Tuesday, July 25, 2017
I am speaking at a plenary session tomorrow during the the Energy Impacts Symposium at the Nationwide & Ohio Farm Bureau 4-H Conference Center in Columbus, Ohio. The program is exciting, and I look forward to being a part of it. The program is described as follows:
Energy Impacts 2017 is a energy research conference and workshop, organized by a 9-member interdisciplinary steering committee, focused on synthesis, comparison, and innovation among established and emerging energy impacts scholars from North America and abroad. We invite participation from sociologists, geographers, political scientists, economists, anthropologists, practitioners, and other interested parties whose work addresses impacts of new energy development for host communities and landscapes.
The pace, scale, and intensity of new energy development around the world demands credible and informed research about potential impacts to human communities that host energy developments. From new electrical transmission lines needed for a growing renewable energy sector to hydraulically fracturing shale for oil and gas, energy development can have broad and diverse impacts on the communities where it occurs. While a fast-growing cadre of researchers has emerged to produce important new research on the social, economic, and behavioral impacts from large-scale energy development for host communities and landscapes, their discoveries are often isolated within disciplinary boundaries.
Through facilitated interactive workshop activities, invited experts and symposium participants will produce a roadmap for future cross-disciplinary research priorities.
I will be talking about Community Development and the North Dakota Sovereign Wealth Fund, and we'll discuss the implications of the resource curse. I am of the view that the resource curse is correlative, not causative, and that natural resource extraction can prove harmful to local communities, but that it doesn't have to be. From North Dakota's $4.33 billion fund to Norway's Government Pension Fund Global, there are examples of funding that can provide for the future. But there are numerous examples of struggling communities and bankrupt local governments where funds benefited few. And even North Dakota and Norway provide stark contrasts in how the funds are used. The point, for me, is that generalizations overstate the role of the resource and understate the role of local decision making. What we prioritize matters, and often, I think, we can do better. It's not preordained. We can do better, as long as we decide to do so.
Monday, July 24, 2017
Hot Off the Press: Russell and Heminway on Representing the Organizational Client on Environmental Matters
My good friend and long-time mentor Irma Russell and I wrote a chapter for the recently released ABA book, Ethics and the Environment: A Lawyer's Guide. Irma also is a co-editor of the book (with Vicki Wright). In our joint contribution, the chapter entitled "Representing the Organizational Client on Environmental Matters," Irma and I cover issues involving professional responsibility, corporate governance, and environmental compliance. Guess which part was my primary responsibility . . . ?!) Covering some 37 pages of the 242-page book, the rules we cover and the observations we make are fairly wide-ranging. We hope, as we noted in our conclusion to the chapter, that we supply legal counsel representing corporations and other organizations with "foundational tools to assist them in providing advisory and advocacy-oriented services to organizational clients in the environmental law context." Irma and I received our copies last week. The book soon will be available through the ABA and other outlets.
Sunday, July 23, 2017
"close to 50% of all college grades given are A’s" https://t.co/USFKLPst3p— Stefan Padfield (@ProfPadfield) July 18, 2017
"Uber is operating a virtual, for-profit hiring hall..on terms..not..allowed to workers" 38 Berkeley J. Emp. & Lab. L. 233 #corpgov— Stefan Padfield (@ProfPadfield) July 23, 2017
"shareholders with more than 2% holdings could sue the directors for failure to pursue public..benefits" 2017 Colum. Bus. L.Rev. 92 #corpgov— Stefan Padfield (@ProfPadfield) July 23, 2017
"individual property leaves the private domain ... presuming to replace the public dimension" 18 Theoretical Inquiries L. 269 #corpgov— Stefan Padfield (@ProfPadfield) July 23, 2017
"whether property is a limit on or the product of sovereignty" 18 Theoretical Inquiries L. 447 #corpgov— Stefan Padfield (@ProfPadfield) July 23, 2017
Saturday, July 22, 2017
So Michael Piwowar inspired a bit of heartburn in the plaintiffs’ bar this week when, during a speech to the Heritage Foundation, he encouraged corporations to add mandatory arbitration provisions in their charters prior to an IPO. This is a subject on which I’ve frequently posted, but since it’s in the news again I can’t let it go by without comment.
Mandatory arbitration is an idea that terrifies plaintiffs’ attorneys because arbitration clauses typically come with a class action waiver, and that could sound the death-knell for federal securities litigation. Moreover, because the Supreme Court has interpreted the Federal Arbitration Act to bar most attempts at regulating contracts to arbitrate, see, e.g., AT&T Mobility LLC v. Concepcion, 563 U.S. 333 (2011), the fear is that once an arbitration clause makes it into the corporate governance documents, it’s pretty much game over. The plaintiffs’ bar has long taken comfort in the fact that (at least until now) the SEC has taken the position that such provisions are impermissible, which is exactly why Piwowar's remarks raised concern. Delaware, of course, recently amended its corporation law to prohibit the use of mandatory arbitration clauses in corporate charters and bylaws, see Del. Code tit. 8, § 115, but there’s some question as to whether the prohibition extends to federal securities claims, and, even if it does, whether Delaware’s law is preempted by the FAA.
But, as I explained in my article Manufactured Consent: The Problem of Arbitration Clauses in Corporate Charters and Bylaws, 104 Geo. L.J. 583 (2016) (and, to a lesser extent, my chapter Limiting Litigation Through Corporate Governance Documents, in Research Handbook on Representative Shareholder Litigation (Sean Griffith et al., eds., forthcoming 2017)) - and as I previously posted here, here, and here - I don’t think existing law permits charters and bylaws to regulate federal securities claims. And even if charters and bylaws do extend that far, I do not believe the FAA applies. To summarize briefly (you can consult older posts or Manufactured Consent for the long version):
First, corporate charters and bylaws only govern internal governance matters, i.e., the matters typically governed by the internal affairs doctrine. This makes sense; corporate law is intended to govern stockholders’ relationship to the corporation in their capacity as stockholders. It does not govern matters outside the role of the stockholder as a member of the corporate polity, such as personal torts. Federal securities law may be closely related to corporate law, but it’s a different animal, and therefore outside the scope of the state-constructed corporate entity.
Second, though it is fashionable to describe charters and bylaws as “contractual,” I do not believe they are, at least not in the manner envisioned by the FAA. Within the corporate form, shareholders are not treated as autonomous counterparties bargaining with directors over terms. Thus, the preconditions for contract envisioned by the FAA jurisprudence are not present.
All of which is to say – I don’t think Piwowar’s suggestion is viable, no matter whether the SEC has changed its views. Of course, there’s always the chance it’ll take a lot of litigation to settle the matter.
Friday, July 21, 2017
My mother-in-law was reading the book for her job at a private elementary school, and I brought a limited number of books (due to the weight of my hardcopy books), so I read this book too. Our teaching center at Belmont University has mentioned Palmer’s work a number of times, so I was interested in the book.
Simply stated, Palmer’s thesis is that “good teaching comes from the identity and integrity of the teacher.” He defines identity as “an evolving nexus where all the forces that constitute my life converge in the mystery of self," and he defines integrity as “whatever wholeness I am able to find within that nexus as its vectors form and re-form the pattern of my life.” (13) Teaching, he argues, comes from the heart and soul of the teacher, and not primarily from chosen techniques.
Palmer makes a solid point about paradox and pedagogical design. “The space should be bounded and open….hospitable and charged….invite the voice of the individual and the voice of the group…welcome both silence and speech.” (76-77). The tendency in teaching, I think, is to swing from one side to the other, when we really need to be addressing all of these things simultaneously. Making space for silence in the classroom is something that is especially difficult for me.
He observed, “students who have been well served by good teachers may walk away angry—angry that their prejudices have been challenged and their sense of self shaken. That sort of dissatisfaction may be a sign that real education has happened. It can take many years for a student to feel grateful to a teacher who introduces a dissatisfying truth.” (96-97). This made me wonder if we should add teaching evaluations from alums 5+ years after the class.
I also liked his description of subject-centered classes (instead of teacher-centered or student centered). In the subject-centered class, the students are active and important participants, but they are not the focus of the time.
Palmer notes that he uses mastery grading, allowing students to revise their papers as many times as they like with only the final grade counting. I tried this once, in an MBA class, because many of my colleagues utilize it. I found mastery grading lacking. It encourages weak initial effort, as the students wait for comments, knowing that they can revise their poor product with more specific guidance.
Finally, I really liked the Quaker concept of a “clearness committee” that Palmer describes. The committee consists of four or five colleagues and a focus person. Before the meeting, the focus person writes a description of the problem (as professors, likely stemming from the classroom). Then, for two to three hours the colleagues of the focus person ask him/her open-ended questions about the problem, being careful not to offer advice, bring attention to themselves, or ask questions that are really advice in disguise (e.g., Have you considered seeing a therapist?) After the questions, the focus person has the option of continuing with mirroring (“reflecting to the focus person things he or she said or did but might not be aware of: 'When asked about A, you said B,' or 'When you spoke about X your voice dropped and you seemed tired.'”) (160). Confidentiality is pledged, not only to those outside of the committee, but also within the committee--meaning that the topic would not be raised again, even among the group members. The clearness committee would take a fair bit of time but seems like a great way to solves problems, as most solutions that stick seem to stem from personal realizations rather than merely outside advice.
There wasn’t all that much that surprised me in this book, but it was an easy read and had a few good reminders.
Thursday, July 20, 2017
"Dark money groups [are] comparing themselves to civil rights heroes in Alabama under Jim Crow" 121 Penn St. L. Rev. 1049 #corpgov— Stefan Padfield (@ProfPadfield) July 16, 2017
stakeholder theory's "subordination of the equity holders ... is an ... assault on fundamental property rights" 72 Bus. Law. 735 #corpgov— Stefan Padfield (@ProfPadfield) July 18, 2017
"important differences between an assignment for the benefit of creditors and bankruptcy liquidation" 69 Rutgers U.L. Rev. 137 #corpgov— Stefan Padfield (@ProfPadfield) July 18, 2017
"for all the talk of creating an ownership society, close to half of Americans do not have..investments in equity" 126Yale L.J.1870 #corpgov— Stefan Padfield (@ProfPadfield) July 18, 2017
Wednesday, July 19, 2017
Last year, I was asked to contribute to a symposium on law and entrepreneurship hosted at the University of North Carolina. Although I had to Skype in for my presentation from Little Rock, Arkansas (where I had just given a separate, unrelated CLE presentation), the panel to which I was assigned was fabulous. Great scholars, with great ideas.
For my contribution to the symposium, I chose to reflect on the unfulfilled promise of the potentially mutually beneficial relationship between an entrepreneur and a business finance lawyer. I recently posted the published work memorializing my thoughts on the topic, featured this spring with several other articles from the symposium in a dedicated edition of the North Carolina Law Review. The brief abstract for my article follows:
Entrepreneurs have the capacity to add value to the economy and the community. Business lawyers—including business finance lawyers—want to help entrepreneurs achieve their objectives. Despite incentives to a symbiotic relationship, however, entrepreneurs and business finance lawyers are not always the best of friends. This Article offers several approaches to bridging this gap between entrepreneurs and business finance lawyers.
My hope in writing this article was to infuse some energy into conversations about the role of business finance and business finance lawyers in the start-up and small business environment. Too many principals of emergent businesses with whom I interact think that business entity choice and formation are divorced--wholly or in major part--from finance. Of course, governance and tax matters (as well as, e.g., intellectual property and employment law concerns) are key. But my personal view is that entrepreneurs and promoters of new businesses should map out their plan for financing firms from the start and take that plan into account in choosing the form of legal entity for those businesses. I may be fighting an uphill battle on this (for a variety of reasons, mostly relating to the limited resource environment in which start-ups and small businesses exist), but I hope the article gives both clients and lawyers in this space something to consider, at the very least.
Tuesday, July 18, 2017
The more I read about social enterprise entities, the less I like about them. In 2014, my colleague Elaine Wilson and I wrote March of the Benefit Corporation: So Why Bother? Isn’t the Business Judgment Rule Alive and Well? We observed:
Regardless of jurisdiction, there may be value in having an entity that plainly states the entity’s benefit purpose, but in most instances, it does not seem necessary (and is perhaps even redundant). Furthermore, the existence of the benefit corporation opens the door to further scrutiny of the decisions of corporate directors who take into account public benefit as part of their business planning, which erodes director primacy, which limits director options, which can, ultimately, harm businesses by stifling innovation and creativity. In other words, this raises the question: does the existence of the benefit corporation as an alternative entity mean that traditional business corporations will be held to an even stricter, profit-maximization standard?
I am more firmly convinced this is the path we are on. The emergence of social enterprise enabling statutes and the demise of director primacy threaten to greatly, and gravely, limit the scope of business decisions directors can make for traditional for-profit entities, threatening both social responsibility and economic growth. Recent Delaware cases, as well as other writings from Delaware judges, suggest that shareholder wealth maximization has become a more singular and narrow obligation of for-profit entities, and that other types of entities (such as non profits or benefit corporations) are the only proper entity forms for companies seeking to pursue paths beyond pure, and blatant, profit seeking. Now that many states have alternative social enterprise entity structures, there is an increased risk that traditional entities will be viewed (by both courts and directors) as pure profit vehicles, eliminating directors’ ability to make choices with the public benefit in mind, even where the public benefit is also good for business (at least in the long term). Narrowing directors’ decision making in this way limits the options for innovation, building goodwill, and maintaining an engaged workforce, to the detriment of employees, society, and, yes, shareholders.
I know there are some who believe that I see the sky falling when it's just a little rain. Perhaps. I would certainly concede that the problems I see can be addressed through law, if necessary. I am just not a big fan of passing some more laws and regulations, so we can pass more laws to fix the things we added. My view of entity purpose remains committed to the principle of director primacy. Directors are obligated to run the entity for the benefit of the shareholders, but, absent fraud, illegality, or self-dealing, the directors decide what actions are for the benefit of shareholders. Period, full stop.
Monday, July 17, 2017
Save the Date!
The Yale Law School Center for Private Law will host a Private Equity Conference on November 17, 2017. The conference will bring leading theorists from law, economics, finance, and sociology into dialogue with people with experience at the highest levels of private equity, including from law practice, financial firms, and institutional investors.
Oliver Hart, winner of the 2016 Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel, will give the keynote address.
Other speakers include:
Jon Ballis, Kirkland & Ellis
Rosemary Batt, Cornell University, ILR School
Neil Fligstein, UC Berkeley Sociology Department
Stephen Fraidin, Pershing Square Capital Management
Will Gaybrick, Stripe
Adam Goldstein, Princeton University Department of Sociology
Victoria Ivashina, Harvard Business School
Andrew Metrick, Yale School of Management
Meridee Moore, Watershed Asset Management
John Morley, Yale Law School
Alan Schwartz, Yale Law School
David Swensen, Chief Investment Officer, Yale University
Location: Yale Law School, 127 Wall St., New Haven, CT
Time: Approximately 9:45 a.m.-4:00 p.m.
Cost: There is no cost associated with this event, though pre-registration is required. Registration information will be available soon at this link.
The conference is sponsored by the Kirkland & Ellis Fund for the Study of Private Law.
Sunday, July 16, 2017
"Current free speech theory and doctrine support the extension of free speech rights to strong AI speakers" 101 Minn. L. Rev. 2481 #corpgov— Stefan Padfield (@ProfPadfield) July 16, 2017
Saturday, July 15, 2017
Could this be the beginning of the end for the event study in Section 10(b) class certification?
Yes, I’m probably overstating, but still, the Second Circuit’s opinion in In re Petrobras Securities, 2017 WL 2883874 (2d Cir. July 7, 2017), definitely takes a step in that direction.
As a recap, a private plaintiff alleging fraud claims under Section 10(b) of the Exchange Act must demonstrate that he or she “relied” on the defendant’s false statements. In Basic Inc. v. Levinson, 485 U. S. 224 (1988), the Supreme Court held that reliance could be demonstrated via the fraud on the market doctrine – namely, the presumption that in an open and developed market, any material, public misstatement is likely to have impacted the market price of the security. The fraud on the market doctrine is what allows Section 10(b) claims to be brought as class actions, since it eliminates the need for plaintiffs to demonstrate reliance on an individual basis. Since Basic, then, battle has been joined between plaintiffs and defendants regarding what counts as an “open and developed” market for class certification purposes.
In recent years, it has become de rigueur for plaintiffs to use an event study to establish the necessary market conditions. An event study is a statistical analysis comparing the change in a security’s price with an event, such as the release of new company-specific information.
The event study methodology, however, has come under heavy academic criticism, the thrust of which is that while it is a useful tool for studying markets generally, its utility is greatly diminished when deployed to examine a single company. See, e.g., Alon Brav & J.B. Heaton, Event Studies in Securities Litigation: Low Power, Confounding Effects, and Bias, 93 Wash. U. L. Rev. 583 (2015).
In Halliburton Co. v. Erica P. John Fund, Inc., 134 S. Ct. 2398 (2014), the Supreme Court held that the Basic presumption represents merely a “modest premise” that public information affects prices. Commenters (including your humble blogger) interpreted Halliburton to mean that courts should loosen their criteria for identifying an “open and developed” market for Basic purposes.
Judge Scheindlin was one of the first judges to take up Halliburton’s invitation. Acknowledging the criticism of event studies, she held that plaintiffs need not submit an event study to prove the existence of an open and developed market, so long as they submit other types of evidence.
In Petrobras, the Second Circuit appeared to follow her lead. Though the Second Circuit stopped just shy of holding class certification does not require an event study – the court claimed that the issue was not squarely presented – it did acknowledge the academic critiques of event studies, and (quoting its earlier caselaw) “explicitly declined to adopt any particular test for the market efficiency of stocks or bonds.” As the court put it, “Event studies offer the seductive promise of hard numbers and dispassionate truth, but methodological constraints limit their utility in the context of single-firm analyses.” The court also noted that the various factors that go into a finding of an open and developed market – analyst coverage, trading volume, and so forth – would be of little use if in fact event studies were required in all instances.
Petrobras could have an enormous impact on securities litigation. If event studies are not required, it may be easier for plaintiffs to win certification in cases involving securities other than exchange listed stocks – such as the notes at issue in Petrobras, as well as preferred stock, over the counter stocks, and so forth. Beyond that, event studies have been critical to proving damages and loss causation; if they are suddenly deemed unreliable, it may open the door to a much wider variety of evidence on these elements, as well.
Friday, July 14, 2017
I highly recommend Jayber Crow by Wendell Berry.
Set in rural Kentucky, Jayber Crow is a story about small town life, community, love/hate, sustainability, and industrialization. The main character, Jonah "Jayber" Crow loses both his parents and his Aunt and Uncle by the age of ten. He spends the next few years in an orphanage before obtaining a scholarship to a local college as a "pre-ministerial" student. Doubting his calling to the ministry, Jayber drops out and returns to his hometown. He serves as the town's only barber, and he also picks up jobs as the local grave digger and church janitor. Jayber narrates, in vivid detail, the exodus from the small town by the younger generation and the invasion of large-scale, profit-focused, corporate farming.
The author, Wendell Berry, warns that "persons attempting to explain, interpret, explicate, analyze, deconstruct, or otherwise 'understand' [this book] will be exiled to a desert island in the company only of other explainers" so I will simply end with a few of my favorite quotes below. I think one of the reasons I so liked this book is because it reminded me of my family's property and of my maternal grandfather, who lived at a pace unknown to most of us and who worked the land with his hands and simple tools.
"You have been given questions to which you cannot be given answers. You will have to live them out--perhaps a little at a time." (54)
"The university thought of itself as a place of freedom for thought and study and experimentation, and maybe it was, in a way. But it was an island too, a floating or a flying island. It was preparing people from the world of the past for the world of the future, and what was missing was the world of the present, where every body was living its small, short, surprising, miserable, wonderful, blessed, damaged, only life." (71)
"Instead of sitting out and talking from porch to porch on the summer evenings, the people sat inside rooms filled with the flickering blue light of the greater world." (258)
"We were, as we said again, making war in order to make peace We were destroying little towns in order to save them. We were killing children in order that children might sleep peacefully in their beds without fear." (294)
"On those weekends, the river is disquieted from morning to night by people resting from their work. This resting involves traveling at great speed, first on the roads and then on the river. The people are in an emergency to relax." (331)
"The Economy does not take people's freedom by force, which would be against its principles, for it is very humane. It buys their freedom, pays for it, and then persuades its money back again with shoddy goods and the promise of freedom." (332)
Update: Here is a trailer for a new film on Wendell Berry, Look & See. Powerful, especially if you grew up in a rural place that is now being "developed," or if have seen beautiful landscapes that you love ruined. "Those who had wanted to go home could never get there now...."
Thursday, July 13, 2017
Wednesday, July 12, 2017
Prior to joining academia, I served as a compliance officer, deputy GC, and chief privacy officer for a Fortune 500 company. I had to learn everything on the job by attending webinars and conferences and reading client alerts. Back then, I would have paid a law school graduate a competitive salary to work in my compliance group, but I couldn’t find anyone who had any idea about what the field entailed.
The world has changed. Now many schools (including mine) offer relevant coursework for this JD-advantage position. I just finished teaching a summer skills course in compliance and corporate social responsibility, and I’m hoping that I have encouraged at least a few of the students to consider it as a viable career path. Compliance is one of the fastest growing corporate positions in the country, and the number of compliance personnel has doubled in the past 6 years. Still, many business-minded law students don’t consider it in the same vein as they consider jobs with Big Law.
This summer, my twelve students met twice a week for two hours at 7:30 pm. In the compressed six-week course, they did the following:
- Heard from compliance officers and outside counsel for public companies and government entities
- Read the same kinds of primary source material that compliance officers and counsel read in practice (such as the Federal Sentencing Guidelines, the Yates Memo, deferred prosecution agreements, and materials from the EU on the upcoming changes to data protection regulation)
- Compared and contrasted CSR reports from WalMart and Target, and reviewed the standards for the Global Reporting Initiative and the UN Global Compact
- Advocated before a board as a worker safety NGO for a company doing business in Bangladesh
- Served as a board member during a meeting (using actual board profiles)
- Wrote a reflection paper on the ideal role and reporting structure of compliance officers
- Considered top employment law and data protection risks for fictional companies to which they were assigned
- Looked at the 10-Ks and CDP report for climate change disclosures after examining the role of socially responsible investors and shareholder resolutions
- Drafted industry-specific risk assessment questionnaires
- Drafted three code of conduct policies
- Wrote a short memo to the GC on health care compliance and the DOJ Yates memo
- Did a role play during a crisis management simulation acting as either a board member, SEC or DOJ lawyer, the CEO, compliance officer or GC and
- Conducted a 20-minute board presentation or employee compliance training (worth the biggest part of the grade).
Perhaps the most gratifying part of the semester came during tonight’s final presentations. The students could pick any topic relevant to the fictional company that they were assigned. They chose to discuss child labor in the supply chain for a clothing company, off-label marketing in the pharmaceutical industry, anti-money laundering compliance in a large bank, and environmental and employment law issues for a consumer product conglomerate. Even though I was not their BA professor, I was thrilled to hear them talk about the Caremark duty, the duty of care, and the business judgment rule in their presentations. Most important, the students have left with a portfolio of marketable skills and real-world knowledge in a fast growing field.
If you have your own ideas on how to teach compliance and CSR, please leave them below or email me at email@example.com.
Clinical Faculty Position
The Ohio State University, Michael E. Moritz College of Law
* * *
Description: The Moritz College of Law invites applications for the position of Assistant Clinical Professor of Law in its Entrepreneurial Business Law Clinic (EBLC), to start in late 2017. The EBLC professor has primary responsibility for directing and teaching the Entrepreneurial Business Law Clinic, which provides third-year law students with the opportunity to learn lawyering skills by representing entrepreneurs and their start-up businesses. EBLC students typically work with clients on all phases of starting a business, including client intake, entity formation, legal business planning, and contract drafting (including employment and independent contractor contracts). When relevant for the client, students also learn how to protect the intellectual property of a business. The EBLC’s clinical professor will have several areas of responsibility, including 1) supervising law students who represent clients under the Ohio Supreme Court's student practice rule 2) classroom teaching of lawyering skills, 3) engaging with the local and regional entrepreneurial community, and 4) participating in the life and governance of the College of Law.
We will consider all applicants; however, we prefer candidates with significant experience in representing entrepreneurs and early-stage companies. Candidates also should have an excellent academic record that demonstrates potential for clinical teaching and preparation of clinical educational materials. Candidates should be admitted to the Ohio Bar or eligible for admission in Ohio. The starting salary range will be $78,000 - $81,000 for a 12-month contract; full University fringe benefits are provided as well. The ideal starting date will be November 15, or as soon thereafter as possible. The successful candidate will begin teaching in January 2018.
Application Instructions: A resume, references, and cover letter should be submitted to Professor Paul Rose, Associate Dean for Academic Affairs, The Ohio State University Moritz College of Law, 55 West 12th Avenue, Columbus, Ohio 43210. Send e-mail applications to firstname.lastname@example.org. Applications will be reviewed immediately and will be accepted until the position is filled; preference will be given to applications received before September 1st.
The Ohio State University is committed to establishing a culturally and intellectually diverse environment, encouraging all members of our learning community to reach their full potential. The Ohio State University is an equal opportunity employer. All qualified applicants will receive consideration for employment without regard to race, color, religion, sex, sexual orientation, gender identity, national origin, disability status, or protected veteran status.
About Columbus: The Ohio State University campus is located in Columbus, the capital city of Ohio. Columbus is the center of a rapidly growing and diverse metropolitan area with a population of over 1.5 million. The area offers a wide range of very affordable housing, many cultural and recreational opportunities, excellent schools, and a strong economy based on government as well as service, transportation, and technology industries (see http://columbusregion.com/). Columbus and its many suburbs have consistently been rated as one of the Top U.S. places for quality of life. Additional information about the Columbus area is available at http://www.columbus.org.
Tuesday, July 11, 2017
CSLSA is an organization of law schools dedicated to providing a forum for conversation and collaboration among law school academics. The CSLSA Annual Conference is an opportunity for legal scholars, especially more junior scholars, to present working papers or finished articles on any law-related topic in a relaxed and supportive setting where junior and senior scholars from various disciplines are available to comment. More mature scholars have an opportunity to test new ideas in a less formal setting than is generally available for their work. Scholars from member and nonmember schools are invited to attend.
Please click here to register. The deadline for registration is September 2, 2017.
Hotel rooms are now available for pre-booking. The conference hotel is the Holiday Inn Conference Center in Carbondale. To reserve a room, call 618-549-2600 and ask for the SIU School of Law rate ($109/night) or book online and use block code SOL. SIU School of Law will provide shuttle service to and from the Holiday Inn & Conference Center for conference events. Other hotel options (without shuttle service) are listed on our website. Please note that conference participants are responsible for all of their own travel expenses including hotel accommodations.
For more information about CSLSA and the 2017 Annual Conference please subscribe to our blog.
Most LLC statutes provide an exclusive charging order remedy that creditors can use against a member's interest. A charging order is effectively a lien on the member's transferable interest (i.e., the member's financial rights) in the LLC. If a court imposes a charging order, the judgment creditor is entitled to any distributions made by the LLC that would otherwise have gone to the debtor-member. The entitlement to distributions continues until the judgment creditor has received enough proceeds to pay off the judgment. The creditor is not permitted, however, to execute on a member's interest in the same way that a creditor could normally execute on the debtor-member's non-exempt personal property. If the LLC does not make sufficient distributions, some statutes allow a court to order foreclosure of the charging lien, which effectively results in a sale of the debtor-member's transferable interest. Significantly, even with foreclosure, the purchaser at the foreclosure sale will only become a transferee and will not have the status of a member (nor the rights of a member). This charging order scheme protects the rights of the non-debtor members to control the admission of new members to the LLC.
In Olmstead v. Federal Trade Commission, 44 So. 3d 76 (Fla. 2010), the Supreme Court of Florida held that, in a single-member LLC, the statutory charging order procedure did not preclude a creditor from executing on an ownership interest. The court acknowledged that a charging order provision is generally designed to preserve a non-debtor member’s right to block the admission of a new member (and the exercise of accompanying management rights), but it implied that this right was not implicated when the debtor was the sole member of the LLC. The court was particularly influenced by the fact that the Florida LLC statute at the time did not indicate that a charging order was a creditor’s exclusive remedy, while the Florida general partnership and limited partnership statutes did so provide. Although the court appeared to limit its holding to disputes involving a single-member LLC, the dissent noted that the court’s emphasis on the lack of exclusivity language in the statute would seem to extend its holding to multiple-member LLCs.
In response to Olmstead, the Florida legislature amended its charging order statute to make it clear that multiple-member LLCs were not affected by the decision. With respect to single-member LLCs, however, the Florida statute provides that a court may order a foreclosure sale of the member’s interest. The purchaser at the sale “obtains the member’s entire [LLC] interest, not merely the rights of a transferee”; consequently, “[t]he purchaser at the sale becomes the member of the [LLC].” Fla. Stat. § 605.0503.
The 2013 Revised Uniform LLC Act also provides that a charging order (with the possibility of foreclosure) is a creditor’s exclusive remedy, see RULLCA (2013) § 503(h), but it carves out a separate Olmstead-like treatment for single-member LLCs. If a court orders foreclosure of a charging order in a single-member LLC, “the purchaser at the sale obtains the member’s entire interest, not only the member’s transferable interest,” and “the purchaser thereby becomes a member.” Id. § 503(f). In discussing this procedure, the comment to § 503 states the following:
The charging order remedy—and, more particularly, the exclusiveness of the remedy—protect the “pick your partner” principle. That principle is inapposite when a limited liability company has only one member. The exclusivity of the charging order remedy was never intended to protect a judgment debtor, but rather only to protect the interests of the judgment debtor’s co-owners.
Put another way, the charging order remedy was never intended as an “asset protection” device for judgment debtors. Accordingly, when a charging order against an LLC’s sole member is foreclosed, the member’s entire ownership interest is sold and the buyer replaces the judgment debtor as the LLC’s sole member.
What do you think? Did the Revised Uniform LLC Act make the right decision in following Olmstead for single-member LLCs?
Monday, July 10, 2017
Conference Announcement and Call for Papers
2017 Junior Scholars #FutureLaw Workshop 2.0 at Duquesne
The conference is organized by Seth Oranburg, Assistant Professor, Duquesne University School of Law. Funding is provided in part by the Federalist Society. All papers are selected based on scholarly merit, with an emphasis on scholarly impact, topical relevance, and viewpoint diversity.
September 7-8, 2017
By invitation only
OVERVIEW: The conference aims to foster legal and economic research on “FutureLaw” (as defined below) topics particularly by junior and emerging scholars by bringing together a diverse group of academics early in their career focusing on cutting-edge issues.
TOPICS: The conference organizers encourage the submission of papers about all aspects of FutureLaw, which includes open-data policy, machine learning, computational law, legal informatics, smart contracts, crypto-currency, block-chain technology, big data, algorithmic research, LegalTech, FinTech, MedTech, eCommerce, eGovernment, electronic discovery, computers & the law, teaching innovations, and related subjects. FutureLaw is an inter-disciplinary field with cross-opportunities in crowd science, behavioral economics, computer science, mathematics, statistics, learning theory, and related fields. Papers may be theoretical, archival or experimental in nature. Topics of interest include, but are not limited to:
- Innovation in legal instruments (e.g., new securities, new corporate forms, new litigation procedures, etc.)
- Innovation in legal technology (e.g., new law firm governance, legal automatic, democratizing access to legal services, legal chatbots, etc.)
- Innovation in legal teaching (e.g., new classroom techniques, distance learning studies, experiential learning, transactional clinics, etc.)
Papers regarding the effect of these innovations (e.g., diversity, inclusion, equity, equality, fairness, return on investment, productivity, security, etc.) are also welcome.
DUAL SUBMISSION PROCESS: For the 2017 conference, the FutureLaw Workshop and the Duquesne Law Review (DLR) announce a new, non-exclusive, combined submission process. At your discretion, a paper submitted to the 2017 FutureLaw Workshop 2.0 may also be considered for publication by DLR free of charge. The rules for this dual submission process are as follows:
(1) You must apply online at http://law.duq.edu/events/junior-scholars-futurelaw-workshop-20. Submitted papers will be considered for publication by the DLR free of charge. A reply to your submission in acceptance to the Workshop or invitation to publish in the DLR is your option, not your obligation.
(2) If you do not wish to be considered by the DLR while submitting for the FutureLaw Workshop, please indicate this in the comments field provided.
(3) Papers submitted for dual consideration must not already be accepted by another journal.
(4) While under consideration as a dual submission for the 2017 FutureLaw Workshop and invitation by the DLR, a paper may be submitted to another journal (or JAR).
PAPER SUBMISSION PROCEDURE: Please upload a PDF version of your working paper, by August 4, 2017 via the online submission form at http://law.duq.edu/events/junior-scholars-futurelaw-workshop-20. When you select the radio button for “Attendance Category: Participant,” you will see an option to upload a paper.
The FutureLaw Workshop may reimburse presenters and discussants reasonable travel expenses and accommodations. Please let us know if your academic institution does not provide you with travel and accommodation expenses.
CONFERENCE ATTENDANCE: Attendance is free and by invitation only. Academics interested in receiving an invitation to attend but who do not wish to submit a paper may apply online as “observers” at http://law.duq.edu/events/junior-scholars-futurelaw-workshop-20.
Sunday, July 9, 2017
Saturday, July 8, 2017
As most readers of this blog are likely aware, Hobby Lobby is in the news again.
Hobby Lobby is a privately-held corporation that runs a chain of arts and crafts stores. Its shareholders consist of members of the Green family, who also manage the corporation on a day to day basis. The Greens are religious Christians, and Hobby Lobby’s statement of purpose declares that the company will be run in accordance with biblical principles.
When Hobby Lobby last made the news, it had just won its case in the Supreme Court, Burwell v. Hobby Lobby Stores. The Greens argued, successfully, that the Affordable Care Act impermissibly burdened their religious beliefs by requiring that Hobby Lobby provide birth control coverage to its employees. The difficulty with this argument, from a corporate law perspective, is that it draws no distinction between burdens placed on Greens in their personal capacities, and burdens placed on the Hobby Lobby corporation itself. (The Supreme Court opinion did little to clarify the matter, which is why I use it in my class as part of my introduction to business law).
Now the company making headlines again, for smuggling ancient artifacts out of Iraq.
[More under the jump]