Wednesday, April 29, 2015

Tennessee . . . . The Business Law State? Yay For Us!

OK.  So, Tennessee is not Delaware.  But the Tennessee legislature and Supreme Court have been busy bees this spring on business law matters.   Here's the brief report.

In the last week of the legislative term, the Tennessee Senate and House adopted the For-Profit Benefit Corporation Act, about which I earlier blogged here, here, and here.  Although I remain skeptical of the legislation, it looks like the governor will sign the bill.  So, we will have benefit corporations in Tennessee.  We'll see where things go from there . . . .

The Tennessee legislature also passed a technical corrections bill for the Tennessee Business Corporation Act.  The bill was drafted by the Tennessee Bar Association's Business Entity Study Committee (on which I serve and to which I have referred in the past), a joint project of the Tennessee Bar Association's Business Law Section and Tax Law Section.  The governor has already signed this bill into law.

Separately, in a bit of a stealth move (!), the Tennessee Supreme Court recently announced the establishment of a business court, an institution many other jurisdictions already have.  The court is being introduced as a pilot project in Davidson County (where Nashville resides)--but only, as I understand it, to iron the kinks out before introducing the court on a permanent basis.  Interestingly, the Tennessee Bar Association Business Law Section Executive Council was not informed about the new court project until its public announcement in the middle of March.  Although we found that a bit odd, the "radio silence" is apparently attributable to the excitement of the Tennessee Supreme Court to get the project started effective as of May 1 and the deemed lack of need for a study on the subject before proceeding.  Regardless, I think it's safe to say that the bar welcomes the introduction of a court that specializes in business law cases as a matter of principle.  Again, we'll see where it goes from here.

A few reflections on all this follow.

Although it sometimes is painful to serve the bar in generating and reviewing legislative proposals relating to business associations and related business law topics (especially in the spring when the legislative and academic calendars collide), this type of service does give me a different perspective on business entities and legislative enactments.  Although I would like to think that bar engagement and good, sound policy, based on theory and experience, drive legislative enactments, the reality is that legislative bodies are political deliberative institutions.   So, sometimes, it's more politics than policy, theory, or data that drives the decision-making process.  Knowing all that is one thing; living it is another.  By the way, I do find that active engagement in legislative projects enriches my teaching and writing, although it is primarily an avenue for service to the bar.

And as for the Tennessee Supreme Court's foray into business-court-land, well, that will be good spectator sport for many of us.  And I do not mean that in a negative way.  The move affords Tennessee the opportunity to develop a more expertised judiciary and, perhaps, a more consistent, sophisticated body of decisional law over time.  I will plan to report back on some or all of that later, when and if there is something to say.

In the mean time, go TN!

https://lawprofessors.typepad.com/business_law/2015/04/tennessee-the-business-law-state-yay-for-us.html

Business Associations, Corporate Governance, Corporations, Current Affairs, Joan Heminway, Litigation, Social Enterprise | Permalink

Comments

Like you, I am interested to see where things go in our state. I will only be a short distance from the business court and plan to check it out.

Posted by: Haskell Murray | Apr 29, 2015 11:00:01 AM

Great, Haskell. Yes, I had almost forgotten that you will have the business court in your backyard! Do keep us posted on anything you see or hear.

Posted by: joanheminway | Apr 29, 2015 11:01:47 AM

I was in Chancellor Lyle's court the other morning. There is no doubt in my mind that she was the right choice in the right place to drive this initiative. Her heart is in equity much to the chagrin of those of us who like "cut and dry." If we all ever have the time and opportunity, remind me to share with you her pursuit of recognition of “unconscionability” as a cause of action rather than as an affirmative defense in Tennessee.

I am very pleased to see Tennessee focusing and appreciating that reliable and predictable business litigation is a factor in business situs. We have been relatively successful in recruiting national headquarters in the past decade. However, when trying to pare Tennessee decisional law “on point” with casebook concepts, I find our case law is relatively bereft for purposes of parallel multi-state and Tennessee specific. I am often left to analogize corporate law decisions to application of un-corporations. Perhaps, we too, will develop a “rich” and reliable source like Delaware.

Posted by: Tom N. | Apr 30, 2015 8:42:13 AM

I appreciate hearing the positive news about Chancellor Lyle's heart and mind. I admit to being skeptical of her recognition of unconscionability as a cause of action, however. So, I ewill certainly remind you to tell me about that when we meet up!

Posted by: joanheminway | Apr 30, 2015 10:45:52 AM

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