Law Commons^™

Freezing Out Ben & Jerry: Corporate Law And The Sale Of A Social Enterprise Icon, Antony Page, Robert A. Katz

Faculty Publications

Companies with social missions are frequently bought by larger, more conventional profit-seeking firms and just as frequently accused of “selling out.” Ben & Jerry’s Homemade Inc. is perhaps the leading example: its takeover by international conglomerate Unilever is an oft-repeated cautionary tale of the negative proclivities of the publicly-traded corporate form and profit-maximizing corporate law. Contrary to conventional wisdom, however, corporate law did not compel the sale, or sell-out, of Ben & Jerry’s. This familiar account omits a critical part of the narrative -- the company and its founders had established impressive anti-takeover defenses that, when pressed, the board declined …

African-American Entrepreneurs: Integration, Education, And Exclusion, Cheryl L. Wade

Faculty Publications

(Excerpt)

In this Article, I describe some of the subtle, obscure, and hidden challenges that African-American entrepreneurs face by providing the narratives of three African-American businesspeople. Two of the narratives are about African Americans who started businesses in the first half of the twentieth century. Theirs is a success story. Their businesses thrived. Yet, for a variety of reasons, the success these two entrepreneurs enjoyed would be unlikely today, even with the legislation and policy initiatives enacted in the latter half of the twentieth century and aimed at providing access to opportunities for people of color. The third narrative is …

Reply: Clawback To The Future, Miriam A. Cherry, Jarrod Wong

Faculty Publications

(Excerpt)

In Clawbacks: Prospective Contract Measures in an Era of Excessive Executive Compensation and Ponzi Schemes (the “Article”), we undertook the task of proposing a doctrine of clawbacks that would not only furnish a framework for analyzing the term more systematically, but would also describe the ways the doctrine would relate to established rules of contract law. With his response, In the Shadow of the Omnipresent Claw: In Response to Professors Cherry & Wong (the “Response”), Michael Macchiarola has provided us with an opportunity to articulate these thoughts on the doctrine of clawbacks further, and for that opportunity and his …

Debunking The Purchaser Welfare Account Of Section 2 Of The Sherman Act: How Harvard Brought Us A Total Welfare Standard And Why We Should Keep It, Alan J. Meese

Faculty Publications

The last several years have seen a vigorous debate among antitrust scholars and practitionersa bout the appropriates tandardf or evaluating the conduct of monopolists under section 2 of the Sherman Act. While most of the debate over possible standards has focused on the empirical question of each standard's economic utility, this Article undertakes a somewhat different task: It examines the normative benchmark that courts have actually chosen when adjudicating section 2 cases. This Article explores three possible benchmarks-producer welfare, purchaser welfare, and total welfare-and concludes that courts have opted for a total welfare normative approach to section 2 since the …

For Optional Federal Incorporation, George W. Dent

Faculty Publications

The American economy suffers from the domination of corporations by chief executive officers who exercise control for their own benefit, at considerable cost to shareholders and to efficiency. The costs of this defect are rising as capital flees the United States for a growing number of countries that treat investors better. America’s corporate governance problem began and persists because corporations are franchised by the states, and it is in the economic interest of the states (especially Delaware) to cater to CEOS because they control the choice of state of incorporation. To break this destructive arrangement I propose optional federal incorporation …

The Essential Unity Of Shareholders And The Myth Of Investor Short-Termism, George W. Dent

Faculty Publications

The separation of ownership and control publicized by Berle and Means in 1932 persists today. Domination of public companies by self-serving and ineffective executives costs America billions of dollars every year and contributed to the current economic meltdown. Repeated efforts to solve this problem--including the Sarbanes-Oxley Act, expanded disclosure duties, and more stringent requirements for director independence--have had little benefit and have sometimes made matters worse. The flaws in our corporate governance system are a growing problem for America’s economy as disillusioned investors increasingly place their capital in other countries.

Nonetheless, proposals for greater shareholder power have encountered criticisms: various …

Consumer Interest In Corporate Law, David Yosifon

Faculty Publications

This Article provides a comprehensive assessment of the consumer interest in dominant theories of the corporation and in the fundamental doctrines of corporate law. In so doing, the Article fills a void in contemporary corporate law scholarship, which has failed to give sustained attention to consumers in favor of exploring the interests of other corporate stakeholders, especially shareholders, creditors, and workers. Utilizing insights derived from the law and behavioralism movement, this Article examines, in particular, the limitations of the shareholder primacy norm at the heart of prevailing "nexus of contracts" and "team production" theories of the firm. The Article concludes …

Unconscious Bias And The Limits Of Director Independence, Antony Page

Faculty Publications

Corporate directors make difficult decisions: How much should we pay our CEO? Should we permit a lawsuit against a fellow director? Should we sell the company? Directors are legally obligated to decide in good faith based on the business merits of the issue rather than extraneous considerations and influences. Naturally, some directors may have preferences, or even biases: Our CEO, my colleague and friend, deserves a lot; The company should not sue my fellow board member; We should not sell, because after all, I would like to remain a board member. But the courts presume that independent directors either do …

Leveraged Liquidity: Bear Raids And Junk Loans In The New Credit Market, Jose M. Gabilondo

Faculty Publications

No abstract provided.

A Voice-Based Framework For Evaluating Claims Of Minority Shareholder Oppression In The Close Corporation, Benjamin Means

Faculty Publications

No abstract provided.

A Voice-Based Framework For Evaluating Claims Of Minority Shareholder Oppression In The Close Corporation, Benjamin Means

Faculty Publications

No abstract provided.

The (Not So) Puzzling Behavior Of Angel Investors, Darian M. Ibrahim

Faculty Publications

No abstract provided.

Entrepreneurs On Horseback: Reflections On The Organization Of Law, Darian M. Ibrahim, D. Gordon Smith

Faculty Publications

“Law and entrepreneurship” is an emerging field of study. Skeptics might wonder whether law and entrepreneurship is a variant of that old canard, the Law of the Horse. In this Essay, we defend law and entrepreneurship against that charge and urge legal scholars to become even more engaged in the wide-ranging scholarly discourse regarding entrepreneurship. In making our case, we argue that research at the intersection of entrepreneurship and law is distinctive. In some instances, legal rules and practices are tailored to the entrepreneurial context, and in other instances, general rules of law find novel expression in the entrepreneurial context. …

Individual Or Collective Liability For Corporate Directors?, Darian M. Ibrahim

Faculty Publications

Fiduciary duty is one of the most litigated areas in corporate law and the subject of much academic attention, yet one important question has been ignored: Should fiduciary liability be assessed individually, where directors are examined one-by-one for compliance, or collectively, where the board's compliance as a whole is all that matters? The choice between individual and collective assessment may be the difference between a director's liability and her exoneration, may affect how boards function, and informs the broader fiduciary duty literature in important ways. This Article is the first to explore the individual/collective question and suggest a systematic way …

Sentencing High-Loss Corporate Insider Frauds After Booker, Frank O. Bowman Iii

Faculty Publications

The Federal Sentencing Guidelines have for some years prescribed substantial sentences for high-level corporate officials convicted of large frauds. Guidelines sentences for offenders of this type moved higher in 2001 with the passage of the Economic Crime Package amendments to the Guidelines, and higher still in the wake of the Sarbanes-Oxley Act of 2002. Today, any corporate insider convicted of even a moderately high-loss fraud is facing a guideline range measured in decades, or perhaps even mandatory life imprisonment. Successful sentencing advocacy on behalf of such defendants requires convincing the court to impose a sentence outside (in many cases, far …

Academics In Wonderland: The Team Production And Director Primacy Models Of Corporate Governance, George W. Dent

Faculty Publications

This paper examines the Team Production and Director Primacy Models of corporate governance, finds them wanting, and explains why corporate governance is moving toward shareholder primacy and why this will benefit not only investors but the whole American economy.

The director primacy model posits that shareholders are so ill-informed and so divided in their interests that they would self-destruct if they controlled the firm. Accordingly they tie their own hands by ceding control to a board of independent directors. Advocates of the team production theory often agree with the foregoing but stress the importance to the firm of other constituencies, …

Corporate Therapeutics At The Securities And Exchange Commission, Jayne W. Barnard

Faculty Publications

No abstract provided.

Stakeholder Governance: A Bad Idea Getting Worse, George W. Dent

Faculty Publications

Calls for a stakeholder voice in corporate governance never end, as evidenced by the Symposium Corporations and Their Communities to which this paper is a contribution. The demise of labor unions and explosion of executive compensation while the income of most Americans has stagnated over the last several years has precipitated cries for remedial action, some of which include stakeholder governance. Although complaints about deepening inequality are just, other remedies should be pursued. The traditional objections to stakeholder governance remain valid: the interests of stakeholder groups clash not only with those of the shareholders but also with each other, and …

Introduction: Corporations And Their Communities, Robert N. Strassfeld

Faculty Publications

No abstract provided.

Narcissism, Over-Optimism, Fear, Anger, And Depression: The Interior Lives Of Corporate Leaders, Jayne W. Barnard

Faculty Publications

No abstract provided.

A Uniform Domestic Partnership Act: Marrying Business Partnership And Family Law, Jennifer Ann Drobac, Antony Page

Faculty Publications

For decades, Americans have argued about who may marry and what marriage actually means in legal, religious, and philosophical terms. For almost as long, two problems - the rising divorce rate and the poverty of some "divorced" children and their custodians - have fed concerns about the viability of marriage as an institution that promotes domestic stability and economic security. This Article explores the notion that domestic partnership based upon business partnership law would better serve more couples, their families, and society as a whole. It proposes a Uniform Domestic Partnership Act, loosely modeled after the UPA, as a substitute …

What's Love Got To Do With It?: The Corporations Model Of Marriage In The Same-Sex Marriage Debate, Jeremiah A. Ho

Faculty Publications

The time may come, far in the future, when contracts and arrangements between persons of the same sex who abide together will be recognized and enforced under state law. When that time comes, property rights and perhaps even mutual obligations of support may well be held to flow from such relationships. But in my opinion, even such a substantial change in the prevailing mores would not reach the point where such relationships would be characterized as "marriages". At most, they would become personal relationships having some, but not all, of the legal attributes of marriage. And even when and if …

Introduction: Capitalizing On The Success Of Entrepreneurship: Ipos, Private Sales, Tax Aspects, Residual Interest Of Entrepreneurs After Sales Of Ipos, Richard K. Gordon

Faculty Publications

Panel discussion on "Capitalizing on the Success of Entrepreneurship: IPOS, Private Sales, Tax Aspects, Residual Interest of Entrepreneurs after Sales of IPOS" from the "The Canada-United States Law Institute Conference on Comparative Legal Aspects of Entrepreneurship in Canada and the United States" - Cleveland, Ohio April 13-14, 2007.

The Model Federal Sentencing Guidelines Project: Adjustments For Guilty Pleas And Cooperation With The Government, Model Sentencing Guidelines §3.7 - 3.8, Frank O. Bowman Iii

Faculty Publications

This Article is the tenth of twelve parts of a set of Model Federal Sentencing Guidelines designed to illustrate the feasibility and advantages of a simplified approach to federal sentencing proposed by the Constitution Project Sentencing Initiative. The Model Sentencing Guidelines and the Constitution Project report are all to be published in Volume 18, Number 5 of the Federal Sentencing Reporter. The project is described in an essay titled 'Tis a Gift To Be Simple: A Model Reform of the Federal Sentencing Guidelines, available on SSRN at http://ssrn.com/abstract=927929. This segment of the project contains rules addressing cases in which the …

Financial Moral Panic! Sarbanes-Oxley, Financier Folk Devils, And Off-Balance Sheet Arrangement, Jose M. Gabilondo

Faculty Publications

No abstract provided.

The Ducks Stop Here? The Environmental Challenge To Federalism, Jonathan H. Adler

Faculty Publications

PIn Solid Waste Association of Northern Cook County v. U.S. Army Corps of Engineers ("SWANCC"), the Supreme Court considered whether federal regulatory authority reaches isolated wetlands and ponds due to the potential presence of migratory birds. In rejecting such an expansive view of federal authority, the Court's majority underlined its devotion to the federalism principles enunciated in Lopez and other recent cases. The federalist majority further reiterated its support for a canon of statutory construction which holds that federal statutes will not be interpreted to intrude into state matters, such as local land-use control, absent a clear statement by Congress. …

At The Top Of The Pyramid: Lessons From The Alpha Women And The Elite Eight, Jayne W. Barnard

Faculty Publications

No abstract provided.

Did The Private Securities Litigation Reform Act Work?, Michael A. Perino

Faculty Publications

In 1995 Congress passed the Private Securities Litigation Reform Act (the PSLRA or the Act) to address abuses in securities fraud class actions. In the wake of Enron, WorldCom, Adelphia, and other high profile securities frauds, critics suggest that the law made it too easy to escape liability for securities fraud and thus created a climate in which frauds are more likely to occur. Others claim that the Act has largely failed because it did little to deter plaintiffs' lawyers from filing nonmeritorious cases. This article employs a database of the 1449 class actions filed from 1996 through 2001 to …

Corporate Governance: Still Broke, No Fix In Sight, George W. Dent

Faculty Publications

Dissatisfaction with the governance of public companies is as old as the public company itself, but public concern about corporate governance is spasmodic. Prior reforms did not cure the ills of corporate governance, and there is little reason to think that the recent spate of reforms will be any more effective. The fundamental problem of corporate governance remains what it has always been: the separation of ownership and control. No reform can succeed unless it overcomes this contradiction. Corporate executives determined to preserve their privileges and a number of scholars deny this claim; in effect, these Panglosses consider the status …

The Descendants Of Fassihi: A Comparative Analysis Of Recent Cases Addressing The Fiduciary Claims Of Disgruntled Constituents Against Attorneys Representing Closely-Held Entities, Matthew Rossman

Faculty Publications

Accordingly, this Article will examine three recent cases closely and then make observations about what these "descendants of Fassihi" 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.