January 2018

As regular readers know, I am particular about language and meaning, especially in the business-entity space related to limited liability companies (LLCs).  I think because of that, I was drawn to a new paper from Shu-Yi Oei (Boston College), The Trouble with Gig Talk: Choice of Narrative and the Worker Classification Fights, 81 Law & Contemp. Probs. ___ (2018).  The abstract: 

The term “sharing economy” is flawed, but are the alternatives any better? This Essay evaluates the uses of competing narratives to describe the business model employed by firms like Uber, Lyft, TaskRabbit, and GrubHub. It argues that while the term “sharing economy” may be a misnomer, terms such as “gig economy,” “1099 economy,” “peer-to- peer economy” or “platform economy” are just as problematic, possibly even more so. These latter terms are more effective in exploiting existing legal rules and ambiguities to generate desired regulatory outcomes, in particular the classification of workers as independent contractors. This is because they are plausible, speak to important regulatory grey areas, and find support in existing laws and ambiguities. They can therefore be deployed to tilt outcomes in directions desired by firms in this sector.

This Essay’s analysis suggests that narratives that are

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Just over a month ago, I published a post on meal delivery kits, describing the nature of the service and noting a few points about the market, including some information about legal claims.  In that post, I promised more–specifically, a review of the kits themselves.  That review will come in two parts.  This is the first.  Today, I want to note some of the advantages and disadvantages of using meal kits, from my perspective.

First, the advantages:

  • delivery to your doorstep
  • the convenience of food and recipe in one box
  • little food waste (tailored quantities of food and fixings)
  • exposure to new recipes
  • introduction to new ingredients (most recently for us, spaghetti squash)
  • the chance to learn new cooking techniques
  • recipe cards that
    • lay out sequential steps
    • include helpful pictures and tips
    • have a glossy finish and wipe clean
    • fit in a magazine rack or storage unit

Now, the disadvantages:

  • undue packaging waste? (box, internal containers, cold packs)
  • uneven quality instructions (e.g., herbs divided . . . how–by type or by volume?)
  • expense (depending on what your household would do instead)

I have included below some pictures (click on any for full-size images) of the packaging for Hello Fresh…

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Sometimes it feels like I’m on the litigation-limiting-bylaw beat.

To briefly recap, in several prior posts, a law review article, and a forthcoming chapter, I’ve argued that corporate governance documents are not contracts in the traditional sense and thus should not be read to impose contract-like obligations on shareholders (critical for, among other things, the applicability of the Federal Arbitration Act).  I’ve also argued that a corporation’s governing documents cannot impose forum-selection or other limitations on shareholders’ ability to press federal claims or claims that arise under the law of a nonchartering state. 

This is relevant because some companies have gone public with forum selection provisions in their charters purporting to restrict Securities Act claims to federal court.  Snap was one, as I discuss in more detail here; apparently, other companies include Blue Apron, Stitch Fix, and Roku.  The Supreme Court is set to decide this term whether SLUSA requires that Section 11 class actions be brought in federal court, but that’s a separate issue from whether corporations can use private ordering to require that all Section 11 claims be brought in federal court.

Anyhoo, it looks like New Jersey is getting…

On a previous post about Etsy dropping its B corp. certification, because of the B Lab requirement to convert to a public benefit corporation, I received the following comments:

  • “I simply believe that, in most ways, being a public benefit entity is more about a marketing strategy than a business plan.” (Tom N.)
  • “I had my students read the NY Times articles on Etsy as a part of their last class in my clinic this semester (thanks to my fellow Joe Pileri who alerted me to the article). We represent social enterprises in the clinic so this was a perfect wrap-up. The questions that I posed to my students: what social enterprise isn’t a soft target like Etsy? Won’t they all eventually cave to profit maximization?” (Alicia Plerhopes)
  • “I agree with To[m] N … Also, no theory of CSR actually requires an explicit weighting of the various stakeholders of a firm, so in reality, if the interests of shareholders are receiving the greatest weight, then Milton Friedman was right all along!” (Enrique)

I wanted to respond to these thoughtful comments, briefly, above the line.

Tom, I think the marketing benefits of becoming a PBC, currently, are weak. How many of…

The Wall Street Journal has an article on Morgan Stanley’s rising profits and stock price.  Much of the profits come from servicing retail investor accounts.  It’s an increasingly profitable business line:

Morgan Stanley’s X-Factor, though, is increasingly its giant retail brokerage, which oversees $2.4 trillion for some 3.5 million households. That unit’s revenue rose 10%, while lower expenses lifted its profit margin—once in the high single digits—1 percentage point to 26%. Mr. Gorman set a new upper goal of 28%.

Many of these profits come from gathering assets and then charging a management fee.  This allows Morgan Stanley to profit even when clients do not actively trade their accounts.  The Journal described it this way:

Morgan Stanley’s retail brokerage gets a growing portion of its revenue from steady fees that are assessed as a percentage of client portfolios, rather than commissions on trades. As the stock market marches higher, Morgan Stanley is guaranteed profits on those accounts whether clients trade or not.

Wrap fees

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Call for Papers

The NYU Stern Center for Business and Human Rights and the Global Business and Human Rights Scholars Association invite you to submit papers: 4th Annual Conference of the Global Business and Human Rights Scholars Association at New York University, New York City, on September 14-15, 2018. Scholars from all disciplines are invited to apply, and we invite contributions that reflect the interdisciplinary character of BHR in theory and in practice.

We will also consider applications to participate as observers and discussants. Anyone interested in this possibility should submit their application in a few sentences to the email address below. Doctoral candidates are not eligible to present their research at this workshop, but they are welcome to attend. To discuss their work, PhD students may apply to the Young Researchers Summit (https://bhr.stern.nyu.edu/youngresearchers/). This is a workshop to discuss research-in-progress; papers must be unpublished at the time of presentation.

In addition to presenting a paper at the conference, participants are expected to read and be prepared to comment on and discuss the papers of other participants. The conference will be organized around three parallel working groups. Please indicate in your application to which of the three broad tracks you…

I have had reason to look back on some foundational scholarship in LLCs recently, and one article really stood out for me. Larry Ribstein’s The Deregulation of Limited Liability and the Death of Partnership. It’s another snow day with kids, so I haven’t had a lot of time to delve into the thoughts this raised for me, so I’ll let Larry’s words speak for themselves.  Keep in mind this is from 1992:  

The popularity of the partnership form of business1 indicates that an organizational form in which some owners can be held personally liable for the firm’s debts is efficient for many firms. This could be because, for many firms, individual liability reduces the firm’s credit costs more than it increases owners’ risk-bearing, monitoring, or other costs. This Article, however, suggests an alternative explanation: the partnership form is attractive for many firms on the margin only because of the regulatory costs of limited liability, including double corporate taxation and limitations on organizational form.

Recent developments provide a valuable opportunity to test this explanation. Many lawyers and legislators have become interested in a new limited liability business form, the “limited liability company” (LLC), that lets firms adopt limited liability

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“Injustice anywhere is a threat to justice everywhere.”

Martin Luther King, Jr., Letter from Birmingham Jail, Alabama, 16 April 1963, in Atlantic Monthly August 1963

I had wanted to post a tribute to Dr. King here early on Monday.  However, after posting the Emory conference announcement, I moved on to other work, and that work filled up the available time in the day.  So, this late post including the quote above will have to suffice.

As I read meaningful quotes from Dr. King on social media and elsewhere all day on Monday, I found myself thinking of examples of inequality and injustice.  Many are compelling; many are meaningful.  Some are current events; and some of those involve business law questions.

For a number of days now (since before MLK Day) we have been showered with news stories relating to the compensation disparity between Mark Wahlberg and Michelle Williams for reshooting scenes from All the Money in the World in the wake of Kevin Spacey’s replacement in the film resulting from allegations of sexual misconduct.  (See here, among other places.)  Most folks who follow Hollywood business issues know that gender discrimination is common.  My sister, a visual effects…

Sixth Biennial Conference:
To Teach is to Learn Twice: Fostering Excellence in Transactional Law and Skills Education

June 1-2, 2018 • Atlanta

Emory’s Center for Transactional Law and Practice is delighted to announce its sixth biennial conference on the teaching of transactional law and skills.  The conference, entitled “To Teach is to Learn Twice:  Fostering Excellence in Transactional Law and Skills Education,” will be held at Emory Law, beginning at 1:00 p.m. on Friday, June 1, 2018, and ending at 3:45 p.m. on Saturday, June 2, 2018. 

Four New and Different Things about the Conference: 

  • Presentation of the inaugural Tina L. Stark Award for Excellence in the Teaching of Transactional Law and Skills.  Note:  For information about how to nominate yourself or someone else for this award, please visit http://bit.ly/2C1HdMW.
  • New 45-minute “Try-This” time slots for individual presenters to demonstrate in-class activities.   
  • Reduced registration fee for new transactional law and skills educators.
  • Reduced registration fee for adjunct professors.  

CALL FOR PROPOSALS

We are accepting proposals immediately, but in no event later than 5 p.m. on Monday, February 16, 2018. 

We welcome you to present on any aspect of transactional law and skills education as long as you view…