Business Law Prof Blog

Call for Papers--Wharton Conference on Business Law & Ethics

Wharton’s Legal Studies & Business Ethics Department invites submissions for its inaugural Conference on Business Law and Ethics, to take place March 31-April 1, 2017.

This is the first meeting of what will be a recurring conference: we aim to gather together each year the most cutting-edge work on law, ethics and business. Papers are invited from scholars both senior and junior, and from diverse disciplines, on the theme of “The Ethical Lives of Corporations.” Submit an abstract of an unpublished paper to Phil Nichols ([email protected] ) and Gwendolyn Gordon ([email protected]). The deadline for abstract submissions is January 6th, 2017.

Note to Trump and the New Congress: Play Conservative and Leave It Alone

When it comes to regulations and economic policy, I am quite conservative.  Not a Republican-type conservative (probably more Libertarian in a political sense), but in the sense that I often advocate for less regulation, and even more often, for less changes to laws and regulations. People need to be able to count on a system and work within it. As such, whether it is related to securities law, energy and environmental law, or other areas of the law, I find myself advocating for staying the course rather than adding new laws and regulations.  

For example, a while back, co-blogger Joan Heminway quoted one of my comments about securities law, where I noted "my ever-growing sense that maybe we should just take a break from tweaking securities laws and focus on enforcing rules and sniffing out fraud. A constantly changing securities regime is increasingly costly, complex, and potentially counterproductive." 

After the BP oil blowout of the Deepwater Horizon well in the Gulf of Mexico, I similarly argued that we should approach new laws with caution, and that we might be better served with existing law, rather than seeking new laws and regulation in a hasty manner. I explained, 

[T]here are times when new laws and regulations are necessary to handle new ways of perpetrating a fraud or to address new information about what was previously viewed as acceptable conduct. But often, new laws and regulations are not a reaction to new information or technology; they are a reaction to a unique and unfortunate set of facts that is more likely related to timing or circumstances than an emerging trend. Other times, it is a lack of enforcement of existing protections meaning the problem is not the law itself; it is the enforcement of the law that is the problem.

Choosing a Better Path: The Misguided Appeal of Increased Criminal Liability After Deepwater Horizon, 36 Wm. & Mary Envt'l L & Pol. Rev. 1, 19 (2011) (footnotes omitted). More recently, I have taken the same view with regard to hydraulic fracturing regulations:

There may well be a need for new regulations to improve oversight of hydraulic fracturing and other industries that pose environmental risks, but new regulations do not necessary lead to better oversight. . . . There is a strong argument that the problems related to hydraulic fracturing (and, for that matter, coal extraction, chemical storage, and hazardous waste operations) are more linked to a lack of enforcement and not a lack of regulation.

Facts, Fiction, and Perception in Hydraulic Fracturing: Illuminating Act 13 and Robinson Township v. Commonwealth of Pennsylvania, 116 W. Va. L. Rev. 819, 847 (2014). 

I swear I have a point, beyond just quoting myself.  Here it is: I'd like to urge the President-Elect and the 115th Congress to sit back and stay the course for a little bit to see where things are headed. I have a strong suspicion things are headed in the right direction from an economic perspective. This is not to suggest that there are not holes in the economy or people in desperate need of jobs, training, and education (there are -- I live in West Virginia. I know.). But with a White House and a Congress controlled by the same party, the GOP play should be simply: we're in charge now, and the economy is ready to move ahead.  

We have already seen it -- the stock market is up and economic indicators look better.  And there has been no new legislation or regulation (or repeals of either).  It's just consumers believing the economy will get better.  And consumer confidence is key to expansion.  Who cares that it started before the election?  What matters is whether we're going in the right direction.  And it seems we are. The Financial Times reported today: 

A gauge of US consumer sentiment has hit a post-recession high, painting a positive outlook ahead of the key holiday shopping season as recent data point to a strengthening US economy.

The Conference Board’s consumer confidence index climbed to 107.1 in November from 100.8 in October, the highest since July 2007 and above analysts’ forecast of 101.5.

Most of the survey was conducted before the presidential election on November 8. But “it appears from the small sample of post-election responses that consumers’ optimism was not impacted by the outcome,” said Lynn Franco, director of economic indicators at the Conference Board. “With the holiday season upon us, a more confident consumer should be welcome news for retailers.”

 

And, just to reinforce that is not a post-election position, I have been making this argument on this blog since at least 2010, when I wrote, How to Fix the "Broken" Financial System: Stop Trying to Fix It. 

So, let's stay the course for a bit and see how people respond to a little stability. Let's see what a surge in consumer confidence can do for the U.S. and world economies. Let's make sure it's broken (and if so, how), before anyone tries to fix it. And maybe, in the meantime, we can spend a little time treating each other better.

Last Class? Coggins to the Rescue!

Today, I share a quick teaching tip/suggestion.

I taught my last classes of the semester earlier today.  For my Business Associations class, which met at 8:00 am, I was looking for a way to end the class meeting, tying things from the past few classes up in some way.  I settled on using the facts from a case that I used to cover in a former casebook that is not in my current course text:  Coggins  et al. v. New England Patriots Football Club, Inc., et al.  Here are the facts I presented:

• New England Patriots Football Club, Inc. (“NEPFC”), the corporation that owns the New England Patriots, has both voting and nonvoting shares of stock outstanding.
• The former president and owner of all of the voting shares of NEPFC, Sullivan, takes out a personal loan that only can be repaid if he owns all of the NEPFC stock outstanding.
• The board and Sullivan vote to merge NEPFC with and into a new corporation in which Sullivan would own all the shares.
• In the merger, holders of the nonvoting shares receive $15 per share for their common stock cashed out in the merger.

From this, I noted that three legal actions are common when shareholders are discontented with a cash-out merger transaction: appraisal actions, derivative actions for breach of fiduciary duty, and securities fraud actions.  Shareholders in NEPFC brought all three types of action.  (Footnote 9 of the Coggins case and the accompanying text explain that.)  

Having just covered business combinations, including approval and appraisal rights, and wanting to address some new information about the process of derivative litigation, the facts from the case worked well.  I am sure there are other cases or materials that also could have done the job.  (Feel free to leave suggestions in the comments.)  But adding a little football and conflicting interests to the last class seemed like the right idea . . . .

 

 

Welcome to BLPB, Kathryn Kisska-Schulze!

For the next few weeks, we will be joined by Clemson University Legal Studies Professor Kathryn Kisska-Schulze. I met Professor Kisska-Schulze at the SEALSB Annual Conference earlier this month and enjoyed her presentation on the appropriate tax home for college athletes (if and when they are paid).

In addition to a JD, Professor Kisska-Schulze has an LLM in Taxation. She has published extensively in the tax law area, intersecting most frequently with sports law and environmental law. I look forward to her posts, and welcome her to the blog.

ICYMI: Tweets From the Week (Nov. 27, 2016)

"Why Have M&A Contracts Grown? Evidence from Twenty Years of Deals" https://t.co/T1zyyeEH8D #corpgov

— Stefan Padfield (@ProfPadfield) November 22, 2016

personhood: "3 claimants who have most frequently..claimed the protections..: corporations, aliens, & felons" 84Geo.Wash.L.Rev.605 #corpgov

— Stefan Padfield (@ProfPadfield) November 22, 2016

"More than 4 Billion people in the world have a per capita income of less than ... $1,600 per year" https://t.co/EeOR0EB6Bu #corpgov

— Stefan Padfield (@ProfPadfield) November 23, 2016

“24% of Americans report earning money from the digital ‘platform economy’ in the past year.” https://t.co/CXHbHfdc0v #corpgov

— Stefan Padfield (@ProfPadfield) November 25, 2016

US 21-30 y.o. males w/ less than Bachelor's: About 18% "reported not working at all during the prior year." https://t.co/rg40GeesSQ #corpgov

— Stefan Padfield (@ProfPadfield) November 27, 2016

As God is my witness, I thought turkeys could fly

Okay, this post has nothing to do with the subject line; given the time of year, I just couldn’t resist.

(Maybe we’ll just characterize that episode of WKRP in Cincinnati as a demonstration of PR tactics gone wrong.  See?  There’s a business law hook).

Anyhoo, today I want to call attention to the phenomenon of the fake whistleblowing hotline. 

As compliance becomes an increasingly large part of corporate operations – and a de facto reconfiguration of corporate governance standards – it seems that companies are fond of creating “whisteblowing hotlines” to demonstrate their commitment to compliance with the law.  Public companies, in fact, are required to do so under Sarbanes-Oxley.

Which is why two recent news items are so disturbing.  First, in connection with the Wells Fargo fake account scandal – on which both Anne Tucker and Marcia Narine Weldon recently posted– it turns out that employees who offered tips on the Wells Fargo whistleblowing hotline were quickly fired; meaning that the hotline itself operated as a kind of reverse-ethics test to weed out employees most likely to object to Wells Fargo’s practices.

And it turns out that Wyndham Vacation Ownership did the same thing.  This company, which sells time shares using legally dubious tactics, also has an “integrity hotline” that it uses, apparently, to identify and fire salespeople who have integrity.

It strikes me that these incidents are particularly pernicious.  They represent traps to catch employees who might be troubled by the company's behavior, while faking compliance with the law - a false compliance that may not easily be detected.  And they imply a certain degree of premeditation: if you set up a hotline and then misuse it, presumably, you know what you're doing.  I realize that federal and state laws provide penalties for retaliation against whistleblowers; I do wonder if there can be especially tough scrutiny of adverse employment decisions in the wake of utilization of company-established compliance procedures - like, perhaps, a presumption that punitive damages should be awarded.  I’m not an expert in this area, though; does anything like this exist?  Could it?

Patagonia, Black Friday, and Social Enterprise

It is not secret that Patagonia is one of the companies that I admire most; it may be my favorite company and is certainly in my top-five.

Patagonia's decision regarding its Black Friday sales adds to the reason I like the company. Patagonia will donate 100% of its Black Friday sales to grassroots environmental groups.

As I read it, the donations will be 100% of revenue, not profits, and the donations are estimated to be millions of dollars.

Patagonia is both a California benefit corporation and B corporation certified, but unlike many social enterprises, Patagonia often does things like the above that don't appear to be done just for the PR, and may actually hurt the company in the very short-term.

That said, Patagonia definitely has a good PR team and is probably getting millions of dollars of exposure out of this decision. And their apparel is quite expensive, so they may be able to afford to do things like this, based, in part, on the margins and goodwill built over time.  

Can "Doing Good" Pay Off for Carnival Cruise Line?

Happy Thanksgiving from the Dominican Republic. I'm blogging from the Fathom Adonia, Carnival's fledgling social impact cruise line. I've spent the past few days in Puerto Plata teaching English in schools and local communities. Other passengers worked on reforestation projects, built water filtration systems, installed concrete floors in homes, worked with women on cocoa farms, and learned how to recycle paper with local workers. Passengers can  also do typical excursions such as zip lining and snorkeling, or can lounge around in the $80 million dollar Amber Cove built up like a resort. But most people come on this cruise for the volunteer activities and don't expect frills (our bus got stuck in the mud and we needed pig farmers in a truck to help push us out on the way back from teaching English 75 minutes outside of town). Fathom has restaurants, a spa, dancing, bars, onboard activities such as wine and paint, extremely friendly staff, and enthusiastic, young "impact guides" but no Vegas-style shows and only carries approximately 700 passengers.

Carnival has banked on profiting from people's stated desire to do good in the world. Lots of surveys support this idea in theory. However, as regular readers of this blog know, I have written several posts skeptical of those who claim to care about corporate social responsibility, but choose to buy based on convenience, quality, and price. I have also repeatedly and publicly acknowledged that I am one of those people who selectively boycotts products and vendors. Although the idea of a social impact cruise line excited me, I wondered about whether It would succeed when I first heard of it because most people I know want to relax and not work on a vacation.

Unfortunately, it appears that Carnival's bet may not be paying off. Yesterday, the Miami Herald had an article discussing the future of the social impact product. Apparently, the Fathom, which also goes to Cuba, may stop doing these impact cruises, although Carnival promises that passengers will have "voluntourism" opportunities on its other cruise lines. Carnival also plans to continue its trips to Cuba on a different line starting next summer.

This change in direction, if true, does not surprise me. The Fathom trips to the Dominican Republic have never sold out, even at prices that are one third the price of the Cuba trip- my husband and I paid less than $1000 between the two of us for a seven day cruise, and were upgraded because they had capacity. We learned from one of Fathom's partners on the ground that there have been layoffs in Puerto Plata  because they don't have enough volunteers traveling on the ship. Fathom has even had to cancel some of the sailings altogether. 

Although the trips have not been popular with the masses, everyone that I have met on this trip has raved about their activities (particularly the English teaching) and the interactions with the warm Dominican people. Carnival may have hoped that word of mouth would suffice and that they wouldn't need heavy marketing. It's possible that Carnival believed all of the surveys of millennials who claim they want to change the world. Either way, it appears that there won't be a cruise line dedicated to social impact after next summer. That will be a huge loss for Puerto Plata and for those who want this kind of experience and are willing to pay to work with reputable, caring organizations.

I'm pulling for Fathom to survive in some form and for this idea to spread to other cruise lines. My husband and I both found that teaching English to 5th graders in a crowded classroom in a rain storm was the best Thanksgiving we have ever spent. When the students and volunteers spoke about the expeierence at the end of today's tutoring, there wasn't a dry eye in the house. That may not be profitable for Carnival, but it was priceless for those of us who experienced it. 

Can/Should We Focus Capital on the Long Term?

I have been thinking about the long-short term investment horizon debate, definitions, empirics and governance design consequences for some time now (see prior BLPB post here and also see Joshua Fershee's take on the topic).  This has been on mind so much  that I am now planning a June, 2017 conference on that very topic in conjunction with the Adolf A. Berle Jr. Center on Corporations, Law & Society (founded by Charles “Chuck” O’Kelley at Seattle University School of Law). In planning this interdisciplinary conference where the goal is to invite corporate governance folks, finance and economics scholars, and psychologists and neuroscientist, I have had the pleasure of reading a lot of out-of-discipline work and talking with the various authors.  It has been an unexpected benefit of conference planning.   I also want some industry voices represented so I have reached out to Aspen Institute, Conference Board and a new group, Focusing Capital on the Long Term (FCLT), which I learned about through this process.

I share this with BLPB readers for several reasons.  The first is that the FCLT, is a nonprofit organization, a nonprofit organization for BUSINESS issues created and funded by BUSINESSES.  In July 2016, the Canada Pension Plan Investment Board, McKinsey & Company together with BlackRock, The Dow Chemical Company and Tata Sons founded FCLT. Other asset managers, owners, corporations and professional services firms (approximately 20) have joined FCLT as members.  Rather than the typical application of a chamber of commerce style organization or trade industry group, here the stated missing of FCLT is to “actively engage in research and public dialogue regarding the question of how to encourage long-term behaviors in business and investment decisions.” 

Second, FCLT has access to otherwise proprietary information—like C-suite executive surveys---and is conducting original research and publishing white papers and research reports on the issues of management pressures, and governance designs that may promote a long-term time horizon.

I know for some folks reading, especially those strongly aligned with a shareholder rights camp, will view this with skepticism as a backdoor campaign to promote executive/management power and bolster the reputation of professional service firms hired by those managers.**  For me, though the anecdotal experience is a valuable component to considering all sides to the debate.  It also helps articulate why and how the feedback loop of short-term pressures—even if it is only perceived rather than structurally quanitifable—may exist. 

Third, I found some of the materials, particularly the Rising to the Challenge of Short-termism, written by Dominic Barton, Jonathan Bailey, and Joshua Zoffer in 2016 to be a useful reading for my corporate governance seminar.  It helped to explain the gap between the law and the pressure of short-termism.  It also helped provide a window into at least some aspects of decision making and payoffs in the governance setting. It can be quite hard to give students a window in the C-suite and BOD dynamics that they are naturally curious about while in law school.  Even if you ideologically or empirically disagree with the claim of short-termism when trying to structure balanced reading materials that provide an introduction to the full scope of measures, these are resources worth considering. 

Rising to the Challenge of Short-termism, written by Dominic Barton, Jonathan Bailey, and Joshua Zoffer in 2016, draws upon a McKinsey survey of over 1,000 global C-Suite executives and board members.  The report describes increasing pressures on executives to meet short-term financial performance metrics and that the window to meet those metrics was decreasing.   The shortening time horizon shapes both operations decisions as well as strategic planning where the average plan has shrunk to 2 years or less.  Culture matters.  Firms with self-reported long-term cultures reported less willingness to take actions like cut discretionary spending or delay projects when faced with a likely failure to meet quarterly benchmarks compared with firms that didn’t self-report a long-term culture.  Sources of the pressure are perceived to come from within the board and executives, but also cite to greater industry-wide competition, vocal activist investors, earning expectations and economic uncertainty.  The article concludes with 10 elements of a long-term strategy as a mini action plan.

Straight talk for the long term: How to improve the investor-corporate dialogue published in March 2015.

Investing for the future: How institutional investors can reorient their portfolio strategies and investment management to focus capital on the long term, published in March 2015.  The paper identifies 5 core action areas for institutional investors focusing on investment beliefs, risk appetite statement, bench-marking process, evaluations and incentives and investment mandates to evaluate investment horizons.

A roadmap for focusing capital on the long term: A summary of ideas for asset owners, asset managers, boards of directors, and corporate management to focus on long-term value creation, published March 2015.

Long-term value summit in 2015 with a published discussion report made available February 2016.  “120 executives, investors, board members, and other leaders from around the world gathered in New York City for the Long-Term Value Summit. Their mandate: to identify the causes and mechanisms of the short-term thinking that has come to pervade our markets and profit-seeking institutions and, more importantly, to brainstorm actionable solutions”

**The initial board of directors, announced on September 28, 2016 at the first board meeting, include some well positioned folks within BlackRock (Mark Wiseman), McKinsey & Co. (Dominic Barton), Dow Chemical (Andrew Liveris), Unilever (Paul Polman) and more. The BOD will be advised by Larry Fink, Chairman and CEO of BlackRock, as well.

 

-Anne Tucker

For Coal Jobs, Rhetoric Trumps Truth

Back in May, I discussed Donald Trump’s campaign dubious promises to bring back coal jobs to places like West Virginia and Kentucky.  He promised (and continues to promise) that reduced regulation and elimination of the Clean Power Plan will bring back job.  Voters in West Virginia bought the claim, and they believed it from incoming governor, Democrat Jim Justice, a billionaire coal magnate.   

Trump and Justice spoke the other day, with the Governor-Elect saying in a statement:

“It’s an exciting day for West Virginia because we now have a pathway to the White House and a president-elect who is totally committed to putting our coal miners back to work. President-elect Trump made it clear that he won’t forget about West Virginia when it comes to our nation’s energy policies. I will work closely with the President-elect and his administration on clean coal technology, rolling back the job-killing EPA regulations on coal, and growing West Virginia’s other job opportunities.”

How this will work to improve coal jobs remains an open question.  Trump has yet to announce his energy-related appointments, which will include the EPA, Department of Energy, and Department of Interior.  His energy secretary short list (and possibly Interior) still includes Harold Hamm, CEO of the oil and gas company, Continental Resources. Forrest Lucas (of Lucas Oil) remains on the list, as well.  So, how are oil and gas executives going to help coal?  Well, by “rolling back the job-killing EPA regulations on coal,” of course. (Note: that is really an EPA issue, not a Department of Energy issue.)

The problem with this for coal country, as I have noted before, is that rolling back these regulations also has the effect of rolling back regulations that impact the natural gas industry, meaning that even as coal gets cheaper, so does natural gas. 

Further, there is talk in the administration about opening up more federal lands to coal mining and oil and gas exploration.  (This would be a Department of Interior action, not Energy.)  This move, too, is curious, as it is hard to see how increased access to more supply is going to move up prices to support the struggling industries.  A greater supply of oil or gas or coal will lead to even lower prices.  Lower taxes and reduced regulations equals means a lower cost of exploration and production, which leads to more resources and lower prices.  

Absent a commitment to increasing the cost of natural gas, coal is simply not going to compete.  Natural gas burns cleaner than coal, is substantially more flexible, and despite criticisms of the process of hydraulic fracturing, it is environmentally preferable to coal mining. With oil and gas executives playing a large role in the new administration, there is no reason to expect coal will get a preference over natural gas.  Perhaps renewable energy sources will be less attractive, though the prices of those sources continues to drop, and natural gas can actually work to facilitate those such energy sources.  Recent reports suggest renewables and natural gas are the future.  This does not bode well for coal. 

Increased research on clean coal would have value. There are still millions of people around the world without access to electricity, and millions more getting power from old coal-fired plants that create health and environmental problems. But that research is not likely to change markets in the near term, and it is not likely to benefit U.S. coal miners as long as cheap natural as remains.  And it is expected to remain.   

Finally, reduced regulations may help move the energy sector forward more quickly, and it may help facilitate related businesses who use natural resources as a feedstock or energy-intensive processes.  That remains to be seen.  Any plan that does that, though, still likely leaves coal, and the people who work in the industry, behind. Just saying you will save coal jobs, doesn’t make it true.  But apparently it does make some people feel better.  I doubt that will last very long. 

Penn State Journal of Law & International Affairs Call for Papers: Spring 2017

The Penn State Journal of Law & International Affairs (“JLIA”) is conducting a call for papers for an upcoming publication in spring 2017. The publication will focus on areas of taxation, corporate law, banking and finance, and related subject areas. Current papers accepted for publication cover areas of international taxation, international financial regulation for cryptocurrencies, and regulations resulting from the global financial crisis.

JLIA is an interdisciplinary journal that is jointly published by Penn State’s Law School and the Penn State School of International Affairs. As a result, deference will be given to papers that incorporate international elements. However, papers with a purely domestic focus will be given full consideration based on their fit within the publication.                                              

Submissions will be considered for publication on a rolling basis. Authors interested in submitting papers should refer to http://elibrary.law.psu.edu/jlia/policies.html for submission procedures and policies. Please note that text and citations should conform to The Bluebook: A Uniform System of Citation, and that submissions through ExpressO are the best way to ensure quick response times as it is the internal platform for reviewing all official submissions to JLIA.

Please direct all questions regarding this Call for Papers to Zach Bollman, Editor in Chief, at [email protected] or Camman Piasecki, Managing Editor of Articles, at [email protected].

 

Still Worried About Teaching Business Associations . . . .

Thanks to all who responded to my query two weeks ago on teaching corporate fiduciary duties.  I continue to contemplate your suggestions as I recover from the cold that has consumed me now for a week.  Don't catch this version of the common cold!  It's a bear.

Anyway, the weekend after I published that post, I presented at a super symposium on shareholder rights at the University of Oklahoma College of Law--"Confronting New Market Realities: Implications for Stockholder Rights to Vote, Sell, and Sue," hosted by the Oklahoma Law Review.  (I spoke on rights to sell securities purchased in an offering exempt from registration under the CROWDFUND Act, Title III of the JOBS Act.)  Although it was not part of the formal agenda for the symposium, I got a chance to chat informally with a group of folks at and after the conference, including our host, Megan Shaner, along with Jessica Erickson, Gordon Smith, and Vice Chancellor Travis Laster from the Delaware Chancery Court (among others) about fiduciary duty complexity.  All, even the Vice Chancellor, had sympathy, offering ideas for simplifying corporate fiduciary duty law (as opposed to merely the teaching of it) that made sense.  And it seems that among those of us in the academy, there are many ways this material currently is taught in an introductory Business Associations/Organizations or Corporations course.

Of course, I am not the only one worried about teaching the law of business associations.  In extended discussions on the topic, co-blogger Marcia Narine raised a great question.  In general, she asked how one might teach business associations law to a relatively small class.  I understand that she in the past has taught 60-75 students in a four-credit-hour course.  That's similar to my situation at UT Law.  I typically teach up to 72 students (although I teach a three-credit-hour-course).  But in the future, Marcia may teach as few as 30 students in her four-credit-hour offering.  

She noted that she doesn't want to overburden the students or herself, but she wants to think about doing things differently.  She floated the idea of more peer grading.  I suggested in response that my oral midterm exam becomes more palatable in a smaller class.  I also noted that I would generally use more skills training in that environment and maybe even introduce current events or group presentations (2-3 students in each group) over the course of the semester.  But I also allowed as how I wouldn't try too many things all at once.  In fact, I noted that she might be better off just deepening what she already does that works.

What ideas do you have?  Do some of you teach a Business Associations class that includes as few as 30 students?  Do you use any specific pedagogies or tools that may be especially useful in a course like Business Associations/Organizations--a basic doctrinal upper-division course--when taught to a 30-student class?  Do you have any tricks of the trade you would feel comfortable offering?  If so, please post them in the comments.

In other Business Associations teaching news, I requested and have received permission to increase my Advanced Business Associations offering to three credit-hours from two.  This is great news.  I use this course to focus in more on publicly held and closely held firms, business combinations, derivative and securities litigation, and social enterprise and corporate social responsibility topics.  I ask the students to describe and assess the interaction among policy, theory, doctrine, and practice skills in corporate governance.  I like to have the students read full cases and law review articles, in addition to teaching text and excerpts.  (And I now plan to add Ann Lipton's new book chapter to the reading list this spring for the part of the course in which we cover the importance of bylaw amendments to contemporary corporate governance.  Great timing.)  

Bottom line?  The course, structured this way, just felt too densely packed with only two hours per week of teaching time.  So, my last two-credit-hour version of the course will be taught this spring.  Then, I will revamp the syllabus to add the extra credit-hour for 2018.  Interestingly, it was my students who came to me originally asking for the change, because they wanted to pause more over some of the material.  I did, too.  So, now I am not worried about this any more.  One thing to take off the ever-growing list of Business Associations teaching worries . . . .

 

ICYMI: Tweets From the Week (Nov. 20, 2016)

"Bond Vigilantes": "America’s creditors can still wield considerable power to constrain public spending" https://t.co/Jc492QSr5a #corpgov

— Stefan Padfield (@ProfPadfield) November 15, 2016

"repatriated offshore holdings of U.S. corporations can be used to offset new spending on roads & bridges" https://t.co/Y7bxsnXOry #corpgov

— Stefan Padfield (@ProfPadfield) November 15, 2016

"More than half of America's 60 biggest employers offer no paid family leave or will not disclose...policy" https://t.co/x5swt0hBfc #corpgov

— Stefan Padfield (@ProfPadfield) November 16, 2016

"the irreconcilable visions of corporations embodied in Citizens United and Hobby Lobby" https://t.co/jVWpASblmY #corpgov

— Stefan Padfield (@ProfPadfield) November 17, 2016

"A rising trade in illegal mining means ‘blood gold’ in everything from smartphones to cars" https://t.co/8GGgscJttF #corpgov

— Stefan Padfield (@ProfPadfield) November 18, 2016

New chapter posted to SSRN on litigation limits in charters and bylaws

For this week's post, I offer a plug.  I just posted to SSRN a draft chapter, Limiting Litigation Through Corporate Governance Documents, for the forthcoming Research Handbook on Representative Stockholder Litigation (Sean Griffith et al., eds. 2017), published by Edward Elgar Publishing.  For those who are interested, here is the abstract:

There has recently been a surge of interest in “privately ordered” solutions to the problem of frivolous stockholder litigation, in the form of corporate bylaw and charter provisions that place new limitations on plaintiffs’ ability to bring claims.  The most popular type of provision has been the forum selection clause; other provisions that have been imposed include arbitration requirements, fee-shifting to require that losing plaintiffs pay defendants’ attorneys’ fees, and minimum stake requirements.  Proponents argue that these provisions favor shareholders by sparing the corporation the expense of defending against meritless litigation.  Drawing on the metaphor of corporation as contract, they argue that litigation limits are often enforced in ordinary commercial contracts, and that bylaws and charter provisions should be interpreted similarly. 

In this chapter, I recount the history of these provisions and the state of the law regarding their enforceability.  I then discuss some of the doctrinal and policy questions that have been raised regarding different types of litigation limits, and the propriety of private ordering in this context.  In particular, I explore how corporate managers’ structural and informational advantages may make litigation limits easy to abuse; moreover, litigation itself serves public purposes that may be more appropriately subject to public control. 

Call for Proposals: “Teaching Cultural Competency and Other Professional Skills Suggested by ABA Standard 302”

The following comes to us from Prof. Kelly Terry, Co-Director, Institute for Law Teaching and Learning.  Submit proposals to her at [email protected] by 2/1/17 .

Call for Proposals for the Institute for Law Teaching and Learning’s Summer 2017 Conference, “Teaching Cultural Competency and Other Professional Skills Suggested by ABA Standard 302.” The conference will take place July 7-8, 2017 at the University of Arkansas at Little Rock William H. Bowen School of Law.

The Institute invites proposals for workshop sessions addressing how law schools are responding to ABA Standard 302’s call to establish learning outcomes related to “other professional skills needed for competent and ethical participation as a member of the legal profession,” such as “interviewing, counseling, negotiation, fact development and analysis, trial practice, document drafting, conflict resolution, organization and management of legal work, collaboration, cultural competency and self-evaluation.” The conference will focus on how law schools are incorporating these skills, particularly the skills of cultural competency, conflict resolution, collaboration, self-evaluation, and other relational skills, into their institutional outcomes, designing courses to encompass these skills, and teaching and assessing these skills. The deadline to submit a proposal is February 1, 2017.

Faith and Work in Churches

Interest from churches in the integration of faith and work seems to have grown exponentially over the past few decades. That said, as far back as Martin Luther, there has been a call to view even jobs outside of ministry as a vocation or religious calling.  

I plan to update this post from time to time, and I may add more discussion, but for now, I will just list some of the church-founded or church-connected faith & work initiatives or resources below. I welcome suggestions for additions to this list.

Organizations 

• Center for Faith and Work (This recent video on Civility in the Public Square is one example their events)
• Denver Institute for Faith & Work
• Institute for Faith, Work & Economics
• Nashville Institute for Faith & Work
• U.S. Conference of Catholic Bishops: The Dignity of Work and the Rights of Workers

Presentations and Panels

• Why Faith@Work Matters - Katherine Leary Alsdorf
• Redefining Work - The Gospel Coalition Panel Discussion 
• Why Work Matters - Tim Keller

Books

• Culture Making - Andy Crouch
• Every Good Endeavor - Tim Keller
• Life at Work - John Maxwell 
• Work Matters - Tom Nelson

Stock Market Politics, Take 2

Last week on the eve of the election, I shared a series of predictions regarding the market's response to a Trump or Clinton presidential election victory.  Almost all of the predictions were for a swift and negative reaction to a Trump victory.  Immediate market predictions, like polling predictions, were, in a word: WRONG.  

From the Wall Street Journal:

Dow Posts Best Week Since 2011

Stocks were mixed on Friday, taking a pause to end an eventful week that pushed the Dow industrials to their best week since 2011.

The Dow climbed 0.2% on Friday to 0.2%, pushing the index up 5.4% for the week to 18847.66.

The S&P 500 dipped 0.1% on Friday to 2164.45, while the Nasdaq Composite jumped 0.5% to 5237.11.

I find myself so disorientated in this post-election reality.

Anne Tucker

A Congressional Punt on Chevron Deference

Rep. John Shimkus (R-Ill.) has already started soliciting support as he seeks to chair the House Energy & Commerce Committee. He says in his letter: 

[W]e will use our oversight and investigative authority to rebalance the federal government, recommending changes so future administrations won’t have the same ability to abuse their power.  In particular, this will entail building the case against the Chevron Deference, which has enabled executive agencies to upend congressional intent through the courts.

Our success in this area will restore Congress as the sole lawmaking apparatus of the federal government.

This is rather funny to me.  First of all, Chevron was a case during the Reagan Administration in which the Administration decided to take a view of the Clean Air Act with which the Natural Resources Defense Council, Inc. disagreed. The court sided with the Administration.  The power of deference has value to who ever is in charge of the executive branch.  

More important, though, Congress has always been the sole lawmaking apparatus of the federal government. Congress can eliminate Chevron deference by statute. Congress can repeal Massachusetts v. EPA by statute.  Congress has the power.  They are just unwilling or unable to wield it.  This is true as to the EPA and SEC and FCC and any other agency.  So, sure, one can blame the role of the courts and the executive if they don't like how agencies operate.  But I'd suggest that, for members of Congress who don't like that, the first place they should look is in the mirror.  

ICYMI: Tweets From the Week (Nov. 13, 2016)

"Candidate..Trump..blasted AT&T’s..acquisition of Time Warner..will President Trump stick to that belief?" https://t.co/PUPka6mDtM #corpgov

— Stefan Padfield (@ProfPadfield) November 10, 2016

2. "Twitter's shares rose 4.1% ... boosted by investor recognition of its role in the election outcome." https://t.co/ImQSanEL81 #corpgov

— Stefan Padfield (@ProfPadfield) November 10, 2016

"loose monetary policy helped elect..Trump..[b/c] it caused..reallocation of wealth from..the middle class" https://t.co/mzBnZfKCfl #corpgov

— Stefan Padfield (@ProfPadfield) November 10, 2016

"we are going to repeal a half dozen or more regulations in the first week of Congress" https://t.co/Ag2yW65oSz #corpgov

— Stefan Padfield (@ProfPadfield) November 10, 2016

"Investors are..repositioning their portfolios in favor of what they view as Trump Administration policies" https://t.co/YTGMpmbBGc #corpgov

— Stefan Padfield (@ProfPadfield) November 10, 2016

"Trump infrastructure plan may have a hard time finding workers" https://t.co/gwsXAdQTW9 #corpgov

— Stefan Padfield (@ProfPadfield) November 11, 2016

Suddenly I have more sympathy for people who were blindsided by the mortgage crisis

The results of Tuesday’s election stunned most people – including internal analysts within the Trump camp –  because the polling seemed to give Clinton an insurmountable lead.  She was ahead of Trump in many states, and though there was great room for uncertainty in each poll, everyone assumed that even if there were some polling errors, there were not enough to make a difference in outcome.  I.e., she could lose Ohio and Florida and still win so long as she held Pennsylvania and so forth, so it seemed as though even accounting for polling error, there was little chance she could lose.

That assumption, however, ignored the possibility that all of the errors were correlated – so that an error in one state’s polls meant that the same error would be replicated across multiple states.  That’s something that Nate Silver accounted for in his model, however, and others rejected, and it contributed to Silver's more bearish Clinton predictions.

And of course, that’s what happened with respect to mortgage backed securities as well.  Everyone knew that some mortgages would fail – and that some RMBS tranches would fail – but the assumption was that there were enough of them that any errors would not damage an entire pool.  What many (though, as with Clinton, not all) people failed to foresee was that the errors were correlated, so that they stood or fell in unison.  What seems so obvious in retrospect was difficult to understand at the time.