Business Organizations Law Commons^™

Weyerhauser's Implications For Punitive Damages Litigation, Nickolai G. Levin

UC Law Business Journal

In Weyerhaeuser Co. v. Ross-Simmons Hardwood Lumber Co., 127 U.S. 1069 (2007), the Supreme Court addressed the antitrust claim of "predatory bidding"-i.e., that a manufacturer paid too much for an "input." Although the Ninth Circuit allowed predatory-bidding liability to be based on the jury's subjective estimation that the defendant paid more than "necessary" for an input, the Supreme Court reversed, holding that the objective, two-part "predatory pricing" test from Brooke Group Ltd. v. Brown & Williamson Tobacco Corp., 509 U.S. 209 (1993), should govern predatory-bidding claims instead. Otherwise, the Court explained, there would be a serious risk of chilling procompetitive …

O'Hagan, 10b-5-2, Relationships And Duties, Thomas M. Madden

UC Law Business Journal

In the past ten years, the principal events in the law concerning insider trading have been the Supreme Court's adoption of the fraud on the source misappropriation theory in O'Hagan and the Commission's promulgation of Rules 10b5-1 and 10b5-2. While this article provides a solid grounding in the O'Hagan decision and the case law informing it, its commentary addresses the role that Rule 10b5-2, speaking to relationships giving rise to duties of trust or confidence, together with O 'Hagan, has had on recent securities litigation. Asking whether this post O'Hagan rulemaking and case law indicates a policy directive from the …

Patent Incentives In The Semiconductor Industry, Dan Callaway

UC Law Business Journal

The semiconductor industry comprises organizations of all sizes, from single engineers contracting their work to companies as large and powerful as have ever existed. The rapid advancement of technology in the semiconductor field makes it a crucible for theories about the patent system as a whole. It is arguably desirable that as new technologies come to market, patents should be issued with appropriate scope so that other inventors retain incentive to innovate. But it is not only the Patent Office which can offer or hinder incentives for inventors. The semiconductor industry is subjected to various incentives, both negative and positive, …

Issues Concerning The Admissibility In Federal Courts Of Business Records Containing Opinions Or Diagnoses Under Federal Rule Of Evidence 803(6), Erik C. Olson

UC Law Business Journal

Federal Rule of Evidence 803(6) explicitly provides for the admissibility in the federal courts of business records containing opinions or diagnoses. Despite that, over the years, the courts have routinely excluded business records containing opinions and diagnoses for a variety of reasons. In 1979, for example, the Court of Claims fashioned a rule preventing the admission of expert appraisals unless the preparer of the appraisal were present to testify to his qualifications as an expert pursuant to Rules 702 and 705. Many courts continue to follow this rule. This note discusses and critiques that rationale for exclusion (and others), in …

Exporting Risk: Global Implications Of The Securitization Of U.S. Housing Debt, Aaron Unterman

UC Law Business Journal

The process of securitization has revolutionized the global debt market creating vast investment opportunities while fundamentally altering the dynamics of lending risk. Asset securitization allows risks to be transferred from, mortgage lenders to investors through the sale of mortgage-backed securities. This detachment of risk has led to a lack of accountability within the industry and the creation of the infamous U.S. sub prime mortgage market. This piece examines the effect of securitization on the international capital market focusing on the legal and economic implications of the rise and fall of the U.S. housing market. It argues that this failure is …

What Your Lender And Mortgage Broker Didn't Tell You: A Call For Disclosure Of Loss Of The Section 580b Anti-Deficiency Protection Upon Refinancing, George W. Kuney

UC Law Business Journal

California Civil Code of Procedure section 580b protects a California homeowner from a deficiency judgment when the homeowner's purchase money lender forecloses on the house. The protection of section 580b applies only to purchase money mortgages - not to cash out refinance mortgages and probably not to any refinancing mortgage loan under existing law. The California Civil Code requires an initial disclosure of this protection to purchase money mortgage borrowers, but it does not specifically require disclosure of its loss upon refinance. Moreover, lenders that are subject to the Federal Truth in Lending Act or the Homeowners Equity Protection Act …

Fraud Not On The Market: Rebutting The Presumption Of Classwide Reliance Twenty Years After Basic Inc. V. Levinson, Matthew L. Mustokoff

UC Law Business Journal

This article explores a wave of recent federal court decisions addressing the applicability of the "fraud-on-the-market" presumption of reliance in securities fraud cases at the class certification stage. In the two decades since the US Supreme Court first recognized the fraud-on-the-market doctrine in Basic, Inc. v. Levinson, the district and circuit courts have taken somewhat divergent approaches to the question of classwide reliance. The most recent decisions, however, mark an emerging trend, one which signifies heightened judicial scrutiny - in many cases, going beyond the pleadings and involving extensive fact-finding and expert analysis. Among the decisions discussed are the Second …

Defining Substantial Activity: Helping Tax-Exempt Hospitals Keep Their Tax-Exempt Status, Kevin Leo

UC Law Business Journal

Joint ventures between tax-exempt hospitals and for-profit organizations have become a common mechanism for hospitals to acquire new sources of revenue and expand their health care services without completely relying on more traditional sources of funding. Joint ventures between tax-exempt organizations and for-profit entities can lead to unfavorable tax consequences for the exempt organization if the venture is not structured in accordance with the rules and regulations provided by the Internal Revenue Service. IRS Revenue Ruling 2004-51 held that an exempt organization would maintain its exempt status as long as it only contributed an insubstantial amount of its assets or …

The Discrete, The Relational, The Selfish, And The Societal: Elements Present In All Transactions, Christine Liyanto

UC Law Business Journal

In the discourse of contract theory, we associate discrete contracts with a goal of self-interest, while associating relational contracts with community-based objectives. This article examines the characteristics of the discrete paradigm, the relational paradigm, and the way in which all transactions reflect the goals associated with both of those models.

Trade Or Business Within The United States As An Interpretive Problem Under The Internal Revenue Code: Five Propositions, Anthony P. Polito

UC Law Business Journal

Whether a particular set of activities constitute the conduct of a trade or business within the United States is an ongoing interpretive question affecting many foreign taxpayers. It controls what form of U.S. taxation, if any, applies to them. In the domestic context, a trade or business entails profit-oriented non-investment activity that is regular, continuous and considerable. It is tempting, in the transition to the international context, to conclude that the conduct of a trade or business within the U.S. requires that the taxpayer's U.S. activities must be regular, continuous, and considerable, and the standard is often articulated in this …

Understanding Hedge Fund Adviser Regulation, Thierry Olivier Desmet

UC Law Business Journal

The hedge fund industry has grown tremendously and gained much influence on our nation's capital markets in the past decade. Helping fuel this growth in size and influence has been the fact that many hedge funds have sought investments from less affluent and sophisticated investors than in the past. In addition, the number of securities enforcement cases filed against hedge funds has increased. As a result, many have called for some form of regulatory oversight to protect the investing public and reduce market risks. This article focuses on the regulations imposed on hedge fund advisers as well as the controversial …

The Tax Burden And The Propensity Of Small-Business Entrepreneurs To File For Bankruptcy, Rafael Efrat

UC Law Business Journal

Despite the success of many entrepreneurs, a sizable number of small businesses fail every year. Tax problems have been found to be a small but an important contributor to business closure. The extent of the tax problems experienced by small business owners is alarming but not surprising given the disproportionate tax burden small business owners face in operating their businesses. The research undertaken in this study aims to explore the extent to which individual small business owners, who have filed for bankruptcy, attribute their financial distress to tax problems. Further, this study intends to examine the demographics and financial characteristics …

The Roles Of Standardization, Certification And Assurance Services In Global Commerce, Margaret M. Blair, Cynthia A. Williams, Li-Wen Lin

All Faculty Publications

In this article we examine the rapid emergence and expansion of standardized product and process frameworks and a private-sector compliance and enforcement infrastructure that we believe may increasingly be providing a substitute for public and legal regulatory infrastructure in global commerce. This infrastructure is provided by a proliferation of performance codes and standards, many of which define acceptable social and environmental behavior, and a rapidly-growing number of privately-trained and authorized inspectors and certifiers that we call the third-party assurance industry. We offer reasons for this development, evidence of its scope and scale, and then describe the phenomenon in more detail …

A Closer Look At Veil Piercing In Federal District Courts, Christina L. Boyd, David A. Hoffman

Scholarship@WashULaw

In this project, we utilize six years of original federal district court data to identify the first representative sample of corporate veil piercing litigation. This study will provide a more nuanced understanding of the process of litigation of piercing claims than previous studies, which have been modeled on Robert Thompson's (1991) groundbreaking work on this topic. Our method first identifies veil piercing litigation through Westlaw's trial pleadings database, and proceeds to code each case through detailed examination of PACER records.

We identify and model the differing types of success plaintiffs achieve when they seek to pierce the veil, including those …

Deconstructing Equity: Public Ownership, Agency Costs, And Complete Capital Markets, Charles K. Whitehead, Ronald J. Gilson

Cornell Law Faculty Publications

The traditional law and finance focus on agency costs presumes that the premise that diversified public shareholders are the cheapest risk bearers is immutable. In this Essay, we raise the possibility that changes in the capital markets have called this premise into question, drawn into sharp relief by the recent private equity wave in which the size and range of public companies being taken private expanded significantly. In brief, we argue that private owners, in increasingly complete markets, can transfer risk in discrete slices to counterparties who, in turn, can manage or otherwise diversify away those risks they choose to …

The New Role For Assurance Services In Global Commerce, Margaret M. Blair

Vanderbilt Law School Faculty Publications

In this Article we examine the rapid emergence and expansion of a private-sector compliance and enforcement infrastructure that we believe increasingly may be providing a substitute for public and legal regulatory infrastructure in global commerce, especially in developing countries where rule of law is weak and court systems are absent or inadequate. This infrastructure is provided by a proliferation of performance codes and standards, and a rapidly growing global army of privately trained and authorized inspectors and certifiers that we call the "third party assurance industry. " The growth in the third party assurance business has been phenomenal in the …

Narcissism, Over-Optimism, Fear, Anger, And Depression: The Interior Lives Of Corporate Leaders, Jayne W. Barnard

Faculty Publications

No abstract provided.

Do Patents Perform Like Property?, Michael J. Meurer, James Bessen

Faculty Scholarship

Do patents provide critical incentives to encourage investment in innovation? Or, instead, do patents impose legal risks and burdens on innovators that discourage innovation, as some critics now claim? This paper reviews empirical economic evidence on how well patents perform as a property system.

The Problems Of Securitizing Sub-Prime Loans, Tamar Frankel

Faculty Scholarship

In October 2007, the board of directors of Merrill-Lynch, Smith & Fenner, one of the largest if not the largest brokerage houses in the United States, accepted the request for early retirement of its Chief Executive Officer. The brokerage firm disclosed that it has lost over $8 billion on its investments in sub-prime mortgage loans.¹ Merrill Lynch was not the only financial giant to sustain enormous losses. The losses caused market liquidity to dry up. The U.S. government took steps to ease the pressure.² But the high leverage of the system is still unravelling. The effect of these …

The 2007 Amendments To The Kentucky Business Entity Statutes, Thomas E. Rutledge

Kentucky Law Journal

No abstract provided.

The Fetishization Of Independence, Usha Rodrigues

Scholarly Works

According to conventional wisdom, a supermajority independent board of directors is the ideal corporate governance structure. Debate nevertheless continues: empirical evidence suggests that independent boards do not improve firm performance. Independence proponents respond that past studies reflect a flawed definition of independence.

Remarkably, neither side in the independence debate has looked to Delaware, the preeminent state source for corporate law. Comparing Delaware's notions of independence with those of Sarbanes-Oxley and its attendant reforms reveals two fundamentally different conceptions of independence. Sarbanes-Oxley equates independence with outsider status. An independent director is one who lacks financial ties to the corporation and is …

The Future Of Enterprise Regulation: Corporate Social Accountability And Human Freedom, Lindsay J. Thompson

Journal of Business & Technology Law

No abstract provided.

Shutting The Door On Pension Fund Investment In Hedge Funds - Protecting Investors That Need Protection, Jonathan H. Bliley

Journal of Business & Technology Law

No abstract provided.

Transitioning The Family Business, Dwight Drake

Articles

By any measure, family-dominated businesses are the backbone of the American economy. Although a large majority of family businesses are managed by senior family members who are older than age 55 and more than 80 percent of such senior family members claim that they want the business to remain in the family, less than 30 percent of such businesses have tackled the challenge of developing a plan for transitioning the business to the next generation.

For over 90 percent of such families, this planning challenge is aggravated by the fact that they have no diversified wealth: the family’s wealth is …

Settling A Corporate Accountability Lawsuit Without Sacrificing Human Rights: Wang Xiaoning V. Yahoo!, Theresa Harris

Human Rights Brief

No abstract provided.

A Forensic Study Of Daewoo's Corporate Governance: Does Responsibility For The Meltdown Solely Lie With The Chaebol And Korea?, Joongi Kim

Northwestern Journal of International Law & Business

At the end of 1999, one of the largest conglomerates in the world, the Daewoo Group, collapsed in a spectacular fashion. During its peak, Daewoo was a sprawling enterprise with over 320,000 employees with 590 subsidiaries overseas that operated in over 110 countries. Its management received widespread praise and academic recognition for its success. Yet, when the Asian financial crisis hit in 1997, it managed to commit a deception worth 22.9 trillion won ($15.3 billion) that was termed the "biggest accounting fraud in history, surpassing WorldCom and Enron . . . ." Years later, inner-workings of the conglomerate are finally …

Universal Corporation Business Overview: Presentation To The University Of Richmond And Questions With Preston Wigner, General Counsel, Christopher L. Rathlev

Richmond Journal of Global Law & Business

George C. Freeman, III presented a business overview of Universal Corporation at the University of Richmond on September 5, 2007. Prior to joining Universal Leaf Tobacco Company in 1997, Mr. Freeman served as a law clerk for the Honorable Richard S. Arnold, Circuit Judge, United States Court of Appeals for the Eighth Circuit, and for the Honorable Lewis F. Powell, Jr., Associate Justice of the United States Supreme Court. He also spent time as an associate with Hunton & Williams, an international law firm. Mr. Freeman was elected General Counsel and Secretary of Universal Corporation in February 2001 and Vice …

Dirty Dancing: The Fda Stumbles On The Chevron Two-Step, Gary S. Lawson

Faculty Scholarship

Professor Lars Noah deserves much credit for exposing some of the myriad ways in which the Food and Drug Administration (FDA) has consistently sought to expand its authority through questionable, and perhaps in some cases abusive, legal practices.' As Professor Noah observes, there are signs that the federal courts' century-long honeymoon with the FDA may be ending 2 -and perhaps the FDA never deserved the solicitude that it has traditionally received from both the judiciary and Congress. 3 If Professor Noah can hasten the onset of a more realistic legal and public attitude toward the FDA, he will have performed …

The Doj Risks Killing The Golden Goose Through Computer Associates/Singleton Theories Of Obstruction, Julie R. O'Sullivan

Georgetown Law Faculty Publications and Other Works

The DOJ, through its corporate criminal charging policy, puts a premium on corporate cooperation with prosecutors. The "partnership" that the DOJ's cooperation policy demands of corporations is extremely valuable. But the DOJ threatens to kill its own golden goose by bringing a spate of high-profile prosecutions of corporate executives (Sanjay Kumar, Stephen Richards, and Greg Singleton) for obstruction of an "official proceeding" premised on their lies to the corporation's own counsel.

A Requiem For Sam's Bank, Ronald J. Mann

Faculty Scholarship

This paper situates Wal-Mart's failed application to form a banking subsidiary in the context of payments policy. Generally, I argue that permitting Wal-Mart to have a bank would have a salutary effect on the relatively uncompetitive market for payment networks. The dominant position of Visa and MasterCard, in which payments are priced above cost to subsidize credit, inevitably will give way to a world in which payment services are priced at cost, or even below cost as a loss-leader to attract customers to other goods and services. Entry into this market by Wal-Mart would be likely to spur more robust …