Monday, June 21, 2021
This coming Friday, June 25, at 1 PM EST, the Federalist Society is presenting Part 3 of its Freedom of Thought Six-Part Zoom Webinar Series. This Part is entitled Limiting the Right to Exclude: Common Carrier and Market Dominance. You can find additional details and register here (a recording of Part 1 can be found here; Part 2 here). Below is a brief description of the focus of the program.
The recent concurrence by Justice Thomas in Biden v. Knight First Amendment Institute has raised new questions about how we might think about restrictions on speech and debate on social media. Where private, concentrated control over online content and platforms exists, can a solution be found in doctrines that limit the right of a private company to exclude?
Friday, June 11, 2021
Do job interview questions about commitments to diversity violate state laws against discrimination on the basis of political viewpoint?
Insider.com recently profiled Jeffrey Housman, who is “chief people and services officer at Restaurant Brands International.” Part of the article explains that:
One of the first DEI initiatives Housman's team spearheaded was a change to the interview process. RBI hiring managers now ask job candidates in their first interview what diversity means to them, and how they'd champion diversity if they joined the team. And, across RBI's corporate offices, at least 50% of all candidates in the final interview round must be "from groups that are demonstrably diverse, including race."
Putting aside the legality of the interview quotas, this reminded me of the debate a few years ago regarding “Diversity, Equity and Inclusion” statements required of applicants for faculty positions at a number of UC campuses. An op-ed in the Wall Street Journal argued that:
This system specifically excludes those who believe in a tenet of classical liberalism: that each person should be treated as a unique individual, not as a representative of an identity group. Rather than helping achieve inclusion, these DEI rubrics act as a filter for those with nonconforming views…. Mandatory diversity statements can too easily become a test of political ideology and conformity.
There are grounds for concluding that Democrats have become the party of racial discrimination in the name of anti-discrimination (see, e.g., here and here), while Republicans defend the colorblind ideal that: “The way to stop discrimination on the basis of race is to stop discriminating on the basis of race.” (We can assume that both parties take their respective positions in the good faith belief that they are championing the best way forward for us as a nation and, in particular, for the continued progress of historically marginalized groups.) To the extent this partisan divide exists, do job interview questions asking about commitments to diversity violate state laws against discrimination on the basis of political viewpoint?
Tuesday, June 8, 2021
This coming Friday, June 11, at 2 PM, the Federalist Society is hosting a teleforum entitled, Free Speech and Compelled Speech: First Amendment Challenges to a Marketplace of Ideas. You can register here (I believe registration is free). What follows is a description of the program.
Section 230 has been understood to shield internet platforms from liability for content posted by users, and also to protect the platforms’ discretion in removing “objectionable” content.
But policy makers have recently taken a stronger interest in attempting to influence tech companies’ moderation policies. Some have argued the policies are too restrictive and unduly limit the scope of legitimate public debate in what has become something of a high-tech public square. Other policy makers have argued the platforms need to more aggressively target “hate speech,” online harassment, and other forms of objectionable content. And against that background, states are adopting and considering legislation to limit the scope of permissible content moderation to preclude viewpoint discrimination.
Some have suggested that the §230 protection, in combination with political pressure, create First Amendment state action problems for content moderation. Others argue that state efforts to protect the expressive interests of social media users would raise First Amendment concerns, by effectively compelling speech by social media and tech platforms.
What are the First Amendment limits on federal and state efforts to influence platform decisions on excluding or moderating content?
Eugene T. Volokh, Gary T. Schwartz Distinguished Professor of Law, UCLA School of Law
Jed Rubenfeld, formerly Assistant United States Attorney, U.S. Representative at the Council of Europe, and professor at the Yale Law School
Mary Anne Franks, Professor of Law and Dean's Distinguished Scholar, University of Miami School of Law
Moderator: Hon. Gregory G. Katsas, Judge, United States Court of Appeals, District of Columbia Circuit
Tuesday, March 2, 2021
FYI: “Society of Socio-Economists (SoS) (Virtual) Meeting Program: ‘Ethical Dimensions of Economic Analysis and Pressing Social Issues’”
On Saturday, March 6, 2021, 1:00 pm - 4:00 pm (Eastern Time) the following presentations/discussions are scheduled as part of the next Society of Socio-Economists Meeting (Zoom link and additional information here).
1:00 - 1:30 Welcoming Remarks, Discussion of Pressing Social Issues and Future Meetings
1:30 - 2:25 Ethical Dimensions of Economic Analysis
Deirdre McCloskey (Economics, History and Communication, Emerita, Illinois-Chicago)
Shubha Ghosh (Law and Economics, Syracuse)
2:30 - 3:25 Modern Monetary Theory: Is Money Debt? Does it Matter? Who Decides When the Economy is at Full Capacity?
Rohan Gray (Law, Willamette)
William Black (Law and Economics, Missouri - Kansas City)
Philip Harvey (Law and Economics, Rutgers - Camden)
Nicolaus Tideman (Economics, Virginia Tech)
3:00 - 3:25 Continuation of Discussion of Pressing Social Issues and Future Meetings
3:30 - 3:50 For Whose Benefit Public Corporations?
Sergio Gramitto (Law, Monash) “The Corporate Governance Game”
3:50 - 4:00 Concluding Session.
Saturday, February 20, 2021
Dreher: "How is Wells Fargo going to double black leadership in five years without actively hiring and firing people on the basis of race?"
I found the following in my inbox this morning: Facebook, Twitter, United Airlines and other large companies pledge to boost numbers of diverse leaders ("Nowhere in corporate America have I seen these metrics or an initiative with these types of metrics," said SVLG CEO Ahmad Thomas in an interview with MarketWatch before the announcement of the initiative.).
That reminded me of some commentary Rod Dreher posted last year in response to similar initiatives by Microsoft and Well Fargo (here):
Nadella didn’t say that Microsoft will attempt to do that; he said that Microsoft will do that. You can only double the number of blacks at the company through discriminatory hiring and firing. If you are white, Asian, or Hispanic, and work at Microsoft, you will not have the same chance at promotion, or perhaps you will even have to be laid off to make room for black managers…. How is Wells Fargo going to double black leadership in five years without actively hiring and firing people on the basis of race? ....
According to theorists of “antiracism” like Ibram X. Kendi, any time you see fewer blacks within an institution …, that is conclusive evidence of racism. Racial discrimination is the only explanation. It could not possibly be that, for example, fewer blacks chose to study finance (Wells Fargo), tech (Microsoft) or in related fields that would have brought them into the workplace at those particular companies. Only racism explains it…. This is what Microsoft apparently believes. This is what Wells Fargo apparently believes. This is what they are committed to doing: discriminating against non-black employees to fit this ideological idea of antiracism.
Relatedly, Ed Whelan had the following to say about Coca-Cola's new diversity guidelines for outside counsel (here):
Title VII of the Civil Rights Act of 1964 broadly prohibits employers from discriminating on the basis of race, including in assigning work. But that’s exactly what Coca-Cola would have law firms do. It’s often thought that the Supreme Court’s anti-textual ruling in United Steelworkers v. Weber (1979) gives a green light to racial preferences that favor blacks. But the Court’s actual holding is much narrower than that …. While declining to “define in detail the line of demarcation between permissible and impermissible affirmative action plans,” the Court emphasized that the plan at issue was “a temporary measure” and was “not intended to maintain racial balance, but simply to eliminate a manifest racial imbalance” resulting from the systematic exclusion of blacks from craft unions…. Far from adopting its guidelines as “a temporary measure” to “eliminate a manifest racial imbalance,” Coca-Cola contemplates that the guidelines will operate in perpetuity to achieve and “maintain racial balance.” Indeed, the guidelines explicitly state that their “minimum commitments will “be adjusted over time as U.S. Census data evolves.” In short, there is little reason to think that the employment discrimination that Coca-Cola’s guidelines call for would fall within the Weber exception to Title VII.
Richard Epstein makes the further point (here) that if there is a known pipeline problem (i.e., based purely on the current number of Black attorneys, the quotas appear to require reaching further into the talent pool) then a breach of duty claim might also be possible: It is also worth asking whether a shareholder could succeed with a derivative legal action that held that the adoption of Coke’s decision to hire weaker minority workers was a breach of its fiduciary duty.
It is easy to find at least some of the foregoing analysis offensive and/or just plain wrong, but the question remains for discrimination law experts: In terms of surviving a motion to dismiss in a reverse-discrimination case, how much (if at all) do these corporate diversity commitments help plaintiffs? In terms of Epstein's fiduciary duty point, I find it very difficult to imagine a set of facts that would preclude management from claiming a pro-corporate cost-benefit analysis sufficient to dismiss a fiduciary duty claim. You'd basically need "smoking gun" evidence of decision-makers having a Henry Ford or Tim Cook moment to even have a chance of avoiding that as a plaintiff (i.e., some version of "we have reason to believe this might destroy shareholder value but we don't care").
Friday, February 12, 2021
Holger Fleischer has posted Corporate Purpose: A Management Concept and its Implications for Company Law on SSRN (here). I like the idea of distinguishing (1) a "management concept" of identifying a corporate purpose "beyond mere profit" from (2) a corporate law conception of the for-profit corporation as a profit-maximizing entity. Here is the abstract:
Many companies have recently been following the so-called corporate purpose concept that is recommended by leading management scholars. To this end, they identify a raison d'être for their enterprise that goes beyond mere profit making and they anchor it in the entire value chain. This paper puts the corporate purpose concept in perspective by linking it to the larger debate on corporate social responsibility and by outlining its theoretical foundations and practical application. It then goes on by explaining how this management concept fits into the company law framework, looking to France and the UK as well as to the US and Germany. Finally, this paper assesses various policy proposals made by leading purpose proponents, ranging from mandatory purpose clauses in the articles of association to say-on-purpose shareholder voting and dual-purpose business organisations.
Tuesday, January 26, 2021
Over at Law & Liberty, James Rogers reviews Cass Sunstein's "Too Much Information: Understanding What You Don't Want to Know." Below is a brief excerpt from the review. There are apparently at least some references to the SEC in the book.
[Sunstein] writes, “The primary question in this book is simple: When should government require companies, employers, hospitals, and others to disclose information?” His answer, he writes, is simple, although perhaps deceptively simple. Government should require disclosure “When information would significantly improve people’s lives.” The surprise is that the book focuses mainly on the argument that making judgment of when disclosure “improves people’s lives” can be so complicated that government policymakers often should not attempt it except under carefully identified conditions.... The book reads almost as though Sunstein started the book with one hypothesis in mind—that he would develop a framework that would help with developing sensible government disclosure policies going forward—but he instead became increasingly skeptical of his initial project as he worked through the research.
Sunday, January 24, 2021
Professor Megan Wischmeier Shaner (Associate Dean for Research & Scholarship; President's Associates Presidential Professor of Law, University of Oklahoma College of Law) recently published Privately Ordered Fiduciaries (28 Geo. Mason L. Rev. 345 (2020)). Below is an excerpt from the Introduction that might be of interest to readers.
Over the past two decades, legal and practical hurdles to developing doctrine addressing the corporate officer have been cleared away. In 2004, the Delaware Code was amended to provide for personal jurisdiction over nonresident officers of Delaware corporations. “Around this same time there was a dramatic shift underway in corporate governance norms that had been buttressed by federal regulation to create greater board independence from officers.” With fewer board seats occupied by company executives, officer conduct was no longer reliably regulated by bootstrapping obligations to an officer's concurrent director status, underscoring the need for specific rules addressing officer obligations.
The separation of director and officer status in public corporations led to a heightened focus on officers as distinct legal actors in the corporation and on the accompanying legal standards that would govern them. The Delaware Supreme Court's 2009 decision in Gantler v. Stephens clarified, in part, the fiduciary obligations and accountability of corporate officers. In Gantler, the court held that “officers of Delaware corporations, like directors, owe fiduciary duties of care and loyalty, and that the fiduciary duties of officers are the same as those of directors.” These developments in corporate law, individually and collectively, cleared a path for the exploration and development of the legal contours of officer duties. The courts, stockholders, and their counsel, however, have declined the invitation to tackle officer accountability and responsibility. And somewhat ironically, when faced with the few officer challenges that have been brought before them, the Delaware courts have applied a director-centric lens in evaluating officer issues, narrowing the potential avenues for legal challenges, closing the door on future doctrinal development, and limiting the guidance available to market actors.
The absence of officer doctrine has not gone unnoticed. Academics, jurists, corporate managers, and their counsel have all commented on the ambiguity that exists with respect to the legal rules governing officer decisionmaking and liability. In fall 2018, the Officer Liability Task Force (the “Task Force”) of the American Bar Association (“ABA”) met for the first time to discuss: (1) the uncertainty in the law surrounding the nature and scope of the fiduciary duties of, and applicability of the business judgment rule to, corporate officers; and (2) potential ways to address that uncertainty, including whether any potential products, such as annotated model employment agreements, would assist in providing additional clarity. The Task Force's objectives are, however, relatively narrow ….
This Article tackles the broader issues raised by the Task Force's work, taking a deep dive into the issue of private ordering of corporate officer fiduciary obligations and liability.
Wednesday, January 20, 2021
Via Christopher Rufo (here):
Today, President Biden rescinded the Trump executive order banning critical race theory training programs from the federal government.
Critical race theory is a grave threat to the American way of life. It divides Americans by race and traffics in the pernicious concepts of race essentialism, racial stereotyping, and race-based segregation—all under a false pursuit of “social justice.” Critical race theory training programs have become commonplace in academia, government, and corporate life, where they have sought to advance the ideology through cult-like indoctrination, intimidation, and harassment.
It is time to fight back. Last year, I declared a “one-man war” against critical race theory, which led to the presidential order banning these trainings from the federal government. Today, I am announcing a new coalition of law firms and legal foundations with the explicit goal of fighting critical race theory in the courts. This coalition, called Stop Critical Race Theory, has already filed three lawsuits against public institutions conducting critical race theory programs and, in the coming months, will file additional lawsuits in the state and federal courts.
Our ambition is to take one of these cases to the United States Supreme Court and establish that critical race theory-based programs—which perpetuate racial stereotypes, compel discriminatory speech, and create hostile working environments—violate the Civil Rights Act of 1964 and the United States Constitution.
Monday, January 18, 2021
[I found the following in my inbox this morning and subsequently received permission from Dean Peters to republish it here.]
Dear members of the Akron Law family,
Over the weekend, I revisited Martin Luther King Jr.’s astounding Letter from a Birmingham Jail. If you haven’t read it, or haven’t read it recently, it is worth ten minutes of your time on this day devoted to Dr. King’s legacy. (Be aware that Dr. King twice repeats an offensive epithet in the Letter to describe racist insults in the South.) Letter from a Birmingham Jail is essential reading for all Americans, and it carries particular significance for lawyers.
Dr. King wrote Letter from a Birmingham Jail in April 1963, at the height of the Civil Rights Movement and a few months before his “I Have a Dream” speech in Washington. He and his colleagues had been arrested for illegally marching to protest segregation in Birmingham, Alabama, the fiefdom of the infamous Theophilus Eugene “Bull” Connor and his fire hoses and police dogs. While Dr. King sat in jail, a group of white Alabama clergymen published an open letter denouncing King’s methodology of public (and sometimes illegal) protest and resistance. The white clergy insisted that the anti-segregationist cause “should be pressed in the courts and in negotiations among local leaders, not in the streets.”
Letter from a Birmingham Jail was Dr. King’s response to this indictment, and there are many aspects of it that remain strikingly resonant today. The Letter is a cogent defense of civil disobedience, one of the most eloquent explorations of that topic ever written. But it is not an excuse for thoughtless lawbreaking or a call for disobedience without consequences. And it is a powerful rejection of the urge to violence.
In the Letter, Dr. King argued that while a person “has not only a legal but a moral responsibility to obey just laws, … one has a moral responsibility to disobey unjust laws.” But King was meticulous about the distinction between just and unjust laws. An unjust law is not simply a law that one does not like, or even a law that one personally believes to be unjust. Rather, an unjust law is one that is rotten at its core – a law that is made or applied so as to deny the equal humanity of those it purports to bind. For example, King wrote, “[a] law is unjust if it is inflicted on a minority that, as a result of being denied the right to vote, had no part in enacting or devising the law.”
Segregationist laws were unjust in this way, Dr. King understood, and so disobedience of them was justified. But even those who engage in justified disobedience had to be willing to pay the consequences: “In no sense do I advocate evading or defying the law …. That would lead to anarchy. One who breaks an unjust law must do so openly, lovingly, and with a willingness to accept the penalty.” For King, “an individual who breaks a law that conscience tells him is unjust, and who willingly accepts the penalty …, is in reality expressing the highest respect for law.”
Dr. King thus accepted the crucial distinction between peacefully resisting a particular unjust law and “defying the law” itself. And he emphatically rejected the legitimacy of violent disobedience of the law. In his Letter, King denounced the “force … of bitterness and hatred” that tugged at some opponents of segregation, one that “comes perilously close to advocating violence.” In place of violence, King advocated “a type of constructive, nonviolent tension which is necessary for growth. … It seeks so to dramatize [an] issue that it can no longer be ignored.”
These central threads of Dr. King’s message – the legitimacy of peaceful civil disobedience and the illegitimacy of unequal laws; the importance of respect for the underlying institution of the law; and above all the utter rejection of violence – deserve our attention now. And there is another dimension of Letter from a Birmingham Jail that carries lessons for us today. The Letter is an unfailingly civil document and a fastidiously reasoned one. King takes his antagonists to task, certainly; but he never insults them or the intelligence of his readers. He recognizes that his real audience is the nation and posterity, not the intransigent white clergymen whose letter sparked his reply. And so he is careful about his facts and scrupulous about his assertions. He lets his arguments speak for themselves.
Dr. King was an extraordinary man who lived in extraordinary times. We live in such times too, and although we can only glimpse Dr. King’s greatness across the distance of years, we can aspire for ourselves to the values he espoused: civility in the face of deep disagreement; reasoned argument supported by facts; abhorrence of violence; and an unflinching desire to make our laws more just.
Please be well; be safe; and be kind and respectful to each other.
Thursday, December 17, 2020
AALS Panel: Perspectives on Shareholder and Stakeholder Primacy (Friday, January 8, 2021, 1:15 - 2:30 pm)
If you are attending the AALS Annual Meeting, I hope to see you here (Zoom link details forthcoming):
For Whose Benefit Public Corporations? Perspectives on Shareholder and Stakeholder Primacy
Sponsored by the Section on Socio-Economics
Co-Sponsored by the Sections on Business Associations and Securities Regulation
Friday, January 8, 2021, 1:15 - 2:30 pm
(Papers drawn from this program will be published in the University of the Pacific Law Review)
On August 19, 2019, the Business Roundtable, a self-described “association of chief executive officers of America’s leading companies,” issued a statement seeking to redefine the purpose of the corporation by moving away from shareholder primacy and towards a “commitment to all stakeholders.” Since that time, corporate governance experts have continued to vigorously debate the merits of shareholder primacy and stakeholder primacy. Focusing on tensions and synergies among the financial and other socio-economic interests of the corporation and its fiduciaries, shareholders, and other stakeholders, this panel seeks to provide relevant perspectives on the current state of this debate.
Robert Ashford (Syracuse)
Lucian Bebchuk (Harvard)
Margaret Blair (Vanderbilt)
June Carbone (Minnesota)
Joshua Fershée (Dean, Creighton)
Sergio Gramitto (Monash)
Stefan Padfield (Moderator, Akron)
Edward Rubin (Vanderbilt)
Marcia Narine Weldon (Miami)
From the SEC press release (here):
The Securities and Exchange Commission today charged Robinhood Financial LLC for repeated misstatements that failed to disclose the firm’s receipt of payments from trading firms for routing customer orders to them, and with failing to satisfy its duty to seek the best reasonably available terms to execute customer orders. Robinhood agreed to pay $65 million to settle the charges.
According to the SEC’s order, between 2015 and late 2018, Robinhood made misleading statements and omissions in customer communications, including in FAQ pages on its website, about its largest revenue source when describing how it made money – namely, payments from trading firms in exchange for Robinhood sending its customer orders to those firms for execution, also known as “payment for order flow.” As the SEC’s order finds, one of Robinhood’s selling points to customers was that trading was “commission free,” but due in large part to its unusually high payment for order flow rates, Robinhood customers’ orders were executed at prices that were inferior to other brokers’ prices. Despite this, according to the SEC’s order, Robinhood falsely claimed in a website FAQ between October 2018 and June 2019 that its execution quality matched or beat that of its competitors. The order finds that Robinhood provided inferior trade prices that in aggregate deprived customers of $34.1 million even after taking into account the savings from not paying a commission.
Tuesday, December 15, 2020
"$20,000 in scholarships are available to the high school students who best answer why 'free speech is a better idea than censorship.'"
For the high school student in your life:
The mission of FIRE is to defend and sustain individual rights at America’s colleges and universities. These rights include freedom of speech, legal equality, due process, religious liberty, and sanctity of conscience—the essential qualities of individual liberty and dignity. In addition to defending the rights of students and faculty, FIRE works to educate students and the general public on the necessity of free speech and its importance to a thriving democratic society.
The freedom of speech, enshrined in the First Amendment to the Constitution, is a foundational American right. Nowhere is that right more important than on our college campuses, where the free flow of ideas and the clash of opposing views advance knowledge and promote human progress. It is on our college campuses, however, where some of the most serious violations of free speech occur, and where students are regularly censored simply because their expression might offend others....
In a persuasive letter or essay, convince your peers that free speech is a better idea than censorship.
Tuesday, December 8, 2020
Over at Defining Ideas, Richard Epstein notes:
This past week, Nasdaq announced that it had applied to the Securities and Exchange Commission for authorization to impose diversity requirements on the boards of directors of its listed companies. The substantive proposal requires that each company include on its board at least two diverse directors, one of whom must be a woman (or, more precisely, one who self-identifies as female) and one who self-identifies as a member of an underrepresented minority, including “Black or African American, Hispanic or Latinx, Asian, Native American or Alaska Native, Native Hawaiian or Pacific Islander, two or more races or ethnicities,” or as “LGBTQ+.” Whenever these targets are not met, the listed company must offer a public explanation as to why that is the case.... In defense of its diversity mandate, Nasdaq tries to bring itself within ... traditional rationales by claiming that increasingly diverse boards will help “prevent fraudulent and manipulative acts and practices.” Such avoidance of fraud and manipulation purportedly follows from a decrease in groupthink that comes from airing diverse perspectives.
This made me wonder whether we'll soon be seeing a similarly structured viewpoint diversity proposal from Nasdaq, given that according to the Free Enterprise Project:
The vast majority of members of the boards of directors of the largest companies in the United States are, where their viewpoints are discernable, demonstrably left of center. As Baron Political Affairs, LLC revealed in 2019, every single director of a Fortune 1-10 company who had been elected to political office or who had worked for an administration was (or had worked for) a Democrat. The ratio shifted to 2 Democrats for every Republican in the Fortune 100 generally, but only to 5:1 for financial or tech firms within that group. FEP’s own research, as part of a proposal-review proceeding this past winter, confirmed this trend at AT&T, where every member of the board of directors who had held elective or appointed office had done so as a Democrat or with a Democratic administration.
Turning back to the Defining Ideas piece, Epstein further notes that:
it is appropriate to ask whether the SEC, as a government agency, should give its explicit approval to a policy that introduces explicit racial and gender classifications.... Government imprimatur might give rise to serious constitutional challenges that the Nasdaq report never addresses, let alone resolves.
Monday, December 7, 2020
Friend of the blog Bernard Sharfman has posted The Conflict between Blackrock's Shareholder Activism and ERISA's Fiduciary Duties (Case Western Reserve Law Review, Forthcoming) on SSRN (here). The abstract:
The focus of this Article is on the agency costs that may be created by the empty voting of investment advisers to index funds and how they can be mitigated so as to protect the value of private employee pension benefit plans. This Article focuses on BlackRock because it has taken a leadership role in the leveraging of its delegated voting authority. Therefore, the issue I address in this white paper is whether the fiduciary duties of a plan manager of an “employee pension benefit plan,” as authorized under the Employee Retirement Income Security Act of 1974 (“ERISA”), requires it to investigate BlackRock’s shareholder activism. This indirect approach is required as the fiduciary duties of ERISA do not generally extend to mutual funds and ETFs and their investment advisors.
This Article takes the position that a plan manager has a fiduciary duty, the duty of prudence, to investigate BlackRock’s shareholder activism. This duty applies not only to the BlackRock’s mutual funds or ETFs that an ERISA plan invests in but also to those BlackRock fund selections that it makes available to its participants and beneficiaries in self-directed accounts.
Given these fiduciary duties, this Article argues that if a plan manager were to investigate BlackRock’s shareholder activism, especially its engagement strategy, it would likely find it to be in conflict with the manager’s fiduciary duties. Such a finding would require a plan manager to seek out other reasonably available alternatives that is not associated with such shareholder activism.
While the focus of this Article is on BlackRock’s delegated voting authority and associated shareholder activism, it is meant to apply to any and all investment advisers who attempt to leverage their delegated voting authority for purposes of engaging in such activism. Moreover, the Department of Labor should provide guidance to plan managers on when the investment products of investment advisers with delegated voting authority need to be excluded.
This Article was presented at the George A. Leet Business Law Symposium (Case Western Reserve University School of Law) on Nov. 6, 2020.
Thursday, December 3, 2020
The world lost an intellectual giant this week when the economist Walter E. Williams passed away. Williams was the John M. Olin Distinguished Professor of Economics at George Mason University, an economist’s economist, a scholar’s scholar, and an unparalleled communicator of economic wisdom and ideas. He loved liberty, defended it eloquently, and went to great lengths to show how good intentions don’t readily translate into good outcomes.
Thomas Sowell, as quoted by his Twitter tribute account:
There was a time when the black conservative community would have consisted of me and Walter Williams. I know Walter used to say the two of us should never fly on the same plane otherwise the whole movement will disappear if the plane goes down.
Here are some prominent Conservative Black Intellectuals who have written extensively on race/ethnic relations. Many have argued, with evidence, that affirmative action does not largely help its intended beneficiaries, and that statistical disparities do not imply discrimination[: Thomas Sowell, Walter E. Williams, Shelby Steele, Jason Riley, Candace Owens, Clarence Thomas, Ben Carson, John McWhorter, Larry Elder, Star Parker.] Will any of their books and articles be included in the enhanced efforts to study and reduce "racial injustice?" Probably not.
Williams was an Army veteran, a Ph.D. economist published in numerous peer-reviewed journals, an author of 11 books, a syndicated columnist whose work appeared in newspapers across the country, a substitute radio host whose voice was heard by millions, a subject of two documentaries, a former chair of the Mason Economics department and a professor at Mason since 1980....
As Williams persisted well beyond retirement age, his passion for economics undimmed, he was the kind of man that made you say, “He’s going to teach until the day he dies.” On Dec. 1, he taught his last class of ECON 811 to complete the semester, ending the 7:20-10:00 p.m. block around 30 minutes early, as was typical. Fewer than 12 hours later, he died, aged 84. R.I.P.
Walter Williams’s last syndicated weekly newspaper column:
Several years ago, Project Baltimore began an investigation of Baltimore's school system. What they found was an utter disgrace. In 19 of Baltimore's 39 high schools, out of 3,804 students, only 14 of them, or less than 1%, were proficient in math. In 13 of Baltimore's high schools, not a single student scored proficient in math. In five Baltimore City high schools, not a single student scored proficient in math or reading. Despite these academic deficiencies, about 70% of the students graduate and are conferred a high school diploma -- a fraudulent high school diploma.
The Detroit Public Schools Community District scored the lowest in the nation compared to 26 other urban districts for reading and mathematics at the fourth- and eighth-grade levels. A recent video captures some of this miseducation in Milwaukee high schools: In two city high schools, only one student tested proficient in math and none are proficient in English. Yet, the schools spent a full week learning about "systemic racism" and "Black Lives Matter activism." ....
Should we blame this education tragedy on racial discrimination or claim that it is a legacy of slavery? Dr. Thomas Sowell's research in "Education: Assumptions Versus History" documents academic excellence at Baltimore's Frederick Douglass High School and others.
Some say that educational expenditures explain the gap, but is that true? Look at educational per pupil expenditures: Baltimore city ranks fifth in the U.S. for per pupil spending at $15,793. The Detroit Public Schools Community District spends more per student than all but eight of the nation's 100 largest school districts, or $14,259.... There appears to be little relationship between educational expenditures and academic achievement.
Sunday, November 29, 2020
Came across the abstract below as part of my WestClip Alerts, you can find the SSRN version here.
The approaching anniversary of E.I. duPont deNemours & Co. v. Christopher is the impetus for this exploration and evaluation of the role of “commercial morality” in trade secret misappropriation doctrine. Christopher is the well-known industrial espionage case in which the U.S. Court of Appeals for the Fifth Circuit held that flying an airplane over an under-construction manufacturing facility to take photos of briefly-but-inevitably exposed trade secrets was an “improper means” of accessing a trade secret and was contrary to standards of “commercial morality.”
Commercial morality has played a significant but shifting role in trade secret law over the past seven decades and has become an important part of the contemporary trade secret doctrine lexicon, yet courts and commentators have not explored the meaning of this term. This study fills that gap in the literature by analyzing the origins of the commercial morality doctrine and its proper application in trade secret law. The development of U.S. commercial morality doctrine breaks down into four distinct time periods that illustrate the evolution of the doctrine in trade secret law over time, including the shift from the doctrine's initial use as a way to justify nascent trade secret law and its liability expansion to the doctrine's modern equitable role in structuring injunctive relief for misappropriation.
The analysis also shows that while courts invoke commercial morality when adjudicating misappropriation claims, they do not define the meaning of the term or provide reasoned analysis of its application. This is problematic when courts use the term in lieu of careful analysis of the facts and reasoning underlying their decision. Explicit recognition of the equitable nature of commercial morality doctrine would facilitate judicial application of the concept in a principled and effective manner.
Lynda J. Oswald, The Role of "Commercial Morality" in Trade Secret Doctrine, 96 Notre Dame L. Rev. 125 (2020).
Wednesday, November 25, 2020
For the one BLPB reader who doesn't also check in on The CLS Blue Sky Blog:
Based on an analysis of public communications around earnings announcements, we find that managers are 34 to 43 percent more likely to cite stakeholder value maximization during periods following earnings announcements that fall short of market expectations. This finding is consistent with concerns that the inability to measure stakeholder value may reduce managers’ accountability for firm performance....
Managers seem to be aware that stakeholder-oriented goals may reduce their accountability for performance, but does the manager’s push for stakeholder objectives sway the board’s evaluation of an underperforming manager? We use CEO turnover-performance sensitivity, a measure used in numerous prior studies of CEO evaluation, to determine whether this behavior produces any observable benefit to the manager. Indeed, we find that it does; CEOs that cite stakeholder value maximization as an objective are less likely to see turnover following poor performance.
Tuesday, November 24, 2020
ICYMI: "SEC Proposes Temporary Rules to Facilitate Measured Participation by Certain 'Platform Workers' in Compensatory Offerings"
The Securities and Exchange Commission today voted to propose rules that, on a temporary basis and subject to percentage limits (no more than 15% of annual compensation), dollar limits (no more than $75,000 in three years) and other conditions, would permit an issuer [to] provide equity compensation to certain "platform workers" who provide services available through the issuer's technology-based platform or system.
The proposed rules reflect the significant evolution that has taken place in the composition and participation of the workforce since the Commission last substantively amended Rule 701 or Form S-8, particularly the development of the so-called "gig economy," which has resulted in new work relationships.
Thursday, November 19, 2020
Over at the Harvard Business Law Review, Sanjai Bhagat has posted Economic Growth, Income Inequality, and the Rule of Law (here). Here's what caught my eye:
Besides the size of the national pie, which is measured by GDP, senior policy makers and the media across the globe are increasingly concerned about how this pie is sliced, that is, about income inequality. We find that countries with greater adherence to Rule of Law are characterized by less income inequality. Additionally, we find that countries with greater GDP per capita are characterized by less income inequality; however, once we control for Rule of Law in the country, we do not observe this negative correlation between GDP per capita and income inequality. This further highlights that adherence to the Rule of Law relates to reducing income inequality.