisprudence, the concept of public 
use for purposes of interpreting state eminent domain authority is very broad.^^^ 
Some jurisdictions attempt to list every possible public use for which the eminent 
domain can be exercised, while others use broad language similar to the Fifth 
Amendment. This broad language allows the courts significant discretion in 
deciding what constitutes a public use. 

Although many states have a broad interpretation of public use, some states, 
such as Arizona, specifically identify the public uses subject to the 
condemnation, including canals, roads, wharves, bridges, telephone lines, 
aviation fields and petroleum pipe lines. ^^^ An Arizona decision involving a 
city's attempt to use its power to acquire property for a public cemetery 
expansion restricted municipal power to only those public uses expressly 
authorized by statute.^^^ The Arizona court held that because the public cemetery 
use was not specifically listed, the city did not have the power to use 
condemnation for the expansion.^^^ However, if the public use the city is 
attempting to municipalize is specifically listed, the Arizona Constitution grants 
municipalities "the right to engage in industrial pursuits"^^^ and courts 
interpreting this provision have held that it "confers on municipalities the right 
to engage in industry 'without specifying any limitation whatever as to kind or 
character. '"^^^ Given that there is a requirement that the public use to be 
condemned be specifically listed, Arizona municipalities and municipalities in 
other states using the same approach^^^ will need to check statutory provisions 

225. See Barron, supra note 212, at 2366-27 (suggesting that state constitutional grants of 
home rule be expanded to "include matters of greater-than-local concern" to facilitate interlocal 
efforts to reduce sprawl). 

226. See 8A ROHAN & Reskin, supra note 164, § 22.02[3][c] (noting that "in numerous 
jurisdictions, the public use requirements for eminent domain have been interpreted in very broad 
terms"); see also supra Part II.A (discussing Fifth Amendment). 

227. Ariz. Rev. Stat. § 12-1 1 1 1 (2002) (discussing "[p]urposes for which eminent domain 
may be exercised"). 

228. City of Mesa v. Smith Co. of Ariz., Inc., 816 P.2d 939, 940 (Ariz. Ct. App. 1991). 

229. Id. at 941 ("We interpret the statutes narrowly because the power of eminent domain 
belongs to the state, and it is for the legislature to decide when that power should be delegated to 
another body."). 

230. See ARIZ. CONST, art. 2, § 34. 

231. Hohokam Irrigation & Drainage Dist. v. Ariz. Pub. Serv. Co., 64 P.3d 836, 839 (Ariz. 
2003) (quoting Crandall v. Town of Safford, 56 P.2d 660, 663 (Ariz. 1936) (allowing an irrigation 
district to sell electricity to customers outside district boundaries)). 

232. See, e.g., N.C. Gen. Stat. § 40A-3 (2003) (listing specific public uses); Dep't of Transp. 
V. Rowe, 549 S.E.2d 203, 211 (N.C. 2001) (referring to the eminent domain statute in stating 
"[e]ach section also lists with some specificity the types of public uses that these condemnors can 
undertake through the use of eminent domain"). 

86 INDIANA LAW REVIEW [Vol. 38:55 

before attempting to municipalize a particular utility, even if the municipality has 
the constitutional authority to engage in such a pursuit once it has been 

Some jurisdictions may list uses that qualify as public, but these statutory 
declarations of public use are not necessarily exhaustive. For example, 
Washington state lists a myriad of public uses subject to condemnation, ^^"^ but a 
general grant of power authorizes eminent domain over a use not enumerated so 
long as a court determines that the use is a public one '*of the same kind" as those 
specifically listed.^^^ In California, the statutory scheme was changed in 1975^^^ 
from one using a specific list of uses for which eminent domain could be applied 
to one with a general provision allowing a city to ''acquire by eminent domain 
any property necessary to carry out any of its powers or functions."^^^ 

Regardless of whether the allowed use is specifically stated or freely 
interpreted from a broad grant of sovereignty, jurisdictions vary as to who makes 
the final determination of public use.^^^ Arizona, in its constitution, specifically 
reserves this decision for the judiciary. ^^^ Similarly, in the Washington 
Constitution, "the question whether the proposed acquisition is for such a use is 
a judicial question, although a legislative declaration will be accorded great 
weight."^"^^ However, in California, case law indicates that "decisions as to the 
proper scope of the power of eminent domain generally have been considered 
legislative, rather than judicial, in nature"^"^^ and thus the judiciary cannot act to 
constrain this power without legislative authority.^"^^ Case law in Connecticut 
and Hawaii also establishes that the legislature, not the judiciary, is responsible 

233. 5ee Ariz. Rev. Stat. § 12-11 11(10) (2003) (listing the following public uses: "[ejlectric 
light and power transmission lines, pipe lines used for supplying gas, and all transportation, 
transmission and intercommunication facilities of public service agencies"). 

234. Wash. Rev. Code § 8.12.030 (2002). 

235. In re City of Seattle, 638 P.2d at 559 ("the general language of RCW 8. 12.030— 'for any 
other public use' — is restricted to uses which are of the same kind as those enumerated in the 
section or which are specifically authorized by the legislature"). 

236. See Cal. Civ. Proc. CODE § 1240.010 (Deering 2003) (stating, in the Law Revision 
Commission Comment, that the new language was intended "to avoid the need to state in each 
condemnation authorization statute that the taking by eminent domain under that statute is a taking 
for public use"). 

237. Cal. Gov't Code § 37350.5 (Deering 2003). 

238. See In re City of Seattle, 638 P.2d at 556 ("Only the constitutions of Arizona, Colorado 
and Missouri have provisions similar to the Washington State Constitution. Like the Washington 
Constitution, the question whether the contemplated use be really a public use shall be a judicial 
question and determined as such without regard to any legislative assertion."). 

239. Id. 

240. Id. at 555 (citing Des Moines v. Hemenway, 437 P.2d 171, 175 (Wash. 1968)). 

241. City of Oakland v. Oakland Raiders, 646 P.2d 835, 846 (Cal. 1982) (Bird, C.J., 
concurring and dissenting). 

242. Id 


for the determination of what constitutes public use.^"*^ Therefore, states wishing 
to encourage municipahzation may legislatively revise their statutory provisions 
to delegate this sovereign power, but the final decision as to whether an attempt 
to use the power in this way is a valid public use may be reserved for the 
judiciary .^"^ 

4. Necessity. — Another limitation on the government's eminent domain 
power is that it can only be used to acquire property that is necessary for the 
public good.^"*^ Similar to the determination of what constitutes a public use, 
jurisdictions vary in approach as to whether the necessity determination is made 
by the legislature or the judiciary. In a few states, the judiciary determines 
whether or not the condemnation is necessary.^"^^ In Alabama, for example, the 
court in Southern Electric Generating Co. v. Leibacher, held that the judge 
determines the right to condemn, not the jury, and stated '*[w]hether or not the 
property is necessary or advisable, or whether more property is taken than 
necessary, and whether or not it is ever paid for or who pays for it, are not 
questions for the jury to consider nor to be brought before it in any way."-"^^ By 
statute, Nevada requires that before a condemnation of judgment is entered, the 
court must first find that "[t]he property is necessary to such public use."^"^^ 

Other states require judicial deference to the legislature's necessity 

243. See, e.g., Bugryn v. City of Bristol, 774 A.2d 1042, 1049 (Conn. App. Ct. 2001) (quoting 
Gohld Realty Co. v. City of Hartford, 104 A.2d 365, 371 (Conn. 1954)). 

It is well settled that "[t]he determination of what property is necessary to be taken in 

any given case in order to effectuate the public purpose is, under our constitution, a 

matter for the exercise of the legislative power. When the legislature delegates the 

making of that determination to another agency, the decision of that agency is 

conclusive; it is open to judicial review only to discover if it was unreasonable or in bad 

faith or was an abuse of the power conferred." 

Id. at 1049; Small Landowners of Oahu v. City of Honolulu, 832 F. Supp. 1404, 1408 (D. Haw. 

1993) ("When the legislature's purpose is legitimate and its means are not irrational, our cases make 

clear that empirical debates over the wisdom of takings — no less than debates over the wisdom of 

other kinds of socioeconomic legislation — are not to be carried out in the federal courts."). 

244. See, e.g., ARIZ. CONST, art. 2, § 17 (The Arizona Constitution states that "the question 
whether the contemplated use be really public shall be a judicial question, and determined as such 
without regard to any legislative assertion that the use is public"). 

245. See, e.g., Fla. Stat. ch. 73.021 (2003) ("[W]hich petition shall set forth: (1) The 
authority under which and the use for which the property is to be acquired, and that the property 
is necessary for that use . . . .") (emphasis added); Marsh Mining Co. v. Inland Empire Mining & 
Milling Co., 165 P. 1 128, 1 128 (Idaho 1916) ("If a reasonable, although not an absolute, necessity 
exists to take property for a public use, it is sufficient."). 

246. See, e.g., S. Elec. Generating Co. v. Leibacher, 110 So. 2d 308 (Ala. 1959); see also 
Steams v. City of Barre, 50 A. 1086, 1092 (Vt. 1901) ("The sovereign remains the judge of the 
necessity, but ultimately determines it through the judicial branch of its government, instead of the 
legislative branch."). 

247. 110 So. 2d at 313. 

248. Nev. Rev. Stat. § 37.040(2) (2003). 

88 INDIANA LAW REVIEW [Vol. 38:55 

determination. In California, "courts have traditionally refused to examine 
whether the taking of a particular piece of property is necessary for an asserted 
public purpose. "^'^^ The "[l]egislature has narrowly defined court review in this 
area"^^^ such that there is no judicial relief unless it can be shown that "the City's 
decision to use its power of eminent domain in this fashion was completely 
irrational. "^^' When the determination of necessity is reviewed, the degree of 
necessity required for condemnation is generally considered to be "reasonable," 
not "absolute," necessity. ^^^ Several other jurisdictions limit judicial intervention 
or investigation into the determination of whether a government's exercise of 
eminent domain is necessary.^^^ Only when the condemning authority abuses its 
discretion or acts irrationally may the court review the necessity determination.^^"^ 

249. City of Oakland v. Oakland Raiders, 646 P.2d 835, 846 (Cal. 1982) (Bird, C.J., 
concurring and dissenting). 

250. Id. 

251. ld.\ see also Sandefur, supra note 176, at 669-70 ("The distinction between public use 
and public necessity remains viable in California law; courts defer in almost every case to a 
legislative finding of necessity, but will review to at least some extent whether the use is in fact 

public"). * 

252. See, e.g., Mich. State Highway Comm'n v. Vanderkloot, 204 N.W.2d 22, 25 (Mich. Ct. 
App. 1972), ajf'd, 220 N.W. 2d 416 (Mich. 1974) ("The taking, however, need not be an absolute 
necessity; it is sufficient that it is reasonably necessary for public convenience or advantage."); In 
re R.I. Suburban Ry. Co., 48 A. 591, 592 (R.I. 1901) ("V^e do not question that the term 
'necessary,' as used in the statute, does not mean an absolute necessity, in the sense that the 
particular land is indispensable, but, rather, that the land, or other similarly situated, is reasonably 
required for a public purpose."). 

253. See, ^.g., Miles v. Brown, 156S.E.2d898,900(Ga. 1967) ("The necessity or expediency 
of taking property for public use is a legislative question upon which the owner is not entitled to 
a hearing under the due process clause of the Fourteenth Amendment and the same clause of the 
Constitution of this state.") (quoting Tift v. Atl. Coast Line R.R. Co., 131 S.E. 46, 52 (Ga. 1925)); 
Indianapolis Power & Light Co. v. Barnard, 371 N.E.2d 408, 411 (Ind. Ct. App. 1978) 
("Significantly the courts are not to infringe upon the administrative act of determining the 
necessity or reasonableness of the decision to appropriate and take land. Rather they are only to 
determine whether there is legislatively delegated legal authority which would allow the exercise 
of the power of eminent domain to acquire the land.") (citing Cemetery Co. v. V^arren Sch. Twp., 
139 N.E.2d 538 (Ind. 1957)); Louisville & N. R. v. City of Louisville, 1 14 S.V^. 743, 747 (Ky. Ct. 
App. 1908) ("The necessity for the taking is a matter to be determined by the legislative department, 
state, or municipal, as the case may be, and the question whether it is taken for a public use is for 
the judiciary."); City of Bristol v. Horter, 43 N.W.2d 543, 546 (S.D. 1950) ("The question of the 
existence of the necessity for exercising the right of eminent domain, where it is first shown that 
the use is public, is not open to judicial investigation and determination, but that the body having 
power to exercise the right of eminent domain is also invested with power to determine the 
existence of the necessity."). 

254. See, e.g.. Emerald People's Util. Dist. v. Pacificorp, 784 P.2d 1 1 12, 1 1 17 (Or. Ct. App. 
1990) (involving a "judicial application of a state statute that requires the courts to determine 
whether a condemnor has abused its discretion through a taking that is not compatible with the 


Even where this power is delegated to a private corporation, some jurisdictions 
provide that "the corporation has also the authority to decide on the necessity for 
exercising the right, and its decision will be conclusive in the absence of a clear 
abuse of the right."^^^ 

5. Property. — Many states use the broad term "property" to identify what 
may be subject to eminent domain,^^^ but some jurisdictions use more specific 
terms such as "real property,"^^^ "land,"^^^ "real or personal property,"^^^ or even 

greatest public good and least private injury"); Town of Perry v. Thomas, 22 P. 2d 343, 345 (Utah 
1933) ("Under powers thus delegated to municipal boards the necessity, expediency, or propriety 
of opening a public street or way is a political question, and in the absence of fraud, bad faith, or 
abuse of discretion the action of such board will not be disturbed by the courts."). 

255. Zum V. City of Chicago, 59 N.E.2d 18, 25 (111. 1945) ("[W]hile the question whether the 
use for which the appropriation of property by eminent domain is sought is public in its nature is 
a judicial question which the court may determine, yet when it is determined that the proposed use 
is public the court cannot inquire into the necessity of [sic] propriety of exercising the right of 
eminent domain.") (citing Chicago, Milwaukee & St. Paul Ry. Co. v. Franzen, 122 N.E. 492, 496 
(111. 1919)). See also City of Newport v. Newport Water Corp., 189 A. 843, 846 (R.I. 1937) 
(finding that legislative power can be delegated to a private corporation and stating that "[t]he 
necessity and expediency of the taking, as distinguished from the nature of the use to which the 
property taken is to be devoted, is purely a legislative question with which the courts have nothing 
to do. If it is admitted that the use for which the property is taken is public, there is nothing left for 
judicial determination."); Atkinson v. Carolina Power & Light Co., 121 S.E.2d 743, 746 (S.C. 
196 1 ) ("[T]he Legislature of South Carolina has expressly delegated to the defendant company, and 
all others similarly engaged, the power of eminent domain. In the exercise of that power those to 
whom it has been delegated represent the sovereignty of the state, and are empowered to decide, 
subject only to supervision of the courts to avoid fraudulent or capricious abuse, what and how 
much land of the citizens they will condemn for their purposes."). 

256. See, e.g., Fla. CONST, art. X, § 6(a) ("No private property shall be taken except for a 
public purpose and with full compensation therefor paid to each owner or secured by deposit in the 
registry of the court and available to the owner.") (emphasis added); Ga. Const, art. I, § I, ^ I ("No 
person shall be deprived of life, liberty, or property except by due process of law."); III. Const. 
art. 1, § 15 ("Private property shall not be taken or damaged for public use without just 
compensation as provided by law."). 

257. See, e.g., IND. CODE ANN. § 32-24-4- 1(a) (West 2002) (stating authorized entity "may 
take, acquire, condemn, and appropriate land, real estate, or any interest in the land or real estate"") 
(emphasis added); S.C. Code Ann. § 28-2-60 (Law. Co-op. 2002) (The eminent domain power 
appears to be limited to real property based on the statutory language that a "condemnor may 
commence an action under this chapter fbr the acquisition of an interest in any real property 
necessary for any public purpose."). 

258. See, e.g., iND. CODE Ann. § 32-24-4- 1(a) (West 2002) (stating authorized entity "may 
take, acquire, condemn, and appropriate land, real estate, or any interest in the land or real estate'') 
(emphasis added). 

259. See, e.g., Ga. CODE ANN. § 46-3-126 (2003) ("The authority shall have all powers 
necessary or convenient . . . including, but without limiting the generality of the foregoing, the 
power: ... (3) To acquire in its own name real property or rights and easements therein and 

90 INDIANA LAW REVIEW [Vol. 38:55 

"rights of way,"^^^ "water gates,"^^' or "easements."^^^ The general term, 
"property," sometimes is construed to refer only to real property ,^^^ but in many 
jurisdictions judicial decisions have construed the term broadly to cover both real 
and personal property of all kinds. ^^"^ Judicial decisions awarding just 
compensation for personal property impacted by condemnation proceedings 
involving real property may also indicate the jurisdiction's willingness to allow 
the government to condemn personal property directly. 

Some courts will not require the government to compensate the property 

franchises and personal property necessary or convenient for its corporate purposes. . . ."). 

260. See, e.g., Ga. CODE. ANN. § 22-3-20 (2002) ("Any person operating or constructing or 
preparing to construct a plant for generating electricity shall have the right to purchase, lease, or 

condemn rights of way or other easements over the lands of others "); N.D. CONST, art. 1, § 16 

("[N]o right of way shall be appropriated to the use of any corporation until full compensation 
therefor be first made in money or ascertained and paid into court for the owner. . . ."). 

261. Nev. Rev. Stat. § 37.010 (2003) (listing the public purposes for which the right of 
eminent domain may be exercised). 

262. See, e.g., Ky. Rev. Stat. Ann. § 96.590 (Michie 2002) ("Any board proceeding under 
KRS 96.550 to 96.900 shall have the tight to acquire by the exercise of the power of eminent 
domain, all lands, easements, rights of way, either upon or under or above the ground . . . .") 
(emphasis added). 

263. See, e.g., Mr. Klean Car Wash, Inc. v. Ritchie, 244 S.E.2d 553, 557 (W. Va. 1978) ("It 
was pointed out that our eminent domain statutes relate only to interests in real property."). 

264. See, e.g., ALASKA CONST, art. I, § 18 ("Private property shall not be taken or damaged 
for public use without just compensation."); Wamer/Elektra/ Atlantic Corp. v. County of DuPage, 
991 F.2d 1280, 1285 (7th Cir. 1993). "Nothing in the notion of 'property,' whether as used in the 
due process clause of the Fourteenth Amendment, which has been held (by incorporation of the 
just-compensation clause of the Fifth Amendment) to require just compensation when state 
government takes private property for a public use, or in the constitutional and statutory provisions 
of Illinois governing condemnation, limits condemnation and inverse condemnation to real 
property." Stroh v. Alaska State Hous. Auth., 459 P.2d 480, 485 (Alaska 1968) ("finding no clear 
legislative intent [manifesting] that personal property taken or damaged by public use should not 
be justly compensated"); City of Oakland v. Oakland Raiders, 646 P.2d 835, 840 (Cal. 1982) ("For 
eminent domain purposes, neither the federal nor the state Constitution distinguishes between 
property which is real or personal, tangible or intangible."); Superior Coal & Builders Supply Co. 
V. Bd. of Educ, 83 S.W.2d 875, 876 (Ky. Ct. App. 1935) ("The Constitution was written to protect 
the citizen from the improper acts of the state, its arms and its officers; nor does it make any 
difference that a portion of the plaintiffs property was personal property, as sections 13 and 242, 
Ky. Const., apply to both real and personal property."); State Highway Comm'n v. Rollings, 471 
P.2d 324, 328 (Wyo. 1970) ("[I]t is well settled that the word 'property' as contained in the Fifth 
Amendment to the Constitution of the United States, in [section] 33, Art. I, of the Wyoming 
Constitution, and in [secfion] 1-775, for which an owner must receive 'just compensation' when 
taken or damaged by a condemnor, 'is treated as a word of most general import and is liberally 
construed.'") (citafion omitted). See also Tobin-Rubio, supra note 157, at 1191-92 (discussing 
property interests subject to condemnation and citing various statutes and judicial decisions, some 
which allow condemnation of intangible property and some which do not). 


owner for personal property interests when real property is condemned since a 
business interest such as a lease or license is arguably transferable to another 
location.^^^ In Michigan State Highway Commission v.L&L Concession Co.^^^ 
a Michigan court observed that "[o]rdinarily no compensation is allowed for the 
goodwill or going-concern value of a business operated on the real estate being 
condemned."^^^ Nevertheless, the court also noted that "since the state but rarely 
intends to operate the business, the courts have been unwilling to award 
compensation unless the destruction of the business was a necessary consequence 
of the condemnation."^^^ While some jurisdictions will not require compensation 
for personal property associated with a real property condemnation, the Michigan 
court at least considered the possibility of using eminent domain power to 
acquire property with the intent to operate an ongoing business.^^^ 

In some states, legislative or constitutional language expressly declares that 
private property in the form of an ongoing enterprise may be subject to eminent 
domain. Statutory language in Alabama dealing with supplying electricity to the 
public provides that the county and municipal condemnation power applies to 
"all the property, tangible and intangible"^^^ and allows a municipal corporation 
or county to acquire "[a]ll or any part of any existing power plant."^^^ The Texas 
Constitution also allows an existing business operation to be acquired by the 
government for purposes of servicing the public. The Texas Constitution 
provides that the legislature may create Airport Authorities composed of one or 
more counties that have the power to exercise eminent domain to acquire "any 
airport or airports, landing fields and runways, airport buildings, hangars, 
facilities, equipment, fixtures, and any and all property, real or personal, 
necessary to operate, equip and maintain an airport" and "shall authorize the 
purchase or acquisition by the Authority of any existing airport facility publicly 
owned and financed and served by certificated airlines, . . . through the exercise 
of the power of eminent domain."^^^ Although Virginia allows a municipality to 

265. Mich. State Highway Comm'n v. L & L Concession Co., 187 N.W.2d 465, 469 n.lO 
(Mich. Ct. App. 1971) ("The loss of good will is not an element of compensation where the 

business is not taken for use as a going concern A good plumber should be able to continue his 

business in almost any location and do as well as he formerly did.") (quoting In re Edward J. 
Jeffries Homes Housing Project, 1 1 N.W.2d 272, 276 (Mich. 1943)). But see Okla. Stat. tit. 11, 
§ 22-104-3 (2003) ("Any business or profession which is affected by the right of eminent domain 
as exercised pursuant to the provisions of this section shall be considered as a property right of the 
owner thereof and proper allowance therefor shall be made."). 

266. 187 N.W.2d 465 (1971). 

267. /^. at 468. 

268. Id. at 469. 

269. See also N.M. STAT. ANN. § 3-18-10(c) (1999) (stating a municipality may "acquire by 
eminent domain any existing cemeteries, mausoleums or both, or combinations thereof) (emphasis 

270. Ala. Code § 1 l-81-200(a) (2002). 

271. Id. 

272. Texas Const, art. 9, § 12(a) & (e). 

92 INDIANA LAW REVIEW [Vol. 38:55 

condemn electrical utility distribution facilities to serve a public purpose, the city 
or town must first obtain permission from the State Corporation Commission 
upon demonstrating "that a public necessity or that an essential public 
convenience shall so require" such a condemnation. ^^^ 

The use of eminent domain power to provide for public utilities such as light, 
heat, water, and power is also authorized in some states. ^^"^ Although it is not 
always clear from the statutory language that eminent domain can be used to 
acquire an ongoing utility, ^^^ some states specifically authorize the use of eminent 

273. Town of Blackstone v. Southside Elec. Coop., 506 S.E.2d 773, 777 (Va. 1998) (quoting 
Va. Ann. Code § 25-233) (finding that evidence did not support a finding that "the pubhc would 
benefit under the entire circumstances of the proposed condemnation"). 

274. See, e.g., OR. CONST, art. XI, § 12 (Peoples' Utility Districts have authority to exercise 
the power of eminent domain); Ark. Code § 14-54-70 1(a)(1) (2002) ("Municipal corporations 
shall have power to provide for, or construct, or acquire works for lighting the streets, alleys, parks, 

and other public places by gas, electricity, or otherwise "); Ark. Code § 23-18-307(14) (2002) 

(describing corporate power to provide electric power and energy, including "the right of eminent 
domain for the purpose of acquiring rights-of-way and other properties necessary or useful in the 
construction or operation of its properties"); Niegocki v. Dennison, 219 N.Y.S.2d 109, 111 (Sup. 
Ct. 1961) ("The Suffolk County Water Authority is specifically empowered to purchase water 
supply systems, by condemnation or direct purchase (§ 1078, Public Authorities Law)."); Emerald 
People's Util. Dist. v. Pacificorp, 784 P.2d 1 1 12, 1 1 16 (Or. Ct. App. 1990) (stating Peoples' Utility 
Districts may use eminent domain to acquire existing hydroelectric power plants under ORS section 
35.235(2) provided there is "public necessity for the use, necessity for the property and 
compatibility with the greatest public good and least private injury"). But see N.Y. PUB. AUTH. 
Law § 1020-a (2003) and 98 N.Y. Op. Att'y Gen. (Inf ) 13 (1998) (finding that legislature 
establishes Long Island Power Authority to replace investor owned utility with a publicly owned 
power authority, but Attorney General opinion precludes municipalities from condemning facilities 
or assets in this service area to operate a municipal utility); Or. Rev. Stat. § 262.075(3) (2001) 
(A joint operating agency is considered to be a municipal corporation with the power of eminent 
domain "however, a joint operating agency shall not condemn any properties owned by a publicly 
or privately owned utility which are being used for the generation or transmission of electric energy 
or power."). 

275. See, e.g., OHIO CONST, art. XVIII, § 5 ("Any municipality proceeding to acquire, 
construct, own, lease or operate a public utility, or to contract with any person or company therefor, 
shall act by ordinance and no such ordinance shall take effect until after thirty days from its 
passage."); MiNN. Stat. § 216B.47 (2002) (providing that a municipality may acquire the property 
of a public utility by eminent domain proceedings provided that the damages "include the original 
cost of the property less depreciation, loss of revenue to the utility, expenses resulting from 
integration of facilities, and other appropriate factors," but it is not clear from the language that the 
municipality would be acquiring the utility as an ongoing concern); N.D. Cent. Code § 32-15-02 
(2002) ("[RJight of eminent domain may be exercised in behalf of the following public uses: . . . 
electric light plants and power transmission lines . . . [o]il, gas, coal, and carbon dioxide pipelines 
and works and plants for supplying or conducting gas, oil, coal, carbon dioxide, heat, refrigeration, 
or power . . . ."); Tenn. Code Ann. § 65-22-101 (2002) (empowering utility corporations "to 
condemn and take upon paying or securing payment thereof, to purchase or otherwise acquire, such 


domain to acquire a plant and facilities from a public or private utility so long as 
it is within the city limits.^^^ Nebraska's statutory scheme provides that a power 
district can use eminent domain "to acquire from any person, firm, association, 
or private corporation any and all property owned, used or operated, or useful for 
operation, in the generation, transmission, or distribution of electrical energy. 

lands and interests in and by whomsoever owned as may be necessary or advisable in the 
construction, maintenance, and operation of either its gas or electric plants or both") (emphasis 
added); City of Logan v. Utah Power & Light Co., 796 P.2d 697, 701 n.3 (Utah 1990) (finding that 
under Utah Constitution article I, section 22, which provides that "[p]rivate property shall not be 
taken or damaged for public use without just compensation," city must pay just compensation to 
acquire title to public utility facilities). 

276. See, e.g., Ky. Rev. Stat. Ann. § 96.590 (Michie 2002) (authorizing eminent domain to 
acquire an electric plant from a public or private utility so long as the property acquired is located 
within the area to be served by the municipal plant); La. Rev. Stat. Ann. § 33:4175(c)(l) (West 
2002) (authorizing public power authorities to "finance, acquire, construct, operate, and maintain 
facilities and to engage in the generation, production, transmission, distribution, and sale, at 
wholesale or retail, of electric power and energy and gas.") (emphasis added); Md. Code Ann. Pub. 
Util. Co. § 7-210 (e)(1) (2002) ("A municipal corporation that acquires the exclusive right under 
subsection (d) of this section to supply electricity within an area annexed by the municipal 
corporation may exercise the right of eminent domain to acquire the existing installed facilities of 
each electric company within the annexed area . . . ."); MiSS. Code Ann. § 77-3-17 (2004) ("Any 
municipality shall have the right to acquire by purchase, negotiation or condemnation the facilities 
of any utility that is now or may hereafter be located within the corporate limits of such 
municipality. . . ."); N.M. STAT. ANN. § 3-24-1 (2003) (Certain municipalifies "may acquire, 
maintain, contract for and condemn for use as a municipal utility privately owned electric facilities 
used or to be used for the furnishing and supply of electricity to the municipality or inhabitants 
within its service area."); Vt. Stat. Ann. tit. 30, § 2910 (2002) ("[T]he municipality . . . may take 
such private plant and property by the exercise of the right of eminent domain."); Wash. Rev. Code 
§ 35.92.050 (2002) ("A city or town may also construct, condemn and purchase, purchase, acquire, 
add to, alter, maintain and operate works, plants, facilities for the purpose of furnishing the city or 
town and its inhabitants, and any other persons, with gas, electricity, and other means of power and 

facilities for lighting "). But see WASH. REV. CODE § 43.52.300 (2002) (stafing "an operating 

agency shall not be authorized to acquire by condemnation any plants, works and facilities owned 
and operated by any city or district, or by a privately owned public utility"). See also City of 
Thornton v. Public Util. Comm'n, 195, 402 P.2d 194, 197 (Colo. 1965) (holding Colorado statutory 
provisions also "give full power to the municipality, subject only to the electorate, to purchase or 
acquire by condemnation at the fair market value thereof any water works or system and 
appurtenances necessary to the works or system") (emphasis in original); In re Town of Springfield, 
469 A.2d 375, 377 (Vt. 1983) ("Where the utility currently serving the municipality refuses to sell 
its facilities, [section] 2910 provides that the municipality, after appropriate vote, may: take such 
private plant and property by the exercise of the right of eminent domain, paying therefor just 

compensation "). But see Mo. REV. STAT. § 523.0104 (2003) (stafing public ufility or electric 

cooperative does not have "the power to condemn property which is currently used by another 
provider of public utility service, including a municipality or a special purpose district" if the 
condemnor plans to use the property for the same or a substantially similar purpose). 

94 INDIANA LAW REVIEW [Vol. 38:55 

including an existing electric utility system or any part thereof. "^^^ In 2003, the 
city of Fort Wayne, Indiana, tried to acquire part of a private water and sewer 
utility, arguing that state legislation expressly allowed the purchase of a public 
utility's assets without a government showing of necessity for such a taking.^^^ 
Finally, California judicially recognized a municipal power to acquire an ongoing 
utility or business enterprise in the City of Oakland v. Oakland Raiders^^^ 
discussed above.^^^ In the Raiders' case, the California Supreme Court allowed 
the city's eminent domain action over the sports franchise, concluding that state 
"eminent domain law authorized the taking of intangible property"^^^ since "the 
applicable statutes authorized a city to take 'any property,' real or personal, to 
carry out appropriate municipal f unctions. "^^^ The court pointed to specific 
legislation prohibiting the condemnation of an existing golf course, as evidence 
that the state legislature "has recognized a municipality's broad eminent domain 
power to acquire an existing business unless expressly forbidden to do so."^^^ 
Nevertheless, subsequent litigation in this case precluded Oakland from using 
eminent domain to acquire the Raiders because the action was found to violate 
the dormant Commerce Clause.^^"^ 

Defining what constitutes property subject to condemnation is just one of the 
ways eminent domain power can be limited to avoid government abuse. Express 
legislative statements defining property will assist the courts in determining when 
private interests must yield to government necessity and will either prohibit, 
permit, or encourage condemnation activity. Conversely, when the legislature 
uses broad terminology, such as the term "property," government abuse is more 
likely to occur since "property" can encompass all kinds of private rights — real 
and personal; tangible and intangible. 

6. Prior Public Use Doctrine. — Many states limit the power to condemn 
property by scrutinizing eminent domain actions over property that is already 
being devoted to a public use.^^^ This limitation is referred to as the "prior public 

277. Neb. Rev. Stat. § 70-670 (2002) (emphasis added). 

278. Leininger, supra note 1 15. 

279. 646 P.2d 835, 836 (Cal. 1982). 

280. See supra notes 153-59 and accompanying text. 

281. Oakland Raiders, 6A6 V. 2d dX%^(i. 

282. Mat 843. 

283 . Id. (citing Government Code section 37353(c) which "provides that while a municipality 
may condemn land for use as a golf course, an existing golf course may not be acquired by eminent 

284. City of Oakland v. Oakland Raiders, 220 Cal. Rptr. 153, 154 (Ct. App. 1985); see also 
Saxer, supra note 4. 

285. See Nev. Rev. Stat. § 37.040 (2003) (Before a judgment of condemnation is entered in 
Nevada, the court must first find that "[i]f the property is already appropriated to some public use, 
the public use to which it is to be applied is a more necessary public use."). But see State ex rel. 
Mo. Cities Water Co. v. Hodge, 878 S.W.2d 819, 823 (Mo. 1994) ("The majority of decisions have 
allowed the condemnation of public utilities by municipalities, even though they had already been 
devoted to a public use."). See generally Ralph W. Dau, Problems In Condemnation of Property 


use doctrine" and has been described as follows: 

[When a] condemnor to whom the power of eminent domain has been 
delegated, such as a municipality or a private corporation, seeks to 
exercise the power with respect to property already devoted to public 
use, the general rule is that where the proposed use will either destroy 
such existing use or interfere with it to such an extent as is tantamount 
to destruction, the exercise of the power will be denied unless the 
legislature has authorized the acquisition either expressly or by 
necessary implication. ^^^ 

The purpose of this doctrine is to ensure that state legislative intent is 
properly executed so that one public use does not destroy a public use previously 
authorized by the state, in order to avoid "circular, recriminatory, or serial 
condemnations. "^^^ Additionally, if the property is already devoted to a public 
use, a condemnation for the same use would probably not be considered a 
necessity.^^^ However, under the "compatible use theory," this doctrine will not 
be applied to restrict the condemnation "if the proposed use 'will not materially 
impair or interfere with or is not inconsistent with the use already existing. '"^^^ 

Devoted to Public Use, 44 TEX. L. REV. 1517 (1966). 

286. Mark S. Arena, Comment, The Accommodation of "Occupation" and "Social Utility" 
in Prior Public Use Jurisprudence, 137 U. Pa. L. Rev. 233, 234 (1988) (quoting Greater Clark 
County Sch. Corp. v. Pub. Serv. Co., 385 N.E.2d 952, 954 (Ind. App. 1979) (citations omitted)); 
see also City of St. Marys v. Dayton Power & Light Co., 607 N.E.2d 881, 886 (Ohio Ct. App. 
1992) ("As a general rule, property already devoted to a public use cannot be taken for another 
public use which will totally destroy or materially impair or interfere with the former use, unless 
the intention of the Legislature that it should be so taken has been manifested in express terms or 
by necessary implication, mere general authority to exercise the power of eminent domain being 
in such case insufficient regardless of whether the property was acquired by condemnation or 
purchase.") (quoting Richmond Hts. v. Bd. Of County Comm'rs, 166 N.E.2d 143, 145 (Ohio Ct. 
App. I960)). 

287. Arena, supra note 286, at 238; see also Hodge, 878 S.W.2d at 824 (en banc) (holding that 
requirement that there be express legislative authorization for eminent domain over an existing 
public use property "might also avoid an endless chain of one public entity after another 
condemning out the prior owner of the same property"). 

288. Hodge, 878 S.W.2d at 821 (deciding whether "a waterworks system already dedicated 
to a public use [may] be condemned by a municipality for the very same use"). 

289. Arena, supra note 286, at 244-45 (quoting Georgia S. & Fla. Ry. v. State Rd. Dep't, 176 
So.2d 1 1 1, 112 (Fla. Dist. Ct. App. 1965)). Arena also observed that "[t]his exception has been 
characterized as one of the means by which a court can circumvent the potentially excessive 
inhibitory effect of the rule — its 'frightening inflexibility' — while preserving the rule's policy 
justification 'that an important public use should be protected.'" Id. at 245 (quoting Robert Phay, 
The Municipal Corporation and Conflicts Over Extraterritorial Acquisitions: The Need for Land 
Planning, 17 Vand. L. Rev. 347, 367 (1964); Craig B. Willis, Case Comment, Prior Public Use 
Doctrine: New Judicial Criteria — Florida East Coast Railway v. City of Miami, 5 f^. St. U. L. 
Rev. 505, 509 (1977)). See also Hodge, 878 S.W.2d at 822 (noting that the "consistent thread of 

96 INDIANA LAW REVIEW [Vol. 38:55 

A Kentucky court recognized the need to limit the power to prevent a new 
public use that will destroy a previous public use without explicit authority.^^^ 
Nevertheless, in applying the "compatible use theory" the court explained that 
it is 

a necessary consequence of the power to condemn, that this power may 
be exercised, not only upon private property, but upon property devoted 
to a public use, especially when the new use does not destroy the 
previous use, and when both of the uses may be enjoyed at the same time 
without the unreasonable impairment of either.^^^ 

Thus, it appears that a city's attempt to condemn a utility plant already devoted 
to a public use will not likely be restricted by this doctrine since the "compatible 
use theory" can be applied to argue that new ownership by the city will not 
destroy or interfere with the use of the plant for the general public welfare. 

Some jurisdictions weigh the degree of necessity for each of the potentially 
conflicting public uses to determine whether eminent domain should be 
employed to acquire property already being devoted to public use. This weighing 
requires that the prpposed public use be "more necessary" than the original 
public use.^^^ For example, in Idaho, the condemnor must propose to put a 
property currently used for public purposes to a "more necessary public use," but 
the "condemnor need not demonstrate a 'more necessary public use' when 
condemning only the right to the common use of an existing right of way 
previously appropriated for public use."^^^ Thus, just like with the "compatible 
use" exception to the "prior public use doctrine," the "more necessary public 
use" requirement is probably only applicable when the proposed use conflicts 
with the existing public use. 

When property is already devoted to a public use and the "compatible use" 
exception does not apply, the eminent domain power must be conferred in 
express terms by specific legislative delegation and strictly followed.^^"^ "The 

law running through these cases is that if an existing public use will not be harmed by a new and 
different public use, condemnation will be allowed under a general form of authority"). 

290. Louisville & N. R. Co. v. City of Louisville, 114 S.W. 743, 746 (Ky. 1908). 

291. Id. 

292. See, e.g., Kern River Gas Transmission Co. v. Clark Co., 757 F. Supp. 1110, 1 1 18 (D. 
Nev. 1990) (according to Nevada law "condemnation shall not be entered if the property is already 
appropriated for public use unless the property sought has a 'more necessary' public use") (citing 
Nev. Rev. Stat. § 37.040(3)); see also Arena, supra note 286, at 236 ("Some courts embrace a 
'more necessary use' test, weighing the benefits to the public of the competing uses . . . ."); Dau, 
supra note 285, at 1525 (noting in 1966 that "[a]t least seven states [Arizona, California, Idaho, 
Montana, Nevada, Oregon, and Utah] have statutory requirements that before property already 
appropriated to some public use can be taken by eminent domain, it must appear that the public use 
to which it is to be applied is a more necessary public use"). 

293. Canyon View Irrigation Co. v. Twin Falls Canal Co., 619 P.2d 122, 126 (Idaho 1980). 

294. See State ex rel. Mo. Cities Water Co. v. Hodge, 878 S.W.2d 819, 822 (Mo. 1994). But 
see City of Newport v. Newport Water Corp., 189 A. 843, 847 (R.I. 1937) ("Another principle as 


rationale being that the legislature, not the subsequent condemning authority, is 
the proper entity to decide between mutually conflicting or destructive uses of 
public property."^^^ Assuming that the "compatible use" exception is not 
applicable because the proposed use will result in a destruction or material 
impairment of the existing use, the court in a condemnation action must find 
express authorization for the use of eminent domain.^^^ Courts have strictly 
construed the specificity required for this authorization by requiring "the express 
use of the terms 'the right to condemn' or 'the right to acquire by eminent 
domain'" rather than by "allowing the condemnation of public utilities under a 
more general statute."^^^ Additionally, even home rule cities will not be allowed 
to rely on their general powers of condemnation under a state constitution 
because such provisions do "not constitute express statutory authority nor 
authority by necessary implication. "^^^ 

An excellent example of the prior public use doctrine being j udicially applied 
and the legislative response to this judicial resolution is found in the htigation 
surrounding a New Mexico city's attempt to condemn an electric utility system 
to introduce a municipally-operated utility .^^^ Li City of Las C races v. El Paso 
Electric Co.,^^^ the city adopted a resolution to condemn an electric utility 
operated by a privately-owned Texas corporation. ^^^ The private utility company 
argued that since the property was already devoted to a public use, the prior 
public use doctrine applied, and "the legislative intent must be expressed in 'clear 
and express terms, or must appear from necessary implication. '"^^^ The court 
reviewed three New Mexico statutes dealing with municipal acquisition of an 
electric utility and determined that language such as "acquire," "construct," and 
the phrase "property may also be condemned [by any municipality] for . . . 
electric lines" was too vague and not sufficient to "rise to the standard of express 

well settled as those above discussed is that the Legislature, in the absence of constitutional 
limitations to the contrary, has the right to take, from one, property already devoted to a public use 
and to give it to another to be devoted to the same identical public use .... The necessity and 
expediency of such a transfer are matters of legislative policy with which the courts have nothing 
to do. Where the Legislature clearly designates the property to be taken, it is conclusive, as such 

exercise of power is political "); see also Dau, supra note 285, at 1521 ("A state legislature may 

unquestionably validly authorize the taking of land devoted to one public use for a different public 
use in the absence of a constitutional prohibition."). 

295. Hodge, 878 S.W.2d at 822. 

296. Id. at 823 (noting that "all of the cases holding that a municipality can condemn a public 
utility for its same use have required specific and express authorization from the legislature"). 

297. Mat 824. 

298. City of Las Cruces v. El Paso Elec. Co., 904 F. Supp. 1238, 1251 (D. N.M. 1995). 

299. City of Las Cruces v. El Paso Elec. Co., 954 P.2d 72 (N.M. 1998). 

300. 904 F. Supp. at 1238. 

301. /J. at 1243-44. 

302. Id. at 1249 (reviewing an earlier New Mexico decision, City of Albuquerque v. Garcia, 
130 P. 1 18, 124 (N.M. 1913) (discussing the prior public use doctrine)). 

98 INDIANA LAW REVIEW [Vol. 38:55 

statutory language nor authority by necessary implication."^^^ 

The federal court in the City of Las Cruces litigation explained that the prior 
public use doctrine "cannot be invoked against a condemnor municipality if there 
is no destruction, obliteration or material impairment of the existing use" because 
of the "compatible use" exception to the doctrine.^^"^ The court refused to certify 
the issue of "a municipality's authority to condemn an existing electric utility 
system"^^^ to the New Mexico Supreme Court until it resolved the factual 
determination of whether the City's condemnation action constituted 
"destruction, obliteration or material impairment" of the existing use.^^^ Upon 
resolving the evidentiary issue of "compatible use" against the City because "the 
City failed to meet its burden of showing that there would be no material 
impairment,"^^^ the federal court certified the condemnation issue to the New 
Mexico Supreme Court.^^^ The state supreme court interpreted the certified 
question to be "whether the City's showing justified application of the 
compatible use exception, permitting condemnation, or required application of 
the prior public use doctrine, precluding condemnation."^^^ 

After the federal court decision in 1995, but before the 1998 New Mexico 
Supreme Court decision dealing with the certified question, "[t]he New Mexico 
Legislature acted in the 1997 session to provide express authority to the City."^^° 
The Legislature amended several statutes, including Section 3-24- 1(e), which 
now provides that municipalities of a particular population have the right to 
"acquire, maintain, contract for and condemn for use as a municipal utility 
privately owned electric facilities."^ ^^ Finding that the Legislature acted to give 
the City specific authority to condemn the private electric utility before the court 
answered the certified question, the New Mexico Supreme Court concluded that 
the case was moot.^^^ 

Ideally, the state legislature should decide whether or not it wants to allow 
municipalization of utilities or other ongoing business enterprises. Since a 
municipality will be required to show it is using its condemnation power for a 

303. Id. at 1250-51 (reading the three electric utility condemnation statutes together and 
finding that "the City does not have the necessary legislative authority under New Mexico statutes 
to condemn EPEC's electric utility system"). 

304. Id. at 1252. 

305. Id. at 1256. 

306. Id. at 1252-55 (noting that "[i]t is not enough, however, that some inconvenience may 
occur to the prior user; to constitute destruction, obliteration or material impairment, there must be 
strong evidence that the new use will eradicate or materially impair the prior use" and that "this 
question must be analyzed from the perspective of the user public"). 

307. City of Las Cruces v. El Paso Elec. Co., 954 P.2d 72, 76 (N.M. 1998). 

308. Id. at 74. 

309. Id. at 76 (construing the certified question narrowly so as not to conduct an appellate 
review of the federal court's written opinion and order). 

310. Mat 76. 

311. Mat 76-77. 

312. Id. atll. 


public purpose, it is likely that any ongoing enterprise it seeks to acquire will 
already be devoted to a public use, as in the case of a privately-owned public 
utility. Therefore, to avoid the limitations of the "prior public use" doctrine, state 
legislative provisions promoting municipalization should expressly authorize the 
use of eminent domain power to acquire any "prior public uses."^^^ The New 
Mexico Legislature, as described in the litigation above, did just that, resulting 
in the municipality being allowed to use its power to acquire a privately-owned 
public utility. 

It may be that the "compatible use" exception to the prior "public use" 
doctrine will allow municipalization which does not interfere with or destroy the 
public's use. Express legislative authority will avoid the potential problem that 
occurred in New Mexico where the City was unable to meet its burden of proof 
that its proposed use was compatible. Kentucky addresses the problem of 
duplicate or conflicting public uses by legislatively requiring that a municipality 
acquire an existing public utility plant or facility by purchase or by eminent 
domain rather than by constructing a similar plant or facility.^ ^"^ However, since 
home rule cities will not be affected by state legislative pronouncements 
concerning only local concems,^*^ home rule cities wishing to use eminent 
domain to acquire property previously devoted to a public use may need to 
establish express local legislative authority. 

7. Additional Constraints on Eminent Domain Power. — A final state 
constraint over a municipality's exercise of eminent domain to acquire a 
privately-owned public utility exists in some states which require the approval 
of a state public utilities commission.^*^ Requiring approval at the state level by 

313. See Gray, supra note 120, at B2 (discussing Massachusetts communities attempting to 
municipalize electric companies and explaining that "the state law, as it now reads, needs 
clarification if municipalization is to become feasible for a city or town at this time"). 

314. Ky. Rev. Stat. § 96.045(1). 

No municipality, in which there is located an existing electric, water or gas public utility 
plant or facility shall construct or cause to be constructed any similar utility plant or any 
similar public utility facility duplicating such existing plant or facility or to obtain or 
acquire any similar public utility plant or facility other than by the purchase of the 
existing plant or facility or by the acquisition of such existing plant or facility by the 
exercise of the power of eminent domain. 

315. See, e.g.. City of New York v. Patrolmen's Benevolent v. Ass'n of City of New York, 
Inc., 642 N.Y.S.2d 1003, 1009 (Sup. Ct.) ("[Wjhile the Home Rule provision grants the City 
significant power and authority to act with respect to local matters nothing in the Home Rule 
provision is intended to impair the power of the Legislature to act in relation to matters of State 
concern notwithstanding the fact that the State's concern may also touch upon the City's property, 
affairs or government."), qff'd, 647 N.Y.S.2d 728 (App. Div.), qff'd, 676 N.E.2d 847 (N.Y. 1996). 

316. See, e.g., James Vaznis, Water Takeover on Ballot, BOSTON GLOBE, Mar. 9, 2003, at 1 
(discussing a group of New Hampshire communities attempting to buy a publicly traded water 
utility and stating that "New Hampshire law allows a municipality to take a utility by eminent 
domain; the state Public Utilities Commission must approve any resulting deal"); James Vaznis, 
Pennichuck Deal Opens Taps on Two Fronts, BOSTON GLOBE, Aug. 14, 2003, at 1. 

100 INDIANA LAW REVIEW [Vol. 38:55 

a public utilities commission will help prevent government abuse of the 
condemnation power at the local level. State concerns about the impact of 
municipalization, particularly when it affects surrounding communities, will 
more readily be addressed when state approval is part of the municipalization 

While it is beyond the scope of this article to explore federal constitutional 
constraints on eminent domain power,^^^ local and state government power to 
condemn may be limited by federal constitutional and statutory law. As 
discussed above,^*^ the California Court of Appeal in City of Oakland v. Oakland 
Raiders, ^^'^ prohibited Oakland from using its eminent domain power to acquire 
the Raiders football team because the action was found to violate the dormant 
Commerce Clause.^^^ Additionally, state and local power may be limited by the 
Supremacy Clause and federal pre-emption, the Contracts Clause,^^* and federal 
antitrust legislation.^^^ The federal government's power to condemn may be 
limited by the Commerce Clause and state sovereignty under the Tenth 
Amendment. ^^^ 


Municipal officials seeking to promote the general welfare of their 
communities may consider the municipalization of public utilities to be an 
appropriate response to increasing service costs, decreasing reliability, and 
corporate abuse. Events such as the California energy crisis in 2001, followed 
by the Northeast blackout in August 2003,"^^"* have increased the public's 
awareness of its susceptibility to situations where market manipulation or skewed 
economic incentives may result in unstable and costly public utility service.^^^ 

Public utilities have historically alternated between private and public 
ownership, public regulatory control, and deregulation with market competition. 
Following the unregulated and competitive stage of the later 1800s, the 

317. 5^e Saxer, jMpra note 4. 

318. See supra notes 150-56, 277-82 and accompanying text. 

319. 220 Cal. Rptr. 153 (Ct. App. 1982). 

320. Id.; see also Saxer, supra note 4. 

321. U.S. Const, art. I, § 10, cl. 1 ("No State shall . . . pass any . . . Law impairing the 
Obligation of Contracts. . . .")■ 

322. See Rossi, supra note 77, at 1786-89 (discussing "regulatory federalism doctrines" such 
as federal preemption, the Supremacy Clause, the dormant Commerce Clause, and antitrust laws). 

323. See Fed. Energy Regulatory Comm'n v. Mississippi, 456 U.S. 742, 769-70 (1982) 
(upholding Titles I and II of the Public Utility Regulatory Policies Act (PURPA) against a Tenth 
Amendment challenge to congressional activity). 

324. Nancy Gibbs, Lights Out, TIME, Aug. 25, 2003, at 30, 37 (noting that "the blackout of 
2003 affected eight states and 50 million people and could cost up to $5 billion"). 

325. See Duane, supra note 87, at 529-30 (discussing the impact of public versus private 
ownership of the public power system in California and noting that "the public simply provides the 
money while the private sector provides the monopoly power to keep the lights on"). 


municipalization and public regulatory models for utilities were proposed 
because of deteriorating operations and services, antitrust violations, and political 
corruption in the granting of private charters and franchises. The regulatory 
model prevailed over municipalization because of concerns about political 
corruption in city management and the fear of socialism. This regulatory state 
lasted for almost a century, but is being replaced by a market approach, evident 
in the 1978 Public Utility Regulatory Polices Act (PURPA), which encourages 
market-based rates for conventional fuels. 

Recent abuses by the electricity industry have resulted in decreased service 
and increased rates, leading consumers and city officials to question the wisdom 
of reducing regulatory control to allow competition. Some municipalities are 
responding to these concerns by establishing municipal services instead of 
attempting to regulate or control investor-owned public utilities. As part of this 
municipalization process, cities attempted to acquire part or all of these investor- 
owned utilities through voluntary purchase or eminent domain. Utilities have 
resisted these efforts by refusing to sell and forcefully litigating the resulting 
condemnation suits. 

Allowing local government to force the sale of private ongoing enterprise 
opens the door to a myriad of condemnation actions converting private free 
enterprise to municipal ownership. A fear of piecemeal socialization through the 
use of eminent domain power requires that we examine how this potential for 
government abuse should be managed using existing or revised federal, state, and 
local statutory and constitutional provisions. This Article reviewed current state 
statutory and constitutional guidelines to constrain the eminent domain power 
and concludes by suggesting that each state must decide whether it wishes to 
encourage or discourage the municipalization of utilities and other public 
services and expressly declare this intent in statutory and/or constitutional 

Although local governments will need to conduct extensive assessments to 
decide whether or not to municipalize for the benefit of its citizens, lawmakers 
at the state level should ensure that the eminent domain power is appropriately 
restricted to avoid government abuse. It will likely not be helpful to restrict the 
definition of what constitutes a "public use" under the Fifth Amendment or the 
state eminent domain declaration since municipalization of a public function, 
under even a restrictive or narrow definition, will probably qualify as a "public 
use." Alternatively, the state could restrict its delegation of the state's eminent 
domain power so that local government entities do not have the power to 
condemn certain activities unless the state has decided it wants to encourage 
municipalization of services such as utilities. Home rule cities will be allowed 
to determine their own approach toward municipalization unless such efforts are 
viewed as a matter of mixed local and state concern and are not sufficiently local 
in nature to assure local autonomy over matters controlled by conflicting state 

Other state restrictions on local government eminent domain require that the 
power only be used to acquire property "necessary" for the public good. 
Jurisdictions vary as to whether this "necessary" determination is made judicially 
or legislatively. If the property is already being used for a public purpose, the 

102 INDIANA LAW REVIEW [Vol. 38:55 

eminent domain power may restrict condemnations to facilitate municipal 
ownership since it may not be "necessary" for the public good to municipalize 
a function already being preformed by private enterprise. Indeed, in some 
jurisdictions the '*prior public use doctrine" precludes the government from 
condemning property already devoted to public use unless the proposed use will 
not interfere or conflict with the existing use under the "compatible use theory." 
State and local governments can avoid these restrictions by expressly conferring 
eminent domain power to condemn property already devoted to a public use or 
support these limitations by legislatively enacting a "prior public use" restriction. 

Finally, expressly defining what "property" is subject to condemnation is an 
effective way for the state to restrict the government's eminent domain power 
over private enterprise. The definition of "property" can be legislatively or 
constitutionally restricted to "real property" or can specifically preclude the 
condemnation of an ongoing private enterprise, even if a valid public purpose 
will be served. 

Ultimately, state and local citizens will need to decide whether controlling 
government abuses of the eminent domain power by legislatively or 
constitutionally restricting the extent of this power against ongoing private 
enterprise will unduly limit the government's flexibility and power to promote 
the best interests of the public. While judicial review of government eminent 
domain action may be an effective way to curb abuse, eminent domain legislation 
and constitutional interpretations have historically been broad and deferential to 
an expanded use of this power. Although the extent and scope of the 
condemnation power varies by jurisdiction, each state should discern the limits 
and structure of this power as it applies to ongoing enterprises. Citizens should 
intentionally choose to either legislatively expand this power to promote the 
flexibility needed by government to municipalize or to legislatively prevent the 
government from acquiring an ongoing enterprise. 

National Ingratitude: The Egregious Deficiencies 

OF THE United States' Housing Programs for 

Veterans and the "Public Scandal" 

OF Veterans' Homelessness 

Florence Wagman Roisman* 

"The government should 'provide against the possibility that any 
[person] . . . who honorably wore the Federal uniform shall become the 
inmate of an almshouse, or dependent upon private charity. . . . [I]t 
would be a public scandal to do less for those whose valorous service 
preserved the government.'"^ 

"'I have the obligation as the commander in chief to go thank them for 
their service, to comfort them, to make sure that they are getting what 
they need.'"^ 

"Conservatively, one out of every four homeless males who is sleeping 
in a doorway, alley, or box in our cities and rural communities has put 
on a uniform and served our country."^ 

* Michael D. McCormick I Professor of Law, Indiana University School of Law — 
Indianapolis. This Article is dedicated to Michael D. McCormick, Esquire, in appreciation for his 
generosity to the law school. 

I am grateful to Indiana University School of Law — Indianapolis for a Summer Research 
Fellowship and a sabbatical semester, each of which was essential to the completion of this Article, 
and to these people for particularly thoughtful and insightful suggestions: Gideon Anders, Esq., 
Executive Director of the National Housing Law Project; Professor Megan Ballard of Washburn 
University School of Law; Linda Boone, Executive Director of the National Coalition for Homeless 
Veterans; Professor Daniel H. Cole of Indiana University School of Law — Indianapolis; Professor 
Dennis Culhane of the University of Pennsylvania; Harris David, Esq., of New Jersey Legal 
Services; Professor David M.P. Freund of Princeton University; Professor Beth Harris of Ithaca 
College; Chester Hartman, Ph.D., Director of Research for the Poverty and Race Research Action 
Council; Mary Ellen Hombs, Deputy Director of the U.S. Interagency Council on Homelessness; 
Mary Ellen McCarthy, Esq., Democratic Staff Director of the House Veterans Affairs 
Subcommittee on Benefits; and Roberta Youmans, an expert on low-income housing issues. Of 
course, these people do not necessarily agree with what I have written, and I alone am responsible 
for any errors in this Article. I appreciate the meticulous editing by Seth M. Thomas and his 
colleagues at the Indiana Law Review and the invaluable help of faculty assistant Mary Ruth Deer; 
librarians Richard Humphrey and Michelle Burdsall; and research assistants Andrea Bonds, 
Victoria Deak, Marissa Florio, Paul Jefferson, April Meade, Katie Orton, and Janis Sims. I 
presented earlier versions of this Article as the Paul E. Beam Fellowship Lecture at Indiana 
University School of Law — Indianapolis and at the Law and Society Association's May 2003 
annual meeting. 

1. 1888 Republican Party Platform, reprinted in 1 DONALD BRUCE JOHNSON, NATIONAL 
Party Platforms 82 (1978). 

2. Bob Woodward, Plan of Attack 280 (2004) (quoting President George W. Bush). 

3. National Coalition for Homeless Veterans, Background & Statistics, at http://www.nchv. 
org/background.cfm (last visited Oct. 20, 2004). 

104 INDIANA LAW REVIEW [Vol. 38: 103 

Table of Contents 

Introduction 105 

I. The Development of Veterans' Housing Programs in the United 

States from the Civil War to 2004 112 

A. Veterans' Housing from the Civil War to 1932 112 

B. New Deal Housing: The Federal Housing Administration and 

the Public Housing Program 116 

C Veterans' Housing in the Administration of Franklin Roosevelt 

and the G.I. Bill of Rights 119 

D. The Veterans ' Emergency Housing Program and the Wagner- 

Ellender-Taft Bill: 1945-1949 125 

1. VEHP 126 

2. The Housing Act of 1949 127 

E. Veterans' Housing Programs from 1950 to 2004 134 

1 . Agency Administration and Judicial Interpretation of the 

Veterans' Guaranteed Home Mortgage Loan Program ... 135 

a. Deficiency judgments and related issues 135 

b. Foreclosure avoidance 140 

2. The VA's Programs for Homeless Veterans 144 

n. Consequences of the Focus on Homeownership in the G.I. Bill 146 

A. The Exclusion of Women Veterans 147 

B. The Exclusion of Veterans of Color 149 

C. The Exclusion of Veterans Who Do Not Choose, or Cannot 

Afford, Homeownership 153 

in. Reasons Why Veterans Have Been Offered Only Homeownership 

Since World War H 156 

A. The Interests of Veterans and Veterans' Advocates 158 

B. The Interests of the Real Estate, Lending, Construction, Lumber, 

and Related Industries and Fiscal, Political, and Social 

Conservatives 160 

rV. An Initial Proposal of Solutions 162 

A. The Roles of Veterans and Veterans' Organizations 163 

B. The Design of the Program 169 

1. General Attributes of a Corrective Program 169 

2. Specific Attributes of a Corrective Program 171 

a. A subsidized rental program for veterans 171 

b. Improving the DVA Homeownership Program 175 

c. Redressing the past discrimination against female and 

minority veterans 175 

Conclusion 176 



This Article examines the nature and extent of housing assistance provided 
by the United States government to veterans of its miUtary service.^ It finds that 
assistance remarkably limited and inconsistent with our nation's history and 
rhetoric, providing a sobering corrective for those who wish to believe that public 
policy in the United States progressively becomes more humane or that national 
declarations are matched by national performance. The Article also considers the 
reasons and potential cures for these inadequacies and inconsistencies.^ 

In the late nineteenth century, the United States offered generous assistance, 
including housing, to disabled and elderly veterans. It was generally agreed that 
the government owed this debt to veterans with service-connected disabilities;^ 

4. The Article does not address the government's provision of housing assistance to those 
who are on active military duty or (except incidentally) to the survivors of servicepeople or 
veterans. Studies indicate that many servicepeople live in egregiously substandard housing and that 
some experience literal homelessness. For discussions of the inadequacy of housing for people on 
active military duty, see Pamela C. Twiss & James A. Martin, Conventional and Military Public 
Housing for Families, 78 Soc. SerV. Rev. 240 (1999); INTERAGENCY COUNCIL ON THE HOMELESS, 
U.S . Department of Housing and Urban Development, Homelessness: Programs and the 
People They Serve, Findings of the National Survey of Homeless Assistance Providers 
AND Clients, Technical Report 11-2 (1999) [hereinafter NSHAPC] ("4 percent [of homeless 
people interviewed] say that they were in the military at the time they were interviewed for [the] 
study"); Chester Hartman & Robin Drayer, Military Family Housing: The Other Public Housing 
Program, in CHESTER HARTMAN, BETWEEN Eminence & Notoriety: Four Decades of Radical 
Urban Planning 233 (2002); Elizabeth Becker, Army's Newest Objective is Livable Family 
Housing, N.Y. TIMES, Feb. 7, 2000, at A12 (stating that housing is a major reason that "midcareer 
service members leave the armed forces"); Editorial, Paying the Troops, N.Y. TIMES, Feb. 15, 200 1 , 
at A30 (stating that "[m]ore than 5,000 American military personnel still need food stamps to 
balance their monthly budgets" and that "[h]ousing conditions are even more scandalous. Of the 
300,000 military housing units, 200,000 are rated inadequate by the service's own minimal 

5. While there have been studies of educational programs for veterans (see, e.g. , Keith W. 
Olson, The G.I. Bill, the Veterans, and the Colleges (1974); Suzanne Mettler, Bringing the 
State Back in to Civic Engagement: Policy Feedback Effects of the G.I. Bill for World War II 
Veterans, 96 Am. Pol. Sci. REV. 35 1 (2002)), the housing programs have received virtually no 
critical or scholarly attention. See Kathleen Frydl, Book Review, 17 Law & HiST. Rev. 200, 200 
(1999) (reviewing Patrick J. Kelly, Creating a National Home: Building the Veterans' 
Welfare State 1860-1900 (1997)) (noting "the scant attention that the Veterans Administration 
has received from historians"). I hope that this Article will provoke further consideration of these 

6. See The PRESIDENT'S Comm'n on Veterans' Pensions, 84th Cong., The Historical 
Development of Veterans' Benefits in the U.S., A Report on Veterans' Benehts in the 
U.S. 65 (Comm. Print 1956) [hereinafter REPORT ON VETERANS' BENEFITS]: 

There has never been any question but that it is the Government's duty and 
responsibility to provide, and to provide generously, for those who, while or as a result 

106 INDIANA LAW REVIEW [Vol. 38:103 

and a post-Civil War consensus extended that obligation to encompass all 
veterans with disabihties and all elderly veterans.^ The rationale was that 
veterans had earned this compensation from the federal government, and that it 
would be shameful to allow veterans to suffer want or be forced to rely on state 
or local aid or private charity.^ 

In the late twentieth and early twenty-first centuries, however, veterans' 
housing programs assist relatively few veterans.^ Many veterans and their 

of serving their country in time of war, suffered disease or injury which resulted in their 
being unable to support themselves — in other words, those with service-connected 
disability .... Also, there has been no question as to the Government's responsibility 
to the dependents of those veterans who died as a result of their service in time of war. 

7. 5ee Judith Gladys Cetina, A History of Veterans' Homes in the United States, 1811-1930, 
at 2 (1977) (unpublished Ph.D. dissertation, Case Western University) ("[B]y the mid 1880s, a 
veteran disabled by wounds or the infirmities of old age who had participated in any of the major 
wars of the century . . . could find shelter in one of the branches of the National Home for Disabled 
Volunteer Soldiers (NHDVS) or in one of the many state soldiers' institutions. The professional 
soldier or career naval man in need of shelter could seek admission to either the U.S. Soldiers' 
Home in Washington, D.C. or the U.S. Naval Home in Philadelphia, Pennsylvania."); Theda 
Skocpol, Protecting Soldiers and Mothers: The Political Origins ofSocialPoucy in the 
United States 141 (1992) (stating that "in 1884 a new law specified that the branches of the 
National Home could take in elderly veterans without requiring them to have disabilities linked to 
wartime injuries"); REPORT ON VETERANS' BENEFITS, supra note 6, at 65-66 (Faced with the 
alternative of "do[ing] nothing for the man, thus incurring the criticism that the Government was 
allowing the men who fought and suffered for it to go unattended in their time of want," the 
government usually decided to succour "all veterans with or without restrictions as to disability, 
age, or indigency."). 

8. Skocpol, supra note 7, at 150 ("[HJonorable and generous public provision for Civil War 
veterans was openly defined in opposition to demeaning provision for paupers. The point was to 
keep these deserving men and those connected to them from the degrading fates of private charity 
or the public poorhouse."); see also KELLY, supra note 5, at 3 (deprecating "oblig[ing these 
veterans] to seek an asylum in the almshouses of the country"); id. at 14 (quoting the leaders of 
Boston's Discharged Soldiers' Home, who said in 1863 that "it cannot be presumed that the 
Government will long allow its heroic defenders to be dependent on public charity in any form, 
however delicately or cordially it may be extended"); CONCISE DICTIONARY OF AMERICAN 
Biography 10-11 (Joseph L. Hawkins ed. 1964) (quoting Gen. Josiah Perham as stating, in 1865, 
that "[t]he poor soldier broken in health, or maimed . . . should not return to be the object of 
capricious common charity; he should have a nation's gratitude, a nation's care, a place in the 
nation's household, a seat by the nation's fireside"); REPORT ON VETERANS' BENEFITS, supra note 
6, at 66-67 ("The philosophy is discernible that the Government ought to help the veteran when he 
is down, on the basis that he is a veteran. This seems to be largely the philosophy which prevailed 
up until World War II."). 

9. See The ENCYCLOPEDIA OF Housing 1 16 (Willem Van Vliet ed., 1998) (reporting that 
"about 1% of veterans hold VA loans"). An unknown number of veterans receive federal housing 
assistance under programs that are available to the general public, including programs administered 
by the Department of Housing and Urban Development (HUD) and the Department of Agriculture 


families pay far more than they can afford for shelter or live in overcrowded or 
otherwise substandard dwellings/^ and well over half a million veterans — some 
with dependent spouses and children — experience homelessness each year.^' 

(DoA), and the Low Income Housing Tax Credit Program (LIHTC) and tax advantages provided 
by the Department of the Treasury. It would be very helpful if other housing programs collected 
and reported statistics on the number of veterans they serve. See Anne B. Shlay & Charles E. King, 
Beneficiaries of Federal Housing Programs: A Data Reconnaissance, 6 HOUSING POL' Y DEBATE 
481, 481-83, 486 (1995) ("data are key" for monitoring compliance with requirements). 

1 0. See Mary Ellen Homes, American Homelessness: A Reference Handbook 63 (3d 
ed. 2001) (discussing housing burdens in the general population, which includes veterans); 
National Low Income Housing Coalition, Losing Ground in the Best ofTimes : Low Income 
Renters in the 1990s, at 5 (Mar. 2004), available at 
losingground.pdf. It appears that no statistics are kept regarding housing burdens of veterans as 
distinct from the general population. 

11. Estimates of numbers of homeless people are notoriously unreliable, depending upon 
variations in defining "homelessness" and different protocols for compiling statistics. See, e.g., 
Martha Burt et al.. Helping America's Homeless: Emergency Shelter or Affordable 
Housing? 28 (2001). With respect to homeless veterans in particular, the Department of Veterans 
Affairs (DVA), a department of the federal government, estimated in the 1990s that some 250,000 
veterans were homeless on any given night, twice that many over the course of a year. Press 
Release, DVA, VA Programs for Homeless Veterans (June 1999), at 
/99624hmls.htm; 1990 Annual Report, Interagency Council on the Homeless 248 (1991) 
(stating that between 150,000 and 250,000 veterans are homeless each night). More recently, the 
DVA has amended this to say that "it has been estimated that more than 200,000 veterans may be 
homeless on any given night and that twice as many veterans experience homelessness during a 
year." DWA, Fact Sheet: VA Programs for Homeless Veterans (Dec. 2004), or 
gov/opa/fact/hmlssfs.html [hereinafter DVA Fact Sheet Dec. 2004] . While the statement that "more 
than 200,000 veterans may be homeless on any given night" is not inconsistent with the statement 
that the number of veterans homeless on any given night is 250,000, the change certainly seems 
designed to suggest that the number of homeless veterans was smaller in 2003 than it was in the 
1990s. Unfortunately, there is absolutely no basis for that suggestion; indeed, for several reasons, 
the likelihood is that even the 250,000 per night, half-million per year, estimate is too low. 

In 1991, the National Coalition for the Homeless considered that estimate too low. See 
National Coaution for the Homeless, Heroes Today, Homeless Tomorrow?: 
Homelessness Among Veterans in the United States 2 (Nov. 1991) [hereinafter Heroes 
Today, Homeless Tomorrow?]. One of the most thorough studies of homelessness was the 
National Survey of Homeless Assistance Providers and Clients (NSHAPC), undertaken in 1996, 
nine years prior to the publication of this Article. See Burt et al., supra note 11, at 16-17. 
NSHAPC data indicate that the number of people who may have experienced homelessness during 
a year beginning in February 1996 was 3.5 million. Id. at 49-50. Using that total, and the estimate 
that about 34% of homeless people are in families, yields the result that some 2.32 million single 
people may have experienced homelessness in that year. See id. at 33. Using the estimate that 23% 
of homeless adults are veterans produces the result that some 533,600 single veterans may have 
experienced homelessness in that year, not including veterans who are in families (which is the case 
for many women veterans). See, e.g., NSHAPC, supra note 4, at 11-2, 11-3; GAO, HOMELESS 

108 INDIANA LAW REVIEW [Vol. 38: 103 

Moreover, many of those homeless veterans suffer service-connected disabilities, 
and therefore are veterans to whom the federal government owes a special 
obligation.''^ Rather than accept responsibility for these homeless veterans, the 

Veterans: VA Expands Partnerships, but Homeless Program Effectiveness Is Unclear, 
GAO/HEHS-99-53, at 1 (Apr. 1, 1999) [hereinafter GAO REPORT]. 

NSHAPC's numbers may have underestimated the number of homeless persons in 1996. See 
HOMBS, supra note 10, at 62-63 (discussing other studies of homelessness). Moreover, several 
studies suggest that the numbers of homeless people increased in at least some of the years since 

Homelessness Survey, A Status Report on Hunger and Homelessness in American Cities 
(Dec. 2004) app. (indicating increases in demand for shelter from 1998 to 2003), available at 
t2004.pdf; Joel Stein et al.. The Real Face of Homelessness, Time, Jan. 20, 2003, at 54 {Time 
magazine's survey of eight jurisdictions with relatively reliable statistics showed year-over- year 
increases in either 2001 or 2002 of homeless parents and children); INSTITUTE FOR THE Study of 
Homelessness and Poverty, Homelessness in Los Angeles: A Summary of Recent 
Research 5, 8 (March 2004) [hereinafter Homelessness in Los Angeles]; Jennifer Steinhauer, 
Advocates for Homeless Offer Cautious Praise for City Changes, N. Y. TIMES, Feb. 27, 2004, at B 1 
(stating that "[i]n the past few years, the number of homeless families in the shelter system has risen 
significantly . . .[,] an increase of almost 50 percent since 2001"). 

Furthermore, with respect to the multiplier, note that "[cjounts estimating the number of 
homeless people over a period of a year are commonly three or more times larger than point-in-time 
counts." Homelessness IN Los Angeles, supra, at 8 (reporting ratios between 2.8 and 5); see also 
Burtet AL., supra note 1 1, at 14 (discussing "evidence that the number of people who experience 
homelessness during the course of a year or longer could be as much as six times the number 
homeless at any given time") (citation omitted). All of these are reasons to believe that the number 
of homeless veterans is far higher than 250,000 per night and 500,000 in any given year. 

In addition, none of this takes into account, as the DVA Fact Sheet states, that "[m]any other 
veterans are considered at risk [of homelessness] because of poverty, lack of support from family 
and friends and precarious living conditions in overcrowded or substandard housing." See DVA 
Fact Sheet Dec. 2004, supra. 

12. The Department of Veterans Affairs ("DVA" or "VA") reports that "the vast majority of 
homeless veterans" suffer disabilities. Fund Availability Under the VA Homeless Providers Grant 
and Per Diem Program, 68 Fed. Reg. 34,489 (June 9, 2003). These disabilities include mental 
illness, substance abuse disorders, arthritis, rheumatism and other joint problems, high blood 
pressure, and Post Traumatic Stress Disorder ("PTSD"). Id.; NSHAPC, supra note 4, at 11-6; 
Paula P. Schnurr et al.. Randomized Trial of Trauma- Focused Group Therapy for Posttraumatic 
Stress Disorder: Results from a Dep 't of Veterans Affairs Cooperative Study, 605 ARCHIVES Gen. 
Psychiatry 481 (2003). 

While we do not know how many of these are service-connected disabilities, it is reasonable 
to assume that a substantial number are. See JoelBlau, THE VISIBLE POOR: Homelessness IN the 
United States 29 (1992) (stating that "many" of the Viet Nam veterans have service-connected 
disabilities); REPORT ON VETERANS' BENEFITS, supra note 6, at 65 (stating that, in the past, when 
it was not clear whether a veteran's disabilities were service-connected, the government has 
followed a "prevailing principle that the veteran should be given the benefit of the doubt"). 


federal government has abandoned them to the mercies of state and local 
governments and private charities, remitting many of them to the streets or to 
shelters that are today's equivalent of the poorhouses and almshouses that were 
to be avoided for veterans in the nineteenth century.*^ 

This failure to provide for veterans has occurred despite intervening 
proclamations that decent housing is the right of all human beings, internationally 
and in the United States. In 1941, President Franklin Roosevelt asserted that all 
Americans should live in "Freedom from Want,"^"^ and the 1948 Universal 
Declaration of Human Rights — inspired in part by Roosevelt's 1941 
address*^ — proclaimed that "[e] very one has the right to a standard of living 
adequate for the health and well-being of himself and his family, including food, 
clothing, [and] housing."^^ In the 1949 National Housing Act, the Congress of 

The number of people with service-connected disabilities has grown dramatically with the wars 
in Afghanistan and Iraq. On May 5, 2004, CNN reported the medical evacuation of 40,000 service 
members from Iraq since the war began. CNN New snight Aaron Brown (CNN television broadcast, 
May, 5, 2004), available at Sixteen 
percent of veterans of operations in Iraq and Afghanistan who have separated from military service, 
or 26,633, "had filed [disability] benefits claims with the VA for service-connected disabilities" as 
of April 2004. Josh White, Influx of Wounded Strains VA, WASH. POST, Oct. 3, 2004, at AOl 
(citing a VA accounting). 

13. See, e.g., Dan Barry, Home from Iraq, and Without a Home, N.Y. TIMES, Apr. 24, 2004, 
at A 12; Dan Barry, War Veteran Finds Home Has a Heart, N.Y. TIMES, May 29, 2004, at A13 
(describing an honorably discharged veteran of the war in Iraq who, with her young child, suffered 
homelessness in New York City; a month after the story appeared, she was living in an apartment 
in a building owned by the New York Coalition for the Homeless); see Skocpol, supra note 7, at 
67-101 for the nineteenth century view; see also Heroes Today, Homeless Tomorrow?, supra 
note 1 1, at vi (stating that "some of our troops who fought in Desert Storm are homeless already 
[in 1991]. Their homecoming has resulted in little more than a parade to the shelter"). 

For an anticipation of what seems to be the twenty-first century situation, see Kelly, supra 
note 5, at 45-46 (Urging relief for disabled soldiers in 1 864, Frederick ICnapp prophesied that delay 
would deplete the public's sympathy for disabled soldiers. Kelly quoted Knapp, who wrote, 
prophetically, "We shall get accustomed to it — and communities will accept the fact & pressure of 
a larger number of these disabled men among them, struggling for ... a livelihood, just as they 
accept the fact of the vast mass oi permanent poverty in their midst.") (emphasis in original). 

14. President Franklin D. Roosevelt, State of the Union Speech (Jan. 6, 1941), in 9 The 
PuBuc Papers and Addresses of Franklin D. Roosevelt 672 (Russell & Russell 1969) (1950) 
[hereinafter PUB. PAPERS]. 

1 5 . Mary Ann Glendon, A World Made New: Eleanor Roosevelt and the Universal 
Declaration OF Human Rights 176 (2001). 

16. UnfversalDeclaration OF Human Rights, art. 25, G.A. Res. 217 A, U.N. Doc. A/810 
(1948). The United States also has signed (though not ratified) the International Covenant on 
Economic, Social, and Cultural Rights, which also recognizes the human right of every person to 
"an adequate standard of living," including housing. See Office of the United Nations High 
Comm'r for Human Rights, Ratifications and Reservations, at 
countries/ratification/3.htm (last updated Nov. 24, 2004). 

1 10 INDIANA LAW REVIEW [Vol. 38: 103 

the United States declared the national housing goal to be "the realization as soon 
as feasible of the goal of a decent home and a suitable living environment for 
every American family,"'^ and Congress re-affirmed that goal in 1968/^ There 
also have been rhetorical commitments to adequate provision for veterans in 
particular. President Lincoln concluded his Second Inaugural Address with the 
exhortation that now is engraved over the entrance to the building that houses the 
Department of Veterans Affairs: "to care for him who shall have borne the battle 
and for his widow and his orphan."*^ President Franklin Roosevelt, when signing 
the G.I. Bill of Rights into law on June 22, 1944, said that members of the armed 
forces "have been compelled to make greater economic sacrifice and every other 
kind of sacrifice than the rest of us, and are entitled to definite action to help take 
care of their special problems."^^ In accordance with President Roosevelt's 
reference to entitlement, popular opinion has considered that the G.I. Bill 
embodies "a soldier's right to fair treatment from a grateful nation."^^ 

The G.I. Bill, in general, has been hailed as creating an "American welfare 
state for veterans and their families,"^^ a "universal"^^ program that establishes 

17. Housing Act of 1949, Pub. L. No. 81-171, § 2, 63 Stat. 413, 413 (codified as 42 U.S.C. 
§ 1441 (2000)). 5^e Bruce Headey, Housing PoucY IN THE Developed Economy: The United 
Kingdom, Sweden and the United States 14 (1978) (discussing similar statements in Sweden 

(1967) and Britain (1961) and characterizing the U.S. statement as made "[w]ith greater bombast 
but even less prescience"). 

1 8. Housing and Urban Development Act of 1968, Pub. L. No. 90-448, § 2, 82 Stat. 476, 476 

(1968) (codified as 42 U.S.C. § 1441 (2000)). See also Chester Hartman, The Case for a Right to 
Housing, 9 HOUSING POL'Y DEBATE 223 (1998). 

19. President Abraham Lincoln, Second Inaugural Address (Mar. 4, 1865), in INAUGURAL 
Addresses of the Presidents of the United States: From George Washington 1789 to 
George Bush 1989, at 142, 143 (1989); Veterans Benefits Administration, Leadership Covenant 
of the Veterans Benefits Administration (June 28, 2002), at (stating that 
Lincoln's words "are found in every VA office and convey the sanctity of our mission"). 

20. Franklin D. Roosevelt, The President Signs the G.I. Bill of Rights (June 22, 1944), in 13 
Pub. Papers, supra note 14, at 180, 181; Servicemen's Readjustment Act of 1944, Pub. L. No. 78- 
346, 58 Stat. 587 (commonly known as the G.I. Bill of Rights). 

21 . See, e.g., I'llBuy That!: 50 Small WONDERS and Big Deals That Revolutionized 
THE Lives of Consumers 74 (1986) (emphasis added); Legion Bill Asks Wide Veteran Aid, N.Y. 
Times, Jan. 9, 1944, at 28 (quoting Congressman John E. Rankin as describing the proposed G.I. 
Bill as "the minimum of the just dues owed to the men and women of the armed forces for their 
services in the preservation of the nation in World War 11"). 

22. Edwin Amenta & Theda Skocpol, Redefining the New Deal: World War II and the 
Development of Social Provision in the United States, in THE POUTICS OF SOCL^ POUCY IN THE 
United States 81, 81-82 (Margaret Weir et al. eds., 1988); see also Geoffrey Perrett, Days 
OF Sadness, Years ofTriumph: The American People 1939-1945, at 341-42 (1973) (describing 
veterans' benefits as "a variety of Socialism"). 

23. Sar a. Levitan & Joyce K. Zickler, Swords into Plowshares: Our GI Bill 7 


a "happy ending" for all veterans.^"* On the contrary, however, the housing 
program created by the G.I. Bill was an extremely limited measure that was 
available only to some veterans and provided eligible veterans with restricted aid. 
The program served the interests of industries more than the needs of veterans. 
The ironic reality is that since the enactment of the housing provisions of the G.I. 
Bill of Rights, government housing assistance has been unavailable to most 
veterans, particularly for veterans and veterans with service-connected 
disabilities, who have the strongest claim on and greatest need for government 

Whatever may be the case with respect to the educational and other 
provisions of the G.I. Bill,^^ the housing provisions of the G.I. Bill never did, and 
do not now, "take care of [veterans'] special problems"^^or provide to all or even 
most veterans a "rich bounty,"^^ or "fair treatment from a grateful nation."^^ The 
housing provisions excluded some people by design and others by administration 
and left a legacy of veterans living in unaffordable, overcrowded, or otherwise 
substandard housing, in shelters and in cars, and literally on the streets. 

The substandard housing and homelessness suffered by 
veterans — particularly those with service-connected disabilities — is inconsistent 
with the long-standing understanding that the nation owes a debt to its veterans, 
with the nation' s history, and with the nation' s rhetorical commitments. The goal 
of this Article is to illuminate these inconsistencies, to consider why these 
contradictions exist, and to propose ways of assuring that every veteran has 
access to decent, affordable housing. 

Part I of this Article describes the development of housing assistance for 
veterans in the United States from the Civil War to 2004. The focus is on the 
period after the 1944 enactment of the G.I. Bill of Rights, which created a 
veterans' housing program that provided only homeownership assistance. Part 
n discusses one of the consequences of the decision to offer that homeownership 
assistance only: the exclusion from the G.I. Bill's housing program of women, 
veterans of color, and veterans for whom homeownership is infeasible or 
unaffordable. Part HI considers some reasons why only homeownership may 
have been offered as the response to a problem far too broad to be solved by 
homeownership. Part IV proposes possible solutions to the current crisis with 
respect to veterans' housing, outlining what could be done to help veterans who 
are suffering housing problems, including homelessness. 

24. Davis R.B.Ross, Preparing FOR Ulysses: Politics and Veterans During World 
War II, at 3 (1969) ("This story of the origins of the United States' policy for able-bodied veterans 
of World War II ends happily"; "[n]ever has a nation lavished so many material benefits upon its 
heroes"; "World War II veterans received a rich bounty."). 

25. See, e.g., Mettler, supra note 5. 

26. See supra note 20 and accompanying text. 

27. See supra note 24 and accompanying text. 

28. See supra note 21 and accompanying text. 

1 12 INDIANA LAW REVIEW [Vol. 38: 103 

I. The Development of Veterans' Housing Programs in the 
United States from the Civil War to 2004 

A. Veterans' Housing from the Civil War to 1932 

Some students of the subject maintain that nations traditionally are ungrateful 
to their veterans. Davis R.B. Ross sees the origin of this reaction in the Odyssey, 
which, he writes, "may be said to be a classic description of how societies treat 
their war veterans."^^ After victory, Ross suggests, those at home "discard 
rapidly (if ever they held them) feelings of obligation and gratitude to veterans. "^^ 
Richard Severo and Lewis Milford agree that "[t]here were times in American 
history, including recent history, when such soldiers were lured into service with 
offers of generous pay, bonuses, and benefits, only to be scorned as mercenaries 
and social parasites when they tried to collect their due."^^ They write that 
"[t]hroughout American history, even after 'popular' wars, veterans have had to 
struggle against a Government that has mostly sought to limit its financial 
liability, more like a slippery insurance company than a polity rooted in the idea 
of justice and fair reward."^^ 

As Theda Skocpol and others have shown, however, the federal 
government's provision for veterans after the Civil War "evolved from a 
restricted program to compensate disabled veterans and the dependents of those 
killed or injured in military service into an open-ended system of disability, old- 
age, and survivors' benefits for anyone who could claim minimal service time on 
the northern side of the Civil War."^^ "Through Civil War benefits, the federal 
government . . . became the source of generous and honorable social provision 
for a major portion of the American citizenry. "^"^ This provision included 

29. Ross, supra note 24, at 2. 

(1994) (stating that "[ojften enough the numbers of the poor were increased by demobilized 
soldiers. ... Sir Thomas More ... in Utopia (1516) pointed out that in inter-war periods 
demobilized soldiers and redundant retainers 'were thus destitute of service [that they] either starve 
for hunger, or manfully play the thieves'") (quoting THOMAS MORE, THE UTOPIA ofSir Thomas 
More (J.H. Lupton ed., 1895) (1516)). 

3 1 . Richard Severo & Lewis Milford, The Wages of War: When America' s Soldiers 
Came Home — From Valley Forge to Vietnam 16 (1989). 

32. Id. ; see also DixoN Wecter, When Johnny Comes Marching Home 10, 1 83 (1944) 
(discussing contradictory views of veterans and stating that, after the Civil War, "stay-at-homes 
often nourished a secret distrust of the soldier"). The United States did, however, have a history 
of providing land to some of its veterans — those who were male and white. See, e.g., James W. 
Oberly, Sixty Million Acres: American Veterans and the Public Lands before the Civil 
War (1990); Report on Veterans' Benehts, supra note 6, at 67 (stating that the provision of 
compensation and pensions "was followed by land grants (changed after the Civil War to homestead 
preference)"); id. at 110-14 (discussing government aids to land acquisition by veterans). 

33. Skocpol, supra note 7, at 102. 

34. Id. at 10\; see also id. at 111, 128-29; 5^^ «/5oMichaelB.Katz,In THE SHADOW OFTHE 


housing. At the end of the nineteenth century, "the federal government accepted 
responsibiUty for sheltering citizen-veterans, both disabled and elderly, who were 
physically unable to maintain their livelihoods in the rough-and-tumble world of 
late-nineteenth-century capitalism. "^^ It did this by establishing a series of 
soldiers' homes — collectively entitled the National Home for Disabled Volunteer 
Soldiers (NHDVS) — that offered "a generous and dignified space for citizen- 
veterans," "a system of relatively comfortable, modem, and ornamented 
institutions providing Union veterans with food and board, medical care, 
recreation, religious instruction, and employment opportunities . . . without 
suffering from the stigma afflicting nonveterans forced to seek help from the 
local poorhouse."^^ The residence was "not a charity," but "a home tendered to 
the veteran ... as a partial remission of a debt the government was obliged to pay 
directly to every volunteer who fought in the nation's service."^^ 

By the early 1870s, the United States had "a viable institution for the care of 
disabled veterans," with four branches of the National Home and "an efficient 
system of outdoor relief for disabled veterans who preferred private 
accommodations.^^ By 1900, there were eight branches of the NHDVS; when 
NHDVS was consolidated into the Veterans Administration (VA) in 1930, there 
were twelve.^^ While the Board of NHDVS also used state homes, it insisted 

Poorhouse: a Social History of Welfare in America 200 (1986) (stating that "[i]n the late 
nineteenth and early twentieth centuries, at least one of every two elderly, native-bom white 
Northern men and many of their widows received a pension from the federal government. Pensions 
were the largest expense in the federal budget after the national debt. Through its veterans' 
pensions, the United States federal government . . . spent much more on old-age assistance than did 
Britain, which usually is thought to have been far in advance of America in the development of a 
welfare state") 

35. Kelly, supra note 5, at 129. A contrary view was reported, however, by the 1956 
presidential commission chaired by General Omar Bradley, which said that "[fjor all wars prior to 
World War II, . . . veterans without service-connected disabiUties were left to their own devices in 
the matter of their readjustment to civilian life." Report on Veterans' Beneptts, supra note 6, 
at 51. This finding by the Bradley commission may be related to the commission's 
recommendations. See June A. WiLLENZ, Women Veterans: America' s Forgotten Heroines 
167 (1983) (stating that the Bradley commission "aroused great controversy [when] it questioned 
the rationale for many of the benefits, particularly for those who had not been wounded or maimed 
in battle. It concluded that the justification for non-service-connected benefits was quite weak, and 
that society had other methods at its disposal to meet the needs of veterans who were not wounded 
in war"). 

36. Kelly, supra note 5, at 123. 

37. Cetina, supra note 7, at 94-96. 

38. M at 143; see id. at 3 (stating that in some cases, the soldiers' homes (or "branches") 
were residences for the dependents of elderly veterans as well as the veterans themselves); id. at 320 
(discussing the Wisconsin home's provision for married couples and widows). 

39. Kelly, supra note 5, at 2 n.4. The Veterans Administration (VA) became the cabinet- 
level Department of Veterans Affairs (DVA) on March 15, 1989. Department of Veterans Affairs 
Act of 1988, Pub. L. No. 100-527, 102 Stat. 2635. Both the DVA and others often refer to the 

1 14 INDIANA LAW REVIEW [Vol. 38: 103 

"that it was not the state's duty to care for the disabled soldier but that the 
obligation to assist the needy veteran was a general charge upon the whole 
country, and all sections of the nation should bear their fair share.'"^^ 

The homes, distinguished in their architecture and landscaping, were "highly 
valued prizes for communities .... Requiring a steady supply of goods, labor, 
and services, each branch of this institution played a significant role in sustaining 
the economic vitality of nearby cities. . . . [L]ocal communities displayed an 
intense interest in procuring a branch of the National Home for their area.'"^* 

The NHDVS housed "colored" as well as white veterans, all of whom 
initially were said to have lived "together on friendly terms, . . . without thought 
of each other except [as] soldiers disabled in the cause of a common country .'"^^ 
"[B]y the end of the century, [however,] Jim Crow had apparently destroyed any 
hopes for full integration. Members of the colored company . . . then messed at 
separate tables and patronized a special shop separate from the main 

DVA as the VA; this Article does so as well. 

40. Cetina, supra note 7, at 143; see, e.g. , STATE OFCaufornia, GOVERNOR'S COMMISSION 
ON California Veterans Homes: 1999-2001, Findings and Recommendations on Sites for 
Future State Veterans Homes 4-5 (Oct. 1 5 , 200 1 ) (noting that California' s first veterans ' home, 
in Yountville, has operated since 1884, and that additional homes were added, in the 1990s, in 
Bars tow and Chula Vista). 

41. Kelly, 5M/7ra note 5, at 172. 

42. Cetina, supra note 7, at 1 1 2 (quoting ANNUAL REPORT OFTHE BOARD OF Managers for 
1871, H. Mis. Doc. 298, 42d Cong., 2d Sess., at 2); see also KELLY, supra note 5, at 98 ("In the 
decade of the 1870s, the Home housed approximately 80 black veterans a year."). With respect to 
the situation of Blacks in the pension system, see Skocpol, supra note 7, at 138, stating that 

[S]ome 186,017 blacks served in the Union armies .... Blacks made up about 9 to 10 

percent of the Union forces .... Although there is no systematic evidence about how 

black Union veterans fared in the pension application process compared to whites, hints 

from the historical record suggest that free blacks with stable residential histories in the 

North probably did as well as their white socioeconomic counterparts, while black 

veterans and survivors from the ranks of freed slaves may often have lacked the 

documents they needed to establish claims for pensions. Remarkably unlike most U.S. 

institutions of its day, the Pension Bureau was not formally racist. 

See also id. at 596 n.l30 (noting that about 5 percent of the Pension Bureau's employees in 1903 

were black); cf. Ann Shola Orloff, The Political Origins of America 's Belated Welfare State, in THE 

Politics of Social Poucy in the United States, supra note 22, at 37, 48 (stating that Blacks 

were excluded from the pension system) and Theda Skocpol & John Ikenberry, The Political 

Formation of the American Welfare State in Historical and Comparative Perspective, 6 COMP. SOC. 

RES. 87, 97-98 (1983) (same). 

43. Cetina, supra note 7, at 112; see also KELLY, supra note 5, at 98-99, stating that 


By the end of World War I, provisions for veterans plainly were inadequate. 
Many veterans, including those with disabilities, suffered severe want in the 
1920s.'*^ Wecter writes that, in the depression of 1920-21, "the Keys to the City 
had turned out to be only a pass to the flophouse" for some veterans."^^ 

Black residents, however, lived in segregated quarters, ate their meals at segregated 
tables, and had their hair cut by separate barbers. The number of African- Americans 
living in the home network remained small, especially in proportion to the number of 
African- American men who had served as Union soldiers .... By 1899, . . . only 2.5 
percent (or 669) of the veterans assisted in the NHDVS were African- American. 
See also id. at 225 n.33, stating that: 

In addition to discrimination, there are other explanations for the disproportionately low 
number of blacks in the network. One is the traditional reluctance of African- Americans 
to institutionalize family members. In an agricultural economy, African-American 
kinship networks were possibly both more willing and more able to absorb and care for 
disabled family members. 

The change in treatment of Black veterans is consistent with the thesis that universal 
segregation was not imposed in the South before 1887. See C. Vann Woodward, The Strange 
Career of Jim Crow 6, 16 (1957) ("More than a decade was to pass after Redemption before the 
first Jim Crow law was to appear upon the law books of a Southern state, and more than two 
decades before the older states of Virginia, North Carolina, and South Carolina were to adopt such 


44. See Wecter, supra note 32, at 363-64, stating that: 

Many veterans now [in 1921] felt the pinch of want .... In Greater Boston, in the 
winter of 1920-21, six thousand veterans and their families sought Red Cross relief. . 
. . Panhandlers in faded uniforms and veterans selling apples and pencils and poppies 
stood on street comers, foreshadowing the even bleaker phenomena of ten years later. 
See also RAYMOND MOLEY, Jr., The AMERICAN Legion Story 78-80 (1966) (indicating that even 
veterans who had been disabled in World War I were not adequately cared for after the war. 
Among other things, "[t]he mentally ill were housed in jails, and other patients were led to cots 
provided by [American] Legion posts"); iV/. at 1 1 1-1 13 (discussing the plight of disabled veterans); 
id. at 117 (stating that some of "the shattered of World War I . . . . [n]eglected and destitute, 
bedridden and diseased, . . . sought refuge in insane asylums, poorhouses and even jails .... 
[S]ome [including some with tuberculosis] were compelled to sleep in the open. These were hardly 
the rewards of a grateful nation"); id. at 279 (noting that there were "immediate hardships for most, 
prolonged displacement for some, and, when the waves of depression rolled across the country, a 
full measure of misery for hundreds of thousands who had served" and depicting "cold, hungry men 
in tattered khaki warming themselves in hobo camps along the nation's railroads, the ex-serviceman 
selling apples on a street comer or sidling up to a soup kitchen in old shoes repaired with 
cardboard. The destitute veteran was a familiar sight for two decades between the wars"). These 
descriptions suggest that Kelly errs in stating that "[t]he creation of this system of veterans' 
institutions . . . marked the permanent expansion of the U.S. veterans' welfare state." Kelly, supra 
note 5, at 90. 

45. Wecter, supra note 32, at 345. But see id. at 403-04 (stating that "American pensioners 
of the World War [I] increased 866 percent between 1919 and 1929, whereas among the nations 
of Europe such pensioners were steadily diminishing" and attributing "these transatlantic 

1 16 INDIANA LAW REVIEW [Vol. 38: 103 

Beginning in 1929, with the Great Depression, the need and suffering of 
veterans increased dramatically. In May 1932, between 20,000 and 40,000 
veterans — the Bonus Expeditionary Force (BEF) — arrived in Washington, D.C. 
to urge Congress to provide an immediate cash bonus for veterans."^^ In July 
1932, Army Chief of Staff General Douglas Mac Arthur led 600 troops, including 
mounted cavalry and tanks, to drive the veterans out of their nation's capital."^^ 
What has been called "the grotesque spectacle of the rousting of ex-servicemen" 
contributed to the defeat of Herbert Hoover four months later.'*^ 

B. New Deal Housing: The Federal Housing Administration and the 

Public Housing Program 

The most important contemporary development with respect to veterans' 
housing — the G.I. Bill of Rights — emerged in the administration of Franklin 
Delano Roosevelt (FDR). In order to appreciate the significance of the G.I. Bill, 
it is necessary first to understand the general housing policies and programs of 
FDR's administration — the Federal Housing Administration (FHA) program of 
1934 and the public housing program of 1937 — and the background for those 

Except for military and veterans' accommodation, the United States 
government was not involved in providing housing assistance until World War 
I, and its involvement at that time was limited to assisting in financing the 
development of housing for shipbuilders and other defense workers ."^^ As soon 

differences" to three things: "the generosity of American traditions and our almost reckless gratitude 
toward the man who has shouldered a gun in the nation's defense"; "our lack of universal health, 
old age, and unemployment insurance"; and "our highly developed system of lobby and pressure 
groups, controlled by specialists skilled in amplifying a minority murmur into a roar imperious and 
terrifying to any Congressman"). 

46. See Ross, supra note 24, at 12-16 (discussing, inter alia, the removal of the Bonus 
Expeditionary Force from Washington, D.C. in 1932 and setting the number of BEF marchers at 
20,000); cf. Donald J. Lisio, The President and Protest: Hoover, Mac Arthur, and the 
Bonus Riot 77 (1994) (setting the number at 20,000); Severo & MiLFORD, supra note 3 1 , at 269 
(setting the number between 25,000 and 40,000). 

47. See Severo & MiLFORD, supra note 3 1 , at 274 (stating that President Hoover later said 
that he had intended only that the veterans be moved from the business district of Washington back 
to their encampment in Anacostia); id. at 275 (stating that the VA reported that 67% of the 
marchers had served overseas and 20% of them suffered some disability); Lisio, supra note 46, at 
X (MacArthur "deliberately disobeyed Hoover's written order limiting the scope of the Army's 
assistance, and he later ignored the President's repeated oral messages to stop all operations."). 

48. Severo & Milford, supra note 3 1 , at 276 (calling this event a "grotesque spectacle"); 
id. at 278 ("Hoover's (really MacArthur' s) folly cost Hoover the November election"); Lisio, supra 
note 46, at x ("The expulsion of the bonus marchers delivered an irreparable blow to Hoover's 
reputation, as most people assumed that he had ordered the brutal dispersal."). 

49. See Gail Radford, Modern Housing for America: Poucy Struggles in the New 
Deal Era 16-17, 37-43 (1996); Steven E. Andrachek, Housing in the United States: 1890-1929, 


as World War I ended, the government ordered that housing sold as swiftly as 

After the Great Depression, the homeownership rate in the United States, 
which had been low in the 1920s, became even lower, as milhons of homeowners 
faced foreclosure.^' President Hoover and the Congress acted to protect 
homeowners from foreclosure and to encourage the expansion of 
homeownership, but their efforts were modest and relatively ineffective.^^ 

When Franklin Delano Roosevelt's administration began in 1933, he and 
Congress acted swiftly to expand efforts to protect and advance homeownership. 

in The Story of Housing 123, 169 (Gertrude Sipperly Fish ed., 1979) ("The role of the federal 
government in housing reform between 1890 and 1929 was almost nonexistent."); id. at 170-72 
(discussing the three federal laws enacted in 1918 "to provide housing for laborers in the war- 
related industries"); Eric J. Karolak, "No Idea of Doing Anything Wonderful" : The Labor-Crisis 
Origins of National Housing Policy and the Reconstruction of the Working-Class Community, 

Policy IN Twentieth-Century America 60 (John F. Bauman et al. eds., 2000) [hereinafter From 
Tenements to the Taylor Homes]; id. at 64 ("The wartime production crisis, not the general 
welfare of urban workers and their families, justified the first federal home-building program."). 
This was in sharp contrast to the situation in Great Britain, where, in 1918, Prime Minister 
Lloyd George famously "pledged himself to secure 'habitations fit for the heroes who have won the 
war. ' " Mark S wenarton. Homes Fit for Heroes : The Politics and Architecture of Early 
State Housing IN Britain 79 (1981) (quoting The Times, 13 Nov. 1918). See id. at 67 ("In the 
wake of the Armistice, the 'homes fit for heroes' campaign was adopted as the major weapon of the 
state in the 'battle of opinion' on which, it was believed, the future of the entire social order 
depended."); id. at 1 (Thereafter, between World Wars I and II, "local authorities in England and 
Wales built about three-quarters of a million houses . . ." for returning veterans and their families.); 
see also LAURENCE F. Orbach, HOMES FOR Heroes: A Study of the Evolution of British 
Public Housing, 1915-1921 (1977). 

50. See Karolak, supra note 49, at 74-75; Andrachek, supra note 49, at 172; Mary K. Nenno, 
Housing in the Decade of the 1940' s — The War and Postwar Periods Leave Their Marks, in THE 
Story of Housing, supra note 49, at 242, 245, 247. 

51. See Gwendolyn Wright, Building the Dream: A Social History of Housing in 
America 193 (1981) ("[T]he residential mortgage debt had tripled in one decade [1920s]; and the 
number of foreclosures mounted precipitously at the decade's end. In addition, the percentage of 
homeowners had been steadily declining. . . ."); id. at 195-96 ("The 1920 census showed that only 
46 percent of all American families were homeowners. That figure was even lower in most 
metropolitan areas . . . ."); id. at 205 ("After 1925, foreclosures began to increase."); Nathaniel 
S. Keith, Poutics and the Housing Crisis Since 1930, at 19 (1973) ("In 1932, foreclosures 
reached the disastrous level of 250,000 homes."); id. at 24 (In early 1933, "homes were being 
foreclosed at an average rate of about one thousand per day."). 

52. See WRIGHT, supra note 5 1 , at 196-200 (describing Herbert Hoover's encouragement of 
homebuilding before and during his presidency); Janet Hutchison, Shaping Housing and Enhancing 
Consumption: Hoover's Interwar Housing Policy, in FROM TENEMENTS TO THE TAYLOR HOMES, 
supra note 49, at 81, 93; Radford, supra note 49, at 86-88, 178; Report on Veterans' Beneftts, 
supra note 6, at 42-43 

118 INDIANA LAW REVIEW [Vol. 38: 103 

To preserve homeownership, Roosevelt urged Congress to create the Home 
Owners Loan Corporation (HOLC), which '*help[ed] to save 10 percent of all 
owner-occupied nonfarm residences" in its first year of operation.^^ To stimulate 
housing construction without large federal investment, Roosevelt proposed what 
became the National Housing Act of 1934, which created the Federal Housing 
Administration program of insuring home mortgage loans.^"^ Marinner Eccles, 
who was a principal drafter of the legislation, explained that it "avoided any 
direct encroachment by the government on the domain of private business, but 
. . . used the power of government to establish the conditions under which private 
initiative could feed itself and multiply its own benefits."^^ These efforts served 
both Roosevelt's political goals and his personal support for homeownership.^^ 
Despite the program's emphasis on the private market, the legislation initially 
was opposed by building and loan associations, and by many insurance 
companies and mutual savings banks.^^ The homebuilders and realtors, however, 
were powerful supporters of the program. ^^ 

53. Radford, supra note 49, at 179; Kenneth T. Jackson, Crabgrass Frontier: The 
Suburbanization OFTHE United States 195-203 (1985) (describing the operations of the Home 
Owners Loan Corporation). 

54. See JACKSON, supra note 53, at 203-18; RADFORD, supra note 49, at 179-80. 

55 . Marriner S. Eccles, Beckoning Frontiers: Pubuc and Personal Recollections 
151 (1951); see also id. at 150-51 (describing the "revolution [ary]" nature of the FHA proposals); 
id. at 152 (stating that the original FHA legislation also was intended to promote rental housing); 
id. at 303 (stating that the provision for rental assistance was not adequate); id. at 159-60 (stating 
that the original FHA legislation was effective for home repairs but not for new construction until 
amendments were made in 1938). For a different view, see David M.P. Freund, Colored 
Property: State Poucy and White Racial Politics in the Modern American Suburb 
(forthcoming 2005). 

56. See RADFORD, supra note 49, at 179 (FDR expressed "both a cultural preference for 
homeownership and an intention to use it to maintain political equilibrium."). 

57. See EcCLES, supra note 55, at 155 ("[T]he building and loan associations were opposed 
to the FHA because they did not want to see commercial banks get into the home lending field" and 
many insurance companies and mutual savings banks also opposed the FHA.); id. at 159 (referring 
to "the almost solid opposition to the program offered by the financial community"). 

58. See, e.g., MARK I. Gelfand, A NATION OF CITIES: THE FEDERAL Government and 
Urban America, 1933-1965, at 1 13 (1975) ("Nelson, who dominated the association [the National 
Association of Real Estate Boards ("NAREB")] for three decades before his retirement in the mid- 
1950s," gave "avid support" to the FHA mortgage insurance program, "which practically 
guaranteed a builder his profit," but Nelson strongly opposed public housing.); Keith, supra note 
51, at 13 ( "While the establishment of the FHA mortgage insurance program had some reform 
aspects from the standpoint of correcting the mortgage abuses of the Twenties, it was primarily sold 
politically as a program to unfreeze the home-building industry and thereby stimulate employment 
and the economy."); id. at 25 (The "acutely depressed building materials and equipment industries 
and ... the surviving remnants of the home builders" also supported this approach.); see also 
Eccles, supra note 55, at 154-55 ("While the heart of the FHA involved a reform of the whole 
mortgage market, the character of the opposition that was encountered forced us to soft-pedal that 


Meanwhile, federally subsidized rental housing was developed by the Public 
Works Administration's Housing Division.^^ This program was strongly opposed 
by the lending, insurance, and real estate industries and by conservatives 
generally .^^ Liberals of various persuasions tried to transform it into a permanent 
program, although FDR himself did not offer much support for the effort.^* As 
the ravages of the Depression and enthusiasm for the New Deal waned, 
conservatives in Congress were able to eviscerate these attempts. While 
Congress did create a federally-financed low rent public housing program in the 
United States Housing Act of 1937, the legislation had been substantially 
weakened, and the final bill was considered a victory for the new conservative 

C. Veterans' Housing in the Administration of Franklin Roosevelt and 

the G.L Bill of Rights 

President Franklin Roosevelt shared with President Hoover the view that 
non-disabled veterans should be assisted only in their status as members of the 
general population.^^ Addressing the American Legion in 1933, FDR said "that 
no person, because he wore a uniform, must thereafter be placed in a special class 
of beneficiaries over and above all other citizens. The fact of wearing a uniform 

theme. We were obliged instead to speak merely of the effect the proposed bill would have in 
stimulating new construction."). 

59. Se^RADF0RD,5Mpra note 49, at 89-109. 

60. See id. at 105. "Conservative," a word that recurs throughout this Article, generally refers 
to those who opposed most of the domestic programs of the New Deal. See James T. Patterson, 
Congressional Conservatism and the New Deal, at vii (1967) (citing Cunton Rossiter, 
Conservatism IN America: The Thankless Persuasion 12-13, 165 (2ded. 1962)). 

6 1 . See, e.g. , H. PETER Oberlander & EvA Newbrun, Houser: The Life and Work of 
Catherine Bauer 130-44 (1999) (describing the different approaches of Catherine Bauer for the 
Labor Housing Conference and Mary Simkhovitch for the National Public Housing Conference); 
id. at 143 (stating that when the legislation was being considered in 1926, Catherine Bauer "told 
her union friends that 'the President could change the whole picture in thirty seconds if he would 
make a statement — even a lukewarm one. ' But he remained silent"); Timothy L. McDonnell, The 
Wagner Housing Act: A Case Study of the Legislative Process 214-15, 271-72, 342-45 
(1957) (describing FDR's lack of enthusiasm for the legislation, although he ultimately did support 
its passage). 

62. See RADFORD, supra note 49, at 189-191 (discussing defects in the legislation, which put 
siting and other crucial decisions under local and state control); Phillip J. Funigiello, The 
Challenge to Urban Liberausm: Federal-Cffy Relations During World War II, at xiv 
(1978) ('To some extent ... the urban programs of the Roosevelt administration were a snare and 
delusion .... A matching grant toward construction was very tempting, but there was no similar 
federal grant for maintenance and upkeep."); PATTERSON, supra note 60, at 155 n.68 ("The final 
version [of the 1937 Housing Act] largely reflected the views of conservatives."). 

63 . See Ross, supra note 24, at 24; 2 HERBERT HOOVER, MEMOIRS OF HERBERT HoovER 285 
(1951) (referring to "professional money-hunting veterans"). 

120 INDIANA LAW REVIEW [Vol. 38: 103 

does not mean that he can demand and receive from his Government a benefit 
which no other citizen receives. "^"^ FDR also attempted to prevent the 
redemption of the bonuses created by Congress in 1924.^^ Even with respect to 
disabled veterans, FDR "remove[ed] from pension rolls ... the vast majority 
having nonservice-connected disabilities" and reduced compensation for veterans 
with service-connected disabilities.^^ 

Despite his earlier determination to serve non-disabled veterans only as part 
of the general public, when FDR was planning for reconstruction after the 
Second World War, he became disposed to offer some benefits to non-disabled 
veterans.^^ The President, his advisers, and the nation in general were very much 
concerned that demobilization and "[r]emoval of the war-created federal fiscal 
activity when peace came would lead to widespread unemployment."^^ They did 
not want a recurrence of the Great Depression.^^ 

In a fireside chat in July 1943, FDR said that veterans "must not be 
demobilized into an environment of inflation and unemployment, to a place on 
the bread line or on a comer selling apples. "^^ When the public responded well 
to this suggestion, the Administration proposed legislation whose principal 
provision was for educational benefits for veterans.^^ While FDR spoke of the 

64. Franklin D. Roosevelt, Address to the American Legion Convention, Chicago, 111. (Oct. 
2, 1933), in 2 PUB. PAPERS, supra note 14, at 373, 375-76. See Ross, supra note 24, at 18-19, 27, 
33, 49-50 (discussing the conflict over this view); id. at 18 (quoting Treasury Secretary 
Morgenthau's view that veterans, "a special-interest group," "had no special claim on the 

65. See Ross, supra note 24, at 17-19. 

66. Amenta & Skocpol, supra note 22, at 85-86 (While the New Dealers generally sought to 
expand social welfare programs, they "attempted to cut back one category of social expenditures: 
benefits for military veterans. They believed that the needs of ex-soldiers should be met chiefly by 
programs directed at the entire population."); see also Ross, supra note 24, at 25-28 (describing 
Roosevelt' s initially successful fight for legislation that enabled him to accomplish these reductions 
by executive order); id. at 78-82 (discussing the 1943-44 attack, led by the American Legion and 
the Hearst newspapers, against the Administration's alleged neglect of disabled veterans). 

67. See Olson, supra note 5, at 19-20 (discussing the change in Roosevelt's views). 

68. Ross, supra note 24, at 34; see also MOLEY, supra note 44, at 279 (stating that more 
people were seeking work at the end of the war than had been unemployed in 1933: "[t]ens of 
millions in war work sought peacetime jobs. Compare this with the great depression when eleven 
million were unemployed in 1933, less than the total World War II demobilization"). But cf. Kefth, 
supra note 51, at 22 ("By early 1933, unemployment was estimated variously at from 12 million 
to 17 million persons . . . (there were no accurate statistics)."). 

69. See Ross, supra note 24, at 34-36 (discussing the "Depression Psychosis"); id. at 56-58 
(discussing proposals to keep servicemen in service after the war ended in order to avoid 
demobilizing them into unemployment). 

70. Franklin D. Roosevelt, Fireside Chat on Progress of War and Plans for Peace (July 28, 
1943), in 12 PUB. Papers, supra note 14, at 326, 333; Ross, supra note 24, at 64. 

7 1 . Franklin D. Roosevelt, Message to Congress on the Education of War Veterans (Oct. 27, 
1943), in 12 PUB. Papers, supra note 14, at 449, 45 1 [hereinafter Roosevelt, Message to Congress 


moral obligation to provide for veterans, he emphasized that education would 
"simplify and cushion the return to civilian employment of service personnel. "^^ 
The remaining elements of FDR's proposals — mustering-out pay, a uniform 
system of federal unemployment benefits, and credit for social security for the 
time spent in the service — also were designed to soften the impact of 
demobilization on the labor market^^ 

While housing was not part of the President's proposals for veterans,^"^ FDR 
and his administration did consider that the federal government should provide 
some forms of housing assistance — for the public in general, not veterans in 
particulars^ Indeed, the National Housing Administrator "advised against a 

on the Education of War Veterans]; Ross, supra note 24, at 82, 89, 92. 

72. Roosevelt, Message to Congress on the Education of War Veterans, supra note 7 1 , at 450 
("[T]he Nation is morally obligated to provide this training and education."); Ross, supra note 24, 
at 92-93; see also id. at 61-62 (noting that these points had been made in the report of the National 
Resources Planning Board (NRPB) and that the planners also "believed that aid to veterans would 
strengthen the nation's schools and colleges"). 

For a description of the volatility of the situation in the United States, see Michael J. 
Bennett, When Dreams Came True: The GI Bill and the Making of Modern America 8- 1 7 
(1996); id. at 17 ('"After the last war, except for England, this is the only country where the men 
who wore uniforms did not overthrow the government on either side of the conflict,' Henry 
Colmery, the American Legion national commander who wrote the G.I. Bill, had warned Congress 
when the bill was under consideration.") (quoting OLSON, supra note 5, at 20); Bennett, supra, 
at 17 ("If the twelve million veterans of World War II had been dumped off the boats like the nearly 
four million from the previous war and given only $60 and a train ticket home with neither 
educational nor economic opportunity waiting when they got back, violent revolution might have 
easily been sparked."); OLSON, supra note 5, at 4 ("The sheer numbers of future veterans frightened 
Americans. Leaders across the country influenced others to believe that something had to be done 
for the veterans — something beyond a bonus, something that would contribute significantly to a 
healthy economy, and something that would allay veteran resentment toward government."). 

73. See Ross, supra note 24, at 93. 

74. See id. at 89-94 (describing elements of the Administration's proposals, which did not 
include housing, and revealing that the housing agencies were not represented in the interagency 
committee established by the Budget Bureau to develop the proposals); id. at 55 & n.73 (showing 
that the Housing and Home Finance Agency had not been represented in the Post- War Manpower 
Conference that met regularly during 1942 and early 1943); id. at 52-61 ; id. at 62 (noting, however, 
that the National Resources Planning Board had recommended "disposal of [farm] lands acquired 
by the Federal Government during the war to deserving and apt veterans"). 

75 . Part of the influence on the Administration with respect to housing programs came from 
the National Resources Planning Board (NRPB), chaired by FDR's uncle, Frederic Delano, and 
charged by FDR in November 1940 to develop "national social and economic policies for the 
postwar period." Amenta & Skocpol, supra note 22, at 87; see FUNIGIELLO, supra note 62, at 164 
(regarding "post-defense planning"); ROSS, supra note 24, at 52-53 (referring to the work of the 
NRPB's Post- War Manpower Conference as "the single most important effort on the part of the 
executive department to provide a comprehensive policy for World War II veterans"). With respect 
to housing, "the NRPB had a radical viewpoint. The 'right to shelter' was included in its 1942 New 

122 INDIANA LAW REVIEW [Vol. 38: 103 

special program just to meet the postwar needs of veterans alone. He thought a 
broad policy benefitting all citizens would be more desirable"^^ and expressed 
concern that a special program for veterans might "obstruct or complicate"''^ 
more general programs.^^ 

The source of what became the veterans' housing program was omnibus 
veterans' legislation proposed by the American Legion, legislation that quickly 
came to be known as the G.I. Bill of Rights.^^ In addition to more customary 
forms of veterans' benefits, the Legion's proposed G.I. Bill also included a 
relatively new idea, a housing provision that would have had states administer 
programs for making loans to finance homes and farms, with the federal 
government providing $4 for each $1 contributed by the state.^^ 

The G.I. Bill was introduced on January 10, 1944, by Senator J. Bennett 
C'Champ") Clark (D-Mo.) and Congressman John E. Rankin (D-Miss.).^^ In the 
Senate, the bill had 70 co-sponsors. After some amendments, it was approved 
unanimously by that body on March 24, 1944.^^ 

The bill's progress in the House was considerably slower. The bill was 
referred to the House Committee on World War Veterans' Legislation, chaired 

Bill of Rights, which President Roosevelt cited in his 1944 reelection campaign." Amenta & 
Skocpol, supra note 22, at 92. 

The NRPB was not able to implement any of its recommendations that conflicted with "VA- 

supported programs for veterans [I]n matters such as health insurance and disability programs, 

the jealous control maintained by the VA over national programs for veterans prevented the NRPB 
from realizing its vision of national programs for all citizens." Id. at 108. 

The NRPB was eliminated in 1943 on the urging of "[c]ongressional critics of planning and 
the New Deal, fiscal conservatives, rural Democrats and Republicans, and interest groups such as 
the National Association of Real Estate Boards." FUNiGffiLLO, supra note 62, at 184. 
See also Ross, supra note 24, at 92 (noting that although the recommendations for educational 
benefits for veterans had originated with the NRPB's Post- War Manpower Conference, FDR, in 
an act of apparent "administrative 'genius,'" attributed the recommendations to his Armed Forces 
Committee on Post- War Educational Opportunities for Service Personnel, rather than to the 
controversial NRPB). 

76. Ross, supra note 24, at 72-73. 

77. M. at 244. 

78. Id. at 102 ("The hope of linking veterans' benefits with the overall task of domestic 
reconversion had been a polestar for Roosevelt's planners."). 

79. See id. at 99-102; MOLEY, supra note 44, at 270 ("The broad concept [of the GI Bill] 
originated in The American Legion, a member of the Legion wrote the bill, an employee of the 
Legion suggested its meaningful name. Legionnaires promoted it and handled its legal presentation, 
and a former Commander secured its unanimous approval in the Senate."); OLSON, supra note 5, 
at 18-20 (discussing the Legion's role). 

80. See Ross, supra note 24, at 101-02. 

81. Mat 98, 100. 

82. Id. at 106. The vote was 50-0, with forty-six members absent, all of whom would have 
voted for the bill. Id. 


by Congressman Rankin. ^^ Chairman Rankin and members of his committee 
were not enthusiastic about the legislation.^"^ After some delay, they offered a 
new version of the bill.^^ While the committee's focus was not on the housing 
provisions, its version did change the direct loans to guaranteed loans, and raised 
the maximum interest rate from three percent to six percent. The shift from 
direct to guaranteed loans "represented the successful efforts of Rankin to keep 
the Federal Government participation at a minimum."^^ 

The House as a whole had to decide whether to approve the committee's 
version or the Senate version, which was "generally favored by the 
Administration."^^ Rankin's committee's version, with some amendments, 
passed the House unanimously.*^ An attempt to reduce the interest rate from six 
percent failed.*^ In the House-Senate conference, the guaranteed loan provision 
was retained and the maximum interest rate was reduced from six to four 
percent.^^ President Roosevelt signed the bill into law on June 22, 1944.^^ As 
Ross writes, "the elimination of direct loans to veterans" was one of "the fees 
extracted by conservatives in Congress."^^ The enactment of a housing program 
that benefited only veterans was regarded as a defeat by those New Dealers who 
had tried to provide a universal program.^^ 

Few loans were made under the 1944 provisions, which a later study 
attributed to the facts that the maximum loan guarantee allowed was $2000 "and 
that the careful doublecheck required by law for each applicant was too 
cumbersome."^"^ In 1945, Congress amended the Act to raise the maximum 
guarantee to $4000, streamline the loan process, and extend the deadline for 

83. See id. at 21, 107. 

84. See id. at 107- 11; id. at 21-24 (providing a brief biography of Congressman Rankin). 

85. See id. aillO-n. 

86. M atllln.69. 

87. Matin. 

88. Id. at 1 16. The vote was 388-0, with forty-one not voting. Id. 

89. Mat 115. 

90. Id. at 118. The principal issues at conference concerned the unemployment and 
readjustment sections; dispute over these occasioned a dramatic conclusion to the conference, with 
the American Legion locating and returning to Washington the congressman whose vote made the 
crucial difference. See id. at 1 17. 

91. See supra note 20; see Ross, supra note 24, at 1 18. 

92. Ross, supra note 24, at 124; see also John Robert Moore, The Conservative Coalition 
in the United States Senate, 1942-1945, 33 J. S. HiST. 368, 373 (1967) (The year 1944 was "when 
the coalition [of conservative Southern Democrats and conservative Republicans] reached its peak 

93. See Perrett, supra note 22, at 339 ("A handful of New Dealers fought against the 
principle of veterans' exclusiveness, without the support of the White House. The Legion was 
therefore under no serious pressure to compromise, and its bill passed almost intact. Liberals 
mourned it as a great opportunity lost."). 

94. Report ON Veterans' Benefits, 5M/7ra note 6, at 58. 

124 INDIANA LAW REVIEW [Vol. 38: 103 

securing loans. ^^ The program became even more attractive to private lenders in 
"1950 — when Congress increased the amount of the guarantee to 60 percent, or 
$7,500, whichever was less, and the maximum maturity was increased to 30 
years."^^ In the decades of the 1950s and 1960s, the VA homeownership 
program was used by millions of veterans.^^ 

The housing program in the G.I. Bill was very similar to the Federal Housing 
Administration homeownership program created in 1934.^^ This is not 
surprising, as the American Legion had developed the G.L Bill's housing 
provisions in consultation "with real estate, building and loan and financial 
associations and the FHA."^^ 

Both the VA and FHA programs helped the lending and real estate industries 
by encouraging the financing and construction of single family housing and 
assuring the lenders and builders that a federal agency would make up losses 
caused by borrower defaults. *^^ Both the VA and FHA programs minimized the 
federal contribution. Both used private lenders to make the loans and limited the 
federal role to guaranteeing or insuring the lender against loss in case the 
borrower defaulted. *^^ The fundamental difference between the VA and FHA 
programs was that the veterans' program was run by the Veterans' 
Administration rather than by FHA. 

95. See id. at 58-59; id. at 162-63 (stating that the ^'provisions . . . practically meant a fresh 
start because they changed the law to such an extent"). 

96. Nenno, supra note 50, at 253; see also id. at 254 (stating that "until 1950, about two 
thirds of all VA loans were used for existing housing"); NATIONAL COMMISSION ON Urban 
Problems, Building the American City, H.R. Doc. 91-34, at 103 (1969) [hereinafter The 
Douglas CoMM'N Report] (same); see also PaulF.Wendt, Housing Policy — The Search for 
Solutions 180-81 (1963) (Until October 1950, the VA also guaranteed "Section 505 second 
mortgage loans which were also secured by" a FHA first mortgage. This "permitted 100-percent 
government-underwritten financing on the sale of new tract homes to eligible veteran borrowers."). 

97. See MOLEY, supra note 44, at 282 ("Of 5,268,000 loans made up to 1964, 4,966,000 were 
for homes. One-fifth of all single-family residences built since the end of World War II has been 
financed by the GI program for either World War II or Korean War veterans. Of the twenty-eight 
million home-owner properties ... in the United States [before the date of publication of this book, 
1966], 16,000,000 are mortgaged properties and about 22 per cent are financed by GI loans. ... It 
has been said that the landscape architect of post-war America has been the VA loan-guarantee 

98. See JACKSON, supra note 53, at 204; Levitan & ZlCKLER, supra note 23, at 85 (noting 
two significant advantages of the VA program). 

99. MOLEY, supra note 44, at 273. 

100. See Wendt, supra note 96, at 152 ("The FHA . . . was looked upon as an instrumentality 
of government designed to serve the private mortgage lenders.") 

101 . See Henry J. Aaron, Shelter and Subsidies: WhoBeneftts from Federal Housing 
Policies? 80, 87(1972). 


D. The Veterans ' Emergency Housing Program and the Wagner- 
Ellender-Taft Bill: 1945-1949 

When the G.I. Bill was enacted, the United States was facing a severe 
housing shortage. ^^^ Millions of civilians were living in overcrowded and 
otherwise substandard conditions, and that situation soon would be exacerbated 
by the demobilization of millions of servicepeople.^^^ Policymakers knew that 
rental housing as well as homeownership was needed. ^^"^ A housing report 
published by the National Resources Planning Board in 1940 noted the need for 
housing for "the lower income groups," and said that "this new housing must 
provide houses for both owner occupancy and rental." ^^^ The report continued: 

A large percentage of people now live in rented houses and apartments 
and will probably continue to do so. 

Home ownership for everyone is not a feasible objective. Under 
many circumstances, home ownership is more costly than renting, and 
the risks are great. Under existing conditions, there are the dangers to be 
faced of property and neighborhood deterioration, of buying a poorly 
built house, of being unable to meet the long-time obligations involved. 
Moreover, there are people who prefer, or whose circumstances make it 
advisable for them, to rent rather than to own their living quarters. There 
are those whose present financial position is good but whose future is 
not assured, those who have been unable or do not wish to save, those 
who wish to invest their savings in other ways, those whose place of 
employment is likely to change, those whose occupation demands 


40 (1966); NAT RoGG, Office of the Housing Expediter, A History of the Veterans 
Emergency Housing Program 6-7 (n.d.) ("a housing shortage of unparalleled magnitude"). 

103. See Nenno, supra note 50, at 255 (In 1946, the Housing Expediter reported to the 
President that "[i]n October, 1945, 1 .2 million families were living doubled-up with other families; 
an additional 2.9 million married veterans would need homes by December 1945; more than half 
a million non veterans who would marry during the course of the year would be looking for homes. 
In total, 3.5 million families would be looking for homes in 1946, and about 1.1 million new 
famihes would need homes in 1947. To accommodate this need, only 945,000 vacant units would 
be available in 1946, and 430,000 vacant units in 1947. Thus, by the end of 1946, more than 2.5 
miUion families would need homes."). 

104. See, e.g., ROGG, supra note 102, at 32 ("Surveys of veterans' home preferences made in 
1945 and 1946 indicated at least half of those seeking homes preferred to rent rather than to buy 
at current prices."). 

1 05 . National Resources Planning Board, Housing, The Continuing Problem 3 ( 1 940) 
[hereinafter THE CONTINUING Problem] ; see also Marion Clawson, New Deal Planning: The 
National Resources Planning Board 132 (1981) (noting that the NRPB disclaimed 
responsibility for the views expressed in that report); Amenta & Skocpol, supra note 22, at 92 n.32 
("In 1940, the NRPB contracted for and published a report entitled Housing: The Continuing 
Problem, but it did not endorse any of its conclusions."); see Clawson, supra, at 94-97 (discussing 
the controversial nature of the NRPB). 

126 INDIANA LAW REVIEW [Vol. 38: 103 

frequent absences from home or a central urban location, those who are 
old and who do not wish the responsibility of a home of their own, and 
those who are young and need only small quarters. For all these people 
rental housing must be provided. ^^ 

The Truman Administration recognized that the VA housing program was 
limited not just to veterans but to only those veterans who could afford and 
secure homeownership. Knowing that millions of veterans and nonveterans 
would be unable to use the VA housing program, the Administration "responded 
. . . with a twofold program," seeking enactment of both the Veterans' 
Emergency Housing Program (VEHP) and the Wagner-Ellender-Taft (W-E-T) 

1. VEHP. — On January 26, 1946, President Truman, by executive order, 
established the office of Housing Expediter, responsible for providing housing 
for veterans, and appointed Wilson W. Wyatt to that position. ^^^ In February 
1946, Wyatt announced the Veterans* Emergency Housing Program, proposed 
legislation that was designed to "facilitate rapid construction of low-cost housing 
for veterans." ^^^ Wyatt based his VEHP proposals on continuation of wartime 
controls on rents, building materials, and new homes, and establishment of price 
ceiUngs on sales of existing houses and building lots.'*^ He also sought the 
establishment of "allocations and priorities for residential builders in purchasing 
materials and equipment, subject to a stiff preference for veterans in the sale or 
rental of the resulting housing,"^ *^ "'premium payments' to encourage high- 
volume production of scarce building materials, and Reconstruction Finance 
Corporation loans" for factory-built housing.*'^ 

Aspects of the VEHP bill were powerfully opposed by the "'real estate' 
lobby."^^^ The legislation was enacted only with restrictions and was signed into 

106. The Continuing Problem, supra note 105, at 3. In 1981, Marion Clawson wrote that 
"all housing planners today should be required to read the 1940 report in full." Clawson, supra 
note 105, at 133. His observation is as true in 2005 as it was in 1981. 

1 07. See Davies, supra note 102, at 4 1 . 

1 08 . Keffh, supra note 5 1 , at 59. 

109. Davies, 5M/7ra note 102, at 41-42. 

110. Keith, 5Mpra note 51, at 60. 

111. Id. 

1 12. Davies, supra note 102, at 44-45. 

113. Ross, supra note 24, at 256; id. at 255-56 ("The Democratic leadership complained about 
the immense pressure being put on Congress by the 'real estate' lobby," certainly including the 
National Association of Real Estate Boards (NAREB), which conducted a campaign to defeat it. 
Herbert U. Nelson, speaking for NAREB, urged all Realtors to contact their Congresspersons 
urging defeat of the Patman bill (which included some but not all of the VEHP proposals).); see id. 
at 256 n.69 ("'Act now if you want to save your business,'" he advised them.). Although Ross 
identifies Nelson as NAREB Executive Director, Gelfand says Nelson was executive vice-president. 
See Gelfand, supra note 58, at 1 12. 


law by President Truman on May 22, 1946.'^'^ But subsequent actions by the 
conservatives in Congress "dealt the VEHP a telling blow,"^^^ and "on January 
11, 1947, the President signed an executive order terminating most aspects of the 
program."^ ^^ 

Part of the VEHP legislation had redirected a program of rental assistance 
from "war workers" to "veterans."^ ^^ Under this "Section 608" program, more 
than 400,000 units of housing were built between 1946 and 1950, when the 
program ended. ^^^ Thus, the VEHP did make a short-term contribution to 
meeting the veterans' need for rental assistance, but relatively few rental units 
were produced, ^^^ and both the "houses and apartments produced were primarily 
priced at levels suitable only for middle-income and at best lower-middle-income 
veterans. There was no production for low-income veterans or other families 
requiring housing subsidy for the simple reason that there was no financing 
program to accomplish this result." ^^° 

2. The Housing Act of 1949. — The Truman Administration' s other effort to 
provide rental housing assistance to veterans — and civilians — was resurrection 
of the public housing program created by the Housing Act of 1937.^^^ NAREB 
and other conservative forces had persuaded Congress to deny funding for public 
housing in 1939 and 1940;^^^ and conservative opposition to public housing 

1 14. See Davies, supra note 102, at 46; KEITH, supra note 51, at 62 ("minus only the price 
ceilings on existing housing"); id. at 68 (noting that VEHP passed only with significant restrictions, 
and the program lasted for one year). 

115. Davies, 5Mpra note 102, at 47. 

116. Keith, 5Mpra note 51, at 67. 

117. See Irving Welfeld, HUD Scandals: Howung Headlines and Silent Fiascoes 6 
(1992) (Section 608 of the National Housing Act was enacted in 1942 (56 Stat. 303) and amended 
in 1945 (59 Stat. 47) and 1946 (Veterans' Emergency Housing Act, Pub. L. 79-388, 60 Stat. 207, 

118. See The ENCYCLOPEDIA OF Housing, supra note 9 ("Between 1 942 and the termination 
of the program in 1950, 465,683 units in more than 7,045 developments were built . . . ."); 
Welfeld, supra note 1 17, at 6 (stating that most of these were produced after 1946 — over 425,000 
units in a grand total of 7065 projects). 

1 19. See Rogg, supra note 102, at 32-36 (discussing rental housing under the VEHP); id. at 
36 (concluding that "the volume of rental housing started during 1946 and 1947 is still far short of 
meeting the need for this type of housing"). 

120. Keith, supra note 51, at 64; see also United Negro and Allied Veterans of America 
Representative, Report to the National Veterans Housing Conference 2 (Feb. 29, 1948) (John F. 
Kennedy Library, Papers of John F. Kennedy, Correspondence Series, National Veterans 
Conference, 1948 File, Box 83) [hereinafter United Negro & Allied Veterans] (citing Housing and 
Home Finance Agency surveys that showed that the median monthly rent of units authorized under 
the VEHP in 1946 was $59, "compared to the $39 median rent which Northern Negro veterans 
were able to pay and the $31 median rent which Southern Negro veterans could pay"). 

121. See supra note 62 and accompanying text. 

122. See Gelfand, supra note 58, at 115 ("Joining forces with other conservative groups 
seeking to undo the New Deal's welfare reforms, NAREB succeeded in convincing the House of 

128 INDIANA LAW REVIEW [Vol. 38: 103 

"virtually halt[ed] the program from 1939 to 1949.'"^^ 

While public housing was under attack in the early 1940s, cities and real 
estate developers were promoting discussion of and plans for urban 
redevelopment, including the elimination of "slums and other deteriorated 
areas. "^^"^ While the interests of the cities and developers were quite different 
from the interests of the advocates for public housing, the two topics often were 

In January 1945, the Senate Subcommittee on Housing and Urban 
Redevelopment, chaired by Senator Robert A. Taft (R-Ohio), began serious 
hearings on these topics. ^^^ The public housing movement at this time had 
increasing strength. "The war emergency had given the reformers new 
opportunities to push for government construction. . . ."^^^ The administration 
wanted to expand the public housing program: the National Housing Agency 
(NHA) Administrator, John B. Blandford, Jr., expressed the administration's 
support for resuming the public housing program and "made it quite clear that he 
was adopting the public housers' approach to city rebuilding." ^^^ 

On August 1 , 1945, Senator Taft submitted his subcommittee' s report, noting 
that the only "'accepted national interest' was in improving housing 
conditions." ^^^ On the same day. Senator Robert F. Wagner (D-N.Y.), "the 
Senate' s dean of housing," introduced legislation, co-sponsored by Senator Allen 
J. Ellender (D-La.),^^^ that included both revived public housing and aid to 

Representatives to kill USHA's [United States Housing Authority's] request for additional 
authorizations in 1939 . . . [and] further appeals for more public housing funds were similarly 
denied in 1940 . . . ."); see also Alexander von Hoffman, A Study in Contradictions: The Origins 
and Legacy of the Housing Act of 1949, 11 HOUSING Pol'y DEBATE 299, 303 (2000) ( "[T]he 
growing number of anti-New Deal politicians elected to Congress in between 1938 and 1942 cut 
off funding for the public housing program."); id. at 304 ("During the late 1930s, NAREB 
campaigned intensively against public housing and helped convince a conservative Congress to stop 
funding the program."). 

123. Gelfand, supra note 58, at 199; see also FUNIGIELLO, supra note 62, at 84 ("[T]he 
growing scarcity of building materials and labor in 1940 had virtually halted the slum clearance and 
public housing" programs.). In the conflict between defense housing and public housing, 

administration officials were willing to write off the USHA and the slum clearance 
program in exchange for votes on other legislation. In Congress, fiscal conservatives 
like Senator Harry F. Byrd of Virginia, anti-New Deal Democrats, and Republicans 
from rural constituencies . . . intended to make certain that public housing would not 
emerge after the war to compete with private enterprise. 

Id. at 87-88; id. at 95-96 (In early 1941, Congress "went to considerable lengths to manifest 

displeasure toward the USHA and the public housing lobby."). 

124. See GELFAND, supra note 58, at 137-38. 

125. See id. at 138 ("hearings began in earnest in January 1945"). 

126. Mat 140. 

127. Id at 138. 

128. Id at 142. 

129. J. Joseph Huthmacher, Senator Robert F. Wagner and the Rise of Urban 


redevelopment.*^^ These bills then were combined in the Wagner-Ellender-Taft 
(W-E-T) housing bill, introduced later in 1945.*^* President Truman and Wilson 
W. Wyatt, the Housing Expediter, well aware that neither the G.I. Bill nor the 
VEHP met the need to provide housing assistance for lower-income veterans, 
saw the solution to this problem in enactment of the WET bill.*^^ 

However, the public housing provisions of WET had many opponents, 
notably the real estate and lending industries and conservatives generally. The 
industries that benefitted from homeownership had a pragmatic interest in 
preventing the enactment of rental programs, since the lack of rental 
opportunities drove people to homeownership, whether they would have 
preferred that or not.*^^ "[T]he Home Building Industry Committee, the National 
Association of Real Estate Boards, the National Association of Home Builders, 
and the United States Chamber of Commerce, among others," were determined 
to kill the public housing feature of the bill.*^"^ 

LffiERAUSM 240, 299-301 (1968). 

130. See Gelpand, supra note 58, at 144. 

131. /^. at 144-45. 

132. See Davies, supra note 102, at 42 (Truman "endorsed and actively supported" WET.); 
id. at 49 (Wyatt believed WET would "fill in the gaps in the Veterans' Emergency Housing 

133. See FUNIGIELLO, supra note 62, at 101 ("[E] ven low-income workers, unable to rent, were 
being pressured into ownership, usually with a $100 down payment and the balance of the 
equity in eighteen monthly installments . . . [which] . . . only a few defense workers could afford 

to pay "); Welfeld, supra note 1 17, at 16-17 (Senator Robert Taft, in 1946, noted the relative 

dearth of rental housing opportunities and the more ample "building of housing for sale, the sale 
of which is forced on many veterans who should not have to buy them, and who would prefer to 
live in rental housing."); id. at 17 (Taft's comment was made with respect to the extension of 
Section 608 to veterans; he noted that the program is "perhaps somewhat too liberal for builders, 
but under that [there is] some building of rental housing rather than the building of housing for 
sale."); see also MICHAEL Harloe, The People's Home?: Social rented housing in Europe & 
America 209 n.lO (1998) ("Bowley . . . saw this development [of increasing homeownership in 
the 1930s] as driven by a lack of investment in rental housing, which led many to home ownership 
'because it was the only way of satisfying a particular need.'") (quoting Marian BoWLEY, HOUSING 
AND THE State 1919-44, at 86 (1944)); see also JiM Kemeny, The Great Austrauan 
Nightmare57 (1983) (stating that "[l]ower real rents increasingly deter households whose incomes 

have risen from buying into owner-occupation The danger [in Australia] in the mid-1970s was 

that public renting would increasingly be recognised as a cheap and attractive alternative to home- 

134. See HUTHMACHER, supra note 129, at 323; Gelfand, supra note 58, at 144-47 
(discussing WET and listing also the National Association of Manufacturers as an opponent). 

Lined up on one side were NAREB, the United States Savings and Loan League, the 
American Bankers Association, and other business groups, each of which would have 
liked to get urban redevelopment started, but not at the price of more public housing. 
. . . Ranged against them were the liberal-welfare groups, many veterans organizations, 
the big-city mayors, and the Executive Branch. 

130 INDIANA LAW REVIEW [Vol. 38: 103 

In addition to the Homebuilding and lending industries' financial interest in 
opposing rental housing, many industry actors were opposed to federal assistance 
to rental housing on ideological grounds. Industry spokesmen referred to public 
housing as "European socialism in its most insidious form' and *the cutting edge 
of the Communist front." *^^ Indeed, WET's low-rent public housing provisions 
were "a hete noire for many conservatives of both political parties," who 
opposed public housing on ideological and financial grounds. ^^^ Among the 
opponents of the legislation was the American Legion, whose National 
Convention overrode some American Legion state departments' support for the 
legislation. ^^^ 

Gelfand, supra note 58, at 147 (footnote omitted); see also Ross, supra note 24, at 269-70 (The 
national commander of AmVets wrote to President Truman complaining about "the real estate 
lobby, many of whose members seem to be primarily interested in constructing conventional 
houses, by handcraft methods at high prices."); DAVffiS, supra note 102, at 68 (Senator Robert 
Wagner said: "Domestic treason is being perpetrated on the American Veteran and their fellow 
citizens by the money-mad real estate lobby and their unholy representatives in Congress.")- 

135. Daves, supra note 102, at 18. 

136. Ross, supra note 24, at 252; see also HUTHMACHER, supra note 129, at 301 (on 
opposition to public housing); von Hoffman, supra note 122, at 304 (The leaders of NAREB, 
including Herbert U. Nelson, "abhorred public housing on ideological grounds."); FUNlGffiULO, 
supra note 62, at 227 (stating that "the anti-New Deal, anti-public housing venom spewed forth 
across the pages of the National Real Estate Journal")', id. at 228 (The Urban Land Institute "had 
cooperated with the Association of Housing Builders [sic] in successfully lobbying Congress to 
refuse appropriations for public housing beyond what was needed to shelter defense workers."); id. 
at 224 ("In August 1943, the editor of the National Real Estate Journal warned fellow realtors that 
the fight 'against the ideologies of the public housers is not yet over, and may not be over for a long 
time to come.'"); id. at 104 (outlining the National Association of Home Builders' attack on public 

137. See Letter from Wm. L. Windsor, Department Commander (Pennsylvania), to Paul R. 
McCauley, National Veterans Housing (Jan. 28, 1948) (John F. Kennedy Library, Papers of John 
F. Kennedy, Correspondence Series, National Veterans Housing Conference, 1948 File, Box 82) 
(reciting position of American Legion); Letter from David I. Shapiro, to Paul R. McCauley (Dec. 
12, 1947), appended to Letter from Paul R. McCauley, Executive Director, Housing Authority of 
Kansas City, to John Kennedy, House of Representatives (Dec. 16, 1947) (John F. Kennedy 
Library, Papers of John F. Kennedy, Correspondence Series, National Veterans Housing 
Conference, 1948 File, Box 82) (Shapiro writes that his Kings County (N.Y.) delegation "was the 
only delegation that" supported the T-E-W bill. "The pressure placed by national on the department 
leadership was horrible to witness. The 'big boys' must certainly have an important stake in the 
defeat of the Bill."); Letter from W.B. Stone, National Executive Committeeman, The American 
Legion, Department of Missouri, to Paul R. McCauley, Executive Director, Housing Authority of 
Kansas City (Feb. 11, 1948) (John F. Kennedy Library, Papers of John F. Kennedy, 
Correspondence Series, National Veterans Housing Conference, 1948 File, Box 82) (objecting, 
because of the American Legion's opposition to the Taft-Ellender- Wagner Bill, to McCauley' s 
participation as an organizer of the National Veterans Housing Conference, which supported the 
bill; Stone expresses the hope "that no voice, represented as an official spokesman of the American 


When the Republicans won control of Congress in 1946, the bill was 
renamed the Taft-Ellender-Wagner (T-E-W) Act.^^^ Despite its bipartisan 
support, the legislation was unsuccessful in 1946 and 1947.'^^ It passed in the 
Senate, but failed in the House, largely because of the opposition of Jesse 
Wolcott, chair of the House Banking and Currency Committee, a conservative 
"who was strongly opposed to public housing." ^"^^ 

"Housing was a major issue in the 1948 presidential and congressional 
races . . . ."^'** That election produced both the surprising victory of President 
Truman over Governor Thomas E. Dewey and a Democratic Congress, "but the 
party's center of gravity had shifted to the right. Truman could not count on 
members of his own party to unite behind his agenda." ^"^^ The Senate "had been 

Legion, will be recorded at the proposed conference as favorable to the Taft-Ellender-Wagner 
Bill"); Letter from Paul R. McCauley, Executive Director, Housing Authority of Kansas City, to 
William B. Stone, National Executive Committeeman, The American Legion, Department of 
Missouri (Feb. 12, 1948) (John F. Kennedy Library, Papers of John F. Kennedy, Correspondence 
Series, National Veterans Housing Conference, 1948 File, Box 82) (noting that seven state 
departments of the American Legion had supported the T-E-W bill). 

138. See Da VIES, supra note 102, at 61 ("the names were now reversed in deference to Taft's 
majority leadership"). 

139. See von Hoffman, supra note 122, at 308; HarlOE, supra note 133, at 270 (A principal 
opponent of public housing in the Senate was Senator Joseph McCarthy, who "received financial 
support from William Leavitt [sic; Levitt], one of the most prominent suburban speculative builders 
of the post-war period."); DAVffiS, supra note 102, at 68-72; id. at 68 ("The brash young Senator 
had hit upon housing as the best issue by which he could quickly gain national prominence for 
himself."); id. at 69 ("McCarthy worked hard to find a way to end public housing. He frequently 
belabored witnesses with his idea of providing state-controlled cash subsidies to low-income 
families as a substitute for public housing") — an idea, as Harloe points out, that the Nixon 
Administration favored, see Harloe, supra note 133, at 362 n.22, and Congress later adopted as 
Section 8. Harloe' s assertion about the connection with Levitt apparently is based on a 
mimeographed, undated paper, but Davies provides evidence of McCarthy's involvement with 
another builder. Da VIES, supra note 102, at 72, and reports the comment of liberal Republican 
Senator Charles Tobey, who attacked McCarthy and referred to McCarthy's following instructions 
from the real estate lobby, id. at 69. See also United Negro & Allied Veterans, supra note 120, at 
4-5 ("[W]e are alarmed at the sinister implications of Senator McCarthy's report which sets forth 
that the Committee is preparing to present comprehensive housing legislation to cover aids to 
private enterprise. His expressed intention to separate public housing into separate legislation as 
though it were not a part of the total need, is a clear sign that forces are at work on/in [a strikeover 
provides both vowels] the Congress to wipe out entirely the possibility of the passage of public low- 
cost housing legislation at this session of Congress."). 

140. von Hoffman, supra note 122, at 308. 

141. Peter Dreier, Labor's Love Lost? Rebuilding Unions' Involvement in Federal Housing 
Policy, 1 1 Housing Pol' y Debate 327, 327 (2000). 

142. Id. at 336 (Democrats controlled the Senate 54 to 42 and the House, 263 to 17 1 ); Amenta 
& Skocpol, supra note 22, at 117-18 ('Truman picked up 74 seats in the House when he was 
elected in 1948. This . . . gave him a 91-vote majority overall, a margin comparable to Roosevelt's 

132 INDIANA LAW REVIEW [Vol. 38: 103 

voting regularly for public housing since 1946; 1949 was to be no different." '"^^ 
In the House, "pubUc housing squeaked through by five votes on its crucial roll 

The Housing Act of 1949 was the only element of President Truman's Fair 
Deal that was enacted by Congress. ^"^^ Although it was "hailed as a major 
achievement by housing reformers," it proved to be "a hollow victory." ^"^^ The 
1949 Act may have done more harm than good: it was used to displace hundreds 
of thousands of people and, "in combination with other federal policies, did more 
to promote suburbanization, encourage businesses and middle-class Americans 
to abandon the cities, and exacerbate economic and racial segregation than to 
revitalize central cities .... More housing was razed than was built." ''^^ Two 

in 1938," which had been "considered a disaster for the Democrats. Moreover, in every House 
throughout the 1940s, 105 Democrats came from the former states of the Confederacy, whose 
representatives had always tended to oppose . . . centralized social policies."); see Gelfand, supra 
note 58, at 151 (the election "supplied the public housers with a slim, but working majority"); 
Patterson, supra note 60, at vii ("[T]he formation of a conservative coalition in Congress by 1939 
was one of the most significant developments of recent American political history."); see also 
Keith, supra note 51, at 36 ("The passage of the United States Housing Act of 1937 was the high 
water mark for the tide of New Deal liberalism in housing."); but cf. supra note 62 and 
accompanying text. 

143. Gelfand, supra note 58, at 151. 

144. Id. 

The conservative Republican-Southern Democrat coalition that had prevented the public 

housing bill from emerging from committee for four years tried their delaying tactics 

once again, but persistent White House lobbying and firm Democratic leadership in the 

House broke through this blockade. During the six long days of debate on the House 

floor, marred by a fistfight and bitter charges and countercharges about public housing. 

Title I, the urban redevelopment section, was hardly discussed at all. 

Id. ; Amenta & Skocpol, supra note 22, at 1 10 (Southern Democrats generally did not support "the 

continuation of New Deal programs or social initiatives"); Margaret Weir et al.. Introduction: 

Understanding American Social Politics, in THE POLITICS OF SOCIAL POLICY IN THE UNITED 

States, supra note 22, at 23 (referring to "the special role of the South in modem American social 

policy making"); id. at 24 (referring to "the explicit racism that ensured white dominance over black 

majorities in all sectors of economic and social life" and explaining "why Southern politicians had 

so much leverage during and after the New Deal. . . . The influence of southern agricultural 

interests depended on the insertion of their class power as landlords and their social power as white 

racial oligarchs into federal political arrangements that from the 1890s to the 1960s allowed an 

undemocratized single-party South to coexist with competitive two-party democracy in the rest of 

the nation. Above all, southern leverage was registered through a congressionally centered 

legislative process in Washington that allowed key committee chairmen from safe districts to 

arbitrate precise legislative details and outcomes"). 

145. Dreier, supra note 141, at 331, 336-37. 

146. Davies, supra note 102, at 136. 

147. Dreier, supra note 141, at 350; see generally MARTIN ANDERSON, THE FEDERAL 
Bulldozer (1964). 


parts of the statute, urban redevelopment (Title I) and the expansion of the FHA 
program, were very much in the interests of developers. ^"^^ While the legislation 
did include a public housing title, "the public housing program was essentially 
sabotaged" in several ways.^"^^ 

The public housing legislation had been burdened with restrictions "that 
limited it to the poor, gave local governments (especially suburbs) the right to 
decide whether and where to locate it, provided sufficient funding only to design 
and build boxlike structures, and permitted it to be racially segregated." ^^^ 
Furthermore, as Peter Dreier has noted, 

the opponents of public housing successfully undercut the 
implementation of the public housing part of the Housing Act of 1949 in 
[these] two ways. First, because federal law required local approval of 
all public housing developments, the real estate industry organized a 
national campaign, carried out at the local level, to block the 
construction of new public housing authorized by the act. . . . Second, 
Congress persistently failed to appropriate funds for the authorized 
number of units, and the program' s own regulations — including cost-per- 
unit limits and other standards imposed by Congress — tied the hands of 
local public housing officials, making it difficult to construct projects 
efficiently, quickly, and attractively. The Korean War also slowed down 
the implementation of pubHc housing.^^^ 

Thus, when the WET/TWE bill became law, it proved entirely inadequate to 
provide for lower-income and other veterans who needed a subsidized rental 

148. See, e.g., FUNIGIELLO, supra note 62, at 180 ("As Charles Abrams, Mel Scott, and other 
scholars have observed, it was in the developing programs of government, organized realtors, and 
their allies that the tentative outlines of the urban redevelopment statutes of the several states in the 
1940s and the salient features of Title I of the Housing Act of 1949 were located."). 

149. Dreier, supra note 141, at 351. 

150. Id. at 351; see also Gail Radford, The Federal Government and Housing During the 
Great Depression, in FROM TENEMENTS TO THE TAYLOR HOMES, supra note 49, at 102, 118 
(describing the program created by the 1937 Act as "stingy" and "physically alienating"). 

151. Dreier, supra note 141, at 348; see also DAVffiS, supra note 102, at 126 ("In 1950 and 
1951 the PHA had to reject proposals for over 6,000 units because their cost exceeded the $1,750 
per-room limit" established by the 1949 law.); id. at 126-27 (regarding industry's "public education 
kits" for local opponents of public housing); id. at 127-28 (regarding industry's encouragement of 
referenda against public housing: "By the end of 1 95 1 thirty-eight such referendums had been held, 
and in twenty-five cases the real estate lobby emerged victorious"); von Hoffman, supra note 122, 
at 311 (The real estate industry launched "an anti-public housing campaign at the local level. 
Across the country, members of local real estate agencies and S&Ls [savings and loan associations] 
mobilized to close local housing authorities, veto housing projects, and reject housing 
appropriations or bonds."); DAVffiS, supra note 102, at 125 ("[B]y the expiration of the 
Administration's term of office, forty-three months after the comprehensive bill became law, fewer 
than 60,000 of the authorized 810,000 units of public housing had been constructed and only 
twenty-six slum clearance projects had been started."). 

134 INDIANA LAW REVIEW [Vol. 38: 103 

program. While it did mandate that veterans be given preference as tenants in 
public housing/ ^^ it did not assure that very much, or very desirable, public 
housing would be constructed. Millions of veterans who had been left unserved 
by the G.I. Bill and VEHP continued to be unserved by the Housing Act of 1949. 

E. Veterans' Housing Programs from 1950 to 2004 

The pattern of early twenty-first century inadequate housing assistance to 
veterans was set in these decisions in the 1940s and early 1950s. While Congress 
has made some changes in the veterans' guaranteed home loan program, ^^^ and 
has added small programs of direct^^"^ and insured^^^ home loans, a manufactured 
home loan guaranty program, ^^^ a tax-exempt bond program for five states, ^^^ and 
grants and direct loans for specially adapted housing for veterans with service- 
connected disabilities,'^^ the principal housing program for veterans has 

152. Housing Act of 1949, ch. 338, §§ 301-302, 63 Stat. 413, 422-23. The veterans' 
preferences later were eliminated. See NATIONAL HOUSING Law Project, HUD Housing 
Programs Tenants' Rights § 2.3 (3d ed. 2004) (discussing preferences). 

153. See REPORT ON VETERANS' Benehts, supra note 6, at 59, 163 (discussing many 
instances in which the VA housing program served "as a sort of balance wheel for the building 
industry, and the economy"); 38 U.S.C. § 3710 (2000). 

38 U.S.C. § 3711; THE DOUGLAS Comm'n Report, supra note 96, at 103 ("[T]he VA was 
authorized to make direct loans where satisfactory home loans were not available. These direct 
loans were primarily intended ... for thinly settled regions, small towns, etc. It was difficult to 
persuade lawmakers and the public that poverty-stricken persons in the cities were also, in practice, 
not welcome at the loan window — even if they were veterans."); REPORT ON Veterans' Benefits, 
supra note 6, at 63. 

Congress also created a direct loan program for Native American veterans to purchase, 
construct, or improve homes on trust lands. 38 U.S.C. § 3761 (a pilot program, created in 1993 and 
set to expire on December 31, 2005). 

155. 38 U.S.C. §3710. 

156. 38 C.F.R. § 36.4204(a) (2004). 

157. Barry G. Jacobs, HDR Handbook of Housing and Development Law §3:3 (2004) 
[hereinafter HDR] (discussing a tax exempt bond program for purchase, rehabilitation, or 
improvement of homes owned by veterans, but this is limited to five states — Alaska, California, 
Oregon, Texas, and Wisconsin). 

158. 38 U.S.C. § 2101 (creating a specially adapted housing grant program to assist veterans 
with service-connected disabilities "in acquiring a suitable housing unit with special fixtures or 
movable facilities made necessary by the nature of the veteran's disability"); 38 C.F.R. § 3.809 
(2004). In VA 2005 Budget Highlights, the VA reports that it made 515 such loans in FY 2003 and 
estimates that it will make 615 in FY 2005. See VA, FY 2005 CONGRESSIONAL Budget 
Submission 3A-34 (Apr. 2004), available at But 
see General Services Agency, The Catalog of Federal Domestic Assistance 64. 1 1 8 (Aug. 
2004) [hereinafter CATALOG OF FEDERAL DOMESTIC ASSISTANCE] (regarding direct loans authorized 
by 38 U.S.C. § 371 1 for veterans eligible for Specially Adapted Housing grants and reporting that 


continued to be that of guaranteed home mortgage loans. *^^ Except for a very 
small provision for homeless, disabled veterans, there is no subsidized rental 
program for veterans. Moreover, the implementation of the veterans' housing 
programs by the VA and the courts has not been generous to veterans. 

This section discusses the administration of the veterans' housing programs 
by the VA and the interpretation of those programs by the courts, and then 
considers the particular provisions the VA has made for homeless veterans. 

1. Agency Administration and Judicial Interpretation of the Veterans' 
Guaranteed Home Mortgage Loan Program. — To illustrate the restrictive 
constructions that have characterized agency and judicial supervision of the 
veterans' housing program, this section focuses on the standards governing 
deficiency judgments and foreclosure avoidance. 

a. Deficiency judgments and related issues. — The first significant court test 
of the veterans' housing program was presented in United States v. Shimer, a case 
in which a veteran, George Shimer, had defaulted on a VA-guaranteed home 
mortgage loan.^^^ The loan was for $13,000; the guarantee, $4000. The default 
occurred in May 1948, just a few months after the loan and guarantee had been 
consummated, in January of that year. ^^^ 

After Mr. Shimer' s default, the lender foreclosed and purchased the property 
for $250 at a sheriff's sale. It then sold the property for $10,500 and collected 
the $4000 guarantee from the VA (thus recouping, in total, more than the loan 
amount). The VA then sought to recover the $4000 from George Shimer, who 
resisted on the ground that the Pennsylvania Deficiency Judgment Act barred a 
deficiency judgment unless the mortgagee petitioned (within six months of the 
sale) to fix the fair market value of the property, a step that the lender had not 
taken. Both the district court and the court of appeals agreed with the veteran. 
The court of appeals held that the VA' s recovery from a veteran "is limited to the 
amount which the V.A. under the statute is required to pay on its guaranty and 
not the amount which it actually pays,"^^^ and that the VA's obligation was to be 
determined by the state statute. The court said it was convinced "that Congress 
never intended to deprive veteran-mortgagors of the benefits of Acts such as the 
Pennsylvania one that is clearly ameliorative. Certainly there was no intention 
to put these individuals in a worse position than nonveteran-mortgagors."^^^ The 
United States Supreme Court, however, disagreed, holding that Congress had 
intended to displace such state law protections for borrowers. The Supreme 

in FY 2002 "no direct loans were made in conjunction with Specially Adapted Housing grants" and 
that in FY 2004 and 2005, one loan of $33,000 was expected to be closed each year), available at 

159. HDR, supra note 157, § 9: 140 (Neither the direct nor the insured home loan program is 
as active as the guaranteed home loan program.). 

160. United States v. Shimer, 367 U.S. 374 (1961). Many of the facts are taken from the 
opinion in the court of appeals. United States v. Shimer, 216 F.2d 792 (3d Cir. 1960). 

161. Shimer,216F.2datl95. 

162. Id. 

163. Id. 0X191. 

136 INDIANA LAW REVIEW [Vol. 38:103 

Court decided that the assistance Congress intended for veterans was limited to 
"the substantial equivalent of a down payment ... in order to induce prospective 
mortgagee-creditors to provide 100% financing for a veteran's home," and that 
Congress had not intended that a mortgagee also be subject to a state law which 
would impose additional cost and additional risk.'^ 

The Shimer case illuminates an agency and judicial preference for protecting 
lenders rather than veterans; in general, that preference has continued through the 
decades. Many states have protected homebuyer-mortgagors by either 
prohibiting deficiency judgments after non-judicial foreclosures or allowing 
deficiency judgments after non-judicial foreclosure only if there has been a 
judicial determination of the fair market value of the property. The general rule 
today, however, is that those protections do not cover VA loans. *^^ 

In 1990, the Ninth Circuit considered the deficiency judgment issue in 
Whitehead v. Derwinski, which concerned Washington State's foreclosure 
requirements.*^ Washington State allowed both judicial and nonjudicial 
foreclosures, but permitted deficiency judgments only after judicial 
foreclosure.*^^ In Whitehead, the Ninth Circuit held that when the VA instructed 
a Washington State lender to use nonjudicial foreclosure, the VA was not entitled 
to seek a deficiency judgment against the veteran.*^* 

Whitehead was followed in some cases and not followed in others. In 1993, 
it was reconsidered and overruled by the Ninth Circuit en banc in Carter v. 
Derwinski}^'^ Carter puts the Ninth Circuit in agreement with the Seventh and 
Eighth Circuits; *^^ the Fourth and Tenth Circuits have since indicated agreement 
with that position.*^* 

Carter involved the Idaho foreclosure laws. In Idaho, as in Washington 
State, lenders who use judicial foreclosure may secure deficiency judgments. In 
addition, in Idaho, lenders who use non-judicial foreclosure may secure 
deficiency judgments if they obtain a fair market valuation within three months 

164. Shimer, 367 U.S. at 383. 

165. See, e.g., Dixon v. United States, 68 F.3d 1253, 1255 n.l (10th Cir. 1995) (VA 
regulations preempt Oklahoma's strict requirement that a motion for a deficiency judgment must 
be made within ninety days after a foreclosure sale or no right to recover any deficiency "shall 
exist"); United States v. Rossi, 342 F.2d 505, 506 (9th Cir. 1965) (VA regulations preempt 
California prohibition of deficiency judgments on notes secured by purchase money mortgages). 

166. Whitehead v. Derwinski, 904 F.2d 1362 (9th Cir. 1990), overruled by Carter v. 
Derwinski, 987 F.2d 61 1 (9th Cir. 1993) (en banc). 

167. Wash. Rev. Code Ann. §§ 61.12.040, 61.24.040, 61.24.100 (West 2004); see Carter, 
987 F.2d at 61 1; Whitehead, 904 F.2d at 1362. 

168. Whitehead,9QAV.2d2Xn69. 

169. Ca/t^r, 987 F.2d at 611. 

170. Id. at 613 (discussing United States v. Davis, 961 F.2d 603 (7th Cir. 1992), Vail v. 
Derwinski, 946 F.2d 589 (8th Cir. 1991), and Boley v. Principi, 144 F.R.D. 305, 1992 WL 330423 
(E.D.N.C. Nov. 10, 1992)). 

171. Dixon V. United States, 68 F.3d 1253, 1255 n.l (10th Cir. 1995); Boley v. Brown, 10 
F.3d218(4thCir. 1993). 


of the non-judicial foreclosure. The plaintiffs in Carter were Idaho veterans who 
sought relief from the VA's claims for deficiency judgments, because the VA had 
used non-judicial foreclosure and had not obtained any fair market valuation 
within three months. 

The district court in Carter, following Whitehead, granted relief to the 
veterans.''^ On appeal, however, the Ninth Circuit, en banc, held that the VA 
could secure a deficiency judgment even though it had not complied with the 
state law requirements for doihg so.*^^ The majority opinion, written by Judge 
Kozinski, reached this conclusion by deciding that the VA has two rights, 
subrogation and indemnity, that only the right of subrogation is affected by the 
state law, and that the right of indemnity survives. '^"^ 

As the Ninth Circuit acknowledged, the right of subrogation is the only one 
mentioned in the statute, which directs that "in the event of default ... the 
Secretary shall be subrogated to the rights of the holder of the obligation to the 
extent of the amount paid on the guaranty."*^^ The court said that the VA 
regulation, however, "also gives the Secretary a right of indemnity," for the 
regulation provides that "[a]ny amounts paid by the Secretary on account of the 
liabilities of any veteran . . . shall constitute a debt owing to the United States by 
such veteran."'^^ The Ninth Circuit held that the right of indemnity prevails, 
regardless of the state law. For this holding, it relied on the Supreme Court's 
1961 decision in United States v. Shimer, in which the Supreme Court had said 
that "the statute affords an independent right of indemnity to the Veterans' 
Administration.'"^^ The Ninth Circuit said that Shimer's "square holding — that 
the regulation provides an independent right of indemnity against the veteran — ^is 
directly applicable to this case.'"^^ 

The Carter court rejected the Whitehead court's assumption that the "right 
of indemnity was secondary to the right of subrogation . . . available only when 
subrogation was impossible.'"^^ It found no basis for this ranking, although the 
indemnity right derives not from the statute but from a regulation. The Carter 
court said that the Whitehead "rationale has intuitive appeal. It seems fair to 
recognize the quid pro quo involved in the use of nonjudicial foreclosure. . . . 
But this approach is not consistent with the regulations as written by the VA and 
as interpreted by the Supreme Court in Shimer''^^^ 

The Carter court emphasized that 

[t]he VA is not a private litigant, limited to the choices provided by state 

172. Carter v. Derwinski, 758 F. Supp. 603, 608 (D. Idaho 1991). 

173. C«/ter, 987 F.2d at 614. 

174. U 

175. M (citing 38U.$.C.§ 3732(a)(1)). 

176. W. at 611 (citing 38 C.F.R. 36.4323). 

177. United States v. Shimer, 367 U.S. 374, 387 (1961), quoted in Carter, 987 F.2d at 613. 

178. Cflrr^r, 987 F.2d 613 n.l. 

179. Mat 614. 

180. Id. 

138 INDIANA LAW REVIEW [Vol. 38: 103 

law; it's an arm of the federal government and cannot be deprived of the 
benefits of federal law, regardless of any election it may make under 
state law. Federal law is mandatory, and neither the State of Idaho 
through legislation, nor the VA through its litigation choices, can waive 
its applicability.*^* 

Four judges on the Ninth Circuit dissented. In an opinion written by Judge 
Beezer, they maintained that Shimer endorsed the application of "equitable 
principles of surety law ... in defining the VA's recovery rights. "*^^ They 
identified as the crucial factor the VA's voluntary rejection of the opportunity to 
seek a deficiency judgment. *^^ Under the dissent' s reasoning, Shimer stands only 
for the propositions that equitable principles must determine the VA's rights, and 
that a state that forbids deficiency judgments altogether would inequitably 
deprive the VA of recourse against the borrower. The Carr^r dissenters reasoned 
that since in Carter the VA, having an alternative, voluntarily chose a course 
that, under state law, released the veteran from liability, allowing the VA 
nonetheless to pursue a deficiency judgment would be inequitable and therefore 
is not required under suretyship principles. ''Shimer,'' the dissenters maintained, 
"simply does not stand for the inequitable proposition that the VA may recover 
amounts paid on its guaranty after authorizing the veteran's release from 

As the opinion of the four Carter dissenters shows, the federal statute does 
not necessarily require stripping veterans of their protection from deficiency 
judgments where there has been no independent assessment of fair market value. 
The dissenters' reasonable interpretation of Shimer would afford veterans the 
same protections from unsupervised deficiency judgments enjoyed by non- 
veteran borrowers. But the majority in Carter — and other courts of appeals that 
have considered this issue — hold that the VA is entitled to recover deficiency 
judgments from veterans even though state law would protect non-veteran 
debtors from deficiency judgments in this situation and even though the VA 
could have secured a deficiency judgment had it followed a different procedure. 

In a different context, the Fourth Circuit distinguished Shimer from the kind 
of situation presented in Carter, noting that "[i]n Shimer, the Pennsylvania law 
. . . was directly in conflict with the federal regulations . . . ."*^^ The Fourth 
Circuit said that where "state law does not conflict with any federal regulation 
. . . Shimer is not directly controlling."*^^ In the Fourth Circuit case, Boley v. 
Brown, however, the Fourth Circuit followed the reasoning of Carter and the 
Seventh and Eighth Circuits,*^^ holding that "[t]he VA's right to indemnification 

181. Mat 615. 

182. Mat 617. 

183. Id. 

184. Id. 

185. Boley v. Brown, 10 F.3d 218, 221 n.5 (4th Cir. 1993). 

186. Mat 221. 

187. United States v. Davis, 961 F.2d 603 (7th Cir. 1992), Vail v. Derwinski, 946 F.2d 589 


is a federal right given as part of a nation-wide federal program that should not 
be affected by state law."^^^ 

The Carter court's holding is particularly surprising — especially in a 
decision written by Judge Kozinski — because it sacrifices state to federal law, 
and does that in a situation in which the federal law mandates compliance with 
state law. Indeed, the federal law does not simply provide, as the Carter court 
paraphrases, that "[f|oreclosure of the property is to be done in accordance with 
state law."*^^ Rather, the federal statute specifically and particularly preserves 
protections afforded by state law, directing that "[t]he acquisition of any such 
property shall not . . . impair the rights under the State . . . law of any persons on 
such property."^^^ One of the most important "rights under the State . . . law" of 
the "persons on such property" — the mortgagor-homeowners — is the State law 
right to be protected against deficiency judgments absent a prior judicial 
determination of fair market value. This right is impaired — indeed, 
destroyed — by the Carter court's ruling. 

The Carter court concluded that "[b]ecause this federal indemnity right 
doesn't depend on state foreclosure or deficiency law, preemption analysis is 
unnecessary."^^^ But the issue is not whether state foreclosure law applies. 
Rather, the issue is whether the court has honored the federal law, which directs 
that "rights under the State . . . law" are not to be impaired. ^^^ 

A related situation in which the VA and the courts treat veteran borrowers 
less favorably than non-veteran borrowers is addressed in Wells v. U.S. 
Administrator of Veterans Affairs. ^^^ Plaintiffs there were former owners of 
homes subject to VA loan guarantees. Plaintiffs had defaulted and the 
mortgagees had foreclosed. Plaintiffs argued that they had a constitutionally 
protected property interest in continued occupancy — as tenants. They relied on 
decisions holding that after foreclosure of FHA-insured mortgages, non-owner 
occupants had a "protectable interest in continued occupancy."^^"^ In Wells, the 

(8th Cir. 1991). 

188. Boley, 10 F 3d at 222. 

189. Carter, 9SlF.2d at 612. 

190. 38 U.S.C. § 3720(a)(6) (2000). 

191. Career, 987 F.2d at 616. 

192. For loans guaranteed after January 1, 1990, "veterans who pay the ftinding fee will not 
be liable to the VA for any deficiency upon default except in case of 'fraud, misrepresentation, or 
bad faith' by the veteran in obtaining the loan or creating the default." Bernard Ingold, The 
Department of Veterans' Affairs Home Loan Guaranty Program: Friend or Foe?, 132 MIL. L. 
Rev. 231, 245 (1991) (citing Veterans' Benefits Amendments of 1989, Pub. L. No. 101-237, § 304, 
103 Stat. 2062 (amending then 38 U.S.C. § 1803)). Prior to this, the VA had the discretion to 
release a veteran from liability on a defaulted loan if collection of the "indebtedness would be 
against equity and good conscience." Id. (citing former 38 U.S.C. § 3102(b)(1988)). The 1989 
Act, however, eliminated that discretion from the VA. See id. (nonetheless advising veterans to 
seek such waivers). 

193. 537 F. Supp. 473 (E.D.N. Y. 1982). 

194. Id. at 476 (citing Caramico v. Secretary of HUD, 509 F.2d 694, 701 (2d Cir. 1974)); 

140 INDIANA LAW REVIEW [Vol. 38:103 

court held that occupants of VA-financed homes were not entitled to the 
protections available to occupants of FHA-financed homes. The difference, the 
court held, was that the VA legislation had no intent to aid tenants as well as 
homeowners. "Rental housing is nowhere mentioned in the statute," '^^ the court 
said. "Its only purpose is to aid the returning veteran in purchasing a home. In 
no way can such a narrow goal be reasonably stretched to imply an intent to 
provide subsidized federal rental housing." ^^^ Thus, the court said, the plaintiffs 
"have already received the intended benefit — assistance in purchasing a home. 
The relief they request, that is, to be allowed to remain as tenants, does not fall 
within the scope of the statute." *^^ In this way. Wells insists not only that 
Congress was concerned only with veterans who could become homeowners but 
also that Congress' interest in those veterans ended the moment they became 
unable to continue the homeownership status. 

b. Foreclosure avoidance. — ^The Veterans Administration — and the 
courts — also have demonstrated more concern for lenders than for veteran^ 
borrowers with regard to assisting borrowers to avoid foreclosure. Other federal 
agencies that guarantee or insure home mortgage loans — the Department of 
Housing and Urban Development (HUD) and the Department of Agriculture 
(Do A) — have foreclosure avoidance programs,'^* but the Department of Veterans 
Affairs has refused to administer such a program. 

It long has been understood that the primary danger in homeownership is loss 
of income by the homeowner, whether because of unemployment, illness, spousal 
abandonment, or other cause. In 1965, Charles Abrams wrote that "[t]he 
principal hazard in homeownership is uneniployment or 'curtailment of 
income.'"'^^ He cited a 1963 study in which 

this was the given reason for defaults for 35 per cent of all FHA 

Manners v. Secretary of HUD, 7 1 CV 550 (E.D.N. Y. 1973). 

195. Wells, 537 F. Supp. at 476-77. 

196. Id. 

197. Id. at 471. 

198. For HUD-assisted borrowers, the current protections are provided by the Federal Housing 
Administration (FHA) Loss Mitigation Program. 5^^ Ferrell v. HUD, 186F.3d805(7thCir. 1999); 
12 U.S.C. § 1715(u) (2000); 24 C.F.R. § 203 (2004); HUD, Mortgagee Letter 00-05 (Jan. 19, 
2000), available at With respect to the Department of Agriculture, see 
Housing Act of 1949, ch. 338, § 505, 63 Stat. 434, 435 (codified as amended at 42 U.S.C. § 1475 
(2000)); United States v. Gamer, 767 F.2d 104 (5th Cir. 1985) (discussing the moratorium and 
refinancing options available to DoA); National Housing Law Project, RHCDS (FmHA), 
Housing Programs: Tenants' and Purchasers' Rights, at 19/1-19/19 (2d ed. 1995) 
[hereinafter Tenants' and Purchasers' Rights]; 7 C.F.R. § 1965.26 (2004). Some relief from 
foreclosure is provided for some service members on active duty. See 50 U.S.C. app. § 533 (Supp. 
I 2003) (originally enacted as Soldiers' and Sailors' Civil Relief Act of 1940, ch, 888, § 303, 54 
Stat. 1178, 1183); see also 12 U.S.C. §§ 1739 and 1750c (2000) (providing protection for 
government-insured lenders disadvantaged by the Civil Relief Act). 

199. Charles Abrams, The City Is THE Frontier 262 (1%5). 


borrowers and for about 40 per cent of VA borrowers. The second 
reason was "death or illness in family." In each of the six metropolitan 
areas studied by FHA in 1962, at least 44 per cent of the FHA, VA, or 
conventional loan borrowers had suffered a decline in income between 
the time of loan origination and the day of foreclosure.^^ 

The VA found that 64 percent of the defaults were due to "curtailment of 
income," "death or illness," or "marital difficulties."^®^ 

Subsequent studies have produced similar results: unemployment, death, 
illness, and spousal abandonment are major reasons why homeowners lose their 
homes through default and foreclosure.^®^ Defaults also are likely to occur in 
areas where home values are declining.^®^ These losses can be devastating to the 
homeowners and their families not only financially, but also psychologically and 
socially;^®^ the losses also are expensive to the federal agency that has insured or 
guaranteed the mortgage loan.^®^ But despite the human, societal, personal, and 
financial costs of foreclosure, government agencies have been reluctant to 
implement any form of foreclosure avoidance program — and the DVA has been 
most reluctant of all. 

200. Id. (citing HOUSING & HOME Finance Agency, Mortgage Foreclosures in Six 
Metropolitan Areas (June 1963)), 

201 . Id. (citing VA, REP. OF Loan Service and Claims Study (Apr. 30, 1962)). The precise 
percentages were: Curtailment of income, 39%; Death or illness, 16%; Marital difficulties, 9%. The 
other causes were "Improper regard for obligations," 26%; "Extensive obligations," 7%; and "All 
other reasons," 3%. Id. Abrams wrote that "[i]f the reasons as given by the owners were credited, 
a good part of the 26 per cent of defaults for 'improper regard for obligations' would be added to 
the 55 per cent [of defaults due to curtailment of income and death or illness]." Id. at 263. 

202. See, e.g., DVA OIG, REPORT No. 9R5-B10-047, 9-10, 30 (Mar. 25, 1999) [hereinafter 
DVA OIG Report]; but see id. at 33 (discussing the difficulties of identifying the reason for a 
particular default); see also Sheila Crowley, The Affordable Housing Crisis: Residential Mobility 
of Poor Families and School Mobility of Poor Children, 72 J. NEGRO Educ. 22, 28 (2003) 
(homeowners with few or no financial assets often "spend dangerously high percentages of their 
income on housing," and then often are unable to meet the "unanticipated costs for home repair" 
that frequently appear). 

203. See DVA OIG REPORT, supra note 202, at i, 4-5 (stating that loan defaults were higher 
in "vicinities with declining home values"); see also William N. Goetzmann & Mathew Spiegel, 
Policy Implications of Portfolio Choice in Underserved Mortgage Markets, in Low-lNCOME 
Homeownership: Examining the Unexamined Goal 257-8, 263, 266 (Nicholas P. Retsinas & 
Eric S. Belsky eds., 2002) [hereinafter Low-Income HOMEOWNERSHIP] (discussing the occurrence 
of such conditions in the United States). 

204. See William M. Rohe et al.. Social Benefits and Costs of Homeownership, in Low- 
INCOME HOMEOWNERSHIP, supra note 203, at 38 1 , 388 ("little, if any, research exists on the impacts 
of foreclosure on a person's self-esteem or any other psychological constructs"). 

205. See, e.g., DVA OIG Report, supra note 202, at 5 (discussing losses to the government 
and the veteran); GAO, HOUSING Programs: Increased Use ofAlternatives to Foreclosure 
Could Reduce VA's Losses, GAO/RCED-90-4, at 19 (Dec. 1989). 

142 INDIANA LAW REVIEW [Vol. 38: 103 

Abrams had made two suggestions in the 1960s: the establishment of a fund 
from which owners could borrow, and the provision of equity insurance.^^^ 
Abrams' s suggestions were rejected.^^^ None of the agencies adopted a 
foreclosure avoidance program voluntarily. 

Both the HUD and Do A foreclosure avoidance programs were mandated by 
litigation,^^^ but similar litigation against the VA was uniformly unsuccessful. ^^^ 
A typical case is Rank v. Nimmo, involving John Rank, a veteran, and his wife, 
who together bought a home with a VA guaranteed mortgage loan in 1971 but 
defaulted in 1975, after John Rank had been laid off from his job.^^^ The VA had 
the option of "refunding" defaulted loans, whereby, as the court explained, "[t]he 
VA . . . may take over defaulted mortgages from private lenders and avoid 
foreclosure by extending forebearance to the veteran."^ ^^ Moreover, the VA's 
Lenders' Handbook and pertinent circular and manuals all expressed policies of 
assisting veterans in retaining their homes where foreclosure might reasonably 
be avoided.^^^ Nonetheless, the VA conceded that it never had exercised the 
refunding option in the Los Angeles region between 1974 and 1916?^^ 

The district court held that the VA had abused its discretion in failing even 
to explain its reasons for not exercising the refunding option.^ ^"^ The court of 
appeals reversed, holding that the veteran had no cause of action under either the 
VA statute or the Administrative Procedure Act.^^^ Other courts have followed 
the lead of the Ninth Circuit in Rank?^^ 

As the courts have not required the VA to implement any foreclosure 

206. Abrams, supra note 199, at 263. 

207. Mat 264-65. 

208. See Brown v. Lynn, 385 F. Supp. 986 (N.D. 111. 1974); subsequent opinions sub nom. 
Ferrell v. Pierce, 560 F. Supp. 1344 (N.D. 111. 1983), ajfd, 743 F.2ci 454 (7th Cir. 1984) (HUD); 
United States v. White, 429 F. Supp. 1245 (N.D. Miss. 1977), on remand from 543 F.2d 1 139 (5th 
Cir. 1976) (Do A); see also David B. Bryson, The Role of the Courts and a Right to Housing, in THE 
Right to Housing (Rachel Bratt et al. eds., forthcoming 2005). The HUD Mortgage Assignment 
Program, created by the Brown/Ferrell litigation, subsequently was replaced by a modified program 
enacted by Congress. See Ferrell v. HUD, No. 73C334, 2002 U.S. Dist. LEXIS 16156, at *3-4 
(N.D. 111. Aug. 22, 2002) (discussing the Balanced Budget Downpayment Act I, Pub. L. No. 104- 
99, § 407, 1 10 Stat. 26 (1996) (codified as amended at 12 U.S.C. § 1715(u) (2000)); see also supra 
note 198. 

209. See Rank v. Nimmo, 677 F.2d 692 (9th Cir.), cert, denied, 459 U.S. 907 (1982); Simpson 
V. Cleland, 640 F.2d 1354 (D.C. Cir. 1981); United States v. Harvey, 659 F.2d 62 (5th Cir. 1981); 
Gatter v. Cleland, 5 12 F. Supp. 207 (E.D. Pa. 198 1), affdsub nom. Gatter v. Nimmo, 672 F.2d 343 
(3d Cir. 1982); Buzinski v. Brown, 6 Vet. App. 360, 369 (1994). 

210. Rank, 611 ¥. Id 2X695. 

211. Mat 694. 

212. Mat 694-95. 

213. M. at 700. 

214. Rank v. Cleland, 460 F. Supp. 920, 926 (CD. Cal. 1978); Rank, 677 F.2d at 693. 

215. /?anA:,677F.2dat701. 

216. 5"^^ 5M/7ra note 209. 


avoidance program, the VA never has done so voluntarily.^^^ Thus, while HUD 
and Do A borrowers enjoy some protection from foreclosures because of 
temporary financial problems for which they are not to blame,^^^ veterans who 
suffer temporary loss or reduction of income for reasons beyond their control 
have no protection from foreclosure that causes loss of their family home.^^^ 

The virtual absence of any foreclosure avoidance program for VA-assisted 
homes is a serious problem, for a substantial number of VA financed homes go 
into default each year.^^^ The VA unquestionably has the authority to prevent 
foreclosures. The statute provides that the Secretary may "consent to the 
modification, with respect to rate of interest, time of payment of principal or 
interest or any portion thereof, security or other provisions of any note, contract, 
mortgage or other instrument securing a loan which has been guaranteed, insured, 
made or acquired under this chapter."^^^ Under the "refunding" option, 

the VA, prior to commencement of foreclosure proceedings, pays the 
lender the unpaid portion of the veteran's loan and the lender assigns its 
interest and security in the loan to the VA. The veteran then makes 
monthly payments directly to the VA until the loan is satisfied. The 
veteran must be able to establish an ability to repay the loan and a 
decision by the VA not to refund a loan is not judicially reviewable.^^^ 

But the courts have held that veteran-borrowers cannot compel the VA to use any 
of the amehorative authority it possesses. ^^^ 

217. See DVA OIG REPORT, supra note 202, at 5 ("[The] VA may choose to refund the loan 
or accept a deed-in-Ueu [of foreclosure], but will do so only if the property has enough equity to 
make these alternatives advantageous to the government."). 

218. See Abrams, supra note 199, at 262-65; see also supra note 208. 

219. VA staff may, in some circumstances, arrange an interest rate reduction refinancing loan. 
See DVA OIG REPORT, supra note 202, at i-ii. 

220. See DVA, Guaranteed Loans, Defaults and Claims, and Property Management, FY 1 998- 
2001, at (last updated Apr. 17, 2003) 
(indicating 1 18,426 defaults reported in FY 1999, 132,147 in FY 1998, and 132,534 in FY 1997). 
Compare DVA OIG REPORT, supra note 202, at 19 (132,245 in default at the end of FY 1997). 
Note that approximately 18.5% of these loans are to service members on active duty, and that a 
DVA study of loans that defaulted between 1995 and 1997 showed that "[loans] acquired by service 
members were more likely to default than loans acquired by veterans" and that 26.5% of the default 
loans were to service members. DVA OIG REPORT, supra note 202, at 1. 

221. 38 U.S.C. § 3720(a)(2) (2000). In situations of major disaster as determined under the 
Disaster Relief and Emergency Assistance Act, the act provides that the Secretary "shall . . . 
pursuant to subsection (a)(2) . . . extend on an individual case basis such forbearance or indulgence 
to such owner as the Secretary determines to be warranted by the facts of the case and the 
circumstances of such owner." Id. § 3720(f). 

222. Ingold, supra note 192, at 242 (citing 38 C.F.R. § 36.4318 (1988); Fitzgerald v. Cleland, 
498 F. Supp. 341 (D. Me. 1980); 38 U.S. U.S.C. § 1816(a) (1988)); 38 U.S.C. § 3732(a)(2). 

223. Ingold, supra note 192, at 241 ("These discretionary provisions are designed for the 
benefit of the VA, not the veteran, and are not subject to judicial review."); see supra notes 209-15 

144 INDIANA LAW REVIEW [Vol. 38: 103 

2. The VA 's Programs for Homeless Veterans. — From the enactment of the 
G.I. Bill in 1944, save for the short-lived VEHP and section 608 programs and 
the VA hospital system, the federal government' s provision of housing assistance 
for veterans continued to be for homeownership only. Beginning in the 1980s, 
however, large numbers of people in the United States began to experience 
homelessness, and a significant percentage of those people were veterans.^^"^ In 
response to litigation and other forms of pressure, the VA made available some 
surplus VA properties to organizations serving homeless veterans.^^^ It also sells 
and leases some foreclosed properties to organizations that serve homeless 
people.^^^ That aside, the "[t]wo major VA homeless programs [have been] 
Health Care for Homeless Veterans (HCHV) and Domiciliary Care for Homeless 
Veterans (DCHV),"^^^ both of which serve veterans through the VA Medical 
Centers. ^^^ HCHV serves veterans who are homeless and mentally ill;^^^ in 
general, it relies on "community-based residential treatment facilities" that are 

and accompanying text (discussing Rank v. Nimmo). 

224. See MARTHA BuRT, OVER THE Edge: The Growth of Homelessness in the 1 980s, at 
vii-viii, 3 ( 1 992); 42 U.S.C. § 1 1 30 1 (a)( 1 ) (2000) (commonly known as the McKinney Act) (stating 
that "the Nation faces an immediate and unprecedented crisis due to the lack of shelter for a 
growing number of individuals and families, including . . . veterans"); Committee ON Health 
Care for Homeless People, Institute of Medicine, Homelessness, Health, and Human 
Needs 138 (1988) ("There are a substantial number of veterans among the homeless, especially 
from the Vietnam era."); Heroes Today, Homeless Tomorrow?, supra note 11; Blau, supra 
note 12, at 29 ("Veterans make up about one-third of the homeless male population."); 
Homelessness in Los Angeles, supra note 1 1 , at 1 5 (In Los Angeles, "[ v]eterans are almost twice 
as likely as all adults to be homeless," and "Vietnam veterans make up the largest block of homeless 

225. See Nat'l Law Ctr. on Homelessness and Poverty v. U.S. Veterans' Admin., 765 F. Supp. 
1, 8-9 (D.C. Cir. 1991) (regarding leasing buildings at a VA Medical Center in Arkansas to a 
homeless provider); Nat'l Coalition for the Homeless v. U.S. Veterans' Admin., 695 F. Supp. 1226, 
1234 (D.C. Cir. 1988) (ordering the VA and other agencies to comply with provisions of the 
McKinney Act regarding use of surplus federal properties to assist homeless people); id. at 1230 
n.6 (holding that VA-foreclosed single-family homes are not subject to the McKinney Act); Lee v. 
Pierce, 698 F. Supp. 332, 340-41 (D.C. Cir. 1988) (holding that HUD-foreclosed single-family 
homes are not subject to the McKinney Act). 

226. See DVA, Fact Sheet: VA Programs for Homeless Veterans (Jan. 2003), at 
Fact Sheet Jan. 2003] (stating that "more than 180 properties have been sold and 9 properties . . . 
leased to provide housing for the homeless"); DVA Fact Sheet Dec. 2004, supra note 1 1 (referring 
only to the properties sold). 

227. GAO Report, supra note 1 1 , at 4. 

228. See HOMBS, supra note 10, at 1 12-14. 

229. See id. at 1 12; GAO REPORT, supra note 1 1, at 4 n.4 (HCHV initially was called the 
Homeless Chronically Mentally 111 (HCMI) program; the VA uses the term HCHV to "avoid use 
of the term 'chronically mentally ill'"); id. at 5 (mental illness in this context includes substance 


time limited, "generally for less than 6 months,"^^^ and relatively few 
beds — about 425 beds in 2002 — provided by the VA itself for a Transitional 
Residence program.^^' Under DCHV, "homeless veterans receive rehabilitative 
services while occupying dedicated beds at VA medical centers. "^^^ DCHV 
provided more than 1800 beds at 35 VA medical centers in 26 states, offering 
"residential treatment to over 5000 homeless veterans each year/'^^^ 

As part of the HCHV programs, the VA also has a Homeless Providers Grant 
and Per Diem (GPD) program, which is designed to foster the creation of new 
facilities for homeless veterans.^^"* The maximum number of beds VA has 
attributed to GPD is SOOO.^^'' 

In addition to these programs, in 1992, DVA and HUD agreed to create the 
HUD-V A Supported Housing (HUD- V ASH) program for homeless veterans who 
have severe psychiatric or substance abuse disorders. ^^^ HUD-V ASH provides 
a setaside of HUD Section 8 vouchers and VA case management, health, and 
other supportive services, which are to be made available for the term of the 
Section 8 assistance.^^^ Through 2003, HUD had designated 1780 Section 8 

230. GAO Report, supra note 11, at 5, 6; GAO, Homeless Veterans — VA Expands 
Partnerships, but Effectiveness of Homeless Programs is Unclear, GAO/T-HEHS-99- 1 50, 
at 5 (June 24, 1999) (statement of Cynthia A. Bascetta, Associate Director, Veterans Affairs and 
Military Health Care Issues), available at 
[hereinafter GAO BASCETTA]. 

231. VA Has Largest Homeless Services Network, Works with HUD, Nonprofits to Expand 
Housing, 30 No. CD-16 HOUSING & Dev. Rep. CURRENT Devs. 501, 501 (2002). 

232. GAO Bascetta, :?M/7ra note 230, at 7. 

233. DVA Fact Sheet Dec. 2004, supra note 11. 

234. Homeless Veterans Comprehensive Service Programs Act of 1 992, Pub. L. No. 102-590, 
106 Stat. 5136; 38 C.F.R. § 61.0 - 61.82 (2004); DVA, Grant & Per Diem Program, at (last visited Dec. 28, 2004); Statement of Frances 
M. Murphy, Deputy Undersecretary for Health, DVA, before the House Committee on Veterans 
Affairs 3-4 (Sept. 20, 200 1 ), available at 1 FM_USA.htm 
[hereinafter Murphy Statement]; DVA Fact Sheet Dec. 2004, supra note 11 (referring to the 
program's inception in FY 1994); GAO BASCETTA, supra note 230, at 5. 

235. See DVA Fact Sheet Dec. 2004, supra note 1 1 (stating that "[n]early 20,000 homeless 
veterans are expected to be provided supported housing under this program in more than 8,000 
funded beds annually"). This is a dramatic increase from the VA's January 2003 Fact Sheet, which 
referred to 6000 beds and stated that "more than 10,000 homeless veterans are provided supported 
housing under this program annually." DVA Fact Sheet Jan. 2003, supra note 226. 

236. See Robert Rosenheck et al.. Cost-effectiveness of Supported Housing for Homeless 
Persons with Mental Illness, 60 ARCfflVES GEN. PSYCHIATRY 940, 94 1 (2003) (describing the origin 
of the program in an interagency agreement); Murphy Statement, supra note 234, at 3-4. The HUD- 
VASH program was codified in the Homeless Veterans Comprehensive Assistance Act of 2001, 
Pub. L. No. 107-95, § 5, 1 15 Stat. 903, 913 (codified as amended in 38 U.S.C. § 2041-43 (Supp. 

237. DVA, VA Homeless Programs and Initiatives, at 
cfm?pg=2 (last updated July 7, 2004). The Section 8 voucher program originally was a Section 8 

146 INDIANA LAW REVIEW [Vol. 38: 103 

vouchers for this program.^^^ The VA also operates a VA Supported Housing 
Program, but it offers only supportive services, including help in finding private 
or other government assisted housing.^^^ 

In 1998, Congress enacted the Veterans Programs Enhancement Act, which 
authorized the VA to guarantee up to $100 million in loans to construct, 
rehabilitate, or acquire land for multifamily transitional housing projects for 
homeless veterans.^"^^ But DVA has not exercised this authority.^"^^ Thus, while 
some provision has been made for homeless veterans, it still is the case that the 
only significant housing program for veterans is the guaranteed home mortgage 
loan program. 

II. Consequences of the Focus on Homeownership in the G.I. Bill 

As Part I described, since World War H, the federal government's provision 
of housing assistance for veterans has largely been limited to guaranteeing home 
mortgage loans. There are three crucial limitations to this program: the aid is for 
homeownership only; the aid includes no direct subsidy; and the aid relies on 
private lenders. The decision to offer such limited homeownership assistance has 
meant that many veterans have been excluded from the program. 

Thus, while discussions of the G.I. Bill, which usually focus on the 
educational provisions, often characterize it "as a broad-based, universal program 
. . . open to any veteran who wished to take advantage of it"^"^^ this certainly is 

certificate program. Housing and Community Development Act of 1974, Pub. L. No. 93-383, § 
201(a), 88 Stat. 633, 653, § 201(a) (codified as amended at 42 U.S.C. § 1437f(o) (2000)). It now 
is the Housing Choice Voucher Program. See Quality Housing and Work Responsibility Act of 
1998, 42 U.S.C. § 1437f (2000). 

238. DVA Fact Sheet Jan. 2003, supra note 226; DVA Fact Sheet Dec. 2004, supra note 1 1 
("more than 1,750 vouchers"). 

239. See DVA Fact Sheet Dec. 2004, supra note 1 1 ("VA staff work with private landlords, 
public housing authorities and nonprofit organizations to find housing arrangements."). But see 
infra text accompanying note 35 1 (indicating that many veterans are discharged without housing). 

240. Veterans Programs Enhancement Act of 1998, Pub. L. No. 105-368, § 601, 112 Stat. 
3315 (codified as amended at 38 U.S.C. § 3772 (2000)). 

241. See VA, FY 2005 CONGRESSIONAL BUDGET SUBMISSION, supra note 158, at 3A-34 
(indicating that no such loans were established in FY 2003, and the FY 2004 estimate of 3 loans 
is carried forward to FY 2005); but cf. DVA Fact Sheet Dec. 2004, supra note 1 1 (stating that "The 
Multifamily Transitional Housing Loan Guarantee for Homeless Veterans Program has made 
several conditional commitments to establish housing for formally [sic] homeless veterans"). 

242. Mettler, supra note 5, at 354. There is room for doubt whether in its administration the 
educational provisions of the G.I. Bill were as available to women as to men, to non-whites as to 
whites, or to those of lower class and income groups as to those of higher class and income groups. 
See, e.g., Suzanne Mettler & Eric Welch, Policy Feedback and Political Participation: Effects of 
the G.I. Bill on Political Involvement Over the Life Course 1 1 n. 1 1 (Apr. 4, 2001) (presentation at 
the American Political Development Workshop, University of Wisconsin-Madison) (noting that, 
with respect to the educational benefits of the G.I. Bill, "racial discrimination was commonplace 


not accurate with respect to the housing provisions of the G.I. Bill.^"^^ Because 
of the design and administration of the housing program created by the G.I. Bill, 
several groups of people were excluded from the veterans' housing program: 
female and non- white veterans were excluded for several decades, and all 
veterans who could not afford or did not desire homeownership have been 
excluded for the entire duration of the program, continuing to this date. Each of 
these groups is discussed below. 

A. The Exclusion of Women Veterans 

Although the proposed legislation was described as a bill of rights for G.I. 
Jane as well as G.I. Joe,^"^"^ the hundreds of thousands of women in the military^"^^ 
did not use the veterans' housing programs to the same extent as men did ^"^^ and 

. . . especially in the South"), available «?'-coleman/apd/mettler.pdf; Mettler, 
supra note 5, at 353 (noting a scholarly suggestion "that veterans who took advantage of the G.L 
Bill's educational provisions were likely to have come from more privileged socioeconomic 
backgrounds than nonusers"); id. at 355 (noting that "considerable variation exists among both G.L 
Bill users and nonusers in terms of level of education completed prior to military service"). 

243. "Fifty-one percent of all returning veterans — 7.8 million — took advantage of the 
educational benefits." Id. at 35 1 . By contrast, about 40% of World War II veterans "obtained their 
homes under VA guarantees or loans." The Douglas Comm'n Report, supra note 96, at 103. 
"About 20 percent of the Korean servicemen . . . obtained such help." Id. Today, about 1% of 
veterans use the guaranteed home mortgage loan program. See The Encyclopedia of Housing, 
supra note 9; see also DVA, Guaranteed Loans, Defaults and Claims, and Property Management, 
FY 1998-2001, supra note 220 (indicating that the VA guaranteed 199,160 home mortgage loans 
in FY 2000 and 250,009 in FY 2001); CATALOG OF FEDERAL DOMESTIC ASSISTANCE, supra note 
158, at 64.11 (In FY 2002, VA guaranteed loans for the purchase of 185,362 conventionally 
constructed homes and condominium units; the estimate for FY 2003 was 152,000 purchase loans.) 
Approximately 18.5 percent of these VA loans are made to service members on active duty. DVA 
OIG Report, supra note 202, at 1. 

244. Ross, supra note 24, at 99 (citing the N.Y. TIMES, Jan. 9, 1944). 

245. See Maj. Gen. Jeanine Holm, U.S.A.F. (Ret.), Women in the Mdjtary: An 
Unfinished Revolution 100 (1982) ("At war's end, of the 12 million people in the U.S. Armed 
Forces, nearly 280,000 were women."). 


IN Postwar America 141 (2003) (noting that in the New York-Northeastern New Jersey Standard 
Metropolitan Area before 1956, women owned no VA-financed homes and that women owned a 
much smaller percentage of FHA-financed homes than of privately financed homes. "Whereas 
women owned 9.8 percent of all mortgaged owner-occupied properties and 12.6 percent of 
properties with conventional first mortgages (not government-insured), they only owned 8.5 percent 
of all government-insured first mortgages (FHA and VA combined) and, most revealing, no VA- 
insured homes"); but see MattieE.Treadwell, THE WOMEN'S ARMY CORPS 738 (1953) (stating 
that "[fjewer women than men were interested in loans to buy a home or to go into business," but 
not indicating any basis for attributing the differential use of the program to relative lack of interest 
on the part of women). 

148 INDIANA LAW REVIEW [Vol. 38: 103 

did not have equal opportunities to do so. 

The relative inability of women to use the housing program was due to 
several causes, some of which were unrelated to the focus on homeownership. 
Many women who served in various units associated with the military were not 
accorded veteran status after World War U?"^^ Moreover, even women who were 
accorded veteran status were less likely than men to secure benefits counseling 
from veterans' organizations and were, for other reasons, less likely to claim 
veterans' status. ^"^^ The limitation of the assistance to guaranteed home mortgage 
loans meant, however, that even women who did have veteran status and did seek 
to use the housing program would experience significant difficulty and 
differential treatment (less favorable than that accorded male veterans) because 
the program depended upon private lenders. 

Private lenders in the 1940s, '50s, and *60s — and thereafter — discriminated 
against women who sought to borrow money, for home purchases or anything 
else.^"*^ Women veterans who were married were treated less favorably than male 
veterans because the married women veterans' incomes were disregarded by 
lenders in determining whether and to what extent to make loans. Until 1968, "if 
a married woman veteran applied for a loan, her income was not considered 
among the criteria used to determine whether the couple was a sound credit risk. 
[S]he was seen as a working wife, [whose] . . . income was seen as supplemental 
and unstable."^^^ 

Women who had not themselves served in the military, but were the "widows 
of veterans[,] received fewer and poorer benefits than their husbands had 
received . . . until reforms began in the late 1950s."^^' The widowers of women 
veterans were treated less favorably than male veterans' widows. From 1950 
until 1972, any widow of a male veteran who died in service or as a result of 
service-connected disabilities, who did not remarry, was eligible for a GI loan,^^^ 
but "no provision was made for the widowers of female veterans."^^^ 

247. See WiLLENZ, supra note 35, at 168-79 (discussing the status of the Women's Army 
Auxiliary Corp, later called the Women's Army Corps, and the Women's Air Force Service Pilots). 

248. See COHEN, supra note 246, at 138-39. 

249. This was one of the reasons for the 1974 amendment of the Fair Housing Act and the 
enactment of the Equal Credit Opportunity Act to prohibit discrimination on the basis of sex. The 
Federal Fair Housing Act of 1968 was amended in 1974 to prohibit discrimination on the basis of 
sex. Housing and Community Development Act of 1974, Pub. L. No. 93-383 § 808(b)(1), 88 Stat. 
633, 729 (codified as amended at 42 U.S.C. § 3604 (2000)); Equal Credit Opportunity Act, Pub. 
L. No. 93-495, § 503, 88 Stat. 1500, 1521 (1974) (codified as amended at 15 U.S.C. § 1691(a) 
(2000)) (prohibiting discrimination by financial institutions on account of sex and marital status). 

250. WiLLENZ, supra note 35, at 194; see also COHEN, supra note 246, at 143; WRIGHT, supra 
note 51, at 268 (stating, in a book published in 1981, that "[b]anks . . . still discriminate against . 
. . working women"). 

251. Cohen, 5M/7ra note 246, at 138. 

252. WiLLENZ, supra note 35, at 194; see REPORT ON VETERANS' Benehts, supra note 6, at 

253. WiLLENZ, supra note 35, at 194. See Frontiero v. Richardson, 411 U.S. 677, 690-91 


B. The Exclusion of Veterans of Color 

From the time the veterans' housing programs were created, in 1944, for 
more than twenty years — well into the 1960s — VA (and FHA) housing benefits 
were, on the whole, available only to people who were white.^^"^ "[L]ess than 2 
per cent of the housing financed with federal mortgage assistance from 1946 to 
1959 was available to Negroes. "^^^ Moreover, housing financed by the VA (and 
FHA) was strictly segregated on the basis of race, so that the few such homes that 
were available to non- whites were in non- white neighborhoods. ^^^ 

This limitation of non- whites' access to VA- and FHA-financed housing was 
accomplished in several ways. First, the VA and FHA^^^ required racial 
covenants until 1950, and allowed developers to use them thereafter.^^^ Second, 

( 1 973) (holding unconstitutional federal statutes that allowed servicewomen to claim their husbands 
as dependents only if the husbands in fact depended upon the wives for over one-half of their 
support, while servicemen could claim their wives as dependents without showing any degree of 
actual dependence). 

254. See R. Allen Hays, The Federal Government and Urban Housing: Ideology and 
Change in Pubuc Poucy 85-86 (2d ed. 1995) ("[T]hose aided [by the FHA and VA programs] 
were largely white middle or working class families with enough income to purchase the new 
suburban tract housing springing up around United States cities."); COHEN, supra note 246, at 166- 
73 (discussing racial discrimination against black veterans); see also David H. Onkst, "First a 
Negro . . . Incidentally a Veteran": Black World War Two Veterans and the G.I. Bill of Rights in 
the Deep South, 1944-1948, 31 J. Soc. HiST. 517, 519-20 (1998) (black veterans in Georgia, 
Alabama, and Mississippi rarely were able to secure VA-guaranteed loans). 

255. GelfAND, supra note 58, at 221; see also Jorman v. Veterans Admin., 830 F.2d 1420, 
1422-23 (7th Cir. 1987) (noting that it was not until 1968 that "the VA ceased excluding inner-city 
areas from those in which it would guarantee mortgages for qualified veterans" and attributing this 
change to "pressure from civil rights groups to encourage the use of [the VA] loan program by 
minorities in the inner city"). 

256. The few non- white developments generally were in the South. See Christopher Silver 
& John V. Moeser, The Separate City: Black Communifies in the Urban South, 1940-1968, 
at 9 (1995) (noting that in Atlanta, Memphis, and Richmond, cities with relatively large black 
populations, "the planning process took into account the future expansion needs of blacks"); id. at 
125 ("In all three cities expansion of the public planning function in the 1940s aimed both at 
stabilizing an increasingly volatile racial situation and at speeding the process of neighborhood 
separation by class and race."); THOMAS W. Hanchett, Sorting OUT the New South City: Race, 
Class, and Urban Development in Charlotte, 1875-1975, at 235-36 (1998) (In Charlotte, in 
"a concerted policy on the part of the city's white leaders, in association with the FHA . . . real 
estate developers in Southern cities typically built houses for black buyers on the suburban 
fringe."); id. at 330 n.4 ("[B]y offering opportunities in one specified sector, developers met FHA 
requirements to protect their subdivisions elsewhere from the threat of invasion by nonwhites."). 

257. See JACKSON, supra note 53, at 204 (the VA "very largely followed FHA procedures and 

258. See Arnold R. Hirsch, Choosing Segregation: Federal Housing Policy Between Shelley 

150 INDIANA LAW REVIEW [Vol. 38: 103 

even where developers might be willing to sell homes to minorities, lenders 
discriminated on the basis of race and ethnicity. ^^^ Third, even if developers and 
lenders might be willing to allow purchases by non-whites, neighborhood forces 
often used violence to prevent non-white families from buying or occupying 
housing in neighborhoods that had been identified as "white."^^^ 

Although racial discrimination in the sale and financing of housing was made 
illegal by the Civil Rights Act of 1968,^^^ racial discrimination and segregation 
continue to be practiced by many sellers, lenders, brokers, insurers, neighbors, 
and others involved in home sales. ^^^ Although VA and FHA loans today are 

and Brown, in FROM TENEMENTS TO THE TAYLOR HOMES, supra note 49, at 206, 209, 213)', see also 
National Advisory Commission ON Civil Disorders, Report 474 (Bantam Books 1968) (Mar. 
1, 1968) ("Until 1949, FHA official policy was to refuse to insure any unsegregated housing.")- 

259. See AARON, supra note 101, at 81 ("all lenders use rules of thumb for choosing among 
loan applicants: borrowers must have steady employment; monthly payments may not exceed a 
stipulated fraction of family income; blacks, Spanish- Americans, and Indians need not apply; loans 
in certain neighborhoods will not be approved"). 

260. See Leonard S. Rubinowitz & Imani Perry, Crimes Without Punishment: White 
Neighbors ' Resistance to Black Entry, 92 J. Crim. L. & CRIMINOLOGY 335, 335 (2001) (reviewing 
Stephen Grant Meyer, As Long as They Don't Move Next Door: Segregation and Racial 
CONFUCT IN American Neighborhoods (2000)); United Negro & Allied Veterans, supra note 
120, at 2-3 ("Because of restrictive covenants, backed up in many instances by the application of 
outright terror in which a combination of real estate interests, police and politicians play a united 
role, [nonwhite veterans] are relegated to Jim Crow Ghetto areas by force."). 

261. Civil Rights Act of 1968, Pub. L. No. 90-284, § 801, 82 Stat. 73, 81 (codified as amended 
at 42 U.S.C. § 3601 (2000)); see also Jones v. Alfred H. Mayer Co., 392 U.S. 409, 436 (1968) 
(holding that the Civil Rights Act of 1866 prohibits racial discrimination in sales or rentals of real 
property). President Kennedy's 1962 Exec. Order No. 11,063, 27 Fed. Reg. 11527 (Nov. 24, 
1962), did not apply to FHA and VA financed housing but did ask that agencies like FHA and VA 
insure that their financial assistance programs would not be used to create racially separate housing 
facilities. ROBERT G. ScHWEMM, HOUSING Discrimination: Law and Litigation § 3:4 (1996). 
Title VI of the Civil Rights Act of 1964 barred discrimination on the basis of race in programs 
receiving federal financial assistance, but excluded any "contract of insurance or guaranty." Civil 
Rights Act of 1964, Pub. L. No. 88-352, § 602, 78 Stat. 241, 252 (codified as 42 U.S.C. § 2000d-l 
(2000)). See David M.P. Freund, "Democracy's Unfinished Business": Federal Policy and the 
Search for Fair Housing, 1961-1968, Report to the Poverty and Race Research Action Council, at 
4 (May 9, 2004) (stating that in 1967 "an internal FHA investigation revealed what realtors and 
home buyers alike had long recognized, that the agency continued to deny mortgage insurance to 
most non-whites, in defiance of the Executive Order"), available at 
freund.pdf; id. at 54-55 (discussing 1967 opposition to fair housing legislation by NAREB and 
others and stating that from 1965-1967, "numerous efforts to secure open housing for minority 
servicemen were unsuccessful"); see also Sherie MERSHON & STEVEN Schlossman, Foxholes 
&COLOR Lines: Desegregating the U.S. Armed Forces 275, 285, 290 (1998) (As late as 1967, 
racial discrimination against Black service members was documented in Maryland.). 


Metropolitan Housing Markets: National Results FROM Phase IHDS 2000, at 3-10 to 3-19 


made to minorities, racial discrimination and segregation undoubtedly continue 
with respect to VA- and FHA-financed homes as they do with respect to all 

The overt, de jure racial discrimination that characterized the first two 
decades of the VA program meant that even those non-white veterans who had 
the financial capacity to utilize the program were precluded from doing so. (In 
addition, non-white families were disproportionately too poor to use the 
homeownership programs, a subject discussed infra) }^^ 

The exclusion of non- white veterans from the V A housing program has had 
significant and continuing effects on people and places. With respect to financial 
consequences for individuals, those programs laid the basis for substantial wealth 
accumulation and class mobility for those who were able to use them. 
Discrimination against non- whites in the VA and FHA homeownership programs 
meant, as Melvin Oliver and Thomas Shapiro wrote, that veterans of color were 
almost entirely *'[l]ocked out of the greatest mass-based opportunity for wealth 
accumulation in American history."^^^ Since the VA and FHA loans were made 
only in racially segregated neighborhoods, even the few non-whites who were 
able to secure VA and FHA loans had homes that were in predominantly 
minority communities where property values usually were lower and appreciated 
more slowly than in comparable white neighborhoods. ^^^ And the non- whites 
who were financially capable of homeownership but were excluded from the VA 
and FHA programs because of their race had fewer options than did whites. 
They were barred from much private sales and rental housing because of their 
race, and they would likely be barred also from public housing, because it had 
maximum as well as minimum income requirements. ^^^ 

(Nov. 2002) (showing differential treatment favoring whites over Blacks and Hispanics in home 
sales), available at 

263. See id. 

264. See infra notes 275-77, 280 and accompanying text. 

265. Melvin L. Ouver & Thomas M. Shapiro, Black Wealth/White Wealth: A New 
Perspective on Racl\l Inequality 18 (1995); see also Hays, supra note 254, 85-86. 

266. See Franklin D. Wilson & Roger B. Hammer, Ethnic Residential Segregation and Its 
Consequences, in URBAN INEQUALITY: EVIDENCE FROM FOUR CITIES 272, 294 (Alice O'Connor 
et al. eds., 2001) (Blacks and Hispanics pay a price for living in ethnically homogeneous 
neighborhoods); Nancy A. Denton, The Role of Residential Segregation in Promoting and 
Maintaining Inequality in Wealth and Property, 34 IND. L. REV. 1199, 1205-07 (2001) ("both 
blacks and whites are penalized for living in neighborhoods that are more heavily black"); Oliver 
& Shapiro, supra note 265, at 8 ("We found that the great rise in housing values is color-coded. 
Why should the mean value of the average white home appreciate at a dramatically higher rate than 
the average black home?"); Dalton Conley, Being Black, Living in the Red 38 (1999) 
("[h]ousing in black neighborhoods has a lower rate of value increase (and in some cases may 
decrease in worth) when contrasted to similar units in predominantly white neighborhoods"); 
Thomas M. Shapiro, The Hidden Cost of Being African- American 59, 1 19-25 (2004). 

267. See, e.g., RADFORD, supra note 49, at 190 (public housing "excluded all but the lowest 
income groups"); see also LAWRENCE M. FRIEDMAN, Government and Slum Housing: A 

152 EvJDIANA LAW REVIEW [Vol. 38: 103 

Exclusion from the VA homeownership program often meant not only 
exclusion from an important opportunity to increase one's assets, but also 
exclusion from the suburbs, where superior educational, employment, and other 
opportunities flourished. ^^^ The effects on these communities have been long- 
lasting. In the late 1990s, for example, Levittown, New York, from which non- 
whites were openly excluded for decades, still had a black population of less than 
one percent."^^ 

These concrete consequences were not the only results of the focus on 
homeownership and the racial discrimination. Policy design and administration 
have not only "resource," but also "interpretive" effects, which "may shape 
beneficiaries' subjective experience of what it means to be a citizen . . .[,] may 
affect the formation of political identity . . .[,] and . . . may unify or stratify 
society and the political community in new and different ways."^^^ Suzanne 
Mettler, studying the G.I. Bill's educational provisions, presents evidence that 
"program design, featuring universal eligibility and routinized procedures, may 
have bestowed dignity ... by including all veterans on an equal basis rather than 
stigmatizing less advantaged citizens. "^^* She finds that "[t]he absence of 
invasive procedures and the universality of coverage elevated the status of less 
privileged beneficiaries, rather than stigmatizing them in the manner associated 
with targeted programs for the poor."^^^ It would be instructive to study the 
"interpretive effects" on non-white veterans of the knowledge that their white 
counterparts received home mortgage assistance that was not available to them. 
Anecdotal material suggests what the result of such a study might be. For 
example, in 1997, on the fiftieth anniversary of the creation of Levittown on 
Long Island, New York, the New York Times reported the reaction of Mr. Eugene 
Burnett, a retired Suffolk county police sergeant "who was among thousands of 
military veterans" who sought housing in Levittown "[b]ut . . . was turned away 
because he is black."^^^ Fifty years later, Mr. Burnett said "he still stings from 
'the feeling of rejection on that long ride back to Harlem.'"^^"^ 

Century OF Frustration 133 (1978) ("[f]ederal law requires over-income tenants to be evicted 
unless 'special circumstances' make alternative housing unavailable") (citing 42 U.S.C. 

268. See JACKSON, supra note 53, at 215-16 (discussing FHA and VA concentration in 
suburban locations). 

269. See Paula Span, Mr. Levitt's Neighborhood: After 50 Years, It Still Offers the Good 
Life—for Some, WASH. POST, May 27, 1997, at CI. 

270. Mettler, supra note 5, at 352 (citing Anne SCHNEIDER & HELEN INGRAM, POLICY DESIGN 
FOR Democracy 78-89, 140-45 (1997)). 

271. Id. at 359-60. 

272. Id. at 360. 

273 . Bruce Lambert, At 50, Levittown Contends with Its Legacy of Bias, N. Y. TIMES, Dec. 28, 
1997, § l,at23. 

274. Id. 


C. The Exclusion of Veterans Who Do Not Choose, or Cannot 
Afford, Homeownership 

As discussed above, "there are people who prefer, or whose circumstances 
make it advisable for them, to rent rather than to own their living quarters. "^^^ 
These include 

those whose present financial position is good but whose future is not 
assured, those who have been unable or do not wish to save, those who 
wish to invest their savings in other ways, those whose place of 
employment is likely to change, those whose occupation demands 
frequent absences from home or a central urban location, those who are 
old and who do not wish the responsibility of a home of their own, and 
those who are young and need only small quarters. ^^^ 

In addition, although VA (and FHA) assistance brought homeownership within 
the reach of households with income and wealth levels lower than those required 
for conventional financing of new homes, homeownership still was too expensive 
for many veterans. ^^^ 

275. See supra note 106 and accompanying text. 

276. The Continuing Problem, supra note 105, at 3. With respect to the advantages of rental 
for those who require mobility, see Rohe et al., supra note 204, at 391-94 (discussing ways in 
which homeownership restricts individual mobility); Steven Homburg, Introduction, in Low- 
INCOME HOMEOWNERSfflP, supra note 203, at 375, 379 (stating that "[w]e . . . need a better 
understanding of the downside risk of homeownership, such as the social costs of default and the 
loss of mobility"). 

277. See Davies, supra note 102, at 1 17 (The FHA program "supposedly helped families with 
incomes in the upper-most third to purchase houses."); Levitan & Zickler, supra note 23, at 86 
("predominantly middle-income veterans" participate in the program); Wendt, supra note 96, at 
183 (A study of home loans guaranteed by the VA in 1954 and 1955 showed that more than half 
"were to veterans with incomes between $300 and $499 per month, while only between 3 and 4 per 
cent . . . were to those with incomes below $300 per month."); see also id. at 209 (concluding that 
"[t]he evidence would seem to demonstrate that small percentages of low-income families were 
borrowers under federal loan programs"); id. at 215 (noting that "for many of these homeownership 
is not practical"); id. at 214 ("[FJederal mortgage insurance programs have not specifically met the 
needs of the families most in need of housing."); see also The DOUGLAS Comm'n Report, supra 
note 96, at 104 (noting that although the VA did not serve the "very lowest income group," "the 
VA apparently reached further down the income scale than did FHA"). Furthermore, even those 
lower-income households that could afford homeownership were more likely to use conventional 
mortgages than either FHA or VA mortgages, in part because those purchasers would be more 
likely to purchase "lower priced, older home[s]," many of which "fail[ed] to meet minimum 
construction requirements of FHA and VA." WENDT, supra note 96, at 209. 

See also United Negro & Allied Veterans, supra note 120, at 3. The United Negro and Allied 
Veterans of America reported to the National Veterans Housing Conference in 1948 that "[w]e 
must have a major portion of this comprehensive housing program consist of rental housing." Id. 
at 3. This was based on a 1946 survey by the Housing and Home Finance Agency that showed that, 

154 INDIANA LAW REVIEW [Vol. 38: 103 

With the exception of the veterans served by the HCHV, DCHV, and HUD- 
VASH programs, the VA offers no housing assistance to the millions of veterans 
who cannot afford or do not want homeownership. The VA program, like the 
FHA program, provides a relatively shallow subsidy .^^^ To make homeownership 
feasible for households with significantly lower incomes and asset levels, the 
government would have to provide a deeper subsidy, as it has in DoA and HUD 
programs.^^^ The government's failure to do so meant that "the very lowest 
income group has been largely left out, since its members are unable to meet the 
costs of interest and amortization. "^^^ This lowest-income, lowest-asset group of 

in the South, "[o]nly 51 percent of Negro veterans who were married when they were discharged, 

had their own homes or apartments, compared to 70 percent of the white veterans." Id, at 1. The 


showed that over half of all married Negro veterans in the South were living doubled-up 
or in rented rooms, tourist cabins or trailers, and almost half of them were living in this 
manner in the North. ... In the Southern areas, about 40 percent were living in 
substandard dwelling units and in the Northern areas, about 30 percent were living in 
such unhealthful conditions. 

Id. at 2. 

278. See Wendt, supra note 96, at 188 (reporting a study that found that the VA program 
made homeownership possible for many who could not have purchased homes "if down payments 
had not been reduced or eliminated through the veterans' home loan program") (quoting Daniel B. 
Rathbun, The Veterans' Home-Loan Program: Success or Failure?, APPRAISAL J. 408 (July 
1954)); see also AARON, supra note 101, at 80, 90. 

279. A deeper subsidy is provided by the Department of Agriculture' s interest credit program, 
which is available for both homeownership and rental housing. Housing Act of 1949, § 521, 42 
U.S.C. § 1490a(l) (2000). 5^e Tenants' and Purchasers' Rights, supra note 198, at 1/13, 1/18. 
DoA also offers a self-help program for those "who do not have sufficient income to qualify for a 
loan for a house constructed entirely by a contractor." See id. at 1/ 20. The HUD Section 235 
program provided a deeper subsidy for homeownership, and the Section 221(d)(3), Section 236, 
and Section 8 programs offered deeper subsidies for rental and homeownership. See NATIONAL 
Housing Law Project, HUD Housing Programs: Tenants' Rights, at 1/23, 1/25, 1/27 (2ded. 
1994); Housing in the Seventies: A Report of the National Housing Poucy Re view 107-17 
(1974) (discussing §§ 235 and 236); HDR, supra note 157, §§ 3:1 to 3:124 (discussing § 8). 

280. The Douglas Comm'n Report, supra note 96, at 104; see also id.. Table 7, 
"Distribution of VA Mortgages by Income Category" (showing the percent of VA mortgages taken 
out in 1966, with the highest percentage (3 1 %) going to the highest income category, and the lowest 
percentages (1.6 and 15.4%) going to households with the two lowest levels of income) 

While most of the low-income households in the United States are white, the exclusion of 
lower-income veterans was disproportionately pertinent to non-white veterans, whose incomes and 
wealth, then as now, were significantly lower than the income and wealth of white veterans. See 
Wendt, supra note 96, at 214 ("[M]ore than four million nonwhite families reported a median 
income in 1957 of $2,764, approximately half that for white families .... These data suggest that 
a large proportion, probably above 75 per cent, of these families that in terms of income class are 
in the lowest one-fifth in the United States . . . cannot be served on any extensive basis by existing 
federal mortgage loan insurance programs designed to aid in promoting homeownership. Indeed, 


veterans is likely to include many veterans with disabilities, since people with 
disabilities are disproportionately likely to be poor.^^' 

Although institutional discrimination against women and non-white veterans 
has been unlawful for decades, the twenty-first century begins with the 
continuation of the VA's institutional discrimination against low income/low 
asset households and others for whom homeownership is infeasible. Except for 
the very few veterans who are served by the HCHV, DCHV, and HUD-VASH 
programs, the VA provides no housing assistance to veterans who cannot access 
homeownership because of low income or assets. The need for a subsidized 
rental program for veterans, recognized in the 1 940s, continues in the twenty-first 

[P]ublic policy should not disproportionately promote homeownership 
at the expense of important investments in affordable rental housing. 
Rental housing remains the housing of first and last resort for many 
Americans. More important, rental housing is an appropriate housing 

the data suggest that it is unrealistic to expect that large numbers of families in the lowest income 
group would be homeowners."); see also United Negro & Allied Veterans, supra note 120, at 2 
(The HHFA surveys showed that "the median sales price of new homes constructed in 1946 was 
about $7,500. Yet, Negro veterans indicated in these surveys that they could afford to pay median 
prices of $3,600 in the South and $5,400 in the North." Veterans of color "form the great bulk of 
veterans in the lowest income levels."); id. at 4 (citing a report from the American Federation of 
Labor "showing that average weekly income of white veterans ranges from 30 to 78 percent above 
the average for Negro veterans throughout the South, and giving as an example Jackson, 
Mississippi, where the average weekly wage for white veterans is $48 while Negro veterans average 
$27 per week"). For late twentieth century measures, see Oliver & SHAPIRO, supra note 266, at 
7; William A. Darity & Samuel K. Myers, Jr., Persistent Disparity: Race and Economic 
Inequality in the United States Since 1945, at 136 (1998). 

28 1 . See, e.g. , Samuel R. Bagenstos, The Future of Disability Law, 1 14 YALE L.J. 1 , 9 (2004) 
("[Djisability and poverty are closely intertwined: Disability is a frequent cause of poverty, and 
living in poverty often causes or exacerbates disabling conditions."); see also Robert A. Rosenheck 
et al., Outcomes After Initial Receipt of Social Security Benefits Among Homeless Veterans with 
Mental Illness, 51 PSYCHIATRIC Servs. 1549, 1554 (2000) (finding that for veterans who received 
SSI (Supplemental Security Income), SSDI (Social Security Disability Income) or veterans' 
benefits, the average total annual income was pitifully small: $8820, "about half the amount 
defined as poverty level"). Beneficiaries' incomes, of course, are greater than non-beneficaries' 
incomes. Id. ("[T]hree months after the benefit decision ... the average total income of 
beneficiaries was 1.6 times that of nonbeneficiaries."). Rosenheck and his co-authors also found 
that those whose applications for benefits were granted "were not significantly different from 
nonrecipients on any health status measure." Id. at 1553. The only significant difference between 
those whose applications were approved and those whose applications were denied seemed to be 
"patience — a willingness to carefully and thoroughly proceed through the various steps required 
to obtain benefits." Id. at 1553-54. "Clients who are impulsive, impatient, or disorganized may be 
less willing to follow the procedures necessary to obtain benefits, even though they are severely 
disabled." Id. at 1554. 

156 INDIANA LAW REVIEW [Vol. 38: 103 

choice for many, based on life cycle, employment, or just life-style 

As Henry Aaron wrote in 1972, "[t]he implicit subsidy through VA loan 
guarantees . . . presumably rests on a desire to make partial financial amends to 
men who served in a socially useful, but underpaid, occupation. Why veterans 
who own their residences deserve such a subsidy, while those who rent do not, 
is far from clear.""^^ 

ni. Reasons Why Veterans Have Been Offered Only 


Parts I and n described the development of the veterans' housing programs 
and the consequences of the concentration on homeowner ship. This Part 
considers some of the reasons for the focus on homeownership as a basis for Part 
IV 's discussion of proposals for changing the policies governing veterans' 

As we have seen, there was a severe housing crisis in the late 1940s and early 
1950s, particularly for people with the lowest income and asset levels, people 
who needed help in securing rental housing.^^"^ There was a powerful public 
demand for action on housing, and President Roosevelt expressed support for the 
principle that all people should enjoy "Freedom from Want," a freedom that 
would include access to housing.^^^ The Truman administration strongly 
supported programs of rental as well as homeownership assistance. ^^^ 

As we also have seen, the Roosevelt administration favored universal 
programs. FDR had opposed special programs for veterans, insisting that "the 
fact of wearing a uniform does not mean that he can demand and receive from his 
government a benefit which no other citizen receives. "^^^ At the end of World 
War n, FDR's administration introduced special programs for veterans only to 
the extent it thought necessary to avoid social disruption. ^^^ 

In the face of this universal need for assistance with rental as well as 
homeownership, strong public demand that the need be satisfied, and some 
support within the administration for such satisfaction, the federal government 
produced a program that served veterans only, not civilians, and served only 
some veterans — almost exclusively white men, and exclusively those who could 
afford and desired homeownership. It is essential that we try to understand the 
forces that created and maintain this limited program in order to consider ways 
of expanding housing assistance. 

The principal forces that prevailed were the veterans' organizations, fiscal 

282. Homburg, supra note 276, at 379. 

283. Aaron, supra note 101, at 90. 

284. See supra notes 102-06 and accompanying text. 

285. See supra note 14 and accompanying text. 

286. See supra notes 107, 121, 141-46 and accompanying text. 

287. See supra note 64 and accompanying text. 

288. See supra notes 63-73 and accompanying text. 


and political conservatives, and the lending and real estate industries. The 
veterans' groups were committed to the principle of veterans' exclusiveness: 
they insisted on programs that were administered by the VA, rather than 
programs that were administered by agencies that served the public at large and 
treated veterans as part of that general public. Their determination that the needs 
of veterans be met separately was supported by conservatives, who "feared the 
use of the 'veterans' appeal as a guise to obtain general liberal reforms. "^^^ 
Fiscal conservatives wanted to spend as little money as possible, and therefore 
were relieved to be able to draw a line at helping veterans and not including the 
general public. Political conservatives — sometimes the same people — wanted 
to keep government involvement as slight as possible, and distinguished between 
government provision for veterans (often seen as repaying an obligation) and 
government assistance to the general public (often seen as socialism). Social 
conservatives also had some concern to deflect anger and hostility on the part of 
returning veterans. ^^° The combination of these forces secured a veterans-only 
housing program. 

Given that the program would be one that would serve veterans only, the 
fascinating questions were why and how the decision was made to create a 
program limited to guaranteeing homeownership loans — a program that would 
exclude many veterans: women, non-whites, and others who could not satisfy 
private credit institutions, and all those veterans who could not afford (or did not 
want) homeownership.^^^ The answer seems to be that this limitation, too, served 

289. Ross, supra note 24, at 43 (quoting Congressman Bertrand W. Gearhard (R-Cal.), "a 
founder of the American Legion, a past commander of his department, and a former National 
Executive Committee member," who said that "[t]he thing we have to fight down is the crafty effort 
of so many different groups to use the war for the reorganization of the world after the war; to 
capitalize upon the war sentiment to accomplish their objectives which have to do with social 
uplift"; Ross describes Congressman Rankin as a member "of a wrecking team in Congress that 
hoped to demolish the remaining vestiges of the New Deal"); id. at 74-77 (describing the support 
provided by the American Legion and the Veterans of Foreign Wars (VFW) to Rankin's effort to 
have all veterans' legislation assigned to the World War Veterans' Legislation Committee, which 
he chaired, and stating that part of the Legion's explanation for supporting Rankin, as set out by 
the Legion's Ohio Department Commander, was "so that crack-pots, long-haired professors, and 
radicals will have as little ground as possible to work on in an effort they will undoubtedly make 
to influence the thinking of today's discharged Army") (quoting Coffee to Vorys, July 15, 1943); 
id. at 80 (William Randolph Hearst, who long had "dictated a rabid anti-New Deal policy for his 
[national] newspaper chain," also strongly supported the Legion.); id. at 79 n.38 (discussing work 
of Hearst correspondent); see id. at 39-49 (discussing the successful opposition of veterans' 
organizations and conservatives to efforts to provide job training for all handicapped people, 
including, but not limited to, veterans); id. at 57 (discussing the concern about using "veterans' 
benefits as a lever for broader domestic policy reforms — a characteristic of most of the later New 
Deal-Fair Deal veterans' programs"). 

290. See supra note 72 and accompanying text. 

291. The G.L Bill was rooted in a desire to benefit veterans, but it would be a mistake to 
believe either that such a desire alone is enough to produce any benefit to any veterans or that such 

158 INDIANA LAW REVIEW [Vol. 38: 103 

the varied interests of different groups with political power: the veterans' 
organizations, the lending and real estate industries, and fiscal, political, and 
social conservatives. 

A. The Interests of Veterans and Veterans ' Advocates 

Although veterans were of all genders, races, ethnicities, abilities, and 
economic classes, the organizations that represented veterans focused on some 
but not all portions of the veteran population. While all of these organizations 
supported the principle of veterans' exclusiveness, all of the organizations did 
not agree about which veterans should be served by federal programs. ^^^ The 
Disabled Veterans of America, for example, "doggedly opposed the GI Bill of 
Rights throughout the entire course of its legislative history, "^^^ maintaining that 
it would divert "needed funds and facilities from the disabled."^^'* Other 
veterans' organizations had other ideas about which veterans should benefit from 
federal assistance in which ways.^^^ 

The American Legion, the principal advocate for the G.I. Bill and its housing 
program, purported to represent all veterans, but, in fact, was less representative 
of women, non-whites, and those with lower incomes.^^^ Many more Legion 

a desire necessarily will produce benefits to all veterans or to veterans only. See John Doling, 
Comparative Housing Poucy 10 (1997) ("Governments may intervene ... in ways that improve 
the lot of those who would not otherwise be able to consume housing of a reasonable size and 
quality, but such an outcome is a consequence of an underlying motivation to preserve the social 
order."). Cf. KELLY, supra note 5, at 3, 67 (stating that "[t]he violence and scale of the Civil War 
. . . created a large population of war-disabled veterans and forced the postwar Congress to establish 
a comprehensive system of veterans' institutional care," and that "in the immediate postwar months 
the disturbing sight of battle-scarred soldiers begging in the streets of Northern cities once again 
forced the issue of veterans' institutional care onto the public agenda"). In the late twentieth 
century, "a large population of war-disabled veterans" has not "forced" Congress to establish "a 
comprehensive system of veterans' institutional care," and the "sight of battle-scarred soldiers 
begging in the streets of Northern" (and Southern and Western) cities has not "forced the issue of 
veterans' institutional care onto the public agenda." 

292. See Ross, supra note 24, at 105. 

293. /^. at 103. 

294. Id. at 104. This objection seems to have proven true with respect to the housing program, 
as veterans with disabilities likely are disproportionately too poor to afford homeownership. 

295 . See id. (noting that the Disabled Veterans of America, Veterans of Foreign Wars, Military 
Order of Purple Heart, and Regular Veterans Association proposed alternatives to the G.I. 
Bill — without success). 

296. See Wecter, supra note 32, at 444 (writing of the Legion in 1944: "as statistics showed, 
the prosperous rather than the unprosperous veteran kept up his Legion membership through the 
years"); Moley, supra note 44, at 134 (stating that "[i]n the early 1920's [sic] the Legion despaired 
of assimilating certain nationalities"); id. at 134-35 (discussing the Legion's concern about the 
"Oriental races"); id. at 177 (the Legion opposed increased immigration from China); id. at 148, 
322-23 (discussing "The Forty and Eight," a "fun-making" group associated with the Legion. The 


group's "rules excluded the colored and Oriental races from its membership." This "became 
intolerable" to the Legion in 1960, when "the Legion severed its relations with the Forty and Eight 
and disavowed the organization"); WILLIAM Pencak, For God and Country: The American 
Legion, 1919-1941, at 68 (1989) ("From the beginning, the Legion did not know what to do with 
black veterans."); id. at 99 (describing the 1927 "Pilgrimage" to Paris, for which "[t]he Legion 
travel bureau had refused to accept reservations from black veterans"). 

Some blacks did join the segregated posts adopted throughout much of the nation. 
Northern black veterans usually formed their own posts without incident in communities 
with substantial black populations. . . . But most blacks had little enthusiasm for an 
organization that had no greater commitment to equality than American society as a 

Id. at 69. As late as the 1940s, when the G.L Bill was drafted, the American Legion allowed 
its state departments to confine African- American members to separate posts and to limit severely 
the number of posts for African- Americans. See id. at 68-69 (while some white Southerners in the 
Legion wanted "separate but equal" posts, others were concerned that if black veterans were 
admitted to membership in the Legion, "they would have to be allowed to vote in the Legion, even 
though they could not vote in general elections" and "they would dominate their states by sheer 

numbers Rather than lose Southern whites. Northern supporters of black equality allowed each 

state to reach its own racial solution"); id. at 198 (Arkansas barred black posts altogether); see also 

Chapman v. The American Legion, 14 So. 2d 225, 228 (Ala. 1943) (upholding dismissal of a suit 

brought by "Negro" veterans of World War I who sought to have the American Legion establish, 

in Birmingham, Ala., a post for African-American veterans). The petitioners alleged that Alabama 

had more than 125 posts "whose membership is composed exclusively to that of White World War 

Veterans of World War One; [and] that there is only ONE American Legion Post Chartered and 

established within the entire State of Alabama, where Negro Veterans of World War One are 

privileged [sic] to apply for and be elected to membership" — the Britton McKenzie Post #150 in 

Tuskeega, Ala.. See Record at 5, Chapman (No. 6815-x). The petitioning veterans said expressly 

they are not interested in, nor do they want to be and become members in any of said 

posts now chartered and established in Alabama, whose membership therein is 

composed entirely of white world war veterans; nor or [are] they interested in, nor do 

they want social equality with said white veterans . . . that they are only interested in 

their lawful rights ... to have issued a charter for the establishment of a . . . American 

Legion Post in . . . Birmingham for the benefit of . . . qualified negro veterans residing 


Id. at 12. The petition also refers to a plan in North Carolina, where the American Legion had 

established a "separate department for Negroes." Id. at 7. 

It is worth noting that counsel for the American Legion in this case included Richard T. Rives, 
whose subsequent career on the U.S. Court of Appeals for the Fifth Circuit made him a hero in the 
civil rights movement. See JACK BASS, Unukely HEROES 69-73 (1981) (discussing the 
development of Rives' views on racial issues). 

Other Legion positions were affected by racial considerations. See, e.g., Pencak, supra, at 
198 (stating that part of the Legion's vacillation and internal disagreement with respect to the 
question of a "bonus" had to do with racial concerns: "[i]n the South, especially. Legionnaires 
feared the effects of unprecedented amounts of cash placed in the hands of black veterans, who for 
the most part were sharecroppers locked into a system of debt dependency"); id. at 286 (discussing 

160 INDIANA LAW REVIEW [Vol. 38: 103 

members were men than women, white than non-white, financially comfortable 
than poor. Thus, it is not altogether surprising that the Legion proposed a 
housing program that excluded all veterans who could not afford or did not want 
homeownership, which necessarily meant a disproportionate exclusion of women 
and non- whites. (Although the use of the private market to make guaranteed 
loans — and the private market's hostility to women and non-whites — was not 
part of the Legion's original proposal, which contemplated direct loans made by 
a government agency, the government itself at that time practiced housing and 
lending discrimination against non-whites and women.^^^) 

B. The Interests of the Real Estate, Lending, Construction, Lumber, and 
Related Industries and Fiscal, Political, and Social Conservatives 

The real estate, lending, construction, lumber, and related industries had a 
powerful interest in programs that promoted new housing development. Lenders 
and brokers had a particular interest in promoting private, single family 
homeownership, which would produce additional business for them.^^^ Just as 
the industries' interests led to the creation of the FHA homeownership program 
and the evisceration of the public housing program,^^^ the industries' interests 
shaped the veterans' housing program.^^^ 

The industries' self-interest was buttressed by the ideological commitment 
of fiscal, political, and social conservatives, often but not always the same people 
as the industry actors, who also had strong preferences for homeownership 
programs. Fiscal conservatives preferred homeownership because it seemed to 

"racial troubles, . . .[the] most serious problem" with the Legion's program of Junior Baseball). 

In other respects, at least where there was no disadvantage to the organization in doing so, the 
Legion did advance the interests of non- white veterans. See, e.g., id. at 195-96 (discussing a Legion 
field representative's 1933 protests against review boards that disallowed or reduced benefits for 
presumptively service-connected disabilities. The representative "noted that the 'colored boys' in 
the South fared the worst: only 10 percent retained their benefits"). 

For a discussion of the continuance of American Legion racial segregation, see Pat Arnow, The 
Old South: For Some Black Veterans, Segregation Lingers on, in IN THESE TIMES (Mar. 21, 1999) 
(on file with author). 

297. The FHA "insisted on the application of racially restrictive covenants to properties that 
sought government assistance" until 1948, following the Supreme Court's decisions in Shelley v. 
Kraemer, 334 U.S. 1 (1948) and Hurd v. Hodge, 334 U.S. 24 (1948), and allowed the use of such 
covenants after 1950. Hirsch, supra note 258, at 209, 213; see also supra notes 251-53 and 
accompanying text. 

298. See FUNIGIELLO, supra note 62, at 249 ("Mortgage bankers and builders, with an eye on 
returning veterans as a house-hungry group eager to buy whatever they produced, resisted any 
proposals that might retard the pace of construction or lower their profits."). 

299. See supra notes 54-62, 98-101, 133-37 and accompanying text. 

300. The industries also built on the desire for programs that would increase employment 
opportunities, although production of subsidized rental housing also would have created 
employment opportunities. 


cost relatively little government money,^^^ and political and social conservatives 
preferred homeownership to other housing programs which seemed 

It was the combination of all of these interests that created the G.I. Bill 
housing program enacted by Congress in 1944.^^^ The fiscal, political, and social 
conservatives and the industries wanted a homeownership program. The 
American Legion was disposed to accept that, partly because the Legion itself 
was a conservative organization,^^^ partly because it had developed the housing 
provisions of the G.I. Bill with the advice of representatives of the real estate 
industry,^^^ and partly because its constituency was more the higher-income than 
the lower-income veterans. ^^^ The Congress that enacted the G.I. Bill in 1944 
was a conservative institution.^^^ Indeed, it was conservatives in Congress who 
changed the American Legion's original proposal for direct loans into a program 
of guaranteed loans and increased the interest rate on those loans. ^°^ 

The G.I. Bill's homeownership program was enacted because it served the 
interests of the industries and fiscal, political, and social conservatives, and the 
interests of some of the veterans — white, male veterans — with whom the 
American Legion was most concerned. By satisfying the needs of a large, 
politically powerful, group of veterans — those who could afford 
homeownership — Congress "took the edge off the demand for housing 
assistance, even though the G.I. Bill left other veterans without housing help. 

301. See REPORT ON VETERANS' Benehts, supra note 6, at 161 ("In a way, the loan guaranty 
program was advanced as an alternative device to a cash bonus, advocated because it would be 
vastly less expensive to the Government, and because quite probably it would serve the needs of 
the veterans equally well."); but see generally Kemeny, supra note 133 at 6, 25, 36-37 (arguing 
that homeownership is more expensive for governments as well as for households). 

302. See Davies, supra note 102, at 41 ; see also supra notes 135-36 and accompanying text. 

303. With regard to this general principle, see DOLING, supra note 291, at 45 ("Policy may 
have stated aims to assist specified groups in the population in specified ways, but the groups in the 
population that actually do benefit may be different than those apparently intended."). 

304. See Wecter, supra note 32, at 427-29; see also George Seay Wheat, The Story of 
THE American Legion: The Birth of the Legion 8 1 -92 ( 1 9 1 9); Duffield, King Legion 9, 1 56- 
235 (1931); supra notes 296-97 and accompanying text. 

305. See supra note 99 and accompanying text. 

306. See supra note 296 and accompanying text. The Legion's lack of concern with veterans 
who could not afford homeownership was shown also by its opposition to the Wagner-Ellender-Taft 
Act. See supra note 137 and accompanying text. 

307. See FUNIGIELLO, supra note 62, at 221, 244; Amenta & Skocpol, supra note 22, at 1 1 1 
(noting that "[ajfter the 1942 elections, the conservatives in Congress were strong enough to roll 
back the New Deal .... By 1943 . . . Congress had claimed the initiative in questions of 
reconstruction .... Congressional planning committees were so weighted by conservatives that 
a Republican, Robert Taft, was named to head one key Senate subcommittee"). 

308. See supra notes 86-92 and accompanying text. It was the conservatives, too, who 
undermined the subsidized rental program that the Administration sought as a supplement to the 
VA homeownership program. See supra notes 121-48 and accompanying text. 

162 INDIANA LAW REVIEW [Vol. 38: 103 

The enactment of the G.I. Bill sometimes is presented as an exception to a 
general retrenchment in social welfare policies.^^^ The analysis in this Article 
suggests, however, that the housing provision of the G.I. Bill was perfectly 
compatible with the general retrenchment in social welfare policies.^ ^° By 
enacting the homeownership program, Congress provided "cover" for a 
conservative force, by offering a little to satisfy a politically potent group, and 
thus deflecting the impetus for broader public programs for all, or at least for all 

rv. An Initial Proposal of Solutions 

This review of the development of the veterans' housing programs 
illuminates three problems: (1) save for the tiny HUD-VASH program, there is 
no subsidized rental program for veterans; (2) the existing homeownership 
program does not work well even for many veterans who choose homeownership; 
and (3) although the early discrimination against female and minority veterans 
may have ended, no redress ever was provided for the veterans who were its 
victims.^^^ The review also suggests some actions that might help to solve those 
problems. Although a great deal has changed since 1944, some of the forces that 
produced the limited housing provisions of the G.I. Bill — the lending, real estate, 
and related industries; and fiscal, political, and social conservatives — still have 

309. See, e.g.. Amenta & Skocpol, supra note 22, at 82; id. at 1 18 ("Conservative coalitions 
that opposed other strong federal measures collapsed on the issue of generosity towards veterans. 
Conservatives . . . could not resist veterans' lobbying groups, especially the American Legion, 
which was locally organized throughout the nation and actively appealed to wartime sentiments 
favoring soldiers."); THE POUTICS OF SOCIAL POUCY IN THE UNITED States, supra note 22, at 33 
("both interagency rivalries and the leverage of congressional conservatives proved insuperable 
obstacles . . . except for such measures as veterans' benefits"). 

310. This would be consistent with the G.I. Bill's conservative origins, as described by a 
journalist who celebrates the Bill. See BENNETT, supra note 72, at 3 (describing the law as being 
"written hurriedly in a hotel room by a former American Legion national commander, supported 
editorially by the most widely circulated — but least respectable — newspaper chain in the country, 
and sponsored primarily by an isolationist senator from the Midwest, a racist congressman from the 
South, and a patrician Republican congresswoman from a tough industrial town in the Northeast"). 

311. The federal government's response to legal changes invalidating discrimination in 
housing has been at most a discontinuance of discrimination, not any effort to redress past 
discrimination. See, e.g.. Young v. Pierce, 628 F. Supp. 1037, 1045-1047 (E.D. Tex. 1985) 
(reviewing HUD's actions with respect to public housing); see also Roberta Achtenberg, 
Symposium: Shaping American Communities: Segregation, Housing and the Urban Poor: 
Keynote Address, 143 U. Penn. L. Rev. 1 191, 1 193-95 (1995) (stating that "the federal government 
. . . has a long history of having precipitated and perpetrated housing discrimination . . ." which it 
was "moving to correct"); Florence Wagman Roisman, Keeping the Promise: Ending Racial 
Discrimination and Segregation in Federally Financed Housing, 41 HOWARD L.J. (forthcoming 


great power on Capitol Hill.^^^ Satisfying those interests is likely to be essential 
to the enactment of corrective legislation. This Part suggests some steps 
designed to encourage the adoption of legislation that would assure effective 
housing assistance to all veterans, eliminate the disgrace of United States 
veterans being homeless, and provide compensation for the housing opportunities 
that were withheld from women veterans and veterans of color. 

A. The Roles of Veterans and Veterans ' Organizations 

The history of the veterans' housing programs indicates that veterans and 
veterans' organizations played a crucial role in securing housing assistance for 
veterans. After the Civil War, a veterans' organization, the Grand Army of the 
Republic ("G. A.R."), was a principal and effective advocate for veterans' homes 
and other benefits.^^^ After the First World War and the wars that followed, the 
American Legion and other veterans' organizations were advocates for veterans' 
benefits. The American Legion generally is given credit for securing the 
enactment of the G.I. Bill.^^"^ We cannot know whether the American Legion 
might have succeeded in securing housing assistance for all veterans after World 
War n, but the fact that the Legion proposed a program that benefitted fewer than 
all veterans made it very likely that no more generous program would be enacted. 
Indeed, as we have seen. Congress made the housing program of the G.I. Bill 
significantly less generous than what the American Legion had proposed.^^^ 

While the power of veterans' organizations may have diminished since Word 
War n, the increase in the number of veterans of the wars in Afghanistan and Iraq 

312. See, e.g.. The Center for Responsive Politics, Top Industries Giving to Members of 
Congress, 2004 Cycle, at 
(last visited Jan. 2, 2005) (listing the real estate industry as the third of the industries that contribute 
most to members of Congress. Commercial banks are listed as eleventh on the list; construction 
services are thirty-second, home builders are forty-ninth, and building materials industries are forty- 
eighth); see also The Center for Responsive Politics, Real Estate: Long-Term Contribution Trends, 
at ?Ind= FIO (last visited Jan. 2, 2005) (showing 
real estate contributions from 1990 through 2004, with an average rank for the real estate industry 
as fourth); Washington Power 25, FORTUNE, May 28, 2001, at 94 (Fortune Magazine's list of 
"Washington's most powerful lobbying groups," showing the National Association of Realtors as 
number nine and the National Association of Home Builders as number eleven); Megan J. Ballard, 
Profiting from Poverty: The Competition Between for-Profit and Nonprofit Developers for Low- 
Income Housing Tax Credit, 55 HASTINGS L.J. 21 1, 225 (2003). 

With respect to the veterans' organizations, see infra note 317 and accompanying text. 

313. See, e.g., Cetina, supra note 7, at 213; Skocpol, supra note 7, at 56, 141 ; but cf Orloff, 
supra note 42, at 46 n. 13 (stating that "the initial legislative liberalization of pensions — the Arrears 
Act of 1879 — was not a product of GAR lobbying; rather, the growth of the GAR was stimulated 
by the Arrears Act"). 

314. See supra notes 79-80, 93 and accompanying text. 

315. See supra notes 83-93 and accompanying text. 

164 INDIANA LAW REVIEW [Vol. 38: 103 

is likely to make those organizations more potent/^'^ The support of veterans' 
organizations would seem to be a necessary, though not sufficient, condition for 
the enactment of legislation benefitting all veterans. 

When veterans' organizations have been successful, part of the reason has 
been that they have represented a substantial number of voters^*^ at a time when 
the two major parties were closely divided, making it particularly important to 
secure the votes of veterans and their families, and those who sympathized with 
them.^'^ Numbers alone are not enough to guarantee success, however; veterans' 
organizations also have failed in efforts to advantage veterans. ^^^ Our review of 
the history of the veterans' housing programs suggests that securing more 
generous provisions would require that the veterans' organizations play several 

First, they should present a prominent and compelling national spokesperson 
to deliver a powerful national message.^^^ Second, they should maintain a strong, 
professional, effective, national lobbying team.^^^ Third, the veterans' 
organizations should use their local affiliates as the basis for a grassroots 
campaign.^^^ The Legion itself did this very effectively in the battle to secure the 

316. See, e.g.. United Veterans of America, United Veterans of America, at http://www. (last visited Dec. 29, 2004) (stating that as World War II veterans die, "the ranks of our 
existing veterans organizations are rapidly thinning out, and with that veterans['] influence in the 
Halls of Congress diminishes daily"); EdiiovmX, A Means Test for Veterans, Wash. Post, Aug. 22, 
1985, at A22 ("The veterans groups have influence in Congress."). 

317. See Orloff, supra note 42, at 46 ("In the Northern and Midwestern states, veterans of the 
Civil War constituted fully 12 to 15 percent of the electorate, making the 'soldier vote a prize of 
great worth,' a 'prize' that increased in value with the growth of the Grand Army of the Republic 
(GAR), the veterans' lobbying group."); see also Wecter, supra note 32, at 249. 

318. See Orloff, supra note 42, at 45 ("[I]n the late nineteenth century .... In the North and 
Midwest, Democrats and Republicans faced each other with nearly equivalent popular electoral 
support." Civil war pensions were a way of securing a few hundred votes "in the most politically 
competitive states."); id. at 41-42 (concluding that welfare programs have not been created simply 
by popular demand or perception of need, but that "some element of political incentive, flowing 
from a threat to political control or from an opportunity to gain organizational or electoral 
advantage, especially in periods of electoral competitiveness or when new voters are entering the 
polity, must be operating in order to stimulate elite interest and coalition-building in the social 
welfare field"); see also Skocpol, supra note 7, at 117, 129. 

319. See, e.g., supra notes 46-48 and accompanying text; see also Skocpol, supra note 7, at 
111 (warning against "simple reliance on the GAR pressure group thesis"). 

320. See, e.g., Davies, supra note 102, at 128 (stating that "[hjousing reform desperately 
needed a prominent national figure to revive national interest"). 

321. See, e.g., id. at 130 (discussing the "militant real estate lobby"). 

322. See, e.g., SKOCPOL, supra note 7, at 55 ("In general, U.S. political structures allow 
unusual leverage to social groups that can, with a degree of discipline and consistency of purpose, 
associate across many local poUtical districts."); id. at 182 (discussing reasons why the American 
Association for Labor Legislation failed in its efforts to promote more general social welfare 
measures: "It did not devise emotional appeals that might have made its legislative campaigns 


G.I. Bill, and the importance of these activities has been demonstrated in a 
variety of situations. ^^^ Fourth, recognizing that the united support of veterans 
and their organizations is necessary but not sufficient to induce Congress to 
create and fund a program that assures effective housing assistance to every 
veteran, the veterans' organizations should seek support from the "natural" 
public interest lobby for housing, including labor, "housers," and environmental, 
civic, religious, health, and progressive business groups. ^^"^ Fifth, intellectual as 
well as popular support is essential.^^^ Sixth, the advocates should have an 

attractive to mass-circulation magazines. It did not engage in systematic grassroots political 
mobilization. Nor . . . did the AALL attempt to use its own organizational resources, or those of 
allied federated associations, to reach directly into the civic life of local communities — and 
legislative districts — across the United States .... Certainly the AALL never developed a fully 
ramified, federated structure of local, state, and national associations, nor even as extensive a 
network of formally affiliated local groups as the National Consumers' League"); see also Weir et 
al., supra note 144, at 23 ("The American federal state, with its decentralized and nonprogrammatic 
political parties, has provided enhanced leverage to interests that could associate across many local 
political districts. Such widespread 'federated' interests — including organizations of farmers such 
as the Grange and the American Farm Bureau Federation, along with local businessmen linked to 
the Chamber of Commerce, and certain professional associations including the National Education 
Association and the American Medical Association — have been ideal coalition partners for 
nationally focused forces that might want to promote, or obstruct, or rework social policies, 
especially when proposals have had to make their way through the House of Representatives."). 

323. See Ross, supra note 24, at 1 17 (discussing the American Legion's ability, "using their 
widespread organizational ties," to contact and bring back to Washington a member of Congress 
who had returned home because of illness); see also Keith, supra note 51, at 102 (discussing the 
ability of the real estate lobby to use local members to launch a national campaign); Weir et al., 
supra note 144, at 23 ("More often, widespread federations — especially those involving commercial 
farmers and small businessmen prominent in many communities — have obstructed or gutted 
proposed national social policies."). The veterans' organizations might use the internet to provide 
a twenty-first century version of the grassroots effort behind the G.L Bill. See, e.g., Alexis Rice, 
Campaigns Online: The Profound Impact of the Internet, Blogs, and E-Technologies in Presidential 
Political Campaigning, Center for the Study of American Government, Johns Hopkins University 
(Jan. 2004), available at 

324. See Dreier, supra note 14 1 , at 37 1 -74 (discussing the need for such alliances); Skocpol, 
supra note 7, at 242 (discussing the alliances made by state federations of labor with "farmers' 
groups, women's associations, middle-class reform groups, party factions, or reformist professionals 
and civil administrators"). 

325. See Skocpol, supra note 7, at 57 (discussing the intellectual and popular alliance that 
helped secure veterans' benefits after the Civil War); see also id. at 25 (stating that "[cjross-class 
coalitions between professionals and popular groups have been crucial to the enactment of all 
modern social policies in every nation"); Orloff, supra note 42, at 42 (stating that "[t]he support 
of reformist elites and new middle-class groups as well as the working classes was a necessary 
condition for the political success of the new programs"); but see FUNIGIELLO, supra note 62, at 249 
(stating that city planners of the 1940s "lacked the special kind of democratic leadership that would 
enable them to weld philosophic purpose, scientific fact, and popular initiative into a dynamic 

166 INDIANA LAW REVIEW [Vol. 38: 103 

effective program for using the arts and the media, both national and local. ^^^ 

The development of the veterans' housing programs suggests that the 
substance of a campaign for corrective veterans' housing legislation should have 
several themes, the most important of which is that veterans have earned the 
right to decent housing — that their service in the jungles of Vietnam, the 
mountains of Afghanistan, and the deserts and cities of Iraq require, at the least, 
that they and their families be assured decent homes. ^^^ The Grand Army of the 
Republic succeeded in its arguments for creation of state homes for veterans and 
their dependents by making people feel ashamed that "Union soldiers [were] 
living as paupers in" poorhouses.^^^ The nineteenth century view was that 
veterans were entitled to justice — they were "a selected subset of the working- 
and middle-class people, citizens of both races, who by their own choices and 
efforts . . . had earned aid — for themselves and their dependents, and even for 
their communities. "^^^ 


326. See, e.g., BCelly, supra note 5, at 22 (reporting that Frederick Law Olmstead, general 
secretary of the United States Sanitary Commission, said in 1862 that a policy to aid veterans must 
"be brought before the public adroitly, cunningly"); see also Skocpol, supra note 7, at 116-17 
(discussing the importance of the press and news sheets "distributed to Union veterans across the 
country, in order to agitate for arrears legislation"). With regard to the use of the arts in general, 


246 (1995) (discussing the contribution made by books to the French Revolution); Daved 
LeveringLewis,W.E.B. Dubois: Biography ofaRace, 1868-1919, at 506-08 (1993) (discussing 
the effect of the film. The Birth of a Nation). Abraham Lincoln is said to have called Harriet 
Beecher Stowe, author of Uncle Tom's Cabin, "the little lady who made this big war." David 
Herbert Donald, Lincoln 542 (1995). 

327 . "Of the 25 million veterans currently alive, nearly three of every four served during a war 
or an official period of hostility." T>Vh,AboutVA: OurNation's Veterans, athUp://'W'wv/l. 
about_va/ (last updated Mar. 3, 2004). The number of veterans in the United States and Puerto 
Rico varies with different sources — 26,549,704, Christy Richardson & Judith Waldrop, U.S. 
Census Bureau, Veterans: 2000, Census 2000 Brief 5 (May 2003), available «f 
gov/vetdata/Census2000/c2kbr-22.pdf; 25.2 million on September 30, 2003, VA, FY 2005 
Congressional Budget Submission, supra note 158, at 1-16. 

328. Cetina, 5M/7ra note 7, at 219. 

329. Skocpol, supra note 7, at 151 (emphasis in original); see id. at 156-57 (expressing 
similar sentiments). Skocpol states: 

U.S. Civil War pensions (and other forms of public help for veterans and dependents) 
were not conceptualized in socioeconomic terms at all. Instead they were understood 
in political and moral terms. Legitimate Civil War pensions were idealized as that 
which was justly due to the righteous core of a generation of men (and survivors of dead 
men) — a group that ought to be generously and constantly repaid by the nation for their 
sacrifices. Politicians constantly spoke of a "contract" between the national government 
and the Union's defenders in the Civil War, arguing that in return for their valiant 
service the former soldiers and those tied to them deserved all the public provision 
necessary to live honorable and decent lives free from want. . . . [T]he Civil War 


In the late nineteenth and early twentieth centuries, the veteran was a model. 
Indeed, the effort to create new benefit programs for workers used veterans as a 
point of comparison. As Theda Skocpol reports, Charles Richmond Henderson' s 
1909 book. Industrial Insurance in the United States, argued that since "the 
nation and the states . . . have already declared it to be our duty to shelter the 
aged and the wounded soldier, why should the victims of the 'army of labor' be 
neglected?"^^^ When a delegate proposed (unsuccessfully) that the American 
Federation of Labor (AFL) endorse an old-age pension law, the resolution was 
that "Congress enact an old-age pension law that will do for the aged who have 
given so much to the industrial struggle what the soldier's pension is designed 
to do for the old soldier."^^^ When the AFL decided, in 1909, to support such an 
effort, the Committee on Resolutions sponsored '"an exceedingly adroit draft' 
of a bill to create an 'Old Age Home Guard of the United States Army,'"^^^ a 
proposal supported by "explicit positive analogies to Civil War pensions."^^^ The 
reason that the votes of veterans and their sympathizers could be earned in this 
way was that the public in general regarded veterans as deserving of government 

Although it is not easy to determine what is society's current view about 
homelessness in general or homeless veterans in particular,^^^ the fact that 

pension system, like subsequent provision for "deserving" Americans, was also defined 
in opposition to charity or public programs for paupers at state and local levels. 

Id. at 149; see also KELLY, supra note 5, at 166 ("[M]ost Americans believed that the federal 

government had an obligation to shelter citizen-veterans."). 

330. Skocpol, supra note 7, at 156 (quoting CHARLES RICHMOND Henderson, Industrl\l 
Insurance in the United States 308-09 (1909)). 

331. M at 2 1 3 (quoting PROCEEDINGS OF Twenty-Second Annual AFL Convention 1 1 2 


Convention OF THE American Federation OF Labor 97- 101, 119, 330-31 (1909)). 

333. Mat 231. 

334. See id. at 1 1 5 ("Not only did the expansion of Civil War pensions fit the proclivity of the 
nineteenth-century U.S. polity for distributive policies; the important legal watersheds also reflected 
the changing competitive strategies of the major political parties; and the forms of new legislation 
maximized possibilities for using pensions to recruit voters."); id. at 1 17 ("[I]t was very important 
that northern elected politicians from both parties were highly susceptible at this juncture to 
arguments on behalf of the Union soldiers and survivors .... Neither party wanted to appear 
ungenerous to the widows and disabled soldiers."). 

335. Reviewing "many polls, surveys, and experiments," Gary Blasi reported the "quite 
surprising finding" that "while most people blame poverty on the poor, most people blame 
homelessness on society." Gary Blasi, Advocacy and Attribution: Shaping and Responding to 
Perceptions of the Causes of Homelessness, 19 ST. LOUIS U. PUB. L. REV. 207, 208 (2000). On the 
other hand, some law review articles and the popular press refer to a "backlash" against the 
homeless and "compassion fatigue." See, e.g., Vicki Been, Surveying Law and Borders: Comment 
on Professor Jerry Frug 's The Geography of Community, 48 Stan. L. Rev. 1109, 1 1 14 n. 1 3 (1996) 
(referring to "compassion fatigue"); Robert C. Ellickson, Controlling Chronic Misconduct in City 

168 INDIANA LAW REVIEW [Vol. 38: 103 

millions of veterans have suffered homelessness in the 1980s and 1990s and 
continue to do so into the twenty-first century suggests that the pubhc does not 
consider that it is shamed when veterans live on the streets. Restoring the earlier 
sense that a debt is owed to veterans seems essential to securing legislation that 
will assure decent housing to all veterans. ^^^^ 

Another useful theme is concern about recruitment. A principal reason for 
creation of the original soldiers' homes was to encourage recruitment: 

Army officers and military officials saw that a military asylum might not 

Spaces: Of Panhandlers, Skid Rows, and Public-Space Zoning, 105 YALE L.J. 1165, 1168 (1996) 
(referring to "the emphatic backlash of the 1990s"); Nancy A. Millich, Compassion Fatigue and 
the First Amendment: Are the Homeless Constitutional Castaways?, 27 U.C. Davis L. Rev. 255, 
265 (1994); Larry Tye, Seeking Shelter, The Street People Are Finding Scorn, BOSTON GLOBE, 
Aug. 27, 1990, at 1 (referring to a "backlash against the homeless" and "compassion fatigue"). The 
National Coalition for the Homeless and others have concluded that hostility to homeless people 
is substantial and increasing. See NATIONAL COALITION FOR THE HOMELESS, ILLEGAL TO BE 
Homeless: The Criminalization of Homelessness in the United States 8 (Aug. 2003); Lois 
M. Takahashi, A Decade of Understanding Homelessness in the USA: From Characterization to 
Representation, 20 PROGRESS IN HUM. GEOGRAPHY 291, 291 (1996); see also Wes Daniels, 
"Derelicts, " Recurring Misfortune, Economic Hard Times and Lifestyle Choices: Judicial Images 
of Homeless Litigants and Implications for Legal Advocates, 45 BUFF. L. REV. 687, 732 (1997) 
(predicting reductions in services for homeless people because of "'compassion fatigue' and 
taxpayer frustration, and an 'increasingly hostile climate for homeless persons,'" among other 

Although it may be tempting to try to explain current antipathy to homeless people by 
reference to a philosophy of rugged individualism, that explanation would not take account of the 
strong sense of individualism of the nineteenth century. See Skocpol, supra note 7, at 16-17 
("When liberal values of individualism, self-sufficiency, voluntarism, distrust of government, and 
market competition were supposedly at their height in the late nineteenth century, how was it that 
Americans countenanced such widespread and relatively generous benefits, delivered directly by 
the federal government, and often to people not suffering from war wounds or economic privation 
of any kind?"); as to the level of generosity, see id. at 128-29 ("By 1893, ... the federal government 
was spending an astounding 41.5 percent of its income on benefits for [veterans]."); see also 
Kelly, supra note 5, at 2 ("It is striking that, in an era notorious for its celebration of self-reliant 
individualism and laissez-faire government, war-disabled Union veterans . . . could look to a federal 
institution for shelter and medical assistance."). 

336. The veterans' advocates also would need to be prepared to respond to attacks. See 
Skocpol, supra note 7, at 261 -IS (stating that a significant reason why Civil War pensions were 
abandoned was fear of corruption, although there is no explanation for the fact that this form of 
corruption was not tolerated, when so many other forms of corruption were); id. at 277 ("Visible 
and highly emotional negative publicity about Civil War pensions during the Progressive period 
drowned out the scattered voices of labor leaders, certain refoiTners, and even an occasional 
businessman, who were prepared to see Civil War pensions as a positive precedent paving the way 
toward more universal old-age pensions."); id. at 278-85 (discussing doubts about the government's 
ability to administer a program of benefits). 


only serve to reward the brave and faithful soldier, but might also make 
service in the Regular Army appear more attractive to a larger number 
of individuals and, perhaps, create for the army the image of a kind and 
humane protector, helping to elevate its position in the eyes of the 
American people.^^^ 

Providing housing assistance to all veterans is likely to serve as an inducement 
to recruitment today as it did a century ago/^^^ 

B. The Design of the Program 

The history of the development of the veterans' housing programs suggests 
both general and specific attributes that an improved, corrective veterans' 
housing program should have. 

1. General Attributes of a Corrective Program. — This review suggests that 
a housing program that successfully serves low-income/low-asset veterans should 
have three characteristics: it should be an integral part of a program that serves 
all veterans; it should meet the needs of the lending and real estate industries; and 
it should satisfy fiscal conservatives by relying on tax or other indirect subsidies 
rather than direct expenditures. 

The debate between proponents of universal programs and proponents of 
targeted programs is not easily resolved.^^^ There is much to be said for universal 
programs, programs that will serve everyone, veterans and non- veterans. This, 
as we have seen, is what was sought by some in the FDR and Truman 
administrations; this is what is evoked by the Universal Declaration of Human 
Rights, the International Covenant on Economic, Social, and Cultural Rights, and 
the national housing goal established by Congress in 1949.^"^° Activists and 
scholars have urged universal housing (and other) programs in the past,^"^^ and 

337. Cetina, supra note 7, at 39; see id. at 42 (characterizing an 1829 statement by an Army 
Adjutant General as an observation that "the army asylum might serve as an incentive to increased 
enrollment in the ranks of the army"); id. at 45 (reporting the belief that "the existence of such an 
institution would aid in attracting a better class of men into the army's ranks"); id. at 54 
(characterizing both the navy and army homes as means to encourage enlistment). 

338. A case for effective housing assistance as an essential aid to recruitment might effectively 
be made by those who argued that recruitment for the officer corps justified race-conscious 
admissions policies in ehte law schools. See Grutter v. BoUinger, 539 U.S. 306, 331 (2003). 

339. See, e.g., Theda Skocpol, Targeting within Universalism: Politically Viable Policies to 
Combat Poverty in the United States, in THE URBAN UNDERCLASS 411 (Christopher Jencks & Paul 
E. Peterson eds., 1991); Robert Greenstein, Universal and Targeted Approaches to Relieving 
Poverty: An Alternative View, in THE URBAN UNDERCLASS, supra, at 437. 

340. See supra notes 15-18 and accompanying text. 

341. See, e.g., Skocpol, supra note 7, at 209-10 (discussing Samuel Gompers's argument 
against social insurance, for two reasons: "First, it would subordinate [workers] to a state they 
might not control .... Secondly . . . Gompers criticized workingmen's insurance for its departure 
from universal principles of citizenship. 'Compulsory social insurance,' he wrote, 'is in its essence 
undemocratic. The first step in establishing social insurance is to divide people into two groups'"). 

170 INDIANA LAW REVIEW [Vol. 38: 103 

continue to do so today .^"^^ As a matter of political reality, however, the United 
States Congress does not seem to be ready to implement a universal right to 
housing. It might be easier to persuade Congress to implement a right to housing 
for a smaller, more specific, group: all veterans.^"^^ A program that serves all 
veterans would mean a program that provides assistance with rental as well as 
improved assistance with homeownership, and compensation for the uncorrected 
inequities of the early decades of the veterans' housing program.^"^"^ 

Not all of these veterans have equal political appeal or power; it might be 
easier to secure improvement of the homeownership assistance than to provide 
rental assistance. However, we have seen from the history of the G.I. Bill the 
danger of dividing veterans into groups. What happened in the 1940s very likely 
would happen again: if a group of veterans with great political appeal could be 
satisfied without any provision for veterans who are less powerful politically, 
those with political appeal would be served, and the others would be neglected. 
That is why veterans' housing programs today do not serve lower-income/asset 
veterans, including many veterans with disabilities. Serving those veterans is 
most likely to be achieved as part of a program that also advantages other 
veterans, with the veterans and veterans' organizations agreeing not to allow 
some veterans to be bought off at the expense of all.^"^^ The reasons for 
presenting an all- veteran program are not only altruistic: part of the appeal of 
such a program would be that it would eliminate inequities. In the past. Congress 
has made changes in programs in order to eliminate inequities among veterans. ^"^^ 

Whatever the nature of the corrective program, the history of veterans' 
housing programs suggests that, while support from veterans' organizations 
would be necessary, support from the housing and lending industries would be 
essential. The FHA program, the original VA program, and virtually all other 
major housing programs in the United States have been created primarily to serve 
the industries. ^"^^ If, but only if, the industries support the development of 

342. See, e.g., id. at 41 1; Greenstein, supra note 339, at 437. 

343. Targeting a program to veterans might, of course, reduce the likelihood of support from 
advocates for other groups. See supra note 324 and accompanying text (discussing the value of 
coalitions); see also FUNlGffiLLO, supra note 62, at 248; id. at 228-29 (discussing the need for unity, 
not division, among liberals). 

344. See supra notes 160-223, 244-83 and accompanying text. 

345. See statement of Disabled American Veterans (DAV) National Adjutant Arthur H. 
Wilson: "Just as we don't leave our wounded behind on the battlefield, we must not leave our 
homeless veterans behind abandoned on the streets of our cities." Disabled AMERICAN Veterans, 
The DA V Homeless Veterans Initiative, at 1 .html 
(last visited Jan. 3, 2005). The DAV's official motto is: "We Don't Leave Our Wounded Behind." 
Id., at (last visited Jan. 3, 2005). 

346. See Skocpol, supra note 7, at 1 16 ("[Mjany Congressmen and officials were perturbed 

by inequities among veterans New laws often originate in this way, as officials and politicians 

themselves become dissatisfied with the operation of earlier policies and create revised measures, 
typically more expensive or interventionist, to correct the situation."). 

347. See, e.g., supra notes 54-58, 98-101, 1 13-16, 122-52 and accompanying text; Ballard, 


housing programs for veterans, those programs may have a chance of enactment. 

Moreover, given the growing deficits in the federal budget, ^"^^ a program that 
relied heavily on direct expenditures would be unlikely to succeed. The major 
housing programs in the United States — the homeownership deductions and the 
Low Income Housing Tax Credit program — operate with indirect financing 
through the tax code.^"^^ That is the most likely way to provide significant 
additional housing assistance to veterans or anyone else. 

2. Specific Attributes of a Corrective Program. — A corrective program that 
served all veterans would provide (a) rental assistance, (b) improved 
homeownership assistance, and (c) redress for the early, uncompensated 
exclusions of women and non- white veterans. 

a. A subsidized rental program for veterans. — It is clear, and the "VA 
acknowledges that it alone cannot meet all their [homeless veterans'] needs. 
These programs are not available in all locations and, where available, capacity 
for residential treatment is limited."^^^ HUD-VASH provides fewer than 1800 
vouchers, and HCHV and DCHV provide small numbers of accommodations. 
These accommodations, moreover, are not permanent. When veterans are 
discharged from HCHV and DCHV, many of them are discharged without 

While some — though by no means all — of these homeless veterans need 
physical or mental health or substance abuse services, employment counseling 
or retraining, or assistance with insurance and benefit programs, what they all 
need is a place to live: housing.^^^ Mental illness and substance abuse do not 

supra note 312, at 221, 225. 


Fiscal Years 2004-2013, at xvii (Jan. 2003). 

349. See Steven C. Bourassa & William G. Grigsby, Income Tax Concessions for Owner- 
Occupied Housing, 1 1 Housing POL'Y 521, 521-25 (2000); see also Jean L. Cummings & Denise 
Dipasquale, The Low-Income Housing Tax Credit: An Analysis of the First Ten Years, 10 HOUSING 
POUCY Debate 251, 252, 278 (1999); Ballard, supra note 312, at 223 ("supporters of the LIHTC 
program maintain that it is a more politically palatable alternative to traditional subsidized housing 
because the tax credits result in federal revenues foregone rather than a direct expenditure of limited 
federal dollars"). 

350. GAO Report, supra note 1 1 , at 1 1 . 

351. See GAO Bascetta, supra note 230, at 7 ("In fiscal year 1997, about 8,500 veterans 
were discharged from" DCHV and HCMI. Only "57 percent of DCHV veterans were housed at 
discharge," and"39 percent of HCMI veterans reported having their own apartment, room, or house 
at discharge."). In 1991, the National Coalition for the Homeless had recommended that the VA 
"immediately implement national discharge planning procedures." HEROES Today, HOMELESS 
Tomorrow?, supra note 11, at iv. This recommendation has not been implemented. See 
Interagency Council on Homelessness, Innovative Initiative, Category: Homelessness 
Prevention/Discharge Planning, at http://www.ich.gOv/innovations/l/ (last updated Apr. 25, 2003) 
(discussing discharge planning). 

352. See Robert Rosenheck et al.. Special Populations of Homeless Americans, in HUD & 
HHS, Practical Lessons: The 1 998 National Symposium of Homelessness Research 2- 1 , 2-3 

172 INDIANA LAW REVIEW [Vol. 38: 103 

cause homelessness: most people who are substance abusers, or mentally ill, or 
both, are perfectly well housed. What causes homelessness, among veterans and 
other people, is poverty.^^"^ As a recent HUD/HHS investigation concluded: 
"Every study that has looked has found that affordable, usually subsidized 
housing, prevents homelessness more effectively than anything else. This is true 
for all groups of poor people, including those with persistent and severe mental 
illness and/or substance abuse. "^^'^ "For the most part, veterans become homeless 
for the same reasons that all Americans become homeless — they can't afford to 
pay the rent."^^^ 

It would be useful to further study the housing needs of veterans, to gain a 
more detailed sense of the numbers of veteran households that need housing 
assistance, the income levels, family sizes, disability status, and geographic 
distribution of those households, and the extent to which homeownership or 
rental assistance would meet those needs. Even without such a study, however, 
the fact that more than half a million veterans experience homelessness each year 
signals that it is probable that veterans need more than half a million subsidized 
rental units. 

Pending further study of veterans' housing needs, it is not possible to know 
to what extent the veterans' housing needs may be met by subsidizing payments 
(as with housing vouchers) and to what extent new production of units is 
required. (New production is most likely to be required for households that need 
three bedroom or larger units, households that require particular accommodation 
for physical disabilities, and households in geographic areas with relatively little 
available housing.) Until further study of veterans' housing needs has been 
completed, it is reasonable to assume that both forms of housing subsidy would 
be required. 

Existing programs provide useful models for addressing veterans' housing 

to 2-4 (Linda B. Fosburg & Deborah L. Dennis eds., Aug. 1999) [hereinafter PRACTICAL LESSONS]. 
A study of housing vouchers and intensive case management for homeless people with 
chronic mental illness found that vouchers, but not intensive case management, 

improved housing outcomes An evaluation of a nine-city services-enriched housing 

program for homeless families with multiple problems . . . found that the vast majority 
of these families were still in Section 8 housing at an 18-month follow-up. The authors 
concluded "that it may be an investment in helping families to regain their stability and 
ultimately perhaps, their footing in the workforce." 


353. See BURT ET AL., supra note 11, at 8 ("Housing affordability was, and still is, assumed 
to be the immediate cause of homelessness."). 

354. Marybeth Shinn & Jim Baumohl, Rethinking the Prevention of Homelessness, in 
Practical Lessons, supra note 352, at 13-1; see also Linda B. Fosburg & Deborah L. Dennis, 
Overview, in PRACTICAL LESSONS, supra note 352, at v, vi-vii ("We know that subsidized housing 
works. . . . Receipt of affordable housing is the single greatest predictor of formerly homeless 
persons' ability to remain in housing."); BURT ET AL., supra note 11, at 14 ("the answer [to 
homelessness], succinctly put, is 'housing'") (citation omitted). 

355. Heroes Today, Homeless Tomorrow?, supra note 1 1, at 10. 


needs. For those veterans who need only financial assistance, an appropriate 
model is the Section 8 voucher program.^^^ For those who need financial 
assistance and supportive services, an appropriate model is the HUD-VASH 
program.^^^ And for those who need new production, an appropriate model is the 
largest subsidized housing production program in the United States today, the 
Low Income Housing Tax Credit program. ^^^ 

It is clear that these programs do not now produce enough housing to meet 
the needs of veterans. There are many more people eligible for and in need of 
Section 8 vouchers and supportive housing and subsidized rental units than these 
programs can accommodate; the existence of long waiting lists evidences only 
some of this unmet need.^^^ If these programs were capable of meeting the 
existing need, there would not be millions of people, including at least half a 
million veterans, experiencing homelessness each year.^^^ 

The inadequacy of the resources of the existing programs shows why the 
veterans' needs cannot be met out of those existing resources. Nonetheless, some 
might be tempted to propose to meet the veterans' needs by creating "setasides," 
designating some vouchers and supportive housing and subsidized units for 
veterans, allowing the veterans to claim those benefits in preference to non- 
veteran households. This is, indeed, what has been done with the HUD-VASH 
program, designating some Section 8 vouchers as a "setaside" for veterans. But 
such a "setaside" program meets veterans' compelling needs only by denying 
relief to the compelling needs of others — the elderly, disabled, and other lower- 
income people already served by these programs. Such setasides also violate the 

356. 42 U.S.C. § 1437f (o) (2000). 

357. See supra notes 236-38 and accompanying text. 


Database: Projects Placed in Service Through 1999, at 2 (Apr. 2002), available at http:// 

359. See National Low Income Housing Coalition, Housing Choice Vouchers (Tenant-Based 
Rental Assistance), a/ (last visited Dec. 
28, 2004); see also HUD, HUD 's Public Housing Program, at 
cfm (last updated Dec. 5, 2000) (stating that "[s]ince the demand for housing assistance often 
exceeds the Hmited resources available to HUD and the local [housing agencies], long waiting 
periods are common"). As this Article goes to press, the Administration has proposed funding 
restrictions that will reduce significantly the number of vouchers available. See Center on Budget 
and Pohcy Priorities, Special Series: Housing Voucher Program, at 
housingvoucher.htm (last updated Oct. 12, 2004). 

360. In addition, existing subsidized units are being lost as restrictions on project-based 
Section 8, LIHTC, and Rural Development units are expiring. See, e.g.. National Housing 
Trust, Changes to Project-Based Multifamly Units in HUD's Inventory Between 1995 
AND 2003: Number OF Affordable Project-Based Units Declines BY 300,000, at 1-15 (2004), 
available at; WASHINGTON State Housing 
Finance Commission, A Report on Multi-family Housing and Preservation Activities 1 -2 
(2001), available «?; see also Ballai'd, 
supra note 312, at 235. 

174 INDIANA LAW REVIEW [Vol. 38: 103 

principle of veterans' exclusiveness and administration by the DVA, principles 
that have been important to veterans for decades. 

What will best serve veterans is not an illusory "setaside" of inadequate 
resources administered by HUD, the Treasury Department, and the state housing 
finance authorities. Rather, what will best serve veterans is an entitlement 
program, administered by the DVA, which guarantees every veteran an 
opportunity to rent or buy housing appropriate for her or his household. 

The principal model for such a program would be the Section 8 voucher 
program, with some modifications: the resident contribution should be limited 
to 20% (rather than 30%) of household income,^^^ there should be no 120-day 
limitation on the use of the vouchers,^^^ and there should be a federal prohibition 
against discrimination on the basis of having such a veterans' voucher. There is, 
after all, no reason why a landlord should be permitted to refuse to accept as a 
tenant a person who has served the country, or the survivor of one who died in 
the service. 

For supportive housing, the HUD- V ASH program should be expanded, with 
an appropriation for additional vouchers specifically for veterans and additional 
VA supportive housing funding to accommodate the vouchers. For production 
of new units (and rehabilitation of existing units), the LIHTC program is a good 
model because it has proven itself to be effective in producing units and has 
considerable political support. Detailing the mechanics of adapting the LIHTC 
program to serve veterans is beyond the scope of this Article, but increasing tax 
credit allocations in proportion to each state's population of veterans would seem 
to be the basis for such an accommodation. LIHTC sponsors should be required 
to report on the number of veterans they serve. Just as DVA and HUD 
collaborate on the HUD- V ASH program, DVA and Treasury could collaborate 
in expanding the LIHTC program so that it serves veterans. The principal defect 
of the LIHTC program is that its subsidy alone is inadequate to serve the lowest- 
income households, but the availability of vouchers would help to address that 

361. From 1969 to 1981, public housing rents were limited, in general to 25 percent of 
household income; Congress changed this in 1981 to reduce HUD's expenses. See Omnibus 
Budget Reconciliation Act of 1981, Pub. L. No. 97-35, 95 Stat. 357; MICHAEL Stone, Shelter 
Poverty 34 (1993) ("For a time, analysts and policymakers thought 20 percent was appropriate."). 
Michael Stone argues that "no universal percentage of income [standard] makes sense." Id. at 34. 
He demonstrates that 25% of income is far too high for many households. Id. at 34-50. 


Promise, Report from the Second National Conference on Assisted Housing Mobiuty 1 

363. See Kathryn P. Nelson, Whose Shortage of Affordable Housing?, 5 HOUSING POL'Y 
Debate 401, 411 (1994) ("Unless they have additional subsidies, LIHTC occupants must have 
incomes between 40 and 60% of the median to avoid severe rent burdens, and research shows that 
families who occupy such units do have incomes in that range.") (footnote omitted); Florence 
Wagman Roisman, Mandates Unsatisfied: The Low Income Housing Tax Credit Program and the 
Civil Rights Laws, 52 MIAMI L. Rev. 1011, 1016 (1998); Ballard, supra note 312, at 231. 


b. Improving the DVA Homeownership Program. — Although today 
"[ajlmost anyone who has served on active duty" is entitled to a home mortgage 
guarantee,^^"^ only about one per cent of veterans use the program.^^^ Of those 
who do not use the program now, some do not need any housing help at all, and 
some need a subsidized rental program. Some, however, might well make use of 
an improved homeownership program. 

It would be useful for DVA to study the reasons why ninety-nine per cent of 
veterans do not use the guaranteed home loan program. What we do know is that 
the current program's principal advantage is that it "reduces or eliminates the 
down payment"; it is "most advantageous to first-time homebuyers."^^^ There are 
several steps that could be taken to make homeownership available to more 

First, the VA should offer a deeper subsidy for homeownership. The VA 
vouchers could be used for homeownership, as HUD vouchers are now;^^^ for 
production of homeownership units for lower income/asset households, the 
Department of Agriculture's Rural Housing Service offers a model.^^^ A 
foreclosure avoidance program should be established for veterans' housing; 
Congress should enact a program like the HUD Mortgage Assistance Program, 
converting the VA refunding authorization into a mandatory program. ^^^ To 
discourage more general restrictive judicial interpretations of the assistance 
available to veterans. Congress should specify that assistance to veterans is the 
primary objective of the programs. ^^^ 

c. Redressing the past discrimination against female and minority 
veterans. — The women and veterans of color who were excluded from the 
benefits of the guaranteed home mortgage program after World War 11 suffered 
a significant financial, social, and psychological detriment. They are identifiable 
people who were the victims of government discrimination on the basis of gender 
and race. In the expanding discourse about reparations theory and practice, these 
veterans of United States military service also deserve a place that assures that 
they will be compensated for what they lost in the early years of the VA housing 

364. Capt. Gerald A. Williams, A Pnm^row Veterans' Benefits for Legal Assistance Attorneys, 
47 A.F.L. Rev. 163, 178 (1999). 

365. See The Encyclopedia of Housing, supra note 9, at 116; see supra note 9 and 
accompanying text. 

366. Id. 

367. 24 C.F.R. § 982.625 (2004). 

368. See supra note 279. 

369. See supra notes 209-23 and accompanying text. 

370. See National Housing Law Project Memorandum from Roberta Youmans and Gideon 
Anders, to Senator John Rockefeller and Ms. Barbara Pryor (Feb. 4, 1992) (discussing these points 
and recommending corrective statutory language) (on file with author); see also Heroes Today, 
Homeless Tomorrow?, supra note 11 at iv, 21, 31. 

371. See ERIC K. Y AMAMOTO ET AL. , Race, Rights and Reparation: Law and the Japanese 
American Internment 389-443 (2001); Florence Wagman Roisman, Redressing Racial 

176 INDIANA LAW REVIEW [Vol. 38: 103 


The United States government's current housing programs for veterans fail 
to meet the needs of most veterans, the deficiency being starkest with respect to 
the more than half million veterans who suffer literal homelessness each year. 
Despite all the current rhetoric of "supporting our troops" and aiding veterans 
and their dependents and survivors, most veterans today, including most veterans 
with service-connected and other disabilities, receive no housing assistance 
whatsoever from the federal government. This is hardly a model of gratitude for 
the wealthiest, most powerful nation on earth; it can and should be corrected. 

Discrimination and Segregation in the FHA and VA Homeownership Programs (Nov. 16, 2001) 
(paper presented at the conference on Housing Opportunity, Civil Rights, and the Regional Agenda, 
November 16, 2001 , sponsored by the Civil Rights Project of Harvard University, the Harvard Joint 
Center for Housing Studies, and The Brookings Institution Center on Urban and Metropolitan 

The Descendants of Fassihi: A Comparative 

Analysis of Recent Cases Addressing the Fiduciary 

Claims of Disgruntled Stakeholders Against 

Attorneys Representing Closely-Held Entities 

Matthew J. Rossman' 


It has been over twenty years since the Michigan Court of Appeals 
considered and decided Fassihi v. Sommers, Schwartz, Silver, Schwartz & Tyler, 
P.C} This case involved a suit by one fifty percent shareholder (Fassihi) of a 
closely held corporation against the corporation's attorney after Fassihi was 
forced out of the business by the other fifty percent shareholder, allegedly with 
the attorney's help. Fassihi has since come to stand for the general proposition 
that an attorney who represents a closely-held business entity may owe a 
fiduciary duty, akin to that owed to a client, to each of the entity's individual 
stakeholders^ even when she does not represent them individually.^ This duty is 
especially likely to exist when the entity has a small number of stakeholders and 
is particularly likely to be implicated when the entity, or those who control it, 
asks for the assistance or advice of the attorney in taking action adverse to a 
stakeholder. Although by no means the only case of its time to address an 
attorney's duties to constituents of a "closely-held" client,^ Fassihi is the 

* Associate Professor of Law, Case Western Reserve University School of Law. B.A., 
1992, Miami University; J.D., 1996, New York University School of Law. My thanks to Doug 
Frenkel, Mark Lekan, and Eileen Sullivan for reviewing and commenting upon the initial draft of 
this Article and to Ursula Rossman for her assistance and support through every stage of its 

L 309 N.W.2d 645 (Mich. Ct. App. 1981). 

2. "Stakeholder," for purposes of this Article, essentially means "constituent," as that term 
is defined in the Comment to Rule 1.13 of the American Bar Association's Model Rules of 
Professional Conduct ("MRPC"), but of a "closely held entity," rather than a large publicly traded 
corporation. "Constituent" is defined in the Comment to mean "[o]fficers, directors, employees and 
shareholders . . . of the corporate organizational client" and "the positions equivalent to [those] held 
by persons acting for organizational clients that are not corporations" and applies to all 
organizations, no matter the size or complexity. MODEL RULES OF PROF' L CONDUCT R. 1.13 cmt. 
1 (2003). Because the cases discussed in this Article specifically address closely held entities, it 
is important to distinguish the use of the term "constituents" in this context. The term 
"stakeholder," with its connotation of equity ownership, is appropriate considering that in most 
closely held entities most or all of the constituents are equity owners. 

3. See, e.g., RESTATEMENT (Third) of the Law Governing Lawyers § 56 cmt. h (2000). 

4. The terms "close," "closed," and "closely-held" are often used interchangeably as 
adjectives before "corporation" to mean corporations with a relatively limited number of 
shareholders, the shares of which are not publicly traded. 1 F. HODGE O'Neal & ROBERT B. 
Thompson, O'Neal's Close Corporations: Law and Practice § 1.02 (rev. 3ded. 2002 (1971). 
Certain states further refine this general concept by providing that close corporations are those in 
which there is "substantial majority stockholder participation in the management, direction and 

178 INDIANA LAW REVIEW [Vol. 38: 177 

preeminent case recognizing a stakeholder's claim of breach of fiduciary duty 
against an attorney who represents only the business. 

Twenty years after Fassihi, its central proposition has certainly not gained 
universal acceptance in the nation's courts. Some jurisdictions have flat out 
rejected it, while others have confused or combined the question of whether a 
fiduciary relationship exists between an attorney and individual stakeholder with 
the question of whether they have established a separate attorney-client 
relationship.^ Furthermore, disgruntled stakeholders routinely assert other 
theories of fiduciary-type liability, which have also received uneven treatment in 
the courts, against business attorneys in circumstances factually similar to 

The resulting lack of certainty is disconcerting for attorneys who represent 
closely-held entities. What is disconcerting is not that courts are developing or 
expanding theories of liability to hold accountable attorneys who clearly behave 
improperly, but rather that it is difficult to gauge where courts stand on these 
theories. Perhaps even more perplexing, the theories are not always consistent 
in their application with guidelines governing attorney behavior — in particular, 
the guidelines established by the American Bar Association's ("ABA") Model 
Rules of Professional Conduct ("MRPC").^ 

This state of affairs could adversely impact both lawyers for closely-held 
businesses and the clients they serve. Uncertainty regarding to whom within a 
business a lawyer owes duties could cause risk averse lawyers to avoid serving 
closely-held businesses, impose "self-protective reservations"^ in the attorney- 
client relationship, or overcompensate by considering the interests of an entity 
and each of its individual constituents whenever a significant decision needs to 
be made, even when this would not otherwise be appropriate. Less cautious 
attorneys could be subject to overbroad liability and the risk of lawsuits 

operations of the corporation" and/or where restrictions are placed on the transfer of its shares. Id. 
(citing Donahue v. Rodd Electrotype Co. of New England, Inc., 328 N.E.2d 505, 511 (Mass. 
(citing Donahue, 328 N.E.2d at 51 1). 

Considering that almost all jurisdictions and the MRPC use the same or similar analysis for 
most business entities, e.g., corporation, partnership, LLC, etc., when determining an attorney's 
representational obligations, the author of this Article will use the more universal terms "closely- 
held business" or "closely-held entity" rather than "closely-held corporation." See Model Rules 
OF Prof' L Conduct R. 1.13 (2003); see also id. at R. 1.13 cmt. 1; ABA Comm. on Ethics and 
Prof 1 Responsibility, Formal Op. 91-361, at 2 (1991) ("There is no logical reason to distinguish 
partnerships from corporations or other legal entities in determining the client a lawyer represents.") 

5. See infra Part LB. 

6. See generally MODEL RULES OF PROF' L CONDUCT (2003). 

7. This phrase appears in Goodman v. Kennedy, 556 P.2d 737, 743 (Cal. 1976), to describe 
one consequence associated with overbroad liability in this context. The contention is that the 
lawyer will modify and/or withhold advice to an entity client to avoid any negative impact on the 
interests of individual stakeholders and thus minimize the threat of claims by disgruntled 


whenever a stakeholder feels he or she has gotten the short end of the stick in a 
dispute relating to the business. In fact, the author's interest in this subject grew 
out of his own experiences representing small businesses and repeatedly 
encountering the ethical and professional dilemmas caused when formerly rosy 
relationships among business partners began to wither. 

In recent years, several courts have addressed claims resulting from what 
might be referred to as the "Fassihi Scenario," i.e., when a stakeholder in a 
closely-held business contends that the actions of one or more other stakeholders 
or the entity have adversely affected him or her and that the attorney is partially 
to blame for her participation in, or even mere facilitation of, whatever took 
place. These cases are worth examining closely for several reasons. First, they 
underscore how jurisdictions continue to differ on whether and to what degree 
attorneys must heed the interests of individual stakeholders while counseling a 
business on a decision or course of action that directly affects stakeholders' 
interests. At the same time, the cases do indicate some uniform trends in the 
courts on the viability of particular fiduciary-based theories of attorney liability 
frequently asserted by disgruntled stakeholders and provide a good sense of 
where the law is headed. Finally, considering these cases in combination with 
Fassihi, other related caselaw, and the MRPC, provides valuable lessons for how 
attorneys can frame and conduct their representation of closely-held entities to 
reduce their potential for liability if these inherently thorny situations arise. 

Accordingly, this Article will examine three of these recent cases closely and 
then make observations about what these "descendants of Fassihr say about the 
state of the law and how they should impact attorney behavior. To provide 
proper context for this discussion, a short summary of Fassihi and other 
contemporary responses to the issues raised in Fassihi follows. 

I. FA55//// AND Other Responses 

A. Fassihi v. Sommers, Schwartz, Silver, Schwartz & Taylor, P.C. 

The facts of Fassihi are fairly straightforward. Fassihi, a radiologist, was 
one of two fifty percent shareholders of a closely-held professional corporation.^ 
The corporation formed after Lopez, another radiologist, asked Fassihi to join 
him in a medical practice at the hospital with which Lopez was affiliated. After 
practicing together for a short time, Lopez decided to cut ties with Fassihi and 
asked the corporation's lawyer to determine how Fassihi could be ousted. The 
lawyer complied and a meeting of the Board of Directors of the corporation was 
purportedly held (without Fassihi present) at which the Board voted to terminate 
Fassihi' s interest.^ The Fassihi court noted some skepticism as to whether the 
Board could have taken this action, both because Lopez and Fassihi disagreed as 
to whether or not the Board had a third director in addition to them, and because 

8. Fassihi v. Sommers, Schwartz, Silver, Schwartz & Tyler, P.C, 309 N.W.2d 645, 647 
(Mich. Ct. App. 1981). 

9. Id. 

180 INDIANA LAW REVIEW [Vol. 38: 177 

it seemed unusual to the court that a board could simply terminate a 
stockholder's interest.*^ At the very least, however, the action resulted in 
hospital officials notifying Fassihi that he was no longer eligible to practice at the 
hospital.^ ^ Unbeknownst to Fassihi, but known to Lopez and the corporation's 
lawyer, membership in the corporation was required for retention of medical staff 
privileges at the hospital.*^ 

Fassihi subsequently sued the corporation's lawyer alleging legal 
malpractice, breach of "fiduciary, legal and ethical" duties, and fraud stemming 
from the lawyer's participation in Fassihi' s ouster/^ On appeal from the trial 
court's denial of Fassihi' s motion for sunmiary judgment, the Michigan Court of 
Appeals addressed the question of whether Fassihi had standing to bring any 
individual claims against the law firm, which claimed to represent only the 
corporation. The fraud issue aside, the court noted that the case presented it with 
a difficult question, "what duties, if any, an attorney representing a closely held 
corporation has to a 50% owner of the entity, individually ... a problem of first 
impression in Michigan." ^"^ 

Although it agreed with the defendant that an attorney for a corporation 
represents the corporation and not its shareholders, the court held that the 
absence of an attorney-client relationship between a corporation' s lawyer and one 
of its stakeholders does not preclude the existence of a fiduciary relationship 
between them.^^ Instead, a fiduciary relationship arises whenever 

[0]ne reposes faith, confidence, and trust in another's judgment and 
advice. Where a confidence has been betrayed by the party in the 
position of influence, this betrayal is actionable and the origin of the 
confidence is immaterial. . . . [W]hether there exists a confidential 
relationship ... is a question of fact. ^^ 

Not only might a fiduciary relationship be found, the court noted that such 
relationships between lawyers and stakeholders are likely to occur in closely held 
corporations "where the number of shareholders is small. "^^ In these instances, 
"corporate attorneys, because of their close interaction with a shareholder or 
shareholders, simply stand in confidential relationships in respect to both the 
corporation and individual shareholders."^^ Fassihi' s simple assertion that he 
''believed that, as a 50% shareholder . . . , defendant would treat him with the 
same degree of loyalty and impartiality extended to the other shareholder,"^^ 

10. Id at 647 n.2. 

11. Mat 647. 

12. Id. 

13. /J. at 646. 

14. Id. at 647-48. 

15. Id. at 648. 

16. Id. (internal citations omitted). 

17. Id. at 649. 

18. Id. 

19. Id. at 648 (emphasis added). 


along with the other facts, was sufficient to "tend[] to show some legal duty on 
the part of the attorney to him personal ly."^^ 

Moreover, Fassihi's allegations regarding the lawyer's behavior — in 
particular, his active and covert participation in a plan with one shareholder to 
deprive Fassihi of the economic benefit associated with his fifty percent interest 
in the corporation — seemed to the court to be the type of behavior that would 
constitute a breach of duty if a fiduciary relationship existed. Accordingly, the 
court of appeals found that it could not dismiss this claim simply as a matter of 
law and remanded the case to the trial court.^^ 

Fassihi is significant for at least two reasons. First, its approach was 
distinguishable from a contemporary line of cases in which the central issue in 
upholding the claims of the stakeholders of a closely-held corporation against the 
entity's attorney was whether the attorney represented the stakeholders as 
individuals.^^ Both Fassihi and its contemporaries acknowledged the same 
reality, namely, that "treating a closely held corporation with few shareholders 
as an entity distinct from the shareholders"^^ potentially disregards a 
stakeholder's sometimes reasonable perception that the lawyer for the business 
is representing his or her interests. But rather than tying up this issue solely in 
the question of who the attorney represents, Fassihi recognized the possibility of 
a separate fiduciary duty owed to a non-client stakeholder and therefore 
potentially created an obligation on the attorney's part in many more 

Fassihi is also significant for the standard it used to determine whether a 
fiduciary duty actually existed. Lawyers are considered to owe clients two 
primary duties — a duty of care (essentially a duty of competent representation) 
and a fiduciary duty (composed of various obligations of confidentiality and 
loyal ty).^"^ A separate line of cases had already established the circumstances 
under which non-client stakeholders could assert a breach of the duty of care 
against an attorney — by meeting the very narrowly applied "intended 
beneficiary" test.^^ Rather than apply this standard, the Fassihi court posited that 
a fiduciary relationship existed in this context whenever someone "repose[d] 
faith, confidence and trust in another's judgment and advice. "^^ Although the 
court did not go into extensive detail about how this standard might be met, it did 
connect the standard to the stakeholder's belief of what the relationship entailed 
and, simply as stated, the "reposed faith, confidence and trust" standard would 
almost certainly be easier for a stakeholder to meet than the "intended 
beneficiary" test. Furthermore, it suggested that this type of relationship is 

20. Mat649n.6. 

21. Mat 648-50. 

22. See, e.g.. In re Conduct of Kinsey, 660 P.2d 660 (Or. 1983); In re Banks, 584 P.2d 284 
(Or. 1978). 

23. Fassihi, 309 N.W.2d at 649. 

24. See RESTATEMENT (Third) of the Law Governing Lawyers §§ 48,49 (2000). 

25. See infra notes 85-88 and accompanying text for discussion of this test. 

26. Fassihi, 309 N.W.2d at 648. 

182 INDIANA LAW REVIEW [Vol. 38: 177 

typical in a lawyer's representation of a closely-held entity. Again, the practical 
effect of Fassihi appeared to be the broadening of circumstances under which a 
non-client, disgruntled stakeholder could successfully assert a claim against the 
entity's attorney. 

B. Other Responses to the Fassihi Scenario 

Since Fassihi, several courts have recognized the potential for a fiduciary 
relationship between the attorney for a closely-held entity and its individual 
stakeholders in the absence of an attorney-client relationship.^^ This is true not 
only in cases addressing the Fassihi Scenario, but also in attorney disqualification 
cases where a stakeholder of a business entity has successfully objected to an 
adverse party's use of the entity's attorney in litigation involving the 
stakeholder.^^ It is fair to say that it is now commonplace for a stakeholder 
involved in either type of proceeding to attempt to claim the existence of a 
fiduciary relationship with the entity's attorney. Moreover, the circumstances 
under which courts have acknowledged that this fiduciary relationship potentially 
applies have gone beyond the inherently adverse stakeholder squeeze-out to 
include the execution of more routine corporate tasks. ^^ 

At the same time, Fassihi' s central proposition has certainly not been 
universally accepted. One example is Egan v. McNamara,^^ decided shortly after 
Fassihi. In Egan, the D.C. Court of Appeals considered a claim of the estate of 
a majority shareholder of a close corporation against the corporation's attorney 
alleging that the attorney breached a fiduciary duty by not warning the 
shareholder about certain aspects of a shareholder's agreement that adversely 
affected his interests.^* The court replied resoundingly that the attorney only had 
obligations to the corporation, despite the fact that the attorney had previously 
represented the majority shareholder on personal matters: "[T]here was no 
fiduciary duty. [The lawyer] represented the corporation, an entity legally 
distinct from its directors, and officers, and shareholders. As [the corporation's] 

27. See, e.g., Johnson v. Superior Court, 45 Cal. Rptr. 2d 312 (App. Ct. 1995) (holding that 
lawyer for limited partnership had fiduciary obligations to each of the partners whether or not he 
represented them individually); Brennan v. Ruffner, 640 So. 2d 143 (Fla. Dist. Ct. App. 1994) 
(considering claim of fiduciary duty by shareholder of closely-held corporation against 
corporation's attorney); Schaeffer v. Cohen, Rosenthal, Price, Mirkin, Jennings, & Berg, P.C, 541 
N.E.2d 997 (Mass. 1989) (noting, in dicta, that there is logic in proposition that lawyer for closely- 
held corporation owes nonclient shareholders fiduciary duty); Collins v. Telcoa Int'l Corp., 283 
A.D.2d 128 (N.Y. App. Div. 2001) (reinstating claim of breach of fiduciary duty by minority 
shareholder against corporation's attorney); Arpadi v. First MSP Corp., 628 N.E.2d 1335 (Ohio 
1994) (finding lawyer for limited partnership owed duties to limited partners). 

28. E.g., Marguiles v. Upchurch, 696 P.2d 1195 (Utah 1985) (holding that law firm's 
representation of limited partnership gave rise to fiduciary duty with respect to individual partners). 

29. See, e.g., Brennan, 640 So. 2d at 143 (negotiation of shareholders' agreement). 

30. 467 A.2d 733 (D.C. 1983). 

31. /J. at 738. 


counsel, his obligation was to ensure that the agreement was in the best interest 
of the company, regardless of its impact on individual shareholders."^^ Several 
other courts have found likewise, citing the inevitability of conflicts arising 
between the interests of an entity and those of its stakeholders, the impracticality 
of an attorney having to consider the interests of a potentially unlimited number 
of parties with every entity decision, and the inconsistency of such a duty with 
applicable rules of professional conduct.^^ 

Other courts have appeared willing to consider the claim, but reluctant to find 
in favor of the stakeholder notwithstanding compelling facts. A prime example 
is Skarbrevik v. Cohen, England & Whitfield?^ In this case, a California appeals 
court overturned a trial court's decision in favor of a twenty-five percent 
shareholder (Skarbrevik) of a closely-held corporation who was forced out of the 
corporation by the other three shareholders and the corporation's attorney. The 
court of appeals found that the facts did not support the existence of a fiduciary 
duty owed by the attorney to Skarbrevik, even though the attorney's actions were 
at least as detrimental to the ousted shareholder as in Fassihi?^ The attorney 
assisted the other shareholders in reneging on a previous offer to buy out 
Skarbrevik and then facilitated the amendment of the corporation's Articles of 
Incorporation to eliminate Skarbrevik' s preemptive right to proportional 
participation in stock issuances so that the others could ultimately dilute his 
interest. In finding that the corporation's attorney owed duties only to the 
corporation and not to individual shareholders, the court specifically 
distinguished the facts at hand from Fassihi stating, "the evidence at trial 
established no such relationship of trust and confidence between plaintiff and 
defendant attorneys which would give rise to a fiduciary duty."^^ 

Generally speaking, rules governing attorney behavior do not directly address 
the Fassihi Scenario and, in fact, could very well be construed as inconsistent 
with Fassihi. Rule 1.13(a) of the MRPC, which has been adopted in most U.S. 
jurisdictions, states that an attorney retained by an organizational client 
"represents the organization acting through its duly authorized constituents."^^ 
Section (e) of Rule 1.13 states that the "lawyer may also represent any of [the 

32. Id. at 739. 

33. See, e.g.. Rose v. Summers, Compton, Wells & Hamburg, P.C, 887 S.W.2d 683 (Mo. 
Ct. App. 1994) (citing similar litany of reasons for not recognizing fiduciary relationship in this 

34. 282Cal.Rptr. 627 (Ct. App. 1991). 

35. Mat 639. 

36. Mat 636. 

37. ModelRules of Prof' l Conduct R. 1 .13(a) (2003); see also Model Code ofProf'l 
Responsibility EC 5- 1 8 ( 1 98 1 ), which provides that: 

A lawyer employed or retained by a corporation or similar entity owes his allegiance to 
the entity and not to a stockholder ... or other person connected with the entity. In 
advising the entity, a lawyer should keep paramount its interests and his professional 
judgment should not be influenced by the personal desires of any person or 

184 INDIANA LAW REVIEW [Vol. 38: 177 

organization's] directors, officers, employees, members, shareholders or other 
constituents" subject to the Rules governing conflicts of interest, but in no way 
implies that the lawyer automatically does represent any of these constituents nor 
specifies any circumstances under which the lawyer might be deemed to owe 
duties to any individual constituents."*^ In fact, section (d) of Rule 1.13 explicitly 
directs the lawyer to clarify to constituents that he or she represents only the 
organization when it is apparent that the "organization's interests are adverse to 
those of the constituents with whom the lawyer is dealing."^^ Read literally, Rule 
1.13 seems to say that the lawyer for a closely-held entity must follow the 
direction of those constituents authorized to make decisions for the entity, 
without concern for whether a particular decision adversely affects the interests 
of one or more stakeholders. 

In a 1991 formal opinion, the ABA's Standing Committee on Ethics and 
Professional Guidance, which is charged with interpreting the MRPC, provided 
some additional guidance on these particular aspects of Rule 1.13."^^ Among 
other things, Formal Opinion 91-361 clarified that "[a]n attorney-client 
relationship does not automatically come into existence between a partnership 
lawyer and one or more of its partners," or, by extension, the lawyer and 
individual stakeholders of any type of entity ."^^ It also provided, however, that 
such a relationship could arise in ways other than just an express agreement 
between the lawyer and stakeholder, including where there is evidence of 
reliance by the individual stakeholder on the lawyer or of the stakeholder's 
expectation of personal representation. Interestingly, the Opinion itself made no 
mention of any duties owed by a lawyer to those constituents the lawyer does not 
separately represent, however, Fassihi is cited in a footnote for the proposition 
that "[i]n small partnerships, as with closely held corporations, ... the likelihood 
that the attorney representing the entity will be held to stand in a confidential, or 
fiduciary, relationship with the individual shareholders, or partners, is much 
greater. '"^^ It must be stressed, however, that the Opinion did not specifically 
discuss or endorse the position of the Fassihi court, nor did it take a position on 
exactly when an attorney representing such an entity owes fiduciary duties to its 
stakeholders. In summary, the position of the ABA appears to be that a lawyer 
facing a Fassihi Scenario must act in accordance with the wishes of an entity's 
duly authorized constituents and owes no duties of any kind to individual 
stakeholders unless he or she has expressly or impliedly agreed to represent them. 

38. Model Rules of Prof'l Conduct R. 1 .13(e). 

39. Id. R. 1.13(d). 

40. ABA Comm. on Ethics and Prof 1 Responsibility, Formal Op. 91-361 (1991). 

41. Id. 

42. Id. at n.5. 


11. The Recent Cases 


A. Cacciola v. Nellhaus 

1. Facts. — This recent Massachusetts case involved a family business — four 
brothers who owned equal twenty-five percent interests in a real estate 
partnership. "^"^ Although two of the brothers — Edward and Anthony — handled the 
day-to-day operations of the business, a written partnership agreement gave all 
four equal authority in its management and in partnership decisionmaking. After 
Anthony's death, his estate became successor in interest to his partnership share. 
Pursuant to the partnership agreement, the partnership had the option to purchase 
the share."^^ Although some discussions took place among the remaining brothers 
about purchasing the share (including one between Edward and his brother 
Salvatore in which they agreed the partnership should buy it), the partnership did 
not proceed further with the matter. 

A year and a half had passed when Salvatore, to his surprise, "received a 
financial statement from the partnership's accountant showing Edward with a 
fifty percent interest in the partnership.'"^^ Edward had purchased Anthony's 
interest from his estate, allegedly at below market value and without notifying the 
other partners. To convince the estate to sell to him, Edward allegedly told its 
representatives that Salvatore (and presumably his other brother, David) was not 
interested in the share. Edward closed the transaction with the assistance of the 
partnership's longtime lawyer, Howard Nellhaus. Not only did Nellhaus serve 
as lawyer for the transaction, but he advised Edward that Edward had the right 
and authority to purchase the share without notice to Salvatore, despite the fact 
that the partnership had the first option to buy Anthony's share.^^ When 
Salvatore asked Nellhaus for information about the transaction, Nellhaus refused, 
claiming the information was confidential. 

Salvatore sued Edward. Soon after, Salvatore died and the executrix of his 
estate filed a separate action against Nellhaus asserting what the complaint 
termed "malpractice," but which the plaintiff initially described as a violation, 
"while purportedly acting as counsel for the partnership, [of] the obligations 
[Nellhaus] had as counsel to Salvatore, a partner in the partnership.'"^^ Nellhaus 
successfully moved to dismiss the malpractice claim on the ground that "as 
attorney for the partnership, he owed no enforceable duty to Salvatore.'"^^ The 
executrix appealed, and the appellate court reversed the trial court's dismissal of 
the malpractice claim by reinstating the claim and restating it as a breach of 

43. 733 N.E.2d 133 (Mass. App. Ct. 2000). 

44. Id. at 135. 

45. Id. at 141. 

46. Id. at 136. 

47. Id. 

48. Id. 

49. Id. 

186 INDIANA LAW REVIEW [Vol. 38: 177 

fiduciary duty claim.^^ 

2. Analysis. — Of the three cases considered by this Article, Cacciola is most 
similar to Fassihi. The cases are factually different in that Fassihi involved the 
ouster of one fifty percent stockholder by another, while Cacciola involved a 
somewhat more benign, "secret" acquisition by one partner of an interest that 
should have first been made available to the partnership. As to the issue of the 
lawyer's role, however, the cases have conceptual similarities. In both cases, a 
disgruntled stakeholder alleged that the lawyer actively assisted another 
stakeholder in increasing his ownership of the business at the disgruntled 
stakeholder's expense. 

Cacciola, like Fassihi, began with the question of whether or not the lawyer 
and disgruntled stakeholder had an attorney-client relationship in order to 
determine whether or not the stakeholder's estate had a valid claim for legal 
malpractice against Nellhaus.^^ Based on the allegations of Salvatore's estate, 
the court found neither an express relationship between Salvatore and Nellhaus 
nor an instance of Salvatore's having relied upon Nellhaus 's advice which might 
give rise to an implied attorney-client relationship.^^ The Cacciola court also 
specifically distinguished Massachusetts law from cases in other jurisdictions in 
which courts have recognized attorney-client relationships between lawyers and 
individual stakeholders of small, closely held entities simply by virtue of the 
lawyer' s representation of the entity .^^ 

After finding the malpractice claim inapplicable, the court could have simply 
affirmed the lower court' s decision to grant summary judgment. Instead, drawing 
upon Fassihi and dicta from a prior Massachusetts Supreme Judicial Court case, 
Schaefferv. Cohen, Rosenthal, Price, Mirkin, Jennings, & Berg, P.C.,^^ the court 
implied an additional claim for breach of fiduciary duty against Nellhaus from 
the estate's complaint.^^ This judicial activism might be read as a determined 
effort by the appellate court to address and define a duty alluded to but not 
formally upheld in Schaeffer, or as the court's concern that Nellhaus' s allegedly 
reprehensible behavior might otherwise go unpunished due to poor pleading, or 
both. In any event, the court found in Fassihi abundant guidance for determining 
both whether a fiduciary relationship existed between Salvatore and Nellhaus and 
how the accompanying duty might have been breached. 

In making the first determination, the Cacciola court quoted directly from 

[i]nstances in which the corporation attorneys stand in a fiduciary 
relationship to individual shareholders are obviously more likely to 

50. Id. at 141. 

5 1 . "In order to prove a claim of legal malpractice, the plaintiff must show that the defendant 
owed him a duty of care arising from an attorney-client relationship." Id. at 137. 

52. Id. 

53. Id. 

54. 541 N.E.2d 997 (Mass. 1989). 

55. Cacciola, lS3N.E.2d at 131. 


arise where the number of shareholders is small. In such [circumstances] 
... the corporate attorneys, because of their close interaction with a 
shareholder or shareholders, simply stand in confidential relationships 
in respect to both the corporation and individual shareholders.^^ 

Then, noting simply that partnerships are similar to close corporations and that 
Salvatore was an equal twenty-five percent partner in the partnership, the court 
concluded that Nellhaus may indeed have owed Salvatore a fiduciary duty.^^ In 
doing so, the court suggested this duty may exist whenever an entity has a small 
number of stakeholders. To support this proposition, the court cited dicta in 
Schaejfer as standing for the even broader proposition that "an attorney for a 
partnership owes a fiduciary duty to each partner."^^ 

As for the nature and breach of the duty, the Cacciola court looked first to 
the assertions of the plaintiff in Fassihi who claimed that as a fifty percent 
shareholder, he trusted that his corporation's lawyer would treat him with ''the 
same degree of loyalty and impartiality extended to the other shareholder" and 
that the lawyer violated this trust by failing to disclose his dual representation of 
both the corporation and the other shareholder and by helping to terminate the 
plaintiff shareholder's association with the corporation.^^ Linking the facts in 
Fassihi to the case at hand, the court then stated: 

The allegations set forth in the plaintiff's complaint resemble those at 
issue in Fassihi. Salvatore, as an equal twenty-five percent partner, 
alleged that "although the defendant . . . , as counsel to the partnership, 
had obligations to Salvatore, as one of the partners ... to keep Salvatore 
informed as to significant transactions affecting the partnership, 
nevertheless, [the] defendant . . . did not inform Salvatore about 
Edward' s negotiations and his subsequent purchase of Anthony ' s former 
interest . . ." Moreover, the defendant "refused to provide Salvatore with 
any details of the purchase by Edward," . . . .^^ 

In Cacciola, the fiduciary duty of "loyalty and impartiality" owed by the lawyer 
seemed to consist of, at the very least, a duty of disclosure of significant 
transactions affecting the entity. Given the size of the Cacciola partnership and 
the nature of the estate's allegations regarding the behavior of Nellhaus, the court 
found that a claim for breach of fiduciary duty should withstand dismissal.^^ 

Again, the court could have stopped here. The Fassihi court found a breach 
of fiduciary duty claim applicable to both the lawyer's alleged failure to disclose 
information that affected the plaintiff/disgruntled stakeholder and his alleged 

56. Id. at 138 (quoting Fassihi v. Sommers, Schwartz, Silver, Schwartz, & Tyler, P.C, 309 
N.W.2d 645, 649 (Mich. Ct. App. 1981) (alterations in original)). 

57. Id. 

58. Id. at 137 (quoting Schaejfer, 541 N.E.2d at 1002). 

59. Id. at 138 (quoting Fassihi, 309 N.W.2d at 648). 

60. Id. 

61. Id. 

188 INDIANA LAW REVIEW [Vol. 38: 177 

active participation "in terminating plaintiffs association with the corporation" 
and using a contract to the plaintiffs detriment.^^ The Cacciola court used the 
lawyer's breach of fiduciary duty to encompass only Nellhaus's failure to 
disclose, but suggested a separate theory of liability — "aiding and abetting 
Edward's breach of his fiduciary duty to Salvatore" — that Salvatore's estate 
could have asserted to cover Nellhaus's participation in Edward's purchase of 
Anthony's share.^'^ 

In explaining the basis for such a claim, the court pointed out that partners 
owe to each other a duty of "utmost good faith and loyalty" and even more so in 
this case "because of their familial relationship."^"^ Accordingly, Edward owed 
Salvatore a fiduciary duty that he breached when he secretly purchased 
Anthony ' s interest. In linking Nellhaus to Edward' s improper behavior, the court 
cited Spinner v. Nutt,^^ a Massachusetts Supreme Judicial Court case, for the 
circumstances under which a person may be liable for participating in a 
fiduciary's breach. Liability arises when a person "knew of the breach and 
actively participated in it such that he or she could not reasonably be held to have 
acted in good-faith."^^ Nellhaus then could be liable not only for the breach of 
his own duty to Salvatore, but also for his involvement in Edward's breach of 
duty so long as, presumably, he would be unable to demonstrate that he 
reasonably believed his advice to Edward and his work on the transaction was 

Although Cacciola borrowed heavily from Fassihi, it appears that 
Massachusetts courts have a significantly more expansive view of attorney 
liability in the Fassihi Scenario. According to Cacciola, a lawyer automatically 
owes a fiduciary duty to each stakeholder of a client that is a close corporation, 
partnership or other similar entity. Furthermore, an attorney encountering a 
Fassihi Scenario might also face liability for aiding and abetting one individual 
stakeholder' s breach of fiduciary duty to another stakeholder, even in the absence 
of a relationship with the disgruntled stakeholder. 

B. Chem-Age Industries, Inc. v. Glover^^ 

1. Facts. — The most recent of the three cases discussed in this Article is a 
South Dakota Supreme Court case which involved a shady business venture 
initiated by an entrepreneur named Dahl. Dahl convinced two businessmen, 
Pederson and Shepard, to invest in a business he was starting called Chem-Age 
Industries. ^^ According to their agreement, the investors would contribute cash. 

62. Fassihi, 309 N.W.2d at 648. 

63. Cacciola, 733 N.E.2d at 139. 

64. Id. 

65. 631 N.E.2d 542 (Mass. 1994). 

66. Id. at 546. 

67. 652 N.W.2d 756 (S.D. 2002). 

68. Id. at 761. 


arrange loans for the business, and serve as its Board of Directors. ^^ Dahl would 
act as its chief executive officer responsible for day-to-day operations. ^^ 

The investors gave Dahl some money up front in exchange for a promise of 
shares, but insisted that Dahl get an attorney to formally set up a corporation 
before going any further.^ ^ Dahl engaged Glover, an attorney with whom he had 
worked on various transactions and lawsuits during the previous twenty years, 
to do the work.^^ Glover prepared the necessary paperwork, which listed 
Pederson and Shepard as incorporators and Glover as registered agent of the 
corporation, and in November 1997, the business was incorporated as Chem-Age 
Industries, Inc. ("Chem-Age").^^ After this, Pederson obtained a large loan for 
Chem-Age and the business began purchasing equipment.^"^ After handling the 
incorporation. Glover acted as Chem-Age' s attorney on at least one other 
matter — a lawsuit filed against it — and occasionally held himself out as its 
attorney in conversations with outside parties. ^^ 

By early fall of 1998, Pederson and Shepard began to notice that Dahl was 
accumulating large balances on company credit cards for what appeared to be 
personal expenses and became suspicious that he was swindling them.^^ They set 
up a meeting with Dahl and Glover at which they were surprised to learn not only 
that Dahl and Glover believed Dahl alone owned Chem-Age, but also that the 
two were in the process of negotiating the sale of all of the assets of Chem-Age 
to another company.^^ Dahl told Pederson and Shepard that they would be repaid 
for their investments out of the proceeds from the sale of Chem-Age' s assets.''^ 

Needless to say, litigation ensued against both Dahl and Glover. The suit 
against Glover, brought by Chem-Age as an entity and Pederson and Shepard 
individually, asserted several different claims including legal malpractice and 
breach of fiduciary duty.^^ Glover moved successfully for summary judgment on 
these two claims on the ground that he had only represented Dahl and, therefore, 
owed no duties to Pederson, Shepard or Chem-Age.^° Glover maintained that 
shortly after incorporation Dahl had told him that Pederson and Shepard were no 
longer interested in the business and that Dahl would run Chem-Age as a sole 
proprietorship.^^ The plaintiffs appealed raising several questions relating to the 
nature of the duties Glover owed to them and whether Glover had breached any 

69. Mat 761-62. 

70. Id. 

71. Id. at 761. 

72. Id. 

73. Mat 762. 

74. Id. 

75. Id. 2X161. 

76. Id at 762. 

77. Id 

78. Id 

79. Mat 761. 

80. Id.atl63,161. 

81. Id at 116. 

190 INDIANA LAW REVIEW [Vol. 38: 177 

of the duties owed.^^ 

2. Analysis. — The Chem-Age court's first task in addressing what duties 
Glover owed, and to whom, was to attempt to sort out exactly who Glover 
represented. After considering Glover' s role in setting up the corporation and the 
fact that he continued to perform work and occasionally held himself out as 
working on behalf of Chem-Age after its incorporation, the court was persuaded 
that Glover may have represented the corporation and that the trial court erred in 
granting summary judgment to the contrary.^^ The court was unpersuaded, 
however, by Pederson and Shepard's assertion that Glover represented each of 
them individually because Glover simply had too little direct contact with them 
for either to have reasonably believed he was represented by Glover. 
Accordingly, the court found that Glover may have owed duties arising from an 
attorney-client relationship to Chem-Age, but not to the investors.^'* 

While more could be written just on these findings, what makes Chem-Age 
important for purposes of this Article is the considerable time the court spent 
discussing three "nonclient," fiduciary-based claims Pederson and Shepard might 
have had against Glover as Chem-Age' s attorney. The first, which the court 
termed a Nonclient Third-Party Beneficiary claim, was technically a claim for 
negligence (i.e. a breach of duty of care), and not breach of a fiduciary duty.^^ 
However, it is worth considering here, given the context in which it was 
brought — Pederson and Shepard were not really questioning Glover's 
competence in incorporating Chem-Age, but rather his failure to protect them as 
constituents of the entity. In this way, this claim is very similar to the fiduciary 
claims brought in other cases considered herein.^^ In fact, it is not uncommon for 
stakeholders suing entity attorneys to use negligence claims to encompass breach 
of fiduciary duty claims and vice-versa.^^ 

In essence, the Nonclient Third Party Beneficiary theory provides that in 
certain circumstances a lawyer owes a duty of care to a nonclient when the 
nonclient is either invited or intended to benefit from the lawyer' s services to his 
or her client.^^ In the case at hand, Pederson and Shepard might claim that they 
were invited to rely individually on Glover's services to the corporation or that 
Dahl intended that Glover' s representation benefit them primarily and could then 
assert a valid legal malpractice claim against Glover. 

While the Chem-Age court was intrigued enough by this theory of liability 
to spill considerable ink discussing it, the court ultimately found that Pederson 
and Shepard had not presented sufficient evidence to support it as a technical 
matter under the standards set forth for such a claim in section 51 of the 

82. Id. at 763. 

83. Id. at 768. 

84. Id. 

85. Id. at 769. 

86. Third party negligence claims were also asserted by the plaintiffs in Cacciola, supra Part 
II. A, and Richter v. Van Amberg, supra Part II.C. 

87. Restatement (TfflRD) of the Law Governing Lawyers § 49 cmt. c (2000). 

88. Id. §51. 


Restatement (Third) of the Law Governing Lawyers.^^ Clearly, other concerns 
also influenced the court's decision. The court laid out several policy reasons to 
explain the court's reluctance to relax the rule of strict privity in attorney 
malpractice cases: 

First, the rule preserves an attorney's duty of loyalty to and effective 

advocacy for the client Second, adding responsibilities to nonclients 

creates the danger of conflicting duties .... Third, once the privity rule 
is relaxed, the number of persons a lawyer might be accountable to could 
be limitless .... Fourth, a relaxation of the strict privity rule would 
imperil attorney-client confidentiality .^° 

These policy reasons are nearly identical to the ones cited in cases rejecting the 
availability of a breach of fiduciary claim in the Fassihi Scenario. The court also 
looked at the nature of the services Glover provided — primarily setting up the 
corporation — and contrasted it with a scenario where instead of just preparing 
paperwork, he was called upon to advise and warn "individual constituents of all 
the consequences and dangers inherent in investing in a corporation."^^ 
Considering Glover's role and contact with Pederson and Shepard, the court did 
not see justification for providing them with a legal malpractice claim.^^ 

Next, the court turned to whether Glover owed and breached a fiduciary duty 
to Pederson and Shepard even though he did not represent them. At the outset, 
it stated that no South Dakota court had previously recognized the claim of 
breach of fiduciary duty "involving lawyers and nonclients," although it 
acknowledged that other jurisdictions had, including some "in the corporate 
sphere. "^^ As an example, the court cited Fassihi?^ While not discrediting 
Fassihi, the test the Chem-Age court found in South Dakota caselaw for 
determining whether a fiduciary duty existed was significantly more extensive 
than FassihVs "reposed trust and confidence" standard: 

To ascertain a fiduciary duty, we must find three things: (1) plaintiffs 
reposed "faith, confidence and trust" in Glover, (2) plaintiffs were in a 
position of "inequality, dependence, weakness, or lack of knowledge" 
and, (3) Glover exercised "dominion, control or influence" over 
plaintiffs' affairs.^^ 

Perhaps because of this, the court found no fiduciary relationship between Glover 
and the stakeholders. "Pederson and Shepard have submitted no evidence to 
show how they were in a confidential relationship with Glover, where they 
depended on him specifically to protect their investment interests, and where 

89. Chem-Age, 565 N. W.2d at 77 1 . 

90. Id. at 769 (citations omitted). 

91. Mat 770-71. 

92. Id. at 11 1. 

93. Mat 772. 

94. Mat 773. 

95. Id. at 772 (citation omitted). 

192 INDIANA LAW REVIEW [Vol. 38: 177 

Glover exercised dominance and influence over their business affairs. "^^ Further, 
"[a] side from simple avowals that they believed Glover was watching out for 
their interests, their claim that Glover was entrusted with explicit responsibility 
for their investments is 'factually unsupported.'"^^ In analyzing the stakeholders' 
claim in this way, Chem-Age differs sharply from Cacciola, which seemed to 
imply that a fiduciary duty extending from the lawyer to stakeholders exists 
whenever a lawyer represents a closely held entity. It differs from Fassihi as 
well not only by using a more exacting standard, but by requiring evidence of 
reliance beyond just simple avowals. FassihV s appeal might very well have been 
unsuccessful had it been judged by the Chem-Age court. 

Glover, however, was not out of the woods yet. As in Cacciola, the Chem- 
Age court moved immediately on to consider whether Glover might be liable for 
"aiding and abetting" a breach of a fiduciary duty owed to the disgruntled 
stakeholders by Dahl, even though Pederson and Shepard apparently never 
alleged this themselves.^^ Once again, the Chem-Age court used a different and 
arguably more onerous standard. While the Cacciola court had prior state 
caselaw to rely upon, Chem-Age looked instead to the Restatement (Second) of 
Torts section 876(b), which provides generally that "[f]or harm resulting to a 
third person from the tortious conduct of another, one is subject to liability if he 
knows that the other's conduct constitutes a breach of duty and gives substantial 
assistance or encouragement to the other,"^^ and to Granewich v. Harding, ^^^ a 
1999 Oregon Supreme Court case which applied this Restatement provision to 
the Fassihi Scenario. ^°^ In Granewich, the attorney helped controlling 
shareholders squeeze out a minority shareholder by advising and assisting them 
to take certain steps specifically designed to dilute the minority shareholder's 
interest (for example, amending the corporation's bylaws to eliminate certain 
voting requirements that protected the minority shareholder's interest from 
dilution). ^^^ The Granewich court overturned a lower court's decision that the 
minority shareholder could not bring a claim for aiding and abetting the majority 
shareholders' breach of their fiduciary duty to him against the attorney in "the 
absence of any duty flowing directly from the lawyers to plaintiff. "^°^ 

The Chem-Age court had no difficulty finding that Dahl's behavior, as 
alleged by the plaintiffs, clearly breached fiduciary obligations Dahl owed to the 
company and its investors. ^^"^ Nor did the court have much doubt that material 
questions of fact existed as to whether Glover substantially assisted Dahl in 

96. Id. at 773. 

97. Id. 

98. Id. 

99. Restatement (Second) of Torts § 876 (1979). 

100. 985 P.2d 788 (Or. 1999). 

101. Chem-Age, 652N.W.2datl73-14. 

102. Granewich, 9S5?.2d at 191-92. 

103. Id. at 790, 794 (citing Granewich v. Harding, 945 P.2d 1067 (Or. Ct. App. 1997)). 

104. Chem-Age, 652 N.W.2d at 774. 


breaching those obligations. ^°^ Its concern, again poUcy-driven, was whether it 
was wise to hold Glover partially responsible for Dahl's use of his services. 
Holding attorneys liable in this way, the court posited, "poses both a hazard and 
a quandary for the legal profession."^^^ Echoing the concerns it expressed earlier 
when considering the Nonclient Third Party Beneficiary claim, the court 
cautioned that overbroad liability for attorneys could affect the quality of legal 
services in this context, as attorneys might modify, or refrain from providing, 
advice on matters that affect the rights of third parties. '^^ These "self protective 
reservations" hurt the attorney's client by depriving it of competent, unfettered 
advice from its legal counsel. ^^^ At the same time, the court acknowledged that 
the right to unfettered advice is not an absolute one — "lawyers should not be free 
to substantially assist their clients in committing tortious acts."^^^ 

The court concluded that these competing concerns could be reconciled 
through the strict application of Restatement section 876. First, section 876 
requires that the attorney "substantially" assist or encourage a breach of the 
fiduciary duty.^^^ To be implicated, the attorney must provide "substantial 
assistance" to the actual breach of the duty — merely acting as a scrivener or 
providing routine legal services to someone who then uses them to breach a duty 
is insufficient.^ ^^ As an example, the court noted that in Granewich the lawyer 
did more than just advise the controlling shareholders about their options but 
actually participated in the wrongful acts by making misrepresentations and 
amending the bylaws in a way that violated the law. ' '^ Second, the attorney must 
know — actually or constructively — of the fiduciary's role as fiduciary and that 
the fiduciary's conduct "contravenes a fiduciary duty."^^^ Constructive 
knowledge might suffice especially when the aider and abettor have maintained 
a long-term or in-depth relationship with the fiduciary. ^^"^ When applied 
correctly, the court believed that the standard would protect a lawyer from 
meritless claims by every stakeholder disadvantaged by the lawyer's advice. '^^ 

Li the aiding and abetting claim, the Chem-Age court at last found a hook on 
which Pederson and Shepard could potentially hang their hats. Given the facts 
at hand, the court found that Glover's participation in the formation of the 
corporation, acquiescence in Dahl's treatment of the business as a one-man 
operation, and his long term relationship with Dahl, provided reason enough to 
proceed further on the questions of whether Glover knew or should have known 

105. Id. at 776. 

106. Id. 

107. Id. 

108. Id. 

109. Id. 

1 10. Restatement (Second) of Torts § 876 (1979). 

111. Chem-Age, 652 N.W.2d at 774-75. 

112. Id. at 115. 

113. Id. (citing RESTATEMENT (Second) of Torts § 874 cmt. c (1979)). 

114. Id. 

115. Id. at 114. 

194 INDIANA LAW REVIEW [Vol. 38: 177 

of Dahl's fiduciary duty to the duped investors and whether he substantially 
assisted in the breach of that duty.^'^ This holding then suggests, as Granewich 
did, an alternative way to find an attorney liable to stakeholders she does not 
represent and to whom she does not owe a fiduciary duty. The Chem-Age court's 
measured and careful review of three separate nonclient, fiduciary-based claims 
makes it an important update to Fassihi, 

C. Richter v. Van Amberg^^^ 

7. Facts. — At issue in this New Mexico federal district court case were the 
actions of a lawyer who represented a real estate development partnership called 
Santa Fe Partners n ("SEP"). SEP had two, clearly unequal, partners — Gibbens 
and Richter. Gibbens provided most of the capital for the venture and 
consequently was largely in control. SEP's partnership agreement designated 
Gibbens as the managing partner and provided that Richter was entitled to twenty 
percent of the partnership's profits only after Gibbens had recovered his initial 

1 1 o 


The opinion in this case does not set forth the rest of the facts very clearly. 
What is clear, however, is that the relationship between Gibbens and Richter 
ultimately began to fracture. Gibbens believed that Richter had deceived him in 
taking an undisclosed commission on certain property, presumably associated 
with the partnership and was also disappointed by Richter' s general 
performance. ^^^ Gibbens approached the partnership's lawyer. Van Amberg, 
about representing him personally and, in the course of so doing, expressed his 
dissatisfaction with Richter and his desire to dissolve SEP to avoid paying 
Richter any profits. ^^° Van Amberg declined to represent Gibbens, citing his 
obligations to SEP as an entity, but continued to represent the partnership and 
said nothing to Richter. ^^^ 

Subsequent to this. Van Amberg facilitated a sale of some of the 
partnership's property (the "MAH Sale"). Gibbens insisted that it be done 
without Richter' s knowledge or consent and technically, Richter' s consent was 
not required under SEP's partnership agreement. ^^^ When Richter' s consent to 
the MAH Sale later became necessary to complete its closing (and presumably 
Richter objected because he had not yet received any profits from the venture). 
Van Amberg brokered an accommodation between Richter and Gibbens which 
allowed the sale to go forward. ^^^ After the MAH Sale, Gibbens sued to dissolve 

116. Mat 776. 

117. 97 F. Supp. 2d 1255 (D.N.M. 2000). 

118. /J. at 1259. 

119. /^. at 1262. 

120. Id. 

121. Id. 

122. /J. at 1259. 

123. Id. 

2005] THE DESCENDANTS OF FA55//// 195 

(gpp 124 Richtej. counterclaimed and the partners ultimately settled the dissolution 
of the partnership when Richter accepted payment of $1 10,000.^^^ 

The case at issue arose out of claims Richter later asserted against Van 
Amberg, after learning that Gibbens and Van Amberg had spoken about 
Gibbens's plans to dissolve SEP prior to the MAH Sale. Richter sued Van 
Amberg asserting a catalog of claims, including legal malpractice, breach of 
fiduciary duty and aiding and abetting a breach of fiduciary duty.^^^ Underlying 
all of Richter' s claims were his contentions that Van Amberg facilitated the 
MAH Sale while aware that Gibbens wanted to terminate the partnership without 
compensating Richter and failed to disclose this to Richter. Richter claimed he 
would not have agreed to the MAH Sale had he known Gibbens' intentions. ^^^ 

Van Amberg countered that Richter' s contentions did not amount to any 
wrongdoing on Van Amberg' s part and moved for judgment as a matter of law. ^^^ 
Van Amberg claimed that Gibbens, as SEP' s managing partner, had full authority 
under the partnership agreement over partnership matters, without any right of 
consent by Richter, and, therefore. Van Amberg only owed a duty of disclosure 
to Gibbens. ^^^ Moreover, Van Amberg claimed that ethical rules prohibited him 
from disclosing what he learned about Gibbens's desire to dissolve the 
partnership to Richter because it was a communication by a person "who consults 
a lawyer with a view to obtaining professional legal services."^^^ 

2. Analysis. — The Richter court granted Van Amberg' s motion, agreeing 
that, even assuming Richter' s version of the facts, there was no legally sufficient 
basis to support a finding for Richter on any of his claims. ^^^ What is distinctive 
about the ^/c/ir^r opinion, especially when compared with Cacciola and Fassihi, 
is its analytical approach to determining whether Van Amberg owed a fiduciary 
duty to Richter. In concluding he did not, the court never contemplated that a 
fiduciary relationship might exist between the two, separate and apart from an 
attorney-client relationship. In this way, Richter bears very little resemblance to 
Fassihi. The fact that the Richter court employed several different and 
contradictory tests for determining Van Amberg' s obligations to Richter, 
however, prevents it from representing a clear alternative to the Fassihi 

It is significant that the Richter court began its analysis of Richter' s breach 
of fiduciary duty claim by quoting from a treatise on legal malpractice — "[the] 
breach of fiduciary duty claim is also one for legal malpractice."^^^ For in this 

124. Id. 

125. Id. 

126. Mat 1255-56. 

127. Mat 1259. 

128. M. at 1258. 

129. Id. at 1259. 

130. Mat 1262. 

131. Id. at 1258. 

132. Id. at 1261 (citing 2 Mallen & SMITH, LEGAL Malpractice § 14.1.5 (4th ed. 1998 

196 INDIANA LAW REVIEW [Vol. 38: 177 

court's opinion, such a claim was inextricably tied to an attorney -client 
relationship. For Richter, this meant the court would not recognize his claim for 
breach of fiduciary duty against Van Amberg unless Richter demonstrated an 
attorney-client relationship existed between them. 

The court provided support for this approach, and distanced itself from 
Fassihi, by citing two recent New Mexico cases in which courts had held that the 
attorney for a closely-held entity owed no special duties to its constituents by 
virtue of that representation. '^"^ Most compelling was the decision in Delta 
Automatic Systems, Inc. v. Bingham,^^^ a 1998 case, in which the court 
considered claims by the two sole shareholders of a corporation that the 
corporate attorney owed them a special duty because he represented them in 
matters apart from the corporation. The court stated unequivocally: "In 
representing Delta, Defendants did not owe the Quintanas, as shareholders, any 
special duty above and beyond their duties to the corporation. This is so even 
though the Quintanas were the sole shareholders of Delta and Defendants knew 
that the Quintanas' livelihood depended on Delta's success."^^^ Had the Richter 
court stopped here, we could simply assume that New Mexico law on this issue 
is similar to other jurisdictions which have concluded that attorneys owe no 
fiduciary or other duties to the stakeholders of a closely-held entity absent 
evidence of a separate attorney-client relationship between them. 

Instead, however, the Richter court also pointed to Rice v. Strunk,^^^ a 1996 
decision of the Indiana Supreme Court, which provided that partnerships should 
be treated differently than corporations for purposes of determining who the 
attorney represents, as guidance in reaching its decision. This approach, while 
contrary to Rule 1.13 of the MRPC and the law in the vast majority of U.S. 
jurisdictions, is still followed in a few states. It employs the aggregate, rather 
than entity, theory of representation when analyzing a lawyer' s representation of 
a partnership and other unincorporated associations, holding that an attorney who 
represents a partnership actually represents each partner jointly rather than the 
partnership as an entity. As the court in Rice noted, however, pursuant to 
partnership law, partners may essentially contract away this fiduciary and legal 
relationship with the entity's attorney by entering into a partnership agreement 
that delegates their rights to the management of the partnership to a manager or 
managing partner. ^^^ Following this logic, the Richter court found that, indeed, 
Richter might have had individual claims against Van Amberg had he not entered 
into a partnership agreement with Gibbens delegating full governing authority on 
all partnership matters to Gibbens. ^^^ Because he did so, the court reasoned. Van 
Amberg' s fiduciary obligations of confidentiality and undivided loyalty flowed 
directly to the partnership as represented by its managing partner and not to 

133. Id. at 1263. 

134. 974 P.2d 1174 (N.M. Ct. App. 1998). 

135. Id. at 1 178 (cited in Richter, 97 F. Supp. 2d at 1263-64). 

136. 670 N.E.2d 1280 (Ind. 1996). 

137. Id. at 1288-89. 

138. /?/c/z?^r, 97 F. Supp. 2d at 1263. 


either of the partners individually. ^^^ 

This purely contractarian approach differs from Fassihi in which such 
obligations are not automatically bestowed upon stakeholders, but created 
through the relationship that the individual stakeholder has with the attorney. 
However, it also is clearly inconsistent with the Richter court' s simultaneous use 
of Delta as controlling precedent. 

In the absence of a fiduciary relationship with Richter, Van Amberg's 
behavior, which initially might have appeared problematic, is viewed in a 
different light. The law only imposed on him a duty to his client — the 
partnership. Citing New Mexico's version of Model Rule 1.13, the court stated, 
"As the partnership lawyer, Mr. Van Amberg's responsibility was to the entity, 
specifically the managing partner."^"^^ Therefore, Van Amberg's "secret" 
facilitation of the MAH Sale was not wrongful as Gibbens, pursuant to the 
partnership agreement, "had the authority to convey partnership real 
property ... on behalf of the partnership without Plaintiff Richter' s consent."^^^ 
Van Amberg's non-disclosure of Gibbens' s intent to dissolve the partnership 
without giving Richter any profits was also appropriate because Van Amberg 
only had a duty of disclosure to the partnership, not individual partners. Further, 
and perhaps more plausibly, because Gibbens disclosed it in the course of 
requesting Van Amberg to represent him personally, it was a confidential 
attorney-client communication. ^"^^ 

Clearly, the Richter court was convinced that the facts, as much as the law, 
justified its decision in this case. Even under Richter' s version of the facts, the 
court believed that Van Amberg' s behavior lined up with applicable professional 
standards. Richter and Gibbens were both sophisticated businessmen who 
retained separate counsel during their disputes. ^"^^ When Gibbens approached 
Van Amberg about personal representation. Van Amberg declined and told 
Gibbens to retain separate counsel. ^"^"^ When Van Amberg participated in the 
negotiations between Richter and Gibbens it was at the request of Richter' s 
counsel. ^"^^ Towards the end of its opinion, the court revealed an unwillingness 
to drag Van Amberg into Richter' s sour break-up with Gibbens. It noted that 
both Gibbens and Richter "had colorable claims against one another for breach 
of fiduciary duty" and "have strong personalities" and "it is highly unlikely that 
Mr. Van Amberg could have predicted what either would do regarding their 
ongoing partnership disputes. "^"^^ Accordingly, the court quickly dispensed of 
Richter' s final claim that the lawyer aided and abetted Gibbens 's breach of 
fiduciary duty to Richter, noting again that Van Amberg's actions met 

139. Id. 

140. Id. at 1263 (citing N.M. R. PROF. CONDUCT 16-113 (A)). 

141. Mat 1262-63. 

142. Id. at 1262. 

143. Id. at 1264. 

144. Id. at 1266. 

145. Id. at 1264. 

146. Id. at 1266. 

198 INDIANA LAW REVIEW [Vol. 38: 177 

professional standards and that "no evidence suggests that Mr. Van Amberg's 
non-disclosure was the proximate cause of damages to Plaintiff Richter."^"^^ 

At the end of the day, it is difficult for the reader to decipher on what 
principle the Richter decision rests. Was it that Van Amberg, as lawyer for the 
partnership, owed no duties to Richter, that Richter contracted away any duties 
Van Amberg owed to him, that Van Amberg' s adherence to applicable 
professional standards absolved him of liability, or some combination of these 
three? The answer is unclear. Notwithstanding, this case is significant for its 
discussion of several approaches to the question of the existence of a fiduciary 
duty in the Fassihi Scenario not discussed in Fassihi, Cacciola or Chem-Age. 

in. Lessons Learned 

So what helpful guidance might be gleaned from these "descendants of 
Fassihi" for those who represent closely held businesses? Interests among 
business partners frequently diverge and most significant decisions a business 
makes have the potential to affect constituents differently. Must lawyers in this 
arena practice with an excess of caution, with one eye constantly on the 
stakeholder who is getting the short end of the stick? 

A. Where Does the Law Stand? 

The initial question posed by this Article was: Under what circumstances is 
a lawyer who represents a closely held entity potentially susceptible to fiduciary- 
type claims asserted by individual, nonclient stakeholders? The cases analyzed 
in Part n demonstrate that there still is no uniformity of opinion on this issue. 
This is especially true with the respect to the narrower question of how widely 
has Fassihi's central proposition been accepted. At one end of the spectrum is 
a case like Cacciola in which the language of the court's opinion insinuates that 
a lawyer owes a fiduciary duty to non-client stakeholders whenever the lawyer 
represents a closely-held entity. At the other end of the spectrum is the Richter 
court which, apparently, would not recognize a claim for breach of fiduciary duty 
in the absence of an established attorney-client relationship. Somewhere in the 
middle is Chem-Age which, like Fassihi, requires the demonstration of a 
relationship of trust, not quite arising to the level of an attorney-client 
relationship. Even on the question of what constitutes a relationship of trust, 
courts apply varying standards as a comparison of Chem-Age and Fassihi 
indicates. The recent cases are representative of the diversity of viewpoints 
expressed by courts that have considered this claim during the twenty years since 
the Fassihi decision. ^"^^ 

147. Id. 

148. E.g., Skarbrevik v. Cohen, England & Whitfield, 282 Cal. Rptr. 627 (Ct. App. 1991) 
(considering breach of fiduciary claim but finding absence of relationship of trust between lawyer 
and constituent); Rose v. Summers, Compton, Bells, & Hamberg, P.C, 887 S.W.2d 683 (Mo. Ct. 
App. 1994) (finding lawyer for limited partnership not liable and owed no fiduciary duty to limited 
partners); Arpadi v. MSP Corp., 628 N.E.2d 1335 (Ohio 1994) (finding lawyer for limited 


An important corollary issue for those jurisdictions which acknowledge the 
existence of a fiduciary duty in this context is: what does the duty consist of? 
Is it identical to the fiduciary duty lawyers owe clients, less comprehensive or 
altogether different? The fiduciary duty resulting from an attorney-client 
relationship is really an amalgam of several separate obligations, including 
"safeguarding the client's confidences and property; avoiding impermissible, 
conflicting interests; dealing honestly with the client; adequately informing the 
client; following instructions of the client; and not employing adversely to the 
client powers arising from the client-lawyer relationship."^"^^ The limited 
treatment this issue has received suggests that the duty owed to a nonclient 
stakeholder closely resembles that owed to a client. In Cacciola, the duty 
encompassed Nellhaus's (the attorney) failure to deal honestly with Salvatore by 
not informing him "about Edward's negotiations and his subsequent purchase of 
Anthony's former interest."*^^ In Fassihi, it was the lawyer's behavior in acting 
to deplete Fassihi's property (i.e. his economic interest in the corporation).'^^ 
The Chem-Age court discussed the fiduciary duty to a nonclient as though it were 
the duty owed to a client. '^^ Other cases and the Restatement have insinuated the 

One way in which the three recent cases stand apart from Fassihi, which is 
also an indication of how the jurisprudence has developed, is that they each 
address a separate, additional claim: the attorney's 'aiding and abetting' of 
another stakeholder in breaching his fiduciary duty to the plaintiff. This is not 
because the facts in Fassihi are less compelling than the other cases for such a 
claim, but rather because it is only in the last twenty years that courts have begun 
to recognize the liability of an attorney for this tort.'^^ In fact, it is only since 
Granewich v. Harding, ^^"^ a 1999 decision of the Oregon Supreme Court, that this 
type of claim was upheld in a case involving the Fassihi Scenario. Granewich 
is partially distinguishable from Fassihi, because it involved an attorney who 
began representation of a corporation only after the majority shareholders had 
commenced the plan to oust the minority shareholder. The minority shareholder 
had no direct contact with the attorney and therefore could not reasonably claim 
that he had established a relationship of trust and confidence with the attorney. 
This distinction, however, certainly did not stop the Cacciola, Chem-Age, and 
Richter courts from considering an aiding and abetting claim, in two of the cases 

partnership owed duties to limited partners). 

149. Restatement (Third) of the Law Governing Lawyers § 49 cmt. b (2000) (internal 
references omitted). 

150. Cacciola v. Nellhaus, 733 N.E.2d 133, 138 (Mass. App. Ct. 2000). 

151. Fassihi v. Sommers, Schwartz, Silver, Schwartz & Tyler, P.C, 309 N.W.2d 645, 646 
(Mich. Ct. App. 1981). 

152. Chem-Age Indus., Inc. v. Glover, 652 N.W.2d 756 (S.D. 2002). 

153. Bryan C. Barksdale, Note, Redefining Obligation in Close Corporation Fiduciary 
Representation: Attorney Liability for Aiding and Abetting the Breach of Fiduciary Duty in 
Squeeze-Outs, 58 WASH & Lee L. Rev. 551, 554 (2001). 

154. 985 P.2d 788 (Or. 1999). See supra notes 100-03 and accompanying text. 

200 INDIANA LAW REVIEW [Vol. 38: 177 

even when the plaintiffs had not initially pleaded it. 

The presence of the aiding and abetting claim in the above cases represents 
a clear, recent trend of courts towards treating it not only as complimentary to the 
more direct breach of fiduciary duty claim, but, perhaps in many instances, as a 
better way to determine an attorney's liability in the Fassihi Scenario. There are 
several possible reasons for this. First, caselaw is better developed as to what 
duties majority stakeholders owe to minority stakeholders than it is as to what 
duties an attorney for a closely-held entity owes to individual nonclient 
stakeholders. Because many Fassihi Scenario cases involve a concomitant 
breach of duty by a majority stakeholder, the court can move directly on to the 
more concrete inquiry of whether the attorney knowingly participated in the 
majority stakeholder's breach rather than having to address whether a fiduciary 
relationship existed between the attorney and the disgrunded stakeholder and 
whether the attorney's actions violated this relationship. Along these lines, and 
as has already been demonstrated above, jurisdictions differ significantly on 
whether or not, and when, attorneys owe fiduciary duties to nonclients. The 
aiding and abetting claim addresses the attorney's reprehensible behavior 
notwithstanding the court's position on these other issues. Finally, as one 
commentator recently pointed out, liability for breach of a fiduciary duty does 
not require a mental state and is therefore essentially a strict liability claim. ^^^ 
To be liable for aiding and abetting someone else's breach, one must have done 
so knowingly and therefore this claim may better fit scenarios like those in ail 
three of the recent cases in which the plaintiff seeks redress against the attorney 
for affirmatively and intentionally acting against his interest. 

In summary, whether or not, as well as when, an attorney is susceptible to 
fiduciary claims in this context continues to be largely dependant upon the 
jurisdiction in which the attorney practices. It appears, however, that in a 
growing number of jurisdictions, a lawyer embroiled in a Fassihi Scenario will 
be susceptible to liability if she knowingly and substantially assists one or more 
stakeholders in breaching their fiduciary duties to another stakeholder. Other 
attempts to extend fiduciary type liability, like the nonclient third party 
beneficiary claim alleged in all three of the recent cases, have generally failed. 

B. Possible Responses by the Attorney 

Given the judicial uncertainty, it is tempting to seek a straightforward, 
failsafe answer to this thorny representational dilemma. One particularly risk- 
averse approach would be for the lawyer to simply not involve herself in matters 
that adversely impact the interests of one or more stakeholders. This might 
involve declining to accept representation of closely held businesses where the 
interests of stakeholders appear to be even remotely at odds, refusing to advise 
an entity client (including its control group) on decisions that could negatively 
affect one or more stakeholders and recommending that all affected constituents 
seek separate counsel whenever any intracorporate dispute arises. 

155. Barksdale, supra note 153, at 559. 


Another possible approach would be for the lawyer to attempt to consider 
and reconcile the interests of an entity and each of its stakeholders on all 
decisions. This utilizes the "group" or "aggregate" theory of organizational 
representation, which some legal commentators and courts have asserted (as 
Cacciola implicitly does) is appropriate when lawyers represent closely held 
entities. ^^^ In essence, this approach requires that the lawyer treat each 
stakeholder as a co-client pursuant to Model Rule 1 .7 and refrain from further 
representation if the interests of these co-clients are "fundamentally 
antagonistic." Because the lawyer would owe representational duties to each 
stakeholder, when faced with a potential Fassihi Scenario, she could not assist 
an entity or control group in taking action adverse to any one stakeholder. 

While accomplishing the lawyer's objective of reducing fiduciary liability 
exposure, these approaches both raise legal and practical problems. The most 
fundamental of these is that neither approach comports with the "entity" theory 
of representation embodied in Model Rule 1.13, and its Model Code counterpart 
EC 5-18, which together are the basis for the standards for professional conduct 
adopted in every state pertaining to a lawyer' s representation of an organization. 
The selection of the "entity" theory over the "aggregate" theory by the drafters 
of the MRPC followed from their conclusions that the former had supplanted the 
latter in jurisdictions throughout the United States and that treating stakeholders 
as co-agents of the entity rather than co-clients more accurately reflects basic 
principles of corporate law.^^^ ABA Formal Opinion 91-361 clarified that these 
principles and the entity theory applies equally to partnerships, closely held 
entities and other types of associations as it does to corporations, ^^^ Inherent 
within Rule 1. 13 is the notion that the lawyer, in following the will of the entity 
as expressed by its "duly authorized constituents," may assist in a course of 
action adverse to one or more of the entity's stakeholders. ^^^ 

As a practical matter, following either of the two approaches discussed above 
as a general rule would hinder a lawyer's ability to meaningfully and effectively 
represent closely held business clients. Under either approach, the lawyer would 
have to tailor her advice to omit the discussion of options that could potentially 
negatively impact a stakeholder and thus would deprive an entity client of an 
opportunity to fully consider all options and make fully informed decisions. The 
"risk-averse" approach would require identifying all situations in which interests 
potentially diverge — ranging from inherently contentious ones, like the decision 

156. "Reality inhibits application of the entity representation rule of the closed corporation." 
WUNNICKE, supra note 4, at 232; see also Lawrence Mitchell, Professional Responsibility and the 
Close Corporation: Toward A Realistic Ethic, 74 CORNELL L. Rev. 466 (1989). 

157. See GEOFFREY C. HAZARD , Jr. & W. William Hodes, Law and Lawyering 17.6 to 
17.13 (3d ed. 2001). 

158. ABA Comm. on Ethics and Prof 1 Responsibility, Formal Op. 91-361 (1991). 

159. Model Rules of Prof'l Conduct R. 1.13 (2003) (requiring lawyer to explain to 
constituent that entity is client when lawyer is "dealing with" constituent against whom entity's 
interests are adverse). 

202 INDIANA LAW REVIEW [Vol. 38: 177 

to involuntarily buy out a minority shareholder, to more apparently mundane 
tasks like the preparation of organizational documents that supposedly express 
the agreement of stakeholders — and then recusing herself. ^^° It is hard to believe 
a lawyer could ever identify all such situations or that a client would find it 
valuable to retain a lawyer who did. In the same vein, while under certain 
circumstances it is either advisable or required that a lawyer for a business 
recommend that constituents at odds with one another consult separate counsel, 
in many cases, it is neither required nor helpful to do so, especially when 
considering the attendant costs, both financial and otherwise, of adding more 
lawyers to the fray. 

Although assisting an entity client to reconcile the interests of its 
stakeholders is sometimes in the entity's best interests, a purely "aggregate" 
approach to corporate representation is often unfeasible. Because the lawyer 
owes duties to multiple clients rather than one, the potential for pervasive and 
numerous conflicting duties increases with each additional stakeholder. 
Ostensibly, the lawyer owes obligations of confidentiality to each stakeholder 
and to the entity itself, which could make communications with any one 
stakeholder a potential minefield. Additionally, as previously mentioned, the 
lawyer may feel compelled to impose self protective restrictions on her advice 
to avoid any chance of impairing one client's interests, which ultimately hinders 
the development of an open, trustworthy relationship between the lawyer and 

C. A Case-by-Case Strategy for Reducing Exposure to Fiduciary Liability 

A more appropriate response for containing fiduciary liability should be 
firmly rooted in applicable caselaw and professional standards. To this end, the 
recent cases examined in this Article are quite instructive. 

The recent cases suggest that the course of dealing that the attorney and 
client engage in is often a very important factor. For example, in Chem-Age, 
Pederson and Shepard's claim of a fiduciary relationship with Glover failed 
because there was "no evidence to show how they were in a confidential 
relationship with Glover, where they depended on him specifically to protect 
their investment interests, and where Glover exercised dominance and influence 
over their business affairs."^^^ Simple avowals that they believed Glover was 
watching out for their interests were insufficient absent evidence "that Glover 
was entrusted with explicit responsibility for their investments."'^^ 

Similarly, in dismissing the notion that Van Amberg owed any duties to 
Richter individually, the Richter court looked to their interactions and found no 
specific evidence of Richter' s reliance on Van Amberg in partnership matters; 

160. See Brennan v. Ruffner, 640 So. 2d 143 (Fla. Dist. Ct. App. 1994) (considering claim that 
lawyer breached fiduciary duty to shareholder in preparation of shareholders agreement); see also 
Egan V. McNamara, 467 A.2d 733 (D.C. 1983) (same). 

161. Chem-Age Indus., Inc. v. Glover, 652 N.W.2d 756, 773 (S.D. 2002). 

162. Id. 


in fact, Richter retained separate counsel to protect his interests during his 
negotiations with Gibbens.^^^ The court found Van Amberg's response to 
Gibbens's request for personal representation telling of how he viewed his 
relationship with the stakeholders — he declined and referred Gibbens to outside 
counsel, stating that he could only represent the partnership/^"^ Later, he urged 
Gibbens to disclose certain partnership matters to Richter. 

Cacciola, with its insinuation that a fiduciary relationship between an 
attorney and stakeholder of a closely held entity might be inherent, did not 
explore how the partners of Cacciola Associates perceived Nellhaus nor point to 
this as a factor. In a few jurisdictions, course of dealing will not be a factor. One 
other case, however, is instructive. In Brennan v. Rufner, a Florida appeals court 
affirmed the dismissal of a claim of breach of fiduciary duty by a "disgruntled 
minority shareholder" against the attorney of a closely-held corporation, after the 
corporation's other two shareholders voted the minority shareholder out of the 
corporation using a procedure agreed upon in their shareholders agreement. ^^^ 
In concluding that the attorney did not have a fiduciary relationship with the 
disgruntled shareholder resulting from his preparation of the shareholders 
agreement, the court found persuasive the fact that the attorney had told the 
shareholders that he only represented the corporation in drafting the agreement. ^^^ 
Defining upfront the nature of the attorney's relationship with the constituents 
of an entity chent is also consistent with several sections of the MRPC, including 
Rule 1.2 (c). Rule 1.7 and Rule 1.13 (d). 

For the most part, the logic in these cases closely resembles the "reasonable 
expectations" approach adopted in most jurisdictions and by the ABA for dealing 
with the closely related issue of determining whether an attorney and an 
individual stakeholder have established a separate attorney-client relationship. ^^^ 
This approach looks at the facts of each particular case to determine whether an 
express or implied relationship has arisen based on the stakeholder's reasonable 
expectation of the role of the attorney, including whether "there was evidence of 
reliance by the individual [stakeholder] on the lawyer as his or her separate 
counsel, or of the [stakeholder's] expectation of personal representation. "^^^ 
Similarly then, an attorney who would like to proactively decrease the likelihood 
of creating a fiduciary relationship with individual stakeholders should address 
this issue at the beginning of a representation by clearly stating to each that the 
attorney will only represent the interests of the business entity and not those of 
any of the individual stakeholders. This would best be taken care of in writing. 

163. Richter v. Van Amberg, 97 F. Supp. 2d 1255, 1265 (D.N.M. 2000). 

164. /^. at 1262. 

165. Brennan, 640 So. 2d at 143. 

166. Id. Sit 146-47; see also Buehler v. Sbardellati, 41 Cal. Rptr. 2d 104, 108 (1995) 
(upholding lawyer's limitation of role in formation of limited partnership to merely documenting 
transaction and not representation of each partner's individual interests). 

167. See ABA Comm. on Ethics and Prof 1 Responsibility, Formal Op. 91-361 (1991). 

168. Id. 

204 INDIANA LAW REVIEW [Vol. 38: 177 

ideally in an engagement letter. ^^^ For the risk averse attorney, the letter could 
go even further and provide that undertaking the engagement in no way creates 
any type of a fiduciary relationship with any of the stakeholders. 

Of course, putting this in writing is one thing and following it is quite 
another. As several commentators have noted, it is often difficult in the course 
of representing a closely held entity to separate the entity and its stakeholders. ^^° 
But difficult does not mean impossible. The attorney who wishes to rebut a 
future contention that she has a fiduciary relationship with any of the entity's 
stakeholders would be well advised to adhere to "corporate'V'entity" formalities. 
These formalities include somewhat mundane, yet important, practices like 
ensuring that direction given by a constituent of the client is consistent with the 
constituent's authority and has been properly approved by the entity, insisting 
that constituents adhere to rules and procedures set fort in the entity' s governance 
documents and applicable law and even reinforcing that the entity is the client 
when communicating with constituents (e.g., by addressing letters to constituents 
in their official capacities). They also include obeying requirements directly 
imposed by the MRPC such as explaining the identity of the attorney's client 
when it is apparent that the entity's interests are adverse to those of one or more 
of its stakeholders and keeping paramount the best interest of the entity in each 
and every facet of the representation. Each of the foregoing are examples of 
sometimes overlooked standards of good corporate legal practice. 

Finally, it seems almost too obvious and a little circular to suggest that an 
attorney can better protect himself from liability associated with a Fassihi 
Scenario by obeying the law. And yet it should be of some comfort for attorneys 
to know that courts typically have only upheld the types of claims discussed 
throughout this Article when the attorney has transgressed or assisted someone 
to transgress a law either external or, more often, internal (i.e. constitutional law 
of the entity). 

Cacciola is a good example of this point. The attorney for the partnership 
engineered a transaction that allowed one partner to acquire a deceased partner' s 
interest. What made this otherwise innocuous action improper was that it was 
carried out in violation of a partnership agreement granting the partnership the 
first option to purchase the interest. Similarly, in Chem-Age, Glover's assisting 
Dahl in selling the assets of the business might otherwise not have been 
problematic. But the fact that Glover illegally notarized the signatures of 
Pederson and Shepard on the corporation's Articles of Incorporation and then 
facilitated the sale of Chem- Age's assets without observing any corporate 
formalities seemed to convince the court that the stakeholders might have a 
viable claim against Glover. 

On the other hand, the Richter court dismissed all of the claims brought 
against Van Amberg even though the court believed that Richter had a colorable 

169. For an example of language to use in engagement letters in this context, see CHESTER 
RoHRLicHETAL., Organizing Corporate AND Other Business Enterprises, at app. 2B (6th ed. 

170. See, e.g., sources cited in supra note 156. 


claim against Gibbens for breach of fiduciary duty and Van Amberg assisted 
Gibbens on several matters that Richter alleged to be wrongful. The court noted 
that Van Amberg' s behavior seemed consistent both with applicable ethical 
standards and SFP's partnership agreement, which designated Gibbens as the 
managing partner with decision-making authority on almost all partnership 

Although the results in these cases are in part a reflection of the jurisdiction 
in which they were brought, the matter is certainly not out of the attorney's 
hands. Adherence to those provisions of the MRPC that apply to organizational 
representation, corporate/entity formalities and applicable law will greatly reduce 
an attorney's exposure to fiduciary liability with respect to individual 
stakeholders of an entity client. 

Indiana Law Review 

Volume 38 2005 Number 1 


Global Positioning System Implants: Must 

Consumer Privacy Be Lost in Order 

FOR People to Be Found? 

Kristen E. Edmundson' 


Recent technological advances have allowed the development of a device 
that can determine the location of a person anywhere in the world instantly and 
precisely. This device, known as a Global Positioning System (GPS), is available 
in various shapes and sizes — from backpack-sized devices with centimeter 
accuracy, to hand-held devices used for navigation on hiking trails with an 
accuracy of a few meters. Although GPS implants for humans (termed Personal 
Location Devices (PLDs) by the industry) are not yet on the market, it is only a 
matter of time before the products will be available. The technology exists for 
such a device, and at least one company. Applied Digital Solutions (ADS), is 
poised to market it. The GPS implant device is inserted under the skin using a 
needle and it remains in place until surgically removed. The implant would 
communicate its location via radio signals to nearby cellular towers. 

One may question the utility of such a device or wonder whether any person 
would want to have one implanted under his skin. As will be discussed below, 
the device is being marketed primarily as a personal safety tool — to track a 
kidnapped child or find an injured, lost, or incompetent adult. However, just 
beyond these personal safety uses lies a wealth of untapped commercial uses of 
which the purchaser of a GPS implant may or may not be aware. Imagine 
receiving a letter in the mail from a clothing store at the local mall stating, "We 
missed you! We noticed that you were at the mall last Tuesday at 7: 14 PM but 
you did not have the chance to stop by our store. As an incentive to stop by next 
time, we have included a 10% off coupon for our entire store." This and other 
far more annoying commercial intrusions on private life would be available if the 

* J.D. Candidate, 2005, Indiana University School of Law — Indianapolis; B.A., 2000, 
University of Chicago. Recipient of the Papke Prize for Best Note in Volume 38, endowed by and 
named in honor of David R. Papke, former R. Bruce Townsend Professor of Law and faculty 
advisor to the Indiana Law Review. I would like to thank my husband, Kevin, for his endless 
support, my parents for their encouragement and emphasis on education, and Papa for his urging 
to never stop learning. Additionally, I would like to thank WTH Engineering, my former 
employer, for introducing me to the possibilities of GPS. 

208 INDIANA LAW REVIEW [Vol. 38:207 

GPS implant providers decided to sell their customers' location information.^ 

Use of the GPS implant product would create privacy issues unlike any 
encountered before. Who should have access to the location information of the 
person with the GPS implant? Will this even concern the people who have a 
GPS chip implanted? Or will the customers simply be anticipating the 
emergency uses of the technology — for example locating a kidnapped child or 
a lost Alzheimer's patient? Will the GPS data be encrypted so that it cannot be 
usefully intercepted when it is transmitted to the end user through wireless 

In addition to the strictly locational data generated by GPS, the potential for 
the type of data that could be stored in GPS implants is limitless. For example, 
the chip could store health information including body temperature, blood 
alcohol level, financial data from stores that are visited, and consumer 
information such as which restaurants are frequented. However, this Note 
focuses solely on the privacy issues surrounding the GPS data capabilities — i.e., 
the capacity to determine with accuracy where a person is in the world at any 
given time. This Note does not discuss the medical aspects of GPS 
implants — such as whether the implant is safe, or what effect the radio waves 
could have on the host. This Note does not address legal issues surrounding the 
use of GPS implants for prisoners or parolees. Nor does it address government 
use of the implants. It only addresses commercial use of the GPS implants by the 
public at large. 

In light of the often lengthy process required to enact legislation, it is wise 
to address the privacy concerns surrounding this new technology now, before the 
product is widely marketed and used. Additionally, the potential threats to 
privacy are even greater than in previous technologies, such as the Internet or 
Enhanced 911 cell phones, because the data collected is unlike any other. It can 
determine the location of the person with the GPS implant with an accuracy of 
a few feet and the GPS implant has an element of permanency that no other 
technology has. Once implanted, the GPS chip would need to be removed 
surgically. The host of a GPS implant would not be able to simply leave the 
phone behind or get off the Internet to avoid someone capturing personal 

This Note first provides a background on GPS technology, concentrating on 
the manner in which GPS implants for humans will function. Secondly, the Note 
addresses the potential privacy concerns that the use of GPS implants may create, 
drawing on examples in the cell phone industry and other technologies that use 
GPS to determine the location of their users. Thirdly, the Note analyzes the 
existing privacy torts and legislation that address location information privacy, 
interception of electronic communications, and privacy on the Internet to 

1 . The reader may recall the opening scenes of the film Minority Report where the characters 
are inundated with custom advertising based on retinal scans. MINORITY REPORT (Twentieth 
Century Fox 2002). Although those advertisements were generated based on personal preferences 
databases triggered by the retinal scan, a similar phenomenon could occur based on the transmission 
of GPS information. 


determine whether such torts and legislation are applicable to GPS implants. 
After concluding that the existing legislation and privacy torts are not adequate 
or applicable, the Note offers suggestions for new legislation that would protect 
the privacy of GPS implant hosts. 

I. Global Positioning System (GPS) Implant Technology — 
What Is GPS and How Does It Work? 

A. Overview of GPS 

The Global Positioning System (GPS) was originally created by the 
Department of Defense for use in maneuvering of weapons and troops.^ 
Numerous books and articles have been written on GPS technology in the fields 
of geography and satellite technology. A recent law review article gives a simple 
explanation of the way GPS works: 

GPS consists of three main components: a space-based component, 
a control component, and a receiver. The space-based component 
consists of twenty-four satellites, which orbit the earth while 
broadcasting a positioning signal. The United States Air Force operates 
the control component, which consists of tracking facilities that monitor 
and correct the position of the satellites. The receiver component, which 
varies greatly in size and expense, uses the GPS signal to calculate its 
own position.^ 

A GPS receiver takes the infoiTnation broadcasted by the satellite and then 
determines its three-dimensional location (longitude, latitude, and elevation 
above sea level) through a triangulation calculation."^ With the use of Wide Area 
Augmentation Systems (WAAS) or Differential GPS (DGPS), GPS receivers can 
calculate their location with an accuracy of a few feet.^ 

GPS receivers are available in vastly different prices and accuracies. They 
range from a simple hand-held GPS receiver used by hikers to navigate through 
the forest, to huge contraptions strapped to a person's back with antennae 
extending a few feet in the air. Generally, the larger and more expensive the unit, 
the more accurate the GPS reading will be. Extremely precise GPS receivers that 
have accuracy to within a few centimeters are used by the military, but also by 

2. See U.S. Navy, USNO NAVSTAR Global Positioning System at 
mil/gpsinfo.html (last visited Nov. 15, 2004). 

3 . Jeremy Speich, Comment, The Legal Implications of Geographical Information Systems 
(GIS), 11 Alb. L.J. Sci. &TECH. 359, 361 (2001) (footnotes omitted). 

4. Robert Puterski, The Global Positioning System — Just Another Tool ?, 6 N. Y.U. Envtl. 
L.J. 93, 95 (1997) ("By transmitting synchronized digital codes with a specific frequency, and 
knowing the precise time it takes for that signal to travel a given distance, a position can be 

5. Garmin Ltd., What is GPS? at (last visited Nov. 15, 
2004) (Garmin is a major manufacturer GPS products.). 

210 INDIANA LAW REVIEW [Vol. 38:207 

city planners, utilities, and sanitary or sewer workers to locate buried cables or 
pipes. GPS receivers that have an accuracy of a few feet are frequently used for 
navigation, whether by boat or plane. 

More recently, GPS technology has been made available to the general 
consumer through navigation devices in cars and inclusion in hand-held devices 
such as cell phones and personal digital assistants (PDAs).^ In the case of cell 
phones, GPS is used to determine a 911 caller's location and allow emergency 
vehicles to assist the caller, whereas GPS in PDAs or OnStar is used primarily 
for navigation assistance, although there can be an emergency response 
component as well. 

B. GPS Subdermal Implant 

On May 13, 2003, Applied Digital Solutions (ADS) announced that it had 
developed a working prototype of "what the company believes is the first-ever 
subdermal GPS 'personal location device' (PLD^)."^ Although the product is not 
yet on the market, ADS already sells two other products commercially that 
demonstrate the viability of the concept. Once on the market, the PLD would 
likely take the form of the first product, VeriChip combined with the 
functionality of the second product. Digital Angel. 

The first product, named VeriChip, is a "miniaturized radio frequency 
identification device" which is about the size of a grain of rice and is inserted 
underneath the skin.^ VeriChip stores identification information that is 

6. OnStar is the primary example of the use of GPS in vehicles for navigation and public 
safety purposes. For more information, see (last visited Nov. 15, 2004). 

7 . Throughout this Note, the terms "GPS implant" and "PLD" will be used interchangeably. 

8. Press Release, Applied Digital Solutions, Applied Digital Solutions Announces Working 
Prototype of Subdermal GPS Personal Location Device (May 13, 2003) at 

9. Id. The Food and Drug Administration (FDA) declined to regulate ADS's VeriChip. 
Press Release, Applied Digital Solutions, FDA Ruling — Subdermal VeriChip Is Not a Regulated 
Medical Device " For Security, Financial, and Personal Identification/Safety Applications" (Oct. 
22, 2002), at; see also Matt Fleischer-Black, 
Cosmetic Advocacy, TUE American Lawyer, Aug. 2003, 70, 123 (discussing the decision of the 
FDA's chief counsel, Daniel Troy, not to regulate VeriChip). 

[T]he company formally asked the FDA to rule that the agency had no jurisdiction over 
its product, the VeriChip . . . [I]ts lawyers . . . argued that it shouldn't be regulated 
because the company hadn't claimed anything about health. Troy agreed. The product 
did not fall within the agency's jurisdiction of products intended "to affect the structure 
or function of the body," he wrote in a letter in October 2002 — this despite the fact that 
to be used the chip must be injected. Troy's letter deemed the chip a 'consumer 
product,' and thus the responsibility of the Consumer Product Safety Commission — 
which only regulates products after they hit the market. 

Id. The wisdom of this ruling, or lack thereof, is left to another author. See also Elaine M. 

Cochran, The Unguarded Gate: The Jurisdictional Gap Within FDA "Device" Regulation, 5 J. L. 


transmitted via a radio frequency signal when a proprietary scanner is passed 
over the device/^ VeriChip does not have GPS capability, so it cannot be used 
for locating a person. VeriChip simply stores information that can be read by the 
proprietary scanner. Information, such as name and address, is stored in the 
microchip and can be retrieved in case of emergency by anyone who has the 
scanning device. Although ADS does not provide the number of VeriChips it has 
sold, VeriChips are already being included on standardized requests for 
production forms, suggesting that the use of VeriChips is substantial enough to 
warrant attention. ^^ 

The second relevant product, named "Digital Angel," is a device worn like 
a (removable) watch which can communicate the location of the wearer to any 
designated person via GPS data transmitted through the wireless cell phone 
network and retrievable by the interested party on the Internet or by calling a 
designated number. ^^ Digital Angel is marketed as a safety device for keeping 
track of elderly people and "families on the go."*^ Because Digital Angel is worn 
on the wrist and can be taken off at any time, it does not have the permanency 
that VeriChip offers. 

The presence of the VeriChip and Digital Angel products on the market, 
along with the announcement of a working GPS implant prototype demonstrate 
that it is only a matter of months before PLDs are available commercially.^"^ A 
GPS implant offered by ADS would likely be affordable and require only a brief 
outpatient procedure to insert, given that the VeriChip costs about $200 and the 
device is inserted with a large needle by a doctor. ^^ A GPS implant could be 
marketed to the same demographic as Digital Angel — it could be marketed as a 
tool to keep track of elderly family members or children. However, given the 
rapid expansion of GPS technology from the military to the average consumer. 

& Fam. Stud. 189, 198-99 (2003) (Although this article is outdated as it does not include 
discussion of the FDA's October 2002 decision, the author does discuss loopholes of medical 
device regulation as it would apply to VeriChip and mentions some of the potential safety risks of 
the product.). 

10. Press Release, Applied Digital Solutions, Applied Digital Solutions Announces Working 
Prototype ofSubdermal GPS Personal Location Device (May 13, 2003), at 
news/2003/05 1303.html. 

1 1 . David E. Keltner, Texas Practice Guide, §8:114 (2003) (defining "documents" to 
include "intra- or extra- body technological devices (including but not limited to 'Verichips' and 
like devices)"). 

12. Digital Angel Corp., Digital Angel/Consumer at 
consumer.asp (on file with the Indiana Law Review). A similar watch-like device is available from 
another company named "Wherify." See (last 
visited Nov. 15, 2004). 

13. Id. 

14. For more information on VeriChip or Digital Angel products, see the following websites: and (last visited Nov. 15, 2004). 

15. Christopher Newton, U.S. to Weigh Computer Chip Implant, Ap Onune, Feb. 27, 2002, 
available at 2002 WL 14995023. 

212 INDIANA LAW REVIEW [Vol. 38:207 

it may be only a matter of time before GPS implants are commonplace in 
individuals from all parts of society — not just those that are at risk for getting lost 
or kidnapped. ^^ One could conceive a world where a parent who wishes to keep 
track of where his teenager goes on the weekend or where a spouse, wishing to 
time dinner perfectly, logs onto his computer to determine how close to home his 
wife is. 

n. Privacy Concerns of GPS Implant Hosts — Big Business 

AS Big Brother 

A. Background on Commercial Intrusion into Private Life 

In the twenty-first century the enemy in the privacy war may no longer be the 
government, but instead may be Corporate America. The academic literature is 
rich with analysis of the privacy rights that citizens hold and the limits that these 
rights place on government intrusion into private life.^^ 

Of more recent origin is the intrusion of commercial interests into private 
life. The market value of location information will tempt GPS implant providers 
to sell their customers' location information even if, initially, this is not the 
primary purpose for the device. The national and state do-not-call lists are 
examples of how important privacy is to the general public. ^^ If sales calls during 

16. For more potential applications of VeriChip and GPS implants, see Dean Unatin, 
Progress v. Privacy: The Debate Over Computer Chip Implants, 2002 UCLA J.L. & TECH. NOTES 
24 (2002) (describing uses for soldiers and criminals as well as children and Alzheimer's patients). 

17. This Note will not discuss an individual's right to privacy under the U.S. Constitution or 
state constitutions. Such constitutional privacy rights may be implicated when law enforcement 
officials search or require information as part of an investigation, but that is not the same privacy 
interest as the one at stake when companies release personal information for marketing purposes. 
See U.S. West, Inc. v. FCC, 182 F.3d 1224, 1234 n.6 (10th Cir. 1999) (explaining that the privacy 
interest in a case dealing with telecommunication providers' use of customers' personal call 
information — including location - for outside marketing was not the same as constitutional right 
to privacy as addressed in Griswold v. Connecticut, 381 U.S. 479, 484-86 (1965) or Roe v. Wade, 
410 U.S. 113, 152-56 (1973)). For a recent decision about GPS transmitters used to track a 
criminal suspect, see State v. Jackson, 46 P.3d 257, 269 (Wash. Ct. App. 2002) (comparing the use 
of a GPS tracking device on a car that was lawfully searched to the use of binoculars: "[mjonitoring 
Mr. Jackson's public travels in his truck by use of the GPS device is reasonably viewed as merely 
sense augmenting, revealing open- view information of what might easily be seen from a lawful 
vantage point without such aids."). For a recent discussion of privacy from governmental intrusion 
for wearers of external personal location devices, such as wrist- watch models, see Waseem Karim, 
The Privacy Implications of Personal Locators: Why You Should Think Twice Before Voluntarily 
Availing Yourself to GPS Monitoring, 14 WASH. U.J.L. & Pol'Y 485, 501-09 (2004). 

18. For information on the National Do-Not-Call Registry, see 
donotcall/ (last visited Nov. 15, 2004). Many states have their own do-not-call lists. See, for 
example, Indiana's web page general/telephone/FAQs. htms (last visited 
Nov. 15, 2004). 


the dinner hour are considered intrusive, how would the average American feel 
if their comings and goings were constantly monitored and sold to marketing 
groups to better target advertising? GPS implants may be marketed primarily as 
safety devices, but perhaps, as is the case with supermarket shopping cards, there 
is a marketing opportunity lying just beneath the surface. ^^ 

Privacy of a person's location information, as gathered through GPS 
technology, is a topic of wide-spread importance — as evidenced by the use of the 
topic in a recent national moot court competition.^^ The case for the John 
Marshall National Moot Court Competition in Information Technology and 
Privacy Law for 2002 concerned a student who rented a moving truck that was 
equipped with GPS tracking technology. The truck company used the GPS 
tracking to determine where the truck had traveled and the company charged the 
student extra fees because he had taken the truck outside the state. Additionally, 
the truck company called one of the student' s references to report that the student 
might be in trouble or involved in trouble based on the fact that the truck was 
parked overnight in the parking lot of an adult bookstore. As a result of this call, 
the student lost his scholarship. The student sued based on, among other things, 
the privacy tort of intrusion upon seclusion and deceptive business practices.^^ 

B. Comparison of Privacy Concerns of GPS Implant Hosts to Privacy 
Concerns Surrounding Enhanced 911 

Perhaps the most direct comparison of privacy concerns regarding the use of 
a GPS implant can be drawn from the privacy concerns associated with Enhanced 
911 service for wireless phones. The Federal Communications Commission 
(FCC) requires wireless telecommunications providers to equip their phones and 

19. See Katherine Albrecht, Supermarket Cards: The Tip of the Retail Surveillance Iceberg, 
79 Denv. U.L. Rev. 534 (2002). Albrecht discusses shopper cards which supermarkets use 
ostensibly for savings opportunities for customers, but actually the 

cards allow retailers to amass unprecedented amounts of longitudinal information on 
consumer purchase and eating habits. Each time a shopper scans a card at the checkout 
lane, a record of the items purchased, the time, the store location, and the payment 
method are added to the shopper's profile. Along with millions of other records, this 
profile is stored in an enormous 'data warehouse' (frequently a secure facility run by a 
marketing company under contract to several different supermarkets) where it can be 
analyzed in detail or simply stored until a later use is found for it. 
Id. at 534. 

20. Charles Lee Mudd, Jr. et al.. Moot Court Competition Bench Memorandum, 21 J. 
Marshall J. Computer & Info. L. 37, 41 (2002). 

21. Id. at 41-43, 46, 53. See also South Texas College of Law, Brief for the Petitioner, 21 
J. Marshall J. Computer & Info. L. 59 (2002); Texas Tech University School of Law, Brief for 
the Respondent, 21 J. MARSHALL J. COMPUTER & iNFO. L. 99 (2002); Richard C. Balough, Global 
Positioning System and the Internet: A Combination with Privacy Risks, Cffl. Bar ASSOC. Rec. Oct. 
15, 2001, at 28, 30-33 (2001) (discussing applicability of privacy torts to a rental agency's use of 
GPS tracking device in a rental car). 

214 INDIANA LAW REVIEW [Vol. 38:207 

wireless networks with the technology to locate and transmit the location of a cell 
phone user to a public safety answering point (PSAP — commonly known as the 
dispatch center) whenever the caller dials 911. One possible way of complying 
with this requirement is to use a GPS equipped handset, although cellular 
network-based solutions are also permitted.^^ The location accuracy 
requirements and time tables for implementation have been subject to change, 
but, since October 1, 2001, carriers have been required to have an accuracy of 
"50 meters for 67 percent of calls" in the case of handset-based solutions.^^ 
Many wireless carriers have not complied with the deadlines and some have paid 
fines for their noncompliance.^"^ 

The reason that wireless companies are failing to comply with FCC 
regulations is that the cost of upgrading their systems and developing the 
technology required to transmit accurate location information from a cell phone 
is substantial: "[m]any carriers have already spent hundreds of millions of 
dollars to deploy location-tracking technologies. To recoup expenses, wireless 
carriers are exploring ways to generate new revenue from their investments in 
these capabilities."^^ Traupman notes: 

The same technology that alerts paramedics and police to safety 
emergencies, for example, can also help automobile drivers locate the 
nearest French restaurant or gas station. Additionally merchants will be 
equipped to call a frequent shopper's mobile phone and offer a time- 
sensitive coupon when the shopper is near the merchant's store.^^ 

These uses seem relatively harmless, even if they might be deemed annoying. 
However there are additional potential uses that would have privacy advocates 
even more concerned: 

As explained by James Dempsey of the Center for Democracy and 
Technology, "what if your insurer finds out you're into rock climbing or 
late-night carousing in the red-light district? What if your employer 
knows you're being treated for AIDS at a local clinic? The potential is 
there for inferences to be drawn about you based on knowledge of your 
whereabouts." In short, privacy advocates are concerned that cell-phone 
companies will release location information to third parties — whether 
the third party is a marketer, a law enforcement agency, an employer, or 

22. Revision of the Commission's Rules to Ensure Compatibility with Enhanced 911 
Emergency Calling System, 14 F.C.C.R. 17388, 17393 (1999). 

23. /J. at 17392-93. 

24. See Cingular W^ireless LLC, 17 F.C.C.R. 8529, 8533 (2002) (proposing revised 
compliance dates and mandating contributions to the U.S. Treasury of up to $1.2 million for each 
missed deadline); AT&T Wireless Services, Inc., 17 F.C.C.R. 19938, 19938 (2002) (adopting 
consent decree terminating violation proceeding). 

25 . Ellen Traupman, Who Knows Where You Are ? Privacy and Wireless Services, 1 COMM. 
L. Conspectus 133, 135-36 (2001) (footnotes omitted). 

26. Id. at 136 (footnotes omitted). 


a criminal. ^^ 

Perhaps foreshadowing these privacy concerns, Congress passed the Wireless 
Communications and Public Safety Act of 1999,^^ which requires customer 
approval in order for wireless providers to use or disclose location information.^^ 
However, as will be discussed below, the customer approval process has been the 
subject of much debate and often leaves privacy advocates unsatisfied. ^° 

One might, at first, draw a distinction between GPS equipped cell phones and 
GPS implants, thinking that there is no privacy issue involved with GPS implants 
for humans. After all, the product is being advertised for emergency uses such 
as locating kidnapped children or wandering Alzheimer' s patients. However, the 
same argument could have been made for GPS technology in cell phones. 
Originally, GPS technology in cell phones was mandated by the FCC for use in 
emergency situations. But the cell phone companies and businesses realized the 
value of this location information for market use — and the same is likely to occur 
for GPS implants. As Traupman noted in her article, "[i]nformation like this is 
simply too good — not to mention expensive — to leave for emergencies and police 
work."^* Marketing companies would love to know what time of day a customer 
drives by a certain coffee shop or which customers drive by an athletic store on 
their way to the gym. A business might want to know the location of its 
competition's sales personnel and the routes taken for sales calls. Certain 
individuals might want to purchase location information for blackmail, extortion, 
child custody disputes, or divorce litigation. 

The chance that GPS implant providers would sell the location information 
of their customers to other businesses is extremely high, especially considering 
Digital Angel's privacy policy (Digital Angel is the wrist- watch version of the 
GPS personal location device). The privacy policy, as available on Digital 
Angel's web site, states that "[w]e may, from time to time, share, sell or rent 
some of your personal information with third parties with whom we have a 

27. Aaron Renenger, Note, Satellite Tracking and the Right to Privacy, 53 Hastings L.J. 
549, 553 (2002) (quoting Simon Romero, Location Devices' Use Rises, Prompting Privacy 
Co«c^m5, N.Y. Times, March 4, 2001 at 25). 

28. Wireless Communications and Public Safety Act of 1999, Pub. L. No. 106-81, § 5, 1 13 
Stat. 1288-1289 (1999). 

29. 5e^ 47 U.S.C. § 222(f) (2000). 

30. For further discussion of the inadequacy of current protection for location information 
privacy, especially in the wake of the terrorist attacks of 9/1 1, see Aaron Futch & Christine Soares, 
Enhanced 911 Technology and Privacy Concerns: How Has the Balance Changed Since September 
11?, 2001 Duke L. & Tech. Rev. 38, 23 (2001) ("Given the speed with which events are now 
unfolding both at home and abroad, a well reasoned, carefully considered approach to protecting 
privacy in the E911 system is likely to be an unfortunate casualty."); David J. Phillips, Beyond 
Privacy: Confronting Locational Surveillance in Wireless Communication, 8 COMM. L. & POL'Y 
1, 7 (2003) (discussing the PATRIOT Act). 

31. See Traupman, supra note 25, at 136 n.35 (quoting Alan Charles Raul, O Customer, 
Where Art Thou?, eCOMPANY Now, Mar. 1, 2001 (no longer available at cited website)). 

216 INDIANA LAW REVIEW [Vol. 38:207 

business relationship so long as they agree not to share, sell or rent any of your 
personal information with others. ""^^ This policy may only apply to the 
information required to place an order with the company (such as name, address, 
phone number, and e-mail), but it may also apply to the location information 
gathered when the consumer uses the product. The privacy policy was not 
explicit — which is yet another reason to be wary. 

Additionally, the fact that GPS implants have yet to make an entrance on the 
market does not preclude the consumer privacy issue from being discussed. On 
the contrary, if this new technology is to be given a chance, privacy issues would 
best be dealt with before the GPS implant is available. Consumers must have 
confidence in a new technology before they will use it, and there will be no 
confidence if the public fears that its location information will be up for sale. At 
least one writer has acknowledged this necessity in the case of GPS in cell 
phones: "For this technology to take off, (consumers) must have a uniform 
expectation about their privacy, that it is the customer and not the service 
provider who has control over the use of their location information."^^ Speaking 
more generally of GPS technology, one commentator notes that the "truly 
beneficial uses of location technologies such as safety and search and rescue 
could develop into strong markets for the GPS community only if the Big Brother 
issues can be addressed."^"^ A lack of privacy protection for consumers of new 
GPS products, such as the human implant, could have a disastrous effect on the 
predicted exponential growth of the GPS market.^^ 

Besides privacy concerns, there are more serious concerns that might arise 
with the introduction of GPS implants to the marketplace, such as danger to the 
GPS implant host and liability of the GPS implant provider for bad data or breach 
of security. Although these issues are beyond the scope of this Note, they are 
worthy of brief discussion here. GPS implant providers could be held liable for 
injuries sustained by hosts if the product failed to emit a signal for emergency 
personnel to locate the host or if the data gave the wrong location.^^ If the Digital 
Angel product is any model for the forthcoming GPS human implant product, 
location information would be available for customers on Internet sites as part of 
the standard service. Even if this information were password protected, web sites 

32. Digital Angel Coq)., Digital Angel Privacy Policy at http://www. 
about_privacy.asp (on file with the Indiana Law Review). As of March 4, 2004, the Privacy Policy 
contained this language, but it has since been omitted. 

33 . M.J. Zuckerman, Wireless, with Strings Attached: A Cellphone Can Make You Stand Out, 
to Rescuers and Marketers Alike, USA TODAY, Feb. 7, 2001, at ID (quoting Michael Altschul, 
general counsel to the Cellular Telecommunications & Internet Association, an industry trade 
group, on the subject of location based services utilizing location information from cell phones). 

34. Dee Ann Divis, Saving Private Location, GPS WORLD, Oct. 1, 2003. 

35. The market for location based services is predicted to grow from revenues of $6 million 
today to revenues of $828 million in 2005. Id. 

36. See, e.g., Jennifer L. Phillips, Comment, Information Liability: The Possible Chilling 
Effect of Tort Claims Against Producers of Geographic Information Systems Data, 26 Fla. St. U.L. 
Rev. 743 (1999). 


can be hacked and "[m]isuse of an implanted tracking device embedded in a 
child's shoulder and tracked by Internet access is foreseeable at the least by the 
criminal element of society who habitually adjusts to new technological 
demands. "^^ Worse yet, the presence of a GPS implant in a child could put the 
child at further risk of harm even though the implant is billed as a safety device: 

In the case of the imbedded tracking device, when a child is abducted, 
the criminal is highly motivated to act out in self interest even at the 
child' s expense. If the criminal knew the child had the device implanted 
in a standard location of the shoulder and it was emitting continuous 
information concerning the abductor's location, it is not difficult to 
imagine, and even foreseeable that an abductor would cut the device out 
of the child's shoulder.^^ 

These concerns are certainly important, however, analysis of these issues would 
require a discussion beyond the scope of this Note. 

in. Applicability (or Lack Thereof) of Existing Privacy Torts and 

Legislation to GPS Implants 

A. Privacy Torts 

One potential avenue for protection of consumer privacy is through tort 
claims against GPS implant providers. All modern day privacy torts find their 
birth in Warren and Brandeis' influential nineteenth century article where the 
authors noted that 

The intensity and complexity of life, attendant upon advancing 
civilization, have rendered necessary some retreat from the world, and 
man, under the refining influence of culture, has become more sensitive 
to publicity, so that solitude and privacy have become more essential to 
the individual; but modem enterprise and invention have, through 
invasions upon his privacy, subjected him to mental pain and distress, far 
greater than could be inflicted by mere bodily injury. ^^ 

Although Warren and Brandeis' article was principally aimed at the press and the 
"invention" they referred to was the photograph, which could then be taken 
instantly rather than requiring one to consciously sit for the photograph, their 
words could be applied to businesses and modern day technologies like GPS. 

Warren and Brandeis' theories did not go unnoticed and have given rise to 
four generally recognized privacy torts today: intrusion upon seclusion, false 

37. Cochran, supra note 9, at 198-200 (discussing potential lack of Food & Drug 
Administration (FDA) oversight in the use of VeriChip). 

38. Id. at 199 (discussing ADS's GPS implant in the context of where it would fit into FDA 

39. Samuel D. Warren & Louis D. Brandeis, The Right to Privacy, 4 Harv. L. Rev. 193, 196 

218 INDIANA LAW REVIEW [Vol. 38:207 

light, misappropriation of publicity, and publicity of a person's private life.'^^ If 
these torts were apphed to the use of GPS location information, the success of the 
privacy tort claim would be unlikely. However, the tort claims discussed below 
could be brought against the GPS implant provider. Claims brought against an 
eavesdropper who obtained information location by intercepting the GPS signal 
would be covered under the Electronic Communications Privacy Act, which will 
be discussed below."^^ 

The false light and misappropriation torts would not provide consumer 
privacy protection because they are not applicable to GPS information. The false 
light tort would not be applicable because "[t]he potential privacy invasion 
concerning the use of GPS ... is not based on falsity, but on dissemination of 
truthful information that a consumer would prefer to keep private.'"*^ Likewise, 
the misappropriation tort is not applicable to the use of GPS information because 
this use does not involve "a person's name or image, but knowledge of that 
person's precise whereabouts.'"^^ 

PubUc disclosure of private facts may at first seem to apply to disclosure of 
GPS location information, but the tort is limited because "if an event takes place 
in a public place, the tort is unavailable.'"^ Courts generally find that when a 
person travels over public streets, he voluntarily conveys his location 
information."^^ However, there are some limitations to the public place exception. 
For example, even though women could be observed entering and leaving a 
public Women's Clinic, this was held not a defense to the tort of public 
disclosure of embarrassing personal facts where abortion protesters had placed 
the names of the women on protest signs, implying that they were about to 
undergo an abortion."^^ The court reasoned that "merely because plaintiffs' 
'comings and goings' may have been visible to members of the public does not 
mean that the public was aware of the precise purpose of those 'comings and 
goings. ""^^ Following that reasoning, if a GPS implant provider were to sell or 

40. Restatement (Second) ofTorts §§ 652A, 652E (1977). 

41. See discussion m/ra Part III.C. 

42. Renenger, supra note 27, at 556. 

43. Id. 

44. Id. at 557 (citing RESTATEMENT (SECOND) OFTorts § 652D cmt. b. (1977)). 

45. United States v. Knotts, 460 U.S. 276, 281-82 (1982) (finding suspect had no reasonable 
expectation of privacy while driving on public roads, so use of tracking device was not a violation 
of the Fourth Amendment). 

A person traveling in an automobile on public thoroughfares has no reasonable 
expectation of privacy in his movements from one place to another. When [the 
defendant] traveled over the public streets he voluntarily conveyed to anyone who 
wanted to look the fact that he was traveling over particular roads in a particular 
direction, the fact of whatever stops he made, and the fact of his final destination when 
he exited from public roads onto private property. 

46. Doe V. Mills, 536 N.W.2d 824, 832 (Mich. App. 1995). 

47. Id.\see also Nader v. Gen. Motors Corp., 255 N.E.2d 765, 771 (N.Y. 1969) ("A person 


disclose customer location information (without the customer' s consent), and that 
information was publicly displayed, then conceivably the provider could be held 
liable for the wrongful disclosure of these private facts. A GPS situation 
analogous to the abortion case might be a GPS implant customer whose trips to 
an AIDS clinic or male strip club were disclosed to a conservative group that 
listed the customer's name as a homosexual on protest signs. 

Finally, the intrusion upon seclusion tort, which is often applied in cases of 
eavesdropping, might be applicable to the GPS information situation; however 
the gathering of such information in a public space provides an exception to the 
tort just as it does for pubhc disclosure of private facts."^^ Yet, the 2002 John 
Marshall National Moot Court Competition in Information Technology and 
Privacy Law felt the intrusion upon seclusion tort in the GPS context had enough 
merit to include the issue in its moot court case."^^ 

Torts are one possible way of protecting the privacy of GPS implant hosts. 
However, there are other more proactive rather than reactive measures that can 
be taken such as legislation preventing the disclosure of location information by 
companies providing location services to consumers. 

B. Telecommunications Act of 1996 and Wireless Communications and 

Public Safety Act of 1999 

Although regulation of GPS implants may not fall under the 
Telecommunications Act of 1996 (hereinafter Telecom Act),^^ it is still useful to 
undertake a detailed analysis of how the Telecom Act protects consumer privacy 
because it may serve as a model for legislation tailored specifically for GPS 
implants. The Telecom Act appears to be the only legislation that addresses 
consumer privacy concerning an individual's location information and therefore 
deserves in depth attention. The purpose of the Telecom Act was to update the 
Communications Act of 1934 so that it could handle new technologies such as 
the Internet, cable, cellular phones, and other types of communication available 
in the digital age.^^ Although Congress' "central ambition" may have been to 
"permit more competition into telecommunications markets," the Telecom Act 
also contained privacy legislation aimed at protecting consumers.^^ 

1. Protection for Consumers. — The Telecom Act protects consumers from 
unauthorized release of their personal information. It restricts the use of 
consumer information by telecommunications carriers: 

does not automatically make public everything he does merely by being in a public place. . . .")• 

48. Renenger, supra note 27, at 558. 

49. Mudd et al., supra note 20, at 41. 

50. Telecommunications Act of 1996, Pub. L. No. 104-104, 110 Stat. 56 (codified in 
scattered sections of 47 U.S.C. §§151-710 (2000)). 

51. See Michael I. Myerson, Ideas of the Marketplace: A Guide to the 1996 
Telecommunications Act, 49 FED. COMM. L.J. 251, 252 (1997). 

52. Glen O. Robinson, The "New" Communications Act: A Second Opinion, 29 CONN. L. 
Rev. 289, 304(1996). 

220 INDIANA LAW REVIEW [Vol. 38:207 

Except as required by law or with the approval of the customer, a 
telecommunications carrier that receives or obtains customer proprietary 
network information by virtue of its provision of a telecommunications 
service shall only use, disclose, or permit access to individually 
identifiable customer proprietary network information in its provision of 
(A) the telecommunications service from which such information is 
derived, or (B) services necessary to, or used in, the provision of such 
telecommunications service, including the publishing of directories.^^ 

The Telecom Act protects "customer proprietary network information," which 
is defined as "information that relates to the quantity, technical configuration, 
type, destination, location, and amount of use of a telecommunications services 
subscribed to by any customer of a telecommunications carrier, and that is made 
available to the carrier by the customer solely by virtue of the carrier-customer 

The Telecom Act did not originally include location information, but was 
amended to explicitly include "location" in the definition of customer proprietary 
network information (CPNI) by the Wireless Communications and Public Safety 
Act of 1999.^^ This 1999 Act also added subsection (f) to section 222, which is 
focused on location information exclusively and states: 

For purposes of subsection (c)(1) of this section, without the express 
prior authorization of the customer, a customer shall not be considered 
to have approved the use or disclosure of or access to — (1) call location 
information concerning the user of a commercial mobile service . . . 
other than in accordance with subsection (d)(4) of this section . . . .^^ 

Notice that this part refers to "express prior authorization" rather than "approval 
of the customer" in the CPNI section. As will be discussed below, these 
seemingly similar approval requirements are in fact vastly different. 

2. FCC's First Attempt at Providing Guidance for Telecommunications 
Providers. — The Telecom Act did not explain the manner in which 
telecommunication providers were to obtain consent from customers to use their 
CPNI and location information. In response to telecommunication providers' 
requests, the FCC issued an order in February 1998 ("1998 CPNI Order") under 
which the FCC adopted an "opt-in" approach, requiring providers to obtain 
customer permission before releasing their CPNI to companies for purposes 

53. 47 U.S.C. § 222(c)(1) (2000). The privacy of consumer information is discussed in 47 
U.S.C. § 222. Telecomm. Act of 1996 § 702, 47 U.S.C. § 222. 

54. /J. § 222(h)(1)(A). 

55. Wireless Communications and Public Safety Act of 1999, Pub. L. No. 106-81, §5,113 
Stat. 1288-1289 (1999). 

56. 47 U.S.C. § 222(f). Subsection (d)(4) creates an exception for the release of customer 
location information in the case of an emergency and limits this release to emergency personnel and 
family members. Id. § 222(d)(4). 


outside the customer' s existing relationship with the provider.^^ "Opt-in" consent 
means that "one's prior, express approval must be obtained before personal 
information is used for purposes beyond those associated with the initial 
collection purpose."^^ In contrast, an "opt-out" system "allows approval to be 
inferred from the customer-data processor relationship unless an individual 
specifically requests limits on further use."^^ 

3. Telecommunications Backlash: The U.S. West Case. — The 
telecommunications provider, U.S. West, was not satisfied with the FCC's 
selection of the opt-in approach "rather than its suggested opt-out approach 
(which is allegedly cheaper and results in a higher 'approval' rate than the opt-in 
approach). "^° So, the company filed suit against the FCC alleging that the opt-in 
standard adopted in the 1998 CPNI Order was an arbitrary and capricious 
interpretation of 47 U.S.C. § 222 and violated the First and Fifth Amendments 
of the Constitution.^^ The court reached only the First Amendment claim and 
found that the FCC's opt-in regulation violated the First Amendment under the 
Central Hudson analysis for commercial speech.^^ 

The court described the Central Hudson test as first presenting a threshold 
question of "whether the commercial speech concerns lawful activity and is not 
misleading."^^ No one disputed that the commercial speech based on CPNI was 
lawful and non-misleading, so the court addressed only the remaining prongs of 
the Central Hudson test whereby "the government may restrict the speech only 
if it proves: '(1) it has a substantial state interest in regulating the speech, (2) the 
regulation directly and materially advances the interest, and (3) the regulation is 
no more extensive than necessary to serve the interest. '"^"^ 

57. Telecommunications Carriers' Use of Customer Proprietary Network Information and 
Other Customer Information, 13 F.C.C.R. 8061, 8066-67 (1998) [hereinafter 1998 CPNI Order]. 

58. Paul M. Schwartz, Charting a Privacy Research Agenda: Responses, Agreements, and 
Reflections, 32 CONN. L. REV. 929, 934 (2000). 

59. Id. 

60. U.S. West, Inc. v. FCC, 182 F.3d 1224, 1240 (10th Cir. 1999) (Briscoe, J., dissenting), 
cert, denied, 530 U.S. 1213 (2000). 

61. Id. at 1228 (majority). 

62. Id. at 1240. It is important to note that the court did not find § 222 itself to be 
unconstitutional — that claim was not alleged by U.S. West. 

63. Id. at 1233 (citing Central Hudson Gas & Elec. Corp. v. PubUc Serv. Comm'n, 447 U.S. 
557, 566 (1980)). 

64. Id. at 1233 (quoting Revo v. Disciplinary Bd. of the Sup. Ct. for the State of N.M., 106 
F.3d 929, 932 (10th Cir. 1997) (citing Central Hudson, 447 U.S. at 564-65)). Another Supreme 
Court case holds that the third prong of the Central Hudson test is not entirely accurate. See Bd. 
of Trs. of State Univ. of N.Y. v. Fox, 492 U.S. 469, 478, 480 (1989) (holding the "no more 
extensive than reasonably necessary" test to be incompatible with the subordinate position of 
commercial speech in the free speech hierarchy and designating a "means narrowly tailored to 
achieve the desired objective" test). The Fox test is more lenient to government regulation of 
commercial speech than the Central Hudson test, and the U.S. West court did take this new test into 
consideration when it discussed the third prong in depth. U.S. West, 182 F.3d at 1238. 

222 INDIANA LAW REVIEW [Vol. 38:207 

The court expressed doubt whether there was a substantial state interest in 
regulating the use of CPNI: "[a]lthough we may feel uncomfortable knowing that 
our personal information is circulating in the world, we live in an open society 
where information may usually pass freely."^^ The court required "a more 
empirical explanation and justification" than simply the concern that disclosure 
of CPNI could prove embarrassing.^^ Assuming for the sake of appeal that the 
government had met the substantial state interest requirement, the court found 
that the government failed to show that the regulation materially advanced the 
interest because it presented "no evidence showing the harm to either privacy or 
competition is real."^^ The court reasoned that there was no indication that 
disclosure of CPNI might actually occur, while acknowledging that "protecting 
against disclosure of sensitive and potentially embarrassing personal information 
may be important in the abstract. "^^ 

Lastly, the court found that FCC rules requiring opt-in approval were not 
narrowly tailored.^^ The court found that the FCC rejected an opt-out approval 
process on mere speculation that "there are a substantial number of individuals 
who feel strongly about their privacy, yet would not bother to opt-out if given 
notice and the opportunity to do so. Such speculation hardly reflects the careful 
calculation of costs and benefits that our commercial speech jurisprudence 
requires. "^^ The court was careful to caution that it was not using a least 
restrictive means test, but "merely recognize [d] the reality that the existence of 
an obvious and substantially less restrictive means for advancing the desired 
government objective indicates a lack of narrow tailoring."^^ This obvious and 
substantially less restrictive means was the opt-out approval mechanism.^^ 

4. Current Limitations on the Release of Location Information. — In response 
to the U.S. West case, the FCC issued a further order stating what the approval 
standard should be for § 222.^^ In this document, the FCC adopted an opt-out 
standard for intra-company use of CPNI and for "sharing of CPNI with, and use 
by, a carrier's joint venture partners and independent contractors in connection 
with communications-related services that are provided by the carrier (or its 

65. Mat 1235. 

66. Id. 

67. Mat 1237. 

68 . Id. (Apparently, the court did not deem the fact that the telecommunication industry cared 
enough about the standard to go to court as evidence that the industry intended to disclose CPNI 
for marketing purposes to third parties.). 

69. Id. at 1238 (citing Fox, 492 U.S. at 480; Florida Bar v. Went For It, Inc., 515 U.S. 618, 

70. Mat 1239. 

71. M. atl238n.ll. 

72. Id. at 1239. 

73. Implementation of the Telecommunications Act of 1996: Telecommunications Carriers' 
Use of Customer Proprietary Network Information and Other Customer Information, 17 F.C.C.R. 
14860 (2002) [hereinafter 2002 CPNI Order]. 


affiliates) individually, or together with the joint venture partner."^"^ However, 
in the case of disclosure to third parties and affiliates that provide no 
communications-related services, the FCC determined that an opt-in standard was 
appropriate even in light of the U.S. West case/^ The FCC reasoned: 

[C]onsumers say that their privacy interest is substantially greater when 
asked about releasing information to third parties or for uses beyond 
their expectations based on the existing relationship with their chosen 
carrier. Furthermore, once such information leaves the hands of the 
customer's carrier, the customer loses her ability to limit further 
dissemination, and section 222 and the Commission's rules concerning 
use of CPNI are not applicable to those unknown third parties that 
receive the customer's personal information. For these reasons, there is 
a greater need to ensure express consent from an approval mechanism 
for third party disclosure. Opt-in directly and materially advances this 
interest by mandating that carriers provide prior notice to customers and 
refrain from disclosing CPNI unless a customer gives her express 
consent by written, oral, or electronic means.^^ 

In the 2002 CPNI Order, the FCC established the customer consent standards 
for CPNI, which in its statutory definition includes the word "location. "^^ 
However, wireless location information is also protected by § 222(f) and the 
standard for disclosure of or access to this information is "express prior 
authorization."^^ Ellen Traupman argues that Congress' choice of words in this 
section "means clear, unmistakable customer approval is required before using 
or disclosing location information relating to wireless subscribers," thus 
requiring an opt-in standard.^^ However, Traupman wrote her article before the 
FCC released its 2002 CPNI Order. 

Yet, the FCC noted that "section 222 adopts a different standard for use of 
wireless location information than for use of other kinds of CPNI. The standard 
for use of wireless location information will be addressed in a separately 
docketed proceeding."^^ As promised, the FCC returned to this issue, however 
the FCC declined to commence a rulemaking on § 222(f), reasoning that 
"[b]ecause the statute imposes clear legal obligations and protections for 
consumers and because we do not wish to artificially constrain the still- 
developing market for location-based services, we determine that the better 

74. Mat 14875. 

75. /^. at 14883. 

76. Id. at 14885-86 (footnotes omitted). 

77. 47 U.S.C. § 222(h)(1) (2000). 

78. Id. § 222(f). 

79. Traupman, supra note 25, at 144. 

80. 2002 CPNI Order, supra note 73, at 14865 n.20 (referring to Wireless 
Telecommunications Bureau Seeks Comment on Request to Commence Rulemaking to Establish 
Fair Location Information Practices, WT Docket No. 01-72, Public Notice, DA 01-696 (rel. March 
16, 2001)). 

224 INDIANA LAW REVIEW [Vol. 38:207 

course is to vigorously enforce the law as written, without further clarification 
of the statutory provision by rule."^' 

Although the FCC has deemed § 222(f) self-explanatory, others have warned 
that telecommunication providers may decide for themselves whether the section 
could ever allow implied consent and what is included in the definition of 
location information.^^ Should a telecommunications provider ignore the consent 
requirements or interpret them in a manner that the FCC deems inappropriate, the 
telecommunications provider would be subject to an enforcement action by the 
FCC, which could include fines in the million-dollar range.^^ 

In summary, the existing protection for customer location information under 
the Telecom Act varies depending upon what part of § 222 is used (either CPNI 
or 222(f) location information) and to whom the information is being given (joint 
venture and independent contractors or third parties). If the CPNI protection of 
§ 222 is used, then the FCC applies an opt-out approach for use by the company 
and its partners in communications-related services. If the CPNI is passed to a 
third party, however, the FCC has ordered an opt-in approach. Likewise, 
disclosure of wireless location information under § 222(f) requires "express prior 
authorization," although the FCC has declined to make explicit the meaning of 
this phrase for fear of discouraging further development of location based- 

5. Whether ADS or Other GPS Implant Providers Would Be Covered by the 
Telecom Act. — Now that the reader has a basic understanding of the Telecom Act 
and its implications for consumer privacy of location information, the question 
remains whether the Telecom Act is applicable to GPS implant providers. 
Traupman argues that "non-carrier appUcation providers and content developers" 
who use location information gathered by the telecommunications providers are 
not governed by the § 222 CPNI restrictions.^^ Additionally, Reneger argues that 
the Telecom Act "offers no protection for people whose privacy is violated 
through non-cell-phone-based collections of location information" and cites the 

81. In re Request by Cellular Telecommunications and Internet Association to Commence 
Rulemaking to Establish Fair Location Information Practices, 17 F.C.C.R. 14832, 14832 (2002) 
[hereinafter Request for Location Information Practices]. 

82. "For example, some carriers have asserted that the location of the cell tower nearest a 
customer is not 'location information.'" Phillips, supra note 30, at 14 (citing Request for Location 
Information Practices, supra note 81, at 14839) (statement of Commissioner Michael J. Copps, 

83. "[T]he holder of CPNI, the customer's existing telecommunications provider (including 
its telecommunications affiliates), is subject to enforcement action by the Commission for any 
failure to abide by the notice rules regarding planned use, disclosure, or permission to access a 
customer's CPNI." 2002 CPNI Order, supra note 73, at 14878 (footnotes omitted); see, e.g., 
Cingular Wireless LLC, 17 F.C.C.R. 8529, 8533 (2002) (mandating "contributions" to the U.S. 
Treasury of up to $1.2 milUon for each missed deadline). 

84. See supra text accompanying note 81. 

85. Traupman, supra note 25, at 146. 


use of GPS in rental cars to track customer speeding as an example. ^^ 

In order to determine whether the Telecom Act could apply to GPS implant 
providers, we must look to the definitions of certain terms used in the Act. A 
recent case provides guidance for applying the Telecom Act to new technology .^^ 
In AT&T V. City of Portland, the court considered whether the Telecom Act 
applied to cable broadband internet access and stated that '"we look first to the 
plain language of the statute, construing the provision of the entire law, including 
its object and policy. '"^^ This case is particularly helpful as a statutory 
interpretation standard since the FCC has not offered a construction, in the form 
of a substantive or interpretive rulemaking, of the Telecom Act relating to GPS 
implant providers. 

Many cases emphasize judicial deference to an administrative agency's (like 
the FCC s) statutory construction, however in AT&T, the court disagreed with the 
FCC s interpretation and instead performed its own interpretation of the Telecom 
Act.^^ Since the FCCs interpretation was not arrived at through rulemaking, but 
instead was developed for the purposes of the litigation, the court did not feel 
bound to defer to the agency's litigating position.^^ Thus, this case provides 
insights into the process that a court might undertake if a GPS implant provider 
case were to arise under the Telecom Act in the current situation with an absence 
of an official FCC ruling on GPS implants. 

The contested issue in AT&T was whether the local cable franchising 
authority could "condition a transfer of a cable franchise upon the cable 
operator's [AT&T's] grant of unrestricted access to its cable broadband 
transmission facilities for Internet service providers other than the operator's 
proprietary service ["@Home"]."^^ This issue turned on two determinations: 1) 
whether @Home was a "cable service" as defined in the Communications Act 
(the act which the Telecom Act supplements) and 2) whether @Home, as 
operated by AT&T, was merely an "information service" or also a 
telecommunications service.^^ 

When examining the cable service issue, the court looked both at the 
definition in the statute and the practicality of treating @Home as a cable service. 
The court reasoned that the @Home internet service provider was not a cable 

86. Renenger, supra note 27, at 562. 

87. AT&TCorp.v. City ofPortland,216F.3d 871 (9th Cir. 2000). See also BrandXlntQmet 
Servs. V. FCC, 345 F.3d 1120, 1131 (9th Cir. 2003) (upholding AT&T decision even in light of 
contrary ruling by the FCC); Inquiry Concerning High-Speed Access to the Internet Over Cable and 
Other Facilities, 17 F.C.C.R. 4798, 4802 (2002) (finding "cable modem service, as it is currently 
offered, is properly classified as an interstate information service, not as a cable service, and there 
is no separate offering of telecommunications service"). 

88. AT&T Corp., 216 F.3d at 876 (quoting United States v. Mohrbacher, 182 F.3d 1041, 
1048 (9th Cir. 1999)). 

89. /J. at 876. 

90. Id. 

91. /J. at 873. 

92. /J. at 876-77. 

226 INDIANA LAW REVIEW [Vol. 38:207 

service under the statutory definition because "Internet access is not one-way and 
general, but interactive and individual beyond the 'subscriber interaction' 
contemplated by the statute. "^^ Additionally, the court reasoned that "applying 
the carefully tailored scheme of cable television regulation to cable broadband 
Internet access would lead to absurd results, inconsistent with the statutory 
structure," for example requiring @Home to carry the signals of local 
commercial and non-commercial educational television stations.^"^ 

For the second issue, the FCC argued that a cable broadband internet service 
provider (ISP) was merely an information service, defined as "the offering of a 
capability for generating, acquiring, storing, transforming, processing, retrieving, 
utilizing, or making available information via telecommunications."^^ The FCC 

ISPs are themselves users of telecommunications when they lease lines 
to transport data on their own networks and beyond on the Internet 
backbone. However, in relation to their subscribers, who are the 
"public" in terms of the statutory definition of telecommunications 
service, they provide "information services," and therefore are not 
subject to regulation as telecommunications carriers. ^^ 

However, the court found that the telephone service linking the user and the 
ISP was a telecommunications service as defined under the Act because it 
"controlled] all of the transmission facilities between its subscribers and the 
Intemet."^^ So this particular ISP had both elements of an information service 
and a telecommunications service by virtue of its ownership by AT&T. 
Therefore, the court concluded that AT&T did not need to obtain a franchise to 
offer cable broadband through its ISP because the service was a 
telecommunications service and not a cable service.^^ 

There are three possible scenarios under which GPS implant providers could 
be covered by the Telecom Act. A GPS implant provider could come within the 
scope of the Telecom Act if it was defined as a telecommunications carrier, a 
commercial mobile service, or a joint venture partner. Yet, as will be shown 
below, even if these scenarios existed, other considerations would make it more 
likely that the FCC would either fail to enforce the privacy rules or a reviewing 
court would not interpret the Telecom Act as pertaining to GPS implant 

a. ADS as a telecommunications carrier. — First, ADS (as a prototypical 
GPS implant provider) could be considered a telecommunications carrier for 
purposes of the CPNI privacy protection under 47 U.S.C. § 222(c). Section 153 
of the Telecom Act defines "telecommunications" as "the transmission, between 

93. /J. at 876. 

94. /J. at 877. 

95. Id. (quoting 47 U.S.C. § 153(20) (1996)). 

96. Id. 

97. /J. at 878. 

98. /J. at 878-79. 


or among points specified by the user, of information of the user's choosing, 
without change in the form or content of the information as sent and received. "^^ 
A telecommunications carrier is simply a provider of telecommunication services 
and those services are defined as "the offering of telecommunications for a fee 
directly to the public, or to such classes of users as to be effectively available 
directly to the public, regardless of the facilities used."^^^ 

Under this broad definition of "telecommunications," GPS data might qualify 
as "information of the user's choosing," unchanged in form or content. The GPS 
data is transmitted from the implant to the provider's data warehouse via the 
wireless network, which would qualify as "between or among points specified 
by the user." Once the telecommunications definition is satisfied, GPS implant 
providers could satisfy the definition of "telecommunications carrier" — one who 
provides telecommunications services for a fee to the public. 

However, regulating GPS implant providers was not the purpose that 
Congress had in mind when it enacted these statutes in 1996.^^^ Additionally, 
when compared to the ISP in the AT&Tcslsq, ADS would not have control over 
the transmission facilities between its implant hosts and the GPS satellite or 
computer database storing the location information. The AT&T court's 
determination of the ISP as a telecommunications service is distinguishable from 
the GPS implant scenario because ADS is not owned or operated by the 
telephone company that is providing the transmission facilities. JFurthermore, in 
AT&T, the FCC argued that the ISP was not a telecommunications service, and 
if the FCC were asked to determine the applicability of the Telecom Act to GPS 
implant providers, it would likely refrain from extending the Telecom Act to GPS 
technology which is even more distant from a traditional telephone company. ^^^ 
Finally, even if GPS implant providers were considered telecommunications 
providers and thus subject to the privacy restraints of § 222(c), this protection for 
CPNI does not carry the more protective "express prior authorization" standard 
that is applied to wireless location information. ^^^ 

b. ADS as a commercial mobile service. — Second, GPS implant providers 
could be considered "commercial mobile services" and thus subject to the 
location information privacy protection under 47 U.S.C. § 222(f). "Commercial 
mobile service," as used in § 222(f), is defined as, "any mobile service . . . that 
is provided for profit and makes interconnected service available (A) to the 
public or (B) to such classes of eligible users as to be effectively available to a 
substantial portion of the public, as specified by regulation by the 

99. 47 U.S.C. § 153(43) (2000). 

100. Id. § 153(44), (46). 

101 . See supra text accompanying notes 5 1-52. Although this point is not decisive by itself, 
a court would consider Congress' intent in the passing of the Telecom Act when determining 
whether to extend protection to a new technology. 

102. The argument would have more force if a GPS implant provider first asked the FCC for 
an interpretation of the applicability of the Telecom Act to its service, rather than waiting until the 
point when litigation was inevitable. 

103. SeesupraPanlll.BA. 

228 INDIANA LAW REVIEW [Vol. 38:207 

Commission." ^^"^ "Interconnected service" is defined as "service that is 
interconnected with the pubUc switched network (as such terms are defined by 
regulation by the Commission) or service for which a request for interconnection 
is pending." '^^ Furthermore, the term "mobile service" is defined as: 

[A] radio communication service carried on between mobile stations or 
receivers and land stations, and by mobile stations communicating 
among themselves, and includes (A) both one-way and two-way radio 
communication services, (B) a mobile service which provides a 
regularly interacting group of base, mobile, portable, and associated 
control and relay stations (whether licensed on an individual, 
cooperative, or multiple basis) for private one-way or two-way land 
mobile radio communications by eligible users over designated areas of 
operation . . . .^°^ 

Concentrating on the first part of this definition, in order for GPS implant 
providers to be considered commercial mobile services, they must provide a radio 
communication service, that could be one-way only, and that is carried on 
between mobile stations and land stations. Although ADS has not released the 
mechanics of how its subdermal GPS personal location device would transmit the 
host's coordinates to the company's monitoring station, it is safe to assume that 
it would behave in a similar manner to ADS's existing Digital Angel product. 
The Digital Angel product's "[a]lert transmissions are contingent on operation 
in areas providing network service and strong CDPC (Cellular Digital Packet 
Data) wireless network coverage. In areas with weak or no coverage, alerts 
cannot be sent from the wearer's monitor. Digital Angel's services require the 
network service provided by AT&T Wireless." ^^^ So, the location information 
would be transmitted over the wireless network (cellular phones transmit using 
radio) between the mobile human host and the company's monitoring station. 
Plus, the fact that the GPS implant may not receive information via the wireless 
network (since it relies on satellites to determine its GPS coordinates) does not 
matter since one-way communication is permitted. 

Yet, application of the label "commercial mobile service" to GPS implant 
providers leads to the same limitation as the telecommunications provider — the 
fact that transmission facilities, in the form of cell towers and the associated 
technology, are operated by the cell phone companies themselves — in this case 
AT&T. Defining ADS as a "commercial mobile service" ignores the common 
sense meaning of the term in favor of a blind reading of the statutory definition. 
Furthermore, even if ADS was considered a commercial mobile service and 
therefore subject to the privacy limitations of § 222(f), the statute only protects 
the call location information (as monitored by AT&T — likely the nearest cell 

104. 47 U.S.C.§ 332(d)(1) (2000). 

105. M § 332(d)(2). 

106. Id. § 153(27). For a definition of personal communication service, see 47 C.F.R. § 24.5 

107. Digital Angel Corp., Digital Angel/Consumer, supra note 12. 


tower location), but not necessarily the content of the message being sent from 
the implant to the data warehouse, which includes the exact GPS coordinates. 

c. ADS as a joint venture partner. — Third, ADS could be considered a joint 
venture partner with its cellular network provider — AT&T Wireless. ^^^ The FCC 
gave examples of joint venture partners that provide "information services 
typically provided by telecommunications carriers, such as Internet access or 
voice mail services. "^^^ If ADS used the same wireless internet technology in its 
GPS implants, then its use of customer location information might be constrained 
by the FCC's guidelines. *^^ 

However the relationship between the joint venture (ADS) and the 
telecommunications provider (AT&T) is not of the same type described in the 
2002 CPNI Order. ADS would not be using CPNI from the telecommunications 
provider to market its GPS implants. Instead, ADS would be using its own 
location information generated from the GPS implants and then in turn sharing 
or selling this location information to other companies that might be 
communications or safety related, or could be completely unrelated in terms of 
products or services. This sort of relationship was not anticipated by the FCC, 
meaning that the opt-out requirement and joint venture safeguards are not 
applicable to ADS or AT&T in that capacity. 

6. Conclusion: The Telecom Act Would Not Apply to GPS Implant 
Providers. — As discussed above, the Telecom Act is unlikely to provide privacy 
constraints for GPS implant providers since the providers do not meet the 
definitions or the purposes of the Act. Although public opinion may cry out for 
some sort of privacy protection of location information when GPS implants 
arrive on the market, the FCC would be unlikely to extend the protection of the 
Telecom Act to the new technology and a reviewing court will be unable to find 
such protection in the Act, because the court's task is not to consider what policy 

108. See id. (directing the web page visitor to click on "Wireless Internet" on the AT&T 
Wireless web site to determine whether his or her area was covered by Cellular Digital Packet Data 
wireless network coverage required for Digital Angel to work). 

109. 2002 CPNI Order, supra note 73, at 14881. 

110. SeesupraVanlll.BA. For guidelines, see 2002 CPNI Order, 5M/?ra note 73, at 14881-82: 
We require that carriers that allow access to or disclose CPNI to independent contractors 

or joint venture partners under an opt-out regime assure that certain safeguards are in 
place to protect consumers' CPNI from further dissemination or uses beyond those 
consented to by the consumer. In particular, we require carriers, at a minimum, to enter 
into confidentiality agreements with independent contractors or joint venture partners 
that: (1) allow the independent contractor or joint venture partner to use the CPNI only 
for the purpose of marketing the communications-related services for which that CPNI 
has been provided; (2) disallow the independent contractor or joint venture partner from 
using, allowing access to, or disclosing the CPNI to any other party, unless required to 
make such disclosure under force of law; (3) require that the independent contractor or 
joint venture partner have appropriate protections in place to ensure the ongoing 
confidentiality of consumers' CPNI. 

230 INDIANA LAW REVIEW [Vol. 38:207 

should be.'^' Furthermore, even if GPS implant providers were considered 
telecommunication providers, "the FCC has broad authority to forbear from 
enforcing the telecommunications provisions if it determines that such action is 
unnecessary to prevent discrimination and protect consumers, and is consistent 
with the public interest."* ^^ The FCC might determine that GPS implant use 
(when the implants first reach the market) is so minor as to make any rulemaking 
or enforcement based on an extension of the Telecom Act not worthwhile. For 
the aforementioned reasons, privacy protection for consumers using GPS 
implants must be found somewhere other than the Telecom Act. 

C. Legislation Aimed at Eavesdropping and Internet Web Sites 

1. Electronic Communications Privacy Act. — In addition to the possibility 
that GPS implant providers might attempt to sell their customers' location 
information to marketers and other businesses, there remains the concern that 
third parties might try to gain this information for themselves directly. For 
example, a person might intercept the radio signal that is broadcast from the GPS 
implant on its way through the wireless network and then be able to retrieve the 
location information from the transmission. An analogous concept would be an 
eavesdropper using a high-powered microphone to overhear someone's 
conversation. This type of access to a GPS implant host's location information 
would be a clear violation of the law, although it is unlikely that a GPS implant 
provider would engage in this type of activity against its customers' wishes. 
However, GPS implant providers might still need to address this issue, e.g., by 
providing encryption of the signal broadcasting the GPS coordinates of the host 
in order to deter others from eavesdropping. 

Under the Electronic Communications Privacy Act (ECPA), interception of 
electronic communications is punishable by fines and incarceration.**^ The 
transmission of GPS coordinates by the GPS implant through the wireless 
network would likely fit into the definition of "electronic communications" set 
forth in the ECPA, because the implant would likely operate like the Digital 
Angel product, which uses radio to transfer the data from the GPS device to the 
nearest cell phone tower. ^^"^ "Electronic communication" is defined as: 

[A]ny transfer of signs, signals, writing, images, sounds, data, or 
intelligence of any nature transmitted in whole or in part by a wire. 

111. See AT&T Corp., 2l6F3d at SI 6: 

The parties, and numerous amici, forcefully urge us to consider what our national policy 
should be concerning open access to the Internet. However, that is not our task, and in 
our quicksilver technological environment it doubtless would be an idle exercise .... 
Like Heraclitus at the river, we address the Internet aware that courts are ill-suited to fix 
its flow; instead, we draw our bearings from the legal landscape, and chart a course by 
the law's words. 

1 12. Id. at 879. See also 47 U.S.C. § 160(a) (2000). 

113. 18 U.S.C. § 251 1 (2000); see generally id. §§ 2510-2520. 

1 14. See supra text accompanying note 107. 


radio, electromagnetic, photoelectronic or photooptical system that 
affects interstate or foreign commerce, but does not include — 

(A) any wire or oral communication; 

(B) any communication made through a tone-only paging device; 

(C) any communication from a tracking device (as defined in 
section 31 17 of this title); or 

(D) electronic funds transfer information stored by a financial 
institution in a communications system used for the electronic 
storage and transfer of funds. ^^^ 

There is an exception to the electronic communications definition above for 
"tracking device[s]." A "tracking device" is defined as "an electronic or 
mechanical device which permits the tracking of the movement of a person or 
object."^ ^^ On its face, this definition appears to describe the function of a GPS 
implant. However, the definition of a tracking device appears in the part of Title 
18 that discusses search and seizure limitations on law enforcement, so this 
exception may be limited to law enforcement use. In light of the tracking device 
exception, the interpretation of the ECPA is unclear, and as another commentator 
has suggested, perhaps Congress should clarify the application of the tracking 
device exception to "ensure that anyone who wrongfully obtained location 
information and abused personal privacy could not hide under the tracking device 
exception found in the ECPA."^^^ 

2. Children 's On-line Privacy Protection Act. — Although this Note has not 
concentrated on protection available for personal information that is gathered on 
the internet, one law that applies to websites' collection and disclosure of 
personal information warrants special attention because it is tailored to one of the 
targeted users of the GPS implant — children. The Children's On-line Privacy 
Protection Act requires the FTC to promulgate regulations that "require the 
operator of any website or online service directed to children that collects 
personal information from children or the operator of a website or online service 
that has actual knowledge that it is collecting personal information from a child" 
to take a number of precautions.*^^ Among other things, the operator must give 
notice of the information it collects from children at the website and what its 
disclosure policy is, "obtain verifiable parental consent for the collection, use, or 
disclosure of personal information from children," and "establish and maintain 
reasonable procedures to protect the confidentiality, security, and integrity of 
personal information collected from children."**^ The definition of "personal 
information" includes the standard information such as name, address, phone 
number, and social security number, but it also includes "any other identifier that 
the [FTC] determines permits the physical or online contacting of a specific 

115. 18 U.S.C. §2510(12). 

116. /rf.§ 3117(b). 

117. Traupman, supra note 25, at 151. 

118. 15 U.S.C. § 6502 (2000). 

119. M § 6502(b)(1). 

232 INDIANA LAW REVIEW [Vol. 38:207 

individual. "'^^ Location information in the form of GPS coordinates could be 
considered identifying information that would permit the physical contact of that 

GPS implant providers would likely slip through the requirements of the 
Children's On-line Privacy Protection Act because they are not collecting 
location information from children on the internet. Rather, they would simply 
be displaying location information obtained through a device that the child's 
parents had implanted. Additionally, if the parent asked for the child to have a 
GPS implant inserted, then the parent has given permission for the GPS implant 
provider to track that child and store this information, at least for the parent's 

Although the Children' s Online Privacy Protection Act may not apply to GPS 
implant providers, the Act is still useful to keep in mind as a model for legislation 
that might be developed to protect the location privacy of GPS implant users. 
Additionally, there could be varying levels of privacy protection for GPS implant 
users — perhaps more protection for children using the GPS implant than for 
adults. The Children's Online Privacy Protection Act is such an example of 
differential privacy protection. 

IV. Suggestions for New Legislation 

Since the Telecom Act and other legislation discussed above either does not 
apply to GPS implants or provides inadequate protection, it is clear that new 
legislation is needed to protect hosts of the implants from intrusive commercial 
use of their location information. Legislation to protect the disclosure of location 
information from GPS human implants is perhaps more vital than the legislation 
that has already been enacted in the Telecom Act for GPS in cell phones. After 
all, location information for cell phones was an afterthought brought about 
because of the increase in 911 calls originating from cell phones, whereas 
location information is the primary purpose of GPS implants. 

A. Pending Legislation 

There are several bills pending in Congress that relate to the privacy of 
personal and location information that warrant discussion. House Bill 1636 is 
termed the "Consumer Privacy Protection Act of 2003," and it proposes to 
regulate data collection organizations with a requirement that 

A data collection organization shall provide to the consumer, without 
charge, the opportunity to preclude any sale or disclosure for 
consideration of the consumer's personally identifiable information, 
provided in a particular data collection, that may be used for a purpose 
other than a transaction with the consumer, to any data collection 
organization that is not an information-sharing affiliate of the data 

120. Id. § 6501(8). 


collection organization providing such opportunity 


This bill does not focus on location information. Indeed it does not even mention 
such information in its definition of personally identifiable information. ^^^ 
Additionally, the bill proposes an opt-out requirement for data collection 
organizations' use of personal information, which, as discussed below, may not 
be an adequate protection for the more invasive location information 
disclosure. '^^ 

Although the protections for location information disclosure by cell phone 
providers are not likely to apply to GPS implant providers, ^^"^ it is worth noting 
that there is a bill entitled "Wireless Privacy Protection Act of 2003" proposing 
to further restrict the disclosure of such information. ^^^ The bill defines the 
process of what it would mean to give "express prior authorization" under 47 
U.S.C. § 222(f). The proposed bill states that 

[A] customer shall not be considered to have granted express prior 
authorization for purposes of subsection (f) unless — 

(1) the carrier has provided the customer in writing a clear, 
conspicuous, and complete disclosure of the carrier's practices 
with respect to the collection and use of location 
information, transaction information, and automatic crash 
identification information, before any such information is 
disclosed or used, and such disclosure includes — 

(A) a description of the specific types of information that is 
collected by the carrier; 

(B) how the carrier uses such information; and 

(C) what information may be shared or sold to other companies 
and third parties; 

(2) the customer has agreed in writing to the collection and use 
of such information, or has agreed in writing to such collection 
and use subject to certain limitations; and 

(3) the carrier has established and maintains reasonable 
procedures to protect the confidentiality, security, and integrity 
of the information the carrier collects and maintains in 
accordance with such customer consents. ^^^ 

This bill appeared in a previous session of Congress as well.^^^ 

The language of this bill is rigorous in its prerequisites for disclosure. Not 

121. Consumer Privacy Protection Act of 2003, H.R. 1636, 108th Cong. § 103(a) (2003). 

122. /J. §3(4). 

123. For a competing bill with principally the same aims, i.e, privacy of personally identifiable 
information, see S. 745, 108th Cong. (2003). 

124. See supra Part III.B.5 

125. Wireless Privacy Protection Act of 2003, H.R. 71, 108th Cong. (2003). 

126. Id. ^2. 

ni. See H.R. 260, 107th Cong. (2001). 

234 INDIANA LAW REVIEW [Vol. 38:207 

only does it require prior permission in writing, but it requires minimal privacy 
procedures on the part of the carrier. These specific requirements for the term 
"express prior authorization" should serve as a model for any GPS implant 
legislation because they would give the GPS implant consumer adequate 
information to make an informed decision about allowing the GPS implant 
provider to disclose his or her location information. 

B. Opt-in Versus Opt-out 

As discussed above, '^^ the implications of an opt-in versus an opt-out system 
of consent to release of private location information can have enormous effects 
on the likelihood that consumers will in fact opt for the protection. In an opt-out 
system many consumers will allow the disclosure of their location information 
because they did not bother to read the fine print in the contract for their 
technology. Although GPS implant consumers will be well aware of the location 
capabilities of the technology they are purchasing (unlike many cell phone 
purchasers) and may pay closer attention to the paperwork accompanying their 
purchase, an opt-in requirement for release of location information is 
preferable. ^^^ 

An example of legislation that uses the opt-in mechanism for privacy 
protection is the Driver's Privacy Protection Act of 1994 (Driver's Act).^^^ The 
Driver's Act imposes an opt-in requirement on state departments of motor 
vehicles before they may disclose or sell drivers' information for marketing use. 
The requirement used to be opt-out, but was changed to opt-in in 1999.^^^ 

Conceivably, a person' s location information (in mass, available twenty-four 
hours a day, seven days a week through the GPS implant) would be as private if 
not more private than the information listed on a driver's license and the 
associated driver's information such as speeding tickets. Thus, any legislation 
aimed at the privacy of consumers with GPS implants should have an opt-in 

Perhaps GPS implant legislation should prohibit release of location 
information for GPS implant hosts because the device is so permanent and safety 
driven. Customers might not even fathom how their location information could 
be used, and perhaps they should be given greater protection. After all, if 

128. See supra text accompanying notes 58-59 for definitions of the opt-in and opt-out 

129. The Digital Angel privacy policy available on its internet site offers customers "the 
opportunity to opt-out of receiving communications from us or others." Digital Angel Corp., 
Digital Angel Privacy Policy, supra note 32. This demonstrates, that if left to their own devices, 
ADS and other GPS implant providers likely would at most provide opt-out privacy protection. 

130. 18 U.S.C. §§2721-2725(2000). 

131. Pub. L. No. 106-69, §§ 350(c), (d), and (e), 113 Stat. 986 (1999); see also Reno v. 
Condon, 528 U.S. 141, 145 (2000) (upholding requirement that states obtain "a driver's affirmative 
consent to disclose the driver's personal information for use in surveys, marketing, solicitations, 
and other restricted purposes" against Commerce Clause attack). 


customers want to take advantage of location based services (the primary purpose 
for which companies would want to buy the location information), they could 
always use a cell phone that is equipped with GPS for 911 purposes and utilize 
the services that wireless providers will be developing in the coming years. 

Even if Congress deems it inappropriate to have a prohibition on the release 
of all customers' location information, there is one type of customer that 
Congress would be likely to protect with a blanket prohibition — children. There 
should be a blanket prohibition on release of a child's location information to 
third parties besides law enforcement. A child's whereabouts are not likely to 
interest a third party marketing or sales company as much as an adult's 
whereabouts, so in the interest of protection from the criminal elements of 
society, ^^^ location information from children should be prohibited from 
disclosure. This would be an even harsher measure than that taken in the 
Children's On-line Privacy Protection Act.^^^ 

C Limitations on Legislation 

Any suggestions for new legislation would be incomplete without a 
discussion of Constitutional and other limitations on such legislation. In order 
for such legislation to be effective, it would have to withstand challenges in court 
regarding Congress' authority to pass such legislation and First Amendment 
challenges to the restriction of commercial speech. 

Congress would likely have the authority to make privacy law for GPS 
implants under the Commerce Clause. ^^"^ The information contained on driver's 
licenses has been considered an article of commerce subject to federal 
regulation. ^^^ Likewise, GPS implants would presumably be used across states 
lines, although their use in commerce would not be nearly as pronounced as in 
driver's licenses, at least if the privacy advocates have their way. Congress 
might even be able to regulate location information by virtue of the fact that the 
implant providers would be using federal government data generated from the 
GPS satellites. 

One might think that Congress could simply pass a law that prohibits GPS 
implant providers from using their customer's location information to sell other 
products or from selling the location information itself to third party companies. 
However, such legislation might not be possible because of Constitutional 
constraints. As discussed above, ^^^ the FCC was prohibited from requiring an 

132. See supra text accompanying notes 37-38. 

133. See supra Fan m.C.2. 

134. U.S.CONST. art. I, §8,cl. 3. 

135. In Reno v. Condon, the court reasoned that driver' s information is an article of commerce 
because it "is used by insurers, manufacturers, direct marketers, and others engaged in interstate 
commerce to contact drivers with customized solicitations. The information is also used in the 
stream of interstate commerce by various public and private entities for matters related to interstate 
motoring." Reno, 528 U.S. at 148. 

136. See supra Part III.B.3. 

236 INDIANA LAW REVIEW [Vol. 38:207 

opt-in system for telecommunications providers' use of CPNI for services outside 
the scope of the existing service relationship.'^^ 

If U.S. West were to be applied to GPS implant customer privacy legislation, 
it might limit the protections available for implementation based on the second 
prong of Central Hudson. The court in U.S. West found that the government 
failed to prove that the regulation directly and materially advanced the state's 
interests. '^^ The court reasoned that "while protecting against disclosure of 
sensitive and potentially embarrassing personal information may be important in 
the abstract, we have no indication of how it may occur in realty with respect to 
CPNI" since the government failed to present evidence "regarding how and to 
whom carriers would disclose CPNI."'^^ 

This requirement of evidence regarding disclosure of the information sought 
to be protected could be a significant problem for privacy legislation covering 
GPS implants. GPS implants are not even on the market yet, and when they are 
available they may be slow to gain in popularity and acceptance. Under the 
standard articulated in U.S. West, legislators may have to wait until disclosure of 
GPS hosts' location information becomes a problem before they could justify 
privacy restrictions of an opt-in sort. Yet, a lack of legislation or rulemaking 
could dampen the market for GPS implants and even the federal government 
acknowledges this risk: 

We should do this [privacy rulemaking] before location technology 
investments are made, so that industry isn't forced to retool later, at far 
more expense. We should do so before consumers make up their minds 
about whether they trust location practices, rather than fighting an uphill 
battle to regain consumer confidence after it has been lost.'"^^ 

Thus, Congress is faced with a Catch-22. Its legislation may be subject to 
invalidation by the courts if it legislates before the privacy problem has been 
made manifest, but if it waits to legislate, the market for the new technology may 
be suppressed because consumers are afraid to buy the new technology without 
legislative safeguards. Yet, perhaps a reviewing court would lean in favor of 
privacy given that the information at issue in the case of GPS implants is accurate 
location information rather than the more generalized CPNI which includes 
names and addresses — information for which consumers have less of a privacy 

Any new legislation aimed at consumer privacy for GPS implants will need 
to have its purpose defined in each of the provisions of the legislation. Courts 
are unwilling to apply broad purposes of acts to individual provisions because 
"blind adherence to broad purposes can obfuscate Congress' true intent regarding 

137. U.S. West, Inc. v. FCC, 182 F.3d 1224, 1240 (10th Cir. 1999). 

138. Mat 1237. 

139. Id. 

140. Request by Cellular Telecommunications and Internet Association to Commence 
Rulemaking to Establish Fair Location Information Practices, 17 F.C.C.R. 14832, 14839 (2002) 
(Statement of Commissioner Michael J. Copps, dissenting) (emphasis in original). 


a particular provision." "^^ For example, Congress might pass a bill regulating 
GPS implants that was aimed at the health and safety of the wearer since the 
FDA declined to regulate VeriChips as medical devices/"^^ This bill could also 
include consumer privacy measures, but Congress would need to rearticulate the 
purpose of such sections to avoid confusion and possible weakening of the 
measures when courts are called upon to interpret the legislation in light of free 
speech challenges. 

It is possible that federal legislation could leave the door open for states to 
create their own legislation. However, given the borderless operation of GPS, 
perhaps federal legislation should expressly state that it fills the field and 
preempts any attempts at state legislation. 

D. Alternatives to Legislative Protection of Privacy 

An alternative to legislation to protect consumer privacy of location 
information is industry self-regulation. ^"^^ In this manner, GPS implant providers 
could regulate consumer privacy on their own by providing privacy policies for 
consumer review and abiding by those policies. However, "[s]ince the economic 
incentive to provide strong privacy protections is either weak, nonexistent, or at 
least nonuniformily distributed among all participants in the marketplace, most 
serious proposals for self-regulation among market participants rely on the threat 
of government regulation if the data collectors fail to regulate themselves 

Additionally, the GPS implant industry may be an imperfect market in which 
to apply self-regulation of privacy. There is only one company — ADS — poised 
to enter the GPS implant market. Consequently, there would be a lack of choice 
and bargaining power that is the hallmark of a functioning market approach 
(assuming customers have enough information to realize the potential abuses of 
their privacy). ^"^^ Therefore, self-regulation is not an adequate remedy to 
consumer privacy concerns surrounding location information. 


The potential applications for GPS personal location devices are limitless. 
Such devices could track a lost or kidnapped child, locate an adult with 

141. U.S. West, 182 F.3d at 1237 n.lO (finding that Congress' primary puipose in the CPNI 
provision was customer privacy, not the broader purpose of increasing competition that was 
expressed in the Telecom Act). 

142. See Press Release, Applied Digital Solutions, FDA Ruling — Subdermal VeriChip Is Not 
a Regulated Medical Device "For Security, Financial, and Personal Identification/Safety 
Applications" (Oct. 22, 2002), ar 

143. Frank Douma & Milda K. Hedblom, Wireless Communication Applications for 
Transportation: User Boon or Booby Trap?, 27 Wm. MITCHELL L. Rev. 2163, 2173 (2001). 

144. A. Michael Froomkin, The Death of Privacy?, 52 STAN. L. Rev. 1461, 1524 (2000). 

145. See Shaun B. Spencer, Reasonable Expectations and the Erosion of Privacy, 39 SAN 
DffiGO L. Rev. 843, 890-903 (2002) (discussing market failures in self-regulation of privacy). 

238 INDIANA LAW REVIEW [Vol. 38:207 

Alzheimers who has wandered off, or simply allow family members to keep track 
of each other's whereabouts. But along with these benefits come some 
unforeseen risks. These risks become apparent when looking at a similar location 
technology — Enhanced 911 cell phones. As Enhanced 911 cell phones have 
shown, location information providers have realized that the information they are 
collecting is valuable to third parties, '"^^ and, as a result, personal location 
information can end up in the hands of marketers and businesses — contrary to the 
expectations of consumers. 

Congress saw the need for statutory protection of location information 
gathered from cell phones and responded with the Telecommunications Act of 
1996 and the Wireless Communications and Public Safety Act of 1999.^^^ 
However, the current privacy requirements are not adequate because so many 
consumers will not read the fine print or understand the implications of allowing 
their location information to be sold to third party marketing firms and other 
types of companies. 

Even the inadequate protection for location information from cell phones 
would not apply to the new personal location devices proposed by ADS.^"^^ 
Currently, no laws would prevent ADS from selling location information to 
marketing firms or any other interested parties, and no laws would even require 
consumer consent before the release of this information. 

Privacy legislation is needed to protect GPS implant consumers' location 
information from disclosure to third parties. Although GPS implants are not yet 
on the market, legislators should act now if they wish to encourage the use of this 
fascinating new technology. Without privacy protections in place, consumers 
may be too afraid to use the new technology. 

The protection for cell phone users' location information can serve as a guide 
for new legislation, but the protection for GPS implants must be stronger than 
that for information gathered from a cell phone because the of the permanency 
of the implant — implant hosts would be unable to turn their GPS device off or 
leave it at home since the GPS device is surgically implanted under their skin. 
Even if the potential disclosure of sensitive location information has not crossed 
the mind of the average consumer, legislators should act quickly to protect 
consumers from this danger by creating an opt-in mechanism for the release of 
location information from GPS implants. Not only will the opt-in mechanism 
create a default rule of protection, but it will also require education of the 
consumer by the GPS implant provider about the potential uses for location 
information should the consumer be willing to allow disclosure of location 

146. See supra note 25 and accompanying text. 

147. Telecommunications Act of 1996, Pub. L. No. 104-104, 110 Stat. 56 (codified in 
scattered sections of 47 U.S.C. §§151-710 (2000)); Wireless Communications and Public Safety 
Act of 1999, Pub. L. No. 106-81, § 5, 1 13 Stat. 1288-1289 (1999). See supra Part III.B. 

148. See supra?2inmB.6. 

The Day the Music Died: The RIAA 
Sues Its Consumers 

Andrew C. Humes* 


In early September 2003, the Recording Industry Association of America 
(RIAA)^ brought suit against 261 people accusing them of copyright 
infringement^ for allegedly downloading and uploading copyrighted music from 
the Internet using peer-to-peer systems such as Kazaa, iMesh, Grokster, Gnutella 
and Blubster.^ The decision by the RIAA to pursue the users of services like 
Kazaa and others was somewhat unexpected. Many commentators had predicted 
that the RIAA would never bother going after individual users due to the 
potential public relations nightmare it could create, along with the logistical 
difficulties posed by finding and suing individual users ."^ The fact that the RIAA 
has actually gone after individual computer users illustrates the lack of 
confidence the recording industry has in future legal battles against file-sharing 
entities such as Kazaa and the desperate position in which it finds itself. The 
avenues that the RIAA and the music industry have available to pursue against 
companies like Kazaa are not completely blocked, and undoubtedly there will be 
future litigation. In the meantime, the record conglomerates are tired of losing 
money due to illegal downloads and have chosen to go after those they feel are 
stealing from them — the users themselves.^ Since the first round of lawsuits filed 
in September 2003, the RIAA has filed over 2000 additional lawsuits in at least 
five more rounds of litigation.^ This Note looks at the complaints filed against 

* J.D. Candidate, 2005, Indiana University School of Law — Indianapolis; B.A., 2002, 
Indiana University, Bloomington, Indiana. 

1 . The RIAA represents many of the major record companies including: UMG Recordings 
Inc.; Sony Music Entertainment Inc.; Virgin Records America Inc.; Elektra Entertainment Group 
Inc.; Capitol Records Inc.; Arista Records Inc.; and BMG Music. The RIAA litigates on behalf of 
the companies regarding various matters, most notably as of late are issues surrounding copyright 
infringement using the Internet. 

2. See (last visited Nov. 24, 
2004) (providing a sample complaint filed against the defendants seeking damages under 17 U.S.C. 
§ 504(c) and fees and costs pursuant to 17 U.S.C. § 505). 

3. See Jon Healey et al.. Song Swappers Face the Music, L.A. TIMES, Sept. 9, 2003, at Al . 

4. Peter Jan Honigsberg, The Evolution and Revolution of Napster, 36 U.S.F. L. Rev. 473, 
490 (2002); Aric Jacover, Note, / Want My MPS! Creating a Legal and Practical Scheme to 
Combat Copyright Infringement on Peer-to-Peer Internet Applications, 90 GEO. L.J. 2207, 2246 
(2002); Jennifer Norman, Note, Staying Alive: Can the Recording Industry Survive Peer-to-Peer?, 
26 COLUM. J. L. & Arts 371, 392 (2003). 

5. See Greg Kot, Music Industry Chooses to Bite Hand that Feeds It, Chi. Trib., June 29, 
2003, at 10 (describing an advertisement placed in the New York Times by the RIAA that compares 
suing music customers with prosecuting shoplifters). 

6. See Press Release, RIAA, Music Industry Commences New Wave of Legal Action 
Against Illegal File Sharers (Dec. 3, 2003) (forty-one additional suits filed), available at 

240 INDIANA LAW REVIEW [Vol. 38:239 

the defendants accused of copyright infringement and will focus on defense 
strategies and theories that could possibly be used against them. Additionally, 
this Note points out potential problems surrounding the complaints, such as when 
the downloading or uploading was done by a minor. 

Part I of the Note gives an overview of music on the Internet. It describes 
different models and systems that have been used, or are currently being used, by 
people to download MP3^ files from the Internet. It also briefly explains the 
technology behind these systems in order to make distinctions between them. In 
Part n the sparse case history dealing with music file-sharing is reviewed. This 
is done to further understand the position the RIAA now finds itself in and also 
to review the reasoning used by courts when making determinations regarding the 
activity of the users themselves. Part III briefly illustrates the problems that the 
RIAA or a court could find with using past cases dealing with music file-sharing 
as precedent in the current lawsuits. Part FV of the Note explores the fair use 
doctrine and a defense based on the Audio Home Recording Act (AHRA)^ that 
a hypothetical defendant could employ. Part V focuses on problems surrounding 
the lawsuits such as when the downloading has been done by a minor and the 
possible liability their parents could face, if any. Part VI explores solutions that 
could satisfy concerns of both the RIAA and individual users. 

I. Overview of Internet Music File-Sharing 

Although the practice of sharing song and other files on the Internet is 
relatively new, the technology used has morphed and branched off considerably 
since its inception. The speed at which technology advances is obvious and 
perhaps in no other area can this be seen as plainly as it can when looking at the 
ways computer users have avoided the outstretched arm of copyright law on the 
Internet.; Press Release, RIAA, New Wave of Record 
Industry Lawsuits Brought Against 532 Illegal File Sharers (Jan. 21, 2004) [hereinafter New Wave 
of Record Industry Lawsuits] (532 additional suits filed), available at 
newsletter/0 12 104. asp; Press Release, RIAA, 53 IMore File Sharers Targeted in Latest RIAA Legal 
Efforts (Feb. 17, 2004) (531 additional suits filed), available at 
newsletter/02 1704. asp; Press Release, RIAA, RIAA Brings New Round of Cases Against Illegal 
File Sharers (Mar. 23, 2004) (532 additional suits filed, including 89 against users of university 
systems), available at newsletter/032304.asp; Press Release, RIAA, 
New Wave of Illegal File Sharing Lawsuits Brought By RIAA (Apr. 28, 2004) (477 additional suits 
filed, including sixty-nine against users of university systems), available at http://www.riaa. 

7. MP3 technology "makes digitized songs into smaller, easily transferable files, notably free 
of any restrictive copy-management technology." Matthew Fagin et al.. Beyond Napster: Using 
Antitrust Law to Advance and Enhance Online Music Distribution, 8 B.U. J. SCI. & TECH. L. 45 1, 
458 (2002). Soon after MP3 technology became available, software capable of converting CDs into 
MP3 format also became available. 

8. Audio Home Recording Act of 1992, 17 U.S.C. §§ 1001-1010 (2000). 


A. Napster 

The creation of Napster was undoubtedly revolutionary. This statement is 
not a novel or unique observation, or one that has not been thoroughly researched 
and written upon. However, to understand the litigation involving the RIAA and 
individual song downloaders, it is necessary to have a basic understanding of the 
history of Napster and what other programs have done since. 

Napster was created as a service to allow computer users access to song-files 
from the Internet. It did so by utilizing peer-to-peer (P2P) technology. P2P 
technology generally allows users connected to the Internet to communicate with 
other users whose computers are connected.^ "Peer-to-peer . . . pools the 
resources of those connected to the Internet and makes those resources available 
to whomever is connected to that particular peer-to-peer network."^^ To access 
Napster a user merely had to download Napster's MusicShare software. Once 
downloaded and registered with an account name and password, a user could 
access the centralized database that contained songs and other files from the 
computers of other users who used Napster. ^^ To download a song, a user 
searched Napster for the song and was sent another user's IP address that had the 
requested song and the computers connected allowing the download. ^^ 
"Therefore, although no content [was] stored on, or passed through the central 
server, the centralized search system arguably [facilitated] file-sharing."^^ 

B. Post-Napster Technology 

When Napster was shut down by the courts, many other companies created 
software programs that were like Napster, only with key differences. These 
companies were primarily attempting to build and design around problems that 
plagued Napster in court. The most basic change that many of the companies 
like Kazaa implemented was doing away with the centralized server. "Unlike 
Napster, the decentralized model of peer-to-peer networking does not use a 
central server to establish peer-to-peer connections or facilitate searches. 
Instead, decentralized peer-to-peer networking creates a community of users by 
pooling the IP addresses of other users connected to the Intemet."^"^ Essentially, 
this creates a branching structure that allows the user to have access to the 
computers of numerous other users and thereby minimizes the role of facilitators 
such as Kazaa. Additionally, upon registering for an account name, Kazaa users 
were required to give additional information such as their names and addresses. 

9. Jacover, ^Mpra note4, at 2213. 

10. Id. 

1 1 . Llewellyn Joseph Gibbons, Napster: The Case for the Need for a Missing Direct 
Infringer, 9 ViLL. SPORTS & Ent. L.J. 57, 64 (2002). 

12. Norman, supra note 4, at 373, 

13. Id 

14. Jacover, supra note 4, at 2216. 

242 INDIANA LAW REVIEW [Vol. 38:239 

C. Current Technology 

The author is reluctant to give this subheading the title "Current Technology" 
because as Professor Honigsberg said in his essay about Napster, "[j]ust like the 
technology upon which this essay is based, the essay itself will be out of date the 
moment the typing stops."^^ However, there are some new programs and services 
available for users on the Internet that differ somewhat from those in the past. 
It has been hard to miss the advertisements for the "new" Napster service as they 
have appeared in magazines, on the Internet, and on television. The "new" 
Napster will be similar to many other existing services, in that it will be charging 
users to download songs from its database. There are different options; a user 
could pay a small fee for a single song (usually between $l-$2 for most services) 
and some services allow paying a monthly fee for unlimited downloads. There 
are many conflicting statements regarding the popularity of these services and it 
is too early to tell if they can replace so-called "free" sites like Kazaa. 
Additionally, a service called WinMX is available which provides users a chance 
to download songs on a peer-to-peer network anonymously, in as much as no 
personal information is given. ^^ The sites offering software programs are taking 
deliberate steps to remove themselves from their users as much as possible so as 
to reduce any supervisory role they might have. 

Finally, the music industry has made many attempts to counter copyright 
infringement through technological means. The industry has toyed with the CDs 
themselves, by putting "watermarks" and "fingerprinting" on them. 
Watermarking involves encoding signals onto the CD that are capable of 
surviving conversion from analog to digital music. ^^ When a song is listened to 
on the Internet the signal can be read by the computer and can deliver to licensing 
bureaus the song title, artist name and even the serial number of the music. ^^ The 
fingerprint is virtually identical except that it also protects music that was already 
online. ^^ As one author has noted, this capability raises serious privacy concerns 
amongst consumers.^^ Additionally, some members of the music industry have 
teamed up with Microsoft to create CDs with Digital Rights Management (DRM) 
technology. The DRM technology will not allow a CD to be played on a 
computer unless Microsoft Windows Media Player is used, thereby limiting a 

15. Honigsberg, supra note 4, at 473 

16. See Frontnode Technologies, WinMX: The Best Way to Share Your Media, at (last visited Jan. 9, 2005). 

17. Amy K. Jensen, Comment, Copy Protection of CDs: The Recording Industry's Latest 
Attempt at Preventing the Unauthorized Digital Distribution of Music, 21 J. MARSHALL J. 
Computer & Info. L. 241, 249 (2003). 

18. Id. (citing Konrad Roeder, How Watermarks Protect Copyrights, available at (Nov. 4, 1999)). 

19. Id. (citing Bruce R. Poquette, Current Public Law and Policy Issues: Information Wants 
to be Free, 22 Hamune J. PUB. L. & Pol'y 175, 176 (2000)). 

20. M. at 261-62. 

2005] THE DAY THE MUSIC DffiD 243 

user's ability to use song-files on a server or MPS player.^' 

There is little doubt that by the time this Note reaches publication, many of 
the '^current technologies" will not be so current, but this is the nature of the 

n. The Courts and File-Sharing 

Although there is very little in the way of precedent regarding file-sharing, 
the few cases that have been decided have had substantial repercussions on the 
music and computer industries. No rulings have been more significant with 
respect to file-sharing than the ones involving Napster. 

A. Napster — District Court 

The music industry sued Napster in the Northern District of California 
seeking a preliminary injunction to stop Napster and Napster users from 
downloading and uploading copyright protected song-files. The court granted the 
industry's injunction request and ordered Napster to "develop[] a means" to 
comply with the injunction.^^ Although there were many issues of first 
impression decided by the court, this Note focuses on those surrounding the 
individual users themselves. 

The court granted the preliminary injunction because it held that the 
plaintiffs showed a reasonable likelihood of success on contributory and 
vicarious copyright infringement claims.^^ To establish a contributory 
infringement claim in the context of copyright law, a plaintiff must show: direct 
infringement by the users; that the defendant had knowledge of the infringement; 
and either induced, caused or materially contributed to it.^"^ To establish a 
vicarious liability claim the plaintiff must show that the defendant had the right 
and ability to supervise the user's infringing conduct and had a direct financial 
interest in it.^^ The court concluded that the plaintiffs had established a prima 
facie case of direct infringement, as they relied on data that suggested up to 
eighty-seven percent of music that was on Napster was copyrighted.^^ Napster 
argued that the users' conduct was protected by the affirmative defenses of fair 
use and a substantial non-infringing use. Napster argued specifically that user 
practices such as sampling, space-shifting and new artist distribution were each 
protected by fair use.^' There are four factors taken into consideration when 
deciding whether a user' s infringing activity warrants a fair use exception. They 

21. Id. at 250 (citing John Borland, New CDs Designed to End "Ripping, " available at (last visited May 7, 2004)). 

22. A & M Records, Inc. v. Napster, Inc., 1 14 F. Supp. 2d 8%, 927 (N.D. Cal. 2000). 

23. Mat 920, 922. 

24. /^. at 911, 918. 

25. Mat 920. 

26. Mat 911. 

27. Mat 913. 

244 INDIANA LAW REVIEW [Vol. 38:239 

1 . the purpose and the character of the use, including whether such use 
is of a commercial nature or is for non-profit educational purposes; 

2. the nature of the copyrighted work; 

3. the amount and substantiality of the portion used in relation to 
copyrighted work as a whole; and 

4. the effect of the use upon the potential market for or value of the 
copyrighted work.^^ 

Regarding the first factor the court said, "[a]scertaining whether the new work 
transforms the copyrighted material satisfies the main goal of the first 
factor . . . [but] the court must also determine whether the use is commercial. "^^ 
The court was persuaded by two factors when reaching its decision that users' 
use of Napster was commercial. First, the court ruled that sending a file to an 
anonymous user with the aid of Napster was not engaging in personal use.^^ 
Second, the conclusion that some users did not pay for songs they normally 
would have bought showed the court that the users benefited economically.^^ 
The court found that music was creative in nature and that when users 
downloaded songs they copied all of the copyrighted work, therefore the second 
and third factors of the fair use defense were not met.^^ Finally, the court relied 
on plaintiffs experts to reach the conclusion that the effect on the market was 
substantial because it reduced CD sales amongst college students and it raised a 
barrier to the plaintiffs entry into the market for the digital downloading of 
music. ^^ 

The court was not persuaded by Napster's fair use defenses of sampling or 
space-shifting made on behalf of all individual users. The court held that users 
did not merely sample the music because they could keep a complete copy of it 
after sampling.^"^ Napster's space-shifting argument was based in part on the 
decision in Sony Corp. of America v. Universal City Studios, Inc., which held 
that people who taped TV programs on their VCR tapes were merely time- 
shifting.^^ The court pointed to the plaintiff's evidence surrounding a study of 
college students that found they did not previously own much of the music they 
downloaded and hence, were using Napster for illegitimate purposes. ^^ 

One important point to note regarding this Napster case and its subsequent 
appeal is that there was no actual individual user named as a defendant. Napster 
merely argued on behalf of all possible defendants when asserting fair use 

28. 17 U.S.C. § 107 (2000). 

29. Napster, 1 14 F. Supp. 2d at 912. 

30. Id. 

31. Id. 

32. Mat 913. 

33. Mat 910-11. 

34. Mat 913-14. 

35. See generally 464 U.S. 417, 443 (1984). 

36. Napster, 1 14 F. Supp. 2d at 915-17. 

2005] THE DAY THE MUSIC DffiD 245 

B. Napster — Court of Appeals 

The court of appeals agreed with the district court that the plaintiffs would 
likely succeed in showing that Napster users did not have a valid fair use defense, 
and that Napster was a contributory^^ and vicarious infringer.^^ The court held 
that neither the Recording Industry Association of America v. Diamond 
Multimedia Systems, Inc?^ decision nor the Sony Corp. of America decision"^^ 
applied to Napster's space-shifting fair use defense because when a user posted 
a song to the centralized system in order to access it in a different location the 
user was simultaneously making it available to many other users. "^^ 

Additionally, the court held that Napster users did not have a valid defense 
under the Audio Home Recording Act (AHRA)."^^ The AHRA was created 
primarily to protect consumers. The court in Diamond looked into the legislative 
history of the Act and said, "[t]he purpose of [the Act] is to ensure the right of 
consumers to make analog or digital audio recordings of copyrighted music for 
\ht\r private, non-commercial use.'"'^^ A specific section of the Act spells out the 
protection provided: 

No action may be brought under this title alleging infringement of 
copyright based on the manufacture, importation, or distribution of a 
digital audio recording device, a digital audio recording medium ... or 
based on the noncommercial use by a consumer of such a device or 
medium for making digital musical recordings or analog music 

Napster argued that the MP3 music-file downloading its users participated in was 
protected under the AHRA. The court held that computers were not digital audio 
recording devices under the AHRA because their primary purpose was not to 
make digital audio copied recordings and because computers do not make digital 
music recordings. "^^ However, the court leaned exclusively on the analysis done 
by the court in Diamond in reaching these conclusions. 

C. Aimster and Metro 
1. Aimster. — Aimster (currently Madster) was a software program that 

37. A & M Records, Inc. v. Napster, Inc., 239 F.3d 1004, 1024 (9th Cir. 2001). 

38. Id. at 1022. 

39. 180 F.3d 1072, 1079 (9th Cir. 1999) (holding that a portable MP3 player merely space- 
shifts copies of the music-file from a user's hard drive). 

40. ^owyCorp.o/Am., 464 U.S. at 443. 

41. Napster, 239 F.3d at 1019. 

42. Id. at 1024; 17 U.S.C. § 1001-1010 (2000). 

43. Diamond, 180 F.3d at 1079 (quoting S. Rep. No. 102-294, at 86 (1992) (emphasis added 
in case)). 

44. 17 U.S.C. § 1008 (2000). 

45. Napster, 239 F.3d at 1024. 

246 INDIANA LAW REVIEW [Vol. 38:239 

allowed users to download files from each other by piggybacking onto AOL's 
instant messaging service."*^ It was more of a peer-to-peer system than Napster 
but, "certain aspects of the system, especially the existence of Club Aimster's 
'Top 40' list, indicate that Aimster did have some sort of centralized structure.'"^^ 
The Northern District Court of Illinois ruled that Aimster was subject to a 
preliminary injunction based on contributory and vicarious liability ."^^ The court 
held that because users were potentially sharing files with many others it was not 
a personal use and the AHRA did not apply."^^ 

2. Metro. — InMetro-Goldwyn-Mayer, Inc., v. Grokster, Lr J. , the defendants 
Streamcast and Grokster filed summary judgment motions in regards to their 
alleged contributory and vicarious infringement for users who file-shared using 
their technology, "Morpheus" and "Grokster (FastTrack)" respectively, to 
download and upload music-files.^^ The court held that there was direct 
infringement by the users, but there was no contributory or vicarious liability 
attributable to the defendants, and granted summary judgment in their favor.^^ 
The peer-to-peer software systems used by the defendants were not as centralized 
as the Napster software was. Therefore, the court held that neither defendant had 
actual or specific knowledge of specific infringement at a time when they were 
materially contributing to it, and they were not in a position to supervise the 
infringing conduct because the technology used was more peer-to-peer rather 
than centralized.^^ 

D. Verizon 

In a move one author called "actions that are a mere step away from suing 
direct infringers,"^^ the RIAA sought to obtain the identity of an anonymous 
Internet Service Provider (ISP) user alleged to have offered hundreds of 
copyrighted songs over the Internet, without first filing a complaint. The district 
court (twice) held that Verizon needed to comply with the subpoena, forcing 
them to give the RIAA the user's identifying information.^"^ During the 
completion of this Note, the Court of Appeals for the D.C. Circuit overturned the 
district court's order to deny Verizon's motion to quash and the United States 
Supreme Court has since denied certiorari. ^^ The RIAA can still find the identity 

46. Norman, supra note 4, at 384, 

47. Id. at 387. 

48. In re Aimster Copyright Litig., 252 F. Supp. 2d 634, 666 (N.D. 111. 2002). 

49. /d at 649. 

50. 259 F. Supp. 2d 1029 (CD. Cal. 2003). 

51. Id. at 1046. 

52. Id. at 1038, 1044-46. 

53. Norman, supra note 4, at 392. 

54. In re Verizon Internet Servs., Inc., 240 F. Supp. 2d 24, 45 (D.D.C. 2003) (granting the 
RIAA's motion to enforce the subpoena on the ISP); In re Verizon Internet Servs., Inc., 257 F. 
Supp. 2d 244, 247 (D.D.C. 2003) (denying Verizon's motion to quash the RIAA's subpoena). 

55. Recording Indus. Ass'n of Am., Inc. v. Verizon Internet Servs., Inc., 35 1 F.3d 1229 (D.C. 


of suspected infringers, but the big difference now is that they must file "John 
Doe" lawsuits in court first, and then get a subpoena through a judge to get the 
individual's name and address.^^ The accused infringers should have the right 
to contest any charges brought against them before their identities are revealed. 
Although the recent ruling should not affect subpoenas previously served, it is 
likely that any individual that has been served and sued already would direct the 
court's attention to the recent ruling. During the completion of this Note, the 
RIAA filed four rounds of lawsuits against users after the court of appeals 
decision.^^ The RIAA filed "John Doe" suits,^^ partly in a perceived effort to 
alert users that the recent ruling would not shield them from liability. 

E. The RIAA *s Increasingly Desperate Position 

As noted earlier, many commentators did not expect the RIAA to pursue 
litigation against individual file-sharers. It is logical to assume that suing the 
very people you depend on for survival would be a last resort. In fact, even the 
RIAA itself had stated that they would not pursue litigation against direct 
infringers.^^ However, it is apparent that the recent cases have forced the RIAA' s 
hand. The fact that the court in Metro held that the defendant peer-to-peer 
operators were not liable for contributory or vicarious infringement was a big 
blow to the RIAA. The ruling by the D.C. Court of Appeals in Verizon was not 
as decisive a blow, but will require much more time and resources to be spent 
when pursuing litigation against accused infringers. The bottom line is that the 
RIAA, and the music industry as a whole, is slowly losing the grip it once had on 
its copyright protected music. 

in. Problems with Using Past Cases When Dealing with Suits 

Against Direct Infringers 

There are some potential concerns with using past case holdings dealing with 
file-sharing in regards to lawsuits filed against individuals. Most notably, file- 
sharing cases have only made it to the court of appeals level and therefore, they 
are not binding upon other jurisdictions. Additionally, in the past cases, there has 
not been an individual defendant in place to present an argument against his or 
her direct infringement. 

A. The Cases on Point Are Not Binding 
The Napster cases have been analyzed and used by subsequent courts when 

Cir. 2003), cert, denied, 125 S. Ct. 309 (2004). 

56. See John Borland, Court: RIAA Lawsuit Strategy Illegal, CNET (Dec. 19, 
2003), available at 129687.html?tag=nl. 

57. See supra note 6 and accompanying text. 

58. New Wave of Record Industry Lawsuits, supra note 6. 

59. Jacover, supra note 4, at 2246 (citing Lee Gomes, Music Free Tunes for Everyone!, WALL 
ST.J.,Junel5, 1999,atBl). 

248 INDIANA LAW REVIEW [Vol. 38:239 

dealing with the issue of file-sharing, but courts (except the Ninth Circuit) are not 
bound by the decisions made or reasoning used. It would be logical to assume 
that if any court were to follow the lead of the Napster cases, it would be one in 
the jurisdiction of the same (Ninth) circuit, yet the court in Metro found that the 
peer-to-peer systems used were not liable or essentially responsible for catching 
the people who used their system.^^ Even the court in Aimster, which essentially 
followed the ruling in Napster, disagreed with some significant conclusions the 
court in Napster reached.^^ The point to be made is that a court could find that 
the past cases dealing with file-sharing are not persuasive and either a fair use 
defense or a defense based on the AHRA could apply in the case of an alleged 
direct infringer. 

B. No Individual File-Sharer Was Directly Involved 

One commentator has noted that having a specific infringer in place during 
the Napster cases would have facilitated the fact-finding process and would have 
given the case a human face.^^ As Professor Gibbons said, 

[t]he district court erroneously conflated unauthorized use with 
infringing use because the district court's analysis took a global view of 
whether collective activities by Napster users were excused under the 
theory of fair use. This approach was also adopted by the Ninth Circuit. 
However, Napster's individual users may have been protected under 
some paradigm of fair use because fair use is always an individual 
determination that depends upon the unique facts of the particular 
alleged infringing use. Because no alleged direct infringers were before 
the court, the court could therefore rely on a sense of collective 
wrongdoing as it assumed at least some use must be an infringing use 
due to the sheer size of the Napster enterprise.^^ 

Through forcing subpoenas on ISPs like Verizon, the RIAA was able to 
determine the identities of individuals who supposedly uploaded or downloaded 
material to which the RIAA owned the copyright. With the focus of the lawsuit 
being on the defenses asserted against charges of direct infringement and not 
merely as a means to establish a basis for contributory or vicarious liability, the 
fair use factors or a defense based on the AHRA could be viewed in a different 
light by a judge or jury. A major goal of any defendant being sued by the RIAA 
for file-sharing would be to at least get the case to a jury. 

60. Metro-Goldwyn-Mayer, Inc. v. Grokster, Ltd., 259 F. Supp. 2d 1029, 1046 (CD. Cal. 

61. In re Aimster Copyright Litig., 334 F.3d 643, 649 (7th Cir. 2003). 

62. Gibbons, supra note 1 1, at 60. 

63. Id. at 77-78 (citing Harper & Row Publishers, Inc. v. Nation Enters., 471 U.S. 539, 560 
(1985); Wright v. Warner Books, Inc., 953 F.2d 731, 740 (2d Cir. 1991); People v. Collins, 438 
P.2d 33, 39 (Cal. 1968)). 

2005] THE DAY THE MUSIC DffiD 249 

Given that half of the Internet users in the United States have used a file- 
sharing network, the odds are high that a jury member would know 
someone who has downloaded music improperly. Those jurors could be 
sympathetic. . . . [Juries] might also consider something they are not 
supposed to under copyright law: intent.^"^ 

All this being said, the RIAA has stated that it intended to pursue file-sharers 
who had downloaded or uploaded hundreds of copyrighted songs and it is 
undoubtedly true that some infringement took place. However, it is possible that 
a judge or jury could find that a person of age, who knowingly downloaded or 
uploaded many songs, could have a valid affirmative defense under the fair use 
doctrine or the AHRA. 

IV. The Direct Infringer 

A. The Fair Use Doctrine 

An individual using the fair use doctrine as an affirmative defense would 
likely make arguments similar to Napster: that they were merely sampling the 
downloaded material; they were space-shifting files; and/or they were only 
downloading songs they already owned. A defendant would be hard pressed to 
make a substantial argument suggesting they complied with the second and third 
fair use factors because the nature of the music files is creative, is for 
entertainment purposes and (in most cases) the entire song was likely 
downloaded. However, a court must balance the four fair use factors 
collectively. Therefore, a defendant could make a strong argument that the first 
and fourth factors are in their favor. "[I]ndividuals who try a fair-use defense 
have a chance of winning on the first and fourth tests, some experts believe. 
Theoretically, they could fight to a draw."^^ 

1. The First Factor: The Purpose and Character of the Use. — 
Downloading music does not appear to transform the copyrighted music in any 
meaningful sense and it would be hard to imagine a scenario where a defendant 
could make a legitimate argument that he or she actually transformed the music. 
However, under the first factor, a court must also take into account whether or 
not the activity was commercial. ^^ The district court in Napster reasoned that 
because a user sends files to anonymous requesters and does not have to actually 
buy the songs, the use is a commercial activity.^^ There are problems with this 
analysis for a few reasons. 

One main problem with the Napster decision is that it singled out users that 
allow others to download from them. Napster's centralized structure required a 
user requesting a song file to be routed by Napster to another user willing to let 

64. Joseph Menn, Suits Could Clarify File-Sharing Rules, Cffl. Trib., Sept. 8, 2003, at CI. 

65. Id. 

66. A & M Records, Inc. v. Napster, Inc., 1 14 F. Supp. 2d 896, 912 (N.D. Cal. 2000). 

67. Mat 912-13. 

250 INDIANA LAW REVIEW [Vol. 38:239 

someone download from them.^^ Systems like the one used by Kazaa and others 
that are peer-to-peer systems can be used by an individual without allowing 
others to download files from them. With this system in place, a user could use 
the system without sending files to anonymous requesters. Furthermore, it is 
highly likely that some users were not aware that their system was set up to allow 
others to download from them. Although ignorance would not be a defense in 
and of itself, one could easily conceive of a judge or jury sympathizing with a 
defendant who emphatically and honestly stated they did not understand the 
technology involved and were not aware that they were allowing others to 
download from them.^^ However, in the first 261 suits filed, the RIAA stated it 
was targeting offenders "who shared a significant number of songs on peer-to- 
peer networks."^^ If a defendant knowingly allowed others to download files 
from his or her computer, the Napster holding would seem logical in this regard. 
If the defendant unknowingly allowed others to download songs, his or her role 
in sending files to anonymous requesters becomes much less clear. 

Secondly, there are many legal scenarios that involve an individual listening 
to copyrighted music without having bought it that are acceptable. For example, 
people do not pay anyone directly to listen to the radio, and there are sound 
booths set up in many record stores that allow people to listen to and sample 
selected CDs. Gibbons took issue with the Napster court's reliance on studies 
done that showed college students bought fewer CDs because of Napster. ^^ 

The [district] court stated that students are more likely to download 
"free" music by using Napster [rather] than purchasing the CD. This 
likelihood, however, does not necessarily militate against a finding of 
fair use. If students bought fewer CDs after deciding they did not value 
the songs from those CDs, for example, then this action may constitute 
a fair use. This scenario resembles the business strategy of placing 
music listening stations in record stores, which the Copyright Act 
exempts as a non-infringing activity. . . . [o]ne can argue that Napster 
provided a convenient listening station similar to those in music stores 
that allow a purchaser to preview the CD before they buy it; one that 
does not require the purchaser to stand around in a store for long periods 
of time wearing headphones glazed with the ear wax of hundreds of 

68. Norman, supra note 4, at 373. 

69. For example, when the user downloaded the software, the system could require them to 
uncheck an onscreen box to prevent others from downloading material from them, or a system could 
require a user to change the system settings once the software was downloaded in order to restrict 
others' ability to download from them. See Menn, supra note 64, at CI (stating "[s]ome file 
swappers have told the networks that they didn't want to share music — but didn't realize that when 
they downloaded a file, the new music was still placed in a ft)lder that could be accessed by 

70. 5eeHealeyet al., jwpra note 3, at Al. 

71. Gibbons, 5Mpra note 11, at 79-80. 

2005] THE DAY THE MUSIC DffiD 25 1 

preceding patrons. 


It seems the main point the Napster court was trying to make was that a person 
could download and keep the music without having paid for it, hence it is a 
"commercial" activity. However, it is obvious a person can record songs from 
the radio and could copy a CD for personal use without violating copyright law.^^ 
Additionally, there was nothing in the Napster opinion regarding the length of 
time users kept songs they downloaded as being dispositive of showing a 
commercial activity. It could be argued that a user who downloaded a single 
song, listened to it, and then promptly deleted it, could not be said to have 
derived an economic benefit from participating in a commercial activity. 

The space-shifting argument could hold some merit when made by an 
individual as well. Suppose a person was merely downloading a song they 
already owned in order to have it on their computer. This plausible situation is 
one in which a judge or jury could find that there was no economic benefit or 
commercial activity. Again, as Gibbons reasoned, it becomes readily apparent 
that having a named individual defendant rather than relying on a collective sense 
of wrongdoing, could show that there was no commercial activity involved.^"^ 

2. The Fourth Factor: The Ejfect on the Market or Value. — The 
determination of whether the use is commercial is important not only in the 
analysis of the first fair use factor, but also in the fourth factor because if the use 
is determined to be non-commercial, then the plaintiff bears the burden of 
showing that the practice would adversely affect the potential market if it became 
widespread.^^ Demonstrating the effect of downloading on the potential market 
or value of the music is typically going to entail an expert battle. The court in 
Napster preferred the plaintiffs experts over the defendant's.^^ This was likely 
due, in some degree, to the burden (of proving there was not an effect on the 
market or value of the music) falling on the defendant because of the ruling that 
the user's downloading was a commercial activity. ^^ If the activity had been 
viewed as being non-commercial, the burden would change and so, perhaps, 
would the weight given to expert testimony.^^ 

A defendant could also argue that his downloading was protected by the 

72. Id. (citing A& M Records, Inc. v. Napster, Inc., 1 14 F. Supp. 2d 896, 910 (N.D. Cal. 
2000); 17 U.S.C. § 110(7) (1994)). 

73. Jensen, supra note 17, at 251 n.81 (stating "it is noted that U.S. copyright law allows 
consumers to legally make one copy of a copyrighted work for their personal, private use") (citing 
Richard Ellen, New Audio CD Copy Protection May Already be Cracked, available at (July 24, 2001)). 

74. Gibbons, supra note 1 1, at 60. 

75. Sony Corp. of Am. v. Universal City Studios, Inc., 464 U.S. 417, 451 (1984). 

76. A & M Records, Inc. v. Napster, Inc., 1 14 F. Supp. 2d 896, 916 (N.D. Cal. 2000). 

77. Id. at 924. 

78. Id. at 912. 

252 INDIANA LAW REVIEW [Vol. 38:239 

AHRA7^ By looking at past holdings regarding file sharing and the AHRA, as 
well as the statute itself, it becomes apparent that a valid defense could be made. 
The AHRA is rich in technical language and is at times maddeningly frustrating 
to decipher. However, understanding the statutory language of the AHRA is 
what makes a defense based upon it possible. 

7. AHRA Requirements. — In order for a direct infringer to gain protection 
from the AHRA, he or she essentially would be required to show that a computer 
is a "digital audio recording device." In doing so a defendant would fall under 
17 U.S.C. § 1008, which states, 

[n]o action may be brought under this title alleging infringement of 
copyright based on the manufacture, importation, or distribution of a 
digital audio recording device, a digital audio recording medium, an 
analog recording device, or an analog recording medium, or based on the 
noncommercial use by a consumer of such a device or medium for 
making digital music recordings or analog music recordings}^ 

Therefore, if a consumer were to use a computer to raake non-commercial digital 
music recordings, they would be protected under the AHRA. As was previously 
discussed, it is clearly possible that a user could show the alleged use was non- 
commercial. Hence, a defendant must show that a computer is a "digital audio 
recording device." 

2. The Napster Case: Rejecting the AHRA. — The Ninth Circuit Court of 
Appeals in Napster rejected the defendant's AHRA claim.^^ The court held that 
the AHRA did not apply to the downloading of MP3s to computer hard drives.^^ 
As noted earlier, the court relied extensively and exclusively on the ruling in 
Diamond when reaching this decision. The court stated, 

[f]irst, "under the plain meaning of the Act's definition of digital audio 
recording devices, computers (and their hard drives) are not digital audio 
recording devices because their 'primary purpose' is not to make digital 
audio copied recordings." Second, notwithstanding Napster' s claim that 
computers are "digital audio recording devices," computers do not make 
"digital music recordings" as defined by the Audio Home Recording 

There are some potentially significant flaws with the court's decision that will 
be discussed next. 

a. The AHRA and Diamond. — To analyze the reasons given by the court in 
Napster, it will be necessary to examine the Diamond csise in order to understand 
the context in which the AHRA was used in that case and subsequently applied 

79. 17 U.S.C. § 1001-1010 (2000). 

80. Id. § 1008 (emphasis added). 

81. A & M Records, Inc. v. Napster, Inc., 239 F.3d 1004, 1024 (9th Cir. 2001). 

82. Id. 

83. Id. (citing Recording Indus. Ass'n of Am. v. Diamond Multimedia Sys., Inc., 180 F.3d 
1072, 1077-78 (9th Cir. 1999)). 


verbatim in Napster. In Diamond, the RIAA brought suit against Diamond 
seeking a prehminary inj unction. ^"^ Diamond manufactured and distributed the 
Rio music player which was a hand-held device that allowed a user to download 
MP3s from a computer onto the device and then listen to them through 
headphones. The RIAA was asserting that the Rio did not comply with AHRA 
requirements for ''digital audio recording devices" because it did not have a 
Serial Copyright Management System (SCMS).^^ The AHRA requires "digital 
audio recording devices" to have a SCMS that sends and receives information 
regarding the copyright status of files it plays.^^ Additionally, the RIAA sought 
royalty payments from Diamond because manufactures and distributors of 
"digital audio recording devices" are required to pay them per the AHRA.^^ 
Essentially, the RIAA was arguing that the Rio was a "digital audio recording 
device" while Diamond asserted it was not.^^ 

The court determined that the Rio was not a "digital audio recording device" 
and therefore did not have to pay royalties or include a SCMS.^^ In reaching this 
decision the court analyzed the definition of a "digital audio recording device" 
to see if, in fact, the Rio fell within the statutory language. ^° Working its way 
through definitions that lead through other definitions, the court eventually 
decided that in order for the Rio to be a "digital audio recording device," it must 
be able to reproduce "either 'directly' or 'from a transmission' a 'digital music 
recording. '"^^ The definition of a "digital music recording" according to the 
AHRA is: 

A material object 

(i) in which are fixed, in a digital recording format, only sounds, and 

material, statements, or instructions incidental to those fixed sounds, if 

any, and 

(ii) from which the sounds and material can be perceived, reproduced, 

or otherwise communicated, either directly or with the aid of a machine 

or device.^^ 

The court then had to determine what material object the Rio directly reproduced 
from and concluded it was the computer hard drive.^^ Next, the court analyzed 
whether a hard drive fit the definition of a "digital music recording." It held that 
a hard drive was not a "digital music recording" because hard drives contain 

84. Diamond, 180 F.3d at 1072. 

85. Id. at 1075. 

86. Id. 

87. Id. 

88. Id. 

89. Id. at 1081. 

90. Id. at 1075-76. 

91. Id. at 1076. 

92. 17 U.S.C. § 1001(5)(A) (2000). 

93. Diamond, 180 F.3d at 1076. 

254 INDIANA LAW REVIEW [Vol. 38:239 

more than fixed sounds, material, statements or instructions.^"^ The court 
reasoned that because computer hard drives are not "digital music recordings," 
the Rio (as a "digital audio recording device") could not record directly from 
them.^^ Therefore, the Rio could not be a "digital audio recording device" 
according to the AHRA.^^ 

b. The problem with the Napster court's second reason for why the AHRA 
did not apply to Napster users. — In the Napster case, Napster argued that 
computers themselves were "digital audio recording devices" just as the RIAA 
argued the Rio was a "digital audio recording device" in the Diamond case.^^ 
Simply going through the same steps the court in Diamond did to determine 
whether the Rio was a "digital audio recording device" will expose a serious flaw 
in the Napster court's decision that a computer is not a "digital audio recording 
device." Again, following Diamond (which the Napster court relied on), in order 
for a computer to be a "digital audio recording device," it "must be able to 
reproduce, either 'directly' or 'from a transmission,' a 'digital music 
recording. '"^^ Clearly, a computer is capable of directly reproducing a digital 
music recording such as a CD. The court in Diamond agreed when it explained 
the legislative history behind the AHRA and what constitutes a "material object" 
as referred to in the definition of a "digital music recording." The court said, 

[t]he Senate Report further states that the definition "is intended to cover 
those objects commonly understood to embody sound recordings and 
their underlying works." A footnote makes explicit that this definition 
only extends to the material objects in which songs are normally fixed: 
"[t]hat is recorded compact discs, digital audio tapes, audio cassettes, 
long-playing albums, digital compact cassettes, and mini-discs."^^ 

Additionally, the court in Diamond explicitly acknowledged that computers can 
record "digital music recordings," saying, "[t]he legislative history thus expressly 
recognizes that computers (and other devices) have recording functions capable 
of recording digital music recordings."^^^ Therefore, by following the Diamond 
road-map, it is apparent that a computer could be defined as a "digital audio 
recording device" because it is able to reproduce directly from a "digital music 

This shows that the second reason given by the Napster court as to why the 

94. Id. 

95. Id. 

96. Id. 

97. A & M Records, Inc. v. Napster, Inc., 239 F.3d 1004, 1024 (9th Cir. 2001). The parties 
making the claim that a device is a "digital audio recording device" in Diamond and Napster are 
opposite. In Diamond, the RIAA is the plaintiff seeking to show that defendant's product (the Rio) 
is a "digital audio recording device" while in Napster, the RIAA is the plaintiff, arguing against 
Napster's claim that a computer is a "digital audio recording device." 

98. Diamond, 180 F.3d at 1076. 

99. Id. at 1077 (quoting S. Rep. No. 102-294, at 118-19 (1992)). 
100. /J. at 1078. 


AHRA defense did not apply to Napster users is potentially flawed. At no point 
in Diamond did the court conclude that "computers do not make 'digital music 
recordings' as defined by the Audio Home Recording Act."^^^ The court in 
Diamond determined that the Rio did not make "digital music recordings," and 
that computers (and their hard drives) were not digital music recordings. ^^^ The 
court did not comment on whether a computer could make a "digital music 
recording," likely because it most obviously can.^^^ 

It must be noted that the court in Diamond did state that computers are not 
digital audio recording devices.*^ However, the court reached this conclusion 
based on the same logic the Napster court used in its first reason: because a 
computer' s "primary purpose" is not to make digital audio copied records. While 
an examination of this conclusion will be conducted next, it is important to note 
that by following the exact same analysis performed by the Diamond court 
regarding the Rio, a computer would be considered a digital audio recording 

c. The problem with the Napster court's first reason for why the AHRA did 
not apply to Napster users. — The court in Napster held that "[u]nder the plain 
meaning of the Act's definition of digital audio recording devices, computers 
(and their hard drives) are not digital audio recording devices because their 
'primary purpose' is not to make digital audio copied recordings. "^^^ At first 
glance, this reason seems like a tough one for a defendant to overcome because 
it reflects the AHRA accurately and is logical. One then wonders why the court 
felt it necessary to throw in another, seemingly incorrect, reason to buttress 
something that seems ironclad. 

The legislative history shows that at the time of the Act's passing in 1992, 
"a personal computer's 'recording function [was] designed and marketed 
primarily for the recording of data and computer programs. ' "^^^ Upon analyzing 
the holding in Diamond, it becomes apparent that the reason computers were not 
considered "digital audio recording devices" was because the computer industry 
and its lobbyists would have bitterly opposed its being classified as such.^°^ The 
opposition stemmed from the fact that the computer industry did not want to 
equip their computers with a SCMS or pay royalties to the RIAA,^^^ although this 
has nothing to do with "the Act's main purpose — the facilitation of personal 

If the stated goal of the Act is to allow consumers to record copyrighted 
music for their own non-commercial use, excluding a computer as a means to 


Napster, 239 F.3d at 1024. 


Diamond, 180 F.3d at 1076. 


Id. at 1077. 


Id. at 1078. 


Napster, 239 F.3d at 1024 (quoting Diamond, 180 F.3d at 1078). 


Diamond, 180 F. Supp. at 1078 (quoting S. Rep. No. 102-294, at 122 (1992)). 


See id. at 1078 n.6. 


See id. 


Id. at 1079. 

256 INDIANA LAW REVIEW [Vol. 38:239 

make recordings is asinine and highly implausible. Technology surrounding 
peer-to-peer systems has advanced considerably since the passing of the Act in 
1992 and it is hard to conceive of a means of making a reproduction of 
copyrighted music that does not involve a computer as a "digital audio recording 
device." Today, it can easily be assumed that the device most often used to make 
a copy of a "digital music recording" is the computer, whether it be from a peer- 
to-peer system or from copying already owned CDs into MP3 format in order to 
make a "Greatest Hits" or "Favorites" disc. As one commentator noted, "[the 
Napster] case clearly illustrates that the AHRA was not designed with the 
flexibility that is required for the regulation of modem technology."^ ^^ In holding 
that the Act does not include computers as "digital audio recording devices," a 
court could not rationally say that it is attempting to meet Congress's stated goal 
of allowing consumers to record copyrighted music for private non-commercial 

d. So what does this technological lingo all mean? — First, the court in 
Napster listed two reasons why the AHRA did not apply to direct infringers. The 
second reason was thoroughly inconsistent with the source it was directly cited 
from and was completely flawed. By following the exact same analysis done by 
the court in Diamond using the Rio as the purported "digital audio recording 
device," it is apparent that a computer can make a "digital music recording" and 
for this reason alone it should be considered a "digital audio recording device." 
The first reason given in the Napster decision, that computers are not "digital 
audio recording devices" because their primary purpose is not to make digital 
audio copied recordings, was determined by the court in Diamond to be a product 
of legislative negotiations and compromises between the computer industry and 
other involved industries.^ ^^ This was done so computer manufacturers and 
distributors would not have to comply with the SCMS requirements or pay 
royalties to the RIAA.^^^ However, the role computers play in 2004 is much 
more substantial than it was twelve years ago when AHRA was passed. To not 
include computers (and their hard drives) within the definition of a "digital audio 
recording device" runs contrary to the stated goal of allowing consumers to make 
recordings of copyrighted music for their private non-commercial use. 
Therefore, a judge or jury presented with these arguments could easily determine 
that a user accused of direct infringement was protected by the AHRA. 

V. Direct Infringers That Are Not So Direct: Children 

AND Their Parents 

The first round of lawsuits filed by the RIAA was highly publicized and 
criticized for a few reasons. The first reason the suits received such attention, as 
discussed earlier, was that they were relatively unexpected. Secondly, in the 

1 10. Brian Leubitz, Note, Digital Millennium? Technological Protections for Copyright on 
the Internet, 1 1 TEX. INTELL. PROP. L.J. 417, 433 (2003). 

111. Diamond, 180 F.3d at 1078 n.6. 

112. Mat 1078-79. 


days following the filing of the suits, it became apparent that some were filed 
against children, while others were filed against individuals who had no access 
to the software programs required to download or upload the material they were 
accused of copying. As well as arousing public ire, the suits raised interesting 
legal questions regarding the liability of children and their parents. 

No individual lawsuit filed by the RIAA was as publicized as the one filed 
against Brianna LaHara. At the time, Brianna was a twelve-year-old honors 
student from New York.^^^ Ultimately, her mother settled the suit for $2000 
along with an apology from Brianna. ^''^ Many of the users of such file-sharing 
technology are minors and the RIAA seemed prepared to hear excuses from 
parents named as defendants asserting that their children were responsible for 
any downloading that took place. As Gary Sherman of the RIAA, said "[w]e 
expect to hear people say, 'Well, it wasn't me, it was my kid.' Well, if they 
prefer that the lawsuit be amended to name the kid, we can certainly do that."^^^ 
Whether a parent is sued for his or her child's downloading or a child is named 
directly, there is sparse legal authority regarding parental responsibility for a 
child's copyright infringement or enforceability against the parent in the event 
a judgment is rendered against his or her child. 

A. Parental Liability 

If a parent was named as a defendant and was not liable as a direct infringer 
(because the downloading was done by his or her child) the RIAA would likely 
try to hold the parent liable using either the vicarious or contributory 
infringement doctrines. Again, to establish a contributory infringement claim in 
the context of copyright law, a plaintiff must show direct infringement by the 
user and that the defendant had knowledge of the infringement and induced, 
caused or materially contributed to it.^^^ To establish a vicarious liability claim, 
the plaintiff must show that the defendant had the right and ability to supervise 
the user's infringing conduct and had a direct financial interest in it.^^^ 

7. Contributory Infringement. — ^The most obvious, and perhaps strongest, 
argument that a parent could make in response to a claim he or she was a 
contributory infringer is that he or she had no knowledge the activity was taking 
place. This argument will likely be very case-specific and fact sensitive. 
Certainly, when the parent has no extraordinary computer expertise, a strong 
argument could be made that he or she had no knowledge of the child's 

Even if a parent was shown to have knowledge of the child's infringement, 

113. Alex Veiga, Labels Try to Hold Parents Accountable, AP Onune, Sept. 12, 2003, 
available at 2003 WL 63461561. 

114. Id. 

115. Monty Phan, Facing the Music in Piracy Lawsuit, Newsday, Sept. 10, 2003, available 
at 2003 WL 62868652. 

1 16. A&M Records Inc. v. Napster, Inc., 1 14 F. Supp. 2d 896, 918 (N.D. Cal. 2000). 

117. Mat 920. 

258 INDIANA LAW REVIEW [Vol. 38:239 

the RIAA would still have to show that the parent either induced, caused, or 
materially contributed to it. It would be difficult for the RIAA to show that a 
parent induced or caused their child' s infringement absent a confession admitting 
as much. However, the key question would still remain. Did the parent 
materially contribute to the infringement? **[T]he material contribution 
requirement can be satisfied merely by providing the 'site and facilities for 
known infringing activity. '"^'^ It would appear that a parent providing a 
computer and Internet access to his or her child would be providing the site and 
facilities for infringement. However, as has been noted, that conclusion could 
be hard to reach considering computers and the Internet have many significant 
non-infringing uses. ^^^ 

Assuming a child used a parent's computer at home, it is likely that the 
material contribution requirement would be met. Therefore, the threshold issue 
under the contributory infringement doctrine would likely be whether the parent 
had knowledge of the infringing activity. 

2. Vicarious Infringement. — It is likely that a judge or jury would find that 
a parent had the right or ability to supervise his or her child in the parent's own 
home. Undoubtedly, the RIAA would point to its numerous efforts in warning 
the public about the illegality of downloading music as evidence that parents 
have notice of such activity. "Several cases suggest, however, that there is no 
affirmative duty to police potential infringers, at least absent actual knowledge 
of the infringing activities." ^^^ 

The RIAA would have a much tougher time showing that the parent had a 
direct financial interest in, or financially benefited from, his or her child's 
infringement. Although the RIAA could argue that a parent saved money from 
not having to buy the music that the child downloaded, this would be tough to 
prove because it is exceedingly hypothetical. It would have to be assumed that 
if a child conveyed his musical choice to his parent, the parent would have 
bought it for him. The author of this Note does not recall a time that his parents 
waited, with a pen and paper in hand, for him to tell them what new CDs he 
wanted, just so they could run to the nearest music store and buy them for him. 

Although it appears likely that a parent would be shown to have the ability 
to supervise his or her child's downloading activity, "[t]he direct financial 
interest part of it is pretty hard to meet, if it's not clear the parent is gaining 

118. Memorandum from Mark Zuckerman & Devon Bush, Berkman Center for Internet & 
Society, to the Electronic Frontier Foundation (Oct. 24, 2003) (on file with the Indiana Law 
Review) [hereinafter Zuckerman & Bush] (quoting Fonovisa v. Cherry Auction, 76 F.3d 259, 264 
(9th Cir. 1996)). Zuckerman and Bush, from the Berkman Center for Internet and Society at 
Harvard Law School, prepared a memorandum for the Electronic Frontier Foundation (EFF) 
regarding parental liability and enforceability against minors that was posted on the EFF website. 

119. See id. 

120. Id. (citing Adobe Sys. Inc. v. Canus Prods., 173 F. Supp. 2d 1044, 1054-55 (CD. Cal. 
2001); Artists Music v. Reed, 31 U.S.P.Q. 2d 1623 (S.D.N. Y. 1994)). 

121. Veiga, 5M/7ra note 113. 

2005] THE DAY THE MUSIC DffiD 259 

B. Enforceability Against Parents 

Yet again, there is sparse legal authority regarding whether parents can have 
their assets attached due to a judgment against their child. ^^^ Most likely, any 
state statutes regarding liability of a parent for his or her child's illegal 
downloading will be preempted by federal copyright law, either under the U.S. 
Constitution or section 301 of the Copyright Act.'^^ "For a state common law or 
statutory claim to be preempted, the subject matter must be within the scope of 
the subject of the copyright law, and the claims must be equivalent to the 
exclusive rights set out in the Act."^^"* Any recordings made before February 15, 
1972, are not subject to the Copyright Act preemption provision, but it is unlikely 
that many children were downloading pre- 1972 music. In the event that a child 
did download pre- 1972 music, "the question ... is whether the claims potentially 
pursued by the RIAA under state civil laws are equivalent to those within the 
ambit of the Copyright Act."^^^ For the most part, it is likely that the state claims 
would be preempted. ^^^ 

In the event that the claims are not preempted, state statutory law or common 
law will apply. "Parental liability statutes . . . create liability based on damage 
the child has done to 'property. '"'^^ Most state statutes have a cap on damages 
that can be recovered from the parent. ^^^ The interpretation of what activity 
constitutes a single tort would then be a highly contested issue. The RIAA would 
likely contend that the downloading of each song was a separate tort while the 
defendant would argue the activity as a whole was a single tort. Surprisingly, 
there is a case that deals with the issue in a comparable factual scenario. In 
Thrifty-Tel, Inc. v. Bezenek, the court held two parents liable for the computer 
hacking activity of their teenage sons and their friends. '^^ The children hacked 
into a long-distance provider's computer network in order to make free long- 

122. However, "a creditor cannot 'reach . . . assets in which the judgment debtor has no 
interest.' . . . since a creditor merely 'stand[s] in the shoes of the judgment debtor in relation to any 
debt owed him or property interest he may own." Zuckerman & Bush, supra note 118 (citing Bass 
V. Bass, 528 N.Y.S.2d 558, 561 (1st Dep't 1988), as quoted in Karaha Bodas Co., L.L.C. v. 
Perusahaan Pertambangan Minyak Dan Gas Bumi Negara, 313 F.3d 70, 83 (2d Cir. 2002)). 

123. 17 U.S.C. § 301 (2000). 

124. Zuckerman & Bush, supra note 118. 

125. Id. 

126. "Since claims based on harm caused by file sharing would appear to result exclusively 
from infringement of the copyrights, the argument for preemption is strong." Id. (citing Murray Hill 
Publ'ns, Inc. v. ABC Communications, Inc., 264 F.3d 622 (6th Cir. 2001) (preempting state 
conversion claim); Daboub v. Gibbons, 42 F.3d 285 (5th Cir. 1995) (preempting multiple state 
claims based on copying, distributing and performing plaintiffs music)). 

127. Id. (citing Cal.CivilCode§ 1714.1(a) (2003)). 5^e a/50 IND. Code § 34-31-4-1 (1999). 

1 28. See Cal. CivilCode § 17 14. 1 (a) (2003) (capped at $25,000 per tort); Infd. Code § 34-3 1 - 
4-1 (capped at $5000 per tort). 

129. 54 Cal. Rptr. 2d 468, 477 (4th Dist. 1996). 

260 INDIANA LAW REVIEW [Vol. 38:239 

distance phone calls. Although the court found the parents liable for their sons' 
actions (because the conduct occurred in the parent's home and the children 
knew what they were doing was wrong) and even for the actions of their sons' 
friends, it held that the multiple hackings only constituted a single tort.^'^^ 

[i]t should be noted that the court refused to allow the long distance 
provider to apply the damages specified in the company's "unauthorized 
use" portion of its service agreement, but insisted on actual damages. 
This could be used as precedent indicating that parents would only be 
liable for actual damages, not statutory damages, of their child's 
infringing behavior. ^^' 

If a state has no statute regarding damages imposed on a parent due to the 
actions of his or her child, common law liability could be imposed. Usually, 
however, a parent will not be liable for the torts of his minor child. *^^ 

Again, in the event that a state claim is not preempted by section 301 of the 
Copyright Act, it is likely that most states will have a per statutory tort damage 
cap and at least one similar case has ruled that the computer activity as a whole 
was a single tort. 

VI. Solutions TO THE Conflict 

The effect that the recent lawsuits filed by the RIAA will have on online 
downloading activity remains to be seen. Not only is it beyond the scope of this 
Note, it is primarily a sociological issue rather than a legal one. However, it is 
safe to say that the lawsuits will not end the conflict between copyright holders 
and consumers. Although many different solutions have been proposed to end 
or subdue this conflict, most, if not all, of them forget, ignore, or downplay the 
most obvious and important factor: the ability of consumers to download music 
from the Internet does not appear to be going away anytime soon, if ever. By 
examining some of these proposed solutions, it becomes apparent that the best 
solution is one that will involve a simple — if there is such a thing — royalty 

A. Legislation 

There have been recent attempts by Congress to pass legislation purporting 
to protect copyrighted digital works. Specifically, the Rollings Bill^^^ and the 

130. Mat 477. 

131. Zuckerman & Bush, supra note 1 18, at n.42. 

132. Id. (citing Van Den Eikhof v. Hocker, 151 Cal. Rptr. 456 (Ct. App. 1978); McCarthy v. 
Heiselman, 125 N.Y.S. 13 (App. Div. 1910)). 

133. Consumer Broadband and Digital Television Promotion Act, S. 2048, 107th Cong. 


Berman Bill^^"^ were both introduced before dying in the 107th Congress. ^^^ The 
HolHngs Bill would have, "made the sale, offer of sale, or transport in interstate 
commerce of any digital media device unlawful, unless the device ' include [d] 
and utilize [d] standard security technologies that adhere [d] to the security system 
standards adopted' under the bill."^^^ It failed because, "it placed an unfair 
burden on the technology sector, was not a complete solution for content owners 
. . . and did not provide sufficient exceptions for fair use."^^^ The Berman Bill 
basically allowed copyright holders to hunt down unauthorized users, hack into 
their computers and disable or impair the mechanisms used to do the 
unauthorized activity. ^^^ The Bill essentially immunized copyright holders for 
any damage they caused on the user's computer that resulted in less than 
$250.00.^^^ Although there have been many valid criticisms leveled against this 
piece of legislation, none are more obvious than those focusing on an 
individual's right to privacy. 

Looking at only these two proposed bills, it becomes apparent that drafting 
legislation regarding copyrighted material online is increasingly futile. It is 
virtually impossible to draft a piece of legislation that will satisfy each of the 
affected parties in this conflict. In the rare instance where legislation appears to 
do just that, it will likely be wholly or partially irrelevant in a few years — or even 
months — when the next "new" technology comes along rendering past statutory 
language obsolete. "Modem Internet technology has an incredible ability to 
adapt to changes in market conditions; for examples, one can look at broadband, 
the MPS file format, or the current generation of file-sharing services. "^"^^ 
Legislation based on Internet technology that is used today would likely be of 
little value and a waste of time and resources. Furthermore, an attempt by 
Congress to look into a crystal ball to predict future technological shifts will 
either be so vague as to have no substantive value or will be overly burdensome 
like the Berman Bill. 

In short, legislation is not the answer to the conflict between the music 
industry and consumers as it does little — if anything — to stop the fact that file- 
sharing technology exists and will continue to exist in the foreseeable future. 

B. Technology and Copy Protection 

As mentioned in Part I of this Note, the music industry has also attempted to 
protect its copyrighted material through the use of technology. For primarily the 
same reasons that legislation will not bring an end to this conflict, it is likely that 

134. H.R. 5211, 107th Cong. pmbl. (2002). 

135. Norman, supra note 4, at 396-97. 

136. Id. at 397 (quoting Consumer Broadband and Digital Television Promotion Act, S. 2048, 
107th Cong. § 5(a) (2002)). 

137. Id. at 398. 

138. H.R. 5211, 107th Cong. pmbl. (2002). 

139. Id. 

140. Leubitz, supra note 1 10, at 433. 

262 INDIANA LAW REVIEW [Vol. 38:239 

the use of copy protection or other such technology will fail in this regard. One 
commentator has noted a few problems with the music industry' s copy protection 
attempts: high consumer dissatisfaction; potential invasion of privacy concerns; 
and most importantly, the possibility of technological circumvention.*"^^ Just as 
technology is too fast for legislation, it is also too fast for protection. If our short 
computer history teaches us anything, it is that "hackers" and others will likely 
get around most copy protection devices. 

It has happened time and time again: simply witness the ill-fated attempt 
of the music industry to develop copy-protected discs. A crack . . . was 
quickly discovered and rendered the protection technology wholly 
ineffective. By drawing a thick line around the outer edge of a copy- 
protected CD with a felt-tipped pen, CDs can be copied, despite the 
music industry's best efforts. '"^^ 

Although the DRM technology is innovative and it is possible that the industry 
could begin to lean more heavily on it, it is also capable of being circumvented. 
"If history is any indication, it is unlikely that any DRM technologies will ever 
completely eliminate illegal reproduction of copyrighted works."*"^^ Although as 
one author noted, the goal of the DRM technology is not to eliminate all illegal 
song downloading, but rather, "if [the] deterrent effect is great enough to 
substantially decrease the number of illegal copies that replace legal sales of the 
work, the copy protection has successfully eliminated the largest threat to the 
copyright owner."*"^ If the music industry could come together and use the same 
method of DRM technology, it is possible that it would provide a staunch defense 
against copyright infringement. However, it does not seem logistically probable 
that this will occur anytime soon, and in the event that it does, it is likely that 
hackers and others could get around the technology in little time. 

C. ''New'' Napster Models 

There are quite a few online sites that offer fee-based subscription services. 
The plans vary but offer essentially the same thing: copyrighted songs available 
to download. Most allow the song to be played only on the computer used to 
download it, although some services let the user purchase portable downloads 

141. Jensen, 5Mpra note 17, at 253-54. 

142. John Tehranian, All Rights Reserved? Reassessing Copyright and Patent Enforcement 
in the Digital Age, 72 U. CiN. L. REV. 45, 80 (2003) (citing CD Crack: Magic Marker Indeed, at 
http://www.wired.eom/news/technology/0, 128252665,00.html (May 20, 2002)). 

1 43 . James S . Humphrey, Note, Debating the Proposed Peer-to-Peer Piracy Prevention Act: 
Should Copyright Owners Be Permitted to Disrupt Illegal File Trading Over Peer-to-Peer 
Networks?, 4 N.C.J.L. & TECH. 375, 410 (2003). 

144. Id. (citing Stan Liebowitz, Policing Pirates in the Networked Age, 438 POL'Y ANALYSIS 
1, 1 (2002), available at See also Jacover, supra 
note 4, at 2247-48. 

2005] THE DAY THE MUSIC DffiD 263 

that allow the transfer of songs to a CD or other device. ^"^^ However, a problem 
with most, if not all, of these services is that, "none of the current business 
models are offering enough content, none are easy to subscribe to, and consumers 
do not perceive the value in the content that is being delivered."*"^^ Although 
some observers have argued that these services have shown signs of success, 
others have disagreed. '"^^ Although a service could see some success if it 
partnered with any or all of the major five record companies and offered songs 
for a fairly cheap price, it is unlikely that this will occur anytime soon. The main 
reason for this is the parallel existence of the same material being offered for 
free, with no hassles, at similar web-sites. Right now, it is understandably 
difficult to persuade consumers to pay to join the services available — that do not 
have much selection — when they can get what they want for free. Although the 
deterrent effect of the recent suits filed by the RIAA is unknown, it is safe to say 
that they have not eliminated downloading activity completely. Accordingly, it 
is unlikely that services requiring payment for subscriptions will succeed due to 
the concurrent availability of free sites. 

D. Compulsory Licensing 

Many commentators have suggested that the best way to solve this apparent 
conflict is through the use of compulsory licensing. "Under a compulsory 
licensing scheme, all copyright owners would be required by law to license their 
content on a non-discriminatory basis, at a regulated rate, to any potential 
distributor who met certain baseline requirements. This would effectively 
replace property rules . . . with liability rules."^"^^ "To compensate copyright 
holders, royalties would be collected from various entities that use copyrighted 
material and then distributed to copyright holders. This scheme would operate 
much like performance rights societies, only on a much larger scale." ^"^^ The 
main problem with a compulsory licensing scheme is that it would require the 
tracking of downloading songs in an extensive and precise manner. Besides the 

145. Humphrey, supra note 143, at 403-04. 

146. Id. at 404. Humphrey notes that one service, eMusic, offers "an unlimited number of 
downloads that can be kept forever and transferred to CDs." Id. However, eMusic has not gotten 
any of the five major record companies to join. Therefore, although the service meets consumer's 
portability expectations, there is little content available that consumers want. 

147. See Tehranian, supra note 142, at 63 n.68 (citing Jon Healey, Napster Service to be 
Revived by Year-End, L.A. TIMES, July 28, 2003, at CI (noting the success of Apple's iTunes 
service, which has sold 6.5 million copies in its first two and one-half months of existence); Ciaran 
Tannam, iTunes Sales Continue to Fall, (July 30, 2003), available at http://www.slyck. 
com/news.php?story=208 (noting that week by week sales on iTunes have been declining and that 
the success of iTunes may have been exaggerated)). 

148. Fagin et al., supra note 7, at 524. 

149. Jacover, supra note 4, at 225 1 (citing Alan R. Kabat, Proposal for a Worldwide Internet 
Collecting Society: Mark Twain and Samuel Johnson Licenses, 45 J. COPYRIGHT SOC' Y U.S.A. 329, 
331-33 (1998)). 

264 INDIANA LAW REVIEW [Vol. 38:239 

fact that this daunting task would have to be forced upon someone, there is 
certainly no guarantee that the tracking methods used to determine who owes 
royalties would not be compromised. Whether watermarking or another 
technological device is used, there is currently no sound way to protect any 
tracking system from hackers and others. 

E. Tax-Royalty System 

The author of this Note believes that the best solution is to institute a tax 
administered through either a government copyright agency or other similar 
entity. "Under this system, music on the Internet could be distributed at will, 
without fear of litigation or license payments to copyright holders. "^^^ One 
commentator has suggested taxing "[ejvery entity that derives a financial benefit 
from the use of music on the Internet." ^^^ This approach seems over-inclusive, 
burdensome, and is ultimately unnecessary. The only entities that should be 
taxed are ISPs. This tax will ultimately be passed on to the consumer, reflected 
in higher service charges or monthly billing statements. Essentially, the public 
will be paying the record companies to download their copyrighted material, 
which, if done correctly, could satisfy both. The amount that would need to be 
charged to the ISPs would have to be enough to reasonably accommodate the 
record industry as well as the ISPs for their collection services. One author 
suggested a one dollar monthly charge per ISP subscriber. *^^ Assuming that there 
are fifty million Internet users in the United States, this would equal $600 million 
generated annually. Obviously, studies would need to be done and data would 
need to be collected to arrive at a figure that would compensate the music 
industry fairly, without gouging consumers. ^^^ 

Lemley additionally encouraged the simultaneous creation of legislation that 
would "criminalize software that carries the potential of mass distribution of 
copyrighted works. "^^"^ Additionally, Lemley' s proposed legislation would 
authorize criminal sanctions to be imposed upon individuals that possess any 
"decentralized P2P software already available to consumers."^^^ The stated goal 
of this proposed legislation would be to "initiate a containment of available 
piracy software." ^^^ However, the point of having a tax system in place would 
be to get both the music industry and consumers what they want. Surely the 

150. Id. at 2252-53. 

151. M. at 2253. 

152. Kevin Michael Lemley, Comment, Protecting Consumers From Themselves: Alleviating 
the Market Inequalities Created by Online Copyright Infringement in the Entertainment Industry, 
13 Alb. L.J. Sci. & Tech. 613, 645-46 (2003). 

153. As it was the author's mistaken understanding upon enrolling in law school that there 
would be no math, the author of this Note will not offer any wild speculation on what an agreeable 
tax amount should be. 

154. Lemley, supra note 152, at 638. 

155. /J. at 641. 

156. Id at 638. 

2005] THE DAY THE MUSIC DffiD 265 

public would not support legislation that authorizes criminal sanctions for 
downloading music. Many criminal court systems in this country are already at 
full capacity and asking them — along with law enforcement agencies — to begin 
devoting an astronomical amount of time and resources chasing down individuals 
who download music from Internet services is impracticable at best. As one 
commentator noted, "[criminal sanctions would] incur heavy political and 
economic costs on the enforcement authorities and would ultimately become 
ineffective when the authorities lose interest in enforcing those penalties. Even 
worse, this lack of enforcement might instill in the public a lack of confidence 
in and respect for the legal system." ^^^ 

Obviously, the music industry does not want to lose control over its copyright 
protected material on the Internet. However, a royalty system could ensure that 
the industry receives a substantial amount of compensation for the use of the 
material. Additionally, the music industry could alter its business model to 
incorporate strategies such as windowing to enhance CD sales. "A windowing 
strategy involves the public release of media through several different channels 
over a carefully sequenced time period. In the film industry, this involves 
releasing theatrical films to video, pay-per-view, pay cable, and then finally 
broadcast TV."^^^ This would allow consumers to purchase an artist's CD at 
different times and for different prices. Also, it seems that the music industry is 
finally learning that including items along with the CDs will enhance sales as 
well. Dedicated music fans will still buy CDs, as many consumers will always 
prefer having their favorite artists "new" songs in front of them without having 
to spend time downloading each song individually. 

The fact of the matter is that there are millions of consumers today who 
download copyrighted music from Internet related services without paying 
anything for it. Legislation in and of itself will not correct this situation because 
the process is outpaced by technological advances. Similarly, copy protection 
devices employed by the music industry have been simple to circumvent and 
raise serious privacy issues. Subscription sites that charge consumers to 
download song-files have not received the support of the music industry's major 
players, primarily due to the fact that there is nothing to stop individuals from 
downloading for free. Compulsory licensing schemes could turn into a logistical 
nightmare and do not offer safety from hackers and others. Instituting a tax 
scheme is the simplest way to alleviate this conflict. A monthly per-subscriber 
tax placed on ISPs will be passed on to consumers and the system as a whole will 
remain untouched. As well as being the most simplistic way to solve this 
conflict, a tax scheme would ideally give both the music industry and consumers 
what they want. 

157. Peter K. Yu, The Copyright Divide, 25 Cardozo L. Rev. 331, 403 (2003). 

158. Humphrey, supra note 143, at 406 (citing G. Krishan Bhatia et al., Windows into the 
Future: How Lessons from Hollywood Will Shape the Music Industry, Booz- Allen & Hamilton e- 
Insights 3 (June 2001), at 

266 INDIANA LAW REVIEW [Vol. 38:239 


It is very likely that most of the recent lawsuits filed by the RIAA against 
individuals accused of illegally downloading copyrighted material will be settled 
long before trial. In the event that some do make it to the trial stage, it is likely 
that defenses based on the fair use doctrine and the AHRA will be used. It will 
be interesting to see how long it takes before another technological advancement 
brings about an entirely different conflict, leaving thoughts of this one in the 
dust. In the mean time, it appears that taxing ISPs directly will be the most 
effective way to alleviate the conflict between the music industry and consumers. 

The End of Time for Equal Time?: Revealing 
THE Statutory Myth of Fair Election Coverage 

Anne Kramer Ricchiuto* 


"The news is whatever I say it is."* 

For the Federal Communications Commission ("FCC"), newscaster David 
Brinkley's once tongue-in-cheek remark is a reality. As the agency charged with 
enforcement and interpretation of the Communications Act of 1934^ ("the Act"), 
which also authorized its creation, the FCC makes determinations that affect our 
local and national election coverage. In general, the purpose of the Act was to 
encourage socially responsible use of the airwaves by broadcasters, who were 
viewed as the gatekeepers of this very valuable resource.^ 

Section (a) of the Act contains the "equal time rule," which requires that 
stations that permit candidates to appear on their airwaves must allow opposing 
candidates the same privilege."* Originedly, the rule stopped there. However, in 
1959, in response to an FCC ruling that candidate appearances on news programs 
would trigger the equal time requirements of the Act,^ Congress created four 
explicit exemptions from equal time for news-oriented broadcasts focusing on 
political candidates. These exceptions included: 

(1) bona fide newscast[s], 

(2) bona fide news interview [s], 

* J.D. Candidate, 2005, Indiana University School of Law — Indianapolis; B.S., 2000, 
Northwestern University, Medill School of Journalism, Evanston, Illinois. Many thanks to faculty 
advisor Professor Gerard Magliocca and Volume 37 Executive Notes Editor Jeff Preston. 

1. Alberto Bemabe Riefkohl, Freedom of the Press and the Business of Journalism: The 
Myth of Democratic Competition in the Marketplace of Ideas, (fl Rev. Jur. U.P.R. 447, 458 (1998) 
(citing Ford Rowan, News Media Responsibility — A Program for Improvement, 17 WILLAMETTE 
L. Rev. 231, 231 (1980)). 

2. 47 U.S.C. §315(2000). Onejudge has suggested that provisions in § 315(e) of the Act 
requiring broadcast licensees to collect and publicly disclose records of requests for air time for 
political advertisements are unconstitutional. McConnell v. Fed. Election Comm'n, 251 F. Supp. 
2d 176, 374-75 (D.D.C. 2003) (Henderson, J., concurring). However, the Supreme Court disagreed 
with this contention, fmding that § 315(e) does not violate the First Amendment. McConnell v. 
Fed. Election Comm'n, 124 S. Ct. 619, 639-40 (2003). Further, this Note deals exclusively with 
§ 315(a) of the Act. 

3 . Reed E. Hundt, A New Paradigm for Broadcast Regulation, 1 5 J.L. & COM. 527, 528-29 
(1996) (discussing potential FCC strategies to ensure that broadcasters are operating in the public 

4. "If any licensee shall permit any person who is a legally qualified candidate for any 
public ofHce to use a broadcasting station, he shall afford equal opportunities to all other such 
candidates for that office in the use of such broadcasting station . . . ." 47 U.S.C. § 315(a). 

5. CBS, Inc., 26 F.C.C. 715, 742-43 (1959). 

268 INDIANA LAW REVIEW [Vol. 38:267 

(3) bona fide news documentar[ies] (if the appearance of the candidate 
is incidental to the presentation of the subject or subjects covered by 
the news documentary), [and] 

(4) on-the-spot coverage of bona fide news events (including but not 
limited to political conventions and activities incidental thereto).^ 

The exceptions were enacted to "make it possible to cover the political news to 
the fullest degree,"^ and to "preserv[e] licensees' traditional independent 
journalistic judgment."^ Since the creation of these exemptions, the FCC has 
reviewed many requests from various media outlets to determine whether certain 
programs constitute "bona fide news" as described in the four categories and are 
therefore exempted from equal time requirements. 

Most recently, the FCC considered and granted an exemption to Infinity 
Broadcasting Operations, Inc., broadcaster of The Howard Stem Show, finding 
that Stem's radio program met the requirements of a bona fide news interview 
program.^ In so doing, the FCC followed several similar rulings that exempted 
non-traditional news shows, effectively whittling away at the applicability of the 

The trend created by these rulings highlights a conflict created by the equal 
time rule. Clearly, as more shows are exempted, fewer have to comply with equal 
time and unequal media coverage for candidates multiplies. Allowing the FCC, 
as an administrative body, to make value judgments when applying the 
exemptions created by Congress does and will continue to result in anomalous 
outcomes regarding the exemptions. 

By reviewing various decisions of the FCC and federal courts, this Note 
addresses the current state and the apparent demise of the equal time rule. Part 
I discusses the history and the contents of the Communications Act. Part II 
reviews and compares the various interpretations and criticisms of the equal time 
provisions of the Act by the FCC, the courts, and commentators. Part III explores 
how those interpretations have resulted in numerous exceptions and loopholes far 
beyond those explicitly stated in the statute and Part IV advances suggestions 
about the preservation or abrogation of the doctrine. Ultimately, this Note 
concludes that in its current state, the equal time rule is little more than an 
administrative burden on both the FCC and media lawyers, and should either be 
abandoned or radically overhauled to meet the modem challenges posed by the 

6. 47U.S.C. §315(a)(lH4). 

7. Thomas Blaisdell Smith, Note, Reexamining the Reasonable Access and Equal Time 
Provisions of the Federal Communications Act: Can These Provisions Stand if the Fairness 
Doctrine Falls?, 74 GEO. L.J. 1491, 1498 (1986) (quoting 105 Cong. Rec. 14,451 (1959) (remarks 
of Sen. Holland); see id. at 1493-94 (discussing constitutional challenges to reasonable access and 
equal time and concluding that neither "threaten so substantial a chill on political speech as to 
warrant invalidation," but that the availability of electronic media has diminished the compelling 
need for equal time) (emphasis added). 

8. Id (quoting Kennedy for President Comm. v. FCC, 636 F.2d 417, 424 (D.C. Cir. 1980)). 

9. Infinity Broad. Operations Inc., 18 F.C.C.R. 18603, 18604 (2003). 

2005] EQUAL TIME 269 

abundance of media outlets in today's society. 

I. The Act 

A. A Brief History of the Act 

Historically, all broadcast regulation has been motivated by a ''scarcity of the 
frequencies" theory.*^ Although the merits of this rationale are debated, ^^ the idea 
that "the radio spectrum simply is not large enough to accommodate everybody"*^ 
is responsible for the notion that at least some regulation is necessary to ensure 
fair use of this limited and valuable public resource. Since broadcast frequencies 
are scarce, those who control access to them are viewed as being responsible for 
what those who are not in control get to see and hear. This notion "that the 
[broadcast] licensee should operate as public trustee explains much of the panoply 
of regulations to which . . . broadcasters were subject . . . from approximately the 
end of World War II until very recent times."^^ 

One major area of regulation resulting from the scarcity doctrine is election 
coverage. As an initial matter, there is no common law duty of a television 
broadcaster to treat all political candidates alike, nor a right of candidates to be 
treated alike. ^"^ Rather, the rights and obligations of both broadcasters and the 
public have been created by statute. The regulations of section 3 15(a) of the Act 
originated in section 18 of the Radio Act of 1927,^^ which was intended to 
promote cooperation between public use and private control of broadcasting.'^ 

10. Joel Rosenbloom, The "Vast Wasteland" in Retrospect, 55 Fed. COMM.L J . 51 1 ,51 1-15 
(2003) (discussing origins of the scarcity theory and noting that though it seems antique it has not 
yet been discredited). 

1 1 . William H. Read & Ronald Alan Weiner, FCC Reform: Governing Requires a New 
Standard, 49 FED. COMM. L.J. 289, 294-95 (1997) (outlining the "numerous problems with the 
scarcity rationale . . . not the least of which is the lack of scarcity"). 

12. NBCInc.v. United States, 319 U.S. 190,213(1943). 

13. Thomas G. Krattenmaker, Telecommunications Law and Poucy 147 (2d ed. 

14. Crommelin v. Capitol Broad. Co., 195 So.2d 524, 526 (Ala. 1967) (denying fraud action 
against broadcaster since there was no violation of any legal or equitable duty). 


If any licensee shall permit any person who is a legally qualified candidate for any 
public office to use a broadcasting station, he shall afford equal opportunities to all 
other such candidates for that office in the use of such broadcasting station, and the 
licensing authority shall make rules and regulations to carry this provision into effect 

Radio Act of 1927, Pub. L. No. 69-632, 44 Stat. 1162, 1166 (Feb. 23, 1927) (repealed July 16, 

16. Angela J. Campbell, Political Campaigning in the Information Age: A Proposal for 
Protecting Political Candidates' Use of On-line Computer Services, 38 ViLL. L. Rev. 517, 538 
(1993) (citing CBS, Inc. v. Democratic Nat'l Comm., 412 U.S. 94, 104-05 (1973)). 

270 INDIANA LAW REVIEW [Vol. 38:267 

Because the media was viewed as essential to distributing information and 
promoting political thought. Congress sought to limit private control of 
broadcasting that would permit censorship of opposing views, leaving citizens 
uninformed. ^^ 

Congress decided to revise the specifics of the equal time provision in 1959 
in response to FCC rulings "requiring equal opportunity for rivals of incumbents 
whose activities had been the subject of routine news reporting."'^ Rejecting a 
proposal that would have characterized broadcasters as conmion carriers who 
were required to allow public access to the airwaves. Congress limited the equal 
opportunities obligation to apply only when other political candidates had already 
been permitted access to the station.'^ Though the four statutory exemptions 
created the risk that broadcasters could abuse them to promote favored candidates 
during election coverage. Congress concluded that "[t]he public benefits [of 
dynamic coverage of political campaigns] are so great that they outweight [sic] 
the risk that may result from the favoritism that may be shown by some partisan 
broadcasters."^^ The exceptions were intended to "strike a balance between 
general interests in an informed public and more particularized concern with the 
accrual of special advantage or influence in the course of a political campaign."^^ 
The FCC "made clear during the legislative hearings that it preferred a bill which 
would enable it to define the exempt categories without reference to broadcaster's 
motives, and to decide any cases solely by determining whether the program fell 
within its definition. "^^ However, the legislative history also indicates Congress' 
intent that "a program not be entitled to the exemption if it can be shown that the 
primary purpose of the broadcaster was other than the dissemination of news."^^ 
Thus, it is clear that in the early years of the exceptions. Congress intended them 
to enhance election coverage and maximize the information received by the 
public. However, as this Note will discuss in Parts III and IV, it is questionable 
whether the exceptions have actually helped broadcasters fulfill this goal. 

Congress suspended the equal time requirements in 1960 to permit the 
nation's first televised presidential debates.^"^ Because the exceptions were less 

17. Id. 

1 8 . Donald E. Lively, Essential Principles of Communications Law 238(1 992). 

19. Campbell, supra note 16, at 538-39. 

20. Kyu Ho Youm, Editorial Rights of Public Broadcasting Stations vs. Access for Minor 
Political Candidates to Television Debates, 52 FED. COMM. L.J. 687, 695 (2000) (quoting S. Rep. 
No. 86-562, at 10 (1959)) (examining constitutional issues raised hy Arkansas Educ. Television 
Comm 'n v. Forbes, 523 U.S. 666 (1998), wherein the Supreme Court held that exclusion of a third 
party candidate from a debate was not a First Amendment violation). 

21. LrvELY, 5Mpranote 18, at238. 

22. Recent Statute, Federal Communications Act — Amendment Exempts Certain News 
Programs from Equal-Time Provisions, 73 Harv. L. Rev. 794, 795-96 (1960) (announcing 
statutory revision and noting that "[d]etermining the boundaries of the four excluded categories will 
be a difficult task for the FCC"). 

23. Mat 795. 

24. Pub. L. No. 86-677, 74 Stat. 554 (Aug. 24, 1960). 

2005] EQUAL TIME 271 

than a year old at that point, they had yet to undergo enough interpretation to 
allow Congress to capitalize on their benefits immediately. The suspension 
"enable[d] Democratic and Republican Presidential candidates to debate without 
creating an obligation to provide time to other [candidates]. "^^ Fifteen years later, 
the FCC categorically defined debates as "bona fide news events," that would 
always be exempted from equal time.^^ 

From 1949 to 1987, the equal time requirement had a counterpart known as 
the "fairness doctrine," which provided that broadcasters airing one side of a 
controversial issue must also provide equal time to opposing viewpoints.^^ The 
FCC ultimately abandoned the fairness doctrine, citing chilling effects on 
freedom of speech,^^ "despite a [1969] Supreme Court decision upholding the 
doctrine and legislation rushed through Congress ... to make it an undeniable 
part of the Communications Act."^^ Some commentators wonder why the equal 
time rule has not suffered a similar fate.^° 

In the last several years, the equal time doctrine has virtually stagnated, 
serving only as a technical hurdle to broadcasters without having much effect on 
their substantive content or progranmiing decisions. Its effectiveness as a 
promoter of public information is minimal at best. 

B. The Provisions of the Act, Defined 
1. ''Legally Qualified Candidate ". — In a departure from the deference given 

25. Lively, supra note 18, at 238. 

26. Aspen Inst. Program on Communications and Soc'y, 55 F.C.C.2d 697, para. 21-29 
(1975), ajfd, 538 F.2d 349 (D.C. Cir. 1976); see Paul B. MdA^y, Abundant Media, Viewer Scarcity: 
A Marketplace Alternative to First Amendment Broadcast Rights and the Regulation of Televised 
Presidential Debates, 36 IND. L. Rev. 101, 104, 1 17-18 (2003) (concluding that federal oversight 
of televised debates is a necessary limit on networks' First Amendment rights). 

27. Ackerman v. CBS, Inc., 301 F. Supp. 628, 632 (S.D.N. Y. 1969) (describing and applying 
the fairness doctrine). 

28. Syracuse Peace Council, 2 F.C.C.R. 5043, para. 98 (1987). 

29. William B. Ray, FCC: The Ups and Downs of Radio-TV Regulation 89 (1990). 
One author points out that the 1987 ruling was "just before Limbaugh inaugurated the Age of Rant 
Radio." Patt Morrison, Recent Conservative Outcry Reeks of Liberal Leanings, L.A. TIMES, Oct. 
14, 2003, at B3. That same year. President Reagan vetoed a legislative attempt to codify this 
doctrine. Robin R. Polashuk, Protecting the Public Debate: The Validity of the Fairness Doctrine 
in Ballot Initiative Elections, 41 UCLA L. REV. 391, 399-400 (1993). Both Presidents George 
H.W. and George W. Bush have threatened to veto such legislation should it be presented to them. 
Id. ; Katherine Mangu-Ward, Shut Up, They Explained, TimWKLY. Standard vol. 9 (3) (Sept. 29, 

30. Smith, supra note 7, at 1503; Michael C. Dorf, Why U.S. Law May Keep the Terminator 
Off the Air Until After Election, FiNDLAW (Aug. 22, 2003), at 
08/22/findlaw.analysis.dorf.amold/ (last visited Sept. 29, 2004). One former FCC insider predicts 
that "Congress, the courts, or the FCC itself under a different administration will resurrect the 
doctrine." Ray, supra note 29, at 89. 

272 INDIANA LAW REVIEW [Vol. 38:267 

to broadcasters in interpreting other provisions of the Act, "broadcasters are 
prohibited from exercising their own judgment as to who may be considered 
legally qualified. "^^ As a general rule, determining whether a person is 
considered "a legally qualified candidate" depends on the law of the jurisdiction 
in which the person is running for office.^^ To be a legally qualified candidate, 
a person must have "(1) publicly announced an intention to run for office, (2) [be] 
qualified by pertinent law to hold the office being sought, or (3) [have] made a 
substantial showing of being a bona fide candidate" by participating in campaign 
activities.^^ Write-in candidates who do not meet the requirements for appearing 
on the ballot may, in addition to the rules of their own jurisdiction, be required 
to make other showings such as election eligibility and proof of nomination by 
a commonly known and regarded political party.^"^ 

In the case of a recall like California's 2003 gubernatorial election, where the 
ballot first asks whether the incumbent should be recalled and then who the 
successor should be, all individuals appearing on the ballot, including the 
incumbent candidate, are considered legally qualified candidates. ^^ However, the 
exception does not apply to candidates concurrently running in primaries for 
different parties because they are not yet considered "opposing" candidates, 
despite the fact that they are ultimately running for the same off ice. ^^ 

2. ''Use". — The determination of whether or not a televised appearance is 
a "use" under the Act does not depend on whether or not the appearance is 
political in nature, since even nonpolitical appearances may be considered "uses" 
under the Act.^^ For example, during Ronald Reagan's candidacy for the 
Republican Party nomination, the FCC determined that televising his movies 
would constitute a use that would entitle other candidates for the Republican 
nomination to equal time.^^ 

Initially, "use" was thought to be any appearance in which the candidate was 

3 1 . John R. Bittner, Law and Regulation of Electronic Media 1 1 7 (2d ed. 1 994). 

32. Eleanor Clark French, 40 F.C.C. 417, 418 (1964) (interpreting New York law to 
determine whether complaining candidate was legally qualified); Rady Davis, 40 F.C.C. 435, 435 
(1965) (finding that candidate was not legally qualified since Kentucky election law did not permit 
write-in candidates). 

33. Lively, supra note 18, at 237. 

34. Frank J. Kuhn, Jr., 48 F.C.C.2d 433, 433 (1974). 

35. Station KOAA-TV, Pueblo, Colo., 68 F.C.C.2d 79, 79-80 (1978) (declaratory holding) 
(holding, in case of first impression, that though recalls are generally not contemplated by the Act, 
when they include the question of who should replace the officeholder (if recalled) the incumbent 
would be disadvantaged if not considered a legally qualified candidate). 

36. KWFT, Inc., 43 F.C.C. 284, 284 (1948) (holding that "while both primary ... and general 
elections are comprehended within the terms of Section 315, such elections must be considered 
independently of one another and equal opportunities . . . need only be afforded to legally qualified 
candidates for the same office at the same election"). 

37. Paulsen v. FCC, 491 F.2d 887, 891 (9th Cir. 1974). 

38. Adrien Weiss, 58 F.C.C.2d 342, 342 (1976). 

2005] EQUAL TIME 273 

identifiable to the audience, even if he did not speak.^^ However, in 1991, the 
FCC re-examined that interpretation, and instead concluded that some degree of 
intent to "use" the media by making an appearance was necessary for the use to 
trigger equal time."^^ To reflect that idea, the FCC limited the definition of use to 
"only non-exempt candidate appearances that are controlled, approved, or 
sponsored by the candidate.'"^' In so doing, the FCC pointed to the fact that the 
"plain language of the statute suggests the candidates' tacit approved participation 
in the broadcast," and that the "legislative history of Section 18 of the Radio Act 
. . . indicates that Congress primarily was addressing candidate-initiated 
appearances and speeches when enacting the equal opportunities requirement/"^^ 
Therefore, the current standard for a "use" is "if a legally qualified candidate 
voluntarily appears as a performer, celebrity, or station employee in a non- 
exempt program, his opponents will continue to be entitled to equal 
opportunities.""^^ But if the appearance is involuntary, "such as in unauthorized, 
independently sponsored advertisements or rebroadcasts of appearances that were 
made prior to his attaining the status of a legally qualified candidate, [that] 
appearance would not constitute a use.""^ 

Aside from the candidates' intention for the appearance, the type and format 
of the program on which the candidate appears also affects whether or not the 
appearance is considered a use. The FCC has enumerated the following factors 
to be considered when determining whether a specific program provides the 
format for a use: (1) the format, nature, and content of the program; (2) whether 
the format, nature, or content of the program has changed since its inception, and, 
if so, in what respects; (3) who initiates the program; (4) who produces and 
controls the program; (5) when the program was initiated; (6) whether the 
program is regularly scheduled; and (7) if the program is regularly scheduled, the 
time and day of the week when it is broadcast."^^ Appearances on programs that 
are regularly featured by networks are more likely to be considered "uses" than, 
for example, a special feature that mentions a candidate for some reason other 
than his candidacy. 

In addition, the duration of the appearance has to be "significant enough to 
activate the equal opportunity obligation. '"^^ Appearances lasting only a few 
seconds "have been dismissed as inconsequential and not implicating the terms 
of the statute.'"^^ 

3. The Exceptions. — "The question of what is a bona fide news program. 

39. Nat'l Urban Coalition, 23 F.C.C.2d 123, 123 (1970). 

40. Codification of the Comm'n's Political Programming Policies, 7 F.C.C.R. 678, para. 33 

41. Id. 

42. Id. 

43. Id. at para. 34. 

44. Id 

45. Use of Broad. Facilities by Candidates for Pub. Office, 24 F.C.C.2d 832, sec. Ill (1970). 

46. Lively, supra note 18, at 237. 

47. Id 

274 INDIANA LAW REVIEW [Vol. 38:267 

however, at a time when news and entertainment are often mixed in the same 
program is a subject of much debate in the communications industry.'"^^ As 
evidenced by several recent decisions, this determination remains one that sharply 
divides those with differing views of the FCC's proper role in regulating the 
media. The next portion of this Note clarifies the interpretations of each of the 

a. Exception 1: Bona fide newscast. — Similar to the determination of what 
constitutes a "use," whether a program is considered a bona fide newscast seems 
to depend as much on its format as on its content. The FCC has stated that its 
inquiry focuses on a potential newscast's subject matter, but whether it "report[s] 
about some area of current events, in a manner similar to more traditional 
newscasts. '"^^ In relying on this criteria, the FCC is focused less on evaluating the 
quality or significance of the topics and stories selected, instead relying on good 
faith news judgment.^^ Critics argue that the "crossover these days between news 
shows and entertainment shows ... is turning equal time into a meaningless 
irony."^^ However, one format in which no crossover is allowed is third-party 
produced newscasts created to promote a particular candidate; those programs are 
never considered bona fide newscasts. ^^ 

b. Exception 2: Bona fide news interview. — The second exception to equal 
time that Congress created was for bona fide news interviews. In determining 
when this interview exception applies, the FCC looks to the format of the 
program on which the interview is aired. In so doing, it considers: 

1) whether the broadcast is regularly scheduled[,] 2) whether the 
selection of the content, format, and participants of the program is under 
the exclusive control of the licensee and 3) whether determinations as to 
format, content, and participants are made in independent exercise of 
licensee's news judgment rather than political advantage of any 

48. Office of Int'l Info. Programs of U.S. Dep't of State, U.S. Radio and TV Stations 
Required to Give Equal Time, ISSUES OF DEMOCRACY, Oct. 2000, at 83, available at (last visited Sept. 29, 2004) 
[hereinafter Issues of Democracy] . 

49. Paramount Pictures Corp., 3 F.C.C.R. 245, para. 7 (1988). 

50. In re Request of Access Hollywood. 1997 WL 358720 (F.C.C. July 1, 1997). 

5 1 . Amy Wilentz, Getting Along Famously; One Candidate 's White-hot Star Power make 
this an Election Campaign like no other, L.A. TIMES, Sept. 28, 2003, at M6. 

52. Codification of the Comm'n's Political Programming Policies, 7 F.C.C.R. 678, para. 29. 

53. Ishmael Flory, 66 F.C.C.2d 1047, 1047 (1976). The second circuit applied these factors 
in 1995, finding that an interview with an undeclared candidate for president where the tenor of the 
proceedings was as critical as it was flattering, where audience members asked questions in a 
manner wholly consistent with a typical news interview, and where the host repeatedly pressed the 
candidate for specifics during a question and answer segment was a bona fide news interview, 
notwithstanding a claim that network pursued a competitive advantage that compromised its news 
judgment. Fulani v. FCC, 49 F.3d 904, 912-13 (2d Cir. 1995). 

2005] EQUAL TIME 275 

Many programs, such as The Howard Stem Show, ^^ Access Hollywood,^^ and 
Politically Incorrect,^^ are exempted in their entirety (rather than merely certain 
interview segments) under this exception. To be eligible, it is not necessary that 
program focus exclusively on current events, so long as it features bona fide 
interviews on a regular basis.^^ Exempting entire programs rather than individual 
segments from equal time requirements is one of the factors accounting for the 
deterioration of equal time. For example, although Howard Stem frequently has 
guests on his program, arguably the frequency of actual news interviews is fairly 
limited. However, following the September 2003 ruling, it appears that Stem 
never again has to comply with any equal time requirements, even if he were to 
suddenly shift his focus to hard-news, since the format, and not the contents of 
the program formed the basis of its classification as a bona fide news interview 

c. Exception 3: Bona fide news documentary. — To determine whether a 
program falls under this exception, the FCC again looks to a number of factors, 
including (1) whether the appearance of the candidate was incidental to the 
presentation of the subject; (2) whether or not the program was designed to aid 
or advance the candidate' s campaign; (3) whether the appearance of the candidate 
was initiated by the station on the basis of the station's bona fide news judgment 
that the appearance was in aid of the coverage of the subject matter; and (4) 
whether the candidate had any control over the format, production, or subject 
matter of the broadcast.^^ 

One common format for candidate appearances — debates — has specifically 
been found to preclude a program from being designated as a bona fide news 
documentary.^^ Therefore, under these factors, a documentary news piece on a 
specific issue could include various candidates' viewpoints without triggering 
equal time so long as the primary subject was the issue itself and the station had 
full control over the content. 

d. Exception 4: On the spot coverage of bona fide news events. — This 
provision is most often applied to candidate press conferences and live coverage 
of debates. In specifically discussing press conferences, the FCC found that 
where a station makes a good-faith judgment as to the newsworthiness of the 

54. In response to a request for a declaratory ruling by Infinity Broadcasting Operations Inc., 
the FCC relied on the following facts in determining that the Howard Stem Show is a bona fide 
news interview program: "the program is regularly scheduled; Infinity, which broadcasts the 
program, has control over all aspects of the show; Infinity's decisions on format, content, and 
participants are based on newsworthiness; and guests that happen to be political candidates are not 
selected to advance their candidacies." InfinityBroad. Operations, Inc., 18F.C.C.R. 18603(2003). 

55. See Access Hollywood, 1997 WL 358720, at para. 5. 

56. See ABC, Inc., 15 F.C.C.R. 1355, 1359-60 (1999). 

57. See Multimedia Entm't, Inc., 9 F.C.C.R. 281 1, 281 1 (1994). 

58. Declaratory Ruling Concerning Whether the Educ. Program "The Advocates" Is an 
Exempt Program Under Section 315, 23 F.C.C.2d 462, 462 (1970). 

59. Id. 

276 INDIANA LAW REVIEW [Vol. 38:267 

event and shows no favoritism toward any candidate, the broadcast of a news 
conference held by a candidate for public office, including an incumbent, is on 
the spot coverage.^^ The main criticism of this exception is that it does not 
require equal coverage of candidates who are not invited to participate in 
televised debates. ^^ 

C Enforcement 

Broadcasters are expected to comply with equal time requirements on their 
own volition. However, in the event of noncompliance, grievance procedures are 
available.^^ Generally, a candidate must first make a request for equal time. 
Next, good-faith negotiations between the candidate and the station should occur, 
as candidates are encouraged to undergo negotiations before filing a complaint 
with the FCC, which must be filed prior to any court action on the matter.^^ After 
the FCC has made a ruling on the purported equal time violation, a proceeding 
to have the ruling reviewed may be brought in the appropriate circuit court of 

The FCC has a variety of options for sanctioning a violation, including 
revocation of a station's broadcasting license (though this is unlikely for a minor 
equal time violation), cease and desist orders, or denial of a license renewal.^^ In 
extreme cases where there has been a willful and knowing violation of the Act' s 
provisions or the FCC's regulations or orders, criminal sanctions are available.^^ 
However, there is no private cause of action for violation of equal time 
provisions,^^ which can leave candidates without a remedy should they incur any 
damages as a result of the FCC or a broadcaster denying their request. 

60. Chisholm v. FCC, 538 F.2d 349, 353 (D.C. Cir. 1976). This ruling was later 
characterized as creating a two-part test for bona fide event programming: 1) whether the format 
of the program reasonably fit within the exemption category and 2) whether the decision to carry 
a particular event was the result of good faith news judgment, not partisan purposes. A. H. Belo 
Corp., 11 F.C.C.R. 12306, 12308 (1996). 

61 . Forbes v. Ark. Educ. Television Communication Network Found., 22 F.3d 1423 (8th Cir. 

62. Use of Broad. Facilities by Candidates for Pub. Office, 24 F.C.C.2d 832 (1970). 

63 . The requirement that a candidate first exhaust administrative remedies has been enforced 
by courts. For example, a district court's refusal to rule on an independent political candidate's 
claim that an Arkansas state network improperly refused to grant him equal time because it was not 
first brought before the FCC was deemed proper by the Eighth Circuit. Forbes, 22 F.3d at 1427-28. 

64. 47 U.S.C. § 402(b) (2000). These actions are not moot by virtue of the election having 
passed. Flory v. FCC, 528 F.2d 124, 127 (7th Cir. 1975). 

65. 47 U.S.C. § 312; id. § 309(d). 

66. Id. §§ 501-503. 

67. See Daly v. CBS, Inc., 309 F.2d 83, 85-86 (7th Cir. 1962); Ackerman v. CBS, Inc., 301 
F. Supp. 628, 631 (S.D.N.Y. 1969); butcf. Weiss v. Los Angeles Broad. Co., 163 F.2d 313, 315-16 
(9th Cir. 1947) (allowing action by candidate against radio station for deleting portions of speech, 
but dismissing for lack of factual support). 

2005] EQUAL TIME 277 

II. The Act Interpreted 

A. Court Interpretation 

As previously stated, courts have noted that the basic purpose of the equal 
time provision is to encourage the "full and unrestricted discussion of political 
issues by legally qualified candidates."^^ Though nothing in the Act compels 
broadcasters to accept political advertisements,^^ "[b]roadcasters are not free to 
comply with the [e]qual [t]ime [r]ule by ignoring political broadcasting 
altogether."^^ Therefore, while broadcasters need not allow advertising in all 
political races, they must feature at least some political broadcasting, and in those 
races for which they do accept broadcasting, they must afford equal time. 
Finally, although courts do occasionally interpret the Act, they tend to note that 
equal time matters should be deferred to the administrative expertise of the 
FCC.^^ It is from these basic concepts that courts begin their interpretations of the 
Act and its exemptions. 

In a close reading of statutory exceptions, the D.C. Circuit pointed out that 
by modifying each of the exempted categories with the words "bona fide," 
Congress was making clear its reliance on the importance of newsworthiness in 
sustaining an exception.^^ However, in determining whether an event is truly 
newsworthy, courts usually give great deference to the broadcaster itself. In the 
absence of evidence of favoritism toward a certain candidate, the FCC need only 
look to conditions of the broadcast and whether the broadcaster made a good-faith 
estimate that an event was newsworthy before airing it.^^ Therefore, so long as 
a broadcaster can make a showing that he or she believed an event to be 
newsworthy, no later analysis of whether that belief was reasonable or whether 
the event was actually newsworthy is undertaken. 

Courts have also reviewed broadcasters' interpretations of the limits of the 
exceptions themselves. For example, the D.C. Circuit rejected a station's 
contention that three pre-recorded programs on opposing candidates that were 
aired back to back at three different points during the campaign were bona fide 

68. Farmers Educ. & Coop. Union of Am., N.D. Div. v. WDAY, Inc., 360 U.S. 525, 529 
(1959); see supra note 16 and accompanying text. 

69. CBS, Inc. v. Democratic Nat'l Comm., 412 U.S. 94, 1 10-11 (1973). 

70. Roshon L. Magnus et al.. Access Rights to the Media After CBS v. FCC, 25 How. L.J. 
825, 833-34 (1982). This is because of another broadcast doctrine, the reasonable access rule, 
which provides that a station's license may be revoked for "willful or repeated failure to allow 
reasonable access to or to permit purchase of reasonable amounts of time for the use of a 
broadcasting station ... by a legally qualified candidate for Federal elective office on behalf of his 
candidacy." 47 U.S.C. § 312(a)(7). 

71. Maher v. Sun Publ'ns, Inc., 459 F. Supp. 353, 356 (D. Kan. 1978). 

72. Office of Communication of United Church of Christ v. FCC, 590 F.2d 1062, 1065 (D.C. 
Cir. 1978). 

73. Kennedy for President Comm. v. FCC, 636 F.2d 417, 424 (D.C. Cir. 1980). 

278 INDIANA LAW REVIEW [Vol. 38:267 

news interviews'"^ 

B. FCC Interpretation 

Although stations have no affirmative duty to make their airwaves available 
to any candidate, if they choose to do so, the FCC has clearly held that the 
stations must provide equal time to the opposing candidate without any input as 
to how that time is used/^ In fact, any attempt on the part of a station to dictate 
what a candidate will say or what format he will utilize to say it constitutes 
"censorship," and thus is prohibited by the terms of the statute'^ 

In addition, the FCC has noted that candidates themselves must monitor the 
media for use by opposing candidates. As a general matter, stations are not 
obligated to inform a candidate that his opponent has been granted time and 
affirmatively offer equal time to comply with the statute.^^ The broadcaster need 
only grant the request once it is made. However, when time is arranged, the time 
that is offered to the other candidate must be considered truly "equal" by the 

C Commentator Interpretation/Criticism 

Not surprisingly, commentators have criticized many aspects of the equal 
time rule, from its contents to its application. One main area of comment is the 
application of the exceptions to the equal time rule, including their potentially 
chilling effects on speech. It is argued that in the few broadcast contexts in which 
none of the exceptions apply, the requirement of providing equal time is a 
"disincentive for broadcasters to air material that features candidates,"^^ because 
they may be viewed as providing partisan coverage rather than neutral 
information unless they willingly comply with equal time. 

In addition, because of the lack of clarity surrounding the exceptions' 
application, broadcasters may be so cautious that they "forgo politically oriented 
programming that actually would not be subject to equal time constraints."^^ If 

74. King Broad. Co. v. FCC, 860 F.2cl 465, 470 (D.C. Cir. 1988). 

75 . Control of Content of Broads. Under "Equal Time" Requirements of Section 3 1 5 of the 
Communications Act of 1934, 40 F.C.C. 241, 242-43 (1952) (admonishing radio station for 
attempting to limit subject matter of candidate's appearance to the specifics of his office and 
prohibit general statements advancing Socialist ideology). 

76. Id. 

11. See Richard L. Colby, 37 F.C.C.2d 676, 676 (1972); James Spurling, 30 F.C.C.2d 675, 
675 ( 1 97 1 ). There may be an affirmative duty under certain "unusual circumstances," such as when 
an opponent is granted broadcast time a very short time prior to the election. 

78. Joseph L. Dorton President/CEO Ameron Broad., Inc., 7 F.C.C.R. 6537 (1992) (Station 
fined for violating equal time provision where one candidate was allowed to speak freely on the air 
for nearly five minutes while his opponent was permitted only one minute to speak, had to respond 
to questions rather than speak freely, and had his answers cut off by the host.). 

79. Smith, supra note 7, at 1503. 

80. Id. 

2005] EQUAL TIME 279 

in fact broadcasters are taking this overly-cautious stance, society is being 
deprived of information that is withheld out of concern for possibly violating 
equal time. 

The likelihood of broadcasters' fears diminishing the quantity of election 
coverage also raises First Amendment issues in the context of citizens' rights to 
receive information needed to participate in the political process. ^^ This right, it 
is argued, is far more compelling than is a political candidate's right to equal 
time.^^ As one commentator stated, "while the Court has implicitly recognized 
the value in enabling candidates themselves to present [their relative positions and 
personal qualities] to the public . . . merely ensuring that each competing 
candidate is given reasonable . . . opportunities to do so is all that is necessary to 
achieve this result. "^^ 

In addition to concerns about public access to information, the requirements 
also raise questions about broadcaster autonomy. One perspective is that the 
inquiry required to determine whether the exceptions' application is appropriate 
is overbroad because "the manner in which the Commission administers the equal 
time . . . provisions of the Act is more disruptive of licensee operations and more 
intrusive into editorial discretion than is necessary to achieve the compelling 
government interest to which these rules are dedicated. "^"^ 

In addition, critics wonder if the benefit to the public is enough to justify the 
burdens that the equal time rules place on broadcasters. One observation is that 
the loose and varied interpretations of the exceptions have "substantially diluted" 
the effect of the equal time rule.^^ Whether this dilution is an unfortunate side 
effect or a calculated result is debatable. One critic claims that "[m]uch of the 
confusion in the law is intentional. . . . [It] was written by congressmen who have 
a direct stake involved in maximizing their air time while minimizing that of their 

Because of the non-uniform ways in which the equal time rule has been 
applied and its extremely lax enforcement by the FCC, critics wonder whether the 
public would even notice a difference if the rule were abrogated for good.^^ As 

81. Mat 1511. 

82. Id. 

83. Id. 

84. Id. at 1512. 

85. Rex S. Heinke & Heather L. Wayland, Lessons from the Demise of the FCC Fairness 
Doctrine, 3 NEXUS 3, 7 (1998) (concluding that regulations of media unfairness are ineffective and 
stifle the flow of information). 

86 . What Is Equal Time ?, WASH. TIMES, Aug. 1 5 , 2003 , at A 1 8 (characterizing the equal time 
rule as "a populist gesture to make it look as if the proverbial little guy can take on a political 
Goliath with equal access to the media"). 

87 . Robert W. Leweke, Rules Without a Home: FCC Enforcement of the Personal Attack and 
Political Editorial Rules, 6 COMM. L. & Pol'y 557, 574-75 (2001) (analyzing FCC interpretation 
and concluding that reinstatement of personal attack and political editorial rules is not likely or 

280 INDIANA LAW REVIEW [Vol. 38:267 

long ago as 1976, critics have been decrying the end of equal time,^^ yet it 
remains a part of life for candidates and broadcasters today. 

in. The "Real" Exceptions: Loopholes in Equal Time 

"[T]he legal loopholes are big enough for even Conan the Barbarian to 
sHp through."^^ 

In application it is clear that the equal time exemptions actually exclude many 
more situations than just the four specific categories enumerated by the Act. 
When viewed in light of the Act's intent to promote widespread political 
coverage, it becomes evident that its effectiveness as a promoter of public access 
to information is questionable. This section of the Note will describe areas which 
have not been specifically exempted from equal time but where, because of 
common interpretation and application, it is not applied. While the gaps are both 
specifically related and tangential to broadcasting, when combined, they 
demonstrate the reality that equal time is averted far more often than it is applied. 

Though they are not mentioned in the exemptions, several groups of people 
who are commonly involved in political races are free from the benefits and 
burdens created by equal time. First, as previously mentioned, equal time does 
not create an obligation for broadcasters to feature third party candidates either 
as part of their organized debates or to ensure that all candidates have equal time 
on the air.^° Similarly, broadcasters are not required to accommodate candidates 
who cannot afford air time comparable to that utilized by their opponents, which, 
experience dictates, will often disadvantage candidates from minor parties.^^ 
Therefore, even if a third-party candidate does succeed in getting a broadcaster 
to grant a request for equal time, if he cannot afford a comparable or any time 

88. "If we truly mean to restore openness and a sense of humor to our national life, we should 
acknowledge that equal time is dead and broadcasters are as free as newspapers to determine what 
coverage to give candidates and their speeches." Bittner, supra note 31, at 1 16 (quoting speech 
by Archibald Cox, to Anti-Defamation League of B'nai B'rith, New York, Dec. 7, 1976). 

89. What Is Equal Time?, supra note 86, at A18. 

90. Chandler v. Ga. Pub. Telecomm. Comm'n, 917 F.2d 486, 489-90 (11th Cir. 1990) 
(holding that public television station's decision to exclude Libertarian candidate from debate was 
rational since network felt that a debate between only the two major party candidates would be of 
most interest and benefit to state citizens); see also Maher v. Sun Publ'ns, Inc., 459 F. Supp. 353 
(D. Kan. 1978). 

There are competing views on how mainstream a third party candidate has to be to justifiably 
expect coverage. In the context of the 2004 Democratic nomination, journalists vary widely on 
how much coverage they think is appropriate for "fringe" candidates, who some consider "a waste 
of time," although others feel they are deserving of coverage because of their "unique perspective" 
and "influence [on] other candidates." Mark McGuire, Fringe Presidential Candidates Want Equal 
Time, TIMES UNION (Albany, N.Y.), Jan. 27, 2004, at Dl. 

91. See, e.g.,Chandler,9llF.2dat4S9;Maher,459F.Supp.at356-51. In both cases, minor 
party candidates were excluded from the debates. 

2005] EQUAL TIME 281 

slot, he receives no air time. In addition, even when a candidate can afford the 
same time slot utilized by his opposing candidate, the station need not grant the 
time on the exact same program.^^ The effective result of the fact that third party 
candidates do not have to be invited to debates or to receive air time that they 
cannot afford is that the equal time rule, in practice, usually does not assist third 
party candidates at all. Although that result is not specifically enumerated in 
either the text or the purpose of the statute, the combination of other exceptions 
operates to essentially exclude third parties altogether.^^ 

Another situation that is immune from the equal time doctrine is third parties 
speaking on behalf of candidates. Equal time is not triggered by an appearance 
of family members, campaign workers or any other supporter speaking on behalf 
or in support of a candidate.^'* Therefore, broadcasts featuring coverage of 
endorsements by other political leaders or footage of supporters at a campaign 
rally do not require equal time so long as the candidate himself is not included, 
despite the fact that the clear intent of the appearance is to support the candidate 
and thus the spirit of the equal time provision is certainly implicated.^^ 

Another enormous group that is largely unaffected by equal time is 
incumbents. Although appearances by incumbents do trigger equal time during 
the actual campaign period, their appearances are not considered "use of a 
broadcast station" under the Act until they officially announce that they are a 
candidate for reelection. ^^ Therefore, an elected official who will soon be up for 
re-election but has not yet announced his candidacy can appear on television 
without triggering the equal time rule for his opponents who have declared their 
candidacy for his seat. This helps explain "why candidates time an 
announcement that they are running for office very carefully, so as not to trigger 
the Equal Time rule requiring stations to give broadcast time in equal measure to 
their opponents."^^ One example of the benefits of incumbency occurred at a 
1980 press conference held by President Jimmy Carter. At this conference, which 
was carried by all of the networks in prime time, President Carter criticized his 

92. See Harry Dermer, 40 F.C.C. 407, 407 (1964). 

93. Lack of equal time was a common complaint by Ross Perot's campaigns, especially since 
he was in the unique position of being a minor-party candidate with resources to purchase the time 
he desired. See, e.g., Ross Perot v. ABC, 11 F.C.C.R. 13109, 13114-16 (1996). 

94. See CBS, Inc. v. FCC, 454 F.2d 1018, 1029 (D.C. Cir. 1971); Felix v. Westinghouse 
Radio Stations, Inc., 186 F.2d 1, 3-6 (3d Cir. 1950). 

95. The FCC's response to a 1970 letter from the Communications Counsel for the 
Committee on Commerce created some confusion on this issue. In the interpretive advisory 
statement now referred to as the "Zapple doctrine," (or "quasi-equal opportunities rule,") the FCC 
responded to a hypothetical posed by Mr. Zapple by concluding that "[w]here a spokesman for, or 
a supporter of candidate A, buys time and broadcasts a discussion of the candidates or the campaign 
issues," the (now defunct) fairness doctrine requires that time be provided to supporters for an 
opposing candidate. Nicholas Zapple, Communications Counsel, Comm. on Commerce, 23 F.C.C. 
2d 707 (1970). 

96. Democratic Nat'l Comm., 34 F.C.C.2d 572, para. 6 (1972). 

97. Issues of Democracy, supra note 48, at 84. 

282 INDIANA LAW REVIEW [Vol. 38:267 

rival for the Democratic nomination. In response to criticisms of 
nonenforcement, the FCC said that it "refused to second-guess licensee 
determinations . . . 'absent strong evidence' that bona fide news judgment was not 
being exercised."^^ More recently, one critic has commented on this continuing 
issue: "by abandoning principles of 'equal time,' the [FCC] lets stations broadcast 
political propaganda of authorities in power [which is] entertaining but not 

There are also other timing-related issues than can shield a candidate from 
equal time. For example, non-incumbent candidates-to-be who have not yet 
declared their candidacy can also make appearances of the sort that would trigger 
equal time if they were officially declared. Equal time is also avoided in the 
reverse situation — stations need not grant a candidate broadcast time in order to 
compensate for time provided to his opponents before he became a candidate. ^^° 

Geography creates safe harbors from equal time as well. Although equal time 
applies to candidates at all levels of government, it is not triggered by coverage 
of elections beyond a station's principal service area.^^^ This doctrinal gap has 
the most impact on local or regional races in rural markets, where coverage of the 
fact that, for example, the neighboring mayoral race has a standout democratic 
candidate would not trigger equal time for either of the candidates in the station's 
primary viewing area. 

Aside from groups of people and logistics such as timing and location, certain 
types of programs may also have an easier time escaping equal time requirements. 
As the recent Howard Stem ruling illustrates, the FCC s judgments about which 
programs may be exempted from equal time are not at all affected by the fact that 
a show's format may be non-traditional. As discussed in the Stem opinion, the 
FCC feels that "it would be unsound to mle that a program involving a unique or 
innovative approach to interviewing . . . somehow lacks sufficient licensee 
control evident in traditional news interview programs," because that approach 
"would discourage programming innovation by sending a signal to broadcasters 
that to be exempt an interview program should adhere only to the format of 
certain programs mentioned by Congress over 25 years ago."^^^ 

Implicit in the previous statement is the fact that the FCC does not want to 
make it difficult for programs to be exempted from equal time requirements. In 

98. The Kennedy for President Comm., 77 F.C.C.2d 964 (1980); Kennedy for President 
Comm., 636 F.2d 417, 432 (D.C. Cir. 1980) (upholding FCC ruling); see also Lively, supra note 
18, at 239. 

99. Edward Wenk Jr., Threats to Democracy at Code-Red Level, SEATTLE POST- 
INTELUGENCER, Dec. 3 1 , 2003, at B7. 

100. Aspen Inst. Program on Communications and Soc'y, 55 F.C.C.2d 697 (1975); Hon. 
Joseph S. Clark, United States Senate, 40 F.C.C. 332 (1962). 

101. Barry D. Umansky, Political Broadcasting Primer, Radio World Newspaper (June 5, 
2002), at 
5.shtml (last visited Set. 29, 2004). 

102. Infinity Broad. Operations Inc., 18 F.C.C.R. 18603, 18604 (2003) (quoting Multimedia 
Entm't, Inc., 56 P.2d 143, 147 (1984)). 

2005] EQUAL TIME 283 

fact, in that same decision, the FCC noted that "Hcensees airing programs that 
meet the statutory news exemption, as clarified in our case law, need not seek 
formal declaration from the Commission that such programs qualify as news 
exempt programming under Section 3 15(a). "^^"^ This directive by the FCC seems 
to be urging broadcasters not to bother with petitioning for an exemption, but to 
rely on their independent judgment as to whether the exception applies to 
them — not merely as to specific broadcasts, but for their programs as a whole. 
The signal sent to broadcasters by both the content and outcome of this ruling is 
that all but the most outrageous requests will be granted — allowing more and 
more media outlets to ignore equal time.^^"^ 

The type of media used by candidates also affects whether they must comply 
with equal time. The Act's applicability to cable, a major medium, is less than 
clear. Given the fact that almost ninety percent of television viewers have cable 
or satellite, ^^^ this is obviously a significant news source which includes several 
news-only channels. The FCC has promulgated its own rule which copies the 
language in the Act and applies equal time to ''cable television system[s]."^^^ 
However, the reach of this agency rule is unclear even to broadcasters. During 
Arnold Schwarzenegger's gubernatorial candidacy, there was debate about 
whether and which media outlets were allowed to air his films. Cable television 
networks (which are exempt) attempted to distinguish themselves from cable 
television operators, such as Cox Cable, that deliver service to homes. ^^^ 
Nevertheless, several cable operators said they believe that they are exempt from 
the FCC equal time rules: "Cable and broadcast are not under the same rules. 
We are not required to block out any signals if it is coming from one of our 

103. Id. 

104. This deference from the FCC comes even as polls continually suggest that, in fact, these 
alternative programs are becoming a major news source. See David Bauder, When Campaigns and 
Comedy Mix, the Nervous Laugh is from Lawyers, San DffiGO Union-Trib., Oct. 7, 2003, at E5 
(citing Pew Research center poll that "more than a third of people under age 30 said they got 
campaign news from comedy shows"); Lynn Smith, Taking Sides? Jay Leno's Role at the 
Governor-Elect' s Rally Has Many Wondering Just How Far the Blending of Politics and 
Entertainment Will Go, L.A. TIMES, Oct. 20, 2003, at El (noting that "10 percent of 
Americans — and nearly half of those under 30 — now use the late-night shows as sources of news 
about politics"). 

105. What Is Equal Time?, supra note 86, at A18. 

106. 47 C.F.R. § 76.205 (2004). A "cable television system" is defined as: "a faciUty 
consisting of a set of closed transmission paths and associated signal generation, reception, and 
control equipment that is designed to provide cable service which includes video programming and 
which is provided to multiple subscribers within a community." Id. § 76.5(a). The definition 
identifies four categories that are not considered cable systems, including, for example, a "facility 
that services only to retransmit the television signals of one or more television broadcast stations." 
Id. § 76.5(a)(1). 

107. Kit Bowen, Networks Hold Off Airing Schwarzenegger Movies,, Aug. 
13, 2003, fl[? 

284 INDIANA LAW REVIEW [Vol. 38:267 

programming partners," said one Cox spokesman. '^^ Interestingly, during the 
California elections, some clearly exempt cable channels did elpct to comply with 
the spirit of equal time. For example, both the Sci-Fi channel and FX elected to 
suspend scheduled airings of Schwarzenegger action films. *^^ 

One smaller but still relevant medium is public access television. Equal time 
provisions do not apply to public access networks because "the open nature of 
access automatically makes time available to all who request it."'*^ While this 
seems to make sense, it creates the result that candidates with regularly scheduled 
public access shows may campaign on those shows without providing equal 

Online media is another news source on which equal time has no effect, 
despite the fact that it is increasingly supplementing and, in some instances, 
replacing broadcast. Even if the rule were generally extended to apply to online 
media, the definition of what is considered a "use" for the purposes of the 
requirement may have to be reevaluated, since a candidate could utilize the 
internet without ever displaying his likeness or making a formal "appearance."^ ^^ 
One article noted that because of the exemptions "[m]any electronic journalists 
assume that the equal-time and other political broadcasting rules never apply to 
their work."^^^ 

Publications, another untouched medium, are also not subject to equal time 
requirements.'^"^ Though this is an obvious point, since the print media is outside 

108. Id. 

1 09. Sallie Hofmeister, FX Takes Hero Out of Action; Network Pulls Schwarzenegger Films, 
L.A. Times, Aug. 14, 2003, at CI. However, Sci-Fi rewarded its own civic mindedness by airing 
a Schwarzenegger marathon immediately following the election. Sci Fi Channel Readies a 
Schwarzenegger Marathon, San JoSE MERCURY NEWS, Oct. 9, 2003. 

1 10. Daniel L. Brenner et al.. Cable Television and Other Nonbroadcast Video § 
6:82 (2004). 

111. See Bill McAuliffe, Candidates and Incumbents Are Using Cable TV to Get the Word 
Out, Minneapolis-St. PaulStar-Trib., Sept. 22, 2003, at IB. 

112. Campbell, supra note 16, at 539-40. 

113. Kathleen Kirby, Rules of the Race, RADIO AND TELEVISION NEWS DIRECTORS Ass'N 
Communicator, Nov. 1999, <3v<3//(3Z?/^<3r (last 
visited Sept. 29, 2004). 

Teletext created a similar inquiry in the 1980s. A combination of print and electronic media 
which used electronics to transmit text, teletext was excepted from the equal time requirement 
because it was "not a medium by which a candidate can make a personal appearance." Teletext 
Rules, 48 Fed. Reg. 27054, 27061 (June 13, 1983) (to be codified at 47 C.F.R. pts. 2, 73, 74); see 
Jeffrey S. Hurwitz, Note, Telextext and the FCC: Turning the Content Regulatory Clock 
Backwards, 64 B.U. L. REV. 1057 (1984). Although teletext is no longer common, the FCC's 
determination that it was not subject to equal time could be an indicator of the outcome of online 
media should the FCC ever take a position. 

114. In 1974 the Supreme Court unanimously decided that a newspaper is under no obligation 
to give any sort of equal time — regardless of the paper's economic power. Miami Herald Publ'g 
Co. V. Tornillo, 418 U.S. 241, 254-58 (1974); see Adrian Cronauer, The Fairness Doctrine: A 

2005] EQUAL TIME 285 

of the purview of the FCC's powers, it is still important to consider this medium 
in order to obtain a global view of election coverage. Implicit in the rationale for 
equal time is the notion that hearing or seeing a candidate on the radio or 
television results in a greater awareness of their candidacy or leads the public to 
believe that they were somehow better or more important than other candidates 
because they received network coverage. Although this might have been a 
legitimate concern in 1934, it is far less clear that a television appearance has the 
same impact on citizens in today's media-proliferated society. 

Finally, regardless of where equal time is supposed to apply, the real measure 
of its effectiveness depends on enforcement — another area in which the FCC has 
opted for a hands-off approach. The FCC does not intervene in alleged or even 
blatant equal time violations without a specific complaint. ^^^ And many 
candidates are reluctant to report possible violations because filing a complaint 
against a show decreases their chances of being an invited guest of that show in 
the near future. ^^^ Therefore, when, for example. Jay Leno toes the line of equal 
time by allowing Arnold Schwarzenegger to both announce (while not yet a 
"legally qualified candidate") and celebrate (after his candidacy has ended) his 

Solution in Search of a Problem, 47 Fed. Comm. L.J. 51, 53 (1994) ("If the Miami Herald, 
delivered to 37 percent of all households in its region, escapes any public service obligations, why 
should each of a dozen local television stations and forty local radio stations face the prospect of 
losing their licenses when disagreements arise over 'fairness'?"). 

115. Bauder, supra note 104, at E5; Steve Friedman, Columbia, MO, Hospital Center Board 
Candidates Spar over Radio Remarks, COLUMBIA DAILY Trib., April 4, 2003. 

In the years 1973 to 1976, a total of 6254 complaints were filed regarding alleged violations 
of equal time rules on television. Of the twenty-six station inquiries conducted by the FCC in 
response to these complaints, only twelve resulted in sanctions. In the prior four years, from 1969- 
1972, only 1950 complaints were filed alleging television violations. Steven J. Simmons, The 
Fairness Doctrine and the Media 212-14 (1978). 

The FCC has not kept records of the number or type of complaints they have received for at 
least a decade. Email from Mark Berlin, FCC Policy Division, Media Bureau (Feb. 24, 2004, 
07:59:34 EST) (on file with author). However, an FCC Media Bureau staffer estimates that "you 
could probably be able to count the number of written equal time complaints in an entire year on 
both hands." Email from Mark Berlin, FCC Policy Division, Media Bureau (Feb. 23, 2004, 
10:36:50 EST) (on file with author). 

116. Bauder, supra note 104, at E5; Friedman, supra note 115. However, the prospect of 
losing a potential appearance does not dissuade every candidate. When the 2004 Democratic- 
nomination candidate Rev. Al Sharpton appeared on NBC's Saturday Night Live in December 

2003, candidate Sen. Joseph Lieberman requested — and was granted — an equivalent twenty-eight 
minutes of free air time in states where both men were on the ballot. Mary Leonard, In Lieberman 
Camp, A Lawyer Takes on the Fine Print, BOSTON GLOBE, Jan. 25, 2004, at A20. Sen. Lieberman 
was the only candidate to make this request. Leah Garchik, Daily Datebook, S.F. Chron., Feb. 5, 

2004, at E16. However, more than two dozen NBC affiliates nationwide "opted (with NBC's 
blessing) not to air the episode" for fear of triggering equal time requirements. Gail Pennington, 
They're Politicians, But They Play Guest Stars on TV, ST. LOUIS POST-DISPATCH, Dec. 14, 2003, 
at CI. 

286 INDIANA LAW REVIEW [Vol. 38:267 

campaign on The Tonight Show, few media-hungry candidates, present or future, 
are likely to complain. ^^^ In addition, even when they do intervene, "[s]ince the 
mid-1970s, the Commission has steered a course of review that is more 
deferential to a licensee's subjective judgment regarding the availability of an 
exemption."^ ^^ In "retreat[ing] from the view that the Commission had an 
obligation to force stations to carry out specific public trustee obligations," the 
FCC has moved toward the position that "broadcast stations ought to be governed 
by marketplace forces in their programming . . . decisions and that viewers . . . 
should exercise influence over licensees by turning the dials on their receivers 
rather than by petitioning the Commission for relief."^ ^^ 

When considering the foregoing practical effects of the equal time 
exceptions, it becomes evident that the doctrine in its current state provides little 
or no protection for candidates and does not ensure that the public receives 
balanced coverage of poUtical campaigns. 

IV. Suggestions for the Future of Equal Time 

Equal time is a doctrine which, despite its well-meaning roots, is currently 
serving no useful purpose. But why is this the case, and who is to blame? As 
they did with the now defunct fairness doctrine, critics are asking whether the 
FCC is "simply not enforcing" the equal time rules, or if perhaps, "broadcasters 
[are] so thoroughly compliant that no one [can] catch them in a violation ?"^^^ 
One response to this question is that there is actually very little to comply with, 
given the doctrine's limited applicability after the overwhelming combination of 
explicit and implicit exceptions. The FCC has stated its position that those in 
doubt about equal time should trust their own judgment rather than petitioning for 
approval. ^^^ Moreover, Congress is surely aware of the FCC's repeated 
reluctance to enforce equal time, yet it has not revised or clarified the provision 
since making a minute semantic change in 1972.^^^ 

This inattention is despite the fact that the statute containing the equal time 
rule, 47 U.S.C. § 315(b), contains the guidelines for how and what broadcasters 
may charge for airtime. This hotly contested issue has caused the statute itself to 

117. During the California governor's race, Leno went so far as to openly taunt equal time 
requirements by featuring a segment in which all of the other candidates were invited to the 
audience (eighty-one attended) to receive ten seconds of equal time. Leno then asked the 
candidates what they would do as governor and aired their responses simultaneously so that none 
was actually decipherable. Marvin Kitman, Calif. Debate Cheated Us, Newsday, Oct. 5, 2003, 
at D15; Wilentz, supra note 51, at M6. The result? Criticism in the print media and silence from 
the FCC. 

1 1 8. Lively, supra note 1 8, at 239. 

119. Krattenmaker, supra note 13, at 148. 

120. Leweke, supra note 87, at 574-75. 

121. See Infinity Broad. Operations Inc., 18 F.C.C.R. 18603, 18604 (2003). 

122. Pub. L. No. 92-225 § 103(a)(2)(B), 86 Stat. 3 (1972) (adding "under this subsection" 
following "No obligation is imposed . . ."). 

2005] EQUAL TIME 287 

receive a great deal of attention in the recent past, yet not one of the proposed 
revisions makes any change to the equal time rules in section (a).^^^ 

A. Three Options for the Future 

In light of its current state, in which the doctrine is weak and not completely 
serving its intended purpose, three possibilities arise for its future: continued 
adherence to established principles, increased enforcement by the FCC, or 
elimination of the doctrine. 

1. The Status Quo. — Equal time's current operation, including its 
deficiencies, has been described throughout this Note. Without changes to the 
FCC's application of the statute, especially in the area of enforcement, equal time 
is likely to continue on its current course as a doctrine requiring cursory 
consideration from media lawyers, but not one that has much practical effect on 
mainstream election coverage. 

The doctrine's longevity is perhaps an indicator that it is unlikely that it will 
be soon eliminated. In light of the extensive attention given to the broadcast 
charge provisions amended by the BRCA and the utter lack of attention directed 
at the equal time provisions in section (a), one must wonder whether the lack of 
attention it receives is a ratification by Congress that it is satisfied with the FCC's 
scheme. Perhaps it, along with the courts that have so noted, ^^"^ feel that 
substantial deference is owed to the FCC and that it is inappropriate to interfere 
with their interpretation by statutory revision. 

2. Increased Enforcement of Current Statute. — Another option to increase 
the effectiveness of equal time would be enhanced enforcement by the FCC. In 
order for changes to be meaningful, many of the current enforcement policies 
would have to be modified. For example, to ensure that candidates who are 
deserving of equal time because of an opponent' s appearance actually receive that 
time, they would have to be notified of all qualifying appearances. Rather than 
requiring candidates to self-monitor nationwide media coverage, broadcasters 
would have to design a system whereby a grant of time to one candidate results 
in notification to opponents. However, this would raise the dispute of whether 
the purchasing candidate or the station would be responsible for providing this 
notice. A decision on this point requires a value judgment about who should bear 
the administrative burden of equalizing political coverage. If placed on 
candidates, some of whom may already have their funds overextended by 
campaign expenses, this additional requirement may keep them off the air 
entirely. ^^^ However, placing the burden on broadcasters will potentially result 

123. McConnell v. Federal Elections Commission upheld the McCain-Feingold-sponsored 
Bipartisan Campaign Reform Act (BCRA). 124 S. Ct. 619, 639-40 (2004). Although BCRA 
amended section (e) of the Act, the ruling made no mention of the equal time provisions of the 

124. Maher v. Sun Publ'ns, Inc., 459 F. Supp. 353, 356 (D. Kan. 1978). 

125. For a discussion of whether broadcasters should be required to provide free airtime to 
candidates, see Reed E. Hundt, The Public's Airwaves: What Does the Public Interest Require of 

288 INDIANA LAW REVIEW [Vol. 38:267 

in less political coverage if broadcasters then refuse to sell time to candidates 
since they cannot pass along the charges to their viewers, who can view the 
broadcasts for free. 

Therefore, an obvious setback increased enforcement is the burden on 
broadcasters. Since under the current scheme, they are not required to broadcast 
all election coverage, it is possible that the burdens created by these monitoring 
responsibilities would decrease the amount of coverage given to elections 
generally. In addition, the administrative costs generated by a notice requirement 
would likely be defrayed in costs to candidates — another area that is highly 
regulated. ^^^ 

In addition to notice requirements placed on broadcasters, the FCC would 
have to change its policy of not reviewing potential violations without a 
complaint. ^^^ Because many equal time violations may go unreported or even 
unnoticed, the current system of requiring an aggrieved candidate to both 
discover and complain about the violations (possibly damaging their chances of 
being invited on that same program) does not result in thorough, evenhanded 
application of the doctrine. ^^^ However, a change to the current policy would 
require the FCC to police the airwaves with meticulous detail. The obvious 
disadvantage to this requirement is the resulting administrative burden. Perhaps 
some of this burden could be decreased by instituting a dual notice system, 
whereby notice is provided to both the FCC and the opposing candidate at the 
same time upon any sale of time to a candidate. 

Aside from the logistics of enforcement, changes to the substantive 
interpretation by the FCC, which currently results in several unintended 
loopholes, would be required to obtain effective enforcement. Special attention 
would have to be paid to common equal time victims, such as third party 
candidates. The disparate impact that the requirement seems to have on them 
would be cured in part by changes in notice and affirmative enforcement. 
Changes to the regulatory scheme would not, however, change the reality that 
third party candidates often have fewer financial resources than major party 
candidates and so still might have trouble purchasing the airtime even if it were 
more readily offered. ^^^ 

In addition, the FCC would have to refrain from its deferential approach to 
broadcasters' judgment. As outlined in Part I.B, many of the components of the 

Television Broadcasters?, 45 DukeL.J. 1089, 1104-09 (1996). 

126. See 47 U.S.C. § 3 15(b) (2000) (governing lowest unit charges for sale of broadcast time). 

127. As recently illustrated by the 2004 Super Bowl halftime show, the FCC is at times 
outspoken about what it views as a violation of its rules. Although undoubtedly there were 
eventually formal complaints lodged with the FCC, as soon as the day after the incident, Chairman 
Powell was promising a full investigation into Janet Jackson's alleged indecency. ABC News: 
World News Tonight: Indecent Exposure: The Jackson/Timberlake Show (ABC television 
broadcast, Feb. 2, 2004), available at 2004 WL 62998005. 

1 28. The FCC no longer keeps data on how many equal time complaints it receives. See Email 
from Berlin, supra note 115. 

129. See Hundt, supra note 125, at 1 105-06. 

2005] EQUAL TIME 289 

equal time requirement are evaluated by reference to several factors used to 
determine whether, for example, something is to be considered a statutory "use." 
Most of these factor tests include some review of the newscasters' subjective 
judgment about whether or not the appearance, program, etc. was considered 
newsworthy. ^^^ Because of this consideration, the FCC can often satisfy itself 
that its factors test has been passed based on newscasters' testimony about their 
own broadcast coupled with satisfaction of other factors. Because of this reliance 
on subjective rather than objective factors, broadcasters are justified in beUeving 
that if they can rationalize their belief that equal time was not required, the FCC 
will probably release them from its requirements. 

When it does determine that a violation occurred, the FCC also might need 
more stringent tools for punishing equal time violations. Although this is an area 
that would require statutory revision, undoubtedly a large, publicized increase in 
fines for equal time violations would make broadcasters more conscientious. 

However, it is not necessary that Congress enact statutory changes in order 
to increase enforcement. As an administrative agency, the FCC is part of the 
executive branch and is subject to vacillations in political support from both 
pohticians and the public. ^^^ For example, following the 2004 Super Bowl,^^^ the 
broadcast doctrine of indecency has gained new life, leading to increased 
programming time delays and disclaimers on network television. Congress is 
now calling for higher fines for violations of indecency standards to give the FCC 
better tools with which to enforce this doctrine, which it now perceives to have 
increased importance. ^^^ As this potential reform indicates, the values of the 
current administration are manifested in the actions taken by its agencies. ^^"^ 

130. See, e.g., supra notes 53-54, 58 and accompanying text. 

131. Four of the five current FCC Commissioners (two Democrats & three Republicans) were 
appointed by President Bush in 2001 or 2002. The FCC's current Chairman, Michael Powell (R), 
was nominated to the Commission by President Clinton in 1997. He was appointed Chairman by 
President Bush in 2001 to replace Chairman William Kennard (D) who resigned from the FCC in 
January 2001, six months before his commission was set to expire. Chairman Powell is Secretary 
of State Colin Powell' s son. Fed. Communications Comm'n, Biography of FCC Chairman Powell, 
at (last visited Sept. 22, 2004). 
See also Fed. Communications Comm'n, Biography of William Kennard, at 
commissioners/previous/kennardbio.html (last visited Sept. 22, 2004). 

132. During the 2004 Superbowl halftime show, performer Janet Jackson suffered what has 
been termed a "wardrobe malfunction," which resulted in a portion of her costume being removed, 
exposing her breast to millions of viewers. Various subsidiaries of Viacom Inc. (CBS's parent 
company) were fined the $550,000 statutory maximum for violating broadcast indecency standard. 
Press Release, FCC, FCC Proposes Statutory Maximum fine of $550,000 Against Viacom-owned 
CBS Affiliates for Apparent Violation of Indecency Rules During Broadcast of Super Bowl 
Halftime Show (Sept. 22, 2004), 2004 WL 2138631. 

133. One proposal currently under consideration includes a tenfold increase in fines for 
indecency violations. Michelle Knueppel, TV Execs Object to Increase in Fines for On-Air 
Indecency, L.A. DAILY NEWS, Feb. 27, 2004, at N14. 

134. With regard to its sudden strong reactions to alleged indecency on television, one writer 

290 INDIANA LAW REVIEW [Vol. 38:267 

Therefore, under a different administration, it is possible that even if procedural 
execution of the statute remained the same, the outcome of some of the agency 
decisions would differ. ^^^ Without specific equal time data to compare 
enforcement during the last few presidencies, these differences are indeed 
speculative, but seem to be made more likely by the renewed focus on the FCC 
generally since the 2004 Super Bowl. 

Overall, increased enforcement would require some specific political 
motivation, followed up by increased time and energy by both the FCC and 
broadcasters. Though it certainly has critics, equal time isn't as divisive as an 
issue like indecency, which carries with it moral and religious judgments. On its 
face, providing equal time seems like an admirable goal that few are likely to 
speak out against, and those who are unhappy with its execution, such as minor 
party candidates, are not calling for its revocation so much as its revision. 
However, without an equal time interpretation or ruling that is somehow 
unfavorable to the current controlling party or a change in leadership, sudden 
interpretive changes resulting in strengthened enforcement seem unlikely. 

3. Elimination of Equal Time. — Another option, of course, is to do away 
with the equal time rule entirely. An argument may be made that this has in fact 
already happened by operation, as the FCC seemingly refuses to enforce all but 
the most egregious violations. Two factors supporting elimination are the 
weakness that results from equal time's lack of applicability to numerous 
situations and the FCC's docile enforcement. 

Elimination of the doctrine would have some positive results. For example, 
it is possible that it would actually increase political coverage generally. As 
previously stated, some broadcasters err on the side of limiting political 
programming to avoid allegations of equal time violations. ^^^ If they are 
uncertain whether a certain broadcast would be exempted, they may choose not 
to air it at all for fear of triggering equal time.^^^ With the requirements lifted, 
broadcasters might actually increase political coverage (albeit it of their favored 
party and/or candidates). 

notes that "Powell's FCC [has] played to the Republican base in the run-up to a national 
election. . . . Self-appointed moral guardians are forever waiting for any opportunity to attempt to 
enforce their personal rigid codes on everyone else." Tom Jicha, The Shot Heard 'Round the Dial, 
South Fla. Sun-Sentinel, Feb. 28, 2004, at ID. 

1 35. For example, even if the current deferential standard remained in place, the broadcasters 
to which the FCC showed deference could change depending on the views of the current 
administration. If today Howard Stem is viewed as indecent, albeit a bona fide newscaster, under 
a more liberal administration, perhaps conservative talk radio hosts would fail under the same 
indecency standard. See Eric Deggans, Clear Channel Becomes Conveniently 'Responsible, ' St. 
Petersburg Times, Feb. 27, 2004, at 2B (quoting Rush Limbaugh asking if the "federal 
government start[s] to define what is okay for someone to say on radio . . . what happens if a whole 
bunch of John Kerry [or] . . . Terry McAuliffe types end up running this country?" (omissions in 

136. See Smith, supra note 7, at 1503. 

137. Id. 

2005] EQUAL TIME 291 

As a matter of administration, elimination of the doctrine would alleviate the 
burdens on both the FCC and broadcasters caused by continued consideration. 
Although its general response is that the doctrine is not applicable to inquiring 
broadcasters, the FCC still must go through the procedures to receive and review 
complaints and issue occasional opinions. The resources used to do so could be 
directed at other areas of the agency's jurisdiction. It would also save 
broadcasters from having to scrutinize every broadcast featuring political 
candidates to see whether it might violate equal time provisions and from 
reviewing and responding to equal time requests by opposing candidates, which 
take up both administrative and air time. 

Although in many ways the doctrine is weak, there would be consequences 
to eliminating it altogether. First, the fact remains that equal time is effective in 
some circumstances. As with Senator Lieberman during the 2004 presidential 
primary campaign, candidates still can and do take advantage of the requirement 
to ensure that broadcasters are not unfairly excluding coverage of certain 
candidates. ^^^ However, this doesn't necessarily help all candidates, only major 
party candidates with enough resources to monitor and contest equal time 
violations. The choice then becomes whether the doctrine is worth keeping to at 
least ensure equal coverage of all major party candidates or whether, based on the 
wide variety of media outlets, it is now fair for those candidates to be in the same 
situation as minor party candidates, that is, with virtually no equal time protection 
at all. 

In addition, there is something to be said for the notion that broadcasters must 
at least take equal time into account when making programming decisions. 
Although they may often creatively avoid it, it is possible that the habit of going 
through the motions of determining whether equal time is applicable is beneficial 
for viewers, in that broadcasters are going to at least attempt to eliminate any 
gross violations. Similarly, at least some citizens value the notion of equal 
time.^^^ It is hard to imagine a way to quantify the loss of confidence in election 
coverage that could result from elimination of the doctrine, as at least those who 
are complaining about it are already aware of its lack of force. 

While complete elimination might seem a drastic solution, in light of the 
repeals of both the fairness doctrine and personal attack rules, it is not completely 
infeasible because it is clear that statutory schemes requiring content monitoring 
have been abolished in the past.^'*^ However, the continued existence of the 
reasonable access rule seems to indicate that political election coverage is one 
area in which Congress wants to remain involved. ^"^^ The inequities of a system 
requiring broadcasters to provide some election coverage, but not requiring them 

138. See Leonard, supra note 1 16, at A20. 

139. See, e.g., Perot, 1 1 F.C.C.R. 13 109 (1996); Paula S. Schlesinger Against Pub. Television 
Station WMUL-TV, 87 F.C.C.2d 773 (1980) (alleging equal time violations). 

140. Syracuse Peace Council v. FCC, 867 F.2d 654, 669 (D.C. Cir. 1989) (FCC decision to 
repeal fairness doctrine was not arbitrary and capricious); Radio-Television News Dirs. Ass'n v. 
FCC, 229 F.3d 269, 272 (D.C. Cir. 2000) (ordering FCC to repeal personal attack rule). 

141. 47 U.S.C.§ 312(a)(7) (2000). 

292 INDIANA LAW REVIEW [Vol. 38:267 

to balance that coverage at all seem obvious. However, in reality, media outlets 
designed to advance only one political view do exist — though such stations are 
generally open about their political leanings, and viewers are likely to understand 
that they are getting only one point of view when they choose to watch. By 
continuing to require at least major broadcast networks to attempt to balance their 
coverage, citizens have the option of receiving their coverage mainly from those 
networks that they perceive to be more balanced. 

B. Recommendation 

A determination about what should become of equal time is complicated 
because it is difficult to separate the reality of what the doctrine has become from 
what it could and was meant to be. It seems unnatural to be "against" a doctrine 
with such well-meaning roots. ^"^^ Realistically, though, conclusions must be 
drawn while facing the reality that reform, especially dramatic reform, is unlikely. 
It is not reasonable merely to claim that if the doctrine were perfectly enforced 
in a vacuum, it would be worth maintaining. 

Part of the judgment about what should become of equal time requires 
pragmatic assessment of whether it can have a meaningful role in today' s society. 
One can idealize its existence and argue that any rule intended to equalize 
election coverage and increase public access to information is worth maintaining 
even if it is flawed. 

However, it is hard to strenuously argue that equal time should be upheld at 
all costs if one is realistic about its practical effect. It does not apply to cable, 
print media or the internet — three major sources of news. It was created during 
a time when election coverage was much scarcer and hearing only one of two 
candidates on the radio might have made a difference in who received one's vote. 
Today, candidates are seen and heard through a multitude of media, and voters 
can seek out information about candidates that they are interested in rather than 
sitting by their radios hoping for a sound bite. Some celebrity candidates are 
already known and respected by voters before they enter the political arena. It is 
hard to imagine that requiring a handful of radio and television programs to 
intricately time all candidate coverage to ensure precise equality is increasing the 
actual quality of our election coverage. 

However, if it's not doing any harm, it might be appropriate to preserve the 
spirit of the rule in light of its limited applicability only to media outlets that 
citizens can access for free (provided they have the technology to receive the 
signals). But arguments can be made that the doctrine does cause harm by 
artificially ensuring that election coverage will feature more than one candidate 
without assuring that it will feature them all. To the extent there is a public 
expectation of equal time, candidates are being disserved by its inconsistent 
application. Therefore, limited application even in the narrow context in which 

142. In fact, even Russia's election law provides for equal time. Alex Rodriguez, Really 
Cover Putin? Not Likely; Journalists Invited to Travel with the President Soon Find They're 
Expected to Chronicle Through the Kremlin '5 Eyes, Chi. Trib., Mar. 7, 2004, at 4. 

2005] EQUAL TIME 293 

it is currently applied is overly idealistic if it is not done precisely enough so that 
viewers can be more confident that they are receiving balanced coverage from 
those outlets. 

Rather than forcing network attorneys and late night comedians to continue 
to struggle with equal time without benefit to voters or consistent application to 
candidates, the equal time doctrine should be abandoned — at least until a time 
when media development has stalled to the point where meaningful reforms may 
be made. 


The year 2004 is equal time's seventieth year. To say that the media 
landscape has changed since its inception is a gross understatement. It is hard to 
imagine why a doctrine that was created to respond to advancements in 
technology has so clearly failed to keep up with its roots. Instead of expanding 
and changing to meet our modem society' s need for information, the FCC has 
broadened equal time's exceptions until they now nearly swallow the whole. 
Rather than the four specific exceptions conceived of by Congress after twenty- 
five years of observing its initial formulation, numerous unstated but consistently 
applied loopholes have been created and maintained by FCC interpretation. 

Though tempting, blaming the FCC alone ignores the fact that equal time is 
a statutory doctrine that Congress has chosen to leave untouched for decades. 
Couple that with frequent changes in FCC leadership and suddenly it seems 
surprising that the doctrine has enjoyed as much stability (albeit virtual 
stagnation) as it has, rather than a more cyclical lifespan in terms of its popularity 
and strength. 

Declaring an end to equal time would really only have effects behind the 
scenes. For the most part, it would not change the substance of most American 
election coverage. Even if voters did notice its abolition, their disappointment 
could be alleviated by resort to the media outlet which best reflects their views, 
finally untainted by the guise of impartiality.