Monday, September 23, 2019

Commercial Law Position Announcement: University of Idaho

The University of Idaho College of Law seeks to fill a tenure-track or tenured faculty position beginning in the Fall of 2020 in the area of Commercial Law for its Moscow location. Both entry-level and lateral candidates are encouraged to apply. In addition to courses in Sales and Property Security, the faculty member will be expected to teach two additional courses – which may include Bankruptcy, Payment Systems, Real Estate Transactions, and/or State Debtor-Creditor Law – according to the interest of the faculty member and the needs of the College of Law. Candidates must have (1) a J.D. from an ABA-accredited school or the equivalent; (2) a distinguished academic record; (3) a record or the promise of teaching excellence; (4) a record or the promise of scholarly productivity; and (5) a record or the promise of expertise in the area of Commercial Law. Preference will be given to candidates with (1) post-J.D. practice, clerking, or teaching experience; and (2) post-J.D. experience related to Commercial Law and other courses listed above. Situated in the beautiful Pacific Northwest, the University of Idaho is a comprehensive research institution. Information about the College of Law is available on its website at Interested candidates should apply online at Questions about the position should be directed to David Pimentel, Chair of the Faculty Appointments Committee, at The University of Idaho is an affirmative action, equal opportunity employer.

[Hat tip to Aliza Plener Cover, Associate Professor at the University of Idaho College of Law, for highlighting this opportunity.]

September 23, 2019 in Commercial Law, Joan Heminway, Jobs | Permalink | Comments (1)

Sunday, September 22, 2019

Learning About SRISK

This past week, Dr. Robert Engle, the 2003 Nobel Laureate in Economics and Michael Armellino Professor of Management and Financial Services at the NYU Stern School of Business, spoke at the University of Oklahoma in the Deane and Ginger Kanaly Lecture Series at the Michael F. Price College of Business and in our Energy and Commodities Finance Research Conference

Engle’s Kanaly Lecture focused on the work of Stern’s Volatility Institute (V-Lab), which he directs.  Specifically, he spoke at length about a measurement of systemic risk termed “SRISK.”  Systemic risk is generally understood to be the risk that the collapse of a financial institution or market will trigger domino-like collapses throughout financial markets and the broader economy.  SRISK measures the capital shortfall of a firm conditional on a severe market decline, and is a function of its size, leverage and riskSRISK can be used not only to measure capital shortfalls in firms, but also undercapitalization of a country or global financial system.  It forecasts how much capital a firm (country or global system) would need to raise were a crisis to occur and, naturally, leads to questioning savings sufficiency.  It asks: how prepared is a firm, country, or global system for a financial crisis?  Is there excessive credit growth (undercapitalization)?  SRISK demonstrates that excessive credit growth creates important externalities in a globally interconnected financial system.  It also provides a rational for global coordination of financial market regulation.   

I encourage readers to visit V-Lab’s homepage.  Take a look at global systemic risk by country, the systemic risk of U.S. financials, and a map of world volatility.  Also, look at the chart “Risk Analysis Overview - All Financials Total SRISK” and enter the year 2000 as the starting date.  Engle discussed this chart during the lecture, noting the four peaks during this time frame: the U.S. financial crisis, the European debt crisis, the slowdown in China, and right now!  GLOBAL SRISK is on the rise!  How Much SRISK is Too Much?  I’m glad you asked!  See Engle and Ruan’s answer: here.

I first encountered the concept of SRISK in working on The Impacts of Financial Regulations: Solvency and Liquidity in the Post Crisis Period (with Christine Cumming and Julapa Jagtiani).  So, it was thrilling to finally have an opportunity to hear Engle speak, especially about SRISK and its importance.  I hope it won't be the last!      

September 22, 2019 | Permalink | Comments (0)

Friday, September 20, 2019

Everything is About Internal Affairs

By now, regular readers of this blog are aware that I’ve been especially forceful in arguing that litigation limits in corporate charters and bylaws can only address matters of corporate internal affairs, and that federal securities claims are beyond their scope.  Vice Chancellor Laster adopted a similar view in his Sciabacucchi v. Salzberg decision, where he invalidated charter provisions that purport to require that all Section 11 claims against the company be brought in federal court.  Now that the matter is on appeal to the Delaware Supreme Court (Docket No. 346,2019) – and the opening brief is due today –  a lot of articles about the scope of the internal affairs doctrine are dropping. 

First up, we have Daniel B. Listwa & Bradley Polivka’s First Principles for Forum Provisions (Cardozo Law Review, forthcoming), in which the authors argue that Laster’s opinion erroneously focused on “territoriality” rather than “comity,” and that the suit should have been dismissed for lack of ripeness.

Next, there’s Mohsen Manesh with The Contested Edges of Internal Affairs (Tennessee Law Review, forthcoming), which explores the uncertainties surrounding the scope of the internal affairs doctrine, spotlighted both by the Sciabacucchi v. Salzberg decision and by California’s new board gender diversity mandate.

And then there’s The Limits of Delaware Corporate Law: Internal Affairs, Federal Forum Provisions, and Sciabacucchi, by Joseph Grundfest, which argues that Laster adopted a “novel” view of the internal affairs doctrine, inconsistent with both Delaware and U.S. Supreme Court precedent.  This is interesting because his previous article, The Brouhaha Over Intra-Corporate Forum Selection Provisions: A Legal, Economic, and Political Analysis, 68 BUS. LAW. 370 (2013), co-authored with Kristen Savelle, stated that forum selection provisions “do not purport to regulate a stockholder’s ability to bring a securities fraud claim or any other claim that is not an intra-corporate matter” and that if they attempted to do so, courts could prevent it.  That passage was relied upon by then-Vice Chancellor Strine in his decision upholding forum selection provisions that apply to state-law internal affairs claims in Boilermakers Local 154 Ret. Fund v. Chevron Corp., 73 A.3d 934 (Del. Ch. 2013), and of course, Laster’s decision relied heavily on Boilermakers.  In the new article, Grundfest acknowledges the tension and explains how his language has been taken out of context.  See manuscript at n.345.

There’s also an interesting new empirical paper by Dhruv Aggarwal, Albert Choi, & Ofer Eldar, Federal Forum Provisions and the Internal Affairs Doctrine, which finds that after the Sciabacucchi v. Salzberg, firms with similar forum selection clauses in their constitutive documents experienced a stock price drop, suggesting that the market values such clauses.  In light of these results, the authors argue that the internal affairs doctrine should be interpreted to permit them.

Point being, the Delaware Supreme Court has a lot of reading to do.

September 20, 2019 in Ann Lipton | Permalink | Comments (0)

Thursday, September 19, 2019

Mass Tort Deals - Chapter Four

The fourth chapter in Mass Torts Deals tackles the role judges play in coercing facilitating mass torts settlements.  (You can find more chapter writeups here.)

In many instances, it seems as though lawyers manage to rope judges into using procedural mechanisms and their trusted status as authority figures to push plaintiffs into settlements.  The big danger seems to be that because we do not have clean, well-established procedural rules specifically for multi-district litigation proceedings, judges simply do whatever they want, often using coercive powers without any real safeguards.

In one case, Judge Susan Wigenton seemed to take a very heavy hand with objectors to a medical device settlement.  She ordered plaintiffs to "enter into a private settlement program that entailed at least 18 months of mediation unless they settled sooner."  At the same time, she stayed the multi-district proceeding, shutting off access to discovery.  Plaintiffs were forced to participate in the program or face dismissal.

In response, many plaintiffs objected.  Lawyers advocating for the settlement contended that Judge Wigenton had "inherent authority" to manage her docket and that the authority allowed her "to send an elderly plaintiff population into a private settlement program without their consent."  In response to the objections, Judge Wigenton defended her authority, saying "I completely, totally and whole heartily disagree with this notion and concept that I do not have the authority manage a case in the manner that I feel is appropriate.  I think that strains logic."

Although most would agree that courts have substantial inherent authority to manage the cases and attorneys before them, modern multi-district litigation processes seem to strain and surpass defensible outer limits for that authority.  Consider two different orders often issued in these cases: (1) census orders, and (2) Lone Pine orders.  Just keeping track of the specialized procedural terminology is a challenge.  Most lawyers won't learn these exotic moves in their ordinary practice or civil procedure.


With census orders, courts order all the lawyers appearing before them to disclose information about all of their clients--even ones in state court or who have not filed any case.  Although this information might be useful for dealmakers working to craft a settlement, forced disclosures of confidential information about other clients seems to create a conflict for an attorney. 

The jurisdictional basis for these orders also baffles me.  I do not understand how a person who has never submitted to the personal jurisdiction of any court by filing any complaint can have their information hauled out simply by having a relationship with a lawyer who is representing a different client in a proceeding in some distant state.

Lone Pine Orders

These orders essentially require plaintiffs who do not agree to a settlement deal to quickly furnish case-specific proof.  If the orders require expedited production of medical records and expert opinions, the aggressive timetables alone can be enough to force plaintiffs into settlements.

Ultimately, Burch captures the challenge with aggressive application of inherent authority in these cases.  She explains that it "appears to have no limits.  It is guided neither by consent nor contract principles.  It swells to fill whatever role it must, sacrificing transparency, predictability, and restraint in its wake."

The challenge here may be to keep encourage judicial behavior that promotes autonomy for plaintiffs instead of simply forcing settlement.  Although courts face pressures to resolve cases, they should make sure that injured plaintiffs can still have their day in court on reasonable terms if they want to try their case.  Without actually trying more of these cases, it's hard to know whether we're actually doing anything close to justice in these proceedings.



September 19, 2019 | Permalink | Comments (0)

Wednesday, September 18, 2019

Reflections on the First Annual ISG/Corporate Issuers Conference

This past Friday, I had the privilege of attending the First Annual ISG/Corporate Issuers Conference, hosted by the Investor Stewardship Group (ISG) and the John L. Weinberg Center for Corporate Governance at the University of Delaware. The Investor Stewardship Group is “an investor-led effort that includes … more than 60 U.S. and international institutional investors with combined assets in excess of US$31 trillion in the U.S. equity markets,” which was formed “to establish a framework of basic investment stewardship and corporate governance standards for U.S. institutional investor and boardroom conduct.”[1] The John L. Weinberg Center for Corporate Governance “is one of the longest-standing corporate governance centers in academia, and the first and only corporate governance center in the State of Delaware, the legal home for a majority of the nation’s public corporations.”[2] Charles M. Elson is the Edgar S. Woolard, Jr., Chair in Corporate Governance and the Director of the Weinberg Center.[3]

The primary work product of the ISG is the “framework for U.S. Stewardship and Governance comprising of a set of stewardship principles for institutional investors and corporate governance principles for U.S. listed companies. The corporate governance framework articulates six principles that the ISG believes are fundamental to good corporate governance at U.S. listed companies.” Meanwhile, the “stewardship framework seeks to articulate a set of fundamental stewardship responsibilities for institutional investors.” The Framework “became effective on January 1, 2018.”[4]

The agenda for the conference included a “deep-dive” into both the ISG Stewardship Principles and ISG Corporate Governance Principles, as well as “Fireside Chat” consisting of Charles Elson interviewing Marty Lipton. What follows, in no particular order, are three of my reflections on the conference. The Chatham House Rule applied, so I will not attribute any statements to any particular speakers.

Continue reading

September 18, 2019 in Stefan J. Padfield | Permalink | Comments (0)

Monday, September 16, 2019

Announcing the Third Annual Business Law Prof Blog Symposium - "Connecting the Threads"

Screenshot 2019-09-13 21.09.15

I am pleased to announce that The University of Tennessee College of Law is again hosting editors of this blog for a symposium focusing on current topics in business law.  The website for the symposium, which is sponsored by UT Law's Clayton Center for Entrepreneurial Law, is here.  Faculty and students from UT Law will comment on presentations given by my fellow BLPB bloggers.  Participating editors of the BLPB in this year's program include Colleen Baker, Ben Edwards, Josh Fershee, me, Doug Moll, Haskell Murray, and Stefan Padfield.  The lunchtime panel features me and two of my UT Law colleagues exploring the legal meaning and understanding of mergers and other business combinations from various perspectives, including business associations law, bankruptcy and UCC law, and federal income tax law.  That, alone, is surely worth the price of entry!

If you live in or near Knoxville, please come and join us.  Continuing legal education credit is available to members of the Tennessee bar.  If you cannot make it to the symposium, however, a video recording of the proceedings will later be available on UT Law's website, with an expected option for online continuing legal education credits.  (Last year's program is available here with a continuing legal education credit option.)  In addition, the written proceedings of the symposium are scheduled to be published in the spring volume of Transactions: The Tennessee Journal of Business Law.

I am looking forward to having many of my BLPB co-editors in town for this program.  It's always a special time when we are together.

September 16, 2019 in Colleen Baker, Conferences, Haskell Murray, Joan Heminway, Joshua P. Fershee, Stefan J. Padfield | Permalink | Comments (0)

Saturday, September 14, 2019

Judicial Reactions to the Financial Crisis

Emily Strauss at Duke has posted a fascinating new paper, Crisis Construction in Contract Boilerplate (Law & Contemp. Probs., forthcoming).  She examines how judges interpreted the boilerplate in RMBS contracts during the financial crisis, and finds that they relaxed their reading of certain provisions in order to enable injured investors to recover their losses, and then reverted to more strict readings when the crisis had passed.

Specifically, the RMBS contracts provided that the “sole remedy” available for loans that did not conform with quality specifications was for trust sponsors to repurchase the noncompliant loan.  Of course, during the crisis, investors alleged that huge percentages of loans backing the trusts were noncompliant, and a loan-by-loan repurchase requirement would have been, as a practical matter, impossible to pursue.  Strauss finds that judges interpreted the clause to permit investors to use sampling to identify noncompliant loans and claim damages, but only in the years following the crisis.  By 2015, they reverted to a stricter reading of the contracts.  She cites this an example of “crisis construction,” namely, the way that courts alter their readings of contracts during times of calamity in order to further some economic policy.  (Strauss discusses that phenomenon in her paper, and Mitu Galati also describes it in this blog post spotlighting Strauss’s work ).

The part that really fascinates me, though, is how this trend strikes me as the opposite of what I experienced when I litigated these cases not as a matter of contract construction, but as a matter of securities law violations.  As I posted a few years ago (with additional discussion here and here), I believe that courts adopted a narrow – and nonsensical – approach to class action standing when investors started suing en masse after the crisis, and they did so as a way of managing what would otherwise be incomprehensibly large liabilities for Wall Street’s major players.  So I’m intrigued that when it came to securities liability, courts shut the door to plaintiffs, but when it came to contract liability, they opened it.



September 14, 2019 in Ann Lipton | Permalink | Comments (0)

Thursday, September 12, 2019

Mass Tort Deals - Chapter 3

Chapter three in Mass Tort Deals by Elizabeth Chamblee Burch tackles repeat player dynamics in aggregate litigation.  If you're interested in earlier posts on it, they're available here and here.  

My biggest takeaway is that for the attorneys in this space, if they want to be in the room where it all goes down, they've got to bro down socialize and remain well-thought of by their well-connected colleagues. A lawyer's ability to make a living in the space and generate results for clients seems to depend on relationships with other key players. So much depends on being well-connected:

  • the ability to get a leadership appointment;
  • the ability to get some of the work flow;
  • the ability to get a decent fee allocation;
  • the ability to get a settlement favoring your "inventory" of clients; and
  • the ability to get other attorneys to back any play you make.

Functionally, this means that attorneys face intense incentives to get along with other attorneys in the space.  This probably does not produce solid strategic behavior because attorneys may be more likely to simply agree with well-connected leaders than to press for things that might rock the boat a bit but generate better outcomes for all plaintiffs swept up in the aggregate litigation vortex.  Burch does a great job of bringing stories forward about questionable litigation decisions likely driven by this process.

Burch also breaks down how pairing these incentives with known shortcomings in group decision-making poses real risks for actually getting cases ready for trial.  Lawyers with better situated test cases or a different understanding than group leaders may not put their information before the group or be able to get their cases ready.

One thing that struck me was how the size of the committees managing the litigation might not be well-suited for effectively operating.  I've seen this dynamic myself.  A small group of 4-5 can generally work well together.  When groups double in size, we don't tend to be as effective.  Judges tend to appoint groups of 12 or more.  Judge Eldon Fallon apparently appoints 12 because "there were 12 apostles."  And I guess that makes sense if you want a group that will mostly just bow down and follow the leader around.  But if you want a group to share power and operate strategically and effectively, a 12-15 lawyer committee might not be the right size.

Ultimately, I'm not convinced that the processes we have now result in adequate representation.  Part of it may be that the plaintiffs in these cases need to develop discovery in different ways.  Conducting consolidated discovery may result in material of some general utility but significantly less utility than a more focused preparation process.  Burch tells the story of a lawyer who wanted to take a tight deposition for use at trial but couldn't because of all the other lawyers that got into the room and dragged the proceeding out.  In that lawyer's telling, it produced a deposition that lots of lawyers got involved in and billed time to but also one that offered significantly less utility for actually trying a case than a more focused one.

We also generally lack actual legal authority for governing these proceedings or the duties the leading lawyers involved actually owe to claimants who are not their direct clients.  It seems as though moving toward something more similar to class action processes and norms would do more to protect actual victims. 

This whole area of law seems like a train wreck.  This is fitting because this area of law might also be the procedural vehicle to deal with injuries arising out of a train wreck.


September 12, 2019 | Permalink | Comments (1)

Wednesday, September 11, 2019

ICYMI: #corpgov Midweek Roundup (Sep. 11, 2019)

[NOTE: You should see embedded Tweets. If you don't, please try a different browser.]

September 11, 2019 in Stefan J. Padfield | Permalink | Comments (0)

Monday, September 9, 2019

Call for Papers - Business Law Empirical Studies - Short Timeframe

Call for Papers for Section on Law & the Social Sciences Program at the AALS Annual Meeting

The Section on Law & Social Sciences is pleased to announce a Call for Papers from which one or two additional presenters may be selected for the section’s program panel to be held during the AALS 2020 Annual Meeting in Washington, D.C. The panel is entitled “Empirical Research in Business Law: Works in Progress,” and the panelists will summarize the methods and/or results of their current qualitative or quantitative empirical research projects as works in progress.

Form and Length of Submission:

The Section welcomes relevant submissions in the form of research proposals, preliminary pilot studies, or even nearly completed projects with results. Junior scholars are particularly encouraged to submit. Submissions should incorporate at least a brief (3-5 page) summary or abstract of the project.

Submission Method and Due Date:

Papers should be submitted electronically to David Kwok ( The due date for submission is September, 20, 2019. Authors selected will be notified by September 27, 2019. The Call for Papers presenters will be responsible for paying their registration fee and hotel and travel expenses.

Inquiries or Questions:

Any inquiries about the Call for Papers should be submitted to David Kwok (

September 9, 2019 in Call for Papers, Conferences, Joan Heminway | Permalink | Comments (0)

Emory Law - Tenured Lateral Business Law Opening

The following comes to us from friend of the BLPB George S. Georgiev at Emory Law:

Emory University School of Law seeks a lateral hire for a tenured position in business law to begin in the 2020-2021 academic year. Candidates should be already tenured at an ABA-approved law school.

Candidates must have a J.D., Ph.D., or equivalent degree, a distinguished academic record, and a demonstrated potential to produce outstanding scholarship. Candidates should complete the online application here, and submit a cover letter, a current CV, a published or unpublished academic article, a brief research agenda, and an indication of teaching interests (if not listed on the CV) to the chair of the Faculty Appointments Committee: Polly J. Price, Asa Griggs Candler Professor of Law, at

Emory Law strives for a world in which law provides a common framework for courageous leaders to engage our most complex social and economic challenges and to achieve positive social transformation by advancing the rule of law. Emory University is dedicated to providing equal opportunities and equal access to all individuals regardless of race, color, religion, ethnic or national origin, gender, genetic information, age, disability, sexual orientation, gender identity, gender expression, and veteran's status.

September 9, 2019 in Joan Heminway, Jobs | Permalink | Comments (0)

Sunday, September 8, 2019

More Blockchain News!

The BLPB is abuzz with blockchain news this weekend!  Past posts have also addressed this topic (here, here, here, and here for a sampling). 

I’m excited to highlight the publication of the book: FinTech: Law and Regulation, edited by Jelena Madir.  Madir is the Director, Chief Counsel at the European Bank for Reconstruction and Development, in addition to having been an outstanding editor of this book, and a delight to work with (thanks, Jelena!).  I’m grateful for the opportunity to contribute to this important work, and thankful to Wharton Professor Kevin Werbach for inviting me to coauthor the chapter: Blockchain in Financial Services (thanks, Kevin!).  Werbach also recently published the highly-rated: The Blockchain and the New Architecture of Trust.  Two great book recommendations for BLPB readers!



September 8, 2019 | Permalink | Comments (0)

Saturday, September 7, 2019

Beyond Bitcoin: Leveraging Blockchain to Benefit Business and Society

Have you ever wanted to learn the basics about blockchain? Do you think it's all hype and a passing fad? Whatever your view, take a look at my new article, Beyond Bitcoin: Leveraging Blockchain to Benefit Business and Society, co-authored with Rachel Epstein, counsel at Hedera Hashgraph.  I became interested in blockchain a year ago because I immediately saw potential use cases in supply chain, compliance, and corporate governance. I met Rachel at a Humanitarian Blockchain Summit and although I had already started the article, her practical experience in the field added balance, perspective, and nuance. 

The abstract is below:

Although many people equate blockchain with bitcoin, cryptocurrency, and smart contracts, the technology also has the potential to transform the way companies look at governance and enterprise risk management, and to assist governments and businesses in mitigating human rights impacts. This Article will discuss how state and non-state actors use the technology outside of the realm of cryptocurrency. Part I will provide an overview of blockchain technology. Part II will briefly describe how public and private actors use blockchain today to track food, address land grabs, protect refugee identity rights, combat bribery and corruption, eliminate voter fraud, and facilitate financial transactions for those without access to banks. Part III will discuss key corporate governance, compliance, and social responsibility initiatives that currently utilize blockchain or are exploring the possibilities for shareholder communications, internal audit, and cyber security. Part IV will delve into the business and human rights landscape and examine how blockchain can facilitate compliance. Specifically, we will focus on one of the more promising uses of distributed ledger technology -- eliminating barriers to transparency in the human rights arena thereby satisfying various mandatory disclosure regimes and shareholder requests. Part V will pose questions that board members should ask when considering adopting the technology and will recommend that governments, rating agencies, sustainable stock exchanges, and institutional investors provide incentives for companies to invest in the technology, when appropriate. Given the increasing widespread use of the technology by both state and non-state actors and the potential disruptive capabilities, we conclude that firms that do not explore blockchain’s impact risk obsolescence or increased regulation.

Things change so quickly in this space. Some of the information in the article is already outdated and some of the initiatives have expanded. To keep up, you may want to subscribe to newsletters such as Hunton, Andrews, Kurth's Blockchain Legal Resource. For more general information on blockchain, see my post from last year, where I list some of the videos that I watched to become literate on the topic. For additional resources, see here and here

If you are interested specifically in government use cases, consider joining the Government Blockchain Association. On September 14th and 15th,  the GBA is holding its Fall 2019 Symposium, “The Future of Money, Governance and the Law,” in Arlington, Virginia. Speakers will include a chief economist from the World Bank and banking, political, legal, regulatory, defense, intelligence, and law enforcement professionals from around the world.  This event is sponsored by the George Mason University Schar School of Policy and Government, Criminal Investigations and Network Analysis (CINA) Center, and the Government Blockchain Association (GBA). Organizers expect over 300 government, industry and academic leaders on the Arlington Campus of George Mason University, either in person or virtually. To find out more about the event go to:

Blockchain is complex and it's easy to get overwhelmed. It's not the answer to everything, but I will continue my focus on the compliance, governance, and human rights implications, particularly for Dodd-Frank and EU conflict minerals due diligence and disclosure. As lawyers, judges, and law students, we need to educate ourselves so that we can provide solid advice to legislators and business people who can easily make things worse by, for example, drafting laws that do not make sense and developing smart contracts with so many loopholes that they cause jurisdictional and enforcement nightmares.

Notwithstanding the controversy surrounding blockchain, I'm particularly proud of this article and would not have been able to do it without my co-author, Rachel, my fantastic research assistants Jordan Suarez, Natalia Jaramillo, and Lauren Miller from the University of Miami School of Law, and the student editors at the Tennessee Journal of Business Law. If you have questions or please post them below or reach out to me at 



September 7, 2019 in Compliance, Conferences, Contracts, Corporate Governance, Corporations, CSR, Current Affairs, Financial Markets, Human Rights, Law Reviews, Lawyering, Legislation, Marcia Narine Weldon, Securities Regulation, Shareholders, Technology | Permalink | Comments (0)

Lorenzo and the Duty to Correct

A few weeks ago, we had an interesting opinion out of the 10th Circuit interpreting the scope of primary liability under Section 10(b) in the wake of the Supreme Court’s Lorenzo v. SEC decisionThe short version is that in Malouf v. SEC, the Tenth Circuit found that scheme liability under Section 10(b) (and parallel provisions of Section 17(a) and the Investment Advisers Act) may be incurred when a defendant knowingly fails to correct someone else’s false statement.  But matters are actually a bit more complicated.

More under the jump; warning, this post assumes basic familiarity with Janus Capital Group, Inc. v. First Derivative Traders, 564 U.S. 135 (2011) and Lorenzo.  If you want that backstory, see this post on Janus and the Lorenzo cert grant and my discussion of the actual Lorenzo decision.

Continue reading

September 7, 2019 in Ann Lipton | Permalink | Comments (2)

Thursday, September 5, 2019

Mass Tort Deals - Chapter 2

Continuing to work my way through Mass Tort Deals by Elizabeth Chamblee Burch.  If you're interested in the earlier post on it--it's available here.  

The chapter is titled "Quid Pro Quo Arrangements" for good reason.  I finished the chapter with the sense that attorneys in the space negotiate with defendants to bargain away plaintiff rights in exchange for things the plaintiffs' attorneys want for themselves and the defense lawyers want for their clients.  As someone who also teaches professional responsibility, I struggled to understand how many practices and agreements could ever be consistent with the ethics rules.

Take the settlement-recommendation provisions.  Lawyers enter into settlement agreements in these cases where they agree that they will recommend to every client in their "inventory" that they accept the settlement.  In many instances, they also put in writing that they will flat out drop clients and withdraw from representation if the clients do not agree to settle.  The ethics rules make whether to take a settlement offer a client decision.  And these "attorney-recommendation" provisions are common.  84% of the settlement agreements in the dataset have them.  53% of the time they also have the withdrawal provisions. 

What do you do if you have a client who would be better served by not agreeing to the settlement?  Settlements will probably be right for some clients and wrong for others.  An attorney who binds herself to give a particular recommendation to a client surely impairs her ability to give independent advice.  The Connecticut Bar Association issued an ethics opinion sharing my view that these provisions fall over the line.  Despite this, the provisions keep showing up in these settlements.  And these are not the only, shall we say, ethically complex provisions showing up.

Consider settlement "reversion" terms.  Funds within the settlement pool that don't get used up will revert back to the defendant.  This also creates an incentive to include terms making it harder for plaintiffs to actually access the settlement.  In some instances, the agreements will set up claim review boards or other gateways plaintiffs must pass through to recover.  Of course, this allows the lead attorneys involved to collect large fees off a big settlement fund and the defendant to claw most of the money back when few plaintiffs can actually collect.

These troubling practices may persist because mass tort deals work differently than their more orderly cousins--the class actions.  There just isn't any procedure available for objecting to these settlement structures. 

Enormous rewards await attorneys involved in striking these deals.  Not only do they get "common benefit" fees premised on the idea that their leadership work gave value to all other plaintiffs, they also get other benefits.  For example, in situations where a settlement matrix gets created, they design the matrix, point system, and guidance documents used to determine how much a particular plaintiff will take home.  This gives them an undeniable edge when they bring their own clients to the table.  They know how to position them in ways that other attorneys do not.  It would not surprise me if some tilted the matrix to favor their particular inventory if they were able to sign up more plaintiffs with particular characteristics.

September 5, 2019 | Permalink | Comments (3)

Wednesday, September 4, 2019

ICYMI: #corpgov Midweek Roundup (Sep. 4, 2019)

September 4, 2019 in Stefan J. Padfield | Permalink | Comments (0)

Monday, September 2, 2019

Work and Mindfulness: Celebrating 125 Years of Labor Day

BLPB(boardgamebusinessmanchallenge-JESHOOTS)Photo by from Pexels

Today marks the 125th anniversary of our celebration of Labor Day as a U.S. national holiday.  As the U.S. Department of Labor reminds us:

Labor Day, the first Monday in September, is a creation of the labor movement and is dedicated to the social and economic achievements of American workers. It constitutes a yearly national tribute to the contributions workers have made to the strength, prosperity, and well-being of our country. . . .

The vital force of labor added materially to the highest standard of living and the greatest production the world has ever known and has brought us closer to the realization of our traditional ideals of economic and political democracy. It is appropriate, therefore, that the nation pays tribute on Labor Day to the creator of so much of the nation's strength, freedom, and leadership – the American worker.

Certainly, there remains much to celebrate.  Yet, an online piece written two years ago that focuses in on the history in a more detailed way offers words of caution:

The original holiday was meant to handle a problem of long working hours and no time off. Although the battle over these issues would seem to have been won long ago, this issue is starting to come back with a vengeance, not for manufacturing workers but for highly skilled white-collar workers, many of whom are constantly connected to work.

[Note: I have been accused of being constantly connected to work--or the equivalent.  Sometimes rightly so.]  The article goes on to urge taking a day off and enjoying time at a barbecue. I want to offer an additional idea: consider adding mindfulness to your tool kit (and more specifically a simple practice).

Yes, I have extolled the virtues of mindfulness practices before, including here and here.  Marcia has, too.  I want to incorporate by reference here all that we have collectively said in that regard.  But I also want to emphasize in today's post a new application of the concept--one that I learned in a series of beginner meditation classes that I completed yesterday.

All of us have thoughts relating to our work (and our personal lives) that niggle at us over time or disrupt our flow in the moment.  They may involve, for example, a grudge against a colleague or anger at an administrator or anxiety about a student or upcoming project or event.  These ongoing meddlesome thoughts interfere with our work and our lives outside work.  Specifically, they distract us and make us unhappy, inefficient, and unproductive.  They can lengthen our work days and extend the work week into weekends.  They can ruin our time with family--even at a Labor Day barbecue.

There are ways of managing this kind of stress in our work lives.  The instructor in my meditation class offered the technique (labeled, apropos of today's holiday, "The Work") suggested and promoted in Loving What Is: Four Questions That Can Change Your Life, by Byron Katie and Stephen Mitchell.  As the title of the book suggests, the approach consists of four questions.  They are:

  • Is it true?
  • Can you absolutely know that it's true?
  • How do you react, what happens, when you believe that thought?
  • Who would you be without that thought?

In addition to the book, a website offers guidance, including a series of videos.  The same coauthors have written a follow-on book, A Mind at Home with Itself: Finding Freedom in a World of Suffering.  (Byron Katie apparently has two other books--one also coauthored with Stephen Mitchell, here and here.  They also may be helpful but may not be as central to using The Work.)  I have not read any of the books, but I plan to practice the use of the four questions.

Why would I invest in this?  If used properly and successfully, what can these four questions do for me?  Here's what I have learned so far.

The four questions and the way in which they are used in The Work invite us to compartmentalize a thought that troubles us, allowing us to explore its contours and question it and ourselves.  In the process, we can reduce the suffering it causes us and slow down any reaction process that we determine is needed.  Ultimately, this method of addressing troubling thoughts has the capacity to free us from the drag that our niggling thoughts have on our working and personal lives.  The Work also may enable us to take required action to address true concerns in the workplace and at home in a manner that is more compassionate and less driven by the exigencies of the moment.

I offer this new mindfulness process for what it may be worth to you, in the spirit of personal wellness, institutional health, and Labor Day--to allow you more "time off" from work (among other things).  Regardless of the appeal--or lack thereof--The Work may hold for you, I wish you all a happy and restful Labor Day.  I am making a special brunch that I will enjoy with my husband and daughter.  No family or neighborhood barbecue is planned, but who knows?  My hubby and I may just make our own . . . .

September 2, 2019 in Joan Heminway, Teaching | Permalink | Comments (2)

Sunday, September 1, 2019

Happy Labor Day Weekend and SEALSB Annual Meeting

I want to wish all BLPB readers a wonderful Labor Day weekend holiday!  Enjoy!

I’ll also make a brief plug for the 2019 Annual Meeting of the Southeastern Academy of Legal Studies in Business (early bird deadline is September 15) in Montgomery, Alabama, November 7-9.  It will be a great conference – packed full of interesting presentations, and opportunities to meet/reconnect with business law scholars writing on diverse topics.  More information can be found here: SEALSB 2019.  It’s an event that will always be near and dear to my heart as it ultimately led me to writing for this blog!  Hope to see many of you in Montgomery in November!   

September 1, 2019 | Permalink | Comments (0)

Saturday, August 31, 2019

Delaware the Obscure

Delaware Chancery court is apparently being dragged into the presidential race, via a new attack ad against Joe Biden.  As reported by Shane Goldmacher, well:

There is so much to talk about here.

First, there’s the fact that the advertisement is misleading; Biden and Warren were apparently sparring about bankruptcy courts, not Chancery.

Second, there’s the fact that Biden – as a federal legislator – has no authority over Delaware Chancery. 

Third, there’s the fact that while I won’t dispute that Delaware courts are too white, Delaware Chancery, at least, now has 3 women and 4 men.  I’d be delighted to see more women on Chancery – and certainly the Delaware Supreme Court – but criticizing Chancery as too male is so last year.

Fourth, there’s the shifting numbers about the size of the ad buy; original reports said $500K, then the number was upped to $1 million, with print as well, and to be honest, I suspect that by blogging it I’m probably giving it the free attention that was the real aim.

But really the salient point is the identity of the buyer: Shirley Shawe, one of the litigants involved in the long-running TransPerfect dispute, tried before Chancellor Bouchard (which is why he is singled out for criticism in the advertisement).

TransPerfect was formed by Shirley Shawe’s son, Philip Shawe, and his one time-fiancee, Elizabeth Elting.  They ended their romantic relationship but continued with the business.  Elting had a 50% interest, and Philip Shawe a 49% interest, with 1% going to his mother so that the business as a whole could qualify as women-owned.  Since Shirley always voted with her son, this meant that authority was split 50/50.

The business was successful but the working relationship was not, leading to prolonged and acrimonious litigation.  Frankly, the Delaware opinions describing the fights between Shawe and Elting read more like a stalking complaint or domestic abuse than a business falling-out; among other things, Shawe was found to have hacked into Elting’s personal email, and – on two! occasions – hidden under her bed

Ultimately, Chancellor Bouchard ordered that the company be sold, and Philip Shawe purchased it.  The matter was not settled, though, because after that, the Shawes claimed that the Skadden partner who ran the auction “looted” the company.

Even today, the Shawes can’t let the matter go.  From what I can glean, Shirley Shawe is involved with this nonprofit, formed in the wake of the TransPerfect dispute and devoted to criticizing the Delaware Chancery court (the group is not officially connected to Shawe, but this article describes her as a “driving force” behind it, and reports that she funded and starred in its advertisements).  And now, of course, there’s this bizarrely irrelevant advertisement in the presidential race.

What the whole thing highlights, I think, is how business disputes that are tangled with family disputes don’t unfold like ordinary business matters, because the issues are far more personal.  And business courts don’t really know how to address the family dynamics.  That’s very much on display in TransPerfect, and it’s also the point of Allison Tait’s article, Corporate Family Law, 112 Nw. U. L. Rev. 1 (2017).  Though she doesn’t talk about TransPerfect specifically, the situation really illustrates her point.

August 31, 2019 in Ann Lipton | Permalink | Comments (1)

Thursday, August 29, 2019

Mass Tort Deal Making - Chapter 1

If you're interested in mass litigation--either through class actions or multi-district litigation--you undoubtedly know that the area can be overwhelmingly and mind-numbingly complex.  Mass Tort Deals by Elizabeth Chamblee Burch cuts through with simple language and accessible stories to help frame the key policy issues.  So far, I'm through the first chapter and have some thoughts.

The book frames the key issues well--how do we balance competing interests and resolve mass tort disputes.  And there are plenty of interests sitting in tension with each other:  judicial economy, efficiency, judicial desires for novelty and importance, plaintiffs' counsel fees, lead plaintiff counsel fees, defense interests in global resolution, and more.  How we set the procedures up for these cases effectively controls how these cases will be resolved.  If judges lock less cooperative litigants out and limit access to discovery or other information, it essentially forces them to come to the table and play ball with the court's chosen lawyers for a case.

From someone who has studied the class action context closely, one of the most surprising things to me about norms in the non-class mass tort space has been that the leadership arrangements seemingly operate as a lawless scrum.  There are no clear rules for how to set up a mass action governance structure for moving these claims through pre-trial proceedings.  This sets the stage for all sorts of jockeying by lawyers.  Even the lawyers courts appoint as lead counsel cannot keep control:

Lead counsel negotiate settlements and dictate trial strategy, but few rules govern this undemocratic process.  For example, Judge Susan Wigenton appointed a five-member plaintiffs' liaison counsel . . . to head lawsuits against Zimmer over its poorly designed Durom hip cup.  Yet, Chris Seeger, one of those five members, quietly joined forces with nonlead lawyer Mark Lanier.  Without the other counsel's members' knowledge or consent, Lanier and Seeger hashed out a global deal with Zimmer, which they signed on behalf of something they dubbed, the 'claimants' liaison counsel.'  Judge Wigenton 'approved' their private deal over the real liaison counsel's objections. Seeger later suggested that instituting rules 'would take the fun out of mass torts.'

This is wild!  I can see how it would be fun to steal the initiative from the other plaintiffs' lawyers and just forge the deal you think right if they don't agree with you.  But you have to wonder about who really benefits from this dynamic?  Defense counsel certainly has an incentive to strike a deal with a wildcat if it will give better terms to the corporation.  This risks leaving money on the table for the plaintiffs.

Burch's book isn't without detractors.  As I read the above paragraph, I recalled something I'd seen when I bought the book off Amazon.  One reader thought the book was terrible.


You have to wonder if it's the same guy.







August 29, 2019 | Permalink | Comments (0)