Law Commons^™

A Pattern Of Unaccountability: Rating Agency Liability, The Dodd-Frank Act, And A Financial Crisis That Could Have Been Prevented, Stephen P. Alicanti

Stephen P Alicanti

By opining on the credit quality of structured debt products, credit rating agencies guide investment decisions and facilitate the debt capital markets. In the years leading up to the financial crisis of 2007, loans were commonly issued to individuals with poor credit histories and insufficient income. After those loans were originated, investment banks packaged them into securitized debt products and sold sections (tranches) to investors. Many of those products received credit rating agencies’ highest endorsement of creditworthiness. Despite their high ratings, those products failed during the financial crisis and devastated individual investors, investment banks, and insurance companies. The financial shockwaves …

Who Sits On Texas Corporate Boards? Texas Corporate Directors: Who They Are And What They Do, Lawrence J. Trautman

Lawrence J. Trautman Sr.

Corporate directors play an important role in governing American business, in the capital formation process, and are key to economic growth. Texas businesses play a disproportionately important role among the states in aggregate U.S. job creation, responsible for 37% of all net new American jobs since the recovery began. It is the job of the board of directors to govern the corporation. Director’s duties and responsibilities include: the duty of care; duty of loyalty; and duty of good faith. The recently published Trautman’s Guide™ to Texas Corporate Directors, provides biographical data for most of the approximately 20,000 for-profit corporate directors …

Legal Mechanization Of Corporate Social Responsibility Through Alien Tort Statute Litigation: A Response To Professor Branson With Some Supplemental Thoughts, Donald J. Kochan

Donald J. Kochan

This Response argues that as ATS jurisprudence “matures” or becomes more sophisticated, the legitimate limits of the law regress. The further expansion within the corporate defendant pool – attempting to pin liability on parent, great grandparent corporations and up to the top – raises the stakes and complexity of ATS litigation. The corporate social responsibility discussion raises three principal issues about how a moral corporation lives its life: how a corporation chooses its self-interest versus the interests of others, when and how it should help others if control decisions may harm the shareholder owners, and how far the corporation must …

Huch V. Charter Communications Inc.: Consumer Prey, Corporate Predators And A Call For The Death Of The Voluntary Payment Doctrine Defense, Oliver T. Beatty

Oliver T Beatty

This article addresses the collision between consumer fraud statutes, which developed in the last forty years, and the voluntary payment doctrine, which dates back to the 1600’s. The voluntary payment doctrine (“VPD”) provides, in its most common form, that “absent fraud or duress, a person who pays with full knowledge of all the facts cannot recover the money back again.” This doctrine holds true even if the money is not legally owed, and in some cases, even if the payment is made under protest. Conversely, consumer fraud statutes typically allow consumers to recover damages in a broad range of contexts, …

Llcs And Corporations: A Fork In The Road In Delaware?, Joshua P. Fershee

Joshua P Fershee

As Vice Chancellor Laster explained in CML V, LLC v. Bax, 6 A.3d 238 (Del. Ch. Nov. 3, 2010): '[T]here is nothing absurd about different legal principles applying to corporations and LLCs.'" This short paper argues that courts should respect the LLC as a business form distinct from corporations and that Delaware courts have taken the first step toward doing just that.

Where legislatures have decided that distinctly corporate concepts should apply to LLCs—such as allowing piercing the veil or derivative lawsuits—those wishes (obviously) should be honored by the courts. But where state LLC laws are silent, courts should carefully …

No More Abuse: The Dodd-Frank And Consumer Financial Protection Act's "Abusive" Standard, Tiffany S. Lee

Tiffany S Lee

The Dodd-Frank Wall Street Reform and Consumer Financial Protection Act creates the new Bureau of Consumer Financial Protection. This consumer watchdog will be responsible for the most powerful consumer protections in American history. Under section 1031(d) of the Act, the Bureau may ban acts and practices that are unfair, deceptive, or abusive. While the unfair and deceptive standards have existed for some time, “abusive” is a relatively new legal standard with limited jurisprudential history. Thus, ironically, critics assert that the inclusion of the abusive standard is itself an abuse of legislative power. This Article asserts that despite some criticism to …

Antitrust In The Skies: The United And Olympic Airline Mergers, Justin Dickerson

Justin Dickerson

This Article explores the 2010 merger of United Airlines and Continental Airlines—which usurped Delta’s briefly-held title as the world’s largest airline—as well as the failed merger of Greece’s two largest airlines, Olympic Air and Aegean Airlines, and the antitrust considerations associated with each of these transactions. Part II of this Article details the United and Continental merger, explaining pertinent portions of each airline’s corporate history over the past 10 years, which has included multiple other unsuccessful merger attempts. Next, Part III describes the circumstances surrounding the failed combination of Olympic and Aegean, including the role the Greek financial crisis played …

“Charitable” Discrimination: Why Taxpayers Should Not Have To Fund 501(C)(3) Organizations That Discriminate Against Lgbt Employees, Austin R. Caster

Austin R Caster

Until now, the first amendment protection of religious liberty has allowed—and even publicly funded—discrimination against LGBT employees, but this article argues that Christian Legal Society v. Martinez changes that analysis. According to Bob Jones University v. United States, organizations that base admissions decisions on racial discrimination violate public policy and cannot receive taxpayer funding. Similarly, Christian Legal Society v. Martinez shows us that universities do not have to fund student organizations that discriminate on the basis of sexual orientation. Therefore, because discrimination based on an immutable minority trait bars taxpayer funding in one instance, this article argues it should also …

Why Europe Should Say No To The Proposed Framework Of Economic Governance: A Legal And Policy Analysis In Light Of The Establishment Of The European Stability Mechanism And The Euro Plus Pact, Vasileios Paliouras

Vasileios Paliouras

The eurozone sovereign debt crisis, despite all the pain and suffering that has caused to the peoples of the affected countries of the European periphery, has the potential to serve the purpose of European integration, if the right signals are transmitted to the political establishment of Europe. Clearly, the crisis has challenged the basic premise that underpinned the creation of the Economic and Monetary Union (EMU), namely that coordination of economic policies would be enough to safeguard the consensus over the common currency. During the last year the leaders of eurozone Member States have taken unprecedented action to make up …

Duties And Liabilities Of Corporate Managers Under Argentine Law, Martin Eugenio Abdala Prof. Dr.

Prof. Dr. Martin Eugenio Abdala

Every individual participates on the commercial traffic, concluding daily different contracts and incurring in many duties, most of which are satisfied correctly on time and form. However, in the cycle from the birth to the extinction of those obligations, it often appears some vicissitudes such as retardation, delay and default. The duties of corporate managers, as a species of that obligation genre, might be obviously affected by such vicissitudes. In Argentine Law the situations of retardation and delay are solved with many tools that come mainly from the Ley de Sociedades Comerciales (Corporation Act). The cases in which there is …

Globalization Versus Normative Policy: A Case Study On The Failure Of The Barbie Doll In The Indian Market, Priti Nemani

Priti Nemani

The Barbie doll leads in the world of young females, with her vast wardrobe, her extensive life experiences, and her many diverse friends. Barbie’s maker- Mattel, Inc. – has sold the doll around the world by making superficial ethnic and racial modifications to the doll; however, the international marketing of Barbie has not been wholly triumphant. Mattel no longer promotes the Barbie in India; rather, the global company now mainly markets gender neutral products, like board games, to the Indian market. Why did the Indian family reject Barbie as the appropriate toy for their daughters?

This article argues that, despite …

Corporate Obligations Under The Human Right To Water, Jernej Letnar Cernic

Jernej Letnar Černič

Almost a billion people do not have access to clean and safe water. Access to safe drinking water and sanitation is increasingly being considered a fundamental human right. Corporations play an important role in the realization of the right to water. For example, they can become violators of the right to water where their activities deny access to clean and safe water or where water prices increase without warning. Corporations can have a positive or negative impact on the human rights of individuals, wider communities and indigenous peoples. This paper argues that corporations bear a certain responsibility for the realization …

Private Ordering With Shareholder Bylaws, Gordon Smith, Matthew Wright, Marcus Hintze

D. Gordon Smith

The Implications Of Citizens United V. Federal Election Commission On Texas Corporate Election Laws, Lynette M. Boggs

Lynette M. Boggs

This Comment provides an historical overview of key federal election laws, culminating in the holding of Citizens United v. Federal Election Commission, to establish the context and framework that may now conflict with current Texas election laws governing the roles of corporations and labor unions in state elections. It provides an analysis of the specific Texas statutes that are likely unconstitutional based on Citizens United and suggests legislative remedies the Texas Legislature, as well as the legislatures of other states, may consider in revising election laws to withstand future First Amendment challenges in light of the Citizens United holding.

Finding Shelter In A Time Of Crisis: A Process-Oriented Approach To Risk Management, Kristin Johnson

Kristin N Johnson

Success in financial markets rests on the effectiveness of a business’s risk management strategy: manage risks well and profits follow; fail to manage risks and a crisis ensues. It has long been evident that inadequate enterprise risk management policies, or internal risk-reducing strategies, create perilous consequences for a business. The recent financial crisis illustrates that the often disparate regulatory guidance and multiplicity of regulators who influence enterprise risk management policies were ill-suited to address conflicts and weaknesses in risk management accountability and enforcement mechanisms. During the crisis, a chorus of commentators demanded a federal solution to address the devastating economic …

Law, Economics, And Politics: The Untold History Of The Due Process Limitation On Punitive Damages, Daniel W. Morton-Bentley

Daniel W Morton-Bentley

Where did the idea that the Due Process clause limits the size of punitive damage awards come from? This question remains unanswered despite a large body of legal scholarship on the Supreme Court’s punitive damage jurisprudence. I contend that the argument won acceptance due to a cultural shift which began in the 1970s: the move towards evaluating social policies based solely on their adherence to free-market ideology. In the face of the economic disruptions of the 1970s, conservative and Republican policymakers relied heavily on free-market economic arguments. According to these arguments, any policies that reduce corporate profits – including punitive …

Law And Venture Capital: The Case Of Japanese Entrepreneurs, Zenichi Shishido

Zenichi Shishido

The biggest difference in the incentive bargains made in the venture capital industries in the US and Japan is that American entrepreneurs abandon control while Japanese entrepreneurs do not. Years ago, this difference was thought to be caused by a lack of liquid IPO markets by some experts in the field. However, there are currently multiple liquid IPO markets in Japan, yet Japanese entrepreneurs are still reluctant to abandon control of their companies to venture capitalists. While there are likely to be many complementary reasons for this difference, it can be partly explained by the different legal systems in the …

Judges Who Settle, Hillary A. Sale

Hillary A Sale

This Article develops a construct of judges as gatekeepers in corporate and securities litigation, focusing on the last-period, or settlement stage of the cases. Many accounts of corporate scandals have focused on gatekeepers and the roles they played or, in some cases, abdicated. Corporate gatekeepers, like investment bankers, accountants, and lawyers, function as enablers and monitors. They facilitate transactions and enable corporate actors to access the financial and securities markets. Without them the transactions would not happen. In class actions and derivative litigation, judges are the monitors and enablers. They are required to oversee the litigation arising from bad transactions …

Returning To First Principles Of Privilege Law: Focusing On The Facts In Internal Corporate Investigations, Christopher T. Hines

Christopher T Hines

In the aftermath of the worst economic downturn since the Great Depression, it is necessary and appropriate to ask some fundamental questions on the economic laws and regulations that, for better or worse, played a contributing role in the recent financial crisis. Although the ongoing financial reform efforts have already resulted in significant changes in applicable laws, a further discussion regarding the principles and practices that existed within the enforcement of law is worthy of consideration. Specifically stated, are there any improvements that can be made to the current federal securities enforcement regime that would work to the benefit of …

Employment, Justice, And The Psychological Contract, Larry A. Dimatteo, Robert Bird, Jason Colquitt

Larry A DiMatteo

The manuscript is a interdisciplinary collaboration between contract law, employment law and management scholars and draws from the fields of law, management, and psychology. One of the authors is currently Editor-in-Chief of the top-tier level ACADEMY OF MANAGEMENT JOURNAL. Because of his nationally-recognized expertise, the survey and statistical analysis is of the highest order.

After reviewing and noting the gaps in the employment and justice literatures, this article then presents the finding of a survey of 763 participants to measure whether certain variables—procedural and substantive fairness, as well as educating employees on the principle of employment at will—impact the propensities …

Mastering The Faithless Servant?: Reconciling Employment Law, Contract Law, And Fiduciary Duty, Charles A. Sullivan

Charles A. Sullivan

Abstract

The quaintly-named “faithless servant” doctrine requires employees subject to it not merely to pay damages for their derelictions but also to disgorge the compensation paid during the period of faithlessness and without any right to recover in quantum meruit for the value the employee may have provided during that time. The net result is that an employer can recover substantial amounts of compensation paid and otherwise due without proof that it suffered any damage whatsoever and, indeed, even if it is established that there were no such damages.

Such a result is startling to those who approach the question …

Delaware's "Expanding Duty Of Loyalty" And Illegal Conduct: A Step Towards Corporate Social Responsibility, David Rosenberg

David Rosenberg

Courts and legal scholars have long agreed that approval of illegal activity constitutes a violation of a corporate director’s fiduciary duties to the shareholders. While directors’ fiduciary obligations have traditionally been divided into the duties of care, loyalty and good faith, recent decisions in the Delaware courts have narrowed them down into a fairly broadly defined single duty of loyalty. Therefore, in order for shareholders to bring a lawsuit against directors for approving illegal activity, they must claim that the directors acted disloyally, even in situations where the directors believed that their decision would benefit the corporation and the shareholders. …

Charting Corporate And Financial Governance In Korea In The New Decade: World Bank And Imf Reports, Young-Cheol K. Jeong

Young-Cheol K. Jeong

No abstract provided.

Judges Who Settle, Hillary A. Sale

Hillary A Sale

This Article develops a construct of judges as gatekeepers in corporate and securities litigation, focusing on the last-period, or settlement stage of the cases. Many accounts of corporate scandals have focused on gatekeepers and the roles they played or, in some cases, abdicated. Corporate gatekeepers, like investment bankers, accountants, and lawyers, function as enablers and monitors. They facilitate transactions and enable corporate actors to access the financial and securities markets. Without them the transactions would not happen. In class actions and derivative litigation, judges are the monitors and enablers. They are required to oversee the litigation arising from bad transactions …

State E-Discovery Today: An Assessment And Update Of Rulemaking, Thomas Y. Allman

Thomas Y. Allman

Discovery of information in electronic form for use in civil litigation in the United States has assumed major importance in the state courts, where the great bulk of litigation occurs. This paper analyzes the 37 states that have formally acted against the backdrop of the key issues facing litigants utilizing electronically stored information, with a particular emphasis on the author's view, as a former General Counsel, that the time has come to embody rationale principles of preservation and spoliation in the rules at both the federal and state level.

Shareholder Litigation After The Meltdown, Dan Morrissey

Dan Morrissey

Abstract of Morrissey Article The article examines the two principal mechanisms available to shareholders to remedy wrongdoing by managers of their corporations, class actions and derivative suits. It discusses objections to those proceedings and concludes that they lack merit. It also finds that notwithstanding legislation passed in response to the recent financial crisis these shareholder remedies are needed now more than ever to safeguard the integrity of American business. The article also reviews recent judicial decisions that have weakened these claims and proposes legislation that will reverse that trend and strengthen them.

Why Is Small Business The Chief Business Of Congress?, Mirit Eyal-Cohen

Mirit Eyal-Cohen

Small business is a sacred cow in America. In 1958, Congress created the Small Business Investment Company ("SBIC"), a unique public-private program that provides long-term capital to small entrepreneurs. From its inception, however, the SBIC has been plagued by inefficiency and failure. Yet, Congress continues to pour millions of dollars into the SBIC program, with no end in sight. What explains this failed policy course?

This article argues that the SBIC program exemplifies the pitfalls of legal and political institutional path dependency and should be replaced by private institutional lending system. Pursuant to this account, past decisions can influence future …

Collaborative Governance For Climate Change Mitigation: Implementing A Co-Regulation Mechanism For Managing The Private Sector’S Contribution To Climate Change, Anastasia M. Telesetsky

Anastasia M Telesetsky

For the past two decades, international climate policy has been handled as a matter for State to State deliberation. Non-state actors have played at best marginal roles in making and implementing international policy. This paper argues that climate change remains an intractable transnational problem because State to State deliberations failed to acknowledge that both climate mitigation and adaptation require ongoing collaborative governance with non-State actors to shift normative behavior. This paper proposes implementing an international co-regulation strategy as a collaborative governance mechanism in order to improve the legitimacy and accountability of intergovernmental meetings. This paper specifically proposes in the context …

The Federal Trade Commission And Privacy: Defining Enforcement And Encouraging The Adoption Of Best Practices., Andrew B. Serwin

Andrew B. Serwin

This article examines the history of privacy enforcement by the Federal Trade Commission, including the FTC’s jurisdiction under Section 5, and its privacy enforcement matters, as well as the FTC's recently issued report, "Protecting Consumer Privacy in an Era of Rapid Change: A proposed Framework for Businesses and Policymakers", in which the FTC examines past enforcement models, noting their failings. In light of the FTC’s examination of past enforcement models, this article then analyzes these models, including the accountability-centric model that has previously been utilized in the United States, as well as the FTC’s proposed solution to the privacy problems …

Shareholder Litigation After The Meltdown, Dan Morrissey

Dan Morrissey

Abstract of Morrissey Article The article examines the two principal mechanisms available to shareholders to remedy wrongdoing by managers of their corporations, class actions and derivative suits. It discusses objections to those proceedings and concludes that they lack merit. It also finds that notwithstanding legislation passed in response to the recent financial crisis these shareholder remedies are needed now more than ever to safeguard the integrity of American business. The article also reviews recent judicial decisions that have weakened these claims and proposes legislation that will reverse that trend and strengthen them.