Monday, July 6, 2015
I have been reading Paul Mahoney’s brilliant new book, Wasting a Crisis: Why Securities Regulation Fails (University of Chicago Press 2015). You should too.
Mahoney attacks the traditional market failure rationale for our federal securities laws. He argues that contrary to the traditional narrative, market manipulation was not rampant prior to 1933 and the securities markets were operating reasonably well. Mahoney concludes that “‘lax’ regulation was not a substantial cause of the financial problems accompanying the Great Depression and . . . most (although not all) of the subsequent regulatory changes were largely ineffective and in some cases counterproductive.”
Mahoney looks at state blue sky laws, the Securities Act, the Exchange Act, the Public Utility Holding Company Act, and, regrettably only briefly, the Investment Company Act. He concludes by discussing the Sarbanes-Oxley and Dodd-Frank Acts. He discusses the rationales for each regulation and whether those rationales are supported by the facts. Mahoney backs up his argument with a great deal of empirical research, some of which has appeared in earlier articles. Warning: Some of that discussion may be a little difficult for those without a background in regression analysis or financial economics, but you can follow Mahoney’s conclusions without understanding all of the analytical detail.
Mahoney’s work is a nice counterpoint to the narrative that prevails in most securities treatises and casebooks. Every law library should have a copy. Everyone interested in securities regulation policy, and certainly everyone who teaches a securities law course, should read this book. Whether or not you ultimately agree with Mahoney (as it happens, I generally do), his arguments must be dealt with.
Sunday, July 5, 2015
7 Tips for Start-Ups http://t.co/usVUBddfx1— VC Experts (@VCExperts) May 26, 2015
"in presenting itself as a hard science, with necessary conclusions, orthodox economics has obscured its politics" http://t.co/zAIZTquGN1— Stefan Padfield (@ProfPadfield) June 29, 2015
"11 things we learned about social enterprise in international development" http://t.co/q2BLrtuWP5— Stefan Padfield (@ProfPadfield) July 2, 2015
Saturday, July 4, 2015
Crowdfunding’s a popular topic here at BLPB, but here’s a use that hadn't occurred to me.
Apparently, a former SEC lawyer is using Kickstarter to fund an investigation into the fees that CalPERS pays for its private equity investments.
It all started when CalPERS announced that it didn’t know what it was paying in private equity fees.
This was somewhat surprising. CalPERS has the money, and is assumed to have the sophistication, to bargain for its interests and at least require firms to make the appropriate disclosures.
Nonetheless, it appeared to be in the dark about its own fee payments.
To be fair, NYC’s Comptroller recently claimed to be shocked by NYC funds' fees, and the SEC has now begun to aggressively investigate private equity fee and expense disclosure. It even recently settled a case with KKR alleging that it improperly allocated expenses to fund investors that it should have partially absorbed itself.
Still, one would have thought that CalPERS, of all funds, could protect itself.
Enter Edward A. H. Siedle, who is seeking public support for his investigation of CalPERS’s fees. Apparently, he’s done this before: he recently issued a crowd-funded report on Rhode Island’s state pension fund, concluding that the fund experienced $2 billion in “preventable losses.”
I’m not sure what the broader lesson is here, but there are certainly plenty of candidates – the versatility of crowdfunding? The dysfunctions of public pension funds generally, or CalPERS specifically? The opacity of private equity? The problems inherent in the SEC’s assumption that assets correlate with sophistication? Or maybe it’s a just a story about the decline of local reporting, because honestly, these are the kinds of stories we might once have expected to be covered by local news outlets. Does the “sharing economy” mean we have to “share” public goods like news reporting?
In any event - happy 4th of July! Have a classic depiction of patriotism in celebration:
Friday, July 3, 2015
Among the DGCL amendments this year were a number of amendments to the Delaware Public Benefit Corporation (“PBC”) Law.
I refer to the Delaware PBC amendments as “The Etsy Amendments” because I believe (without being sure) that a main motivation in passing these amendments was to make it easier for Etsy (among other companies) to become a Delaware PBC. These amendments are effective as of August 1, 2015.
As mentioned in a previous post, Etsy is a certified B corporation and a Delaware C-corporation. According to B Lab’s terms for certified B corporations, Etsy will have to convert to a Delaware PBC by August 1, 2017 or forfeit its certification. This assumes that B Lab will not change its requirements or make an exception for publicly-traded companies.
The amendments to the PBC law are summarized below:
- Eliminates requirement of "PBC" or "Public Benefit Corporation" in the entity’s formal name. This amendment makes it easier and less costly for existing entities to convert, but the amendment also makes it more difficult for researchers (and the rest of the public) to track the PBCs. In addition to the cost of changing names, Rick Alexander notes in his article below that the previous naming requirement was causing issues when PBCs registered in other states because “[s]ome jurisdictions view the term as referring to nonprofit corporations. Other jurisdictions view the phrase ‘'PBC'’ as insufficient to signal corporate identity.”
- Reduces amount of shareholders that must approve a conversion from a traditional corporation to a PBC from 90% to 2/3rds of shareholders. This amendment brings Delaware PBC law in line with most of the benefit corporation statutes and gives Etsy a more realistic shot at converting. The requirement in Delaware to convert from a PBC to a traditional corporation was already approval by 2/3rds of shareholders.
- Provides a “market out” exception to appraisal rights when a corporation becomes a PBC. This amendment brings the Delaware PBC law in line with their general appraisal provision in DGCL 262. This amendment also means that Etsy shareholders would not receive appraisal rights if Etsy converts to a PBC.
Additional posts about the amendments are available below:
- Gregory Williams (Richards, Layton & Finger)
- Rick Alexander (B Lab & Morris Nichols) (Written Prior to Amendments Passing)
Thursday, July 2, 2015
Bridget Crawford (Pace Law) has posted an extensive list of law school professors on Twitter that is available here.
Previously, I compiled a list of business law professors, in both business schools and law schools, but to avoid overlapping with Bridget's list, I am only including business school legal studies professors in this updated list.
I will update the list from time to time. [Last updated - 7/2/15]
Perry Binder (Georgia State) – @Perry_Binder
Seletha Butler (Georgia Tech) – @ProfSButler
Kabrina Chang (Boston University) – @ProfessorChang
Peter Conti-Brown (Penn-Wharton) – @PeterContiBrown
Laura Dove (Troy) – @LauraRDove
Marc Edelman (CUNY-Baruch College) – @MarcEdelman
Nathaniel Grow (Georgia) – @NathanielGrow
Enrique Guerra-Pujol (Central Florida) – @lawscholar
Lori Harris-Ransom (Caldwell) – @HarrisRansom
Laura Pincus Hartman (DePaul) – @LauraHartman
Haskell Murray (Belmont) – @HaskellMurray
David Orozco (Florida State) – @ProfessorOrozco
Eric Orts (Penn-Wharton)– @EricOrts
Marisa Pagnattaro (Georgia) – @pagnattaro
Joshua Perry (Indiana) – @ProfJoshPerry
Susan Samuelson (Boston University) – @bizlawupdate
Tim Samples (Georgia) – @TimRSamples
Inara Scott (Oregon State) – @NewEnergyProf
Adam Sulkowski (UMass-Dartmouth) – @adam_sulkowski
The Kelley School of Business at Indiana University has multiple open positions in their Business Law and Ethics Department.
Kelley is well known in business school circles for having a strong legal studies program. Among the many fine faculty members are my ALSB mentor Jamie Prenkert (department chair) and BLPB guest-blogger Todd Haugh.
Information about these positions is available after the break.
It's barely July and I have received a surprising number of emails from my incoming business association students about how they can learn more about business before class starts. To provide some context, I have about 70 students registered and most will go on to work for small firms and/or government. BA is required at my school. Very few of my graduates will work for BigLaw, although I have some interning at the SEC. I always do a survey monkey before the semester starts, which gives me an idea of how many students are "terrified" of the idea of business or numbers and how many have any actual experience in the field so my tips are geared to my specific student base. I also focus my class on the kinds of issues that I believe they may face after graduation dealing with small businesses and entrepreneurs and not solely on the bar tested subjects. After I admonished the students to ignore my email and to relax at the beach during the summer, I sent the following tips:
If you know absolutely NOTHING about business or you want to learn a little more, try some of the following tips to get more comfortable with the language of business:
1) Watch CNBC, Bloomberg Business, or Fox Business. Some shows are better than others. Once we get into publicly traded companies, we will start watching clips from CNBC at the beginning of every class in the "BA in the News" section. You will start to see how the vocabulary we are learning is used in real life.
2) Read/skim the Wall Street Journal, NY Times Business Section or Daily Business Review. You can also read the business section of the Miami Herald but the others are better. If you plan to stay local, the DBR is key, especially the law and real estate sections.
3) Subscribe to the Investopedia word of the day- it's free. You can also download the free app.
4) Watch Shark Tank or The Profit (both are a little unrealistic but helpful for when we talk about profit & loss, cash flow statement etc). The show American Greed won't teach you a lot about what we will deal with in BA but if you're going to work for the SEC, DOJ or be a defense lawyer dealing with securities fraud you will see these kinds of cases.
5) Listen to the first or second season of The Start Up podcast available on ITunes.
6) Watch Silicon Valley on HBO- it provides a view of the world of re venture capitalists and funding rounds for start ups.
7) Read anything by Michael Lewis related to business.
8) Watch anything on 60 Minutes or PBS' Frontline related to the financial crisis. We will not have a lot of time to cover the crisis but you need to know what led up to Sarbanes-Oxley and Dodd-Frank.
9 Watch the Oscar-winning documentary "Inside Job," which is available on Netflix.
10) Listen to Planet Money on NPR on the weekends.
11) Listen to Marketplace on NPR (it's on weekday evenings around 6 pm).
12) Read Inc, Entrepreneur, or Fast Company magazines.
13) Follow certain companies that you care about (or hate) or government agencies on Twitter. Key agencies include the IRS, SEC, DOJ, FCC, FTC etc. If you have certain passions such as social enterprise try #socent; for corporate social responsibility try #csr, for human rights and business try #bizhumanrights. For entrepreneurs try #startups.
14) Join LinkedIn and find groups related to companies or business areas that interest you and monitor the discussions so you can keep current. Do the same with blogs.
As I have blogged before, I also send them selected YouTube videos and suggest CALI lessons throughout the year. Any other tips that I should suggest? I look forward to hearing from you in the comments section or at firstname.lastname@example.org.
Wednesday, July 1, 2015
As I earlier noted, on June 23rd, I moderated a teleconference on proposals to shorten the Section 13(d) reporting period, currently fixed by statute and regulation at 10 days. If you don't mind registering with Proxy Mosaic, you can listen to the program. The link is here.
The discussion was lively--as you might well imagine, given that one of the participants represents activist shareholders and the other represents public companies. A number of interesting things emerged in the discussion, many (most) of which also have been raised in other public forums on Schedule 13D, including those referenced and summarized here, here, and here, among other places.
- Exactly how does the Section 1d(d) reporting requirement protect investors or maintain market integrity or encourage capital formation? Or is it just a hat-tipping system to warn issuers about potential hostile changes of control, chilling the potential for the market for corporate control to run its natural course? Of course, the answer to many questions about Section 13(d) depends on our understanding of the policy interests being served. It's hard to tinker with the reporting system if we cannot agree on the objectives it seeks to achieve . . . . (Read the remaining bullets with this in mind.)
- We're not in the 1960s, 1970s, or 1980s any more. If market accumulations are deemed to present dangers to investors today (and that case needs to be made), why are they not just an accepted risk of public market participation? Shouldn't every investor know that market accumulations are a risk of owning publicly traded securities? And how does the reporting requirement really protect them from harm? Is this just over-regulation that treats investors as nitwits?
- Not all activist investors are the same. Some act or desire to act as a Section 13(d) group; others don't. Some seek effective or actual control of an issuer; some don't.
- Provisions within the Section 13(d) filing requirements interact. So, can we really talk about decreasing disclosure time periods without also talking about triggering thresholds and mandatory disclosure requirements?
- Why is 5% beneficial ownership the triggering threshold for reporting? What's the magic in that number--and if it were to be changed, should it be lower or higher?
- Schedule 13D is a disclosure form fraught with complexity. Many important judgment calls may have to be made in completing the required disclosures accurately and completely, depending on the circumstances. Is all this complexity needed? In particular, can the Item 4 disclosure requirement be simplified? And is the group concept necessary?
- What is the value, if any, in looking at the issue from a comparative global regulatory viewpoint? Toward the end of the call, international comparisons were increasingly being made and used as evidence that a change in U.S. regulation is needed or desirable. But are other markets and systems of regulation enough like ours for these comparisons to work? E.g., although other countries require Schedule 13D-like filings fewer days after attainment of a triggering threshold of ownership, does that mean we also should reduce the time period for mandatory disclosure here in the U.S.?
Lots of questions; I am beginning to think through answers. Regardless there's much food for thought here. Any reactions? What do you think, and why?
Last week Kent Greenfield and Adam Winkler published "The U.S. Supreme Court's Cultivation of Corporate Personhood," in the Atlantic discussing two recent Supreme Court opinions. Greenfield and Winkler covered the ruling in Horne v. Department of Agriculture where the Court held "a federal program requiring raisin growers to set aside a percentage of their crops for government redistribution was an unconstitutional 'taking' under the Fifth Amendment." The second case addressed was Los Angeles v. Patel where the Court extended Fourth Amendment privacy protections "invalidating a city ordinance (similar to laws around the country) allowing police to search [hotel] guest registries without a warrant."
While they distinguish certain rights, like political speech, that are "more appropriate for people than for corporations," Greenfield and Winkler acknowledge that some constitutional protections should be extended to corporations.
"A corporate right to be free from government takings, for example, makes sense both as a matter of constitutional law and of economics. Government overreach is problematic whether the raisin grower is a family farm or a business corporation. And corporations left exposed to government expropriation would find investors reluctant to take that risk, undermining the basic social purpose of the corporation, to make money."
Tuesday, June 30, 2015
Last week, S.E.C Commissioner Daniel M. Gallagher, gave a speech, Activism, Short-Termism, and the SEC: Remarks at the 21st Annual Stanford Directors’ College. I agree with many of Commissioner Gallagher's views on short-termism, and (I will semi-shamelessly note) he cited one of my earlier posts about the role of activists on board decision making. In his remarks, he said, with regard to short-termsim (i.e., companies operating for short term rather than long-term gains):
The current picture is bleak . . .
Clearly, there’s a way for all the parties . . . to co-exist peacefully. The SEC sets a level playing field; companies manage themselves for the long-term with the vigorous oversight of the board; and activists put pressure on those companies that fall short of that ideal. Unfortunately, we are not in that happy place. Rather, there seems to be a predominance of short-term thinking at the expense of long-term investing. Some activists are swooping in, making a lot of noise, and demanding one of a number of ways to drive a short-term pop in value: spinning off a profitable division, beginning a share buy-back program, or slashing capital expenditures or research and development expenses. Having inflated current returns by eliminating corporate investments for the future, these activists can exit their investment and move on.
. . . .
 See, e.g., Joshua Fershee, Shareholder Activists Can Add Value and Still Be Wrong (Apr. 28, 2015) (positing that activists can signal to boards when the company’s strategy may be inefficient; it is then the board’s responsibility to “use the tools before it to make decisions in the best interests of the entity” — that shareholder activists can improve long-term value even if following their recommendations blindly would not).
I absolutely agree with the Commissioner that too many companies are using a short-term philosophy to guide their decision making and that directors are allowing non-controlling institutional investors too much influence in the boardroom. But, as a believer in director primacy, I see that as a director failure, not an S.E.C. failure or an institutional investor/activist failure. Directors need to make the decisions for the entity based on their view of what is best for the entity, not on someone else's view.
Commissioner Gallagher is spot on when he notes his concern "that some institutional investors are paying insufficient attention to their fiduciary obligations to their clients when they determine whether to support a particular activist’s activity."
That concern, though, has nothing to do with how the board of a company responds to its activist institutional investors that urge short-termist actions. The institutional investor activist in that case should be held accountable to its clients, and perhaps it should not be urging such behavior, but that is not relevant to how a board of a company in which an institutional investors owns stock responds to such pressure.
It could be that some boards really believe that short-termism is how best to run a company. The level of complaining about activists suggests otherwise, but then it is up to boards to reject the activist's requests. If boards are being unduly influenced by non-controlling outside forces, then shareholders need to take a break from their rational apathy, and do something. If controlling shareholders are pushing short termism to the detriment of non-controlling shareholders, boards should not follow the controlling shareholder's request or (again) non-controlling shareholders need to push back to ensure the board and the controlling shareholders are honoring their fiduciary obligations.
If it's just that directors like short termism as a strategy, though, and it's not a decision made for any other reason than directors think it's the right one, I believe those directors are wrong. But that's not my call. I'm not on the board.
Monday, June 29, 2015
I was traveling to the annual CALI Conference on Law School Computing when this happened, but I thought I would share it, in case you haven’t seen it yet.
Two police officers showed up at the annual meeting of PNE Wind AG, a German company focusing on renewable energy. They sealed the room where votes were tabulated and seized documents, apparently to investigate vote-tampering charges filed by two of PNE Wind’s supervisory board members.
Not surprisingly, the company’s stock price dropped more 13% in the two days following the meeting. It rebounded afterward but, curiously, has dropped another 6% in the week since authorities announced that no further investigation was warranted. But a few other things have been going on in Europe in the last week, so the second drop may not have anything to do with the investigation.
Put this at the top of your list of things that can go wrong at the annual meeting.
I was at the CALI meeting to speak on How to Ruin a Presentation with PowerPoint. All the CALI presentations will be posted on YouTube, so I’ll let you know when links are available, if you want to see it or any of the other presentations.
Sunday, June 28, 2015
J. Robert Brown Jr.: testimony on the definition of accredited investor & business development companies http://t.co/gK1AdFEant— Stefan Padfield (@ProfPadfield) June 23, 2015
ICYMI: "Laws and regulators need get up to speed with high-frequency trading technology, panelists say" http://t.co/FS4ejbrdCy— Stefan Padfield (@ProfPadfield) June 24, 2015
"minimizing...negative externalities...preserves the freedom of companies to operate with...minimal...constraints" http://t.co/Yfnbo8uQd1— Stefan Padfield (@ProfPadfield) June 25, 2015
"America's Top States for Business 2015" http://t.co/g15x706n8T Ohio #23— Stefan Padfield (@ProfPadfield) June 25, 2015
Saturday, June 27, 2015
Chen Chen, Xiumin Martin, Sugata Roychowdhury, and Xin Wang have posted a paper to SSRN that attempts to identify firms that suffer from poor internal information flow by comparing the relative insider trading profits of high level managers and low level managers. They find that when lower level managers make higher profits – suggesting that they have better information than higher level officers – the firm’s external financial reporting suffers.
[More under the cut]
Friday, June 26, 2015
A number of months ago, a friend told me about Dolly Parton's Imagination Library. The vision of the Imagination Library is "to foster a love of reading among [the] county’s preschool children and their families by providing them with the gift of a specially selected book each month."
The books are free of charge, and anyone with preschool children can sign up, regardless of family income. Our two-year old son loves getting the books in the mail.
While the Imagination Library has already served over 800,000 children, I wonder if their choice architecture is limiting their reach. Also, I wonder if their choice architecture is preventing use of the program by families who need the books the most. Currently, families can sign up online to receive the books. It is a simple process, but you need to have heard about the program, need to have internet access, and need to be able to fill out the sign-up questions.
A nudge, such as an opt-out form (through the mail, or, if allowed, at the hospital) might allow the Imagination Library to reach a greater number of children. (If Gerber Life Insurance knows when we have a baby, I am sure the Imagination Library could find out). I doubt many families would opt out of the Imagination Library's program. Who would turn down free books? Perhaps, however, the program is purposely set up with a few hurdles because of limited resources.
The partners of Imagination Library include Penguin Group USA. I imagine that Penguin probably sees this partnership as part marketing and part corporate social responsibility. In any event, we have really enjoyed the program.
Thursday, June 25, 2015
In my final post on the subject of “respectability” of lawyers (the first four can be found here, here, here and here), I’d like to tie my thoughts together, discussing what the various parties can do to make Bird and Orozco’s thesis of assimilation of lawyers into corporate business teams the “new normal”. This should give lawyers more career opportunities in the future, slow the loss of influence of the legal profession in businesses, and make legal education a more attractive choice. Much of the discussion in academia has ignored the in-house counsel approach as being a viable option for the woes of the legal industry. Below the fold, this post will discuss the roles that academia, in-house counsel, and business firms each may play in increasing the potential for success of a new model for business lawyers.
It’s always nice to blog and research about a hot topic. Last week I wrote about compliance challenges for those who would like to rush down to do business in Cuba- the topic of this summer’s research. Yesterday, Corporate Counsel Magazine wrote about the FCPA issues; one of my concerns. Earlier this week, I attended a meeting with the Greater Miami Chamber of Commerce and the United States International Trade Commission. Apparently, on December 17th, the very same day that President Obama made his surprise announcement that he wanted to re-open relations with Cuba, Senator Ron Wyden coincidentally sent a request to the USITC asking for an investigation and report on trade with Cuba and an analysis of restrictions. Accordingly, the nonpartisan USITC has been traveling around the country speaking to lawyers and business professionals conducting fact-finding meetings, in order to prepare a report that will be issued to the public in September 2015. Tomorrow the Miami Finance Forum is holding an event titled the New Cuba Revolution.
This will be my third and final post on business and Cuba and in this post I will discuss the focus of my second potential law review article topic. My working thesis is as follows: As relations between the United States and Cuba thaw, American businesses have begun exploring opportunities on the island. Cuba, however, remains a communist nation with a human rights record criticized by exiles, NGOs, and even members of the United States Congress. The EU has taken a "common position" on Cuba stating that the objective of the European Union in its relations with Cuba is to encourage a process of transition to a pluralist democracy, require a respect for human rights and fundamental freedoms, as well as sustainable recovery and improvement in the living standards of the Cuban people." Individual EU member states are free to conduct business with Cuba and many European companies have joined Canadian firms in investing through joint ventures and other state-sanctioned vehicles. This Article will examine whether the US should follow the EU's model in trying to spur reform or whether allowing American firms to do business in Cuba without human rights concessions will in fact perpetuate the status quo.
As I discussed in last week’s blog post, one reason that the U.S. is unlikely to lift the embargo is the nearly 7 billion in claims for confiscated US property. Another reason is Cuba’s human rights record. For example, the island is notorious for violations of rights to freedom of press, association, assembly, and imprisonment of political protesters. The Cuban government continues to control all media limiting the access to information on the Internet due to content-based restrictions and technical limitations. Independent journalists are systematically subjected to harassment, intimidation, and detention for reporting information that was not sanctioned by the state apparatus. My colleague Jason Poblete writes often and critically about the Obama administration’s rapprochement with Cuba. (I highly recommend him for legal advice about Cuba by the way).
Depending on whom you talk to the embargo will be lifted next year, in five year or in ten years. Personally, I don't know that the EU Common Position has been particularly effective in pressuring the Castro brothers to make human rights reforms. I don’t think the U.S. government will be any more successful either. The embargo is Exhibit A.
Most of my academic research thus far has been on what drives corporations to act in the absence of legal obligations vis a vis human rights. With that in mind, I plan to examine a few options related to Cuba. First, I am researching the effect of bilateral investment treaties. A bilateral investment treaty is an "agreement between two countries for the reciprocal encouragement, promotion and protection of investments in each other's territories by companies based in either country.” These typically grant significant rights to foreign investors, provide safeguards to investments against foreign governments, and allow foreign investors to have investment disputes adjudicated outside of the country, which will be critical for those investing in Cuba. The problem is that these BITS rarely have human rights conditions. Accordingly, some scholars have recommended that they require adherence to the Universal Declaration of Human Rights, the United Nations International Covenant on Civil and Political Rights, the ILO Declaration on Fundamental Principles and Rights at Work, the United Nations Convention Against Corruption, the and the Rio Declaration on Environment and Development. I would also recommend reference to the UN Guiding Principles on Business and Human Rights and the OECD Guidance.
Another option is to condition any renewal of a development bank such as the US’s Ex-Im Bank on requiring human rights impact assessments. The Ex-Im bank is the official export credit agency of the US. It’s used when private sector lenders are unable or unwilling to provide financing to companies entering politically or commercially risky countries. Its charter is set to expire on June 30th although its supporters claim that it financed billions in exports, which supported 200 thousand jobs last year. Opponents claim that it financed exports in countries with abysmal human rights records and/or that it supports corporate welfare. I propose that Ex-Im and other lenders follow the lead of many European financers that require human rights disclosures. I (naively?) believe labor may be the only human right remotely and partially in the control of US companies operating in Cuba in the future.
I have some other ideas but those will have to wait for the upcoming article. In the meantime, if you have some thoughts or critiques of these early ideas, please comment below or send me an email at email@example.com. I’m off to Guatemala on Saturday for a week with a group of academics studying business and human rights (another research topic for this summer). We will be exploring climate change, the extractive industries, maquiladoras, corporate social responsibility, and the effects on the rights of indigenous peoples. You can be sure I will be writing about that in a future post.
Chief Justice John Roberts wrote for himself, Justice Anthony Kennedy and the four liberal justices that:
"Congress passed the Affordable Care Act to improve health insurance markets, not to destroy them... If at all possible, we must interpret the Act in a way that is consistent with the former, and avoids the latter."
Justice Antonin Scalia wrote the dissent, joined by Clarence Thomas and Samuel Alito, suggesting that the health care reform should be called SCOTUScare because the high court has now intervened twice to save the flawed law.
The opinion is available here: http://www.supremecourt.gov/opinions/14pdf/14-114_qol1.pdf
Wednesday, June 24, 2015
The AALS Annual meeting will be held in NYC in January, 2016. The Section on Business Associations will be co-hosting a program entitled The Corporate Law and Economics Revolution 40 Years Later: The Impact of Economics and Finance Scholarship on Modern Corporate Law.
Presenters will include Judge Frank Easterbrook, Professor Roberta Romano (Yale) and Professor Kent Greenfield (Boston College).
The full call for papers is available here: Download AALS Call for Papers 2016-1. The deadline for submitting an abstract (please send to Professor Usha Rodrigues at firstname.lastname@example.org) is August 27, 2015.
I had the privilege of sitting in on a stimulating paper session on "Private Fiduciary Law" at the Law and Society Association conference in Seattle last month. The program featured some super work by some great scholars. My favorite piece from the session, however, is a draft book chapter written by Gordon Smith that he recently posted to SSRN. Aptly entitled The Modern Business Judgment Rule, the chapter grapples with the current state of the business judgment rule in Delaware by tracing its development and reading the disparate doctrinal tea leaves. Here is a summary of his "take," as excerpted from his abstract (spoiler alert!): "The modern business judgment rule is not a one-size-fits-all doctrine, but rather a movable boundary, marking the shifting line between judicial scrutiny and judicial deference."
In the mere 18 pages of text he uses to engage his description, analysis, and conclusion, Gordon gives us all a great gift. His summary is useful, his language is clear, and his analysis and conclusions are incredibly useful, imho. I am no soothsayer, but I predict that this will be a popular piece of work.
Gordon posted on his paper the other day on The Glom. He is inviting comments, and I know him to be serious in wanting to receive and incorporate them. So, have at it!
The Turtles continue to have salience in the music world. Now, they also are a "happening thing" in legal circles. Two recently published law review articles take on an interesting issue in copyright law relating to pre-1972 sound recordings that has been the subject of legal actions brought by members of The Turtles. The articles (both of which use the song Happy Together, a Turtles favorite, in their titles) are authored by my University of Tennessee College of Law colleague, Gary Pulsinelli, and Georgetown University Law Center Professor Julie L. Ross.
In his abstract, Gary summarizes the problem as follows:
Federal copyright law provides a digital performance right that allows owners of sound recordings to receive royalties when their works are transmitted over the Internet or via satellite radio. However, this federal protection does not extend to pre-1972 sound recordings, which are excluded from the federal copyright system and instead left to the protections of state law. No state law explicitly provides protection for any type of transmission, a situation the owners of pre-1972 sound recordings find lamentable. These owners are therefore attempting to achieve such protection by various means. . . .
[S]tate law cannot provide the remedy that the owners of pre-1972 sound recordings seek. Their concerns, however, should not be dismissed. The exclusion of pre-1972 sound recordings from the federal system does deprive the owners of such recordings of royalties received by similarly situated owners whose recordings happen to have been made after that date. Because state law cannot remedy the problem, federal law must. Pre-1972 sound recordings should be brought into the federal system, on essentially the same terms as other works from the same era that are already protected by federal copyright.
Professor Ross reaches the same conclusion, as summarized in her abstract:
[G]iven the delicate balancing that has gone into Congress’ recognition of a limited digital performance right and creation of a compulsory statutory licensing system, any remedy for the inequity to owners of pre-1972 sound recordings must be left to Congress. Allowing individual courts in individual states to craft a patchwork of inconsistent remedies would disrupt the balance struck by Congress and interfere with the functioning of the compulsory license system for digital sound recording performances. This is a result that the Supremacy Clause does not permit.
Last week, I posted on federal securities law reform. It looks like federal copyright law also is in need of some fixing . . . . However, the copyright issue addressed in these two papers seems like an easy one to fix efficiently and effectively, unlike some of the federal securities law issues on the current reform agenda. Regardless, I'll raise three cheers to fixing what's legally broken in the most efficacious way!
Imagine how the world could be
So very fine
So happy together . . . .