Business Organizations Law Commons^™

Patients As Stakeholders, Isaac D. Buck

William & Mary Law Review

Once a provider of public support and charity, the American hospital is now a source of dividends for private actors. Profit interests have encroached on, and increasingly replaced, the publicly minded heroism of the American hospital, the central hub of a complex and disordered health care system. This new profit-first posture creates ill effects for the people who rely on health care delivery: those who work within it, those who are treated within it, and those who pay for it. When hospitals need to deliver for their corporate shareholders, legitimate questions arise about how much they are delivering for patients …

Uncertainty In Business Judgment: How A Divide Between Delaware's Judiciary And Legislature Has Changed Corporate Law, Andrea Safran

William & Mary Business Law Review

In response to controversial Chancery Court decisions, the Delaware Legislature rushed to amend the Delaware Code in order to reinforce the business judgment rule. As the foremost business court in the nation, every Chancery Court decision is thoroughly scrutinized by the corporate world, so when the court goes against normal business practices, corporations grow wary in their trust of the State. Thus ensues a scramble by the State to pass legislation that will protect corporate interests. With these recent decisions, however, the Chancery Court may have lost its footing, and Delaware could soon see a mass corporate exodus with the …

Through The Lens Of Natural Selection: Understanding The Development And Adoption Of Legal Forms Of Business Organization, Brent J. Horton

William & Mary Business Law Review

This Article makes three contributions to the scholarship on the development and adoption of legal forms of business organization (LFBO). First, this Article examines how Charles Darwin’s theory of natural selection (i.e., variation, selection, and inheritance) can provide an overarching framework that can integrate previous theories of LFBO evolution propounded by Hurst, Blair, Hansmann, Kraakman, and Squire.

Second, Hurst, Blair, Hansmann, Kraakman, and Squire focused primarily on the evolution of joint stock companies and corporations during the American Industrial Revolution. This Article uses the lens of natural selection to explain the development and adoption of more recent forms of business …

Free Will, Responsibility, And The Corporation: A Critique Of Corporate Criminal Liability, Declan C. Lawson

William & Mary Law Review Online

Part I of this Note will provide background on the relationship between free will and criminal liability and discuss the extant theories underpinning corporate criminal liability. Part II will examine the shortcomings of those theories. Part III will argue for a free will-based approach for apportioning blame for corporate criminal conduct. Such an approach is both theoretically and practically justified.

This abstract was taken from the author's introduction.

Toward Digital Corporate Law: Revisiting Corporate Law's Responses To Technology, Chen Wang, Ke Xu

William & Mary Business Law Review

This Article examines the dynamic relationship between emerging technologies and corporate law, raising fundamental questions about whether these technological advancements require reshaping traditional legal doctrines. It investigates key aspects of corporate law—including corporate formation, governance, and finance—through a comparative analysis of Chinese and U.S. legal frameworks. This Article critically assesses the ability of contemporary corporate law to respond effectively to technological challenges posed by artificial intelligence (AI), particularly in relation to evolving fiduciary duties of corporate agents and shifts in the balance of power between shareholders and management. Furthermore, this Article proposes innovative strategies for future corporate law development, advocating …

Chimeric Contacts And Consent: The Ill-Reasoned Expansion Of Corporate Jurisdictional Exposure, James P. George

William & Mary Business Law Review

Two recent Supreme Court decisions have imposed aspects of general jurisdiction in a way that exposes corporations and possibly other legal actors to litigation in spuriously connected forums. One case—Ford Motor Company v. Montana—reached a fair result but with strained reasoning that will support unfair results. The second case—Mallory v. Norfolk Southern Railroad Company—was wrong on the facts and the law, imposing general jurisdiction based on a vaguely worded corporate registration statute validated by a more than century-old precedent based on Pennoyer v. Neff’s limited territorial model.

Both decisions were the result of conceptual corners …

Envisioning A Duty Of Directors To Link Executive Compensation To Climate Change: Lessons From Europe, Alberto R. Salazar V.

William & Mary Environmental Law and Policy Review

The practice of tying executive compensation to climate change goals has gained some traction. However, designing a duty of directors to link executive pay to climate change objectives poses significant challenges. Some lessons can be drawn from countries attempting to establish such a duty. This Article examines Europe’s Corporate Sustainability Due Diligence Directive (CSDDD) and its negotiation process and draws insights for effectively crafting such a duty. The CSDDD, which entered into force on July 25, 2024, mandates large companies operating in Europe to conduct due diligence on human rights and environmental impacts with respect to their own operations and …

Transitioning To Regenerative Agriculture: One "Net-Zero" Pledge At A Time, Alexia Brunet Marks

William & Mary Environmental Law and Policy Review

As climate change intensifies, food sector multinational companies (MNCs), like Nestlé; Mars, Inc.; Unilever; PepsiCo; and Danone, face increasing pressure to reach net-zero by 2050, whereby they would reduce and ultimately eliminate carbon dioxide emissions from their supply chains by 2050. Carbon dioxide emissions are a major business liability, decreasing a firm’s value an average of $212,000 for every one thousand metric tons produced. As companies seek to align their pledges with regional, national, and subnational climate goals, they are legally required to comply with a growing number of disclosure rules for foods entering the United States and the European …

How Justice Holmes Turned Conspirators Into Partners, Daniel Harris

William & Mary Business Law Review

A fundamental precept of the law of conspiracy is that all members of a conspiracy are partners in crime. This precept is the rationale for many doctrines of conspiracy law, including the controversial judge-made rule that all members of a conspiracy are vicariously guilty of substantive crimes foreseeably committed by one member of the conspiracy even if the other members did not commit the substantive offense, intend the offense, or aid or abet its commission. Why does the law impose partnership status and vicarious guilt on lower-level members of a conspiracy who have no ownership stake in the business and …

Strategically Restated Defaults, Wendy Gerwick Couture

William & Mary Business Law Review

Business and commercial statutes are composed almost entirely of default rules, which parties may override via agreement or adopt via silence. Drafters of these statutes, and theories about the substance of default rules, assume that parties indeed adopt statutory default rules via silence.

Against this backdrop, this Article examines unexpected behavior by parties to business and commercial agreements: parties often restate statutory default rules in their agreements rather than adopting those rules via silence. Based on a review of actual limited partnership agreements and security agreements, this Article identifies five unique species of restatement—bald, tweak, refill, baseline, and context restatements—and …

How Fincen Stole Christmas: The Corporate Transparency Act, Year 1, Christina Houston, Robert R. Keatinge, Thomas E. Rutledge, Jim Wheaton

Popular Media

No abstract provided.

Failing To See What's In Front Of Our Eyes: The Effect Of Cognitive Errors On Corporate Scandals, Nancy B. Rapoport

William & Mary Business Law Review

Why do we believe flim-flam artists so readily, especially in the business and commercial realm? This Article explores four reallife versions of “The Emperor’s New Clothes” fable—FTX, WeWork, Theranos, and a former bankruptcy judge’s hidden romance— and asks why people bought into the hype. Where were the warning signs, and how might we better spot those signs in the future?

Are Employee Noncompete Agreements Coercive? Why The Ftc's Wrong Answer Disqualifies It From Rulemaking (For Now), Alan J. Meese

Faculty Publications

The Federal Trade Commission recently proposed a rule banning nearly all employee noncompete agreements (“NCAs”) as unfair methods of competition under Section 5 of the Federal Trade Commission Act. The proposed rule reflects two complementary pillars of an aggressive new enforcement agenda championed by Commission Chair Lina Khan, a leading voice in the Neo-Brandeisian antitrust movement. First, such a rule depends on the assumption, rejected by most prior Commissions, that the Act empowers the Commission to issue legislative rules. Proceeding by rulemaking is essential, the Commission has said, to fight a “hyperconcentrated economy” that injures employees and consumers alike. Second, …

The Corporate Right To Bear Arms, Robert E. Wagner

William & Mary Business Law Review

The ability of a corporation to exercise constitutional protections has been rife with uncertainty and change since the conception of corporate rights came into existence. The history and rapid development of the corporation, combined with the misapplied and misunderstood “corporate personhood” theory, have resulted in an almost unintelligible hodgepodge of corporate constitutional applications. Similarly, the concept of the right to bear arms has equally been muddled and applied very differently at varying times and locations since before the establishment of the Second Amendment. This Article attempts to clarify how an alternative to the “corporate personhood” theory, namely the “purpose” theory …

When Amazon Drivers Kill: Accidents, Agency Law, And The Contractor Economy, Keith Cunningham-Parmeter

William & Mary Law Review

Amazon vans and Uber drivers frequently crash into other cars. Despite the many injuries and deaths that result from these accidents, Amazon and Uber deny responsibility for such claims because they categorize their drivers as “independent contractors.” But this contractor defense distorts the basic rules of agency law. Over a century ago, courts crafted agency standards that forced businesses to pay for the harms that their workers caused. Since that time, American firms have attempted to skirt this rule by labeling their workers as “contractors” rather than as “employees.” Aware of this age-old tactic to avoid liability, courts historically built …

Wandering Mind As Fiduciary Breach: Cognitive Duties Of Corporate Directors, David Yosifon

William & Mary Business Law Review

Drawing on contemporary science and ancient wisdom, this Article assesses the ubiquitous human problem of mind wandering as it relates to the fiduciary obligations of corporate directors. Directors must endeavor to advance shareholder interests carefully and loyally. Boards have extremely wide latitude to determine the substance of corporate policies, but the law imposes certain process obligations on corporate decision-making with particularity. Directors must approach their decision-making in an informed and deliberate way. They must listen to reports, and they must deliberate with their fellow directors before voting on corporate action at board meetings. This Article identifies the duty to concentrate …

Caging The Bored Ape: How The Ftc's Expanded Anti-Monopoly Authority Can Tame "Nfts" For Web 3.0, J. Scott Colesanti

William & Mary Business Law Review

Non-Fungible Tokens, or “NFTs,” ballooned into a 40-billion-dollar industry in under a decade. Their creators include artists, corporations, entrepreneurs, fraudsters—and even Donald Trump. While NFT owners and traders could be any of us, the parties running the marketplaces are hidden. NFT regulators have yet to be identified. Most alarmingly, the dominant NFT marketplaces are dangerously centralized. Accordingly, the publicized tales of exorbitant or manipulated NFT prices and frequent related scams abound. Meanwhile cryptocurrency—the technology enabling the life of an NFT—remains beset with, at best, theoretical models for effective regulation a full generation after its emergence.

To propose a rational start …

Unauthorized Disclosure Of Tax Return Information: When Is The United States Liable For Actions Of The Irs?, Tammy W. Cowart, Roger Lirely, Alex Brandt

William & Mary Business Law Review

The June 2021 ProPublica report “The Secret IRS Files: Trove of Never-Before-Seen Records Reveal How the Wealthiest Avoid Income Tax” revealed tax return data of many of the wealthiest people in America. However, the tax information about these individuals is not public information. As part of the Tax Reform Act of 1976, Congress removed tax returns and return information from the realm of public documents and protected them under federal law. Congress also provided criminal and civil sanctions for the unauthorized disclosure of tax returns and return information. Over forty-five years later, there have been hundreds of cases adjudicated, but …

Spac Mergers, Ipos, And The Pslra's Safe Harbor: Unpacking Claims Of Regulatory Arbitrage, Amanda M. Rose

William & Mary Law Review

Communications in connection with an initial public offering (IPO) are excluded from the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 (PSLRA). Unsurprisingly, IPO issuers do not share projections publicly—the liability risk is too great. By contrast, communications in connection with a merger are not excluded from the safe harbor, and special purpose acquisition companies (SPACs) routinely share their merger targets’ projections publicly. Does the divergent application of the PSLRA’s safe harbor in traditional IPOs and SPAC mergers create an opportunity for “regulatory arbitrage” and, if so, what should be done about it? …

The Future Of China's U.S.-Listed Firms: Legal And Political Perspectives On Possible Decoupling, Rebecca Parry, Qingxiu Bu

William & Mary Business Law Review

There is a long history of Chinese firms raising capital on leading U.S. exchanges. These shares have proved attractive and are estimated at $1 trillion value, in spite of deep mismatches between Chinese internal approaches to corporate governance and those taken under U.S. securities regulations. Chinese listings of nonstate firms, particularly in the technology sector, had depended on a largely laissez-faire initial approach to the expansion through foreign listings, including tolerance of the opaque Variable Interest Entity (VIE) structures adopted as a means to bypass Chinese restrictions on foreign ownership. Concerns regarding data security had, however, prevented compliance by Chinese …

Reconciling Corporate Interests With Broader Social Interests - Pursuit Of Corporate Interests Beyond Shareholder Primacy, Yong-Shik Lee

William & Mary Business Law Review

A seminal case in corporate law, Dodge v. Ford Motor Co., set the cardinal principle that corporations must serve the interests of shareholders rather than the interests of employees, customers, or the community. This principle, referred to as “shareholder primacy,” has been considered a tenet of the fiduciary duty owed by corporate directors. Scholars have disagreed on the current legal status of shareholder primacy. This Article examines the controversy in light of the current state legislation and case law. Regardless of its current legal status, shareholder primacy has influenced corporate behavior and encouraged short-term profit-seeking behavior with significant social …

I Have To Tell Them What? The New Corporate Transparency Act And Forming Business Entities In Virginia, James J. Wheaton, Gustavo De La Cruz Reynozo

Faculty Publications

The details and requirements of business entity formation traditionally have been solely the province of state law. Most states, such as Virginia, maintain corporate annual report filing requirements that involve the public disclosure of corporate officers and directors. However, these requirements focus on active managers of the entities, not information about beneficial ownership. The recently enacted Corporate Transparency Act ("CTA") will fundamentally change entity disclosure on the national level.

The CTA was part of the fiscal year 2021 National Defense Authorization Act and seeks to aid national security and crime fighting through a national registry of beneficial owners of business …

Substituted Service And The Hague Service Convention, William S. Dodge

William & Mary Law Review

State law plays a surprisingly large role in transnational litigation, and how it defines the applicability of the Hague Service Convention is an important example. In Volkswagenwerk Aktiengesellschaft v. Schlunk, the U.S. Supreme Court held that the Convention does not apply when, under state law, service of process is made within the United States. In Schlunk, Illinois law permitted substituted service on the U.S. subsidiary of a foreign parent company, so the Convention did not apply. This Article looks at substituted service under state law today and when it permits avoidance of the Hague Convention. The Article focuses …

Thoughts Regarding The Application Of The Step Transaction Doctrine To The Section 351 Control Requirement And Complex Media, Inc. V. Commissioner, Philip G. Cohen

William & Mary Business Law Review

Over thirty years ago, Professor Ronald H. Jensen authored an article in the Virginia Tax Review, titled “Of Form and Substance: Tax Free Incorporations and Other Transactions Under Section 351.” Professor Jensen asserted that it was inappropriate to utilize the step transaction doctrine to determine whether the control requirement was met in a purported section 351 transaction, involving a disposition of some, or all, of the transferor’s shares even if effected by a binding contract made prior to the contribution.

Professor Jensen concluded that the courts and the Internal Revenue Service (Service) have produced a hodgepodge of intellectually inconsistent decisions …

Raising Corporate Consciousness Of Employer Liability For Video Zoom While Driving, Nanci K. Carr

William & Mary Business Law Review

Imagine that you have logged onto a video Zoom meeting, and you notice that one of the participants is driving. He fumbles with the phone, trying to align the camera with his face, looking from the phone to the road ahead. Other participants on the call either say nothing or thank him for being willing to participate from his car. That is distracted driving, and if he collides with a car or pedestrian due to that distraction, each of those meeting participants could be held liable for distracting the driver. In addition, they would be witnesses to his distracted driving …

Emergency Bylaws: An Underutilized Tool For Corporate Operation During An Emergency, Grace Myers

William & Mary Business Law Review

Emergency bylaws are an underutilized tool for corporate governance whose importance has been highlighted by COVID-19. Emergency bylaws can be included within corporations’ bylaws and only operate during an “emergency” as defined by state statutes. These provisions usually give boards more agency to act during an emergency through mechanisms such as looser quorum and notice requirements. These provisions will be increasingly important during future pandemics, wars, and global warming. However, few corporations have these bylaws, and the current hodgepodge of state statutes hinders their adoption. The current state of emergency bylaws regulation and implementation raises some questions about shareholder rights …

The Partnership Mystique: Law Firm Finance And Governance For The 21st Century American Law Firm, Maya Steinitz

William & Mary Law Review

This Article identifies and analyzes the de facto and de jure end of lawyers’ exclusivity over the practice of law in the United States. This development will have profound implications for the legal profession, the careers of individual lawyers, and the justice system as a whole.

First, the Article argues that various financial products that have recently flooded the legal market are functionally equivalent to investing in and owning law firms and create all the same governance challenges as allowing nonlawyers to directly own stock in law firms.

Second, the Article analyzes Arizona’s groundbreaking legalization of nonlawyer participation in law …

Salt, Smurthwaite, And Smith: The Origins Of The Modern Legal Identity Of The Church Of Jesus Christ Of Latter-Day Saints, Nathan B. Oman

Faculty Publications

In 2019 there existed a legal entity known as The Church of Jesus Christ of Latter-day Saints. This fact will likely strike most readers as unexceptional. More interesting, however, prior to 2019 there had been no such legal entity as the Church of Jesus Christ of Latter-day Saints for over 150 years, the last of that name likely having been disincorporated in 1862. Even more strangely, although there were millions of people around the globe who identified themselves as Latter-day Saints, in 2019 the only member of the legal entity known as The Church of Jesus Christ of Latter-day Saints …

Appendix: Board Gender Diversity: A Path To Achieving Substantive Equality In The United States, Kimberly A. Houser, Jamillah Bowman Williams

William & Mary Law Review Online

Appendix to article in William & Mary Law Review vol. 63, no. 2 (2021), "Board Gender Diversity: A Path to Achieving Substantive Equality in the United States" by Kimberly A. Houser and Jamillah Bowen Williams.

The Use And Misuse Of Fiduciary Duties: Corporate Social Responsibility And The Standard Of Review, Jonathan R. Povilonis

William & Mary Business Law Review

This Article provides a crucial corrective to the “corporate social responsibility” debate, which concerns whether corporations have the obligation to protect or serve the interests of groups other than their shareholders, like employees or customers (often called “stakeholders”). Scholars on one side of the debate have repeatedly presumed that corporate directors’ fiduciary duties to shareholders play an important role in protecting shareholders from decisions that favor stakeholders at their expense. Scholars on the other side agree that fiduciary duties provide meaningful protection against unfavorable conduct but argue that directors should also owe fiduciary duties to stakeholders so they may be …