Monday, April 6, 2020

The Defense Production Act?!

In my post last week, I mentioned the President's invocation of the Defense Production Act during the current COVID-19 crisis.  I was immediately curious about this law when news of the President's March 27 memorandum focused on General Motors and ventilator production hit my radar screen (a/k/a, my laptop, which has effectively become my lap these days).  Surely, it must be unusual for the U.S. government, I thought, to direct the nature, means, and timing of production and supply.  That seems antithetical to the spirit, if not the letter, of U.S. capitalism.  However, the more I read, the less curious and concerned I am, at least for the moment.  Perhaps some of the reporting in this area is more geared to generating a splashy news item than, well, alerting us to something truly unusual or troubling.  Nevertheless, I will make a few foundational points on the Act here.  I may have more to say later.

The Defense Production Act of 1950 can be found in Chapter 55 of Title 50 of the U.S. Code.  The Act recognizes that "the security of the United States is dependent on the ability of the domestic industrial base to supply materials and services for the national defense and to prepare for and respond to military conflicts, natural or man-caused disasters, or acts of terrorism within the United States."  50 U.S.C. § 4502(a)(1). To meet these and other requirements, the Defense Production Act "provides the President with an array of authorities to shape national defense preparedness programs and to take appropriate steps to maintain and enhance the domestic industrial base."  Id. at § 4502(a)(4).

The President's highly publicized General Motors memorandum referenced above is only one of a number of formalized presidential actions citing to or using the Defense Production Act in the war against COVID-19.  That memorandum directs the Secretary of Health and Human Services to "use any and all authority available under the Act to require General Motors Company to accept, perform, and prioritize contracts or orders for the number of ventilators that the Secretary determines to be appropriate."  The General Motors memorandum follows on a March 16 executive order delegating specified presidential powers under Section 101 of the Act to the Secretary of Health and Human Services.  An April 2 memorandum directs the Secretary of Homeland Security "through the Administrator of the Federal Emergency Management Agency (Administrator), . . . [to] use any and all authority available under the Act to acquire, from any appropriate subsidiary or affiliate of 3M Company, the number of N-95 respirators that the Administrator determines to be appropriate."  A second April 2 memorandum directs the Secretary of Health and Human Services, "in consultation with the Secretary of Homeland Security, . . . [to] use any and all authority available under the Act to facilitate the supply of materials to the appropriate subsidiary or affiliate of the following entities for the production of ventilators: General Electric Company; Hill-Rom Holdings, Inc.; Medtronic Public Limited Company; ResMed Inc.; Royal Philips N.V.; and Vyaire Medical, Inc."  Finally, an April 3 memorandum directs the Secretary of Homeland Security "through the Administrator of the Federal Emergency Management Agency, in consultation with the Secretary of Health and Human Services, . . . [to] use any and all authority available under section 101 of the Act to allocate to domestic use, as appropriate, . . . [specified] scarce or threatened materials designated by the Secretary of Health and Human Services . . . ."  The President also issued a related statement on April 3 that decries "wartime profiteering."

Although the use of the Defense Production Act in directing production during the ongoing COVID-19 crisis may be novel in its nature or scale, Fortune reports that the Act is used "routinely" to prioritize contracts relating to military procurements and in response to natural disasters.  Other past uses also are mentioned in that Fortune article.  None of the President's actions to date invoking the Act as to production by specific firms is in the form of an executive order.  However, the President is afforded many powers under the Act, see 50 U.S.C. § 4554(a) (providing in relevant part that "the President may prescribe such regulations and issue such orders as the President may determine to be appropriate"), although they are subject to certain limitations (including, e.g., broad-based restrictions relating to "wage or price controls" and "chemical or biological weapons" under 50 U.S.C. § 4514).

Even without the issuance of enforceable presidential orders, however, those charged with manufacturing under the various presidential memoranda are (and in some cases, prior to presidential action, were) scrambling to make up for lost time.  A report published over the weekend in The Washington Post describes the status of some of their efforts.  CNBC's similar report is here.  Time weighed in a few days earlier with its story.  Finally, an earlier report from The New York Times offers historic details relevant at that time.  Private industry has been stepping up in so many ways during the pandemic.  With all the hullabaloo around the Defense Production Act, we all should know about and be proud of that.

As for the actual COVID-19 business operational effects of the powers afforded to the President under the Defense Production Act, they remain to be seen.  My interest has been whetted, however, and I will be paying attention to future invocations of the Act not only in the COVID-19 crisis, but also in other contexts.  My perception is that it is one of the lesser-known laws that can impact business in a significant ways if the full force of its provisions is employed.  It is legislation--even 70 years out--that all of us business lawyers and law professors should be aware of.

April 6, 2020 in Current Affairs, Joan Heminway, Legislation | Permalink | Comments (2)

Thursday, April 2, 2020

Notice of Postponement - Emory Transactional Law and Skills Education Conference

Please note the following regarding the postponement of the biennial conference at Emory law, previously posted and promoted on the BLPB here:

Due to the uncertain length of the COVID-19 global pandemic, and out of an abundance of caution, we have decided to cancel the Transactional Law and Skills Education Conference currently scheduled for June 5-6, 2020. 

We will re-schedule the Conference and revisit our theme – “Hindsight, Insight, and Foresight: Transactional Law and Skills Education in the 2020s” – when it is appropriate and safe to do so.

If you have already registered for the Conference, we will refund your money.  If you have submitted a proposal or a nomination for the Tina L. Stark Award for Teaching Excellence, you will have the opportunity to resubmit your proposal or nomination when we establish the new Conference date. 

If you have already reserved a room at the Emory Conference Center Hotel please call them at 800.933.6679 to cancel your reservation.  For other Conference-related questions, please contact our Conference Coordinator, Kelli Pittman at kelli.pittman@emory.edu.

During this period of “social distancing,” we are proud to be members of a community of transactional law and skills educators dedicated to excellence.  We look forward to re-scheduling the Conference and welcoming you back to Emory.

April 2, 2020 in Conferences, Joan Heminway, Teaching | Permalink | Comments (0)

Wednesday, April 1, 2020

Guest Post: Lessons on Teaching with WebEx and Managing Expectations

This post comes to us from friend-of-the BLPB Nadia B. Ahmad.  Many thanks to her for this contribution.  Her post follows nicely on the spirit of my "Teaching through the Pandemic" posts, which can be found here and here.  My favorite part may be the bit on "Troubleshooting Life and Expectations."

image from cdnimages.barry.edu

As I begin this post on Sunday, March 29, 2020, there are currently 674,466 confirmed cases of coronavirus (COVID-19). Immunology and infectious disease researchers are working round the clock with their heads down for a cure and a vaccine, but we have nothing in the near term for an end to this situation. The markets have been a tumbling since January 2020 and spiraling downward since March 2020. Even Brexit and the deceleration of China's economy could not have expected this downturn in the market.  

On March 12, 2020, I taught my last in person Business Organizations class for the semester. For the first half of the class, I had the students complete a practice essay in Canvas on the business judgment rule. The remainder of the time, I had them join via WebEx on their laptops. In that class, approximately 40 percent of the students were able to login to WebEx via Canvas for a lecture of derivative litigation. The rest could join with a direct link. During that triage session while they were in the room, I learned how to troubleshoot connectivity issues with the help of my students. For the past two weeks of online learning, I have had 100 percent attendance in both my classes and student engagement is up as well.

I wanted to share some insights related to teaching via WebEx as well as online teaching generally.

Learning WebEx’s Virtual Classroom

Spending some time on YouTube helped me with figuring out how the platform works. The university also offered some training sessions, but I found YouTube video easier to help me.

Troubleshooting WebEx

Periodically, WebEx may be down altogether because of the load on its system, you can check WebEx’s global status here.

For troubleshooting WebEx audio issues, visit here.

For WebEx video support, visit here.

Some students may have a weak Wifi connection. To alleviate this issue, I also provide the dial-in number. Only one or two students have this issue, but it is also a reliable backup if students cannot connect via WebEx. To locate the dial-in number for your WebEx meeting, visit here.

Checking Hardware and Connectivity (WiFi and Audio)

Some issues with WebEx meeting will be unrelated to the platform itself. While your computer’s existing audio and video functionalities may work, I have found that using a microphone enhances the audio experience. I used Professor Josh Blackman recommendation of the Blue Snowball USB microphone.

Check your high speed internet connection here. You should be running at around 50 mbps. If your internet connection is slower, consider an upgrade in speed.

Troubleshooting Life and Expectations

As an introvert, I welcome this scaling back on social interactions on some levels. At the same time, I miss my students. I have chosen to do hybrid asynchronous/synchronous sessions. I record part of my lectures, but also have live class sessions as well. I was bit nervous to record the classes until I actually did do it and later read a post by Professor William Fischer (Harvard) on Emergency Online Pedagogy. Recording classes is considerate of not only students, but the server. Fischer writes:

First, the quality of a pre-recorded lecture is likely to be substantially higher than that of lecture delivered live. Pre-recorded lectures can be constructed in segments — which can then either be posted online separately (like this) or stitched together and posted online as a single unit. If you are not happy with one segment, you can discard and replace it. Equally important, it is much easier to integrate graphics and audiovisual material in a pre-recorded lecture. (Some techniques for doing this will be discussed shortly.) Last but not least, pre-recorded lectures can be edited.

Having used both formats, I am now strongly in favor of pre-recorded rather than live lectures. Feedback from my students over several years makes clear that they share this preference. My lectures are significantly tighter and clearer when I record them in advance. You may think that you can produce an elegant lecture in “one take,” and perhaps you are right — but I confess that I thought so as well until I watched a recording of one of my unedited presentations.

The second advantage of a pre-recorded lecture is that it is not vulnerable to a major technological threat posed by the sudden and massive shift to online education prompted by the pandemic. … Betting a class on the availability of Zoom [or WebEx] at a particular time is thus risky. By contrast, a pre-recorded lecture can be uploaded to the Internet at any time. In addition, students need not “stream” it, but instead can download it to their computers and then watch it at their convenience. This delivery method is far less vulnerable to technological overload. In addition, the larger the number of teachers who rely on pre-recorded lectures, the smaller will be the aggregate burden imposed on Zoom [and other platforms] and thus the greater the likelihood that it will be available when we need it.

Part of wanting to record a portion of the lectures is also a practical matter for me. I have three kids (ages 2.5, 6, and 9) and my partner is a health care worker and is still working. At any rate, I look forward to welcoming week #4 of online learning and will share tips on integrating current events into discussion on business organizations, the markets, and derivative litigation.

April 1, 2020 in Joan Heminway, Law School, Teaching, Technology | Permalink | Comments (0)

Monday, March 30, 2020

When Your Former Students Make You Proud . . . And Make You Laugh

COVID-19's effects on financings and M&A, as well as contracts more generally (as covered here, here, and here among many other places), the rapid adoption of the Coronavirus Act, Relief, and Economic Security Act, a/k/a the “CARES Act” (key terms summarized briefly here and elsewhere), and the President's invocation of the Defense Production Act have me feeling like I am drinking business law water out of a fire hose this past week.  Anyone else feeling that way?  Whew!

I am still sorting through it all.  I am sure that I will have more to say on some of this as time passes.  However, earlier today, in the process of reading online resources and watching and listening to others talk about the many legal aspects of the current pandemic, I came across this YouTube video, done by one of my former students, a local attorney who works with entrepreneurs, start-ups, and small businesses.

I have not fact-checked this video.  And he jumps in to correct himself.  But what I like about it is that it represents unvarnished, even humorous, boots-on-the-ground legal public service.  He does not want businesses in the local community to miss out or waste time/money shooting in the dark--or in the wrong direction.  

Sometimes, our students do great things after they leave the hallowed halls of law school.  Many times, those good deeds go unrecognized.  Haseeb has always been passionate.  It makes me so happy to see him using his passion to help the local business community.  I want to offer a "shout out" to him here.  (And his dog, Simon, is the cutest! ♥)

March 30, 2020 in Current Affairs, Entrepreneurship, Joan Heminway, Legislation | Permalink | Comments (0)

2020 SEALS Conference - Update

Here is the latest on this summer's annual conference for the Southeastern Association of Law Schools (SEALS), scheduled for July 30 - August 5 at the Marriott Fort Lauderdale, from SEALS Executive Director Russ Weaver:

Dear Deans, Program Committee members and SEALS friends,

First, and foremost, I hope that everyone is staying well and adjusting to the new normal in legal education (with all classes being taught online).

Second, I want to let you know that SEALS’ Board of Trustees is meeting regularly to assess how to move forward on this summer’s meeting. At this point, the situation is uncertain and no decision has been made. However, the Board is meeting regularly and constantly assessing/reassessing the situation. As the situation becomes clearer, we will be making further announcements.

Third, I also want to let you know that, in order to ensure that no attendee is placed in a difficult situation, SEALS has moved the registration cancellation date back to July 1st. In other words, you can cancel your registration and receive a full refund through July 1st. Hopefully, by that time, we will be able to more accurately assess whether our meeting will go forward and in what form.

In the meantime, please stay safe!

Russell L. Weaver
Professor of Law & Distinguished University Scholar
University of Louisville
Louis D. Brandeis School of Law
Louisville, KY 40292
Email: russ.weaver@louisville.edu
PH: (502) 852-6559
FAX: (502) 852-0862

I currently serve as an officer of SEALS.  Fee free to contact Russ, me, or any SEALS officer or board member if you have any questions.

March 30, 2020 in Conferences, Joan Heminway | Permalink | Comments (0)

Monday, March 23, 2020

Teaching through the Pandemic - Part II

I write today to share some Zoom connectivity tips that I have accumulated since my first post on this topic.  I spent class time before (and personal time during) Spring Break, which concluded for us yesterday, testing Zoom connections with students--working with them to overcome barriers to clear Internet communications using Zoom.  My collected tips, which I shared with my students yesterday, are pasted in below.  

Some items on my tip list may not be applicable to you and your students.  Most are mentioned elsewhere; and if you already have been teaching using Zoom for a week or more, you may well have already figured all this out in any case.  Nevertheless, I thought it might be useful to share my "top five" here.

1. Close out of open files and applications before you join in on our class meeting.  Allow your computer to focus its activity on our class exclusively.1

2.  If you are sharing bandwidth in your household, ask your household members if they can schedule their usage around your class meetings.  Internet speed issues can have a real effect on the performance of video conferencing software.2

3.  Log in through the campus's Zoom page, [the url for that page was included here in the original].  It seems to work better than than logging in through the Zoom app directly.  But each of us may want to try each way on our own to see if it makes a difference.3

4.  Download the Zoom app for your phone.  If your Internet connection fails, you may be able to join or re-join class from your phone, assuming your data plan can support that use.4

5.  Remember that you can test your audio or video on Zoom by clicking on zoom-us in the tool bar and clicking on Audio or Video.  You will see the test options there.  Please run those tests before class!5

I also reminded my students to log into class about ten minutes early to best ensure that their links to the class meeting are as strong as possible once class begins.

Nothing in my tip list is Earth-shattering.  But if you are troubleshooting Zoom connection issues with a student, perhaps one or more of these tips will help.  Regardless, I hope that everyone settles into a productive, happy online teaching experience.  If you are like me, you'll figure out a way to ensure that your students are getting what they need, one way or another. 

Leave your own tips in the comments.  They are appreciated.  Footnotes are included below.

____

From the Zoom blog:

During a meeting, other applications have a way of intruding and asking for attention from your CPU or broadband connection. While downloading information through a broadband connection, the application doing the downloading is competing with Zoom. The same occurs when you use CPU-intensive applications: they steal precious ticks from your processor.

When streaming 30 frames per second, your camera is taking 30 pictures of you each and every second, then sending them to the processor with instructions to forward the images through Zoom. Zoom uses your processor to send the images to your network card, which transmits the data to its destination. This process requires the energy of your CPU. To engage in the smoothest possible meetings, close any applications you don’t need to use for the meeting itself. It’s that simple.

2 Zoom's recommended system requirements can be found here.

3 Our campus has a super webpage dedicated to Zoom with a list of linked support documents.  Yours probably does, too.

4 Zoom has a webpage dedicated to information for mobile users.

5 Zoom offers a streamlined process for testing audio and video from the view screen at this webpage (which includes, among other things, a brief video).

March 23, 2020 in Joan Heminway, Teaching, Technology | Permalink | Comments (0)

2020 National Business Law Scholars Conference - CFP Deadline Extended

This follows on my post from last week regarding the 2020 National Business Law Scholars Conference, scheduled for June 18-19, 2020 at The University of Tennessee College of Law.  The planning committee conferred a few days ago and, in recognition of the current state of affairs, determined to extend the deadline for paper submissions to Friday, April 24.  We hope that this takes some pressure off faculty who would like to submit a paper for inclusion in the conference but are wrestling with new challenges and stressors in transitioning to teaching online.

Again, please contact me at jheminwa@tennessee.edu or any other member of the planing committee listed below with questions.  Eric Chaffee handles paper submissions and scheduling.  Accordingly, he is the best person to contact if you need to address specific submission issues or scheduling constraints.  His email address is eric.chaffee@utoledo.edu.

Afra Afsharipour (University of California, Davis, School of Law)
Tony Casey (The University of Chicago Law School)
Eric C. Chaffee (The University of Toledo College of Law)
Steven Davidoff Solomon (University of California, Berkeley School of Law)
Joan MacLeod Heminway (The University of Tennessee College of Law)
Kristin N. Johnson (Tulane University Law School)
Elizabeth Pollman (University of Pennsylvania Carey Law School)
Jeff Schwartz (University of Utah S.J. Quinney College of Law)
Megan Wischmeier Shaner (University of Oklahoma College of Law)

March 23, 2020 in Call for Papers, Conferences, Joan Heminway | Permalink | Comments (2)

Monday, March 16, 2020

2020 National Business Law Scholars Conference - CFP Deadline in Two Weeks!

Thanks to all who have been registering and submitting papers for this year's National Business Law Scholars Conference, scheduled for June 18-19 at The University of Tennessee College of Law.  I posted on the conference last month.  The conference planning committee, like so many others, is monitoring the COVID-19 situation.  At present, the conference is still a "go," and we remain excited about it!

The deadline for paper submissions is March 31.  We hope that you are inspired to submit.  The conference website can be found here.  The planning committee understands that many (most?) of us are currently subject to institutionally imposed travel restrictions.  Please know that if you submit a paper and are unable to attend due to travel restrictions, you may withdraw your paper.

Comments can be left here, or feel free to email me or any other planning committee member for more information.  Paper submission questions are best directed to Eric Chaffee.  The planning committee members are listed again below, for your convenience.

Afra Afsharipour (University of California, Davis, School of Law)
Tony Casey (The University of Chicago Law School)
Eric C. Chaffee (The University of Toledo College of Law)
Steven Davidoff Solomon (University of California, Berkeley School of Law)
Joan MacLeod Heminway (The University of Tennessee College of Law)
Kristin N. Johnson (Tulane University Law School)
Elizabeth Pollman (University of Pennsylvania Carey Law School)
Jeff Schwartz (University of Utah S.J. Quinney College of Law)
Megan Wischmeier Shaner (University of Oklahoma College of Law)

March 16, 2020 in Call for Papers, Conferences, Joan Heminway | Permalink | Comments (0)

Friday, March 13, 2020

Teaching through the Pandemic - Part I

So glad Colleen published the Skadden information in her post earlier today.  I had considered doing that, too.  Instead, I will add two links to the growing knowledge base.  They both relate to teaching during these challenging times.  Then, I will offer a few thoughts of my own.

First, friend-of-the-BLPB Seth Oranburg alerted me to some distance education tips he has posted.  They can be found here.  I appreciate him taking time to write his ideas out and get this essay posted.

Second, Josh Blackman posted tips on teaching using Zoom here.  Some of us are more familiar with videoconferencing technology than others.  I have not taught more than a few classes online, but I am comfortable with Zoom.  A few of Josh's ideas were new to me and seem very useful in the emergent online teaching environment.

Since most law students will be taking all of their courses (as well as conducting meetings and continuing to do much or all of their reading and written work) online, the possibility of boredom and internet overload/online burnout is very real.  As someone who recently suffered from digital eye strain (a/k/a computer vision syndrome), I also am concerned about the possibility that some students will have to combat that.  It will be more important than ever that we take time away from our electronic devices to ensure good physical, psychological, and emotional health.  

Nevertheless, I am toying with continuing to teach my Wednesday law school yoga class online (students already have asked about it) while UT Law is closed to students, since maybe just hearing my voice and doing yoga together could be helpful and healing.  (And at least they would not have to check their phones or computers visually unless they had a question about a pose!)  Not sure about that yet . . . .

I expect to write more about this.  And maybe some of my co-bloggers will do the same.  Comments are always appreciated, too.  Let's all support each other in the brave new teaching world so many of us are facing.

 

March 13, 2020 in Joan Heminway, Law School, Teaching, Web/Tech | Permalink | Comments (0)

Monday, March 9, 2020

Curiosity and Skepticism Make Me Want To Read This Article . . . .

Friend of the BLPB and fellow crowdfunding researcher Andrew Schwartz recently posted this article on SSRN: Mandatory Disclosure in Primary Markets, 2019 Utah L. Rev. 1069.  I was provoked by the abstract, which reads as follows:

Mandatory disclosure—the idea that companies must be legally required to disclose certain, specified information to public investors—is the first principle of modern securities law. Despite the high costs it imposes, mandatory disclosure has been well defended by legal scholars on two theoretical grounds: ‘Agency costs’ and ‘information underproduction.’ While these two concepts are a good fit for secondary markets (where investors trade securities with one another), this Article shows that they are largely irrelevant in the context of primary markets (where companies offer securities directly to investors). The surprising result is that primary offerings—such as an IPO—may not require mandatory disclosure at all. This profound insight calls into question the fundamental premises of the Securities Act of 1933 and similar laws governing primary offerings around the world. Reform of these rules could lead to a new age of simplified, low-cost primary offerings to the public, something that is already happening in New Zealand through its equity crowdfunding market.

As someone who believes that federal law should provide an exemption for small crowdfunded offerings (although current rule-making proposals instead look to ratchet up the aggregate offering prices for the federal crowdfunding exemption) with lighter mandatory disclosure obligations than those provided for under Title III of the Jumpstart Our Business Startups Act and Regulation Crowdfunding, I found myself very curious about Andrew's paper.  So, I skimmed it (since I do not have time to read it in full at the moment).  I am glad to see that the article raises a distinction worth more exploration in the mandatory disclosure space--that between primary and secondary offerings.  But I admit to some skepticism about the overall thesis as to the lack of value of mandatory disclosure in primary offerings.  I hope a thorough review of the paper will provide important information and analyses.  

As the abstract and a recent post on the article on The CLS Blue Sky Blog indicate, the paper highlights for attention two of the theoretical values of mandatory disclosure for examination: its positive effects on agency costs and on information underproduction.  Given those ostensible focuses, here are a few things I will be looking for as I read:

  • An articulation of the different types of agency costs associated with initial public offerings (IPOs) and other primary offerings (as evidenced in the literature) and their relationship to mandatory disclosure obligations, as well as observations on the effects of mandatory and voluntary disclosure on those agency costs;
  • A rationale for why other theories supporting mandatory disclosure regulation are seemingly marginalized or omitted in the paper, including (1) standardization to facilitate investor comparisons and contrasts (which it seems is mentioned in a few footnotes) and (2) efficient capital market theory applications in the IPO disclosure context (including, perhaps, those impacting observed underpricing/overpricing market effects); and
  • An explanation of the role, if any, of investor sophistication and information access (which, together with mandatory disclosure, have framed analyses of the value of mandatory disclosure since the Court's Ralston Purina decision more than 65 years ago) in the article's analyses and overall thesis.

By quick inspection, it appears that the agency costs addressed are restricted to those borne of a manager-shareholder relationship that relies on a somewhat legalistic, rather than economic, concept of agency that would arise only after investors in the market purchase shares of corporate stock in an offering and become shareholders.  I wonder about the role of managers and others as promoters of the offering . . . .  Standardization is at least mentioned in a few places.  And as to the third bullet point, it looks like the answer the paper proffers is that institutional investors will drive significant voluntary disclosure to be made to all in a manner that gets information to the market efficiently.  If that is the argument, I look forward to seeing the evidence.  

So, I am curious, but I remain skeptical.  I am reserving judgment until I read the article in its entirety!  Regardless, this work has my attention, for sure.  Let me know if you have read it and, if so, what your reactions are.  Andrew also may want to comment.

Independent of the mandatory disclosure arguments, I know that I will enjoy reading about New Zealand's crowdfunding experience.  I do find comparative regulatory work like this very enlightening.  I appreciate Andrew adding that to the mix, too.

March 9, 2020 in Corporate Finance, Crowdfunding, Joan Heminway, Securities Regulation | Permalink | Comments (2)

Monday, March 2, 2020

The Health Care Crisis Through A Business Law Frame

I recently had occasion to offer background to, and be interviewed by, a local television reporter about a publicly traded firm that owns several health care facilities in East Tennessee and has been financed significantly through loans from and corporate payments made by a member of its board of directors.  The resulting article and news clip can be found here.  Since the story was published, a Form 8-K was filed reporting that the director has resigned from the board and the firm is negotiating with him to cancel its indebtedness in exchange for preferred stock.

In reviewing published reports on the firm, Rennova Health, Inc., I learned that it had been delisted from NASDAQ back in 2018.  The reason?  The firm engaged in too many stock splits.

I also came across an article reporting that another health care firm, a middle Tennessee skilled nursing provider, Diversicare Healthcare Services, Inc., had been delisted in late 2019.  The same article noted two additional middle Tennessee health care firms also were in danger of being delisted from stock exchanges.  One was subsequently delisted. 

Health care mergers and acquisitions also have been in the news here in Tennessee.  A Tennessee/Virginia health care business combination finalized in 2018 is one of two under study by the Federal Trade Commission.  The combining firms, Mountain States Health Alliance and Wellmont Health System, avoided federal and state antitrust merger approvals and challenges through the receipt of a certificate of public advantage (COPA) under Tennessee law and a coordinated process in Virginia.  The resulting firm, Ballad Health, is an effective health care monopoly in the region and has had well publicized challenges in meeting its commitment to provide cost-effective, quality patient care.

I can only assume that these health care corporate finance issues in Tennessee are a microcosm of what exists nationally.

All of this has made me interested in the U.S. healthcare industry as an engaging and useful lens through which one could teach and write about the legal aspects of corporate finance . . . .  Many of the current business law issues in U.S. health care firms stem from well-known financial challenges in the industry and the related governmental responses (or lack thereof).  With public debates--including in connection with this year's presidential caucuses, primaries, and election--over the extent to which the federal government should provide financial support to the health care industry under existing conditions and whether the health care industry has become too big to fail, health care examples and hypotheticals seem very salient now, in the same way that banking or telecomm examples and hypotheticals may have had pedagogical and scholarly traction in corporate finance in the past.  

Some of the business law issues facing U.S. health care firms may be quite the same as they are for firms in any other industry.  Yet, some also may be unique to the health care industry and worth further, individualized exploration in the classroom or in the research realm.  For example, innovation and entrepreneurship--intricately tied to corporate finance--may be different in the health care space, as currently configured in the United States.  This article makes arguments in that regard.

In all, it seems there is a synergy worth examining in the connections between the U.S. health care crisis and business law teaching and research.  Unless and until something fundamental changes in the U.S. health care delivery system, corporate finance lawyers and professionals are likely to have important (if somewhat hidden) roles in ensuring that health care firms survive while providing cost-effective care to those who need it.  Business law analyses and innovations are sure to play strong roles in this environment, making business law professors key potential contributors. Time for us to step up and take the challenge!

March 2, 2020 in Corporate Finance, Current Affairs, Entrepreneurship, Joan Heminway, M&A, Research/Scholarhip, Teaching | Permalink | Comments (0)

Monday, February 24, 2020

National Business Law Scholars Conference 2020 @ The University of Tennessee College of Law

National Business Law Scholars Conference (NBLSC)

June 18-19, 2020

Call for Papers

The National Business Law Scholars Conference (NBLSC) will be held on Thursday and Friday, June 18-19, 2020, at The University of Tennessee College of Law.

This is the eleventh meeting of the NBLSC, an annual conference that draws legal scholars from across the United States and around the world. We welcome all scholarly submissions relating to business law. Junior scholars and those considering entering the academy are especially encouraged to participate. If you are thinking about entering the academy and would like to receive informal mentoring and learn more about job market dynamics, please let us know when you make your submission.

Please use the conference website to submit an abstract or paper by March 31, 2020.  If you have any questions, concerns, or special requests regarding the schedule, please email Professor Eric C. Chaffee at eric.chaffee@utoledo.edu. We will respond to submissions with notifications of acceptance shortly after the deadline. We anticipate the conference schedule will be circulated in May.

Conference Organizers:

Afra Afsharipour (University of California, Davis, School of Law)
Tony Casey (The University of Chicago Law School)
Eric C. Chaffee (The University of Toledo College of Law)
Steven Davidoff Solomon (University of California, Berkeley School of Law)
Joan MacLeod Heminway (The University of Tennessee College of Law)
Kristin N. Johnson (Tulane University Law School)
Elizabeth Pollman (University of Pennsylvania Carey Law School)
Jeff Schwartz (University of Utah S.J. Quinney College of Law)
Megan Wischmeier Shaner (University of Oklahoma College of Law)

February 24, 2020 in Call for Papers, Conferences, Joan Heminway | Permalink | Comments (0)

Monday, February 17, 2020

Designing Legal Documents

In an email exchange with Stanford business law clinician Jay Mitchell, I learned of this intriguing post on legal document design.  Jay takes the design thinking context way beyond my "legal design" idea of using IRAC in corporate finance drafting as a means of ensuring that students are engaging with applicable law and norms in their drafting, and in doing so, he makes a number of interesting observations and points that relate to both document planning and drafting, on the one hand, and teaching planning, drafting, and overall business law practice, on the other.  Here are a few.

  • "The physical design of clinic work-products and client communications is a constant concern. It’s humbling, idea-generating, and inspiring to look at graphic design and wayfinding books and see great solutions to complex information design challenges."
  • "Our world is one of entities; structures; flows of information, money, and property rights; time periods; decision-making processes; legal, tax, and accounting principles; and dense and difficult documents — and then helping clients operationalize all this across multiple functions and geographies. Seems like we need good tools for capturing, assessing, and conveying information. Visual executions can provide those tools. They have great communicative capacity: shape, color, line, line weight, line effects, and white space are all at hand, and, as noted, people just get pictures."
  • "Design outlooks and practices seem to distill and operationalize knowledge, from a variety of disciplines, in ways relevant to a lawyer, service provider, professional writer, and producer of tangible products. Our clients notice the attention to user, context, and functionality, as well as factual and legal accuracy, in our advice, client communications, contracts, and governance materials."
  • "In a setting where students are drafting and doing other legal tasks for the first time, we need to give them room to try, receive feedback, and try again."
  • After advocating sketching (using shapes, colors, etc. on a whiteboard) with students: "Sketching enables us to visibly and slowly break down a situation, and then to build it back up, step by step. It lets, or maybe forces, us to leave out detail; it helps reveal higher-order relationships that are otherwise difficult to discern. It helps us define the problem and possible solutions. Those qualities make it a good tool for identifying the most important features in an unstructured environment . . . ."
  • "What are seen as core elements of design thinking are now familiar: observation, empathy, ideation, and experimentation. Designers focus on the realities and needs of people for whom they’re designing a product or process. They frame problems and generate lots of ideas. They test those ideas through low-fidelity prototypes, over and over. They try to “keep people at the center” of their work. These are useful notions for the clinical teacher or senior lawyer working with new lawyers." (footnote omitted)

Jay notes along the way in describing the impact of design thinking on his teaching and practice: "I’ve learned more about legal documents, about their features and footprints, about what they demand of user and thus producer. Which leads to thinking harder about what to make, what to include, and how to present information in effective ways. And to productive discussions with students not only about work-product but also client respect and client reality."  Great stuff.  I know that our contract drafting curriculum at UT Law focuses on presentation as well as content (as do, I am sure, most similar law school programs of that kind).  Jay's post is great food for thought in executing on that focus.

February 17, 2020 in Contracts, Joan Heminway, Teaching | Permalink | Comments (0)

Monday, February 10, 2020

Me, Too and #MeToo: Women in Congress and the Boardroom

My short essay, "Me, Too and #MeToo: Women in Congress and the Boardroom," was recently published in the George Washington Law Review.  The abstract follows.

The “Year of the Woman” (1992) and the year of #MeToo (2018) were landmark years for women in federal congressional elections. Both years also represent significant milestones for women’s roles as U.S. public company directors. In each of these two years, social context was interconnected with these political and corporate gender changes. The relevant social context in 2018 is most clearly defined by public revelations of sexual misconduct involving a significant number of men in positions of political and business power. The relevant social context in 1992 similarly involved specific, highly public disclosures and allegations of sexual misconduct.

These parallels beg many questions. In particular, one may ponder whether the correlation between social context and congressional or public company board elections is coincidence or something more. Apropos of the current era, those of us who focus on corporate board diversity may wonder whether looking at the election of women to Congress and corporate boards in the #MeToo era provides any insights or lessons about female corporate board representation.

This brief Essay examines and comments on possible gender effects of the #MeToo movement on public company board composition in relation to the possible gender effects of the #MeToo movement on the composition of legislative bodies. Although #MeToo has clarified, and perhaps expanded, the salient connections between business issues and women’s issues, those who have the power to elect corporate directors may not fully recognize this connection or other factors as unique values of female corporate board participation. Until additional female membership on corporate boards is substantively valued, swift sustainable changes in the gender makeup of corporate boards may not be realizable without specific, enforceable legal mandates. Although California’s state legislature has taken a bold step in this direction in the #MeToo era, it seems unlikely that additional state legislatures will follow its lead. As a result, the pace of change in corporate board gender composition is likely to continue to be more evolutionary than revolutionary.

I appreciate the opportunity to publish these thoughts generated in connection with a conference held at GWU Law back in 2018.  The conference, "Women and Corporate Governance: A Conference Exploring the Role and Impact of Women in the Governance of Public Corporations," featured a number of super panels.  I had the opportunity to moderate one ("Women as Counsel and Gatekeepers") and publish this piece.

February 10, 2020 in Corporate Governance, Corporations, Current Affairs, Joan Heminway, Management | Permalink | Comments (0)

Friday, February 7, 2020

7th Biennial Conference on the Teaching of Transactional Law and Skills

 

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CALL FOR PROPOSALS AND REGISTRATION INFORMATION

Emory’s Center for Transactional Law and Practice is delighted to announce its seventh biennial conference on the teaching of transactional law and skills.  The conference, entitled Hindsight, Insight, and Foresight: Transactional Law and Skills Education in the 2020s,” will be held at Emory Law, beginning at 1:00 p.m. on Friday, June 5, 2020, and ending at 3:45 p.m. on Saturday, June 6, 2020.

Come together with your colleagues and friends in Atlanta to reflect upon transactional law and skills education and ponder the answers to three vital questions:

  • Where have we been?
  • What have we learned?
  • Where are we going?

Our keynote speaker – to be announced soon – will elaborate on our theme. In addition, conference attendees will participate in a workshop to create a vision for transactional law and skills education in the 2020s (the “Vision Workshop”).  Finally, we will bestow the second Tina L. Stark Award for Excellence in the Teaching of Transactional Law and Skills.  (For information about how to nominate yourself or someone else for this award, please click here.)

CALL FOR PROPOSALS

 

We are accepting proposals immediately, but in no event later than 5 p.m. on Friday, March 20, 2020. 

We welcome you to present on any aspect of transactional law and skills education as long as you view it through the lens of our theme.  For example, if you present about a course, curriculum, or program, tell us how it’s worked, what you’ve learned, and how you envision it evolving over time.  Alternatively, you may want to focus on just one of the three questions. For example, if you present a “Try-This” session, you may want to examine what you have learned from teaching the exercise a number of times – and even from preparing to teach it to your colleagues. 

We also welcome proposals that address the big picture.  Maybe you have a scheme to address the legal education system’s tendency to value litigation skills training above transactional skills training.  Perhaps you have experience moving a law school faculty and administration to give transactional law and skills education the attention it deserves.  Or maybe you believe that riding the wave of the future means teaching students particular topics or skills – such as how to be a leader or how to use technology.

Try-This Sessions.  Each Friday afternoon “Try-This Session” will be 45-minutes long and will feature one classroom activity and one individual presenter.

Panels.  Each Saturday session, except for one hour devoted to the Vision Workshop, will be approximately 90 minutes long and feature a panel presenting two or more topics grouped together for synergy. 

Please submit the proposal form electronically via the Emory Law website found here before 5 p.m. on March 20, 2020. 

PUBLICATION OF SELECTED MATERIALS

As in prior years, some of the conference proceedings as well as the materials distributed by the speakers will be published in Transactions:  The Tennessee Journal of Business Law, a publication of the Clayton Center for Entrepreneurial Law of The University of Tennessee, a co-sponsor of the conference.

CONFERENCE REGISTRATION

Both attendees and presenters must register for the Conference and pay the appropriate registration fee: $250 (general); $200 (adjunct professor and new professor).  Note: A new professor is someone in their first three years of teaching.

The registration fee includes a pre-conference lunch beginning at 11:30 a.m., snacks, and a reception on June 5, and breakfast, lunch, and snacks on June 6. We are planning an optional Thursday evening reception (June 4) and Friday evening dinner (June 5) at an additional cost of $60 per person for the dinner.

Registration is now open for the Conference and the optional events here.

TRAVEL ARRANGEMENTS AND HOTEL ACCOMMODATIONS

Attendees and presenters are responsible for their own travel arrangements and hotel accommodations. Special hotel rates for conference participants are available at the Emory Conference Center Hotel, less than one mile from the conference site at Emory Law. Subject to availability, rates are $159 per night. Free shuttle transportation will be provided between the Emory Conference Center Hotel and Emory Law.

To make a reservation at the special conference rate, call the Emory Conference Center Hotel at 800.933.6679 and mention “The Emory Law Transactional Conference.” Note: The hotel’s special conference rate expires at the end of the day on Thursday, May 14, 2020.  If you encounter any technical difficulties in submitting your proposal or in registering online, please contact Kelli Pittman, Program Coordinator, at kelli.pittman@emory.edu or 404.727.3382.

We look forward to seeing you in June!

Sue Payne                               Katherine Koops                      Kelli Pittman
Executive Director                 Assistant Director                    Program Coordinator

February 7, 2020 in Conferences, Joan Heminway | Permalink | Comments (0)

Tuesday, February 4, 2020

The Value Proposition for Transactional Business Lawyers and Lawyering

When do transactional business lawyers add value to projects?  The literature tells us that transactional business lawyers can help correct information asymmetries and facilitate regulatory arbitrage through their knowledge and skills.  That all seems right.  But how can that message and other conceptions of value be conveyed to first-year law students in less than two hours in a mandatory, S/NC course (i.e., a course in which some--maybe many--of the students do not really want to be there and believe they have better uses for their time)?  Welcome to my world, for today . . . .

Steve Bainbridge has a nice blog post relating to transactional business lawyers that our students are required to read before class.  (Thanks, Steve!)  We will discuss the absence of transactional business lawyers in popular culture, elucidate the value propositions they represent in real life, and work through some business transactional scenarios that illustrate the value (or lack thereof) of involving lawyers in the matter.  I have worked out the class plan with my co-instructor (who cannot be there for this class meeting).  But I am looking for more.

What, in your view, must I ensure that I cover--and how?  Are there videos or charts that you recommend I "check out" for potential presentation to the class?  I teach the main session on this topic tomorrow afternoon (and I had hoped to post this yesterday . . .), but I can always come back to this topic in a future class meeting, if I play my cards right.  Let me know if you have ideas or views.

February 4, 2020 in Joan Heminway, Lawyering, Teaching | Permalink | Comments (2)

Monday, January 27, 2020

Weidner: LLC Default Rules Are Hazardous to Member Liquidity

Although I had to miss the American Bar Association's LLC Institute this past year, it looks like I can still get the benefit of some of the wisdom shared there in written form.  FSU Law Dean Emeritus and Alumni Centennial Professor Don Weidner has posted an articleLLC Default Rules Are Hazardous to Member Liquidity, based on the thoughts he shared as the keynote speaker at that annual event.  The SSRN abstract follows:

This article is based on the author’s Keynote Address at the 2019 LLC Institute sponsored by the American Bar Association’s Business Law Section. It traces and critiques the shift in the default rules in LLC law away from partnership law and toward corporate law, using the Uniform LLC Acts of 1996 and 2006 as exemplars of the national trend. It focuses on two key issues: the removal of liquidity rights, both the right to dissolve and the right to be bought out, and the removal of easy access to member remedies. It argues that, on both key issues, the default rules have moved away from enforcing the presumed intent of small groups of entrepreneurs who form businesses without the benefit of counsel. By forming LLCs, entrepreneurs across the country are now unwittingly locking themselves in to perpetual entities that offer them no liquidity and present them with costly procedural obstacles to enforcing both their rights under the operating agreement and their statutory rights.

I look forward to reading this.  SSRN: it's the next best thing to being there--at least in this case.  I am grateful to Don for writing up his thoughts on the migration of limited liability company default rules (away from partnership norms and toward corporate norms) and for mentioning this work to me in a recent conversation and email message.

January 27, 2020 in Joan Heminway, LLCs | Permalink | Comments (0)

Monday, January 20, 2020

Business Law Work and Martin Luther King Jr.

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[Image courtesy of Clipart Library, http://clipart-library.com/mlk-cliparts.html]

Today, on Martin Luther King Jr. Day, I was in the office preparing for the week+ ahead.  I was not the only one there.  Part of me wanted to be elsewhere, publicly supporting the life and legacy of Dr. Martin Luther King Jr.  I did think about him and his work as I toiled away.

Although most of what I was sorting and sifting through today was business law-related, part of what I focused on was committee work for our celebration tomorrow that honors Dr. King.  I chair a committee at UT Law this year that is responsible for hosting one or more Martin Luther King Jr. events every year.  This year, we will have a luncheon and informal table discussions based on facts about Dr. King and quotes from his public appearances and published work.  As I was going through the facts and quotes, I came upon this quote: "No work is insignificant.  All labor that uplifts humanity has dignity and importance and should be undertaken with painstaking excellence."  (The quote is apparently from Strength to Love, a 1963 book of Dr. King's sermons.)  Admittedly, it spurred me on and made me feel more than a bit better about devoting much of my day to somewhat menial tasks. 

As I continued to read through the quotes, I kept finding more and more that interested me.  I observed that, among other things, Dr. King's speeches and writings address leadership in many ways.  One of my favorites along these lines: "Change does not roll in on the wheels of inevitability but comes through continuous struggle."  Yes!  And another: "An individual has not started living until he can rise above the narrow confines of his individualistic concerns to the broader concerns of all humanity."  Right!  And inspiring, too, for those of us who are concerned about our students.

As I think about teaching materiality (in Securities Regulation), public company charter and bylaw issues (in Advanced Business Associations), and closely held corporation bylaw drafting (in Representing Enterprises) tomorrow, I plan to carry Dr. King's courage, perseverance, and energy into my day.  And I hope that my students are ready to respond to my teaching with enthusiasm, trust, and confidence at this early stage of the semester. "Faith," Dr. King said, "is taking the first step, even when you don’t see the whole staircase."  I may read that in class tomorrow . . . .

January 20, 2020 in Current Affairs, Joan Heminway, Law School | Permalink | Comments (0)

Monday, January 13, 2020

Question of the Day: SWM - Doctrine, Theory, Policy?

Each time I teach Advanced Business Associations, I try to engage students on the first day in an exercise that leverages their existing knowledge of business associations law but also introduces new angles and nomenclature.  I assign a reading (this year, on shareholder wealth maximization) and ask each student to write up a brief definition of the concepts of “policy” and “theory” as they may apply to and operate in business associations law. I then ask them to relate their definitions to the reading.

So, the core question before the house in that course on the first day of classes last week effectively was the following: is shareholder wealth maximization legal doctrine, policy, theory, or something else?  We had a wide-ranging discussion on the question, working off three propositions I put on the board.  The class session enabled me to review some concepts from the foundational Business Associations course while also discussing the role of theory and policy in law and lawyering, getting some creative mental juices flowing, and teaching a bit of the new vocabulary they will need for the course.

I decided that it could be beneficial to share with my students the views of others on our effective core question from class last week.  So, today, I ask you:

Shareholder wealth maximization: doctrine, theory, policy, or something else?

Offer your answers in the comments or send me a private message.  You can pick more than one category, of course, in classifying shareholder wealth maximization.  In other words, the categories are not intended to be mutually exclusive. A brief explanation for your response would be helpful.  I will not attribute the answers I pass on, unless you want me to.  I hope this post will stimulate some interesting responses, but I also know that law professors are busy with the start of the new semester.  It may go without saying, but (especially in these circumstances) a short response is appreciated as much as a long one.

January 13, 2020 in Business Associations, Corporate Governance, Joan Heminway, Teaching | Permalink | Comments (0)

Monday, January 6, 2020

Advice to My Business Associations Students . . . And Maybe Yours, Too

Business Associations is a tough course to teach, whether it is taught in a three-credit-hour or four-credit-hour format.  I have written before (here, here, and here) about the challenges of teaching fiduciary duties in this course.  And I recently posted here and here about the characterization of a classic oversight conundrum as a matter of corporate fiduciary duty law in Delaware.

I just recently finished grading my Business Associations exams from last semester.  They were a good lot overall, but they evidenced several somewhat common errors that seemed to beg for broad dissemination to the class. So, I sent them all a message inviting them to come in and review their exams and highlighting certain things for their attention of a more general nature.  

Today, I offer you that general counsel that I gave to my Business Associations students based on that review of their written final exams.  It is set forth below, absent my introductory and closing remarks.  As you'll see, some of it relates to substantive law, and some of it relates to exam or other skills.  Perhaps this is of use to those of you who just taught or are about to teach the course.  Maybe some students will read it and learn from it.  Regardless, here it is.

  • Agency rules and management rules in business associations law are often confused. Agency rules express the authority of a person to act on behalf of the firm in transactions with third parties--those who enter into transactions with the firm. For example, by default under the RUPA, each partner in a RUPA partnership is an agent of the partnership that can bind the partnership to contracts with others. Management rules, by contrast address the governance and control authority of a particular firm constituent within the governance structure of the firm. Thus, agency rules relate to authority that is outward-facing (pertaining to transactional parties) and management rules relate to authority that is inward-facing (pertaining to internal constituents of the firm). For example, by default under the RUPA, each partner has an equal right to manage the partnership.

  • Similarly, the concept of "limited liability" is commonly understood to refer to the limited liability of a firm owner for the firm's obligations. For example, under the RUPA, each partner is jointly and severally liable for the obligations of the partnership, whereas under corporate law, shareholders are not personally liable for the corporation's obligations to third parties. Exculpation, which eliminates the monetary liability of directors in the corporate context, relates to corporate governance claims--legal actions for breach of the fiduciary duty of care. This is internal governance litigation that does not relate to corporate obligations to third parties. So, while exculpation does limit (eliminate) a director's personal liability for a breach of the duty of care, it is not part of what people generally refer to as "limited liability" in a corporate context.

  • Fiduciary duties are typically understood to instill or increase trust in relationships. Accordingly, they are commonly employed to provide a benefit in circumstances involving untrustworthy business associates. Yet a number of you seemed to think they were an undue burden to business venturers in circumstances where trust may be lacking (i.e., where fiduciary duties should be useful). You will need to make a solid argument to most folks to justify that the detriments outweigh the benefits.

  • If an exam or assignment question asks for you to talk about why one set of rules is better than another in addressing a specific scenario, make sure you contrast examples from the two sets of rules, applying each to the relevant facts.

  • Read questions carefully and closely. When a question asks for you to reference or rely on statutory default rules,ensure that your response references or relies on statutory default rules--not on ways on which those rules can be or have been agreed around through private ordering. When a question asks for information or an evaluation or rules relating to member-managed LLCs, ensure you directly address member-managed LLCs in lieu of (or at least before) commenting on manager-managed LLCs or the flexibility of moving back and forth between member-managed and manager-managed LLCs.

  • Don't forget to cite to an appropriate source for rules on which you rely in your legal analysis.

  • Keeping track of and managing time is important to the bar exam and other in-class timed exercises. If you ran out of time in responding to the prompts on this exam, evaluate why. I can help, if need be. But understanding how and why your time management skills may have failed you can be important.

Feel free to add your observations or advice of a similar (or different) nature in the comments.  I am teaching Advanced Business Associations this semester, so I can work on some of these things during that course.  In any event, I wish you all a happy and healthy semester and year, whatever you may be teaching or doing.

January 6, 2020 in Business Associations, Joan Heminway, Law School, Teaching | Permalink | Comments (8)