Saturday, December 16, 2017

Appraisal is the New Fiduciary Duty

This week, the Delaware Supreme Court reversed and remanded Chancery’s appraisal determination in Dell et al. v. Magentar Global Event Driven Master Fund et al..  The decision amplified the Supreme Court’s earlier opinion in DFC Global Corp. v. Muirfield Value Partners, LP, et al..

In DFC, the Delaware Supreme Court held that courts entertaining appraisal claims should place heavy emphasis on the deal price, at least for arm's length negotiations with no apparent flaws.

Dell, however, was a slightly different animal.  Unlike DFC, it involved a management buy-out, which is a scenario rife with potential conflicts of interest.  It was precisely because of these conflicts that the Chancery court refused to accept the deal price, and instead used its own discounted cash flow analysis to determine that the stock was worth more.

On appeal, the Delaware Supreme Court reversed.  Though the Court acknowledged that there may be cause for concern in the MBO context, the Court concluded – based on Chancery’s own findings – that those concerns had been allayed in this particular case due to, among other things, an efficient market for the company’s stock, a robust sales process with full disclosure, and a CEO who was apparently willing to join with any potential buyer.

What was implicit in DFC – and what Dell makes explicit – is that in some ways, the Delaware Supreme Court is using appraisal to recapture ground it gave up in the context of fiduciary duty litigation.

As we all know, after Corwin v. KKR Financial Holdings LLC, 125 A.3d 304 (Del. 2015), a shareholder vote can cleanse a variety of management sins in the context of negotiating a sale of the company.  Though Corwin may have much to recommend it, the chief criticism is that management may be left with little incentive to conduct a robust sales process.  As management is presumably well aware, so long as there’s some kind of premium over market, stockholders may be feel pressured to accept a deal on the table rather than hold out hope that management, if rebuked by an unfavorable vote, will apply their full efforts towards obtaining a better price (especially given customary break up fees).  Corwin provides management with no incentives to do better than the minimum of what the stockholder vote will accept.

In DFC, the Delaware Supreme Court took the first steps toward filling that gap.  By holding that deal price should carry great weight in the appraisal context absent evidence of a dysfunctional sales process, the court provided new incentives for management to obtain the best possible price for stockholders.

What was implicit in DFC is explicit in Dell.  After explaining all the reasons why Dell’s sales process raised no red flags, and even counterbalanced the ordinary concerns that are raised in the MBO context, the court explained: “If the reward for adopting many mechanisms designed to minimize conflict and ensure stockholders obtain the highest possible value is to risk the court adding a premium to the deal price based on a DCF analysis, then the incentives to adopt best practices will be greatly reduced.”

Thus, the substitution of appraisal litigation for fiduciary litigation is near complete:  improving upon deal price in the context of appraisal may be impossible unless something went wrong in the sales process (at least for the sale of a public company without a controlling stockholder).  In this way, the Delaware Supreme Court ensures that there remain incentives for directors to use best practices when negotiating deals, while avoiding some of the pathologies that have infected fiduciary duty litigation.  See Charles Korsmo & Minor Myers, The Structure of Stockholder Litigation: When do the Merits Matter?, 75 Ohio St. L.J. 829 (2014).

The question remains, however, whether Delaware made the right call.  Commenters have argued that the threat of appraisal results in higher deal prices; those salutary effects may be mitigated under the new standards.  It is not clear how proficient courts are at detecting the kinds of subtle distortions in a sales process that might result from even mild degrees of director self-interest, lack of expertise, or distraction – indeed, commenters have argued that it is precisely because appraisal can avoid these inquiries that makes it such an effective remedy. 

December 16, 2017 in Ann Lipton | Permalink | Comments (0)

Friday, December 15, 2017

Doping, Russia, and Morality Clauses

Recently, the International Olympic Committee (IOC) announced that Russia will be banned from the 2018 Winter Games for systemic doping

If you have not watched Icarus (on Netflix) on this topic, I recommend it. The documentary starts slowly, and the story-line is a bit disjointed, but the information uncovered about state-sponsored doping in Russia is fascinating and depressing.  Even if you are not a sports fan, you may be interested in the parts in the documentary related to the alleged involvement of the Russian government. 

It has been a busy semester, but I am working (slowly) on a journal article on morality clauses in sports contracts. Doping is often specifically mentioned in these contracts, and doping is a sad reality in many sports. Doping also betrays, I think, improper prioritization. While we are starting to see more attention paid to courage and compassion in sports, "winning" has often been promoted as the top priority. Hopefully we will see more people (and  countries) who compete with passion, but also with integrity.  

December 15, 2017 in Contracts, Current Affairs, Haskell Murray, Sports | Permalink | Comments (0)

Thursday, December 14, 2017

Should Non-Lawyers Represent People in Arbitration?

Thank you to the BLPB for the chance to write some for the platform. Reading the BLPB has informed my work, and it has kept me up to speed on breaking developments.  For readers that don't know me, I'm at the University of Nevada, Las Vegas.  My teaching and scholarship focus on business, securities, and professional responsibility issues.

On that note, the Financial Industry Regulatory Authority (FINRA) now considers a live securities and professional responsibility issue.  It has a request for comment out about whether non-attorney representatives (NARS) should continue to represent persons in FINRA's arbitration forum.  States approach unauthorized practice in different ways.  Florida has vigorously policed the unauthorized practice of law.  New York, on the other hand, has allowed NARS to represent persons in arbitration. 

There may be good reason to be concerned about representation quality from non-attorney advocates.  The New York Times covered the issue in 2010, profiling Stock Market Recovery Consultants, an outfit that represents investors in securities arbitration.  The Times pointed out that one of the firm's principals "pleaded guilty in 2004 to insurance fraud in a million-dollar scam involving jewelry."  Another one of the firm's principals suggested that the Times speak with an attorney that had represented a defendant against them:

Mr. Lapin offered a lawyer who has opposed him on several cases — Michael Schwartzberg of Winget, Spadafora & Schwartzberg — to vouch for his performance. He vouched thusly: “Dealing with Mr. Lapin and his operation is one of the most frustrating experiences I’ve ever dealt with.” Mr. Schwartzberg said the claims that Stock Market Recovery Consultants files — before it has fully investigated the case, and using passages cut and pasted from previous claims — sometimes don’t even get the client’s name right. When it comes to settling, he added, “It’s like hondling at a flea market with these guys: ‘I got these shirts 3 for 10, but for you, 3 for 5.’ ”

FINRA has begun to post comments that it has received.  One arbitrator reports that "experiences with NARS have, without exception, been negative: NARs have been discourteous to everyone and made numerous baseless objections and irrelevant arguments, resulting in unnecessarily long and unpleasant hearings."  Perhaps shedding light on NARS's practice quality and attention to detail, an oddly-formatted letter takes the opposite position and contends that "[w]hen we restrict, FINRA or State or other, the rights to an effective ADR process in which would impede the intended purpose; we spit in the face of SCOTUS and the American people."   Another arbitrator and commentator memorably relates his experience encountering a claim that was "heavy on legal jargon" and "significantly short of the factual allegations needed to state a claim."  The arbitrator assumed the pleading had "been prepared by a singularly incompetent lawyer."  When he discovered it was a NAR, he reached out to the state bar. 

For those interested, the FINRA comment period closes on December 18th.  

Sometimes, it can be difficult to distinguish between consumer protection and protectionism for attorneys. To be sure, booting NARS out of the forum will mean that attorneys get more cases.  It should only be done if NARS have not delivered competent representation.  




December 14, 2017 | Permalink | Comments (0)

Wednesday, December 13, 2017

Something to Help You Relax While Grading

Malaga, Spain

I'm in the midst of grading, revising an article, researching for another article, starting a travel blog, and preparing for next semester. Normally, this would cause some level of stress. But this year, for the first time, I chose to take a vacation before grading. I took a cruise around the Canary Islands and the Spanish coast. I didn't think about work at all, and I have come back refreshed and ready to grade. Now, when I'm reading exams, I'm more relaxed and less frustrated. I'm convinced that the pre-grading vacation led to my state of mind, and will likely lead to a better grading process for me. If you're grading and frustrated, here are some pictures to help you relax too.

Sunset tenerife
Sunset off the coast of Tenerife with Mt. Teide in the background


Las Palmas


Photo Nov 28  11 50 27
Mt. Teide, the 3rd largest volcano in the world

The exterior of Hassan II Mosque in Casablanca, Morrocco


Mijas, Spain

December 13, 2017 in Marcia Narine Weldon, Travel | Permalink | Comments (1)

Tuesday, December 12, 2017

Getting LLC Definitions Wrong: It's Not Always the Judge's Fault

As I have noted in the past, it is not just judges that make the mistake of calling limited liability companies (LLCs), "limited liability corporations."  Today, I got a notice of a Texas case using the later definition.  Here's the excerpt:

The statute defines a “licensed or registered professional” to mean “a licensed architect, licensed professional engineer, registered professional land surveyor, registered landscape architect, or any firm in which such licensed or registered professional practices, including but not limited to a corporation, professional corporation, limited liability corporation, partnership, limited liability partnership, sole proprietorship, joint venture, or any other business entity.” Tex. Civ. Prac. & Rem. Code Ann. § 150.001(1-a) (emphasis added).

CH2M Hill Engineers, Inc., v. Springer, No. 09-16-00479-CV, 2017 WL 6210837, at *2 (Tex. App. Dec. 7, 2017). 
My first thought was, "Doesn't everyone cut and paste statutory language these days?  How could they get that wrong?"  I went to look up the code, and even before the code section had loaded, it dawned on me:  Of course, they cut and pasted it.  It's the code that's wrong.  Sure enough, it is.
Another recent example comes from a Westlaw source: Business Transactions Solutions § 60:358. I am going to tread lightly here because my mission is not to be a snarky jerk (I can be one sometimes, but that is not my goal).  The source provides what appears to be a model letter to an LLC client that has some very useful information, but I am going to be critical of a couple parts.  The letter opens: "[T]he following is a summary of our discussion concerning business responsibilities that must be met to maintain your LLC status."  Good start.  And then: "Failure to comply with LLC formalities can result in individual liability to the members if the 'corporate veil is pierced.'" I know this is colloquial talk, but couldn't it just say "if the limited liability veil is pierced?"
The draft letter continues:
You can also be liable for the company's debts by implied actions or negligent conduct. If you disregard LLC formalities or commingle your personal interests with the company's assets or interests, you can open the door for an adverse party to “pierce the corporate veil” and render you personally liable for the LLC's debts. To avoid such consequences, you should never refer to your company as “my” business or “our” business. Such a statement could later be used against you as being a material representation that the business was a proprietorship or a partnership rather than a corporation.
There's a lot here with which I disagree. For example, LLCs don't, in my view, have formalities. And an LLC is not a corporation.  The letter also explains that "[m]anagers control the policy of the LLC, (this is similar to a director in a corporation)" and refers to the LLC's "corporate name " and "corporate records." Some of this is accurate colloquially, but don't you hire a lawyer for precision?  I appreciate the idea that lawyers should share a lot of this kind of information with clients, and a lot of this is useful, but this really can be better. The LLC letter should be different than the corporation letter.  

Anyway, this is another example where a lot of my complaints are simply nits, and they probably impact nothing.  But it's not all nits.  Some of this is substance that matters.  So, I keep picking nits. 


December 12, 2017 in Joshua P. Fershee, LLCs | Permalink | Comments (0)

Monday, December 11, 2017

Law and Entrepreneurship - Association Call for Papers - Near-Term Deadline!

The twelfth annual meeting of the Law and Entrepreneurship Association (LEA) will occur on February 9, 2018 at the University of Alabama School of Law

The LEA is a group of legal scholars interested in the topic of entrepreneurship—broadly construed. Scholars include those who write about corporate law and finance, securities, intellectual property, labor and employment law, tax, and other fields related to entrepreneurship and innovation policy.

Our annual conference is an intimate gathering where each participant is expected to read and actively engage with all of the pieces under discussion. We call for papers and proposals relating to the general topic of entrepreneurship and the law.

Proposals should be comprehensive enough to allow the LEA board to evaluate the aims and likely content of papers they propose. Papers may be accepted for publication but must not be published prior to the meeting. Works in progress, even those at a relatively early stage, are welcome. Junior scholars and those considering entering the legal academy are especially encouraged to participate.

To submit a presentation, email Professor Mirit Eyal-Cohen at with a proposal or paper by December 31, 2017. Please title the email “LEA Submission – {Name}.”

For additional information, please email Professor Mirit Eyal-Cohen at

December 11, 2017 in Conferences, Entrepreneurship, Joan Heminway | Permalink | Comments (0)

Johnny Hallyday - French Rock 'n' Roll, Death, and Taxes . . . .

While I was in France last week touring and attending an academic conference, a French music legend died and was mourned.  Johnny Hallyday, the King of French rock 'n' roll (known widely as the "French Elvis"), died earlier this month at the age of 74 after a battle with lung cancer.  I learned of this in a circuitous way--because one of his songs, Quelque Choses de Tennessee (Something of Tennessee), was playing on the radio in a hotel shuttle van and caught my attention (for obvious reasons, although the song refers to Tennessee Williams, not the state, as it turns out).  Also, I happened to be in Paris the day of his funeral, when many roads (including the Avenue des Champs-Élysées) were blocked off for the related activities.

Curiosity about the song and the singer led me to the Internet.  My Internet searching revealed Hallyday as the singer and described an interesting life.  This guy loved the United States--not only adopting rock 'n' roll, but also writing lyrics about this country based on his U.S. travels.  Perhaps most famous is Mon Amérique à Moi (My America and Me), which includes the following lyrics near and dear to my heart (sung in French, of course):

My America is modest and quiet
She says to me, "Good morning!" with a big smile
Serves hot coffee, vanilla apples
Invites me to spend Christmas in Tennessee
And to go horseback riding in West Virginia . . . .

Cool.  Honestly, I am amazed that I hadn't heard of this guy before.  I am sorry that he left this world before I knew of his music.  But I am glad to have found it.

My research also revealed that Johnny Hallyday had business-related law issues--specifically French wealth tax law issues.  Of course, show business--like other businesses--generates income and, therefore, income taxes.  An article on Hallyday's death in Variety, for example, notes that "he struggled for a long time to reimburse 100 million francs in back taxes."  A CATO Institute article (quoting from a book coauthored by the author of the article) offers a bit more information:

Hallyday created a media sensation when he fled to Switzerland in 2006 to avoid the tax. He has said that he will come back to France if Sarkozy “reforms the wealth tax and inheritance law.” Hallyday stated: “I’m sick of paying, that’s all … I believe that after all the work I have done over nearly 50 years, my family should be able to live in some serenity. But 70 percent of everything I earn goes to taxes.”

Interestingly, in addition to his time in Switzerland, Hallyday resided for many of his last years in Los Angeles for tax reasons.

So, here's to Johnny Hallyday, a fan of U.S. culture who brought that culture to the French populace.  May he rest in peace, free of illness, pain, and French wealth taxes.  And may his music be a lasting memory and legacy.  Check it out, if you are unfamiliar with it.  It has some Elvis, some Johnny Cash, and something else in it.

December 11, 2017 in Current Affairs, Joan Heminway, Music | Permalink | Comments (0)

Sunday, December 10, 2017

ICYMI: #corpgov Weekend Roundup (Dec. 10, 2017)

December 10, 2017 in Stefan J. Padfield | Permalink | Comments (0)

Saturday, December 9, 2017

Investor Advisor Committee Weighs In on Dual Class Shares

The SEC’s Investor as Owner Subcommittee of the Investor Advisor Committee has just posted a discussion draft regarding dual class share structures in advance of the December 7 meeting at which such structures were under consideration.  (As of this posting, details of what transpired at the meeting are not online).

Dual class structures are increasingly common these days; presumably, that’s in large part due to the fact that institutional investor power has become a serious threat to management control, and dual class shares are a mechanism for pushing back.  (Staying private is another mechanism, and the more that companies choose that route, the more bargaining power they have when they eventually go public, etc etc).

Suffice to say that despite various defenses of dual class shares that have been offered, the Investor as Owner Subcommittee is not impressed.  It highlights a number of risks, which basically come down to that public investors may have different views about corporate strategy than the control group – precisely the feature that endears the structure to some commenters – and that controllers may use their control to further cement their own control (i.e., Google and the nonvoting shares).  And then of course there are the risks that are backlashes the first risks: exclusion from indices and associated decline in share value and liquidity, litigation risks when investors inevitably challenge the controllers’ actions.

Since this is the SEC, the Subcommittee can’t really recommend that dual class shares be barred entirely; the best it can do is recommend additional disclosure, and that it does.  Among other things, it wants clear line items disclosing that holders of x% of equity have x% of the votes, as well as the risks that controllers may use their control to further entrench themselves, and index and listing risks.   And to make absolutely certain investors aren't confused, the Subcommittee recommends that even the label "common stock" be reserved for one share/one vote stock; stock with lesser rights should be called something else.  The Subcommittee also recommends further monitoring to identify the types of disputes that arise out of these structures.

As with many SEC disclosure requirements, the proposals seem aimed less at simply informing investors than to pressure companies into adopting certain forms of governance.  Whether the SEC takes heed in this new, highly deregulatory administration, remains to be seen.

December 9, 2017 in Ann Lipton | Permalink | Comments (4)

Friday, December 8, 2017

Masterpiece Cakeshop and the Political Supreme Court Justices

I have had an opportunity to read the oral argument transcript (112 pages) from Tuesday's oral argument in the Masterpiece Cakeshop case. 

One of the first things that struck me was that it seemed pretty clear that most of the justices have already taken sides. This is not surprising, but it does sadden me. 

I wish that judges, especially justices on the Supreme Court of the United States, were really trying to get the "correct" answer rather than reasoning backward from some predetermined outcome.  Perhaps that is naive. Perhaps that is not possible. My former Constitutional Law professor warned of some of the political issues with the Supreme Court and recently wrote about the issues in his book Supreme Myths: Why the Supreme Court Is Not a Court and Its Justices Are Not Judges. 

Only Justice Kennedy is thought to be "in play" in this case. All intelligent people of integrity, however, should be aware of their biases, open to the possibly that their initial thoughts are wrong, and open to persuasion based on the law and the facts. Maybe that is too much to ask. Or maybe on of the "reliably conservative" or "reliably liberal" justices will surprise us in this case. In any event, I am definitely looking forward to reading this opinion; it will undoubtedly bring significant consequences.   

(As an aside, corporate law scholars may be interested in pages 96-98 regarding who is speaking - Masterpiece Cakeshops (the entity) or Jack Phillips (the individual)). 


December 8, 2017 in Business Associations, Haskell Murray, Lawyering | Permalink | Comments (4)

Thursday, December 7, 2017

ICYMI: #corpgov Midweek Roundup (Dec. 7, 2017)

December 7, 2017 in Stefan J. Padfield | Permalink | Comments (0)

Will More Women on Boards Change Corporate Culture and Stem the Tide of Harassment Complaints?

Two weeks ago, I asked whether companies were wasting time on harassment training given the flood of accusations, resignations, and terminations over the past few weeks. Having served as a defense lawyer on these kinds of claims and conducted hundreds of trainings, I know that most men generally know right from wrong before the training (and some still do wrong). I also know that in many cases, people look the other way when they see or hear about the complaints, particularly if the accused is a superstar or highly ranked employee. Although most men do not have the power and connections to develop an alleged Harvey Weinstein-type "complicity machine" to manage payoffs and silence accusers, some members of management play a similar role when they ignore complaints or rumors of inappropriate or illegal behavior. 

The head in the sand attitude that executives and board members have displayed in the Weinstein matter has led to a lawsuit arguing that Disney knew or should have known of Weinstein's behavior. We may see more of these lawsuits now that women have less fear of speaking out and Time honored the "Silence Breakers" as the Person of the Year. As I read the Time  article and watched some of the "silence breakers" on television, it reminded me of 2002, when Time honored "The Whistleblowers." Those whistleblowers caused Congress to enact sweeping new protection under Sarbanes-Oxley.  Because of all of the publicity, companies around the country are now working with lawyers and human resources experts to review and revamp their antiharassment training and complaint mechanisms. As a result, we will likely see a spike in internal and external complaints. But do we need more than lawsuits? Would more women in the boardroom and the C-Suite make a difference in corporate culture in general and thereby lead to more gender equity?

Last week, Vĕra Jourová, the EU Commissioner for Justice and Gender Equality put forth some proposals to redress the gender pay gap in Member States’ businesses. She recommends an increase in the number of women on boards for companies whose non-executive Boards are more than 60% male. These companies would be required to “prioritize” women when candidates of “equal merit” are being considered for a position. Germany, Sweden, and the Netherlands have already previously rejected a similar proposal.

I'm generally not in favor of quotas because I think they produce a backlash. However, I know that many companies here and abroad will start to recruit more female directors and executives in an effort to appear on top of this issue. Will it work? We will soon see. After pressure from institutional investors such as BlackRock and State Street to increase diversity, women and minorities surpassed 50% of  S & P open board seats in 2017. Stay tuned. 


December 7, 2017 in Compliance, Corporate Governance, CSR, Current Affairs, Employment Law, Ethics, Marcia Narine Weldon, Shareholders | Permalink | Comments (1)

Tuesday, December 5, 2017

Waterhouse Wilson in DePaul Law Review: Cooperatives: The First Social Enterprise

The DePaul Law Review recently posted the article, Cooperatives: The First Social Enterprise, written by my friend and colleague Elaine Waterhouse Wilson (West Virginia Univ. College of Law). I recommend checking it out. Here is an overview: 

As the cooperative and social enterprise movements merge, it is necessary to examine the legal and tax structures governing the entities to see if they help or hinder growth. If the ultimate decision is to support the growth of cooperatives as social enterprise, then those legal and tax structures that might impede this progress need to be re-examined.

This Article considers some of the issues that may impede the charitable sector in supporting the growth of the cooperative business model as a potential solution to issues of income inequality. To do so, the Article first defines a “cooperative.” Part II examines the definition of a cooperative from three different viewpoints: cooperative as social movement, cooperative as economic arrangement, and cooperative as legal construct. From these definitions, it is possible to identify those elements inherent in the cooperative model that might qualify as a tax-exempt purpose under the Internal Revenue Code (the Code) §501(c)(3). Part III reviews the definition of “charitable” for § 501(c)(3) purposes, specifically in the context of economic development and the support of workers. This Part demonstrates that many of the values inherent in the cooperative model are, in fact, charitable as that term is understood for federal tax purposes.

If a cooperative has charitable elements, however, then it should be possible for the charitable sector to support the cooperative move- ment. Part IV analyzes the possibilities and limitations of direct support by the charitable sector, including mission-related investing by charities and program-related investing by private foundations. In this regard, the cooperative can be viewed in many respects as an ex- isting analog to the new social enterprise forms, such as the benefit corporation or the L3C. Finally, Part V provides recommendations for changing both federal and state law to further support the cooperatibe movement in the charitable sector.


December 5, 2017 in CSR, Family Business, Joan Heminway, Joshua P. Fershee, LLCs | Permalink | Comments (1)

Monday, December 4, 2017

Calling All Foodies!

Because I am having significant Internet access issues through the Wi-Fi in Terminal A at the Detroit Metropolitan Airport (where I am waiting to board a flight to France to present a crowdfunding paper later in the week), I am writing a short "preview" post this week. I am typing this on my cell phone. Please forgive typos, etc.

I have promised a number of folks that I would write a post about the food delivery services I have been using for a bit more than a year now--Blue Apron, Plated, and Hello Fresh. My idea is to write about the business model, comparative attributes, legal aspects, and anything else that might make sense. So, I post today to ask you what you want to know. You can suggest a business, legal, or personal topic. Have at it! And if you'd rather PM me, just send an email. I will keep a folder and use your ideas to plan my post.  Or maybe I will end up with enough for more than one post. Who knows?

Anyway, thanks in advance for your ideas. And I apologize for the short post. But this proves to be a good juncture to ask for your input . . . .

December 4, 2017 | Permalink | Comments (0)

Sunday, December 3, 2017

ICYMI: #corpgov Weekend Roundup (Dec. 3, 2017)

December 3, 2017 in Stefan J. Padfield | Permalink | Comments (0)

Saturday, December 2, 2017

‘Tis the season

To draft end of semester exams.  So while I frantically try to develop fact-patterns that are simple and coherent and yet simultaneously engage a semester’s worth of material, I offer three links that interested me recently.

First, Vice Chancellor Laster’s ruling in Wilkinson v. Schulman (pdf).  In this opinion, VC Laster denied a books and records request on the grounds that the purposes of inspection belonged to Wilkinson’s counsel, and not Wilkinson himself.  Wilkinson had complaints about the company, but the purposes of inspection raised in the demand letter were different, and developed by the attorneys without Wilkinson’s involvement.  As Laster concluded, “Wilkinson simply lent his name to a lawyer-driven effort by entrepreneurial plaintiffs’ counsel.”  This strikes me as the kind of ruling that could have broader implications – we’ll see if future cases pick up these threads.

Second, Bloomberg recently reported on an organization called “Protect Our Pensions,” which purports to be a grassroots effort to fight against fossil fuel divestment, but is in fact industry-backed astroturf.   The reason I find this fascinating is that the standard argument against divestment is that it conveys no new information to the market and therefore will not affect prices.  But the fact that the industry bothered to organize this effort at all tells us that the industry, at least, believes these efforts are having some kind of adverse effect.

Third, Buzzfeed posted an exposé of sexual assaults at Massage Envy franchises across the country.  (Warning for graphic descriptions).  Aside from all of the other issues raised, what struck me was how the franchise model – which allows Massage Envy to use its branding but disclaim responsibility –  appears to have played a role in the cover-ups and lack of response to complaints.  I’m not sure I’d want to use scenarios this fraught in business class, but it would certainly make a change from the standard McDonald’s cases featured in most textbooks to illustrate vicarious and apparent agency theories of liability.

December 2, 2017 in Ann Lipton | Permalink | Comments (0)

Friday, December 1, 2017

Etsy to Drop B Corp Certification

I have written about Etsy in at least three past posts: (1) Etsy becoming a certified B Corp, (2) Etsy going public, and (3) Delaware amending it's public benefit corporation laws (likely, in part, to help Etsy convert to a PBC, which Etsy would need to do to maintain its certification because it incorporated in a non-constituency statute state that does have a benefit corporation statute (Delaware)).

In May, some questioned whether Etsy would keep its social focus after a "management shakeup." In September, B Lab granted Etsy an extension on converting to a PBC. That article claims that B Lab would reset the deadline for conversion to 2019, if Etsy re-certified as a B Corp by the end of 2017 and would commit to converting to a PBC.

The 2019 date was 4 years from the 2015 Delaware PBC amendments (instead of 4 years from Etsy's first certification). One of B Lab's co-founder reportedly said that the statutory amendments were needed because the original 2013 version of the Delaware PBC law was "perfectly fine for private companies and unworkable for public companies."

Just a few days ago, however, Etsy announced that it would abandon its B Corp certification and not reincorporate as a Delaware PBC. Josh Silverman (CEO since the May shakeup) is quoted in that New York Times article as saying "Etsy’s greatest potential for impact is helping sellers — many of whom are women running small businesses — increase their sales." He sounds a lot like Milton Friedman's article The Social Responsibility of Business is to Increase its Profits. Mr. Silverman also said that Etsy "had the best of intentions, but wasn’t great at tying that [sales] to impact....Being good doesn’t cut the mustard.”

Other than the New York Times article, the press around Etsy's announcement to let its B corp certification lapse seems to be relatively light. In the short-term at least, this move probably hurts B Lab and the social enterprise community more than it hurts Etsy given how few big companies are certified. In the long-term, however, Etsy may experience significant negative consequences, as it seems that this move to drop its certification is being done in conjunction with Etsy shedding a lot of the culture that made it a beloved company.  

Update: Perhaps Etsy is bracing for competition from Amazon. (Or maybe, and this is complete speculation on my part, Etsy is trying to make itself a more attractive acquisition target for Amazon, if Amazon realizes it cannot replicate Etsy on its own. Now, it is debatable whether Etsy is more valuable with or without its B Corp certification). 

December 1, 2017 in Corporations, CSR, Current Affairs, Delaware, Haskell Murray, Social Enterprise | Permalink | Comments (3)

Thursday, November 30, 2017

ICYMI: #corpgov Midweek Roundup (Nov. 30, 2017)

November 30, 2017 in Stefan J. Padfield | Permalink | Comments (0)

Wednesday, November 29, 2017

Tenure-Track Legal Studies Position at Oakland University (Michigan)

From an e-mail I received today. Tenure track legal studies professor position at Oakland University (Michigan). Details below the page break. 

Continue reading

November 29, 2017 in Business School, Haskell Murray, Jobs | Permalink | Comments (0)

Call for Papers. Deadline 12/15

I’m proud to be part of this project and to have written a chapter on corporate social responsibility in Latin America that stemmed from my time in Guatemala two years ago. 


2018 SNX (South-North Exchange Conference)

Antigua, Guatemala

May 18-19, 2018


From Extraction to Emancipation: Development Reimagined 


Call for Papers


Sponsored by:

Latina & Latino Critical Legal Theory, Inc. (LatCrit), the UC Davis Journal of International Law and Policy, and _________ [other sponsorships are under consideration, and please suggest your own school or program]


In July 2015, a delegation of law professors and lawyers from the United States and Canada traveled to Guatemala to study sustainable development. That study inspired the group to produce an edited volume, to be published in early 2018 by the ABA Section of International Law, that considers Guatemala as a case study to examine broad global themes arising from development practices in emerging economies around the world. The 2018 SNX conference provides an opportunity to continue the discussions and further engage and involve the local victims of unfettered globalization


This project offers important lessons to policy makers, corporate investors, and affected individuals and communities on strategies to improve distributional justice and respect for the rule of law, including human rights and environmental norms and aspirations. It also connects to such global themes as climate change, labor regimes in the context of trade, and forced migration, all of which have transborder implications and across-border commonalities. 


The 2018 SNX conference posits extraction as a metaphor for looking at exploitation from a wider lens. Although the conference is grounded in the Guatemalan experience, we invite speakers from a broader global context whose work is informed by similar experiences. We seek  papers that look at exploitation and resistence from a variety of perspectives and experiences. Particularly, we invite papers across disciplinary boundaries and from all constituencies on the following topics, as well as other topics you might suggest of relevance to the Global South:


• Trade/Economies
• Migration—Economic and Refugee
• Human Rights
• Natural Resources and the Environment
• Labor/Precarity
• Globalization
• Women’s Rights
• Violence and Gender Violence
• Children’s Rights
• Poverty/Class
• Corruption/Constitutional Crisis
• Corporate Social Responsibility
• Indigenous Peoples


The conference’s proceedings will be held in Spanish and English (with simultaneous translation)


To be considered for participation, please send a brief abstract (not exceeding 500- 600 words) of your presentation and your contact info by December 15, 2017 to: and Decisions will be announced in December 2017. The UC Davis Journal of International Law and Policy will publish a symposium volume to include selected papers from the conference. Please indicate in your abstract if you are interested in this publication opportunity. 


Conference Information: The 2018 SNX will be held at the Posada de Belen facility in Antigua, Guatemala. The organizing committee is currently negotiating a conference rate with a hotel(s) close to our conference venue.


Conference Registration fees, to include some meals and in-country transportationare subject to change, but estimated for now as:

• Participants from the Global North $225
• Student Participants from the Global North $100
• Participants from the Global South $75
• Student Participants from the Global South $25


If you have any questions, please contact the program coordinators: Raquel Aldana (UC Davis), Steven Bender(Seattle University), Anibal Rosario Lebron (Howard), Willmai Rivera-Perez (Southern), Yanira Reyes (InterAmerican), or Sheila Vélez Martínez (Pitt)


November 29, 2017 | Permalink | Comments (0)