Thursday, August 5, 2021

Oregon Law is Hiring for Business Law!

The University of Oregon School of Law invites applications for a tenure-track assistant professor focusing on business/corporate law, to begin in August 2022. Oregon Law has a nationally recognized Business Law Program and we are excited to continue building our institutional expertise in that area. Applicants must have scholarship, teaching, applied research experience, and/or practice expertise in business law, corporate law, and/or related fields. All methodologies and approaches are welcome.

To review our job posting and application instructions, please click here:  

The University of Oregon School of Law is a dynamic ABA-accredited law school and Oregon’s only public law school. Degrees offered include Juris Doctor (JD), Master of Laws (LLM), Master of Conflict and Dispute Resolution (CRES), and a minor in undergraduate legal studies. Oregon Law’s mission is to provide a world-class education. We prepare students through excellent classroom teaching paired with a multitude of practical experience opportunities and robust professional development. Our faculty produce exceptional research and scholarship. We accomplish our mission in a positive, inclusive environment where we strive to provide everyone opportunities to grow, contribute, and develop. Our aim is to learn, teach, and practice the principles of equity and justice as critical foundations for our overall effort to achieve excellence as a top-ranked law school. Success in this work requires a diverse group of people in various faculty and staff roles working in one of our two locations, Eugene and Portland. The University of Oregon is located within the traditional homelands of the Southern Kalapuya. Learn more about Oregon Law at

August 5, 2021 in Joan Heminway, Jobs | Permalink | Comments (0)

Wednesday, August 4, 2021

Open Faculty Position in Business Law: California State University Northridge

Dear BLPB Readers:

The Department of Business Law at California State University Northridge (CSUN) is hiring!

The Department of Business Law invites applications for a tenure-track position at the Assistant Professor level. J.D. or J.S.D. from an ABA-accredited law school and admission to the bar at time of appointment required.  In addition, previous experience and proven excellence in teaching law, business ethics, or related courses at the university level, a history of scholarly research and publications, experience practicing law, and business experience are preferred. An LL.M., M.B.A. or other graduate degree in business or economics from an accredited college or university, law review membership, and experience as a law clerk at the appellate level are desirable. At time of appointment, the candidate must meet and must continue to maintain current AACSB International “Scholarly Academic” standards of qualification throughout their tenure. 

Complete job posting information is here: Download 22-02 Business Law (CSUN)

August 4, 2021 in Colleen Baker, Jobs | Permalink | Comments (0)

Tuesday, August 3, 2021

Stetson Law - Business Law Hiring!

STETSON UNIVERSITY COLLEGE OF LAW seeks to fill up to two entry-level tenure-track positions, with a possibility of a third visiting position. While our needs are flexible, we have a particular focus for entry-level positions relating to our newly-created Business Law Concentration, especially in areas of Business Entities, Mergers and Acquisitions, and Securities Regulation, as well as in the areas of Intellectual Property (emphasis on Patent Law) and Professional Responsibility. We may also have a need for a visitor in Constitutional Law or Legal Writing. Other doctrinal areas may be considered depending on our developing institutional needs.

Located in Florida’s Tampa Bay area, the nation’s nineteenth largest metro area, Stetson was established in 1900 and is Florida’s oldest law school. Our main campus is in Gulfport, just outside St. Petersburg. We also have a part-time program with classes on both the main campus and our satellite campus in downtown Tampa. Stetson has earned a national reputation for its advocacy, elder law, legal writing, and higher education programs, and has Centers for Excellence in Advocacy, Elder Law, and Higher Education Law and Policy. Stetson nurtures a vibrant intellectual community, situated on a beautiful campus. We encourage potential applicants to visit our website at to learn more about our school, our community and our programs.

Stetson encourages applications from women, minorities, LGBTQ+ candidates, and all others who will contribute to our stimulating and diverse cultural and intellectual environment. All applicants must have a strong academic record and be committed to outstanding teaching and scholarship. Stetson’s Equal Employment Opportunity policy is available at

The Faculty Appointments Committee will continue to review applications until positions are filled.

Contact: Applicants should send a cover letter indicating teaching and scholarly interests, a current CV, and at least three professional references to Professors Ellen Podgor and James Fox at or by standard mail to Professors Podgor and Fox at Stetson University College of Law, 1401 61st Street South, Gulfport, FL 33707.

August 3, 2021 in Joan Heminway, Jobs | Permalink | Comments (0)

Detroit Mercy Law - Business Law is One Area of Need


Hiring Announcement

University of Detroit Mercy School of Law

Tenure-Track Faculty Positions for 2022-2023

University of Detroit Mercy School of Law is seeking two to three entry-level, tenure-track faculty for the 2022-2023 academic year. Our primary hiring needs are in the areas of Constitutional Law, Criminal Law, Business Law, and Legal Writing, though we welcome inquiries from interested candidates in other areas, including clinicians. Detroit Mercy Law has a unified tenure track regardless of one’s area of teaching focus and supports scholarship from all tenure-track faculty.     

Candidates should have a Juris Doctor degree and send a current CV or resume, along with a cover letter expressing their interest and qualifications, to Prof. Erin R. Archerd, Chair of the Faculty Recruiting Committee, at Candidates may also submit additional materials such as research statements, prior publications, and teaching evaluations. Applications will be reviewed on a rolling basis, with initial, online interviews to begin in Summer 2021.

About Detroit Mercy Law

Led by our new Dean, Jelani Jefferson Exum, Detroit Mercy Law offers a curriculum that complements traditional theory- and doctrine-based course work with intensive practical learning. Students must complete at least one clinic, one upper-level writing course, one global perspectives course, and one course within our Law Firm Program, an innovative simulated law-firm practicum. Detroit Mercy Law also offers a Dual J.D. program with the University of Windsor in Ontario, Canada in which students earn both an American and a Canadian law degree in three years and gain a comprehensive understanding of two distinct legal systems.

Detroit offers a dynamic variety of culinary, cultural, entertainment, and sporting attractions. Detroit Mercy Law is located one block from the riverfront in Downtown Detroit, within walking distance of federal, state, and municipal courts, the region’s largest law firms, and major corporations such as General Motors, Quicken Loans, and Comerica Bank.

Michigan’s largest, most comprehensive private university, University of Detroit Mercy is an independent Catholic institution of higher education sponsored by the Religious Sisters of Mercy and Society of Jesus. We seek qualified candidates who will contribute to the University's urban identity, social justice mission, commitment to diversity and inclusion, and tradition of scholarly excellence. University of Detroit Mercy is an Equal Opportunity Affirmative Action Employer with a diverse faculty and student body and welcomes persons of all backgrounds.

It is the policy of the University of Detroit Mercy to provide equal opportunity to all employees and applicants for employment. The University will not discriminate in employment on the grounds of race, color, religion, ancestry, national origin, age, sex, height, weight, marital status, sexual orientation, veteran status, medical condition or disability. This policy applies to all terms, conditions and privileges of employment including recruitment, hiring, placement, employee development, promotion, transfer, compensation, benefits, discipline and termination.

August 3, 2021 in Joan Heminway, Jobs | Permalink | Comments (0)

Monday, August 2, 2021

Mitchell Hamline Law - Business Law-Related Openings

Mitchell Hamline School of Law--a leader in pedagogical innovation dedicated to expanding access to high-quality legal education--seeks candidates for five tenure-track/tenured faculty positions beginning in July 2022.

Our faculty has committed to help Mitchell Hamline become an anti-racist law school. We seek to recruit and retain a diverse faculty as a reflection of our commitment to serve the people of our state and nation; to improve the legal profession and expand access to justice; to maintain the excellence of the law school; and to offer our students richly varied perspectives and ways of knowing and learning.

We are looking for:

  • Candidates with experience in law practice, law-related professional fields, or academia who are interested in teaching in any field. We have needs in Civil Procedure, Constitutional Law, Contracts, Criminal Law, Criminal Procedure, Dispute Resolution, Intellectual Property, Legal Writing, Property, Torts, Trial Advocacy, and in our clinical law program.
  • Candidates whose law-practice, teaching, research, or community-service experience has prepared them to contribute to our commitment to diversity and excellence.
  • Candidates who are interested in, and excited about, teaching in our innovative blended learning program (

Candidates must have a J.D. or foreign equivalent degree. We strongly encourage those who attended or taught at the following categories of institutions to apply:

  • Historically Black Colleges and Universities and Law Schools (HBCUs) or Predominantly Black Institutions (PBIs)
  • Tribal Colleges and Universities (TCUs), Native American Serving Non-Tribal Institutions (NASNTIs), or Alaska Native and Native Hawaiian Serving Institutions (ANNHs)
  • Hispanic Serving Institutions (HSIs)
  • Asian-American & Native Pacific Islander-Serving Institutions (AANAPISIs)

We welcome candidates whose scholarly approach contributes to the understanding of law's impact on marginalized groups or advances equitable access and diversity in education; and candidates whose teaching incorporates effective strategies for educational advancement of students in underrepresented groups.

Our law school is in an historic area of Saint Paul, on the Indigenous homelands of the Dakota Oyate, home to the Penumbra and Fitzgerald theaters, a diverse array of restaurants, and one of the finest chamber orchestras in the world. Just across the river, Minneapolis is the home to the Walker Art Center, First Avenue, the Guthrie Theater, the Minneapolis Institute of Art, and one of the nation's liveliest performing arts scenes. The city was the birthplace of the American Indian Movement and continues to boast one of the largest urban American Indian populations in the country. Eleven federally recognized tribes, including four Dakota and seven Ojibwe tribes, remain within the State of Minnesota. Minneapolis and Saint Paul are among the top cities for the arts and entertainment, active lifestyles, non-profit organizations, and exceptional levels of volunteer engagement.

Candidates must submit: (1) a resume; and (2) a cover letter that discusses their interest in the position and how their law-practice, teaching, research, or community-service experience have prepared them to contribute to our commitment to diversity and excellence.

The committee will consider applications on a rolling basis until all positions are filled. To be considered for our first set of interviews, submit your application by September 1.

For questions about the application process, contact Professor Tom Cobb, Appointments Committee Chair, at

Mitchell Hamline School of Law is an Equal Opportunity, Affirmative Action Employer. We are dedicated to building a diverse employee base that is committed to teaching and working in an environment focused on equity and inclusion. Each employee is responsible for ensuring equity and inclusion is rooted into their day-to-day work. Employees must strive to promote equity through continuous learning and improvement, the positive development of our community, and the identification and removal of barriers.

August 2, 2021 in Joan Heminway, Jobs | Permalink | Comments (0)

Tennessee Law - Dean Search

I write to encourage applications to our Dean search.  Business law profs are welcome at UT Law (given our business law center and clinics), but so are others!  So, pass this on to folks you know who may be interested.  Copies of this announcement are also being posted to and distributed through the usual channels.  But I am serving on the Dean search committee this time around, so I am also promoting this position here.  I am happy to answer questions.



Dean, College of Law 

Knoxville, TN



The University of Tennessee, Knoxville (UTK) invites applications and nominations for the position of Dean of the College of Law (UT Law). The university seeks an experienced, collegial, and energetic leader who will provide the inspiration, cohesion, and vision for UT Law and serve as its chief academic and administrative officer. The dean reports to the provost and works closely with the vice provosts, deans of other academic colleges, and UT Law faculty, staff, students, alumni, and other stakeholders (including members of the Tennessee bench and bar), in setting overall academic and strategic priorities for UT Law, allocating resources to move those priorities forward, and developing a collaborative community committed to student success.

As the leader of the state’s flagship law school at a land-grant university, the dean must recognize and support the institution’s duty to serve the people of Tennessee. Because UT Law graduates practice in a wide variety of settings that are subject to change over time, the dean should recognize the significance of preparing law students for diverse practice areas and professions. Moreover, the dean must be able to balance an internal role that engages the law school community with an external role that engages alumni, the state and local bench and bar, state legislators, local governmental officials, and other Tennesseans.

The next dean inherits an active, involved faculty committed to shared governance, a dedicated staff, a strong student body, a supportive campus administration, and a loyal alumni base. UT Law embraces a unitary tenure track for doctrinal, clinic, legal-writing and library faculty, and has developed an egalitarian culture among its faculty, staff, and students. The successful candidate will be a collaborative, transparent, and inspiring leader who is equally committed to teaching, service, and scholarship. The dean will further UT Law’s commitment to diversity, equity, and inclusion; continue to develop a successful fund-raising and alumni-engagement program; promote and, where possible, advance UT Law’s local, regional, and national reputation; and support a community that is engaged, transparent, and inspirational for all its stakeholders.

Candidates should be able to demonstrate relevant experience in managing a comparable enterprise within a complex system like UTK; leading and inspiring a diverse, mission-driven community and stakeholder base; and promoting engagement inside the College, across the campus and the greater university, and within the legal profession and the public. The successful candidate will have strong interpersonal skills, a capacity for creative thinking, and the enthusiasm and demonstrated ability to lead with a spirit of service.

Continue reading

August 2, 2021 in Joan Heminway, Jobs | Permalink | Comments (0)

Saturday, July 31, 2021

ScarJo, SPACs, and LexisNexis

In the 1990s, newspapers had a problem.  They wanted their articles to be included in electronic databases like LexisNexis, but such databases being a relatively new technology, the newspapers had not bothered to include database republication rights in their agreements with freelance reporters.  Some publishers argued that their existing contracts covered database inclusion, but the Second Circuit wasn’t having it.  See Tasini v. New York Times Co., 206 F.3d 161 (2d Cir. 2000).  After the Supreme Court held that the articles could not be included in databases without the reporters’ permission, news organizations updated their contracts to cover electronic database republication.

Scarlett Johansson and Disney are now embroiled in their own dispute over a contract impacted by new technology.  Johansson’s contract for the Black Widow movie included a fairly standard provision (at least for big name actors) that she be entitled to a cut of the box office, and to ensure that the box office receipts would be worth her while, she extracted a promise that the movie would receive a “wide theatrical release of the Picture i.e., no less than 1,500 screens.”  In the wake of Covid-19, however, Disney chose to simultaneously release the film in theaters and on its streaming platform, which likely reduced the box office take and Johansson’s cut.  She’s now suing the company for $50 million, but however the case comes out, I think we can safely say that box office sharing contracts going forward will explicitly account for streaming.

And now it seems that shareholder agreements are also being affected by a new “technology” of a sort, namely, SPACs.  In two cases pending in Delaware Chancery, investors in private companies slated for a SPAC merger are arguing that their shareholder agreements impose certain obligations on them in the event of a traditional IPO, but impose no obligations in the event that a company goes public via SPAC.

In the first, Brown v. Matterport et al., 2021-0595, the plaintiff is the former CEO.  He claims that he agreed to a lockup for his shares in the event of an underwritten IPO, but that no such restriction attaches for a de-SPAC transaction – and that Matterport is improperly trying to bind him to a lockup via the merged company’s bylaws.

In the second, Pine Brook Capital Partners v. Better Holdco et al., 2021-0649, a venture capital firm claims that its shareholder agreement only gives the company redemption rights for some of its shares in the event of an underwritten IPO – not a de-SPAC transaction.  (The firm also claims that the company is improperly requiring that larger shareholders – including itself – agree to a lockup as a condition to receiving merger consideration; the complaint does not specify whether its shareholder agreement provides for a lockup in the event of an IPO.)

SPACs have recently become an attractive alternative to IPOs, at least in part because of regulatory arbitrage.  Specifically, the common wisdom has been that projections issued in connection with a SPAC IPO are protected by the PSLRA’s safe harbor while projections issued in connection with a traditional IPO are not.  Also, it seems that while underwriter compensation must be fully disclosed in connection with a traditional IPO, SPAC IPOs may give more leeway for underwriters/investment banks to play multiple roles and leave some fees undisclosed.  But with the Matterport and Better cases, we’re seeing the downside: shareholder agreements were not drafted with SPACs in mind.  I assume that will change for shareholder agreements going forward, but it creates something of a holdup problem right now.

July 31, 2021 in Ann Lipton | Permalink | Comments (0)

Friday, July 30, 2021

Hiring Announcement -- University of Kansas School of Law

The University of Kansas School of Law invites applications from entry level and junior lateral candidates for two tenure-track, associate professor positions to begin fall 2022.  We will consider candidates in all subject areas, but are particularly interested in the areas of (1) property and (2) business, corporate finance, and transactional law, as well as candidates whose work engages these subjects in dialogue with other areas of law. Qualified candidates who will contribute to the diversity of our law school community, including a diversity of scholarly approaches, are especially encouraged to apply.

Applicants must possess a J.D. from an accredited U.S. law school or equivalent degree, and must demonstrate strong scholarly potential and a commitment to excellence in teaching.  The School actively seeks applications from members of groups that are underrepresented in higher education.

Review of applications begins in August and will continue until the positions are filled. Initial interviews will be conducted via Zoom. We will review candidate materials posted in the AALS Faculty Appointments Register (FAR), and also invite applications from candidates not participating in the FAR. Applications must be submitted online:  

and should include a cover letter, a CV/resume, a detailed statement of research interests and future plans, a statement related to diversity, a writing sample, and the names of three references. Materials such as teaching evaluations or additional samples of scholarly work may be requested of candidates at a later date. For fullest consideration, candidates not participating in the FAR should apply by August 25, 2021.

Contact:  Professor Uma Outka, Chair, Faculty Appointments Committee,  

Qualified applicants will receive consideration without regard to race, color, ethnicity, religion, sex, national origin, age, ancestry, disability status as a veteran, sexual orientation, marital status, parental status, gender identity, gender expression or genetic information.

July 30, 2021 | Permalink | Comments (0)

Referral Fee Litigation for Class Action Plaintiffs

Anthony Rickey and I wrote about hidden conflicts in securities class action litigation and used the State Street case as a key example.  When the special master investigated in that action, discovery revealed an email from Damon Chargois to Labaton, stating:

“We got you ATRS as a client after considerable efforts, political activity, money spent and time dedicated in Arkansas, and Labaton would use ATRS to seek legal counsel appointments in institutional investor fraud and misrepresentation cases. Where Labaton is successful in getting appointed lead counsel and obtains a settlement or judgment award, we split Labaton’s attorney fee award 80/20 period.”

The New York Times reported on the revelations and indicated that the court, client, and class had not been informed of the relationship:

The payment to the lawyer, Damon Chargois, had not been previously disclosed. Mr. Rosen’s investigation unearthed documents showing that Mr. Chargois did no work on the litigation other than help introduce the Arkansas Teacher Retirement System to Labaton roughly a decade ago. In 2011, Labaton filed a lawsuit for the retirement fund that was later consolidated with similar lawsuits filed by a few other law firms.

None of those other law firms, nor Judge Wolf, were aware of the payment to Mr. Chargois. The Arkansas retirement fund also was unaware of any fee arrangement.

In an interesting development, Damon Chargois is now seeking to collect on the referral fee agreement.  He alleges that Labaton had repeatedly pushed him to take less than what he was owed on their agreement.  Reuters' Alison Frankel has an excellent article covering the dispute.  The case will be interesting to watch to see if more information about referral relationships emerges.

July 30, 2021 | Permalink | Comments (0)

Thursday, July 29, 2021

Future Business Law Professors Conference


Presented by the John F. Scarpa Center for Entrepreneurship and Law


Friday, September 10, 2021

9:00 a.m.–3:00 p.m.

Virtual Event


Click to Register


The John F. Scarpa Center for Entrepreneurship and Law will host the second Future Business Law Professors Conference on Friday, September 10. All visiting assistant professors, fellows, researchers, law clerks, practitioners and others who are considering entering the higher education academic teaching market in business law—including business associations, securities regulation, corporate finance and business ethics—are invited to attend. This year’s conference will be virtual.

Participants will learn more about the business law teaching market, receive advice on how to be a successful candidate and meet future colleagues. Attendees will have the opportunity to participate in mock interviews and get a sneak-peak into the hiring process from current business law faculty. Some will be able to present their job talk paper to leaders in the field and receive feedback.

Faculty from University of Colorado Law School, Georgetown University Law Center, George Washington University Law School, University of Michigan Law School, University of Nebraska College of Law, University of Pennsylvania Carey Law School, University of Pittsburgh School of Law, Rutgers Law School, Temple University Beasley School of Law and Villanova University Charles Widger School of Law are scheduled to participate.

Please note registration is required. Attendees will receive an email from Eventbrite with the Zoom link on the day of the event.

July 29, 2021 | Permalink | Comments (0)

Wednesday, July 28, 2021

Open Faculty Position in Financial Law: Surrey Law School

Dear BLPB Readers:

Surrey Law School is recruiting a tenure-track or tenure-equivalent position in Financial Law (Lecturer or Senior Lecturer). They have an energetic and highly international faculty, and the University of Surrey campus is ideally situated in the leafy English countryside a mere 25 miles from central London (30 min by train). The School comprises three main research clusters: The Surrey Centre for Law and Philosophy, the Surrey Centre for International and Environmental Law and the Law and Technology Hub. This new position in Financial Law is part of an investment in strengthening our Law & Technology Pathway LLB degree, and our FinTech & Policy MSc programme run with Surrey Business School, among other strategic initiatives. The School is in a period of growth and the hiring committee is interested in considering applications also from US-trained lawyers and legal academics. For more information about the position and to apply, please see link below. (Note the application deadline of September 6th.)

July 28, 2021 in Colleen Baker | Permalink | Comments (0)

Monday, July 26, 2021

Guest Post from Alicia Plerhoples: The Anti-Racist Corporation?

The following comes to us from friend-of-the-BLPB Alicia Plerhoples.

How to Be An Antiracist author Ibram X. Kendi urges individuals to undertake the difficult work to become anti-racist. In Kendi’s view, racism is not a spectator sport. One can either recognize their participation in racist concepts and institutions that benefit some and work to dismantle racism, or one participates in racist concepts and institutions to perpetuate them. As he explains in Stamped from the Beginning, the 582-page academic version of his popular press book, a person can hold both racist and anti-racist views at the same time, under an assimilationist race theory.

As a business law professor, I am concerned with whether a corporation can be anti-racist. If so, what corporate policies, processes, programs, and culture does an anti-racist corporation have? These questions are imperative given America’s reckoning with racism and in my view, the disproportionate power and excessive protections that corporations have consolidated in American law and the economy.

One might quickly jump to my second question without considering the first. Can a corporation be anti-racist? Slavery’s Capitalism authors Sven Beckert and Seth Rockman identify slavery as the key driving force in the development of the American economy, including American corporations, before the Civil War. “Slavery, as the foundational American institution, organiz[ed] the nation’s politics, legal structures, and cultural practices with remarkable power to determine the life chances of those moving through society.” Corporations, like individuals, benefit from a racially inequitable sociopolitical and legal framework, including, for example, the racial wealth gap, which affects everything from who the corporation’s founders and investors are to who its employees, customers, and suppliers are. According to Majority Action, “business-as-usual can never be neutral in an economy founded on systemic racism.”

Applying Dr. Kendi’s anti-racist theory, corporations can work to be anti-racist similarly to individuals who have been impacted by sociopolitical notions of human value originating from rationalizations of slavery.

What does an anti-racist corporation look like? Racial equity is “the condition that would be achieved if one’s racial identify no longer predicted, in a statistical sense, how one fares.” How does a corporation embody racial equity?

A year ago, partners at Wachtell wrote that “ESG metrics…provide valuable tools and models to help both public and private companies and their investors and other stakeholders (including employees, customers, business partners and communities) understand their progress on [systemic racism and injustice] issues.” While many engaged in ESG work focus solely on the environment (particularly given the climate crisis), we should focus ESG on anti-racism too.

The same Wachtell partners recently reflected on the various racial equity tools that they have seen corporations use during the past year. These tools include:
• Hiring for Diversity, Equity, and Inclusion (DEI) roles;
• Expanding DEI roles;
• Anti-bias training;
• Inclusive hiring practices;
• Audits of DEI progress and effectiveness;
• Public disclosure of DEI goals and targets, including workforce data such as EEO-1 data;
• Executive compensation tied to DEI performance;
• Supporting and increasing supplier diversity; and
• Board and management diversity.

Some racial equity tools go further, calling for corporations to undertake and publicly disclose results of racial equity audits. A racial equity audit analyzes the corporation’s “adverse impacts on non-white stakeholders and communities of color.” Indeed, the 2021 proxy season saw several shareholder proposals calling for racial equity audits. Majority Action, a nonprofit organization that supports investors in holding corporations accountable for ESG and long-term value creation, supports such shareholder proposals and maintains a list of 2021 proposals here.

If a corporation’s leadership were to adopt all of these racial equity tools, would it be an anti-racist corporation? I suspect not given external forces at play. What else would a corporation’s leadership need to do to consider itself an anti-racist corporation? As I explore these issues in a law review article and other project-based work, I would love to hear thoughts from my business law professor colleagues.

Alicia's thoughts and work in this area overlap with my own on sexism and boards of directors.  I cannot help but wonder, given that, what makes an anti-sexist board of directors . . . .  Hmm.  Something to contemplate. 

Look for more from Alicia on this as her work in this area continues.  We appreciate her publishing this post with us!

July 26, 2021 in Corporations, Joan Heminway | Permalink | Comments (0)

Saturday, July 24, 2021

Robinhood and the Section 11 Defense

Robinhood is gearing up for its IPO, and one of its gimmicks is to allot 20-35% of its newly issued shares to its own customers, who trade on its platform.  This unusual allocation is being billed, in part, as evidence of its commitment to “democratize finance,” and it’s not the first time a company has used its IPO allocations as, essentially, a branding mechanism.

But this New York Times piece also points out that Robinhood is allowing its own employees to trade up to 15% of their shares right away, which is pitched as being of a piece with Robinhood’s nontraditional stock allocations.  And, in fact, Robinhood’s S-1 says:

up to 15% of the shares of our outstanding Class A common stock and securities directly or indirectly convertible into or exchangeable or exercisable for our Class A common stock held, as of the date of this prospectus, by our directors, officers and current and former employees and consultants (other than our founders and our Chief Financial Officer, who are discussed above) …, with such 15% calculated after excluding any shares withheld for taxes associated with IPO-Vesting Time-Based RSUs, may be sold beginning at the commencement of trading on the first trading day on which our Class A common stock is traded on Nasdaq

The registration statement says that another 15% of employee shares can be sold after 90 days.

Now, I’m not going to speculate as to Robinhood’s actual motives for permitting its employees and directors to trade 15% of their stock immediately, but I will note that if these shares – which were presumably issued pursuant to a Rule 701 plan and are not registered – become immediately tradeable, that will make it much more difficult for open-market purchasers in the future to bring any Section 11 claims.

Section 11, of course, permits purchasers of registered securities to sue when the security’s price drops below the offering price, if the registration statement contains false or omitted information.  Section 11 claims don’t require a showing of scienter, but there’s a catch: the plaintiff must be able to show that his or her shares were, in fact, issued pursuant to the defective registration statement; unregistered shares, or shares issued pursuant to some other registration statement, won’t qualify.  Which means, if there’s a “mixed” pool of shares trading – some of which were issued on the defective registration statement, and some of which were not – an open-market purchaser will have trouble establishing that his or her shares were part of the registered group, which could bar Section 11 claims no matter how deceptive the registration statement may turn out to have been.

As I previously posted, this requirement has already created some havoc in the context of direct listings – and the Slack case, described in my blog post, has been pending before the Ninth Circuit basically forever – but most traditional IPOs require that pre-IPO shares be locked up at least for 180 days after the offering.  The lockup means that at least for the first 180 days, all shares available to trade are registered shares, and anyone who buys in that period will be able to show that their shares were traceable to the registration statement.  If there’s a problem with that registration statement, those early purchasers will be able to advance Section 11 claims.

Attorneys have in the past proposed that lockups be made less strict, essentially as a method of stymieing Section 11 claims; if unregistered shares are mixed in with the registered shares as soon as trading begins, the theory goes, no open-market purchaser will be able to trace their shares to the registration statement.  Robinhood (whatever its actual motivation) seems to be adopting that strategy. 

Now, I’m going to do something very dangerous: I’m going to try to read the S-1 and do math, and I’m not at all certain I’m getting this right, so everything I’m about to say should be taken with a pillar of salt. 

But, if I’m reading the S-1 correctly, Robinhood is registering and selling 60.5 million shares (including the greenshoe, and registered insider sales).  And it looks like the additional employee shares that will be available to trade right away number a little over 7 million.  Plus, as I understand it, there’s an additional 45 million shares or so that may be free to trade soon after the IPO as a result of certain note conversions, but these additional shares will be registered on a separate registration statement soon after the IPO.  Let’s assume that this new registration statement contains the same information as in the IPO registration statement.  And after 30 days ish, I believe another 45 million shares can be converted, and will also be free to trade, but these will also be registered on the second registration statement.

(Again, I really need to emphasize I am not at all certain I’m catching everything, so really just take this as a vague sort of ballpark thing)

My point – however inexact my calculations may be – is this: if it turns out that the registration statement(s) contain false information, or omit required information, we’re looking at an open-market pool of (at various times) as many as 105 to 150 million registered shares, and maybe 7 million unregistered ones, for at least the first 90 days of trading.  Of course, not all holders will trade; that’s just an approximation of the shares available.

Which means any open-market purchaser is very likely to have bought registered shares; but is not certain to have done so. 

Will that be enough to bar Section 11 claims?

Well, the law’s not exactly clear on this.  The Fifth Circuit famously held that even if there was over a 90% probability that shares purchased by the plaintiffs were registered, they would not be able to bring Section 11 claims.  See Krim v., Inc., 402 F.3d 489 (5th Cir. 2005); see also Doherty v. Pivotal Software, 2019 WL 5864581 (N.D. Cal. Nov. 8, 2019) (following Krim).  But in In re Snap Securities Litigation, 334 F.R.D. 209 (C.D. Cal. Nov. 20, 2019), the court held that 100,000 unregistered shares mixed in with 200 million registered shares would not be enough to bar Section 11 claims.  In so doing, the court noted, “As a policy matter, barring use of statistical tracing in litigation following a major IPO would mean that waiving the lock-up period for even nominal number of pre-IPO investors would effectively inoculate a corporation against nearly all potential Section 11 liability it might face for misstatements or omissions in its registration statement.”

Which means – I don’t know what happens with a pool that’s maybe 4.5% unregistered, and I really don’t know whether a court is likely to split the baby and distinguish between pleading Section 11 standing and actually proving it later in the case, either on the merits or at class certification.

Now, obviously, maybe there won’t be any Section 11 claims!  Maybe the shares will never trade below their IPO price; maybe there won’t be any false statements in the registration statement.  But considering the overwhelming regulatory risks that Robinhood’s business model poses (and of course its S-1 describes these), I think there’s a nonzero chance all this is going to be tested.  And I’d assume Robinhood’s lawyers are gearing up for that possibility.*


*Another problem might concern the issue of multiple registration statements.  Now, if the two registration statements contain identical misstatements and omissions, it isn’t necessary that a plaintiff trace her shares to either one simply to show that she purchased shares pursuant to a defective registration statement.  But – and this is an issue I discuss in my Slack blog post – Section 11 damages are tied to the “the price at which the security was offered to the public,” and for shares issued pursuant to note conversions, that price, I assume, is likely to be the conversion price.  But the note conversion price is a different, and lower, price than the offering price for the IPO shares.  That would mean that a damages calculation might require an open-market purchaser to identify whether her shares originally are traceable to a note conversion, or to the IPO (which, of course, will be impossible once trading in both begins, and since there are a lot of note-conversion shares, the probabilities will work less in plaintiffs’ favor than the issue of registered vs. unregistered shares).  But the Slack court held that the issue of damages did not have to be decided at the pleading stage, and if Robinhood’s share price were to fall even below the note conversion price, a plaintiff class might be willing to just agree that the note conversion price will be treated as the offering price for the entire class.

Edit: See comments; the converted stock may be registered only for resale at the market price.  Which means, the converted stock wont have a specific offering price, creating a similar issue as occurred in the Slack case, i.e., figuring out how to define an offering price when shares are registered only for resale by someone other than the issuer.  A court might decide the offering price for Section 11 purposes should be defined as the conversion price, but might decide the offering price should be defined as something else, or even that there is no offering price at all.

July 24, 2021 in Ann Lipton | Permalink | Comments (2)

Friday, July 23, 2021

Call for Papers – AALS 2022 Discussion Group: “A Very Online Economy”

Professor Martin Edwards (Belmont University College of Law) and I are excited to moderate a discussion group titled, “A Very Online Economy: Meme Trading, Bitcoin, and the Crisis of Trust and Value(s)—How Should the Law Respond,” at the 2022 American Association of Law Schools Annual Meeting. The discussion group is scheduled to take place (virtually) on Friday, January 7, 2022. We welcome responses to the call for participation (here). Here’s the description:

Emergent forces emanating from social and financial technologies are challenging many underlying assumptions about the workings of markets, the nature of firms, and our social relationship with our economic institutions. The 21st century economy and financial architecture are built on faith and trust in centralized institutions. Perhaps it is not surprising that in 2008, a time where that faith and trust waned, a different architecture called “blockchain” emerged. It promised “trustless” exchange, verifiable intermediation, and “decentralization” of value transfer.

In 2021, the financial architecture and its institutions suffered a broadside from socialmedia-fueled “meme” and “expressive” traders. It may not be a coincidence that many of these traders reached adulthood around 2008, when the crisis called into question whether that real money, those real securities, or that real, fundamental value were really real at all. People are engaging with questions about social values in an increasingly uneasy way. There is a flux not only in the substantive values, but also with what set of institutions people should trust to produce, disseminate, and enforce values.

One question is what role business corporations might play in this moment, which is being worked out most prominently through discussions about environmental and social governance (ESG). Social and financial technologies may be rewriting longstanding assumptions about social and economic institutions. Blockchains challenge our assumptions about the need for centralization, trust, and institutions, while meme or expressive trading and ESG challenge our assumptions about economic value, market processes, and social values.

It promises to be a great discussion!

July 23, 2021 in Corporations, Current Affairs, Ethics, Financial Markets, John Anderson, Law and Economics, Securities Regulation, Web/Tech | Permalink | Comments (0)

Thursday, July 22, 2021

SEB Investment Management AB v. Symantec Corp.:  The Clash of Two Class Action Titans

Last year, Anthony Rickey and I published a paper highlighting potential conflicts of interest that can arise between securities class action plaintiffs, their counsel, and the class.  Our article suggested that courts could discourage troublesome practices by requiring law firms to disclose past findings of misconduct when they apply for lead counsel appointments.  The idea is to make sure that future judges know what happened in past cases so they can protect the class.

Recently, Judge Alsup of the Northern District of California issued this type of order after two of the country’s largest plaintiff-side securities litigation firms hurled allegations of misconduct back and forth.  The fallout from this decision demonstrates a potential shortcoming of mandatory disclosure orders:  they are not self-enforcing.

The Case:  SEB Investment Management AB v. Symantec Corp., et al., No. 3:18-cv-02902-WHA (N.D. Cal.)

Judge Alsup’s April 20, 2021 order briefly summarizes the troublesome facts of a securities class action involving Symantec Corporation.  When SEB Investment Management AB (“SEB”) became lead plaintiff in 2018, the court ordered SEB to interview law firms to serve as class counsel.  SEB selected Bernstein, Litowitz, Berger & Grossman, LLP (“BLBG”), its original counsel, to lead the litigation “even though BLBG asked for a richer fee proposal than others.”

The litigation ran over two years.  Then, in late 2020, a Norfolk County pension fund represented by Robbins, Geller, Rudman & Dowd, LLP (“RGRD”) filed a “Notice of Potential Conflict of Interest” informing the Court that Hans Ek, the staff member at SEB selected to oversee the case, had left SEB and joined BLBG.

This development concerned the court because it opened the door to the “allegation that [BLBG] engaged in play to pay, which means, ‘you hire me as counsel, and I’ll make it up to you down the road.’”  Judge Alsup explained that this kind of deal, if it existed, is “adverse to the interests of the class because class counsel should be selected as the best lawyer for the class.”

At a hearing on January 22, 2021, Judge Alsup designated a special counsel from RGRD to report after taking discovery from SEB and BLBG.  The following conflict between two class action titans is required reading for anyone seeking to understand potential conflicts of interest between class plaintiffs and their counsel.

The special counsel alleged that BLBG’s arrangement with Ek would result in tens of thousands of dollars paid to SEB as offsets to Ek’s severance package.  The report described this as a “side benefit” from BLBG to SEB, lowering its compensation expenses.  (Our article pointed to similar indirect benefits given to institutional plaintiffs, such as when a local counsel agreed not to raise its monthly retainer after the firm received a share of the national counsel’s class action award.)  BLBG argued that this setoff was a standard provision not particular to BLBG.  Given that Ek was employed by other entities as well as BLBG, and could have gained employment elsewhere, BLBG denied that its payments constituted a conflict of interest.

Counterattacking, BLBG described the conflict as stemming “from a contentious relationship between [BLBG] and Robbins Geller” or “a personal vendetta being pursued by senior named partner Darren Robbins—who felt slighted because he believed his firm’s checkered past of Rule 11 violations precluded it from seeking a leadership position.”  In an earlier letter to the court, BLBG had described RGRD as “seek[ing] revenge for its not being appointed Lead Counsel in this Action.”  BLBG noted that RGRD had not responded to SEB’s request for proposal to become lead counsel, and suggested it abstained because it did not want to disclose a history of sanctions from federal courts.[1]  In later filings, BLBG accused RGRD of likewise employing former employees of lead plaintiffs that it has represented as lead counsel and David J. Hoffa, grandson of James R. Hoffa of Teamsters fame.  RGRD responded that it had employed one former employee of a plaintiff over a decade after she left employment, and that Mr. Hoffa had never worked for an organizational lead plaintiff.  And RGRD shot back with references to payments allegedly made by BLBG to the Kwame Kilpatrick Civic Fund and allegations of pay-to-play made in Bernstein v. Bernstein Litowitz Berger & Grossman LLP, unsealed by the Second Circuit back in 2016.

This summary does not do justice to the dispute between BLBG and RGRD.  In most class actions, the adequacy of representation element amounts to formalistic box-ticking, with plaintiff’s counsel insisting on their own excellence and defendants holding their tongue.  One can’t settle with an inadequately-represented class, after all.  The papers in this case show what two major law firms can dig up after even minimal discovery.  Policymakers and academics should look closely at this case for examples of where the class action system may be failing and for where to look to get another angle on what Professor Coffee described as a hidden market for access to and influence with institutional investors capable of serving as lead plaintiffs.

In the end, Judge Alsop’s order largely looked past the pointed barbs flying back and forth.  The court found itself “unable to determine whether the move of Mr. Ek to BLBG was coincidental versus culpable,” although it noted that “[t]he appearance alone raises eyebrows, arched eyebrows.”  However, rather than replacing SEB or BLBG, the court ordered further notice be provided to the class members, who received a new opportunity to opt out.  (The revised notice is available on the settlement website.)  The order then required that:

[I]n future cases, both SEB in seeking appointment as a lead plaintiff and BLBG in seeking appointment as class counsel shall bring this order to the attention of the assigned judge and the decision-maker for the lead plaintiff who is to select counsel.  This disclosure requirement shall last for three years from the date of this order.

Disclosure Requirements and Conflicts of Interest

The SEB decision highlights the need for increased efforts to address conflicts of interest in class action cases.  Our article proposed two reforms related to candor.  First, we recommend that candor should be made an explicit component of adequacy of representation, such that plaintiffs who fail to disclose conflicts should be removed from the case.  Second, courts should issue what could be called “firmwide disclosure orders,” such as the SEB ruling above, requiring firms to disclose negative findings to other courts in other cases.  SEB suggests that both reforms are necessary, while the latter is insufficient on its own.

As always, the non-adversarial nature of the settlement approval process limits the effect of potential reforms.  A firmwide disclosure order is neither self-interpreting nor self-executing.  For instance, does the SEB order’s reference to “future cases” mean “future instances in which a firm seeks approval as class counsel?”  Affected law firms have every reason to limit the requirement to “cases filed after April 20, 2021.”  As a practical matter, class counsel’s interpretation will control unless the court issuing the firmwide disclosure order takes up the burden of continually monitoring the law firm.

To test this aspect of the SEB order, we first looked for examples of class settlements approved by the Delaware Court of Chancery after April 20, 2021.  We focus on the Court of Chancery for two reasons:  many securities class actions can also be brought as fiduciary actions in Delaware courts, and the File&ServeXpress docket system is more expensive, and thus less transparent, than PACER.  Simply put, Chancery is the court where non-disclosure of the SEB order would be least likely to be observed.

We found one settlement:  Weiss v. Burke, et al., C.A. No. 2020-0364-PAF.  The Court of Chancery preliminarily approved BLBG as class counsel on April 19, 2021, one day before the SEB order.  The plaintiff then moved for final approval of class certification and the settlement.  Reviewing the dockets and the transcript of the settlement hearing, we find no sign that the SEB order was ever provided to the Court of Chancery or the class.  On June 15, 2021, the Court of Chancery awarded attorneys’ fees of $3.45 million, although it is impossible to know how much BLBG received.

On the other hand, BLBG did disclose the SEB order in a footnote to their opening brief in support of a motion for consolidation and appointment as lead counsel in ISZO Capital LP v. MHR Fund Management LLC, et al., C.A. No. 2021-0497-JRS, a case filed on June 8, 2021.  (This raises another interpretation issue:  does a footnote satisfy the requirement to bring something to the attention of a court?) What influence, if any, the SEB order will have on the Court of Chancery remains to be seen.  However, Weiss and ISZO Capital are consistent with a narrow interpretation of the SEB order.  Although nationwide electronic document searches are far from reliable, we found no example of the order being provided to any court in a case filed before April 20, 2021.

While it is still early days, we suspect that the SEB order, and firmwide disclosure orders, will have limited effect on the incentives of class counsel.  As we noted in our article, issues related to conflicts of interest rarely surface through nonadversarial settlement review processes.  Just as Milberg Weiss’s malfeasance came to light after a former client agreed to testify against the firm, and issues with the Arkansas Teacher Retirement System emerged only after a Boston Globe investigation, the SEB court remained unaware of Ek’s hiring until another stockholder provided notice.  Such intervention is rare.  (And notably, neither BLBG nor RGRD investigated the kind of conflict discussed in our article and highlighted by the ATRS v. State Street case:  the ability of counsel to benefit their clients indirectly by sharing fees with local counsel.) Without stringent consequences for failing to reveal potential conflicts—consequences that go to a firm’s bottom line—class counsel have little incentive to change course.

More certain or severe penalties will be necessary to deter bad conduct.  The best solution would be for courts (or Congress) to affirmatively require disclosure as a component of adequacy of representation, such that firms that do not inform courts of potential conflicts risk being removed as class counsel.  Alternatively, less severe sanctions would be necessary if it were more likely that bad conduct would come to light.  Thus, our article recommended that courts routinely appoint class guardians to conduct the type of discovery that RGRD’s special counsel did in SEB.  Counsel facing the prospect of routine scrutiny of their claims would be more likely to voluntarily disclose potential conflicts of interest.

This post was co-authored with Anthony Rickey of Margrave Law LLC


[1]           From BLBG’s February 10, 2021 letter: “Apparently, given its history as a repeat offender under Federal Rule 11, Robbins Geller believed that it could not even respond to the RFP. If it had, Robbins Geller knew it would have to disclose, including to this Court, that it has been repeatedly sanctioned by numerous federal courts. For example, Robbins Geller was sanctioned in City of Livonia Employees’ Retirement System v. Boeing Co. for engaging in ‘repeated misconduct’ in the litigation and ‘ma[king] fundamental misrepresentations to the court.’ 306 F.R.D. 175, 182-83 (N.D. Ill. 2014). In Boca Raton Firefighters’ & Police Pension Fund v. Devry Inc., Robbins Geller was sanctioned for filing a ‘frivolous’ complaint and allegations that ‘prolonged a strike suit.’ 2014 WL 1847833, at *8 (N.D. Ill. May 8, 2014). And, in Plumbers Union Local No. 12 Pension Fund v. Ambassadors Group, the court sanctioned a former Robbins Geller partner for misrepresenting the firm’s expenses in connection with a securities class action settlement. 2012 WL 1906384, at *3-4 (E.D. Wash. May 25, 2012). There, the court only refrained from also sanctioning the firm itself because Robbins Geller committed to ensuring that it would not make such ‘misleading statements’ to a tribunal again—an obligation it apparently disregarded by engaging in the conduct that resulted in Robbins Geller being sanctioned in Devry and Boeing. See Ambassadors, No. CV-09-0214-JLQ, ECF No. 230 at 5.”

July 22, 2021 | Permalink | Comments (0)

Wednesday, July 21, 2021

Call for Papers - Fourth Conference on Law & Macroeconomics

 Fourth Conference on Law and Macroeconomics, 2021

The role of law as an instrument of macroeconomic policy through the Covid-19 pandemic, including as a means to provide social protection, has opened up new and exciting research opportunities. As we edge towards recovery, what is the role of law in creating a macroeconomy appropriate for a post-pandemic world?

We welcome submissions for an online virtual conference on October 27 and 28, 2021 that will continue to explore connections between law and macroeconomics. Papers may address the role of law, regulation, and institutions in:

  1. Monetary policy, both conventional and unconventional, including how it is impacted by payments systems, e.g., new platforms and technologies, as well as the effects and risks of the unwinding of QE;
  2. Financial regulatory policy, both domestic and international, including its effect on the economy, its role in crisis containment and resolution, access to capital, and other aspects of financial inclusion;
  3. Fiscal policy, especially its role in mitigating the effects and frequency of economic downturns, including the respective roles of federal, state, and local governments. We are particularly interested in papers that explore the combination of expansionary fiscal policy and loose monetary policy;
  4. Moderating recessions with other policy levers, including bankruptcy, contract, and property law; environmental, utility, and labor regulation; and investment and capital controls;
  5. ESG – which coalitions decide how to implement it, and what will it mean for investment?
  6. Law and data – whose data is it anyway?
  7. Sovereign debt, debt relief and forgiveness, and the possible consequences;
  8. Is the legal profession able to deliver for people in the twenty-first century economy?
  9. Legal strategies for reducing inequality, including policies affecting labor, competition, access to housing, healthcare, and other public services, as well as personal, corporate and public debt relief.

The submission deadline is September 15, 2021.  Conference website is here and complete call for papers here: Download Fourth Conference on Law & Macroeconomics

July 21, 2021 in Call for Papers, Colleen Baker | Permalink | Comments (0)

Tuesday, July 20, 2021

Illinois Law - Tenured/Tenure-Track Openings

University of Illinois College of Law
Tenured/Tenure Track Faculty

University of Illinois College of Law invites applications for positions on the tenured/tenure-track faculty to begin in August 2022. The College welcomes applications from scholars in all subject areas of the law.

The University of Illinois offers a distinguished and collegial law school community in the setting of a premier research university, affording opportunities for cutting-edge legal scholarship and innovative interdisciplinary work. Champaign-Urbana is a vibrant college town with an exceptional quality of life.

JOB DESCRIPTION: This is a nine-month, 100% time tenured or tenure track position. As a member of the College faculty, you would teach, contribute to your areas of specialization through scholarly research, and provide service via internal and external engagement.

JOB QUALIFICATIONS: Applicants must have a J.D. or Ph.D. or their equivalent, a strong academic record, and a record of scholarly distinction or great scholarly promise. These positions are full-time, nine month, tenured or tenure-track positions. Salary is commensurate with experience.

APPLICATION PROCEDURE: For full consideration, please use the AALS FAR website, (preferred) or create a candidate profile at and upload the following required documents: Curriculum Vitae, sample publications, and contact information of four references (name, telephone number and email address) by October 1, 2021. References will not be contacted until advanced stages of screening and candidates will receive prior notification. For further information regarding application procedures, contact Tish Lehigh at

Application deadline: October 1, 2021

The University of Illinois is an Equal Opportunity, Affirmative Action employer that recruits and hires qualified candidates without regard to race, color, religion, sex, sexual orientation, gender identity, age, national origin, disability or veteran status. For more information, visit

The University of Illinois conducts criminal background checks on all job candidates upon acceptance of a contingent offer. Convictions are not a bar to employment. The University of Illinois System requires candidates selected for hire to disclose any documented finding of sexual misconduct or sexual harassment and to authorize inquiries to current and former employers regarding findings of sexual misconduct or sexual harassment. For more information, visit Policy on Consideration of Sexual Misconduct in Prior Employment. As a qualifying federal contractor, the University of Illinois System uses E-Verify to verify employment eligibility.

July 20, 2021 in Joan Heminway, Jobs | Permalink | Comments (0)

Monday, July 19, 2021

Since the Pandemic is Still with Us . . .

 . . . I figure it is still OK to publish a link to the SSRN posting of my co-authored article from the 2020 Business Law Prof Blog symposium, Connecting the Threads.  Published earlier in the spring, this piece, entitled Business Law and Lawyering in the Wake of COVID-19, was written with two of my students: Anne Crisp (who will start her 3L year in about a month) and Gray Martin (who graduated in May and will take the bar exam next week).  My March 30, 2021 post on business interruption insurance came from this article.  The SSRN abstract is included below.

The public arrival of COVID-19 (the novel coronavirus 2019) in the United States in early 2020 brought with it many social, political, and economic dislocations and pressures. These changes and stresses included and fostered adjustments in business law and the work of business lawyers. This article draws attention to these COVID-19 transformations as a socio-legal reflection on business lawyering, the provision of legal services in business settings, and professional responsibility in business law practice. While business law practitioners, like other lawyers, may have been ill-prepared for pandemic lawyering, we have seen them rise to the occasion to provide valuable services, gain and refresh knowledge and skills, and evolve their business operations. These changes have brought with them various professional responsibility and ethical challenges, all of which are ongoing at the time this is being written.

No doubt both the changes to business lawyering and the lessons learned from the many substantive, practical, and ethical challenges that have arisen in the wake of COVID-19 will survive the pandemic in some form. This offers some comfort. While the thought of another systemic global crisis is unappealing at best, what we have experienced and learned will no doubt be useful in maneuvering and surviving through whatever the future may bring.

This article came to be because I agreed to take on additional research assistants after summer jobs were scuttled for many students in the spring of 2020.  I shared the germ of an idea with Anne and Gray.  They took that idea and ran with it, adding important new concepts and support.  The writing collaboration naturally followed.  They co-presented the article with me at the symposium back in October.  Working with them throughout was so joyful and fun--a true pandemic silver lining.

July 19, 2021 in Contracts, Corporate Governance, Current Affairs, Ethics, Joan Heminway, Law Firms, Lawyering | Permalink | Comments (0)

Saturday, July 17, 2021

Will He or Won’t He?

The business news this week was just lousy with reports on the Tesla trial currently ongoing in Delaware, and in particular, with reports on the testimony of Elon Musk (which, disappointingly, appears to have been less inflammatory than his depositions).  

The basic set up, of course – as I previously blogged – is that Musk championed Tesla’s acquisition of SolarCity, a company he founded with his cousins, chaired, and in which he held a substantial stake.  The unaffiliated Tesla shareholders voted in favor of the deal, which would be enough to cleanse it and restore business judgment review if Musk was not a controlling shareholder, but if he was, entire fairness review would follow.  So one of the burning questions at trial – and the one which most of the news reports focus on – is whether Musk, with something like a 22% stake in Tesla at the time, could be considered a controlling shareholder.  And that question, in turn, focuses not just on his voting power, but on his practical control over the company and the board. 

Y’all know that the question of who is a controller is one that has dominated a lot of my thinking recently (my most recent blog post on the subject is here; earlier posts are here, and here, and here, and here, and here, and here, and here), so I do have to observe that in In re Pattern Energy Group Stockholders Litigation, VC Zurn spent a lot of time explaining how one can be a controller – with fiduciary duties that follow – even without any stock ownership at all.  As she put it:

Fiduciary duties arise from the separation of ownership and control.  The essential quality of a fiduciary is that she controls something she does not own.  A trustee need not (and does not) own the assets held in trust; directors need not own stock. Even a third party lender that influences extraordinary influence over a company may be liable for acting negligently or in bad faith.  If a stockholder, as one co-owner, can owe fiduciary duties to fellow co-owners because the stockholder controls the thing collectively owned, surely an “outsider[]” that controls something it does not own owes duties to the owner.  “[I]t is a maxim of equity that ‘equity regards substance rather than form,’” and “the application of equitable principles depends on the substance of control rather than the form[;] it does not matter whether the control is exercised directly or indirectly.”  “[T]he level of stock ownership is not the predominant factor, and an inability to exert influence through voting power does not foreclose a finding of control.”  Thus, “Delaware corporate decisions consistently have looked to who wields control in substance and have imposed the risk of fiduciary liability on that person,” and “[l]iability for breach of fiduciary duty therefore extends to outsiders who effectively controlled the corporation.”

With this foundation, and considering evolving market realities and corporate structures affording effective control, Delaware law may countenance extending controller status and fiduciary duties to a nonstockholder that holds and exercises soft power that displaces the will of the board with respect to a particular decision or transaction.

That’s a point I made in my essay, After Corwin: Down the Controlling Shareholder Rabbit Hole; as I wrote there:

[O]ne of the first things a business law student learns is that even without a formal equity stake, contractual control can be exerted to the point where fiduciary obligations follow.  But all of this just raises the question whether the shareholder aspect of the controlling shareholder inquiry is necessarily doing any work.

Point being, the fact that Musk’s power does not come from his stock holdings alone is not dispositive of this question.  Musk is the kind of figure that boards, and shareholders, might be afraid to buck because he can’t be dislodged – Musk himself testified that Tesla would “die” without him – and he can send Tesla’s stock price tanking with a single tweet.  Imperial CEOs present a difficult case, but those factors are pretty much the basis for treating controlling shareholders differently from just ordinary conflicted boards. 

Or, with apologies to Guth v. Loft, 5 A.2d 503 (Del. 1939), “Musk was Tesla, and Musk was SolarCity.”  

That said, it must be observed that: (1) Plaintiffs can win this case even if Musk is deemed not to be a controlling shareholder, and (2) it’s possible VC Slights won’t have to decide whether Musk is or isn’t.

More under the cut...

Continue reading

July 17, 2021 in Ann Lipton | Permalink | Comments (0)

Friday, July 16, 2021

My Thoughts on Cuba

I've posted on Cuba and business in the past. See here, here, and here, for example.

I have 3,000 pictures of Cuba from my four visits to research and speak on business and human rights. I’ve written three law review articles and met with farmers, judges, lawyers, families of people who have “disappeared,” restaurant owners and others. For the law review articles see, Ten Ethics-Based Questions for U.S. Companies Seeking to do Business in Cuba, The Cuba Conundrum: Corporate Governance and Compliance Challenges for U.S. Publicly-Traded Companies, and You Say Embargo, I Say Bloqueo—A Policy Recommendation for Promoting Foreign Direct Investment and Safeguarding Human Rights in Cuba.

This is a different kind of post. It's more personal. 

My first visit in 2016 was during the Bienal art festival, where some of the most talented artists in the region had their work featured by the New York Times. I visited some of them in their homes. Later in the trip, I spent time with members of the Florida bar to learn from local lawyers and economists. One lawyer who spoke with us had to move to the US after someone misreported what he had said to us in a closed door meeting. Our tour guide reminded me that while we had dozens of cheeses and fruits to choose from in our hotel, the average Cuban had to use a ration card. Afrocuban women who walked into nice hotels were stopped because they were assumed to be prostitutes.

I met with Black lawyers in bufetes in Santiago de Cuba during a visit with the National Bar Association and Ben Crump. I sat on a panel with Cuban judges and received a copy of their Constitution as a gift. I was careful to use “bloqueo” instead of “embargo” in my remarks and gently corrected the interpreter when she put a slant on my words about human rights. The Cuban government searched all of our luggage when we landed and unlike other colleagues, my materials weren't confiscated because I made sure not to have hard copies. I destroyed my online version of my presentation as soon as I concluded. This was not any different from my past visits to do business in China and prepared me for my trip to teach in Pakistan in 2019.

The 2018 trip to Cuba was different from my other three visits. I smoked my first and last cigar in Cuba on a tobacco farm in Vinales. I walked the malecón every morning at sunrise to talk to fishermen. I didn't have to use government tour guides who were always watching. One upside of the Trump rules related to Cuba limiting US hotels was that Cubans opened their own AirbnBs. I met with a former accountant who wasn't making any money in his chosen profession but could now afford to travel overseas to get more materials for his Airbnb. He also restored old family cars and made more in a month hiring drivers to take care of his guests than he had in a year.  I went to a baseball game with locals, met with Afrocuban millennial entrepreneurs to learn about ceremonies, ritual, and culture, and watched a 21-year old driver marvel at being able to use the internet on his phone to find a date. The government had just opened up widespread internet access to Cubans the week before. He worried about using up his minutes like we used to ten years ago. Things weren't great, but they were looking up. 

I fell in love with the people and the culture. With each visit, I saw changes and more cautious, skeptical optimism from people. I had planned to visit again after Covid to see the effects of reforms. That will have to wait. I’m so proud of the Cuban people for standing up for themselves with the protests. The rise of the internet gave rise to the government’s worst fear. Artists and their music helped to motivate the people to ignore their fear of repercussions. Cuba is about so much more than rum, salsa, and restored cars. #soscuba

Cuba collage

July 16, 2021 in Compliance, CSR, Current Affairs, Human Rights, Marcia Narine Weldon | Permalink | Comments (0)