Law Commons^™

Where Did Mill Go Wrong?: Why The Capital Managed Firm Rather Than The Labor Managed Enterprise Is The Predominant Organizational Form In Market Economies, Justin Schwartz

Justin Schwartz

In this Article, I propose a novel law and economics explanation of a deeply puzzling aspect of business organization in market economies. Why are virtually all firms are organized as capital managed and owned (capitalist) enterprises rather than as labor managed and owned cooperatives? Over 150 years ago, J.S. Mill predicted that efficiency and other advantages would eventually make worker cooperatives predominant over capitalist firms. Mill was right about the advantages but wrong about the results. The standard explanation is that capitalist enterprise is more efficient. Empirical research, however, overwhelmingly contradicts this. But employees almost never even attempt to organize …

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, …

Midwest Corporate Law Scholars Conference Presentation: Mitigating The Harmful Effects Of Proxy Access (Sec Rule 14a-11), Bernard S. Sharfman

Bernard S Sharfman

Presentation given at the Midwest Corporate Law Scholars Conference (June 15, 2011)

Demystifying The Determination Of Foreign Law In U.S. Courts: Opening The Door To A Greater Global Understanding, Matthew J. Wilson

Matthew J. Wilson

With globalization and the proliferation of international commercial interaction, U.S. courts commonly encounter issues governed by the laws of other sovereigns. These encounters arise by virtue of private agreements or choice-of-law rules covering contractual relationships, cross-border conduct, tortuous acts, employment matters, intellectual property rights, and various other legal foundations. Because the substantive law applied in an international lawsuit can be outcome-determinative, it is important to accurately ascertain and determine the relevant law. In fact, the proper functioning of private international law in a domestic system is based on the appropriate application of law.

U.S. federal and state courts are presumed …

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 …

Let Charities Speak: 501(C)(3) Charitable Organizations After Citizens United, Paul D. Weitzel

Paul D. Weitzel

This paper argues that tax deductible charities have a constitutional right to speak about politics. 501(c)(3) organizations include all tax deductible charities, including religious groups. Citizens United v. Federal Election Commission abrogated the ban on political speech by 501(c)(3) organizations by rejecting the reasoning in Regan v. Taxation with Representation of Washington. Regan found that 501(c)(3) organizations could be prohibited from speaking because they would still be able to speak through affiliate organizations. Citizens United rejected this argument when applied to for-profit corporations, and that reasoning applies equally to non-profit organizations. Citizens United also rejected the distinction between subsidies and …

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 …

Women On Corporate Boards Of Directors - A Global Snapshot, Douglas M. Branson

douglas m branson

This paper builds on earlier books by the author (No Seat at the Table - How Governance and Law Keep Women Out of the Boardroom (2007) and The Last Male Bastion - Gender and the CEO Suite at America's Public Companies (2010)). The article identifies, describes, and critiques six movements or programs from various parts of the globe, all intended and designed to place additonal women directors on corporate baords of directors and in senior corporate management.

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 …

“No Fishing Poles Allowed At The Office,” And Other Suggestions On How To Limit “Fishing Expeditions” To An Outdoor Weekend Activity And Away From The Realm Of E-Discovery, Joanna K. Slusarz

Joanna Slusarz

Early settlement is usually encouraged by the courts and welcomed by most parties involved in a lawsuit. However, it may not always be the most favorable result. This idiosyncrasy arises most when the costs of continuing litigation and adjudication on the merits outweigh those of early settlement. On the other hand, early settlement raises the risk of “encourag[ing] additional, low merit cases that might not otherwise have been filed had the company chosen to litigate existing lawsuits.”

The phenomenon of electronic discovery (“e-discovery”) has exponentially increased the occurrence of the latter result. As a result, defendants, particularly large corporations with …

Legal Political Moral Hazard: Does The Dodd-Frank Act End Too Big To Fail?, Troy S. Brown

Troy S Brown

Abstract In the aftermath of the 2008 financial crisis, Senator Chris Dodd proposed the Restoring American Financial Stability Act of 2010 (the “Dodd-Frank Act”). The Dodd-Frank Act, the result of more than 18 months of negotiation and debate, aims to strengthen consumer protection, and regulate complex financial products. President Obama called the Dodd-Frank Act “the greatest overhaul of Wall Street since the Great Depression.” Among the many changes and hopes for the Dodd-Frank Act is that it will finally end the financial calamity, social unrest, and massive federal bailouts associated with the “too big to fail” concept. The “too big …

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 …

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.

The Global Shadow Bank--Systemic Risk And Tax Policy Objectives: The Uncertain Case Of Foreign Hedge Fund Lending In The United States, Julie A.D. Manasfi

Julie A.D. Manasfi

ABSTRACT: THE GLOBAL SHADOW BANK-- SYSTEMIC RISK AND TAX POLICY OBJECTIVES: THE UNCERTAIN CASE OF FOREIGN HEDGE FUND LENDING IN THE UNITED STATES With the recent financial crisis in the U.S. starting in 2007, much attention has been drawn to the issue of whether and to what extent financial regulation should keep pace with financial innovation and the shadow banking system. However, often ignored is the Internal Revenue Code’s failure to adequately keep pace with this financial innovation. One example of how the tax laws lag behind financial innovation can be found in the taxation of lending into the U.S. …

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 …

Abdullahi: A Lost Opportunity To Clarify Alien Tort Statute Jurisprudence For Corporations, Benjamin P. Harbuck

Benjamin P Harbuck

The Supreme Court recently denied certiorari from the Second Circuit’s Abdullahi v. Pfizer, Inc, an Alien Tort Statute (ATS) case concerning Pfizer’s nonconsensual medical testing of the antibiotic Trovan after a meningitis epidemic in Nigeria. The seminal Supreme Court ATS case of Sosa v. Alvarez-Machain, with its oft-quoted “vigilant doorkeeping” requirement, provided the basis for many of the arguments in Abdullahi. Yet the Second Circuit failed to act as a vigilant doorkeeper, extending ATS jurisdiction to situations that should not be considered to rise to the standard required by Sosa. This paper therefore advocates that the Supreme Court accept an …

The Irony Of International Business Law: U.S. Progressivism, China's New Laissez Faire, And Their Impact In The Developing World, Andrew Brady Spalding

Andrew Brady Spalding

As the financial crisis draws U.S. business overseas and developing countries rise in influence, the regulation of international business has never figured so prominently in federal law. But the dominant paradigm through which academics and policymakers continue to view that law – the so-called “Washington Consensus” – proves deeply misleading. A more accurate account of the components, origins, and aims of U.S. international business law reveals two striking ironies.

First, in discrete but critical ways, the U.S. no longer represents the comparatively laissez-faire approach to federal business regulation. Rather, owing to its origins in the Progressive Era, U.S. federal law …

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 …

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 …

Beyond The Board Of Directors, Kelli A. Alces

Kelli A. Alces

The law of corporate governance places the board of directors at the top of the corporate decisionmaking structure. So, accountability for corporate decisions rests primarily on the shoulders of part-time employees who lack the time and thorough knowledge of the firm necessary to perform the board’s duties effectively. Corporate governance scholarship is similarly preoccupied with the board of directors. Scholars have debated whether to enhance or diminish the board’s authority within the firm, but all accept that a board of directors should preside over corporate decisionmaking. This Article argues that scholars on both sides of the debate have missed the …

Reconsidering The Separation Of Banking And Commerce, Mehrsa Baradaran

Mehrsa Baradaran

This Article examines the long-held belief that banking and commerce need to be kept separate in order to ensure a stable banking system. Specifically, the Article criticizes the Bank Holding Company Act (BHCA), which prohibits non-banking entities from owning banks. The recent banking collapse has caused and exacerbated several problematic trends in U.S. banking, especially the conglomeration of banking entities and the homogenization of assets. The inflexible and outdated provisions of the BHCA are a major cause of this movement toward conglomeration and homogenization. Since the enactment of the BHCA, the landscape of U.S. banking has changed dramatically. The strict …

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.

Derivatives: A Twenty-First Century Understanding, Timothy E. Lynch

Timothy E. Lynch

Derivatives are commonly defined as some variation of the following: a financial instrument whose value is derived from the performance of a secondary source such as an underlying bond, commodity or index. But this definition is both over-inclusive and under-inclusive. Thus, not surprisingly, derivatives are largely misunderstood, including by many policy makers, regulators and legal analysts. It is important for interested parties such as policy makers to understand derivatives, because the types and uses of derivatives have exploded in the last few decades, and because these financial instruments can provide both social benefits and cause social harms. This Article presents …

Gambling By Another Name? The Challenge Of Purely Speculative Derivatives, Timothy E. Lynch

Timothy E. Lynch

Derivatives contracts can be used to hedge pre-existing risks, but they can also be used to speculate. This Article focuses on derivatives contracts in which both counterparties are speculators. These “purely speculative derivatives (PSD) contracts” have become increasingly common over the last several years and have notably resulted in the transfer of many tens of billions of dollars from institutions that had invested in the US subprime housing market to a handful of speculators who foresaw the market’s collapse, as well as many billions of dollars in fees to PSD brokers. PSD contracts are problematic. PSD contracts are less-than-zero-sum transactions …

Beyond The Board Of Directors, Kelli A. Alces

Kelli A. Alces

The law of corporate governance places the board of directors at the top of the corporate decisionmaking structure. So, accountability for corporate decisions rests primarily on the shoulders of part-time employees who lack the time and thorough knowledge of the firm necessary to perform the board’s duties effectively. Corporate governance scholarship is similarly preoccupied with the board of directors. Scholars have debated whether to enhance or diminish the board’s authority within the firm, but all accept that a board of directors should preside over corporate decisionmaking. This Article argues that scholars on both sides of the debate have missed the …

Beyond The Board Of Directors, Kelli A. Alces

Kelli A. Alces

The law of corporate governance places the board of directors at the top of the corporate decisionmaking structure. So, accountability for corporate decisions rests primarily on the shoulders of part-time employees who lack the time and thorough knowledge of the firm necessary to perform the board’s duties effectively. Corporate governance scholarship is similarly preoccupied with the board of directors. Scholars have debated whether to enhance or diminish the board’s authority within the firm, but all accept that a board of directors should preside over corporate decisionmaking. This Article argues that scholars on both sides of the debate have missed the …