Business Organizations Law Commons^™

A Tangled Web: Compliance Director Liability Under The Securities Laws, Anthony Pirraglia

Fordham Journal of Corporate & Financial Law

No abstract provided.

Financial Account Aggregation: The Liability Perspective, Ann S. Spiotto

Fordham Journal of Corporate & Financial Law

No abstract provided.

A Control-Based Approach To Shareholder Liability For Corporate Torts, Nina A. Mendelson

Articles

Some commentators defend limited shareholder liability for torts and statutory violations as efficient, even though it encourages corporations to overinvest in and to externalize the costs of risky activity. Others propose pro rata unlimited shareholder liability for corporate torts. Both approaches, however, fail to account fully for qualitative differences among shareholders. Controlling shareholders, in particular, may have lower information costs, greater influence over managerial decisionmaking, and greater ability to benefit from corporate activity. This Article develops a control-based approach to shareholder liability. It first explores several differences among shareholders. For example, a controlling shareholder can more easily curb managerial risk …

Leach Keynote Address, James A. Leach

Fordham Journal of Corporate & Financial Law

No abstract provided.

To Know A Veil, Douglas C. Michael

Law Faculty Scholarly Articles

Lawyers, judges, law students, and law professors have a love-hate relationship with the doctrine of “piercing the corporate veil”—the idea that shareholders might sometimes be personally liable for the debts of the corporation. It is the subject covered more than all others in courses on corporation law. It is widely litigated, being the subject of thousands of opinions. Yet, for all this attention, it is routinely vilified by the experts. Most commentators recognize that it is jurisprudence without substance.

This Article is an attempt to form a basis for rigorous analysis of virtually every veil-piercing case and to rid the …

Playing Doctor: Corporate Medical Practice And Medical Malpractice, E. Haavi Morreim

University of Michigan Journal of Law Reform

Although health plans once existed mainly to ensure that patients could pay for care, in recent years managed care organizations (MCOs) have attempted to limit expenditures by exercising significant influence over the kinds and levels of care provided. Some commentators argue that such influence constitutes the practice of medicine, and should subject MCOs to the same medical malpractice torts traditionally brought against physicians. Others hold that MCOs engage only in contract interpretation, and do not literally practice medicine.

This Article begins by arguing that traditional common law doctrines governing corporate practice of medicine do not precisely apply to the current …

Corporate Judgement Proofing: A Response To Lynn Lopucki's 'The Death Of Liability', James J. White

Articles

In "The Death of Liability" Professor Lynn M. LoPucki argues that American businesses are rendering themselves judgment proof.- Using the metaphor of a poker game, Professor LoPucki claims American businesses are increasingly able to participate in the poker game without putting "chips in the pot." He argues that it has become easier for American companies to play the game without having chips in the pot because of the ease with which a modern debtor can grant secured credit, because of the growth of the peculiar form of sale known as asset securitization, because foreign havens for secreting assets are now …

Schizophrenia Among Carriers: How Common And Private Carriers Trade Places, Rob Frieden

Michigan Telecommunications & Technology Law Review

This article will examine court cases and actions by the Federal Communications Commission (FCC) that distort the traditional concepts of common and private carriage by establishing new rights and responsibilities previously applicable to the other category of carrier. This article will also consider the feasibility of (a) maintaining the traditional common carrier regulatory model and (b) continuing the application of that model to basic services provided by local exchange carriers (LECs). This is especially important as LECs qualify to become private carriers tapping new market opportunities, even within the same geographical region where they provide basic services. Finally, this article …

You Wanna Do What? Attorneys Organizing As Limited Liability Partnerships And Companies: An Economic Analysis, Mark Rosencrantz

Seattle University Law Review

Although many states have embraced the concept of limited liability for attorneys, approval is not universal. Rhode Island and California statutorily ban attorneys from practicing in such forms. Further, even those states that have embraced the concept recognize concerns that, under a limited liability scheme, the quality of attorney work may suffer, and sufficient funds may not be available for potential plaintiffs. This Comment argues that attorneys should be allowed to limit their liability by using the LLP and LLC forms to provide relief from the upsurge of liability because traditional arguments against attorneys' use of such forms ignore the …

How To Negotiate A Sales Contract, James J. White

Articles

A. Introduction 1. In my experience, lawyers begin negotiating only after the business people have decided upon the description and quality of the product, the time of delivery, and the mode and amount of payment. The lawyers are left with the pathological problems - who gets what in case of trouble. 2. Most of those pathological problems relate to the seller's responsibility if the product does not conform to the contract or otherwise fails to please the buyer. These failures can cause economic loss to the buyer, economic loss to a remote purchaser, or personal injury or property damage to …

Educators Who Drive With No Hands: The Application Of Analytical Concepts Of Corporate Law In Certain Cases Of Educational Malpractice, Cheryl L. Wade

Faculty Publications

(Excerpt)

The national debate concerning the inadequacies of public schools in the United States and ways to alleviate some of the problems that plague them continues to rage. The performance of children in the United States on standardized tests is dangerously poor, and the rate of illiteracy dangerously high. An alarmingly large number of students do not finish high school. Education is often compromised because of crowded classrooms and shortages in school personnel and textbooks. Part of the debate about the problems in public education involves the search for someone or something to blame. While societal problems contribute to the …

Reinsurance: Bad Faith Considerations And Insolvency Dilemma, Hui-Ju Hsieh

LLM Theses and Essays

Reinsurance is insurance that an insurance company purchases from another insurance company. The original insurance company is called the reinsured, and the insurance company that is contracted is called the reinsurer. The main purpose of reinsurance is to disperse or spread the risk of loss. The reinsurance relationship is frequently characterized as an exercise of fiduciary responsibility based upon an undertaking of utmost good faith between contracting parties. However, disputes arise; most litigation involving reinsurance has been between reinsurers and persons not party to the reinsurance agreement. This paper’s first major area of discussion is the relationship between the reinsurer …

Responsibility Of Investment Bankers To Shareholders, Ted J. Fiflis

Publications

No abstract provided.

Book Review, Richard Gruner

Vanderbilt Journal of Transnational Law

Large corporations are important, yet enigmatic, participants in world commerce. International corporate behavior is morally and legally significant because of its immense scope and societal impact. That behavior, however, is often so complex as to defy characterization under the simple moral or legal standards applicable to individuals. Furthermore, the ability of traditional moral or legal systems to shape multinational corporate conduct is also unclear given that large corporate bureaucracies lack the motivations and fears normally used to enforce moral or legal accountability. As one frustrated court noted, the problem is that corporations have "no soul to damn, and no body …

Disbursement Of Insurance Money Covering An Insured's Legal Expenses As Incurred, Arthur P. Xanthos

Fordham Urban Law Journal

In the Southern District of New York, Pepsico, Inc. v. Continental Casualty Co. held that the D & O insurance carrier was obligated to pay the insured's costs as they accrue, subject to reimbursement should adjudication show that there were no grounds for coverage. This Note proposes that the Pepsico rule favoring the insured is the more judicious view regarding interim payments. This Note discusses the differing interpretations of D & O policy defense cost clauses, and then analyzes the Pepsico rule from the standpoints of reasonable expectations, contract interpretation and unconscionability. After comparing D & O insurance with standard …

Conclusion, Christopher C. Whitson, Thomas A. D'Ambrosio, Patricia A. Daniel, Kathryn N. Fine, Robert P. Mckinney, Marcia M. Mcmurray, Bennet L. Ross

Vanderbilt Law Review

Despite recent responses designed to combat the increased liability exposure of directors and officers, the personal risks for corporate insiders remain significant. With corporations operating in an ever-complex regulatory maze, there has been an increased focus on corporate accountability. The difficulty in resolving director and officer liability issues, however, arises in balancing the need to punish misguided fiduciaries with the need to protect aggressive managers who take good faith risks to produce increased corporate profits. While long-range solutions to this balancing problem are essential, directors and officers should pursue short-term tactics to reduce their risk of personal liability.

Because it …

Successor Liability In Bankruptcy: Some Unifying Themes Of Intertemporal Creditor Priorities Created By Running Covenants, Products Liability, And Toxic-Waste Cleanup, David G. Carlson

Articles

No abstract provided.

The Scope Of Liability Under Section 12 Of The Securities Act Of 1933: "Participation" And The Pertinent Legislative Materials, Douglas E. Abrams

Fordham Urban Law Journal

The Securities Act of 1933 creates two private rights of action. Since 1971, seven circuits have adopted the "participation" theory, imposing section 12 liability not only on the transferor, but also on any person whose participation in the transaction is substantial in causing the transaction to occur. This article traces the development of the participation theory. The author argues that limiting section 12 liability to the transferor would significantly diminish the protections afforded by the act and that the scope of the act should be reexamined by Congress rather than determined by judicial interpretation. Finally, in light of his thesis, …

Limiting Directors' Duty Of Care Liability: An Analysis Of Delaware's Charter Amendment Approach, Craig W. Hammond

University of Michigan Journal of Law Reform

This Note explores the corporate law principles guiding the amendment of section 102(b)(7) and considers what effects this statute will have on the investor-director relationship. The Note focuses on whether this reform measure excessively protects directors at the expense of shareholders.

Part I analyzes the neoclassical economic view of the contractual relationship between stockholders and management that serves as the theoretical justification of section 102(b)(7). Part II proposes a modification of the Delaware statute that would provide for periodic shareholder review of charter amendments limiting liability.

Mppaa Withdrawal Liability Assessment: Letting The Fox Guard The Henhouse, Daniel A. Etna

Fordham Urban Law Journal

This student note discusses Congress's attempt to regulate group pension plans, and thus protect employees whose employers withdraw from those plans, through the Multiemployer Pension Plan Amendment Act of 1980. The author traces the history of multi-employer pension programs, including union and corporate plans, Taft-Hartley plans, and ERISA accounts, which were created through 1974 legislation (the Employee Retirement Income Security Act). The author discusses how liability arises under each type of plan when an employer decides to withdraw, juxtaposing the resulting liability with the consequences of voluntary arbitration. The author suggests an alternative, to insure the employer's removal from the …

Charting The Future Course For Corporate Management Of Health Risks, Michael S. Baram

Faculty Scholarship

Corporations engage in technological activities of benefit to society, but thereby also create new health risks for workers, consumers, and communities. Government regulatory agencies deal with this chronic problem by conducting risk analyses and imposing various duties on private firms. Despite agency efforts and corporate compliance, health risks continue to arise and take their toll. To what extent will private firms voluntarily assume greater responsibility for preventing these health risks? This question is of increasing social importance, because the limitations of regulatory efforts are now obvious, whereas health risks are now being identified at what appears to be an increasing …

The Joint Enterprise: Collaboration Between The Public And Private Sectors, Howard Anawalt, Karen Robbins

Michigan Journal of International Law

This article first outlines the structures of the joint and tripartite enterprises. It then addresses two legal concerns facing an operational enterprise, the potential tort liability of enterprise participants and antitrust restrictions. Tort liability is a threshold concern of any joint venture or partnership, and antitrust law is a basic constraint on the operations of any business. The article proceeds to show that the problems they pose for a joint enterprise can be minimized or avoided. In the third part of the article the authors demonstrate the special utility of the joint enterprise.

Corporate Indemnification Of Directors And Officers: Time For A Reappraisal, K.G. Jan Pillai, Craig Tractenberg

University of Michigan Journal of Law Reform

This Article evaluates the benefits and burdens of shifting litigation risk from management to the enterprise. The Article begins by considering the nature of the legal risks confronting the corporate executive, and the principles of common law that developed to counter those risks. The Article proceeds to assess the two statutory responses to threats of personal liability against the corporate executive: indemnification statutes, and director and officer insurance. Finally, after comparing the effective absolute immunity available to corporate executives with the qualified immunity enjoyed by high-level government officials, the Article concludes that indemnification practices have overinsulated the corporate officer from …

Individual Liability Of Agents For Corporate Crimes Under The Proposed Federal Criminal Code, Stephen D. Goodwin

Vanderbilt Law Review

In discussing the contours of individual liability under section 403, this Note has not attempted to criticize the section's draftsmanship or counsel against its adoption. The philosophy of liability reflected in section 403 wisely avoids the imposition of vicarious liability on corporate officials. The defendant's personal misconduct, failure to act, or reckless failure to supervise invoke the sanctions of the provisions. In addition, subsections (b) and (c) provide a theoretical underpinning for punishing omissions that is preferable to the indicia of artificial "participation" relied upon in former state and federal cases.

This Note has also attempted to establish some limitations …

Accident And Malpractice Liability Of Professional Corporation Shareholders, Richard Tunis Prins

University of Michigan Journal of Law Reform

Part I of this note describes the various tort liability provisions found in the professional corporation acts, focusing particularly on the recently published Model Professional Corporation Supplement. Part II compares how effectively these alternatives accomplish the goals of accident law in the professional corporation setting. The inability of the preferred model provision to alleviate the malpractice problem in any way as well as proposals for reinvigoration of the professional corporation act concept are discussed in Part III.

Limited Liability For Corporate Shareholders: Myth Or Matter-Of-Fact, Rutheford B. Campbell Jr.

Law Faculty Scholarly Articles

One of the most important and firmly entrenched concepts of modern corporate law is the concept of limited liability. The digests abound with ringing phrases granting the owners of corporations immunity from liability beyond their initial investment. There are, however, numerous cases in which the courts have denied the owners of corporations the protection of limited liability and have held the owners liable for an obligation incurred by the corporation. It is the purpose of this paper to examine the theories under which the owners of corporations have been held liable for the contractual obligation of corporations.

Comparison Of Major Tax And Legal Advantages Of Operating In An Unincorporated Form, Douglas A. Kahn

Book Chapters

As an introduction to the subject of this conference, several topics will be discussed. First, the tax and non-tax consequences of conducting business in a partnership form will be examined and compared with the consequences of doing business in a corporate form. The principle concern of this paper, however, is to examine the tax consequences of transferring property to a corporation, whether such transfer is made at the time the corporation is organized or at some subsequent date.

Limited Liability For Corporate Shareholders: Myth Or Matter-Of-Fact, Rutheford B. Campbell Jr.

Kentucky Law Journal

No abstract provided.

Technology Assessment And Social Control, Michael S. Baram

Faculty Scholarship

The emerging concepts of corporate responsibility and technology assessment are, to a considerable extent, responses to problems arising from technological developments and their applications by industry and government. These problems appear in the relatively discrete sectors of consumer protection and occupational safety and in the diffuse sectors of community quality of life and the national and international environments.

The "Control" Test For Limited Partnerships, Alan L. Feld

Faculty Scholarship

Under the Uniform Limited Partnership Act, a limited partner may become generally liable if "in addition to the exercise of his rights and powers as a limited partner, he takes part in the control of the business." Although the Act is now over fifty years old, no satisfactory standard of "control" has been enunciated, and no definition of the "rights and powers" of a limited partner has been forthcoming. Mr. Feld examines the ambiguities in the statutory language and the dilemma in which they place counsel seeking to advise his clients, and concludes that the Act is due for an …