Commercial Law Commons^™

Shareholder Wealth Maximization As Means To An End, Robert P. Bartlett, Iii

Seattle University Law Review

In several recent cases, the Delaware Chancery Court has emphasized that where a conflict of interest exists between holders of a company’s common stock and holders of its preferred stock, the standard of conduct for directors requires that they strive to maximize the value of the corporation for the benefit of its common stockholders rather than for its preferred stockholders. This article interrogates this view of directors’ fiduciary duties from the perspective of incomplete contracting theory. Building on the seminal work of Sanford Grossman and Oliver Hart, incomplete contracting theory examines the critical role of corporate control rights for addressing …

Lobbying, Pandering, And Information In The Firm, Adam B. Badawi

Seattle University Law Review

In their classic and insightful article on team production in corporate law, Margaret Blair and Lynn Stout identify the minimization of rent-seeking as one of the chief benefits of vesting ultimate authority over a firm with the board of directors. In their analysis, this problematic rent-seeking arises when parties need to divide the gains from production after the fact. The squabbling that is likely to ensue may threaten to eat away most, or all, of the gains that come from productive activity. If parties know that this sort of rent-seeking will occur, they may not engage in productive activity in …

The History Of Team Production Theory, Ron Harris

Seattle University Law Review

In this short Essay, the author consider the team production theory developed by Margaret Blair and Lynn Stout1 from a historical perspective, in three senses. First, does the theory fit the historical use of the corporate form? Second, can it explain the development of corporation law doctrines? And third, can we place the development of the theory as such into the intellectual history of corporation theories at large? The author will state my bottom line up front: while the Article finds the team production theory insightful and useful for my historical research, for teaching corporation law, and for thinking about …

Choosing The Partnership: English Business Organization Law During The Industrial Revolution, Ryan Bubb

Seattle University Law Review

For most of the period associated with the Industrial Revolution in Britain, English law restricted access to incorporation and the Bubble Act explicitly outlawed the formation of unincorporated joint stock companies with transferable shares. Furthermore, firms in the manufacturing industries most closely associated with the Industrial Revolution were overwhelmingly partnerships. These two facts have led some scholars to posit that the antiquated business organization law was a constraint on the structural transformation and growth that characterized the British economy during the period. Importantly, however, the vast majority of manufacturing firms in the modern sector were partnerships. An easy explanation for …

Boards Of Directors As Mediating Hierarchs, Margaret M. Blair

Seattle University Law Review

In June of 2014, the board of directors of Demoulas Supermarkets, Inc.—better known as Market Basket, a mid-sized chain of grocery stores in New England—decided to oust the man who had been CEO for the previous six years, Arthur T. Demoulas. Most likely, the board of directors did not anticipate what happened next: Thousands of employees, customers, and fans of Market Basket boycotted the stores and staged noisy public protests asking the board to reinstate “Arthur T.” The reaction by employees and customers made what had been a simmering, nasty, intrafamily feud within the closely held Market Basket chain into …

The Long Road To Reformulating The Understanding Of Directors' Duties: Legalizing Team Production Theory?, Thomas Clarke

Seattle University Law Review

In this Article, the historical evolution of corporate governance is considered, highlighting the different eras of governance, the dominant theoretical and practical paradigms, and the reformulation of paradigms and counter paradigms. Two alternative and sharply contrasting theorizations, one collective and collaborative (the work of Berle and Means), the other individualistic and contractual (agency theory and shareholder value) are focused upon. The explanatory potential of Blair and Stout’s team production theory is elaborated, along with its conception of the complexity of business enterprise, with a mediating hierarch (the board of directors) securing a balance between the interests of different stakeholders. The …

The Agency Cost Paradigm: The Good, The Bad, And The Ugly, Claire A. Hill, Brett H. Mcdonnell

Seattle University Law Review

In the “managerialist” world that preceded our present shareholder value world, some corporate managers could, and did, help themselves when they should have been doing their jobs. The modern agency cost paradigm has focused attention on this problem, in part by conceptualizing the duty of corporate managers as maximizing shareholder value. This paradigm has had a variety of effects: some good, some bad, and some ugly. The agency cost paradigm has had a good effect by focusing on the problem of managerial enrichment and providing a simple, clear benchmark—shareholder value-- that may quickly indicate when managers are performing badly. However, …

A Theory Of The Just Corporation, Ronit Donyets-Kedar

Seattle University Law Review

In their seminal article A Team Production Theory of Corporate Law, Margaret Blair and Lynn Stout hold that the modern corporation is best understood in terms of team production. Challenging the principal–agent model, Blair and Stout offer an analysis that considers the various stakeholders of the corporation as members of a team. Accordingly, they suggest, the purpose of corporate law is to provide a response to the problems created by collective production processes, in particular those pertaining to the distribution of profits stemming from the cooperation. According to Blair and Stout, the solution to this problem is to be found …

Team Production Theory And Private Company Boards, Elizabeth Pollman

Seattle University Law Review

In their path-breaking article, A Team Production Theory of Corporate Law, Margaret Blair and Lynn Stout provided a new theory of the board of directors in a corporation. Drawing on the economic theory of team production, Blair and Stout argued that the board of directors serves as a mediating hierarchy for the firm as a whole, encouraging firm-specific investments from team members and reducing shirking and opportunistic behavior. While Blair and Stout provided a dramatically different view of the corporation from the conventional principal-agent account, they also delineated limitations to their proposed theory. Most importantly, they suggested that the …

The Corporation As Time Machine: Intergenerational Equity, Intergenerational Efficiency, And The Corporate Form, Lynn A. Stout

Seattle University Law Review

This Symposium Article argues that the board-controlled corporation can be understood as a legal innovation that historically has functioned as a means of transferring wealth forward and sometimes backward through time, for the benefit of present and future generations. In this fashion the board-controlled corporation promotes both intergenerational equity and intergenerational efficiency. Logic and evidence each suggest, however, that the modern embrace of “shareholder value” as the only corporate objective and “shareholder democracy” as the ideal of corporate governance is damaging the corporate form’s ability to serve this economically and ethically important function.

Litigating Consumer Protection Acts In The Hamp Context, Amanda Martin

Seattle University Law Review

The foreclosure crisis has lingered despite the improving economy. To alleviate this crisis, the U.S. government implemented the Home Affordable Mortgage Program (HAMP), a Treasury-sponsored initiative that aims to prevent foreclosure by encouraging mortgage loan servicers to modify the mortgages of qualified homeowners. The Treasury Department has extended HAMP multiple times—from its original ending date in 2013 to its present ending date in 2016. While HAMP has indeed helped homeowners avoid foreclosure, the program has spawned an array of litigation as servicer misconduct runs rampant. As the Ninth Circuit recently noted, “the [HAMP] program seems to have created more litigation …

Copyright, Consumerism, And The Cloud: Proposing Standards-Essential Technology To Support First Sale In Digital Copyright, Marco Puccia

Seattle University Law Review

America’s entertainment industry, and the creative talent that drives it, is a national treasure. Equally valuable, however, is America’s drive and commitment toward technological innovation. These two sectors have been in tension since at least 1908, when the U.S. Supreme Court was asked to determine whether the makers of piano rolls for automatically playing pianos had to pay royalties to the composers. Since that time, the entertainment industry has continued to use copyright law to resist advances in technological innovation that it views as a threat to its existing business models. This Note seeks to provide the necessary context and …

Ceo Retention, Lee Harris

Florida Law Review

Again and again, economists, corporate law scholars, and Congress have turned to reforms, such as executive compensation reforms, as a solution to executive misbehavior. The root of the evil, they muse, is sky-high pay with only a flimsy connection to managerial performance. If CEO pay can only be rejiggered on the front end and tied to performance, the argument goes, executives can be expected to pursue shareholder interests and put aside egos, and firms will prosper. This Article argues that such reforms are, despite the best of intention, fool’s gold. The fallacy is not in thinking that CEOs and other …

The Economics And Regulation Of Network Branded Prepaid Cards, Todd J. Zywicki

Florida Law Review

One of the fastest growing sectors of the consumer payments marketplace is the general-purpose reloadable prepaid card sector. Their importance accelerated as a consequence of new regulations enacted in the wake of the 2008 financial crisis. This increased use of prepaid cards also increased angst among regulators, especially regarding the number and size of fees on prepaid cards. State and federal regulators as well as Congress are interested in imposing new regulations on prepaid cards. These calls for regulation, however, proceed in a largely fact-free environment. This Article describes the current economic and regulatory landscape for prepaid cards. The market …

Shareholders On Shaky Ground: Section 271'S Remaining Loophole, Alex Righi

Northwestern University Law Review

No abstract provided.

Newsroom: Ahern "07 Leads Ced Clinic, Roger Williams University School Of Law

Life of the Law School (1993- )

No abstract provided.

Price Gouging: A Gray Area, Mathis Mateus

Common Reading Essay Contest Winners

Second Place

Essay Prompt: In Justice, Sandel discusses a number of contemporary political issues (e.g. price gouging during the 2004 Hurricane, the 2008-9 financial meltdown, the volunteer army, pregnancy surrogates, executive pay, slavery reparations, immigration, and gay marriage). Take a position on one of the issues discussed in the book and make the best case that you can for why this position is the most just. You may include evidence from the book, your prior studies, your own experience, and/or outside research. (Outside research is not required.)

Data Protection Laws: Quilts Versus Blankets, Samantha Diorio

Syracuse Journal of International Law and Commerce

No abstract provided.

"Softness" In International Instruments: The Case Of Transnational Corporations, Harri Kalimo, Tim Staal

Syracuse Journal of International Law and Commerce

No abstract provided.

Bridgefunding Crowdfunding And The Market For Entrepreneurial Finance, Seth C. Oranburg

Law Faculty Scholarship

This Article explores the business environment of entrepreneurial finance through the lens of securities regulations. It finds that regulators should be more concerned with protecting investors from startup failure than from crowdfunding fraud. It recommends an amendment to Regula- tion Crowdfunding that may enable startup success: the limit on fun- draising should be raised from $1 to $5 million.

Host States' Due Diligence Obligations In International Investment Law, Eric De Brabandere

Syracuse Journal of International Law and Commerce

Due diligence is present in a variety of aspects of the protection of foreign investors in international investment law and plays an important role in several aspects of the protection of foreign investors. In particular, certain standards of investment protection, notably "full protection and security" ("FPS") include an obligation for the State to act with due diligence.

This articles seeks to establish an explanatory framework for past and future decisions of arbitral tribunals which have applied or will be confronted to applications of the due diligence standard in international investment law, by providing a typology of the different possible applications …

Cpa Dictates On Iraq: Not An Update To The Customary International Law Of Occupation But The Nucleus Of Blowback With The Emergence Of Isis, Robert Bejesky

Syracuse Journal of International Law and Commerce

No abstract provided.

The Future Direction Of Delaware Law (Including A Brief Exegesis On Fee Shifting Bylaws), J. Robert Brown Jr.

Sturm College of Law: Faculty Scholarship

Delaware sets the governance standards for most public companies. The ability to attract corporations could not be explained solely by the existence of a favorable statutory regime. Delaware was not invariably the first or the only state to implement management friendly provisions. Given the interpretive gaps in the statute and the critical importance of the common law in the governance process, courts played an outsized role in setting legal standards. The management friendly nature of the Delaware courts contributed significantly to the state’s attraction to public corporations.

A current example of a management friendly trend in the case law had …

Foia, Inc., Margaret B. Kwoka

Sturm College of Law: Faculty Scholarship

Government transparency is imagined as a public good necessary to a robust democracy. Consistent with that vision, Congress enacted the Freedom of Information Act (FOIA) to allow oversight and accountability of governmental activities, imagining the prime intended users to be journalists. But this democracy-enhancing ideal is at odds with FOIA’s reality: at some agencies, commercial—not public—interests dominate the landscape of FOIA requesters.

This Article provides the first in-depth academic study of the commercial use of FOIA, drawing on original datasets from six federal agencies. It documents how corporations, in pursuit of private profit, have overrun FOIA’s supremely inexpensive processes and, …

Social License To Operate: Hydraulic Fracturing-Related Challenges Facing The Oil & Gas Industry, Don C. Smith, Jessica Marie Richards

Sturm College of Law: Faculty Scholarship

The crossroads of urban development and improved technology allowing oil and gas development in new areas can result in contentious community issues. The debate over one of the improved technologies – i.e., hydraulic fracturing – can be highly emotional. Consequently, industry must address community issues, earning trust and therefore a “social license to operate.” This paper provides fundamental knowledge of the social license to operate concept, validates its application to the oil and gas industry, particularly with respect to shale gas development, discusses the current status of social license in the unconventional development sphere, analyzes current ongoing efforts for shale …

The Liabilities Of Sureties, Daniel P. Cipollone

Osgoode Legal Studies Research Paper Series

This paper provides an overview of when a surety may be released from his or her obligations under a guarantee following a material variation to the principal lending contract. Part I frames the overall discussion by reviewing the role and importance of guarantees in contemporary commerce, outlining the central tenets of guarantee obligations, and distinguishing them as a subset of indemnities. Part II reviews how sureties have traditionally enjoyed a favoured status at law as well as what, in law, is considered to constitute a material variation. Part III introduces and sets out a longstanding rule governing the liability of …

Recent Developments In Key Latin American Jurisdictions To Attract International Commercial Arbitration, Henry Burnett

American University Business Law Review

No abstract provided.

Stubborn Things: An Empirical Approach To Facts, Opinions, And The First Amendment, Daniel E. Herz-Roiphe

Michigan Law Review First Impressions

This essay offers an empirical approach to the problem, rooted in an argument that the underlying rationale for the fact/opinion distinction in compelled speech doctrine tells us something about how this distinction should be policed. Commercial speech enjoys protection by virtue of its value to listeners, it is from the listener's vantage point, then, that courts should assess whether a compelled disclosure is fact or opinion. And if we are interested in learning how disclosures will affect listeners, we might try asking them, just as courts adjudicating trademark suits frequently use consumer surveys to determine how customers understand the meaning …

Michigan Craft Beer Legislation, Kincaid C. Brown

Law Librarian Scholarship

Michigan is currently in the midst of a craft beer boom. The Michigan Brewers Guild’s member list includes more than 150 breweries and brewpubs brewing craft beer. Michigan’s craft beer industry is boosting the state’s economy. According to an analysis by the Brewers Association customized by the Michigan Brewers Guild, the craft beer industry is directly responsible for more than 5,000 Michigan jobs and contributes more than $277 million to the state’s economy and more than $144 million in wages.

"Commercial Peacemaking"-The New Role Of The International Commercial Arbitration Legal Order, Tamar Meshel

Cardozo Journal of Conflict Resolution

International commercial arbitration (ICA) has risen to prominence over the past several decades as the most efficient and effective mechanism for resolving cross-border disputes between commercial entities, and has long been considered by the international business community as "the normal means of settling disputes arising from international transactions." ICA offers disputing parties an accessible, neutral, and private mechanism that is distinct from any specific national legal system; a "kind of social jurisdiction, opposed to State jurisdiction." It has thus been considered by some to constitute a specialized international regime, a form of "transnational" or "global" governance, or an autonomous legal …