Business Organizations Law Commons^™

Ai As A Service: What Lawyers And Business Clients Need To Know, Martin Petrin

Commissioned Reports, Studies and Public Policy Documents

AI is seemingly everywhere. Hardly a day goes by in which there is not another media report on new areas in which the technology is being deployed and its potential consequences. While the advances of AI entail many opportunities for business and society, they also create challenges and risks. Although there is already awareness around problems such as AI bias, privacy, and human rights impacts, there are significant issues arising in the specific business-to-business context that have remained largely hidden and tend to receive much less attention. This article will, first, look at business-to-business more generally and show how AI …

The Gift Of Exit Financing, Robert W. Miller

Marquette Law Review

Aggressive liability management exercises have spilled over into bankruptcy court and exit financing is often the prize in the center of the arena. Debtors no longer rely upon gifting, the traditional strategy for buying plan support. Instead, they can replicate gifting’s benefits in a more defensible package by funneling discounted subscription rights to chosen constituencies as part of exit financing.

Recognizing exit financing’s distortive power, courts responded by evaluating the quality of negotiations and reviewing precedent transactions. Meanwhile, commentators suggest heightened monitoring and informal guardrails. All of these approaches ignore the shortcomings of judicial valuation. Market testing is the only …

Table Of Contents, Seattle University Law Review

Seattle University Law Review

Table of Contents

Corporate Scenarios: Drawing Lessons From History, Madison Condon

Seattle University Law Review

As corporations are increasingly pressed to reveal information about their exposure to climate-related risks, they are often asked to undertake and disclose the outcome of “scenario analysis.” In this exercise, corporations, including financial institutions, examine how their business would fare under different pathways the future may take. One oft-used scenario, for example, is the International Energy Agency’s “Net-Zero by 2050: A Roadmap for the Energy Sector.” This Essay presents a history of the use of scenarios as a corporate planning tool, particularly in the oil industry, arguing that it is key for understanding our present moment and the role of …

Shareholder Expression In A Time Of Heightened Political Tension, Aaron A. Dhir

Seattle University Law Review

In this article, I provide context for my forthcoming research project on shareholder proposals and racial equity audits. Since the murder of George Floyd in May of 2020, progressive shareholder actors have increasingly used the proposal mechanism to advance diversity, equity, inclusion, and justice-related goals. These proposals have frequently gone beyond requesting the usual corporate fare of diversity trainings, intersectionality workshops, affinity groups, etc. Instead, a more ambitious type of proposal asks corporate America to conduct racial equity audits, defined as “an independent, objective and holistic analysis of a company’s policies, practices, products, services and efforts to combat systemic racism …

Corporate Governance Speech, Sarah C. Haan

Seattle University Law Review

The State has always regulated the intra-firm communications that make corporate governance possible, most commonly by mandating disclosures of information by a corporation to its shareholders. Some such laws are labeled “securities regulation,” but securities regulation is a broad category that extends to speech by actors who are outside the corporate enterprise as well. Also, the conventional securities regulation category does not capture all such laws; other examples, including informationforcing mandates, can be found in state corporate law. This Article uses the term “corporate governance speech” to describe the communications among shareholders, directors, and officers through which corporate governance is …

Dark Accounting Matter, Colleen Honigsberg

Seattle University Law Review

Physicists calculate that approximately 85% of the matter in the universe is composed of “dark matter” that “does not absorb, reflect, or emit electromagnetic radiation and is therefore difficult to detect.” The S&P 500 currently trades at a price-to-book value of 4.2, suggesting that book value accounts for less than 20% of the S&P 500’s market value. The remaining 80% appears nowhere in these firms’ balance sheets—it is invisible to contemporary accounting techniques and constitutes “dark accounting matter.”

Some “dark accounting matter” is composed of factors commonly described as components of “ESG.” Human capital, for example, is an intangible asset …

The Employees’ Dilemma: Balancing Internal Reporting, Whistleblowing, And Insider Trading Risks, Geeyoung Min

Seattle University Law Review

The Essay examines how recent developments in insider trading regulations and whistleblower reward programs can lead to unintended and counterproductive results of discouraging employees from using internal reporting channels within corporate compliance programs. While the presence of a robust and well-functioning corporate compliance program is a critical factor both in mitigating the level of public enforcement actions against companies and in protecting corporate managers from liability in private litigation, these programs often provide little incentive for employees to report potential misconduct internally.

Corporate compliance programs are designed to promote the upward information flow within the company, which is essential for …

How The Antidiscrimination Law Of Commercial Transactions Really Works, Helen Norton

Seattle University Law Review

A variety of businesses now cite 303 Creative when seeking First Amendment protection for their refusal to serve certain customers based on those customers’ protected class status. How this litigation will play out remains to be seen. But future courts need not, and should not, repeat the 303 Creative Court’s misunderstanding of how the antidiscrimination law of commercial transactions actually works.

Part I of this Essay explains the Court’s longstanding understanding of the antidiscrimination law of commercial transactions, and then describes the Court’s failure to engage with this precedent in 303 Creative. Part II then identifies the 303 Creative decision’s …

The Problem Of Purpose In Corporate Law, Matthew T. Bodie, Grant M. Hayden

Articles

For the last half century, shareholder primacy has reigned as the dominant definition of corporate purpose, as to both the purpose of individual companies and corporate law more generally. Recently, however, the Business Roundtable, the American Law Institute’s Restatement of the Law: Corporate Governance, and many business and legal academics have developed new answers to explain why we have corporations, and the ends to which their massive economic powers should be directed. This Essay endeavors to reframe the focus of the debate beyond purpose itself into the realm of actual governing power. In order to be meaningful, purpose needs governance. …

The American Oligarchy, Match Dawson

Faculty Articles

What was designed as a constitutional republic, bound by self-rule and democratic accountability, has become an oligarchy camouflaged by the illusion of public sovereignty. The corporate architects of this new world order did not seize power through conquest or force: they legislated, litigated, and purchased it into existence. Oligarchic rule is more than a simple political crisis. It is a democratic one. Just as prior generations have been called upon to preserve the republic against threats to liberty, we now face our own defining challenge and must decide whether to accept a government auctioned to the highest bidder or reclaim …

The Efficient Default Rule For Sandbagging In Mergers And Acquisitions: A Limited Pro-Sandbagging Default, Alexis Klimaszewski

Connecticut Law Review

In the area of mergers and acquisitions (“M&A”), a buyer “sandbags” a seller when, knowing the seller has breached—intentionally or unintentionally—a representation or warranty prior to closing, the buyer nonetheless closes the sale and subsequently brings a post-closing indemnification claim. Parties to a merger or acquisition can negotiate a pro- or anti-sandbagging provision; however, the recent trend has been rising instances of silence in M&A agreements. Given the modern majority default rule, the result is that most buyers in the United States hold a sandbagging right; however, default rules are ambiguous, uncertain, and inconsistent across jurisdictions. While sandbagging at first …

Under The Influence: Duties, Deception, Disclosures, And Due Diligence Of Social Media Influencers, Arianna Kiaei

Washington and Lee Law Review

The encroachment of social media into the daily lives of society reflects a major shift in consumer behavior. As social media moves from providing platforms of narrow connectivity among friends and family to social connection beyond one’s personal network, novel channels are being formed for consumers to absorb and share information. It opens opportunity for corporations to market their products beyond traditional methods and establishes the “influencer” sharing personal thoughts and recommendations on such products.

Social media’s immense purchasing power has a direct effect on the decision-making processes of individuals and the profit margins of corporations, and thus, the capacity …

Why We Need A Merger Cap: An Antitrust Lesson From General Electric, Carl T. Bogus

Journal of Legislation

This Article makes a modest proposal from a radical perspective. The proposal is this: Once a firm reaches a certain size, it should be prohibited from growing larger through mergers or acquisitions. The radical perspective is that antitrust law should be concerned with corporate size. It was a century ago that Louis D. Brandeis coined the term “curse of bigness,” and his concern about the social and political consequences of corporate size has long since fallen out of favor. Today, the consensus view is that antitrust should be concerned exclusively with economics. Current doctrine allows corporations to merge, provided only …

Green Dividends: A Case Study In Green Dividends And The Conditions For Private Ordering Solutions, Anne M. Tucker

Seattle University Law Review

This Essay introduces a novel private ordering solution to facilitate corporate investments in pro-social and environmental initiatives: Green dividends. Green dividends are an optional increase in shareholder dividends that are returned to the company to be reinvested in environmental initiatives or kept by a shareholder.

Green dividends pose an alternative to the current gridlocked debate that corporations can’t, won’t, shouldn’t, and shouldn’t even try to act in pro-social or environmental ways. Turning the common refrains on their head converts each narrative into an element for a successful private ordering solution: authority, accountability, shareholder buy-in, and government- backed enforcement. With Green …

Does Climate Disclosure Work To Reduce Greenhouse Gas Emissions? Emerging Evidence Suggests Cautious Optimism, Cynthia A. Williams

Seattle University Law Review

Significant regulatory resources have been spent developing global, voluntary climate and sustainability disclosure standards, such as the TCFD, TNRD, and ISSB’s Sustainability and Climate Disclosure standards, or domestically required disclosures, such as in the EU and in the U.S. Thus, it is important to evaluate whether this disclosure, particularly voluntary, qualitative disclosure, will have the power to shift the allocation of capital, will have a significant effect on the management of climate risk within firms, and ultimately will reduce climate change risk and biodiversity loss.

In this Article, several interrelated questions will be discussed. First, what does the empirical evidence …

The Sovereign Acre, Match Dawson

Faculty Articles

What if the next constitutional crisis is not declared from a presidential podium but tyranny forged into a deed? Not a contested election. Not a rogue legislature. Not even a runaway court. This time, it is quieter—with a deed signed and title passed, a new sovereign is crowned in private ink. Across the country, billionaire land grabs are redrawing the map of municipal governance itself. As wealthy elites and corporate oligarchs carve out private enclaves—from the privatized contract city of Sandy Springs, Georgia, to the unsettling governance of The Woodlands, Texas—we bear witness to public sovereignty giving way to oligarchic …

How To Let A Democracy Die: “First,…Let’S Kill All The Lawyers” And Other Lessons From The Bard, Jena Martin

Faculty Articles

This article serves to provide a much-needed perspective on how international legal mechanisms (or the lack thereof) impact democratic in institutions.

Public-Private Partnerships After Murthy V. Missouri, Danielle Keats Citron, Jeff Stautberg

Indiana Law Journal

This Essay considers the future of public-private collaboration in the wake of the Murthy v. Missouri litigation, which cast doubt on the constitutionality of information sharing between federal agencies and social media companies. The litigation has been a good and a bad teacher. On one hand, the lower court decisions made legible the risks to free expression, accountability, transparency, and intimate privacy posed by government-industry collaborations. On the other hand, the litigation chilled information sharing between federal agencies, state election officials, and social media companies at the moment that such collaboration could and should help protect against foreign malign influence …

On Entityness And Takeovers: Acquisition Valuation, Theory Of The Firm, And Coase's Error, Robert J. Rhee

UF Law Faculty Publications

This Article advances a theory of entityness that theorizes the firm and its relationship to the acquisition premium. This theory is the first scholarly analysis to construct a general model of takeover valuation by integrating the modern finance theory of asset value and a corrected Coasean theory of the firm. The acquisition premium is an enigma. Acquirers must pay it. But why? Isn’t the market price tethered to fundamental value through an efficient market? This enigma reveals a key insight about firms. The theory of entityness postulates that the acquisition premium is compensation for a capitalized asset intrinsic in the …