Law Commons^™

The Federal Option: Delaware As A De Facto Agency, Omari Scott Simmons

Washington Law Review

Despite over 200 years of deliberation and debate, the United States has not adopted a federal corporate chartering law. Instead, Delaware is the “Federal Option” for corporate law and adjudication. The contemporary federal corporate chartering debate is, in part, a referendum on its role. Although the federal government has regulated other aspects of interstate commerce and has the power to charter corporations and preempt Delaware pursuant to its Commerce Clause power, it has not done so. Despite the rich and robust scholarly discussion of Delaware’s jurisdictional dominance, its role as a de facto national regulator remains underdeveloped. This Article addresses …

Rethinking Mac Clauses In The Time Of Akorn, Boston Scientific, And Covid-19, Samuel Shapiro

Michigan Business & Entrepreneurial Law Review

The MAC clause is perhaps the most important clause in contract law, giving acquirers the ability to terminate even the largest agreements in the face of an often vaguely defined “Material Adverse Change.” For decades, even though MAC clauses have been present in nearly every merger agreement, courts have almost universally refused to enforce them. But the Delaware Chancery Court’s 2018 decision in Akorn may finally change that. As the world deals with the economic uncertainty caused by COVID-19, courts may soon get more opportunities to decide whether or not they will follow Akorn’s lead and begin to allow …

Choice Of Law And The Preponderantly Multistate Rule: The Example Of Successor Corporation Products Liability, Diana Sclar

Dickinson Law Review (2017-Present)

Most state rules of substantive law, whether legislative or judicial, ordinarily adjust rights and obligations among local parties with respect to local events. Conventional choice of law methodologies for adjudicating disputes with multistate connections all start from an explicit or implicit assumption of a choice between such locally oriented substantive rules. This article reveals, for the first time, that some state rules of substantive law ordinarily adjust rights and obligations with respect to parties and events connected to more than one state and only occasionally apply to wholly local matters. For these rules I use the term “nominally domestic rules …

State Competition For Corporate Headquarters And Corporate Law: An Empirical Anaylsis, Jens Dammann

Maryland Law Review

No abstract provided.

A New Urban Front For Shareholder Primacy, Anne Choike

Michigan Business & Entrepreneurial Law Review

The hundredth anniversary of Dodge v. Ford marks an occasion to reflect upon what, if anything, has changed about shareholder primacy in a century. Seizing this opportunity, in this Article I analyze new local laws and ordinances that promote stakeholder governance and engagement, which seek to protect the interests of non-shareholder constituencies such as workers, the environment, and the communities in which corporations operate, among others. In doing so, I argue that such local laws meaningfully differ from traditional stakeholder protections, most significantly in the way that they weaken managerial accountability to shareholders. The emergence of these city laws challenges …

Unintentional Irony In Landmark Decisions Of The Delaware Supreme Court Regarding Corporate Law, Steven J. Cleveland

Michigan Business & Entrepreneurial Law Review

Three landmark decisions of the Delaware Supreme Court exhibit unintentional irony: Beam v. Stewart, Smith v. Van Gorkom, and Paramount Communications Inc. v. Time Inc. In Beam, the court concluded that, regarding the decision of whether to seek remedy against Martha Stewart, her fellow directors would not have jeopardized their reputations for the minimal gain of continuing their business and personal relationships with her. Ironically, the court failed to acknowledge that Martha Stewart—in trading on material nonpublic information, which gave rise to the corporate claim against her—jeopardized her reputation (ultimately losing hundreds of millions of dollars and her freedom) for …

The Elephant In The Room: Helping Delaware Courts Develop Law To End Systemic Short-Term Bias In Corporate Decision-Making, Kenneth Mcneil, Keith Johnson

Michigan Business & Entrepreneurial Law Review

Short-termism in corporate decision-making is as problematic for long-term investors as relying on a three-mile radar on a supertanker. It is totally inadequate for handling the long-term risks and opportunities faced by the modern corporation. Yet recent empirical research shows that up to 85% of the S&P 1500 have no long-term planning. This is costing pension funds and other long-term investors dearly. For instance, the small minority of companies that do long-term planning and risk management had a long-term profitability that was 81% higher than their peers during the 2001–2014 period—with less stock volatility that costs investors dearly as well. …

Lessons From Institutional Shareholder Services: Governing Benefit Corporations' Third-Party Standard, Tammi S. Etheridge

Michigan Business & Entrepreneurial Law Review

Almost one hundred years ago, Henry Ford, as CEO of the Ford Motor Company, announced a plan to cease payment of special dividends to shareholders. Instead, the company would reinvest its profits to employ more workers and build more factories. Investing in new workers and factories would cut the cost of cars and make them affordable to more people. Ford publicly declared that his “ambition [was] to employ still more men, to spread the benefits of this industrial system to the greatest possible number, to help them build up their lives and their homes. To do this we are putting …

Savings And Loan Service Corporations: Regulations In Ohio, Ronald E. Alexander

Akron Law Review

The purpose of this article is to examine Ohio's scheme for regulating service corporations. This examination includes the history of service corporation regulation in Ohio, the scope of permissible business activities of these corporations, investment limitations for parent savings associations and the supervisory authority of the Ohio Division of Building and Loan Associations [Division]. Perhaps this article will also provide a useful vehicle for judging whether the risks perceived by the GAO and FHLBB can arise from a single state's regulatory scheme for service corporations. It must be remembered that any such risks inherent in Ohio's scheme threaten not only …

Cooperative Mineral Interest Development In The Lone Star State: It's Time To Mess With Texas, Matthew K. Trawick

Michigan Journal of Environmental & Administrative Law

Since the early discoveries of the Spindletop, King Ranch, and East Texas oil fields, the oil and gas industry has dominated the Texas economy. The industry has also played an important role in shaping state politics and culture. The oil boom of the early 1900s created thousands of jobs for ordinary workers and immense wealth for a select few. Early Texas oil barons made headlines because of their lavish lifestyles and often extreme political beliefs. Legendary wildcatter H.L. Hunt typified this oil-fueled exuberance. Hunt became one of the eight richest individuals in the United States after securing mineral rights to …

Federalism And Preemption In October Term 1999, Jonathan D. Varat

Pepperdine Law Review

No abstract provided.

Daedalean Tinkering, Sean J. Griffith

Michigan Law Review

Part I of this Review describes Skeel's account of corporate scandal, focusing on the central theme of excessive risk-taking. Part II examines Skeel's most original policy proposal-the creation of an investor insurance scheme to protect against excessive risk. Although the proposal takes up only a few pages of the book, it targets the books' core concern-the risk of corporate fraud. In evaluating the proposed investor insurance regime, this Review raises a set of objections based on cost and administrability and argues that an insurance regime would be duplicative of existing mechanisms that effectively spread the risk of financial fraud. Part …

Has The Fog Cleared - Attorney Work Product And The Attorney-Client Privilege: Texas's Complete Transition Into Full Protection Of Attorney Work In The Corporate Context., Fred A. Simpson

St. Mary's Law Journal

The following discussion in this Article fills the gaps in the substantive rules surrounding the attorney work product doctrine and the attorney-client privilege, thereby encouraging practitioners to utilize these tools more freely. Initially, the attorney-client privilege contemplated application only to individuals. As the rule developed in the United States, however, the scope of the privilege broadened until it included corporations. Since 1982, Texas has provided for the attorney-client privilege in Texas Rule of Civil Evidence 503.149. Notably, the Rule defined client in such a way as to include a corporation. Unlike the attorney-client privilege, the work product doctrine developed much …

New York's State Constitution In National Context, Robert F. Williams

Touro Law Review

No abstract provided.

The First Amendment, Burt Neuborne

Touro Law Review

No abstract provided.

Protecting Nonshareholder Interests In The Market For Corporate Control: A Role For State Takeover Statutes, Frank J. Garcia

University of Michigan Journal of Law Reform

Part I of this Note describes a phenomenon of modern corporate activity first identified over fifty years ago as the "separation of ownership and control." This separation gives rise to the need for a governing corporate norm; recognizing the normative aspect of this phenomenon has direct implications for the takeover debate.

Part II analyzes the problem of a target board's fiduciary duty as the modern version of the fundamental normative issue of corporate law. It argues that the norm of shareholder wealth maximization, assumed as the starting point by those most in favor of an active and minimally regulated control …

Misreading The Williams Act, Lyman Johnson, David Millon

Michigan Law Review

This Article examines the emerging controversy over preemption of the most potent of recent antitakeover laws, the so-called business combination statutes recently passed by Delaware, New York, and other states, and Pennsylvania's director-approval statute. After examining the strategy employed by the states to shield these statutes from constitutional attack, we consider the issues raised by the preemption claim and the arguments currently being advanced by the SEC and others in favor of preemption. Resolving the preemption controversy requires inquiry into the original meaning and objectives of the Williams Act. We argue that this should involve attention not only to the …

Missing The Point About State Takeover Statutes, Lyman Johnson, David Millon

Michigan Law Review

In a recent article in this journal, Professor Richard Booth offers an extended appraisal of state legislation regulating hostile corporate takeovers. We think Booth's article requires comment for two reasons. The first reason is perhaps more obvious, though less interesting from our point of view. To be blunt, "unfairness" to shareholders due to coercion arising out of two-tier or partial offers simply does not occur with enough frequency to warrant a sixty-seven-page article in a major law review. According to recent congressional testimony by SEC Commissioner Cox, from 1982 to 1986 the number of two-tier offers declined from 18% of …

Corporate Auctions And Directors' Fiduciary Duties: A Third-Generation Business Judgment Rule, Steven G. Bradbury

Michigan Law Review

This Note proposes a rationale and a methodology for applying the business judgment rule when directors resist a hostile bid during the auction phase of a control contest. Part I examines the changes that occur in the responsibilities of target directors when a corporate auction is initiated. This Part describes the Unocal business judgment rule test and discusses its usefulness in the auction phase of a takeover. While the test requires modification if it is to complement effectively the auction-phase duties announced in Revlon, this Part suggests that the business judgment rule continues to be relevant and important during …

The Promise Of State Takeover Statutes, Richard A. Booth

Michigan Law Review

The purpose of this article is, first, to describe the problems associated with two-tier tender offers and the closely related, and perhaps still more coercive, partial tender offer. Second, the article will address the natural question why such offers have not already been banned, suggesting a better view of what coercion means in the context of a tender offer. Third, the article will offer a management-oriented view of coercion, explaining the legitimate interests of managers (and other groups) in resisting takeovers, as well as how greenmail and poison pills, though subject to abuse, can be used quite properly to combat …

Limiting Directors' Duty Of Care Liability: An Analysis Of Delaware's Charter Amendment Approach, Craig W. Hammond

University of Michigan Journal of Law Reform

This Note explores the corporate law principles guiding the amendment of section 102(b)(7) and considers what effects this statute will have on the investor-director relationship. The Note focuses on whether this reform measure excessively protects directors at the expense of shareholders.

Part I analyzes the neoclassical economic view of the contractual relationship between stockholders and management that serves as the theoretical justification of section 102(b)(7). Part II proposes a modification of the Delaware statute that would provide for periodic shareholder review of charter amendments limiting liability.

The Birth Of A Public Corporation, Jon C. Teaford

Michigan Law Review

A Review of Public Property and Private Power: The Corporation of the City of New York in American Law, 1730-1870. by Hendrik Hartog

Kentucky Law Survey: Corporations, Willburt D. Ham

Kentucky Law Journal

No abstract provided.

Second Generation State Takeover Legislation: Maryland Takes A New Tack, Michigan Law Review

Michigan Law Review

This Note examines the approach recently adopted by the Maryland legislature in special session one year after the Supreme Court's decision in MITE. Maryland has departed radically from the regulatory approach of first generation statutes; however, this Note argues that the statute has failed to escape the constitutional infirmities of its predecessors. Part I outlines the various mechanisms that regulate acquisition of corporate control: the federal tender offer regulatory mechanism known as the Williams Act, state takeover legislation such as the Illinois statute invalidated in MITE, and the new Maryland statute. Part II analyzes the debate concerning the …

Kentucky Law Survey: Corporations, Willburt D. Ham

Kentucky Law Journal

No abstract provided.

Qualification Requirements For Foreign Corporations: The Need For A New Definition Of "Doing Business" Based On In-State Sales Volume, Stanley M. Klem

University of Michigan Journal of Law Reform

Part I of this article examines the mechanics of the present qualification system, paying special attention to the problems created by a multiplicity of vague state standards. Part II discusses the historical justification and purposes of the present system, concluding that only the protection function justifies the continued existence of the system. Finally, Part III proposes that "doing business" be defined in terms of the annual volume of in-state sales. This solution would remedy the problems which plague the present system while furthering the legitimate protection function of the state qualification requirements.

A Reconsideration Of The Stock Market Exception To The Dissenting Shareholder's Right Of Appraisal, Michigan Law Review

Michigan Law Review

This Note engages in such a reassessment. It contends, first, that appraisal has not been an unreasonable burden on corporations and that adjustments in the appraisal procedure can eliminate remaining inequities. Next, it asserts that the stock market exception inadequately protects the dissenting shareholder, since a market might, for a variety of reasons, price a shareholder's stock at less than its intrinsic value. Finally, this Note concludes that an appraisal procedure with modifications, and not the stock market exception, reflects the appropriate balance of corporate and shareholder interests.

Corporations--A Survey Of The Pending West Virginia Corporation Act, Stephen R. Brooks, Steven E. Deem, Frederick L. Delp, Michael D. Foster, James P. Holland, Charles J. Kaiser Jr., Katherine P. Kenna, Charles F. Printz Jr., William A. Trainer

West Virginia Law Review

No abstract provided.

Kentucky Adopts A New Business Corporation Act, Willburt D. Ham

Kentucky Law Journal

No abstract provided.

Organizing The Corporation Under The New Kentucky Business Corporation Act--A Comparison With Prior Law, Charles E. Shivel Jr.

Kentucky Law Journal

No abstract provided.