Business Law Prof Blog

Heading to Knoxville and Paying for Energy Peaks

As co-blogger Joan Heminway mentioned in Monday's post, I'm soon heading to Connecting the Threads VI.  I could not be more excited! I'm so grateful to the University of Tennessee Law School for hosting the Symposium, and especially Professors Joan Heminway and George Kuney, in addition to all of the hard-working, excellent law student editorial staff of Transactions: The Tennessee Journal of Business Law, who help with the Symposium and later edit and publish our symposium-related articles.  Paying for Energy Peaks: Learning from Texas' February 2021 Power Crisis, coauthored with Professor James Coleman, is my latest article in Transactions and my first in the energy space!  Here's its first paragraph (with footnotes removed):

"From February 14–19, 2021, winter storm Uri blanketed Texas with extreme cold. Tragically, the severe temperatures overwhelmed the state’s power system. Texas’ power grid ended up more than 20 Gigawatts short of the electricity Texans needed – more power than all of California produces on an average day. Over two-hundred lives were lost and an estimated $295 billion in damage resulted. Yet many had long regarded Texas’ electric power system, and its regulation, as a model for others. What happened? That question is the focus of this article."

 

UT Law Again Welcomes the Business Law Prof Blog to Knoxville!

After two years of the "Zoom version" of the annual Business Law Prof Blog symposium, Connecting the Threads VI, the live, in-person symposium is back.  Scheduled for this coming Friday, September 30, the symposium features presentations by me and fellow BLPB bloggers John Anderson, Colleen Baker, Doug Moll (with co-presenter and special guest Ben Means), and Stefan Padfield.  The agenda and more can be found here.  UT Law looks forward to hosting this event for a sixth year!

I will be speaking on The Fiduciary-ness of Business Associations.  A brief summary follows.

Fiduciary duty has historically been a core value of statutory business associations.  However, with Delaware leading the charge, limited liability company and limited partnership statutes in some jurisdictions allow equity holders to contractually eliminate fiduciary duties.  In addition, state legislatures in jurisdictions like Wyoming and Tennessee have adopted legislation that allows decentralized autonomous organizations—blockchain-based associations of business venturers—to organize as limited liability companies and avoid statutory fiduciary duties without engaging in private ordering. 

The public policy ramifications of some of these legislative moves have not been fully vetted in traditional ways or have not been completely explored in certain contexts.  Moreover, business lawyers now have more options in advising businesses and their constituents, adding to already complex matrices applicable to choice-of-entity decision making.  This presentation offers a window on recent fiduciary-related legislative developments in business entity law and identifies and reflects on related professional responsibility questions impacting lawyers advising business entities and their owners.

I look forward to seeing my co-bloggers in person, sharing some ideas, and hearing from the commentators--my UT Law colleagues and students.  BLPB commenter Tom N. is making a special appearance as the symposium lunch speaker, too.  It should be a great day all around!

Podcast on "The Shareholder Solution to Corporate Race Discrimination"

I recently had a chance to listen to an episode of the Institutionalized podcast discussing efforts by the American Civil Rights Project to combat the embrace of neo-racism by corporate America. (Cf. "In his new book, Woke Racism: How a New Religion Has Betrayed Black America, Professor John McWhorter argues that a neoracism, disguised as antiracism, is hurting Black communities in this country.")  In the course of that podcast, Dan Morenoff, Executive Director of the American Civil Rights Project, discussed a relevant recent litigation filing against Starbucks. A copy of the complaint can be found in the ACRP press release here, and here is an excerpt from that release:

Yesterday [8/30/22], for the National Center for Public Policy Research, a longtime Starbucks shareholder, the American Civil Rights Project sued Starbucks’ officers and directors. That suit – NCPPR v. Schultz et al. – seeks both to bar those officers and directors from continuing to implement racially discriminatory policies and to hold them responsible for the harms those policies have done to shareholders. This step follows the parties’ exchange of letters.  In March, the ACR Project wrote the defendants and Starbucks demanding the immediate retraction of seven racially discriminatory policies. In July, the defendants responded that Starbucks’ directors had “determined that it is not in the best interest of Starbucks to accept the Demand and retract the Policies.” That response compelled the ACR Project’s filing. The complaint argues that Starbucks’ policies violate applicable state and federal civil rights laws, creating material corporate liabilities.... “Corporate America has embraced illegal, discriminatory policies that almost all Americans oppose …,” said ACR Project Executive Director Dan Morenoff…. [Meanwhile,] Director of the National Center for Public Policy Research’s Free Enterprise Project Scott Shepard explained, “NCPPR is proud to stand up for the countless small shareholders who feel powerless to challenge Starbucks’ disregard for civil rights. It cannot be in the best interests of shareholders for Starbucks to violate a huge array of civil rights law by discriminating on the basis of race. Its officers and directors ought to be ashamed of themselves and must be held liable.”… The ACR Project’s previous demands to the Coca Cola Corporation and the Lowes Companies, Inc. ended in each abandoning its illegally discriminatory policy, without litigation.

A Wolters Kluwer summary (here) provides some additional details on the Starbucks suit:

Specifically, the plaintiff alleges that the DEI policies violate 42 U.S.C. § 1981, which codifies the Civil Rights Act of 1866 to prohibit racial discrimination in contracting. The policies obligate Starbucks to base its contracting decisions on race by adopting race-based goals for hiring employees and nominating directors; excluding some employees from career development programs based on their race; basing executive compensation on the racial composition of the workforce; choosing suppliers based on the race of their owners; and reallocating advertising funds away from vendors owned by non-minorities toward minority-owned and -targeted media companies. All these policies exclude individuals and businesses from contracts on a “but-for” basis because of their race, the complaint argues. The complaint also alleges that some of the policies violate Title VII's prohibitions on race-based employment decisions, as well as the civil rights laws of multiple states .... In addition to seeking declaratory judgment that the policies violate the above laws, the complaint also asks for a declaratory judgment that they expose Starbucks to material liabilities to private plaintiffs and governmental authorities, including the potential for uncapped damages and punitive damages…. The plaintiff alleges that the many D&O defendants breached their fiduciary duties in adopting and implementing the policies. Some or all of them knew or should have known the policies were illegal, and any who didn't could only have failed to know by failing to inquire, in breach of their duties of due care. Alternatively, the defendants learned the policies were illegal no later than March 2022, when they received the ACR Project's demand letter. The complaint also raises an alternative theory for breach of fiduciary duty, which is that the policies' adoption constituted self-dealing at the expense of Starbucks and its shareholders. The D&O defendants allegedly enjoyed the social benefits of promoting the policies, while the corporation and shareholders bear the expenses and liabilities.

The Strange Private Markets Transparency and Accountability Act

Senators Reed, Warren, and Cortez Masto recently introduced a bill to expand Section 12(g) of the Exchange Act.  The bill, as I understand it, would require that private companies with WKSI-level private valuation, or $5 bill in revenue plus 5,000 employees, would become reporting companies.

I couldn't find announcements from the sponsoring senators about the purpose of the bill, but there is this floor statement from Sen. Reed:

[T]hese companies have incredible influence over our society and way of life.  ... It should be alarming when private companies can become extremely large and influential in our economy and raise unlimited amounts of capital from an unlimited number of investors, while circumventing the basic disclosure and governance requirements that Congress sought to apply...

I wrote a whole article on how securities disclosures are nominally intended for investors, but they are used by other audiences, and the distortive effects of attempting to hijack the securities disclosure system for the benefit of stakeholders.  My point is not that stakeholders don't deserve disclosure - far from it! - but instead that we should openly create a stakeholder disclosure system rather than continue to filter stakeholder-oriented disclosures through the SEC.

This bill ... illustrates the problem.

Section 12(g) disclosures are currently tied to the number of investors a firm has, on the theory that when investors are sufficiently dispersed, they need mandatory disclosure.  This bill, by contrast, would require disclosure based solely on size, even, I take it, if a firm has only a handful of investors.  I think size is a great trigger for disclosure - it's what I recommended in my paper! - but it only makes sense if your audience is stakeholders.  And though Sen. Reed's full floor statement does nod to investor needs, his interest in protecting stakeholders seems to be the real motivator here.  But the mindset that somehow only investors are entitled to holistic disclosure forced him and his co-sponsors to try to filter still more stakeholder-disclosure through a securities disclosure system that is not designed for their needs.

How Generation, Nationality, and Expertise Influence Stakeholder Prioritization of ESG Issues Pt. 1

You can’t read the business press without seeing some handwringing about ESG. It’s probably why I’ve been teaching, advising, and sitting on a lot more panels about the topic lately. Like it or not, it’s here to stay (at least for now) so I decided to do a completely unscientific experiment on lawyer and law student perceptions of ESG using a class simulation. Over the past three months, I’ve used the topic of tech companies and human rights obligations to demonstrate how the “S” factor plays out in real life. I used the same simulation for foreign lawyers in UM’s US Law in Action program, college students who participated in UM’s Summer Legal Academy, Latin American lawyers studying US Business Entities, and my own law students in my Regulatory Compliance, Corporate Governance, and Sustainability class at the University of Miami.

Prior to the simulation, I required the students to watch The Social Dilemma,  the Netflix documentary about the potentially dangerous effects of social media on individuals and society at large. I also lectured on the shareholder v. stakeholder debate; the role of investors, consumers, NGOs, and governments in shaping the debate about ESG; and the basics of business and human rights. Within business and human rights, we looked at labor, surveillance, speech, and other human rights issues that tech and social media companies may impact.

Participants completed a prioritization exercise based on their assigned roles as either CEO, investor, government, NGO, consumer, or influencer. It’s not an apples-to-apples comparison because some groups did not look at all of the issues and some had different stakeholders. In this post, I will provide the results. In a future post, I’ll provide some thoughts and analysis.

The topics for prioritization were:

Labor- in complex global supply chains that often employ workers in developing countries, how much responsibility should companies bear for forced labor particularly for Uyghur labor in China and child labor in global mining and supply chains? What about the conditions in factories and warehouses before and during the COVID era? 

Surveillance- how much responsibility do tech companies bear for the (un)ethical use of AI and surveillance of citizens and employees?

Mental Health- how much should companies care about the impact of the “like” button and the role social media plays in bullying, self-esteem, anxiety, depression, addiction, and suicide, especially among pre-teens and teens?

Fake News- should a social media company allow information on platforms that is demonstrably false? What if allowing fake news is profitable because it keeps more eyeballs on the page and thus raises ad revenue? Should Congress repeal Section 230?

Incitement to violence- what responsibilities do social media companies have when content leads to violence? We specifically looked at some of the issues with Meta (Facebook) and India, but we also examined this more broadly.

Suppression of Speech- should a social media company ever suppress speech? This was closely related to fake news and the incitement to violence prompt and some groups combined these.  

The Rankings

 

International Lawyers (approximately 40 total participants)

The international lawyer group consisted of participants from Bolivia, Brazil, Bulgaria, Canada, Colombia, Ecuador, Egypt, Ethiopia, India, Iran, Jamaica, Mexico, Nepal, Sweden, Switzerland, and Ukraine. The group was not assigned to rank mental health as a social issue.

CEO:

1. Fake news
2. Labor
3. Surveillance
4. Incitement to violence
5. Suppression of speech

Socially responsible investors:

1. Incitement to violence
2. Fake news
3. Labor
4. Surveillance
5. Suppression of speech

Institutional investors:

1. Labor
2. Incitement to violence
3. Suppression of speech
4. Fake news
5. Surveillance

NGO:

1. Fake news
2. Labor
3. Suppression of speech
4. Incitement to violence
5. Surveillance

Consumers:

1. Incitement to violence
2. Suppression of speech
3. Fake news
4. Labor
5. Surveillance

Latin American Lawyers (approximately 10 total participants)

The Latin American lawyers combined fake news and incitements to violence with suppression of speech.

 CEOs:

1. Labor
2. Surveillance
3. Suppression of speech
4. Mental health

Investors (they chose socially responsible investors):

1. Mental health
2. Surveillance
3. Labor
4. Suppression of speech

NGO:

1. Surveillance
2. Suppression of speech
3. Mental health
4. Labor

Consumers:

1. Surveillance
2. Suppression of speech
3. Mental health
4. Labor

 

Law Students (approximately 52 total participants)

The law students considered six social issues. Several are LLMs or not from the United States, although they attend school at University of Miami.

CEOs:

1. Labor
2. Surveillance
3. Mental Health
4. Fake News
5. Suppression of Speech
6. Incitements to Violence

Investors:

1. Labor
2. Incitements to violence
3. Surveillance
4. Suppression of speech
5. Fake news
6. Mental health

NGO:

1. Fake news
2. Incitement to violence
3. Mental health
4. Labor
5. Surveillance
6. Suppression of speech

Consumers:

1. Surveillance
2. Mental Health
3. Incitement to Violence
4. Suppression of speech
5. Fake news
6. Labor

College Students

Given how little work experience this group had, I divided them into groups of CEOs, investors (no split between institutional and socially responsible investors), members of Congress, social media influencers, and consumers. They also combined suppression of speech, fake news, and incitement to violence in one category.

            CEOs:

1. Speech
2. Surveillance
3. Labor issues
4. Mental health ramifications

            Investors:

1. Labor issues
2. Speech
3. Surveillance
4. Mental Health

            Congress:

1. Speech
2. Surveillance
3. Labor
4. Mental Health

     Consumers:

1. Mental Health
2. Speech
3. Labor
4. Surveillance

            Influencers:

1. Mental Health
2. Speech
3. Labor
4. Surveillance

What does this all mean? To be honest, notwithstanding my sophisticated, clickbait blog title, I have no idea. Further, with two of the groups, English was not the first language for most of the participants. Obviously, the sample sizes are too small to be statistically significant. I have thoughts, though, and will post them next week. If you have theories based on the demographics, I would love to hear your comments. 

SEC Investor Advisory Committee Draft Climate Recomendation

The SEC's investor advisory committee recently released a draft climate disclosure recommendation.  The recommendation generally supported the SEC's proposal with some suggestions changes.  The recommendation runs just 6 pages but makes a number of thoughtful points. 

It calls for eliminating a proposed requirement for the board to disclose the climate expertise of its members in favor of a requirement for management to discuss climate-related risks and opportunities.  This strikes me as a better approach.  Investors want to have a sense about how the corporation will respond to climate change.  So long as the board can get qualified expert advice, it doesn't need to have members with direct climate-risk expertise--something that will be difficult to define anyway.

Open Legal Studies Faculty Position - University of Georgia Terry College of Business

Dear BLPB Readers:

"University of Georgia, Terry College of Business Lecturer of Legal Studies

Department of ILSRE

The Department of Insurance, Legal Studies and Real Estate in the Terry College of Business at The University of Georgia invites applications for a full-time non-tenure-track faculty position in Legal Studies at the lecturer level, beginning Fall 2023.

Candidates must hold a juris doctorate or equivalent degree. Strong communication skills and demonstrated potential for excellent teaching are required. The position is renewable based on performance and promotion to Senior Lecturer is possible after six years of service. For information regarding the requirements for each faculty rank, please see the University of Georgia Guidelines for Appointment and Promotion of Lecturers (https://provost.uga.edu/policies/appointment-promotion-and- tenure/guidelines-for-appointment-and-promotion-of-lecturers/).

Continue reading

Open Faculty Position in Real Estate at U. of Michigan Business School

Dear BLPB Readers:

"The Stephen M. Ross School of Business at the University of Michigan has a tenure-track position available in Real Estate starting in September 2023. Depending on interest and qualifications, the successful candidate will join the Finance, Business Economics, or Business Law area.  Teaching at the graduate and/or undergraduate level. Research and publishing, supervising doctoral research, and service contribution is required.  This position is open-rank."

The complete job posting is here.

Open Faculty Position in Business Law at Penn State Smeal College of Business

Dear BLPB Readers:

"The Risk Management Department in the Smeal College of Business is seeking to fill a tenure-track (open rank) appointment in Business Law effective Fall 2023. Qualified applicants with an expertise in any area of law will be considered, but the department has a particular interest in candidates with a background in UCC and commercial transactions law, securities law and financial regulation, or legal aspects of risk management. This position will have teaching responsibilities at the undergraduate level.

Please review the full posting and application link at: https://psu.wd1.myworkdayjobs.com/PSU_Academic/job/University-Park-Campus/Tenure-Track-Business-Law-Professor--Open-Rank-_REQ_0000035410-2

Consideration of applications will begin immediately and continue until the position has been filled. If you have questions about the position or process, please email [email protected]"

Zheng on "Corporations As Private Regulators"

Wentong Zheng has published Corporations As Private Regulators, 55 U. Mich. J.L. Reform 649. The paper can be downloaded here. Below is an excerpt.

In August 2018, technology giant Microsoft made headlines by announcing that it would soon require its suppliers and contractors with more than fifty employees to offer workers at least twelve weeks of paid parental leave.¹ Microsoft's new policy closely mirrors a Washington state law requiring that workers in the state receive twelve weeks of paid family leave; it is an effort to extend that same level of benefit to workers outside of the company's home state.²

While groundbreaking for the world of paid family leave, Microsoft's move was only one example of an increasingly common trend of corporations weighing in on public policy through corporate action. Following the 2018 mass shooting at Marjory Stoneman Douglas High School in Parkland, Florida, Dick's Sporting Goods banned sales of assault-style weapons and raised the minimum age for purchase of firearms and ammunition in its stores to twenty-one.³ Citigroup placed restrictions on their new retail business clients, prohibiting them from selling guns to customers who have not passed a background check and are under the age of twenty-one.⁴ Bank of America announced that it would stop lending money to gun manufacturers that make military-style firearms for civilian use.⁵ In addition to gun control, banks are taking meaningful action on immigration. In March 2019, JPMorgan Chase & Co. announced its plan to stop financing private operators of prisons and immigration detention centers.⁶ JPMorgan's move was followed by Wells Fargo, which in the same month told Congress that it was exiting its business relationship with the private prison industry.⁷ *651 As a final example, banks are facing increasing pressure from politicians and advocacy groups to stop funding oil pipelines, a major source of greenhouse gas emissions widely believed to cause climate change.⁸ In March 2020, UBS Group said it would no longer finance certain fossil fuel projects, including new offshore oil projects in the Arctic, thermal coal mines, and oil sands on undeveloped lands.⁹

In a sense, this trend of corporate action on public policy issues is a continuation of the corporate social responsibility (CSR) movement that dates back to at least the 1950s.¹⁰ As opposed to the traditional corporate model, CSR “refers to the obligations of businessmen to pursue those policies, to make those decisions, or to follow those lines of action which are desirable in terms of the objectives and values of our society.”¹¹ The earlier forms of CSR, however, featured mostly voluntary action on the part of willing corporations, be it charitable donations or corporate action to improve employee, customer, or shareholder relations.¹² For instance, during the civil rights movement, many corporations in the South hired and served African American employees and customers before the practice was widely accepted.¹³ Another example is when corporations offered employment benefits to LGBTQ employees before they were legally required to do so.¹⁴ These corporate actions were mostly voluntary, with little coercion involved.

By contrast, the recent corporate action on public policy issues heralds a fundamentally different mode of corporate activism. Instead of relying on voluntary action, corporations impose their preferred policies *652 on their suppliers, contractors, and customers. Parties on the receiving end of such corporate action are forced to either comply with the action or discontinue their business relationship with the corporation.¹⁵ More importantly, this corporate action goes above and beyond the law--parties on the receiving end of such action are required to undertake activities not required by law, or barred from activities that they are legally entitled to do.¹⁶ Through this kind of coercive action, corporations are assuming the role of regulators and are drastically changing the scope of permissible and impermissible business conduct in the marketplace.¹⁷

This scholarship is the first to discuss this new phenomenon--referred to as “Corporations as Private Regulators” (CPR) in this Article--which signifies a new mode of corporate participation in public policymaking in the United States. Traditionally, corporations affect public policy through lobbying or industry self-regulation.¹⁸ Under either of these two modes, corporations attempt to capture, manipulate, or avoid the sovereign power of the government in an effort to shape public policy in their favor.¹⁹ CPR, however, departs from these traditional modes by disregarding the sovereign power of the government and relying instead on corporations' own private regulatory power.²⁰ This changing role of corporations in public policymaking is another manifestation of the complex relationships between private businesses and government in the modern economy. Whereas governments increasingly conduct business affairs as market participants, private businesses increasingly exercise power akin to the government's regulatory power.²¹

Indicating the nuanced nature of corporations' private regulatory power, many politicians decry corporations' economic power in general but are nonetheless comfortable encouraging corporations to exercise their regulatory power--which is predicated upon their economic power--to achieve desired political outcomes.²² Political convenience aside, *653 one reason for this apparent contradiction is that the consequences and broader implications of corporations' private regulatory power have not been thoroughly scrutinized….

[T]there are no perfect solutions to the CPR problem. Tackling the problem within the existing legal framework faces serious limitations. Whether antitrust, property, or constitutional law, existing laws do not provide a natural fit for corporations exercising CPR power. A general CPR law that would prohibit large corporations from exercising CPR power on any issues is too inflexible to be practicable. For the time being, an ad hoc approach that allocates the right of refusal on a case-by-case basis appears to be the most realistic way to discipline the CPR power.

Of course, before deciding how to deal with the CPR power, society must first decide a threshold question: whether the CPR power is a problem to begin with. If society does not consider corporations wielding CPR power to be problematic and desires that corporations exercise that power, society more likely than not will embrace the status quo. If society considers the CPR power a threat to citizens' rights, it is conceivable that society will gravitate toward reformed legal arrangements in effort to reign in the CPR power. The greater the threat society considers the CPR power to pose, the more radical the legal solution society will be willing to adopt. On the far end of this spectrum is a completely revamped constitutional order under which private corporations are made subject to constitutional constraints.

Another lead plaintiff problem

A while back, I blogged about a securities fraud case where the only lead plaintiff applicant was rejected on the grounds that he had sent harassing letters to the defendants.  Ultimately, in that case, no alternative lead plaintiff ever completed a new application, and the case did not proceed as a class.  Instead, several investors proceeded on an individualized basis, and their claims were eventually dismissed.

Well, it happened again: in Bosch v. Credit Suisse Group, 22-cv-2477 (ENV), Magistrate Judge Roanne Mann held that the only proposed lead plaintiff – with a $621 stake – simply did not have enough interest in the case to justify appointment as lead. 

This is a bit more unusual than the earlier case I blogged about, though, because the denial wasn’t based on misconduct, but simply dollar value of losses.  The judge reasoned that, according to the PSLRA, the lead plaintiff must make a “prima facie showing that its claims satisfy the typicality and adequacy requirements of Rule 23,” and then held that a $621 loss rendered the plaintiff inadequate: “This Court is not satisfied that Jimenez has a sufficient interest in the litigation to vigorously pursue the claims of the class.”

The problem is, it’s pretty well established that a small financial stake by itself is not sufficient to render a plaintiff inadequate under Rule 23.  See Federal Practice & Procedure § 1767.  In other words, though Judge Mann purported to rely on Rule 23(a)’s adequacy requirement, she in fact created a much more stringent adequacy requirement that seems more to be rooted specifically in the PSLRA.  As she put it:

under the PSLRA, the lead plaintiff must have a substantial stake in the litigation to ensure it has the ability and incentive to control counsel. Institutional investors, in particular, were thought by Congress to have the sophistication and ability to control complex litigation.  Indeed, the principal focus of the PSLRA, as reflected in its legislative history, was that large institutional investors, and not class action counsel, would make the strategic decisions in the litigation….Although an institutional investor need not always be chosen as lead plaintiff, an individual investor should have comparable ability and motivation to control the litigation.

Though she cited other decisions where courts rejected small-dollar investors for the lead plaintiff spot, in all of those cases, there were other plaintiffs available; I am unaware of other decisions that simply refused to appoint any lead due to the perceived small stake of the only applicant.

As I mentioned in my prior post, this reveals one of the critical ambiguities in the PSLRA: it is unclear what the relationship is supposed to be between the lead plaintiff and the class representative, and it is concerning that class treatment might be denied without a full class certification hearing, and in the face of an available plaintiff who apparently satisfies Rule 23’s standards.

I am somewhat sympathetic to the idea that if there’s no one with a real interest in the case who wants the lead plaintiff spot, the case simply should not proceed as a class action, but on the other hand, the literal point of the class action device – its highest and best use – is to aggregate small dollar claims that would otherwise be impractical to bring. 

That said, Judge Mann did highlight an additional fact, beyond the applicant’s small stake, suggesting inadequacy:

in response to the Court’s Order of September 8, 2022, directing the movant to file a copy of his retainer agreement with Pomerantz LLP, see Scheduling Order (Sept. 8, 2022), Jimenez filed a retainer agreement bearing the same date as the Court’s Order, with a fee provision strongly favoring counsel over the putative class, see [Sealed] Retainer Agreement, DE #20. It may reasonably be inferred that no retainer agreement existed until the Court directed its production and that Jimenez failed to negotiate a fee arrangement that favors the class he seeks to represent. Simply put, Jimenez has not demonstrated that he would adequately represent the interests of class members.

And maybe that’s enough to tip it over the edge.

Open Faculty Positions - Bentley University's Law and Taxation Department

Dear BLPB Readers:

"Bentley University’s Law and Taxation Department is accepting applications for two full-time faculty positions: a tenure-track Assistant Professor of Law and a Law Lecturer, both to begin July, 2023. Application review will begin in mid-October, with preliminary interviews targeted for late October and early November. Here are the relevant links to Bentley’s hiring webpage: Bentley University tenure-track Assistant Professor of Law and Bentley University Law Lecturer The links describe the positions and required qualifications, give more information about Bentley University and the Law and Taxation Department, and contain all information necessary for submitting an application. Nonetheless, any questions about the positions or application process may be sent to Marianne Kulow, Chair of the Hiring Committee, at [email protected]"

Professor Skinner on The Monetary Executive

Today, I enjoyed reading Professor Christina Parajon Skinner's timely and important new article, The Monetary Executive, forthcoming in the George Washington Law Review.  It's definitely a worthwhile read!  Here's the abstract:

"As inflation in 2022 surges to a forty-year high, economists, lawmakers, and the public continue to question why. As part of that inquiry, experts and onlookers seek explanations grounded in errors recently made by the central bank, the U.S. Federal Reserve. This Article argues that, while there is no doubt a host of contributing factors to the current bout of inflation, the President’s role remains comparatively understudied. In particular, the Article adds a new dimension to the growing literature on the fiscal foundations of inflation by studying its longstanding statutory roots, which can be traced back to the New Deal Era. Although the Framers of the Constitution were deliberate in vesting power over money and spending with Congress, and separating it from the President, in time, Congress eroded this separation with successive ad hoc delegations directly to the Executive. As a consequence, today, the President has far more influence over money in the economy—and levers for “fiscal dominance”—than the Constitution arguably allows, casting a long shadow over the Federal Reserve’s ability to properly rein in inflation. The Article traces the development of a “Monetary Executive” through the lens of statutory delegations, and suggests the need for new constraints on Fed policy tools to help buffer against pressure from the President to increase the money supply."

Professor Skinner on The Monetary Executive

Today, I enjoyed reading Professor Christina Parajon Skinner's timely and important new article, The Monetary Executive, forthcoming in the George Washington Law Review.  It's definitely a worthwhile read!  Here's the abstract:

"As inflation in 2022 surges to a forty-year high, economists, lawmakers, and the public continue to question why. As part of that inquiry, experts and onlookers seek explanations grounded in errors recently made by the central bank, the U.S. Federal Reserve. This Article argues that, while there is no doubt a host of contributing factors to the current bout of inflation, the President’s role remains comparatively understudied. In particular, the Article adds a new dimension to the growing literature on the fiscal foundations of inflation by studying its longstanding statutory roots, which can be traced back to the New Deal Era. Although the Framers of the Constitution were deliberate in vesting power over money and spending with Congress, and separating it from the President, in time, Congress eroded this separation with successive ad hoc delegations directly to the Executive. As a consequence, today, the President has far more influence over money in the economy—and levers for “fiscal dominance”—than the Constitution arguably allows, casting a long shadow over the Federal Reserve’s ability to properly rein in inflation. The Article traces the development of a “Monetary Executive” through the lens of statutory delegations, and suggests the need for new constraints on Fed policy tools to help buffer against pressure from the President to increase the money supply."

U.C. Irvine Law Seeking Business Law and Other Faculty

The University of California, Irvine School of Law invites applications for tenured/tenure-track faculty positions and for a full-time clinical position with security of employment or the potential for security employment, all with a start date of July 1, 2023. One tenured/tenure-track position is for a faculty member whose research, teaching, and service contribute to UCI’s Black Thriving Initiative (BTI) and the Infrastructure Equity Cluster Hiring Initiative. “Infrastructure equity” is meant broadly to include the promotion of justice in a wide range of public policy areas, including environmental, transportation, water and other natural resources, land use, energy, communication, and health care law. UCI Law also invites applications for tenured/tenure-track positions, in all subject areas, with particular interest in candidates who teach and write in business law, private law, procedural law, and public law. The clinical position is for a faculty member who will either create a new clinic or co-teach in one of the law school’s existing clinics.

The School of Law is a visionary law school focused on training talented and passionate lawyers and driven by professional excellence, intellectual rigor, and a commitment to enrich our communities through public service. UCI Law, founded just 14 years ago, is the newest public law school in California and is highly regarded for its faculty and expert practical training. UCI Law offers a distinct, innovative approach to legal education that features experiential learning and interdisciplinary studies. Committed to values of public service, excellence in scholarship and teaching, and fostering a diverse, inclusive community, UCI Law is home to distinguished faculty and passionate, talented, and socially conscious students.

Applicants for tenured/tenure-track positions must hold a J.D. or a Ph.D. in a related area from an accredited institution and have demonstrated potential for outstanding teaching and scholarly achievements. Scholars from all areas of interest are encouraged to apply.

Applicants for the clinical position must hold a J.D. and be licensed to practice law in California by the end of their first year of employment. At least five years of practice experience and two years of clinical teaching experience are strongly preferred, but all applicants must have demonstrated potential for outstanding teaching achievements. Scholars from all areas of interest are encouraged to apply.

For more information about UCI Law, visit: www.law.uci.edu.

Interested candidates can obtain more information about all positions, and should submit application materials, using UC Irvine’s online application system, AP Recruit. Information on the Infrastructure Equity Cluster position is at https://recruit.ap.uci.edu/JPF07784. Information on the other tenured/tenure-track position is at https://recruit.ap.uci.edu/JPF07786. Information on the clinical position is at https://recruit.ap.uci.edu/JPF07808.

The University of California, Irvine is an Equal Opportunity/Affirmative Action Employer advancing inclusive excellence. All qualified applicants will receive consideration for employment without regard to race, color, religion, sex, sexual orientation, gender identity, national origin, disability, age, protected veteran status, or other protected categories covered by the UC nondiscrimination policy. A recipient of an NSF ADVANCE award for gender equity, UCI is responsive to the needs of dual career couples, supports work-life balance through an array of family-friendly policies, and is dedicated to broadening participation in higher education.

The Buckingham Leadership Series at Akron Law

As set forth below, on September 23 I'll be moderating two panel discussions as Akron Law hosts the Buckingham Leadership Series. The images below are JPEGs, so please click here if you'd like to register to attend (registration is free).

So I’m watching this Buzzfeed case

It’s pending in Delaware Chancery, C.A. 2022-0357-MTZ; VC Zurn heard oral arguments July 26, and presumably a decision will soon be forthcoming.

Buzzfeed was a private company that was taken public via SPAC.  Many of its employees were paid in stock and stock options, but – as was widely reported – on the first day of trading after the merger, they found themselves unable to place sell orders.  By the time it was all straightened out, Buzzfeed’s stock price had dropped significantly, and now those employees are suing Buzzfeed, its managers, and transfer agent.  They sought to bring their claims in a mass arbitration as required by their employment agreements, but Buzzfeed filed a declaratory judgment action in Delaware Chancery, arguing that because the employees’ claims are tied to their status as Buzzfeed stockholders, they are bound by the forum selection provision that was inserted into Buzzfeed’s charter when it went public, requiring that all such actions be brought in Delaware courts.

It's actually a complex case, in part because the publicly traded entity – the one with the forum selection provision – is not the entity that employed the plaintiffs.  The employing entity was merged into a shell corporation and is now a subsidiary of the publicly traded entity, and in the merger, the employees’ private company stock was converted into the stock of the public parent.

And things get even more complex than that – there are issues regarding the exact nature of the claims that the employees have (are they suing as employees, or as stockholders?), which Buzzfeed managers – of which entity – are responsible for any problems, and so forth, but for now, I actually want to point out one specific aspect of the dispute, and that’s why the employees were unable to trade their shares in the first instance.

As alleged in the pleadings, as a private company, Buzzfeed had multiple classes of stock (this is why Carta was created: to help private companies manage their cap tables, because the different classes of stock can get very complex).  And many of its employees received as compensation the same class of stock that the founder received, namely Class B stock.  When Buzzfeed decided to go public, it was also decided that Class B stock would carry 50 votes per share (to maintain founder control).  Of course, Class B stock would not publicly trade, so in the merger, only Class A stock was actually registered with the SEC.  The employees were not, allegedly, made aware of the distinction.  As a result, when employees holding Class B stock tried to sell their shares, they couldn’t – those shares were not registered!  Instead, they first had to convert their shares to Class A stock, which was doable, but time consuming, and that delay was critical. 

So the real question, here, is how did this happen?  I.e., how did ordinary line employees end up with stock carrying 50 votes per share?  I don’t know, of course, but the best I can figure is that this is a fairly dramatic example of the well, sloppiness, that has characterized some SPAC deals, which John Coates talks about here.  As he explains, a lot of the problems with SPACs – such as misaccounting for warrants – did not arise out of new issues, but simply arose out of shoddy work, and once people took a closer look at what had been done, they finally caught the errors.  Buzzfeed may present a particularly egregious example of the problem.

Are we hiring to fire?

From what I can tell, law schools are seemingly falling over one another to hire this season. Following an understandable period of dormancy, lots of schools are apparently looking to fill a lot of slots -- perhaps restocking to get back to pre-pandemic student-faculty ratios. But there appear to be some dark clouds looming. The news on college enrollments is not great (cf. "First-year and transfer enrollment at Rutgers-Camden is down 27%, and faculty are concerned"), hiring is slowing in some areas (cf. "Some law firms are 'pulling back the throttle' on hiring as expenses rise and deal work slows"), winter is coming (cf. "Europe’s household electrical bills could surge by $2 trillion by next year amid a worsening energy crisis"), and some smart market watchers are predicting a long period of significant economic pain ahead (cf. "Chamath Palihapitiya goes into detail on the 2022 economic crisis and warns about an imminent and very prolonged recession."). Of course, these sorts of predictions are fraught with peril, and -- despite the click-bait title of this post -- I'm not arguing that newly-hired faculty will be fired even if the gloomy predictions pan out (buyouts and early retirements for senior faculty are much more likely). I'm also not arguing that law schools should slam on the brakes when it comes to hiring because, as we know: "When the music stops ... things will be complicated.... But as long as the music is playing, you’ve got to get up and dance.”

ADDENDUM: You might want to avoid Googling "layoffs" if the foregoing has bummed you out (cf. "The 'scariest economic paper of 2022' predicts big layoffs over the next 2 years as the fight against inflation gets more intense").

Las Vegas Corporate Governance Summit

I'm pleased to report that registration is now open for our third annual Corporate Governance Summit to be held on Friday September 30, at the Wynn.  Co-sponsored by the William S. Boyd School of Law and Greenberg Traurig, the event features four panels and a keynote address from Jan Jones Blackhurst. 

This is our program:

8:00 a.m.
Registration and Continental Breakfast

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9:00 a.m.
Opening Remarks

•	Michael J. Bonner, Managing Shareholder, Greenberg Traurig, Las Vegas
•	Benjamin P. Edwards, Associate Professor of Law, The UNLV William S. Boyd School of Law
•	Leah Chan Grinvald, Dean and Richard J. Morgan Professor of Law, The UNLV William S. Boyd School of Law

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9:15 a.m.
“We Did What??” What No Board Wants to Hear!

•	Michael J. Bonner, Managing Shareholder, Greenberg Traurig, Las Vegas
•	Frank M. Placenti, Shareholder and Chair of the U.S. Corporate Governance Practice, Greenberg Traurig, Phoenix
•	Nancy Rapoport, Garman Turner Gordon Professor of Law & Affiliate Professor of Business Law and Ethics, The UNLV William S. Boyd School of Law & Lee Business School

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10:30 a.m.
Break

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10:45 a.m.
Dealing with Activists: When the ‘Out of Office’ Greeting is Not Enough

•	Scott Bisang, Partner, Joele Frank, Wilkinson Brimmer Katcher
•	Benjamin P. Edwards, Associate Professor of Law, The UNLV William S. Boyd School of Law
•	Yaron Nili, Associate Professor of Law, University of Wisconsin Law School
•	Paul Schulman, Managing Director – M&A and Activism Advisory Group, Morrow Sodali

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12:15 p.m.
Lunch & Keynote

•	Jan Jones Blackhurst, Las Vegas’ First Woman Mayor, Thought Leader, Senior Corporate Executive, and Experienced Corporate Board Member

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1:30 p.m.
Break

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1:45 p.m.
ESG – Doing Good and Enhancing Corporate Performance

•	Rachel Anderson, Professor of Law, The UNLV William S. Boyd School of Law
•	Barbara A. Jones, Co-Managing Shareholder of Greenberg Traurig’s Los Angeles Office, Co-Chair, Blockchain &  Digital Assets Practice
•	Linda Park, Corporate Secretary, VP & Associate General Counsel, Edwards Lifesciences Corporation (NYSE)
•	Libby Stennes, Shareholder, Greenberg Traurig
•	Jessica Strine, Managing Partner & CEO, Sustainable Governance Partners, LLC

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3:15 p.m.
Strength in Differences – Leveraging Diversity for More Effective Corporate Governance

•	Radhika Papandreou, Office Managing Partner, Chicago, Sector Leader, Travel, Hospitality & Leisure Practice, Korn Ferry
•	Liane Pelletier, Board Member, Switch, Inc. (NYSE: SWCH); Board Member, Frontdoor, Inc (Nasdaq: FTDR); Board Member, Expeditors International of Washington, Inc. (Nasdaq: EXPD); and Board Member, ATN International (Nasdaq: ANTI)

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4:45 p.m.
Cocktail Reception

U. of Michigan School of Business Tenure/Tenure-Track Faculty Positions

Dear BLPB Readers:

"Stephen M. Ross School of Business at the University of Michigan invites applications for two tenure-track professors (open rank) beginning September 1, 2023. This is an open-area search for faculty with outstanding research records and scholarly expertise related to diversity, racial and social equality and economic mobility and opportunity. The successful candidate will be appointed in one of the Ross School’s disciplinary areas: Accounting, Business Economics and Public Policy, Business Law, Finance, Management and Organizations, Marketing, Strategy, and Technology and Operations."

The complete job posting is here: Download Ross Job posting for Diversity Position