Business Organizations Law Commons^™

The Brussels Effect And The Extraterritoriality Of Delaware Corporate Law, William J. Moon

Faculty Scholarship

This essay explores possible shareholder claims in the United States that may arise  if and when member states of the European Union implement the proposed Directive  on Corporate Sustainability Due Diligence. As a doctrinal matter, legal compliance  obligations for corporations incorporated in Delaware extend beyond the borders of  the United States. Under Delaware law, shareholders can bring viable fiduciary suits  against directors and officers when corporations violate applicable “positive law.”  This jurisprudence, principally aimed at ascertaining whether directors and officers  betrayed shareholders by engaging in or facilitating lawbreaking, is not limited to  complying with American law. As Delaware corporations expand …

The Uniform Commercial Code Survey: Introduction, Jennifer S. Martin, Colin P. Marks, Wayne R. Barnes

Faculty Articles

survey that follows highlights the most important developments of 2023 dealing with domestic and international sales of goods, personal property leases, payments, letters of credit, documents of title, investment securities, and secured transactions. Along with the usual descriptions of interesting judicial decisions highlighted in the survey, there has also been legislative progress in several areas. The 2022 Amendments to the Uniform Commercial Code ("U.C.C.") (the "2022 Amendments") have been adopted in twenty-four states plus the District of Colombia and introduced in five states

Balancing Predictability With Flexibility In Contract Negotiation And Drafting, Tahirih V. Lee

Scholarly Publications

No abstract provided.

Brief Of Amici Curiae Corporate And Securities Law Experts: Central Maine Power Company V. Maine Commission On Government Ethics And Election Practices, Sarah C. Haan

Scholarly Articles

Amici submit this brief to share expertise on corporate governance and securities laws and practices that relate directly to the lower court’s narrow-tailoring analysis of the Maine statute at the center of this case. While all participating amici may not agree with every statement in the brief, all amici agree that the Act’s 5% equity ownership threshold is not arbitrary and that ownership of 5% or more of a U.S. entity’s equity by a foreign government or a foreign-government-influenced entity presents a foreign influence on the U.S. entity’s governance and decision-making.

Market Testing Boilerplate, Kelli Alces Williams

Scholarly Publications

Boilerplate contract terms are regularly enforced against consumers who do not like them and would not have selected them if given a choice. But there is no choice. Such terms are offered on a take it or leave it basis to consumers who are either unaware of the terms until a problem arises or hope those terms will never have to be invoked. The lack of meaningful choice is justified by arguments that consumers will avoid contracts that contain harmful terms, so market constraints will prevent businesses from offering socially inefficient terms. If consumers really had a problem with certain …

Navigating The Intersection Of Regulation And Vulnerability: The Evolving Landscape Of Cybersecurity In Investment Management And The Imperative For Comprehensive Safeguards, Giezi Rios

Catholic University Journal of Law and Technology

No abstract provided.

Founder Worship, Effective Altruism, And Corporate Governance, Jennifer S. Fan, Xuan-Thao Nguyen

Articles

Founders are the heart of any startup. Oftentimes, they are given considerable latitude in managing a company, particularly if they are hailed as a visionary founder in a pathbreaking new industry. Additionally, it is assumed that underpinning their actions is the desire to do good. Unfortunately, sometimes this leads to what we term founder worship where the promise of the founder and the innovation may lead to perverse outcomes because too much control is ceded to the founder and there is a lack (or sometimes complete absence of) corporate governance. When unlimited control is coupled with "do gooderism," which in …

Controlling Moral Hazard In Limited Liability With The Consumer Sales Practices Act, Nathaniel Vargas Gallegos

Journal of Legislation

The few states that have passed the Model Consumer Sales Practices Act have common definitions and case law regarding the definition of a “supplier.” This definition is broad enough to include managers of companies in limited liability entities in the states that have adopted the model act. The practicality is that business principals, owners, and managers can be held personally liable for deceptive practices under the state acts. But this is not a piercing of the corporate veil or of the limited-liability company. This Article is meant to accomplish four purposes: (1) exhibit the origins of the act, (2) show …

Enforcing International Human Rights Law Against Corporations, Barnali Choudhury

All Papers

International human rights law is generally thought to apply directly to states, not to corporations since the latter is not a subject of international law. Some domestic courts are, however, enforcing these norms against corporations in domestic settings. Canadian courts have, for instance, recognized that corporations can be liable for breach of customary international law norms while UK courts have enforced international human rights norms indirectly against corporations relying on a combination of domestic corporate and tort law.

At the same time, some states are choosing to enforce international human rights norms against corporations using regulatory initiatives. These initiatives, known …

The Need For Corporate Guardrails In U.S. Industrial Policy, Lenore Palladino

Seattle University Law Review

U.S. politicians are actively “marketcrafting”: the passage of the Bipartisan Infrastructure Law, the CHIPS and Science Act, and the Inflation Reduction Act collectively mark a new moment of robust industrial policy. However, these policies are necessarily layered on top of decades of shareholder primacy in corporate governance, in which corporate and financial leaders have prioritized using corporate profits to increase the wealth of shareholders. The Administration and Congress have an opportunity to use industrial policy to encourage a broader reorientation of U.S. businesses away from extractive shareholder primacy and toward innovation and productivity. This Article examines discrete opportunities within the …

Securities Regulation And Administrative Deference In The Roberts Court, Eric C. Chaffee

Seattle University Law Review

In A History of Securities Law in the Supreme Court, A.C. Pritchard and Robert B. Thompson write, “Securities law offers an illuminating window into the Supreme Court’s administrative law jurisprudence over the last century. The securities cases provide one of the most accessible illustrations of key transitions of American law.” A main reason for this is that the U.S. Securities and Exchange Commission (SEC) is a bellwether among administrative agencies, and as a result, A History of Securities Law in the Supreme Court is a history of administrative law in the Supreme Court of the United States as well.

Delegated Corporate Voting And The Deliberative Franchise, Sarah C. Haan

Seattle University Law Review

Starting in the 1930s with the earliest version of the proxy rules, the Securities and Exchange Commission (SEC) has gradually increased the proportion of “instructed” votes on the shareholder’s proxy card until, for the first time in 2022, it required a fully instructed proxy card. This evolution effectively shifted the exercise of the shareholder’s vote from the shareholders’ meeting to the vote delegation that occurs when the share-holder fills out the proxy card. The point in the electoral process when the binding voting choice is communicated is now the execution of the proxy card (assuming the shareholder completes the card …

Capitalism Stakeholderism, Christina Parajon Skinner

Seattle University Law Review

Today’s corporate governance debates are replete with discussion of how best to operationalize so-called stakeholder capitalism—that is, a version of capitalism that considers the interests of employees, communities, suppliers, and the environment alongside (if not before) a company’s shareholders. So much focus has been dedicated to the question of capitalism’s reform that few have questioned a key underlying premise of stakeholder capitalism: that is, that competitive capitalism does not serve these various constituencies and groups. This Essay presents a different view and argues that capitalism is, in fact, the ultimate form of stakeholderism. As such, the Essay urges that the …

The Esg Information System, Stavros Gadinis, Amelia Miazad

Seattle University Law Review

The mounting focus on ESG has forced internal corporate decision-making into the spotlight. Investors are eager to support companies in innovative “green” technologies and scrutinize companies’ transition plans. Activists are targeting boards whose decisions appear too timid or insufficiently explained. Consumers and employees are incorporating companies sustainability credentials in their purchasing and employment decisions. These actors are asking companies for better information, higher quality reports, and granular data. In response, companies are producing lengthy sustainability reports, adopting ambitious purpose statements, and touting their sustainability credentials. Understandably, concerns about greenwashing and accountability abound, and policymakers are preparing for action.

In this …

Table Of Contents, Seattle University Law Review

Seattle University Law Review

Table of Contents

The Marijuana Insurgency: Federalism And Social Reframing In Policy Reform, Matthew P. Cavedon

Seattle University Law Review

After fifty years of federal prohibition, marijuana reform efforts have won political and legal success. These victories hold lessons for anyone seeking to resist federal law without being able to directly affect it.

Victory can come from reframing an issue. For marijuana reform, social reframing—not formal legal analysis or material factors—provides the best explanation for how advocates achieved change. Their unconventional political tactics, akin to those used by insurgents in wartime, undercut federal prohibition by winning hearts and minds.

This is an analysis of the sociology of legal change. It is also the story of how ordinary Americans retook personal …

What Is In Your Tampon? Increasing Transparency In Menstrual Products, Elianna Spitzer

Seattle University Law Review

The average person who menstruates will bleed for an average of five days, every twenty-four to thirty-eight days, over several decades and could use thousands of disposable menstrual products in their lifetime. Menstrual products line retail shelves. They can be found in homes, bags, and bodies—but until 2021, manufacturers were not required to disclose the ingredients used to make these products to consumers at all. In fact, they still are not federally required to disclose menstrual product ingredients on product packaging. Instead, in recent years, changes to menstrual product labels have largely been the result of state legislation. In 2019, …

Asking The Jewish Question: The Import Of Jewish History To Corporate Law, Dalia T. Mitchell

Lewis & Clark Law Review

This paper brings Jewish American history to bear upon the analysis of three major milestones in the development of corporate law’s fiduciary duties jurisprudence: Meinhard v. Salmon (N.Y. 1928), Bayer v. Beran (N.Y. 1944), and Revlon, Inc. v. MacAndrews & Forbes Holdings, Inc. (Del. 1986). Bringing to the fore the background of the Jewish litigants and the Jewish lawyers who represented them, I use Meinhard, Bayer, and Revlon to explore changing cultural attitudes toward Jewish Americans’ participation in corporate America (as investors, managers, or their legal representatives). I argue that these cases demonstrate how our ideas about the appropriate purpose …

The Delaware-Inspired Next Step Toward Brazil Becoming The South American Leader In Corporate Law: Making Public Company Arbitrations A Matter Of Public Record, Caio Machado Filho, Francisco Rüger Antunes Maciel Müssnich, Leo E. Strine Jr.

American University Business Law Review

Brazil is South America’s leading domicile for listed public companies and has enjoyed substantial economic growth in the last generation. But it remains a nation constrained by limited resources to address all of its challenges and opportunities. Because of this reality, Brazil has chosen to use arbitration as the method to resolve disputes between the stockholders of public companies about critical issues such as the fairness of interested transactions and other claims for breach of fiduciary duty or compliance with statutory law and securities laws.

Likewise, important commercial disputes involving public companies are also resolved in arbitration. This is problematic …

The Failure Of "Quick Look" Analyses Of Antitrust Claims, Jonathan Berman

American University Business Law Review

Before courts can determine whether a defendant may have violated antitrust laws, they must first select the appropriate mode of analysis: the fact-intensive rule of reason, summary condemnation under the per se rules, or a quick look analysis. “Quick look” is intended to shorten and simplify inquiries into conduct that does not fall under the per se rules but that nonetheless has obvious anticompetitive effects.

The quick look doctrine, however, has failed to streamline antitrust litigation, and the related caselaw has failed to develop concrete or usable rules. Despite decades of litigation, the quick look doctrine remains of dubious legal …

Businesses Beware: The Changing Face Of Attorney-Fee Awards In U.S. Courts, Aaron Bartholomew, Sharon Yamen

American University Business Law Review

The American Rule, creating a presumption against attorney-fee awards, is axiomatic in litigation in United States’ courts. Established by the very early U.S. Supreme Court case of Arcambel v. Wiseman in 1796, the rule rejected the British tradition of a “loser-pays” system, in which the losing party pays all parties’ attorney fees and litigation costs. While the Court’s reasoning for the rules creation is murky, later decisions have justified it on various grounds. Critics of the American Rule argue that the rule encourages the assertion of unmeritorious claims and defenses and fails to sufficiently encourage the settlement of those that …

Foreclosure Sales As Fraudulent Transfers, David Gray Carlson

American University Business Law Review

The Supreme Court has declared that noncollusive, regularly conducted foreclosure sales are not “constructive” fraudulent transfers voidable by a bankruptcy trustee. Uniform state legislation ratifies this instinct for private creditor enforcements. But collusive or irregular foreclosure sales or sales that are intended to hinder, delay, or defraud creditors are subject to creditor attack, even though unsecured creditors are not proper parties to the foreclosure process. In such cases, unsecured creditors can cloud the title obtained from foreclosure in the cases of collusion, irregularity or fraudulent intent. This article examines precisely when foreclosure sales can be avoided by unsecured creditors of …

Too Much Domestic Law In International Arbitration: The Case Of Arbitral Res Judicata, Luca G. Radicati Di Brozolo

American University Business Law Review

This paper is the text of the 19th Annual Lecture on International Arbitration given by the author at the Center on International Commercial Arbitration of the American University Washington College of Law in Washington, D.C. on October 19, 2023.

From White Noise To Sound Decisions: Overcoming Noise In Corporate Law, Maria Lucia Passador

American University Business Law Review

This article explores the realm of noise, which is characterized by the lack of discernible patterns and unpredictable nature, distinguishing it from biases in terms of features, implications, and solutions. After examining the integration of behavioral economics into legal matters, the article delves into the application of this framework in the context of corporate law.

Studying noise into corporate law offers valuable insights into specific areas. Needless to say, this paper sheds light on the legal practice of corporate law, encompassing aspects such as contractual matters, M&A due diligence, and corporate governance. Understanding the complexities of corporate transactions is particularly …

Fifa's One Association - One Vote Rule: Does Democratic Governance Ensure Its "Corporate" Integrity?, Ilias Bantekas

American University Business Law Review

This article suggests that in the absence of any requirement in favor of democratic governance of corporations and non-profit entities in national law, as well as in light of a general practice of bifurcated systems (oscillating between de jure equality and power-based governance) in respect of intergovernmental organizations, a nondemocratic governance structure in international sports federations would not deviate from the general rule. What is clearly at stake in complex organizations is effectiveness in achieving the aims of the organization, irrespective if all members are satisfied. The deceptively democratic nature of sporting federations such as FIFA is very much the …

The Original Instagram: Whose Property Is It?, Sue M. Altmeyer

American University Business Law Review

When a worker creates a personal social media account and then uses it to promote their employer, courts differ as to whether subsequent use by the employer can operate as an implied transfer of the account when the employment relationship ends. Allowing an implied transfer flies in the face of traditional contract and property law principles and results in workers unknowingly giving up their right to a valuable asset they created. The better rule in determining ownership of a social media account is to first determine who owned the account at the time of original creation and then determine whether …

A Theory Of Corporate Fiduciary Duties, Benjamin B. Johnson

UF Law Faculty Publications

Corporate law lacks a general theory of a board’s power as fiduciary, and consequently, the law governing corporate fiduciary duties is notably unstable. This Article offers a novel theory that grounds corporate fiduciary duties in stronger microeconomic and legal foundations. The theory, coined the Judicial Monitoring Model (JMM), shows that even imperfect judicial monitoring makes shareholders and boards better off, even when there is no claim of a breach of the duties of loyalty or care as currently understood. The JMM synthesizes the law governing corporate fiduciary duties and other doctrines that protect principals, beneficiaries, and creditors from the risk …

The Submerged Administrative State, Gabriel Scheffler, Daniel E. Walters

Articles

The United States government is experiencing a reputation crisis: after decades of declining public trust, many Americans have lost confidence in the government's capacity to perform its basic functions. While various explanations have been offered for this worrying trend, these existing accounts overlook a key factor: people are unfamiliar with the institutions that actually do most of the governing-administrative agencies-and they devalue what they cannot easily observe. The "submerged" nature of the administrative state is, we argue, a central reason for declining trust in government.

This Article shows that the administrative state is systematically submerged in two ways. First, administrative …

Reflections On Corporate Governance At Work, Margaret Blair, Matthew Bodie, June Carbone, Scott Dewey, George S. Georgiev, Grant Hayden, Claire Hill, Brett Mcdonnell, Sanjukta Paul, Silvie Rohr, Natalya Shnitser, Aaron Sojourner, Alvin Velazquez

Articles

No abstract provided.

Esg And Securities Litigation: A Basic Contradiction, Aneil Kovvali

Articles by Maurer Faculty

Companies are increasingly expected to publicly report on not only their traditional financial results, but also environmental, social, and governance (“ESG”) issues. Trillions of dollars are being invested with ESG considerations in mind, and boosters urge that ESG investing can address environmental and social impacts that are normally ignored by managers focused on share prices. This raises the question of how companies should be punished if they lie about ESG matters. How should the traditional elements of securities fraud map onto the novel ESG context? Commentators have vigorously debated ESG’s relationship to the materiality element of securities fraud. But the …