Law Commons^™

Cleaning Up The Corporate Opportunity Doctrine Mess: A First Principles Approach, Yifat Naftali Ben Zion

Washington and Lee Law Review

Almost a century ago, a legal dispute over who is the rightful owner of Pepsi-Cola, at the time an unknown syrup company on the verge of bankruptcy, led the Supreme Court of Delaware to develop what is now famously known as the corporate opportunity doctrine. This doctrine is the central framework Delaware courts use to this day to determine whether an officer who seized a business opportunity has breached his fiduciary duties. Despite the doctrine’s old roots, it has thus far failed to reach stable ground. For one, while many corporate law scholars have supported the rule developed following this …

Raising The Floor From The Back Door: Shareholder Proposals As A Mechanism For Raising Minimum Wage, Laura Carrier

Washington and Lee Law Review

When adjusted to reflect inflation, the federal minimum wage is almost 40 percent lower than it was in 1970. The Biden Administration tried and failed to legislatively raise the minimum wage, and political deadlock will continue to kill legislative change. The shareholder proposal, a nonbinding recommendation to management that shareholders can submit for a vote at a public corporation’s annual meeting, presents a path for improving the wages of many workers in the absence of federal legislation. This Note analyzes the best approach to crafting a shareholder proposal on minimum wage that will prompt an effective increase in the minimum …

Sheriffs, Shills, Or Just Paying The Bills?: Rethinking The Merits Of Compelling Merchant Cooperation With Third-Party Policing In The Aftermath Of George Floyd’S Death, Stephen Wilks

Washington and Lee Law Review

This Article frames the killing of George Floyd as the result of flawed business regulation. More specifically, it captures the expansion of third-party policing paradigms throughout local nuisance abatement regulations over a period of time that coincided with the militarization of policing culture across the United States. Premised on the notion that law enforcement alone cannot succeed in reducing crime and disorder, such regulations transform grocery stores, pharmacies, bars, and other retail spaces into surveillance hubs by prescribing situations that obligate businesses to contact the police. This regulatory framework, however, sustains the larger historical project of rationalizing enhanced scrutiny of …

Temporary Securities Regulation, Anita K. Krug

Washington and Lee Law Review

In times of crisis, including during the 2020–2021 global pandemic, the U.S. Securities and Exchange Commission (SEC) has engaged in a type of securities regulation that few scholars have acknowledged, let alone evaluated. Specifically, during recent market crises, the SEC adopted rules that are temporary, designed to help the securities markets and their participants— both public companies and public investment funds, such as mutual funds and ETFs—weather the crisis at hand but go no further. Once that goal has been accomplished, these rules usually expire, replaced by the permanent rules that they temporarily supplanted. Although the temporary-rulemaking endeavor is laudable—and …

Real Insider Trading, Michael A. Perino

Washington and Lee Law Review

In popular rhetoric, insider trading cases are about leveling the playing field between elite market participants and ordinary investors. Academic critiques vary. Some depict an untethered insider trading doctrine that enforcers use to expand their power and enhance their discretion. Others see enforcers beset with agency cost problems who bring predominantly simple, easily resolved cases to create the veneer of vigorous enforcement. The debate has, to this point, been based mostly on anecdote and conjecture rather than empirical evidence. This Article addresses that gap by collecting extensive data on 465 individual defendants in civil, criminal, and administrative actions to assess …

The Independent Board As Shield, Gregory H. Shill

Washington and Lee Law Review

The fiduciary duty of loyalty bars CEOs and other executives from managing companies for personal gain. In the modern public corporation, this restriction is reinforced by a pair of institutions: the independent board of directors and the business judgment rule. In isolation, each structure arguably promotes manager fidelity to shareholder interests—but together, they enable manager prioritization. This marks a particularly striking turn for the independent board. Its origin story and raison d’être lie in protecting shareholders from opportunism by managers, but it functions as a shield for managers instead.

Numerous defects in the design and practice of the independent board …

Delaware As Deal Arbiter, Christina M. Sautter

Washington and Lee Law Review

Most would agree that the Delaware courts are the leading jurists in the resolution of corporate conflicts, particularly in the Mergers & Acquisitions (M&A) context. Arguably a greater role that Delaware plays is that of a norm setter, both with respect to the expectations of management conduct in the M&A process and with respect to deal terms, particularly deal protection devices. Like in any relationship, there is a “give and take” between practitioners and Delaware. That is, practitioners are “on the front lines,” often innovating with respect to new deal structures and deal terms. After some time, Delaware has the …

Contract Design, Default Rules, And Delaware Corporate Law, Jeffrey Manns, Robert Anderson

Washington and Lee Law Review

Incomplete contract theory recognizes that contracts cannot be comprehensive and that state law necessarily has to fill in gaps when conflicts arise. The more complex the transaction, the more that lawyers face practical constraints that force them to limit the scope of drafting and broadly rely on legal defaults and open-ended terms to plug holes and address contingencies. In theory Delaware law serves as lawyers’ preferred jurisdiction and forum for merger and acquisition (M&A) transactions and other high-end corporate deals because of the state’s superior default rules for corporate law and its judiciary’s expertise in discerning the “hypothetical bargain” of …

Adversarial Failure, Benjamin P. Edwards

Washington and Lee Law Review

Investors, industry firms, and regulators all rely on vital public records to assess risk and evaluate securities industry personnel. Despite the information’s importance, an arbitration-facilitated expungement process now regularly deletes these public records. Often, these arbitrations recommend that public information be deleted without any true adversary ever providing any critical scrutiny to the requests. In essence, poorly informed arbitrators facilitate removing public information out of public databases. Interventions aimed at surfacing information may yield better informed decisions. Although similar problems have emerged in other contexts when adversarial systems break down, the expungement process to purge information about financial professionals provides …

The Lost Lessons Of Shareholder Derivative Suits, Jessica Erickson

Washington and Lee Law Review

Merger litigation has changed dramatically. Today, nearly every announcement of a significant merger sparks litigation, and these cases look quite different from merger cases in the past. These cases are now filed primarily outside of Delaware, they typically settle without shareholders receiving any financial consideration, and corporate boards now have far more ex ante power to shape these cases. Although these changes are often heralded as unprecedented, they are not. Over the past several decades, derivative suits experienced many of the same changes. This Article explores the similarities between the recent changes in merger litigation and the longer history of …

Social Activism Through Shareholder Activism, Lisa M. Fairfax

Washington and Lee Law Review

This article is based on the author's keynote address at the 2018-2019 Lara D. Gass Annual Symposium: Civil Rights and Shareholder Activism at Washington and Lee University School of Law, February 15, 2019.

In 1952, the SEC altered the shareholder proposal rule to exclude proposals made “primarily for the purpose of promoting general economic, political, racial, religious, social or similar causes.” The SEC did not reference civil rights activist James Peck or otherwise acknowledge that its actions were prompted by Peck’s 1951 shareholder proposal to Greyhound for desegregating seating. Instead, the SEC indicated that its change simply reflected a codification …

Chancery’S Greatest Decision: Historical Insights On Civil Rights And The Future Of Shareholder Activism, Omari Scott Simmons

Washington and Lee Law Review

This article builds upon the author's remarks at the 2018-2019 Lara D. Gass Annual Symposium: Civil Rights and Shareholder Activism at Washington and Lee University School of Law, February 15, 2019.

Shareholder activism—using an equity stake in a corporation to influence management—has become a popular tool to effectuate social change in the twenty-first century. Increasingly, activists are looking beyond financial performance to demand better corporate performance in such areas as economic inequality, civil rights, human rights, discrimination, and diversity. These efforts take many forms: publicity campaigns, litigation, proxy battles, shareholder resolutions, and negotiations with corporate management. However, a consensus on …

From Public Policy To Materiality: Non-Financial Reporting, Shareholder Engagement, And Rule 14a-8’S Ordinary Business Exception, Virginia Harper Ho

Washington and Lee Law Review

This article builds upon the author's remarks at the 2018-2019 Lara D. Gass Annual Symposium: Civil Rights and Shareholder Activism at Washington and Lee University School of Law, February 15, 2019.

In 2017, shareholder proposals urging corporate boards to report on their climate-related risk made headlines when they earned majority support from investors at ExxonMobil, Occidental Petroleum, and PPL. The key to this historic vote was the support of Blackrock, State Street, and Vanguard, which broke with management and cast their votes behind the proposals. The 2018 proxy season saw several more climate-related proposals earn majority support, and in 2018 …

Civil Rights And Shareholder Activism: Sec V. Medical Committee For Human Rights, Sarah C. Haan

Washington and Lee Law Review

This article builds upon the author's remarks at the 2018-2019 Lara D. Gass Annual Symposium: Civil Rights and Shareholder Activism at Washington and Lee University School of Law, February 15, 2019.

What does “corporate democracy” mean? How far does federal law go to guarantee public company investors a say in a firm’s policies on important social, environmental, or political issues? In 1972, the U.S. Supreme Court appeared ready to start sketching the contours of corporate democracy—and then, at the last minute, it pulled back. This Article tells the story of Securities and Exchange Commission v. Medical Committee for Human Rights …

Collaboration Theory And Corporate Tax Avoidance, Eric C. Chaffee

Washington and Lee Law Review

This Article argues that aggressive corporate tax avoidance is legally impermissible based upon the essential nature of the corporate form. The history of the debate over the essential nature of the corporation is substantial. This debate has been reinvigorated by the Supreme Court’s recent opinions, Citizens United v. Federal Election Commission and Burwell v. Hobby Lobby Stores, Inc., which explore the scope of corporate rights.

Innovation Agents, Mirit Eyal-Cohen

Washington and Lee Law Review

The standard narrative of entrepreneurship is one of self-employed creative individuals working out of their garage or independently owned start-up companies. Intrapreneurship— where employees are responsible for being alert to new opportunities inside firms—is another model for developing innovations. Relatively little is known, however, about the latter process through which large, complex firms engage in groundbreaking corporate entrepreneurship.

This Article’s focus is on these types of innovation agents. It provides a thorough account of the positive and negative spillovers of intrapreneurial firms while making the following key points: First, intrapreneurial companies utilize their economies of scale, scope, and age to …

The Diminishing Duty Of Loyalty, Julian Velasco

Washington and Lee Law Review

Fiduciary duties comprise an integral part of corporate law. It is generally understood that directors owe the corporation and its shareholders two fiduciary duties: the duty of care and the duty of loyalty. Although both duties are firmly established in corporate law, they are not treated equally. It is generally understood that the duty of loyalty is enforced far more rigorously than the duty of care. The justification for this dichotomy is twofold. First, differential treatment is appropriate because of the relative urgencies of the underlying subject matter: loyalty issues pose greater risks than do care issues. Second, the deference …

Repugnant Business Models: Preliminary Thoughts On A Research And Policy Agenda, Claire A. Hill

Washington and Lee Law Review

No abstract provided.

Between Sin And Redemption: Duty, Purpose, And Regulation In Religious Corporations, Brett H. Mcdonnell

Washington and Lee Law Review

No abstract provided.

Looking Back, Looking Forward: Personal Reflections On A Scholarly Career, David K. Millon

Washington and Lee Law Review

No abstract provided.

Corporate Officers As Agents, Deborah A. Demott

Washington and Lee Law Review

No abstract provided.

Corporate Power Is Corporate Purpose Ii: An Encouragement For Future Consideration From Professors Johnson And Millon, Leo E. Strine Jr.

Washington and Lee Law Review

No abstract provided.

Confident Pluralism In Corporate Legal Theory, Robert K. Vischer

Washington and Lee Law Review

No abstract provided.

Reflecting On Three Decades Of Corporate Law Scholarship, Lyman P.Q. Johnson

Washington and Lee Law Review

No abstract provided.

The Next Iteration Of Progressive Corporate Law, Matthew T. Bodie

Washington and Lee Law Review

No abstract provided.

The Fiduciary Enterprise Of Corporate Law, Christopher M. Bruner

Washington and Lee Law Review

No abstract provided.

Religious Conceptions Of Corporate Purpose, Ronald J. Colombo

Washington and Lee Law Review

No abstract provided.

Lyman Johnson’S Invaluable Contribution To Delaware Corporate Jurisprudence, Lawrence A. Hamermesh, Jack B. Jacobs

Washington and Lee Law Review

No abstract provided.

Shareholder Wealth Maximization As A Function Of Statutes, Decisional Law, And Organic Documents, Joan Macleod Heminway

Washington and Lee Law Review

No abstract provided.

The Shrinking Scope Of Csr In Uk Corporate Law, Andrew Johnston

Washington and Lee Law Review

Through a historical analysis of corporate law reforms in the United Kingdom (UK) during the twentieth and early twenty-first centuries, this paper traces the shrinking scope for corporations to take socially responsible decisions. It offers a detailed examination of the rationales and drivers of the reforms, and shows that, by focusing exclusively on the question of accountability of directors to shareholders, wider social concerns were “bracketed” after 1948, leading to a permanent state of “crisis,” which constantly threatens the legitimacy of the corporate law system. Following the Brexit vote, there are signs that the UK Government is willing to reconsider …