Law Commons^™

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 …

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 …

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 …

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 …

Public Relations Litigation, Kishanthi Parella

Scholarly Articles

Conventional wisdom holds that lawsuits harm a corporation’s reputation. So why do corporations and other businesses litigate even when they will likely lose in the court of law and the court of public opinion? One explanation is settlement: some parties file lawsuits not to win but to force the defendant to pay out. But some business litigants defy even this explanation; they do not expect to win the lawsuit or to benefit financially from settlement. What explains their behavior?

The answer is reputation. This Article explains that certain types of litigation can improve a business litigant’s reputation in the eyes …

How Did We Get Here? Dissecting The Hedge Fund Conundrum Through An Institutional Theory Lens, Cary Martin Shelby

Scholarly Articles

This article dissects both the origins and resulting harms of what the author terms the "hedge fund conundrum," in which institutional investors, such as pension plans and endowments, have consistently increased hedge fund allocations over the past decade despite pervasive evidence of excessive fees and subpar returns. It then utilizes an historical institutionalist lens to examine how lawmakers may have enabled a conundrum of this magnitude. By and large, this phenomenon is a symptom of regulatory loopholes that have permitted the private hedge fund market to increase in "publicness" through its expanding access and subsequent harm to retail investors. Such …

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 …

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.

Board Governance For The Twenty-First Century, Faith Stevelman, Sarah C. Haan

Scholarly Articles

A decade after the global financial crisis, corporate governance is in a state of flux. A conceptual shift is underway. Years ago, in "first wave" governance, boards had a cozy relationship with the company C-suite. In "second wave" governance, which took hold in the 1970s, legal academics reimagined the board's role, conceptualizing directors as monitors charged with limiting waste and abuse that can arise in agency relationships. Now, we find ourselves at the threshold of "third wave" governance, in which boards are asked to grapple immediately and candidly with both the financial aspects of business and new environmental, social, and …

Bytes Bite: Why Corporate Data Breaches Should Give Standing To Affected Individuals, Caden Hayes

Washington and Lee Journal of Civil Rights and Social Justice

High-profile data hacks are not uncommon. In fact, according to the Privacy Rights Clearinghouse, there have been at least 7,961 data breaches, exposing over 10,000,000,000 accounts in total, since 2005. These shocking numbers are not particularly surprising when taking into account the value of information stolen. For example, cell phone numbers, as exposed in a Yahoo! hack, are worth $10 a piece on the black market, meaning the hackers stood to make $30,000,000,000 from that one hack. That dollar amount does not even consider copies the hackers could make and later resell. Yet while these hackers make astronomical payoffs, the …

Facebook's Alternative Facts, Sarah C. Haan

Scholarly Articles

In this short essay, I argue that Facebook’s adoption of the alternative-facts frame potentially contributes to the divisiveness that has made social media misinformation a powerful digital tool. Facebook’s choice to present information as “facts” and “alternative facts” endorses a binary system in which all information can be divided between moral or tribal categories—“bad” versus “good” speech, as Sandberg put it in her testimony to Congress. As we will see, Facebook’s related-articles strategy adopts this binary construction, offering a both-sides News Feed that encourages users to view information as cleaving along natural moral or political divisions.

Justice Kavanaugh, Lorenzo V. Sec, And The Post-Kennedy Supreme Court, Matthew C. Turk, Karen E. Woody

Scholarly Articles

This Article analyzes a recent Supreme Court case, Lorenzo v. Securities and Exchange Commission, and explains why it provides a valuable window into the Court's future now that Justice Kennedy has retired and his seat filled by Justice Brett Kavanaugh. Lorenzo is an important case that raises fundamental interpretative questions about the reach of federal securities statutes. But most significant is its unique procedural posture: when the Supreme Court issues its decision on Lorenzo in 2019, Justice Kavanaugh will be recused while the other eight Justices rule on a lower court opinion from the D.C. Circuit in which he wrote …

The Role Of Women Entrepreneurs In Rebuilding A Nation: The Rwandan Model, Karen E. Woody

Scholarly Articles

This Article contributes to the literature by analyzing the normative shifts within the country's institutions, both pre- and post-genocide, and observes the role of women in restructuring the institutions as a major factor in the success that Rwanda enjoys today. By prioritizing gender equality in the recreation of its legal and economic structures, Rwanda is able to leverage the talents and capabilities of its entire population, and provides a model that can be applied to a number of other countries.

Part I details the historical underpinnings of the Rwandan genocide and humanitarian crisis. Part II addresses the efforts to establish …

Myth Of The Attorney Whistleblower, Carliss N. Chatman

Scholarly Articles

Notwithstanding the political grandstanding and legal regimes put in place to prevent the next Enron, this article explores whether attorney whistleblower provisions provided in the Standards of Professional Conduct for Attorneys Appearing and Practicing Before the Commission in the Representation of an Issuer and in the Model Rules of Professional Conduct are effective. When faced with attorney involvement in Enron, Congress passed § 307 of the Sarbanes Oxley Act (Sarbanes), which required the Securities and Exchange Commission (SEC) to amend its standards governing the conduct of attorneys practicing before the SEC. In response, the SEC and the American Bar Association …

Improving Human Rights Compliance In Supply Chains, Kishanthi Parella

Scholarly Articles

Corporations try to convince us that they are good global citizens: “brands take stands” by engaging in cause philanthropy; CEOs of prominent corporations tackle a variety of issues; and social values drive marketing strategies for goods and services. But despite this rhetoric, corporations regularly fall short in their conduct. This is especially true in supply chains where a number of human rights abuses frequently occur. One solution is for corporations to engage in meaningful human rights due diligence that involves monitoring human rights, reporting on social and environmental performance, undertaking impact assessments, and consulting with groups whose human rights they …