November 2015

Thanks to Greg Day, assistant professor of economics and legal studies at the Spears School of Business at Oklahoma State University, for joining us as a guest blogger for the month of November.

Greg’s posts are collected below and his scholarship is available here:

Following up on Arbitration and Human Rights

Cobras and Housing Markets

Do Sophisticated Parties Really Prefer the Freedom of Contract?

And Now Another Corporate Inversion–And More Corporate Inversion Restrictions

I never thought I would say this, but my favorite book this year is about punctuation. That’s right. Punctuation! The book is Making a Point: The Pernickety Story of English Punctuation, by David Crystal, and it’s well worth reading.

It’s an enjoyable romp through the English language, with limited attention to writing in other languages as well. (I just placed something in a German English-language publication and discovered that Germans don’t know how to “correctly” use quotation marks.)

This isn’t a rule book; Crystal talks about current usage, including areas where the “experts” disagree. (Oxford comma, anyone?) But he also covers the history—how the use of punctuation has evolved over time. One of the book’s recurring themes is how two functions of punctuation–clarifying the writer’s meaning and providing cues to speakers–can sometimes be at odds.

The history is fascinating. I have to admit that, after reading this book and seeing what excellent writers have done in the past, it’s harder to argue for a prescriptive position. I don’t always agree with Crystal’s position on disputed issues, but his case is always cogent.

Crystal covers all the major punctuation marks: , , ;, :, . . . , ., and…

A short while ago, some commentators declared that the Treasury had successfully ended corporate inversions. But after several recent corporate migrations, reports of the inversion’s death appear to have been greatly exaggerated.

A corporate inversion is a complicated and costly transaction used by American corporations to avoid particularly burdensome aspects of the U.S. tax code. The United States not only enforces the OECD’s highest corporate tax rate (the tax rate for most U.S. corporations ranges between 35% to 39%) but also worldwide taxation. This latter feature subjects an American corporation’s entire revenue stream to the United States’ extraordinary tax rate, whereas most countries tax only what is earned inside their territorial borders. In simplified terms, a corporation hoping to invert must merge with a foreign corporation—while satisfying some very idiosyncratic conditions—in order to reorganize in the foreign company’s country. After inverting, a company’s foreign generated income becomes subject to more favorable foreign tax rates, though it must still pay U.S. taxes on domestically generated revenue.

The rhetoric surrounding inversions has been heating up since Pfizer announced its intentions to invert into an Irish entity after acquiring Allegran in a $160 billion deal. The chief complaint against inversions is that inverted companies…

Hillary Sale and Robert Thompson have published a new article to SSRN discussing the role of 10b-5 class actions, and, in particular, how private class actions function to protect the goals of securities regulation more broadly, including investor protection and general confidence in U.S. securities markets.  One of their key insights is that the concept of market efficiency is critical both to the current system of regulation, and to the 10b-5 class action – and that there is a basic hypocrisy when large, publicly-traded issuers take advantage of the concept of market efficiency to reduce their regulatory disclosure burdens while simultaneously arguing against market efficiency to defeat securities claims.  They contend the presumption of reliance – and what should be a very narrow space for defendants’ rebuttal of price impact, thus allowing classes to be certified – fits well with the class action’s role in protecting markets.

I agree with their thesis generally, namely, the role that securities class actions play in policing markets, rather than as a direct system for compensating defrauded investors.  In fact, I argued in a recent paper that courts have altered their definitions of organizational scienter to account for the changing role of the securities…

Please accept my apologies for not posting this notice sooner.  I received the call for papers a few weeks ago and meant to post it then.  But I now see that the deadline for abstract submissions is Monday!  Mea culpa.  Please feel free to post a comment here or contact me by email for more information if you want to submit.  I have a more full-blown version of the call for papers that I can send by email to those who are interested in more information.  (I omitted here prior conference locations as well as the names and affiliations of members of the conference academic and practice review boards and organizing committee.) 

I have participated in this conference for the past two years.  While there are few law academics in attendance, I have found the work of our international colleagues from the business side of the aisle to be both very informative to my work and interesting in many other respects.  This conference also has enabled me to forge new relationships that have positively impacted my scholarship.

Call for Papers
7th Conference on Innovative Trends Emerging in Microfinance (ITEM-7)
Pumping up Innovations In and Around Microfinance
(Microfinance, Crowdfunding and Community Development Finance)…

I try to read everything Lyman Johnson writes, so my Thanksgiving break reading is his recent book chapter The Reconfiguring of Revlon. The abstract is below:

Three decades later, an irksome uncertainty still impedes a settled understanding of the Delaware Supreme Court’s landmark ruling in Revlon, Inc. v. MacAndrews & Forbes Holdings, Inc. For such a towering doctrine, Revlon’s underlying rationales remain controversial, its exact contours and demands continue to be surprisingly unclear, and it holds out scant hope for remedial relief. In spite of these troubling features of today’s Revlon jurisprudence, however, Revlon is slowly being worked back into the larger fabric of Delaware’s fiduciary duty law and away from being a gangling, standalone doctrine. The organizing themes of this judicial project are strong deference in the deal context to decisions made by independent directors without regard to deal structure, the substantially reduced likelihood of equitable or monetary remedies in all types of deal-related lawsuits, and a nascent effort at harmonizing Revlon with Delaware’s more general, and ill-defined, doctrine on corporate purpose.

This chapter discusses the original Revlon decision and its rapid expansion before turning to lingering uncertainties surrounding the reach of Revlon, the decline of Revlon’s remedial

…

It’s Thanksgiving, which means it’s time to do Christmas shopping. No, that’s not it. I’m sure Thanksgiving is supposed to be about more than that. Food? Football? No, there’s something else. It’s on the tip of my tongue; I just can’t quite remember. . . . . . . . .

Oh, yeah: being thankful.

I’m thankful for many things, but I want to use this column to thank some of the people who have touched my professional life.

First, thanks to my co-bloggers (in alphabetical order): Josh Fershee; Joan Heminway; Ann Lipton; Haskell Murray; Marcia Nanine; Stefan Padfield; and Anne Tucker. Their blog posts are always interesting and informative, and usually, I have to admit, better than anything I write. But, if you think their blog posts are good, you ought to see the incredible behind-the-scenes e-mail conversations we share. I have learned a lot from each of them. Believe it or not, I’ve only met two of them in person, but I’m happy to have all of them in my academic life.

Second, I’m thankful for my colleagues here at the University of Nebraska—well, most of them anyway. All of them are deserving of thanks—if for nothing else…

GIVING-THANKS

Last year, in my first Thanksgiving week post, I gave public thanks for my students. I could just as easily have done that again this year.  My students continue to impress and inspire me.  And that is certainly something to be grateful for–year in, and year out.

This year, however, I also want to acknowledge my thanks for all of the special colleagues I have in the academy (and yes, fellow BLPB editors, that includes you!) and the bar that make my job complete.  When I have needed assistance, support, or just a good laugh, it is my fellow law peeps–and especially my business law peeps–to whom I most often turn and on whom I almost always rely.

You, my law teacher and lawyer friends, have:

  • read and edited my early syllabi, exams, and assignments, preventing me from making mistakes that new law professors often make;
  • taught my Business Associations class when my mother was dying so I could be by her side;
  • helped my son learn about e-discovery and various types of law practice so that he could launch his career;
  • provided assistance to my Corporate Finance students when they needed specialized guidance or advice on their planning and

…

Like many people, I am traveling for the holiday this week.  Because of that, I’ll keep this short. Since November 15, 2015, several more courts have listed an LLC as a “limited liability corporation,” instead of the correct, “”limited liability company.”  The culprits:

Editorial Note: A case was removed from this listing on September 3, 2017 at the request of a reader after consultation with the author.

1) Ironridge Glob. IV, Ltd. v. Securities and Exch. Commn., 1:15-CV-2512-LMM, 2015 WL 7273262, at *11 (N.D. Ga. Nov. 17, 2015) (“Notwithstanding the plain text of § 1391(c), the SEC argues that (1) § 1391(c) was intended to apply to corporations, partnerships, limited liability corporations, and labor unions—not federal agencies—according to “a natural reading of the full text of the statute” and its legislative history; and (2) to read § 1391(c) otherwise would facilitate forum shopping.”).

2) In the caption: Perez v. Sophia’s Kalamazoo, LLC, d/b/a SOPHIA’S HOUSE OF PANCAKES, a limited liability corporation, et al., Defendants., No. 1:14-CV-772, 2015 WL 7272234 (W.D. Mich. Nov. 17, 2015).

3) In the caption: Oracle America, Inc., a Delaware Corporation, Plaintiff, v. The Oregon Health Insurance Exchange Corporation, dba Cover Oregon, an …