Law Commons^™

Deja Vu All Over Again? The Internal Affairs Rule And Entity Law Convergence Patterns In Europe And The United States, Matthew G. Dore

Matthew G Dore

Many scholars embrace the view that corporate law convergence is an inevitable byproduct of the internal affairs rule and market competition by jurisdictions that seek to attract new entity formations by offering ever more efficient business association laws. Yet recent developments in Europe and the U.S. cast doubt on this proposition. As the article describes, the European Court of Justice embraced the internal affairs rule more than a decade ago, and European Union legislation now offers new opportunities for EU Member States to compete in the company law field. But Europe has experienced neither U.S.-style jurisdictional competition for business entity …

E-Commerce And Electronic Payment System Risks: Lessons From Paypal, Lawrence J. Trautman

Lawrence J. Trautman Sr.

What are the major risks perceived by those engaged in e-commerce and electronic payment systems? What development risks, if they become reality, may cause substantial increases in operating costs or threaten the very survival of the enterprise? This article utilizes the relevant annual report disclosures from eBay (parent of PayPal), along with other eBay and PayPal documents, as a potentially powerful teaching device. Most of the descriptive language to follow is excerpted directly from eBay’s regulatory filings. My additions include weaving these materials into a logical presentation and providing supplemental sources for those who desire a deeper look (usually in …

Why Does Executive Greed Prevail In The United States And Canada But Not In Japan? The Pattern Of Low Ceo Pay And High Worker Welfare In Japanese Corporations, Alberto R. Salazar V.

Alberto R. Salazar V.

According to a list of the 200 most highly-paid chief executives at the largest U.S. public companies in 2013, Oracle’s Lawrence J. Ellison remained the best paid CEO and earned $96.2 million as total annual compensation last year. He has received $1.8 billion over the past 20 years. The lowest paid on the same list is General Motors’ D. F. Akerson who earned $11.1 million. The average national pay for a non-supervisory US worker was $51,200 last year and a CEO made 354 times more than an average worker in 2012. Hunter Harrison, Canadian Pacific Railway Ltd., was the best …

Lessons From Metaethics, Cognitive Neuroscience, Moral Psychology, And Behavioral Economics: The Use Of Ethical Intuition In Legal Compliance For Business Entities, Eric C. Chaffee

Eric C. Chaffee

This article challenges the widely held view in legal education and in practice that what lawyers should be doing in providing legal advice consists solely of engaging in legal research and analytic reasoning. This article suggests that ethical intuition—i.e., the unconscious recognition that a specific action is good, evil, or morally neutral—may have a useful role to play in making legal compliance decisions for business entities.

Although largely ignored by the legal academy, scholars in numerous disciplines have acknowledged the role that intuition plays in decision making. Philosophers and religious scholars initially recognized role of intuition in moral decision making …

Corporate “Soul”: Legal Incorporation Of Catholic Ecclesiastical Property In The United States - A Historical Perspective, Vicenç Feliú

Vicenç Feliú

This work is a revision and update of a study carried out in 1933 by Monsignor Patrick J. Dignan. Dignan’s purpose in his study was to outline the history of how the Roman Catholic Church secured laws for the protection of church property in accordance with the hierarchical nature of the Church. The purpose of the present article is to bring up to date Dignan’s work and complete a survey of the law in its present state. The article analyzes the differences in the law since the original survey to determine if Dignan’s conclusion that the Church should operate to …

Freedom Of Establishment And The Effective Participation Of Companies In Economic Life, Michala Meiselles Ms

Michala Meiselles Ms

Though the freedom of establishment has its roots in the provisions of the Treaty of Rome, it is the work of the Court of Justice of the European Union (the Court) that has been instrumental in the evolution of this freedom. In a succession of cases, the Court has transformed this otherwise largely theoretical concept into a functional tool responsive to the needs of business. By so doing, the Court has transformed this freedom into one that is attractive not only to businesses based in the European Union (EU) but also to those based outside it. This paper starts off …

The Plaintiffs' Lawyer's Transaction Tax: The New Cost Of Doing Business In Public Company Deals, Neva Browning Jeffries

Neva B Jeffries

This article addresses the proliferation of frivolous litigation in the context of public company deals. In 2012 93% of public company mergers and acquisitions valued at over $100 million and 96% of such transactions valued over $500 million incurred litigation. Through these “merger objection suits,” plaintiffs’ attorneys have successfully attached a transaction tax – in the form of attorneys’ fees – as the cost of doing business for public company mergers and acquisitions. Armed with the knowledge that time is of the essence in these transactions, plaintiffs’ attorneys understand the leverage they have to force a quick settlement with a …

Financial Armageddon Routs Law Again, Nicholas L. Georgakopoulos

Nicholas L Georgakopoulos

This essay, after highlighting the unique aspects of financial markets, offers a mostly rational account for financial crises, centering on the 2008 crisis as an example. The thesis is that market participants overestimate the duration of high productivity growth due to new technologies and produce occasional—and likely unavoidable—bubbles. Considering potential changes in the regulation of financial markets, the conclusion is grim. Regulators appear to have exhausted the effective legal levers against overestimations of continued high growth. The legislative responses to the last few crises were likely unproductive. The sole (but still unrealistic) effective protection would be the constitutional development of …

Voice Without Say: Why Capital-Managed Firms Aren’T (Genuinely) Participatory, Justin Schwartz

Justin Schwartz

Why are most capitalist enterprises of any size organized as authoritarian bureaucracies rather than incorporating genuine employee participation that would give the workers real authority? Even firms with employee participation programs leave virtually all decision-making power in the hands of management. The standard answer is that hierarchy is more economically efficient than any sort of genuine participation, so that participatory firms would be less productive and lose out to more traditional competitors. This answer is indefensible. After surveying the history, legal status, and varieties of employee participation, I examine and reject as question-begging the argument that the rarity of genuine …

The Need For Federal Preemption Of Executive Compensation Reform: How Corporate Governance And Economic Justice Objectives Are Only Achievable Through Comprehensive Federal Regulation Of Executive Compensation, Cory Howard

Cory Howard

Since the beginning of the most recent economic downturn, there has been an increased level of attention on the pay that executives at publicly traded companies have received. Numerous reforms, including the Dodd-Frank Act and the Troubled Asset Relief Program (TARP), imposed transient, although included some permanent limitations, on executive compensation packages. However, given the importance of executive compensation reform to both corporate governance and economic/social justice initiatives, it is imperative that the federal legislature do more. This article will explore some of the patchwork of regulations that the federal government has enacted and the methods that the states use …

Re-Envisioning The Controlling Shareholder Regime: Why Controlling Shareholders And Minority Shareholders Embrace Each Other, Sang Yop Kang

Sang Yop Kang

According to conventional corporate governance scholarship, controlling shareholder regimes exist in jurisdictions where minority shareholders are not well protected by controlling shareholders’ expropriation. However, Professor Ronald Gilson raises a critical point against the conventional view; if laws are inefficient and do not protect investors, as the conventional view explains, why do we observe any minority shareholders at all in such “bad-law” countries? One possible reason is that in response to controlling shareholders’ expropriation, minority shareholders discount severely shares that corporations issue. Then, a related question is: if it is true, why do some controlling shareholders in bad-law countries have many …

Present At The Creation: Reflections On The Early Years Of The National Association Of Corporate Directors, Lawrence J. Trautman

Lawrence J. Trautman Sr.

Effective corporate governance is critical to the productive operation of the global economy and preservation of our way of life. Excellent governance execution is also required to achieve economic growth and robust job creation in any country. In the United States, the premier director membership organization is the National Association of Corporate Directors (NACD). Now over 36 years old, NACD plays a major role in fostering excellence in corporate governance in the United States and beyond. Over the past thirty-six years NACD has grown from a mere realization of the importance of corporate governance to become the only national membership …

Insider Trading Law In East Asia And Enforcement: Japan, China, Hong Kong And Taiwan Visite, Chien-Chung Lin

Chien-Chung Lin

No abstract provided.

A Corporation Has No Soul - The Business Entity Law Response To Challenges To The Contraceptive Mandate Under The Ppaca, Thomas E. Rutledge

Thomas E. Rutledge

The most contentious matter in the implementation of the Patient Protection and Affordable Care Act (the “PPACA”) is not a question of health care, but rather one of the law of business organizations. The dispute has been over the requirement that group health insurance plans provide, on a no-cost sharing basis, coverage for a variety of procedures and prescription medicines involving contraception and what are described as “abortificants.”

The class of suits subject to this discussion were filed by what are not religious organizations but rather for-profit business ventures, asserting that they should be exempt from the requirements of the …

Unions, Corporations, And The First Amendment: A Response To Professors Fisk And Chemerinsky, Todd E. Pettys

Todd E. Pettys

In this response to Professor Fisk and Chemerinsky’s critique of the Supreme Court’s ruling in Knox v. SEIU Local 1000, I make two arguments. First, I challenge the premise of shareholder-employee equivalency that undergirds key portions of Fisk and Chemerinsky’s analysis. Second, I contest the claim that Knox contributes to incoherence in the Court’s First Amendment jurisprudence. Specifically, I challenge Fisk and Chemerinsky’s argument that Knox is difficult to reconcile with the Court’s leading precedents on the speech rights of government employees, and I raise doubts about their reading of the Court’s compelled-speech cases involving complaints that one’s resources are …

Lessons From Metaethics, Cognitive Neuroscience, Moral Psychology, And Behavioral Economics: The Use Of Ethical Intuition In Legal Compliance Decision Making For Business Entities, Eric C. Chaffee

Eric C. Chaffee

This article challenges the widely held view in legal education and in practice that what lawyers should be doing in providing legal advice consists solely of engaging in legal research and analytic reasoning. This article suggests that ethical intuition—i.e., the unconscious recognition that a specific action is good, evil, or morally neutral—may have a useful role to play in making legal compliance decisions for business entities.

Although largely ignored by the legal academy, scholars in numerous disciplines have acknowledged the role that intuition plays in decision making. Philosophers and religious scholars initially recognized role of intuition in moral decision making …

Judicial Deference And Institutional Character: Homeowners Associations And The Puzzle Of Private Governance, Michael C. Pollack

Michael C. Pollack

Much of the study of judicial review of governing institutions focuses on the institutions of public government at the federal, state, and local levels. But the courts’ relationship with private government is in critical need of similar examination, and of a coherent framework within which to conduct it. This Article uses the lens of homeowners associations—a particularly ubiquitous form of private government—to construct and employ such a framework. Specifically, this Article proceeds from the notion that judicial deference is less appropriate the more unaccountable a governing institution is. It therefore develops a set of tests for institutional accountability and applies …

Will Law Firms Go Public?, Roberta S. Karmel

Roberta S. Karmel

Law in the United States is a big business and big law firms are a global business. Currently, under rules of the American Bar Association (ABA) and most states law, firms are not allowed either to include non-lawyers as partners or accept equity investments from non-lawyers. This Article will argue that (even if law firms retain the form of partnerships) they eventually will accept investments from third parties, and possibly even go public, but this development could lead to a loss of professionalism, as it has with other industries, and could also lead to the end of self-regulation. Among the …

Aligning Corporate And Community Interests: From Abominable To Symbiotic, Barnali Choudhury

Barnali Choudhury

Despite a longstanding recognition of the need for corporations to take into account the interests of the community in which it operates, the misalignment between corporate and community interests continues to persist. The BP oil spill in the Gulf of Mexico and Texaco’s contamination of Ecuador’s rainforest are just two examples highlighting this ongoing conflict.

Corporations’ failure to align their interests with that of the community is reminiscent of the practice of separating issues of business from issues of the community. Indeed one prominent scholar, Ferdinand Tönnies, views communities and businesses as such disparate entities that he finds the notion …

Damning Dictum: The Default Duty Debate In Delaware, Mohsen Manesh

Mohsen Manesh

Bizarrely, today even the most sophisticated business lawyer cannot answer a seemingly simple question: whether, in the absence of an express agreement to the contrary, the manager of a Delaware limited liability company (LLC) owes traditional fiduciary duties to its members as a default matter? This was not always the case. Until recently, this question was settled—settled at least in the Delaware Court of Chancery. But in November 2012, the Delaware Supreme Court cast doubt on a long line of chancery court precedent in Gatz Properties v. Auriga Capital. Given the broad freedom of contract available under LLC law, it …

Corporate Indemnification And Advancement Provisions, Good Faith, And The Responsibility Of Corporate Attorneys To Protect The Corporation From Misconduct, Markena Diane Peavy

Markena D. Peavy

The last decade of corporate scandals has exposed that corporations are vulnerable to corruption and exploitation, which has significant and lasting effects on the national and global economy. This article examines the corporate attorney’s responsibility to serve as “gatekeeper” for the corporation, primarily in circumstances where the interests of corporate officials and the interests of the corporation are in direct conflict, and Section 145 of the Delaware General Corporation Law, which governs the indemnification and advancement rights of corporate officers and the confines of the corporation’s power to confer such rights. Delaware courts have long established that indemnification is to …

The Community Reinvestment Act: Guilty, But Not As Charged, Raymond H. Brescia

Raymond H Brescia

Since its passage in 1977, the Community Reinvestment Act (CRA) has charged federal bank regulators with "encourag[ing]" certain financial institutions "to help meet the credit needs of the local communities in which they are chartered consistent with [] safe and sound” banking practices. Even before the CRA became law—and ever since—it has become a flashpoint. Depending on your perspective, this simple and somewhat soft directive has led some to charge that it imposes unfair burdens on financial institutions and helped to fuel the subprime mortgage crisis of 2007 and the financial crisis that followed. According to this argument, the CRA …

Neoliberalism And The Law Reassessing Historical Materialist Analysis Of The Law For The 21st Century, Justin Schwartz

Justin Schwartz

Historical materialism has been called in question by the triumph of neoliberalism and the fall of Communism. I show, by consideration of two examples, the 2008 crisis and recent Supreme Court campaign spending First Amendment jurisprudence, that neoliberalism instead vindicates the explanatory power of (non-mechanical and non-deterministic) historical materialism in accounting for a wide range of recent legal developments in legislation, executive (in)action, and judicial decision-making.

Neoliberalism And The Law: How Historical Materialism Can Illuminate Recent Governmental And Judicial Decision Making, Justin Schwartz

Justin Schwartz

Neoliberalism can be understood as the deregulation of the economy from political control by deliberate action or inaction of the state. As such it is both constituted by the law and deeply affects it. I show how the methods of historical materialism can illuminate this phenomenon in all three branches of the the U.S. government. Considering the example the global financial crisis of 2007-08 that began with the housing bubble developing from trade in unregulated and overvalued mortgage backed securities, I show how the repeal of the Glass-Steagall Act, which established a firewall between commercial and investment banking, allowed this …

Rise Of The Intercontinentalexchange And Implications Of Its Merger With Nyse Euronext, Latoya C. Brown

Latoya C. Brown, Esq.

This paper examines the impending merger between the IntercontinentalExchange (ICE) and NYSE Euronext against the backdrop of the current structure of the global financial services industry. The paper concludes that the merger embodies what the financial services industry is becoming and captures the model that will allow exchanges to remain competitive in today’s marketplace: mega-exchanges with broader asset classes and electronic platforms. As technology and globalization threaten their vitality, exchanges will need to continue reinventing and adapting. Increasingly over the last decade they have done so by merging and by moving, at least a part of, their operations on screen. …

Transplanting A Poison Pill To Controlling Shareholder Regimes: Why It Is So Difficult, Sang Yop Kang

Sang Yop Kang

Recently, the great tide of globalization has caused M&A activities to spill over into controlling shareholder regimes (economies dominated by controlling shareholders). Due to a seismic change arising from an unprecedented takeover wave, transplanting the Delaware pill has been heavily discussed in controlling shareholder regimes. This Article explores how legal and socio-economic conditions of the United States (State of Delaware) and controlling shareholder regimes are different and why transplanting the Delaware pill could create unintended results in controlling shareholder regimes. First, the legitimacy of the Delaware pill is supported by corporate governance institutions, such as a relatively functional board, a …

Do Social Ties Matter In Corporate Governance: The Missing Factor In Chinese Corporate Governance Reform, Yu-Hsin Lin

Yu-Hsin Lin

In the past decade, Asian countries have adopted various corporate governance measures with the hope that good law will facilitate capital market development. One of the measures adopted by Asian countries to revamp corporate boards is to enhance board independence by introducing the institution of the independent director. Empirical studies have shown that social ties could compromise independent directors’ monitoring capacity and, thus, do matter in corporate governance. Using theoretical and empirical studies, this article analyzes the effects that independent directors' social ties to corporate insiders can have on director efficacy and discusses how the United States, where the institution …

The Merits Of Cooperative Corporate Governance In The Digital Age, Meredith-Anne Kurz

Meredith-Anne Kurz

No abstract provided.

Ending Judgment Arbitrage: Jurisdictional Competition And The Enforcement Of Foreign Money Judgments In The United States, Gregory Shill

Gregory Shill

Recent multi-billion-dollar damage awards issued by foreign courts against large American companies have focused attention on the once-obscure, patchwork system of enforcing foreign-country judgments in the United States. That system’s structural problems are even more serious than its critics have charged. However, the leading proposals for reform overlook the positive potential embedded in its design.

In the United States, no treaty or federal law controls the domestication of foreign judgments; the process is instead governed by state law. Although they are often conflated in practice, the procedure consists of two formally and conceptually distinct stages: foreign judgments must first be …

After Privacy: The Rise Of Facebook, The Fall Of Wikileaks, And Singapore’S Personal Data Protection Act 2012, Simon Chesterman

Simon Chesterman

This article discusses the changing ways in which information is produced, stored, and shared — exemplified by the rise of social-networking sites like Facebook and controversies over the activities of WikiLeaks — and the implications for privacy and data protection. Legal protections of privacy have always been reactive, but the coherence of any legal regime has also been undermined by the lack of a strong theory of what privacy is. There is more promise in the narrower field of data protection. Singapore, which does not recognise a right to privacy, has positioned itself as an e-commerce hub but had no …