April 2017

By now, I am sure virtually all of our readers have heard about the United Airline issue involving the dragging of a passenger off the plane.

If not, you can catch up here, here, and here. And you can watch the viral video here.  

Shortly following the incident, United Airlines stock dropped sharply, losing hundreds of millions of dollars of value. (Of course, it is difficult to tell how much of this drop is related to the incident).

The CEO of United Airlines’ first public statement was tone deaf at best. He wrote, “I apologize for having to re-accommodate these customers” when better terms would have been “unacceptable” and “immediate corrective procedures.” There is not evidence that they “had” to remove passengers; they removed passengers because they wanted to transport some of their employees on that flight. The internal e-mail to the corporation’s employees was no better, calling the passenger “disruptive and belligerent.”

My social media feeds, which include many lawyers and legal academics, are full of debate over whether United Airlines acted within the bounds of the law and their terms & conditions. While this is an interesting discussion, I think it is largely beside the point in this case. Regardless of…

The Uniform Law Commission is in the process of considering the Limited Liability Company Protected Series Act (f/k/a Series of Unincorporated Business Entities Act), and the final reading is schedule to take place in July 2017.  (Draft is here.) I have been discussing the challenges of Series LLCs with a variety of folks, and it strikes me that a consistent theme about the Series LLC is a concern about asset protection between each LLC in there Series. That is, there is concern that some courts may disregard the separateness of each LLC in the Series and treat the entire Series as a single entity.  I share this concern, but it strikes me that it is a rather outlandish concern that a court would do so without some significant level of fraud or other injustice to warrant whatever the state version of veil piercing would mandate. 

One source goes so far as to state: 

Case law has not been developed on Series LLCs yet, and there is much fear in the professional world that the assets may not be as protected as when the entity is formed. What is clear is that the “corporate formalities” must be carefully followed, such that:

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After I published last week’s post, I heard from a few of you in person and by email.  You expressed support and sympathy.  And you had stories of your own.  Those communications motivate this post.

There are, in my view, rules of etiquette that apply to editing academic and professional work for publication.  It seems that I am not the only one who holds this view.  With articles and posts titled, e.g., Editing Etiquette and Editor Etiquette, a number of others in the writing and editing biz have ideas on how editors should behave in their interactions with writers.  And my key observations about best practices in law review, law journal, and law textbook editing echo theirs.  Here are my “Top Three” rules of editing etiquette for law publications.

  1. Always show the author where changes to the text have been made.  This typically means sending the author a blacklined version of the work.  Once the give-and-take of the editorial process is under way, the backline should indicate whether changes suggested by the author have been accepted and where new changes suggested by the editor have been implemented/added.  Recently, a law review sent me a backline that was made from

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I had planned to post about the intersection of business and CSR in light of the Pepsi/Kendall Jenner debacle and the Bill O’Reilly sponsorship flap, but I will save that for next week. For the last two days, I’ve been at my 25th anniversary reunion. I protested every year at HLS due to the lack of faculty diversity, and I also didn’t believe that I had learned a lot that prepared me for the real world, and thus had mixed emotions about coming back.

 HLS turns 200 this year, and Dean Martha Minow is stepping down because she actually misses full time teaching and scholarship. She raised some fascinating statistics about the incoming class that all of us in the profession should think about as we teach and work with the next generation of lawyers. Of course, Harvard is at the cutting edge, but schools at every tier should try to follow HLS’ lead where possible. 

Eighty percent  of  the incoming class didn’t come straight from college. Twenty-five percent have  four or more years of work experience, which means that these are students who didn’t just default into law school. They made a considered choice and their work experience adds…

Barkley

Today’s topic does not have a direct connection to business law, but I do think toughness is important to students, professors, and lawyers. And the Barkleys Marathon is all about toughness, and maybe insanity. So indulge me. I have been thinking about the race, which happened this past weekend, all week. My wife said I wasn’t allowed to talk about the Barkley Marathons anymore, so I am going to write about it here.

If you have not seen the documentary on Netflix entitled The Barkley Marathons: The Race that Eats its Young, watch it. See the documentary’s trailers here and here. See more about the race here.

I will save you from this overlong, mostly unrelated post with a page break, but if you are interested, you can proceed and read below.

No, not that conference, although I suppose that one’s nice too.  

In (very) loose association with that other conference, Tulane hosted a corporate academic conference, made possible by the generous donation of one of our alums, Gordon Gamm, and his wife Grace.

The academic conference, which took place on Saturday, April 1 immediately following the Tulane Corporate Law Institute, was great fun, and allowed me to reconnect with old friends and make some new ones.  It was structured on the theme of Navigating Federalism in Corporate and Securities Law, and featured presentations by 11 corporate and securities scholars (including me!).  

Discussion ranged from how to encourage retail shareholders to exercise their corporate voting rights to whether to redesign the internal affairs doctrine to controlling corporate political spending to issues of SEC regulatory capture and the intensity of its enforcement efforts to – of course – how, and even whether, we should distinguish corporate law from securities law.  Most of the papers were in draft form and are not yet publicly available, but a few are up, including Ed Rock’s and Daniel Rubenfeld’s Defusing the Antitrust Threat to Institutional Involvement in Corporate Governance, Robert Jackson’s, Robert…

The Washington Post reports: 

Back in 2015, Salesforce CEO Marc Benioff admitted something many CEOs wouldn’t: The company had found a pay gap between the men and women who worked for the cloud computing giant, and it was spending $3 million to fix it. Now after acquisitions and rampant growth at the company brought in 7,000 new employees in the past year, he’s doing it again, announcing Tuesday that the company has spent another $3 million to adjust for a pay gap that affects 11 percent of its more than 25,000 employees.

In an interview with The Washington Post, Benioff said he believed the re-opened gap was largely because of the company’s acquisitive streak — it bought 14 companies in its last fiscal year, the largest in its history. When companies acquire others, Benioff said, “you buy their pay practices, and this pay practice — of, basically, gender discrimination — is quite dramatic through our industry and other industries,” he said.

If one cares about equal pay, and I think people should (beyond just today), one needs to account for it in the purchase price of another entity.  This is a great reminder about the due diligence process. We need to think about all the things that…