November 2017

I have had the pleasure to work with a diverse and impressive group of people on the law faculties upon which I have had the privilege to serve.  One of those people is  David C. Hardesty, Jr., President Emeritus of West Virginia University and Professor of Law at the WVU College of Law. President Hardesty holds degrees from West Virginia University, Oxford University (which he attended as a Rhodes Scholar), and Harvard Law School, but more impressive is the time he spends mentoring students and faculty.  He remains committed to the college, university, and state, and we are fortunate he continues to share his time with us.  

President Hardesty teaches a course on leadership, called Lawyers as Leaders, which would be highly relevant at any law school, but it especially important at a school like ours where we are the only law school in the state.  In addition to serving clients big and small, our students consistently go on to hold public office, advise legislators and regulators, and run large companies in the state.  President Hardesty recently wrote an article for the West Virginia Law Review Online that explains part of how he helps prepares lawyers to be leaders.  The article…

The Oklahoma Law Review recently published an article I wrote for a symposium the law review sponsored last year at The University of Oklahoma College of Law.  The symposium, “Confronting New Market Realities: Implications for Stockholder Rights to Vote, Sell, and Sue,” featured a variety of presentations from some really exciting teacher-scholars, some of which resulted in formal published pieces.  The index for the related volume of the Oklahoma Law Review can be found here.  I commend these articles to you.

The abstract for my article, “Selling Crowdfunded Equity: A New Frontier,” follows.

This article briefly offers information and observations about federal securities law transfer restrictions imposed on holders of equity securities purchased in offerings that are exempt from federal registration under the CROWDFUND Act, Title III of the JOBS Act. The article first generally describes crowdfunding and the federal securities regulation regime governing offerings conducted through equity crowdfunding — most typically, the offer and sale of shares of common or preferred stock in a corporation over the Internet — in a transaction exempt from federal registration under the CROWDFUND Act and the related rules adopted by the U.S. Securities and Exchange Commission. This regime includes restrictions on transferring…

Quietly, just over two months ago, we got our Lady Vols back.  As you may recall, back in 2014, The University of Tennessee, Knoxville decided to consolidate its athletic branding behind the ubiquitous orange “Power T.” The women’s basketball team was exempted from the brand consolidation and retained the Lady Vol name and old-school logo in honor of our beloved departed coach, Pat Head Summitt. (See here.)

Many can be credited with the revival of the Lady Vols brand (and I do consider it to be an accomplishment), although perhaps these five heroic women are owed the largest debt of gratitude for the achievement.  I guess my earlier envisioned dreams of profiting from the abandonment of the trademarked Lady Vols logo will not soon be realized . . . .

There are lingering lessons in this affair for businesses and their management–and universities (as well as their athletic departments) are, among other things, businesses.  Knoxville’s former Mayor weighed in with comments on the matter in a recent local news column, advising “you need to be sensitive to what the customer likes.” He concludes (bracketed text added by me):

People will speculate for a long time on how UT…

Paul Caron (Pepperdine) reports that Wake Forest Law has become the 10th law school to accept the GRE. The law school will continue to accept the LSAT.  

Those ten law schools (in chronological order, from earliest adopter to most recent adopter) are:

This shift to accepting the GRE at Wake Forest Law has, apparently, been in the works for over 18 months, and Christine Hurt (BYU) had a nice post on some of the early discussion. Around that time, in February of 2016, Arizona became the first law school to accept the GRE.

Like Christine Hurt, I think this move to including the GRE is probably a good thing, especially if the GRE is shown to be just as predictive as the LSAT. The GRE is offered much more frequently than the LSAT and some pre-law students will have already taken the GRE. Also, I am generally in favor of competition, and the LSAC/LSAT has had a monopoly on law school admissions tests for quite a long time.  

It looks like U.S. News is already converting GRE scores into…

I’m passing this on from Karen Bravo at IU  given all of the ESG disclosures on slavery, supply chains, and human trafficking. 

Call for Papers: 

SLAVERY PAST, PRESENT & FUTURE: 3rd Global Meeting

Indiana University Europe Gateway, Berlin, Germany
July 10 & 11, 2018

 

Throughout history, slavery (the purchase and sale of human beings as chattel), enslavement (through conquest, and exploitation of indebtedness, among other vulnerabilities), and similar extreme forms of exploitation and control have been an intrinsic part of human societies. 

Is slavery an inevitable part of the human condition?

Controversial estimates indicate that up to 35 million people worldwide are enslaved today.  This modern re-emergence of slavery, following legal abolition over two hundred years ago, is said to be linked to the deepening interconnectedness of countries in the global economy, overpopulation, and the economic and other vulnerabilities of the individual victims and communities.

This conference will explore slavery in all its dimensions and, in particular, the ways in which individual humans and societies understand and attempt to respond to it. 

The varieties of contemporary forms of exploitation appear to be endless.  Consider, for example, enslavement or mere “exploitation” among:

  • fishermen in Thailand’s

…

A new Maryland case deals with claims against a limited liability company that the plaintiff claimed was “registered as a limited liability corporation (‘LLC‘).” Farm Fresh Direct Direct By a Cut Above LLC v. Downey, 2017 WL 4865481, at *2 (D. Md., 2017).  The court repeats the mistake, but the complaint is the original source, as it incorrectly identifies the LLC as a “corporation” and not a company.  The court then explains some of the allegations as follows: 
Plaintiff alleges that Sinsky violated 15 U.S.C. § 1125(a)(1)(A) and engaged in unfair and deceptive trade practices, in violation of Maryland common law. ECF 1, ¶¶ 17-22, 23-26. At its core, plaintiff’s contention is that “Sinsky is the resident agent and incorporator” of Farm Fresh Home (ECF 1, ¶¶ 12-13), and in that capacity she “filed” the articles of organization for Farm Fresh Home, creating a name for the “competing company” that is “intentionally confusing” because of its similarity to Farm Fresh Direct. ECF 1, ¶ 12.
. . . .
*4 Farm Fresh Home is a limited liability company. As a threshold matter, I must determine whether Sinsky is subject to suit in light of Farm Fresh Home’s

…

Today’s post is by Shu-Yi Oei (Boston College) & Diane M. Ring (Boston College), and originally appeared at TaxProf Blog:

Senate Republicans released their version of tax reform legislation on Thursday, November 9. The legislative language is not available yet, but the Description of the Chairman’s Mark (prepared by the Joint Committee on Taxation) suggests that one of the key provisions in the bill will clarify the treatment of workers as independent contractors by providing a safe harbor that guarantees such treatment. The JCT-prepared description tracks the contents of the so-called “NEW GIG Act” proposed legislations introduced by Congressman Tom Rice (R-S.C.) in the House and Senator John Thune (R-S.D.) in the Senate in October and July 2017, respectively. “NEW GIG” is short for the “New Economy Works to Guarantee Independence and Growth (NEW GIG) Act.” But notably, and as we further discuss below, the legislation is not limited in its application to gig or sharing economy workers.

Assuming the Senate Bill adopts the basic parameters of the NEW GIG proposed legislation — which looks to be the case based on the JCT-prepared description — we have some concerns. In brief, this legislation purports to simply “clarify” the treatment of workers as independent contractors and to make life easier for workers by introducing a new 1099 reporting threshold and a new withholding obligation. But the legislation carries potentially important ramifications for broader fights over worker classification that are raging in the labor and employment law area. Despite possibly alleviating tax-related confusion and reducing the likelihood of under-withholding, we worry that there are quite a few underappreciated non-tax hazards for workers if these provisions go through.

Summary of the Legislation

The legislation (assuming the Senate Bill more or less tracks the NEW GIG Act language) purports to achieve such “clarification” of worker classification status by doing the following:

First, the legislation introduces a safe harbor “which, if satisfied, would ensure that the worker (service provider) would be treated as an independent contractor, not an employee, and the service recipient (customer) would not be treated as the employer.” The legislation creates three objective tests, which, if met, ensure that the worker would be treated as an independent contractor rather than an employee. Very generally, those tests focus on (1) the relationship between the parties (including specificity of the task, exclusivity of the relationship, and whether the service provider incurs their own expenses), (2) the location of services or means by which they are provided, and (3) the existence of a written contract stating the independent-contractor relationship and acknowledging responsibility for taxes and a reporting/withholding obligation. (See JCT-prepared Description pp. 155-57.)

The first two tests are pretty easy for any sharing economy business to meet. In fact, many non-sharing businesses, such as those contracting with a broad swath of freelancers, could satisfy the safe harbor requirements, thereby extending the true reach of the legislation well beyond the gig economy. The “written contract” test is also not onerous. That requirement is essentially met if there is a written contract that makes the right noises in which the parties agree to independent contractor treatment. (Unsurprisingly, a contractual limitation is often not really a limitation at all.)

Second, the legislation clarifies the information reporting rules: It establishes a $1,000 threshold for Form 1099-K reporting and raises the 1099-MISC threshold from $600 to $1,000. (Under current law, there is some question of whether a Form 1099-K needs to be provided if the transactions do not exceed $20,000 and more than 200 transactions. We detail this issue in our article, “Can Sharing Be Taxed?”.)

Third, the legislation also requires the service recipient/payor to withhold limited amounts on payments made to independent contractor workers covered by the safe harbor. From the JCT-prepared description: “The proposal imposes an income tax withholding requirement with respect to compensation paid pursuant to a contract between a service provider and a service recipient (or payer) that meets the [safe harbor] requirements. For this purpose, a payment of such compensation is treated as a payment of wages by an employer to an employee. However, the amount required to be withheld is five percent of the compensation and only on compensation up to $20,000 paid pursuant to the contract.”

Fourth, the legislation limits the IRS’s ability to reclassify service providers as employees (and service recipients/payors as employers) in cases where the parties try in good faith to comply with the safe harbor but fail. The legislation only allows the IRS to recharacterize the relationship as an employment relationship on a prospective basis.

Finally, the legislation amends Tax Court jurisdiction: Under the current IRC § 7436 mechanism for challenging worker classification, only the person for whom the services are performed may petition the Tax Court regarding misclassification of workers. The bill would expand current law to allow the worker/service provider to bring such a case as well. 

[More under the cut]

I am putting together a panel or discussion group (depending on how many folks respond positively) for the SEALS conference for next summer, which is scheduled to be held August 5-11, 2018, at the Marriott Harbor Beach Resort & Spa in Fort Lauderdale, Florida (details here).

Here is the proposed title and a brief draft description (which may have to be shortened for the submission):

The Role of Corporate Personhood in Masterpiece Cakeshop

The United States Supreme Court is scheduled to hear arguments in the case of Masterpiece Cakeshop, Ltd. v. Colorado Civil Rights Commission on Dec. 5, 2017 (SCOTUSblog summary here). The issue presented in that case is: “Whether applying Colorado’s public accommodations law to compel the petitioner to create expression that violates his sincerely held religious beliefs about marriage violates the free speech or free exercise clauses of the First Amendment.” A group of corporate law professors have filed an amicus brief in support to the CCRC (available here). One of the two arguments in that brief is: “Because Of The Separate Legal Personality Of Corporations And Shareholders, The Constitutional Interests Of Shareholders Should Not Be Projected Onto The Corporation.” This [panel] [discussion group] features…