December 2018

Shop(Photo from Sharing Christmas)

‘Tis the season when people binge on those made for television holiday romance movies – mostly associated with the Hallmark Channel but, to be fair, there are plenty on Lifetime as well.

What strikes me about the genre is how business-centric it seems to be.  Though there are other types of plots (riffs on Cinderella/Roman Holiday/Sound of Music are always popular), a fairly common storyline is that there is some business that revolves around Christmas and is enjoyable for the townsfolk but relatively unprofitable.  The characters have to find a way to make the business viable without turning it over to a soulless corporate operator who will lay everyone off and destroy its essential character.  Typically, this involves teaching someone the true meaning of Christmas and the special value added to a company by longtime employees who put their hearts into their work.

It’s not that this is new, exactly; Christmas stories about profit-motive versus philanthropy trace back at least as far as Miracle on 34th Street (if not A Christmas Carol).  But viewed through a business lens, Miracle on 34th Street is a tale of shareholder primacy.  Of course, Santa didn’t…

Haskell Murray, this one’s for you (and many others who work with B corporations and benefit corporations)!

Friend of the BLPB Tamara Belinfanti recently sent me a link to an article in which she was quoted.  The premise of the article is clear from its title: To B or not to B? That’s the question for companies who seek to “balance profit and purpose.”  Familiar proposition; great article title.  It’s certainly worth a quick read, even if it says nothing new.  (Although it does seem to imply that Justice Strine is no longer the Chief Justice of the Delaware Supreme Court . . . .)

In the article, various folks (including Justice Strine) comment about whether B corporation certification and/or benefit corporations are “needed” for social enterprise firms.  This is a question that I love to think about (especially if it can keep me from grading papers for a bit . . . ).  Some of you may remember my post on this topic from a few years ago.  It also is an issue that I have approached at times in pieces of my academic writing, including in the article featured in this post.

Next summer, at the…

Jack Welch, former GE CEO (1981 to 2001) was revered for his ability to maximize shareholder value.  Yet in 2009, he explained that shareholder value was

“the dumbest idea in the world. Shareholder value is a result, not a strategy… your main constituencies are your employees, your customers and your products. Managers and investors should not set share price increases as their overarching goal… Short-term profits should be allied with an increase in the long-term value of a company.”

This runs contrary to how many people think about the role of the CEO and the board of directors.  I think it’s spot on, and it is a key reason the business judgment rule, and its role in preserving director primacy, is so critical.   

Last week, a Wall Street Journal article about Dick’s Sporting Goods made the rounds. The article reported: 

Ed Stack, the chairman and chief executive of Dick’s Sporting Goods Inc., arrived at work the Monday after a gunman killed 17 people at a school in Parkland, Fla., nearly certain the outdoor retailer should limit sales of some guns.

. . . .

Dick’s Financial Chief Lee Belitsky asked, “So what’s the financial implication here?” according to Mr.

…

Although a bit behind on getting it up, I wanted to flag this article from Ron Lieber about his experience showing up for a “complimentary gourmet meal” with an annuity salesman.  By doing a few record checks, he soon discovered some interesting facts about the annuity salesman:

And the host? An insurance salesman, Arif M. Halaby, who I quickly discovered had been the subject of a state cease-and-refrain order earlier in the decade because of certain financial products that an administrative law judge determined that he had sold. The state found that Mr. Halaby was offering “unqualified” securities after an ailing older client pulled equity from his home to invest in a real estate development in Costa Rica.

At this point, alarm bells should be going off.  This is the sort of high-risk move that could easily prove disastrous.  

The SEC has long warned about these seminars.  When it held its “senior summit” about a decade ago, it issued warnings that the seminars may involve misleading presentations that are just designed to sell products.

When Lieber attended this one, he discovered the presenter using a graphic depicting the annuity product significantly outperforming the S&P 500.  The fine print disclosed that…

A number of years ago, I attended the Biennial Conference on Applied Legal Storytelling.  It was a super event.  I came out of the conference with amazing ideas for teaching and scholarship.  I am thinking of taking my spring research project (on friends and family insider trading) to the conference in 2019.  Will you come join me?

Typically, the conference principally attracts legal writing instructors and clinicians. But more of us should be jumping on this bandwagon.   Storytelling and narrative more generally—which are (of course) a part of all advocacy and dispute resolution—also are used in transaction-building and negotiation.  Accordingly, I am hoping that some of you will consider attending the conference with me this coming summer.  Here are the details from the call for proposals.

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Call for Proposals

Seventh Biennial Conference on Applied Legal Storytelling

Boulder, Colorado, July 9–11 2019

Hosted by the University of Colorado School of Law,
University of Denver Sturm College of Law, and University of Wyoming School of Law, and coordinated by the Rocky Mountain Legal Writing Scholarship Group

This is the call for proposals for the seventh biennial conference on Applied Legal Storytelling. We are offering two deadlines for submitting proposals: January 21, 2019 (priority deadline) and March 11, 2019 (extended deadline).

About the Conference

The Applied Legal Storytelling Conference brings together academics, judges, andpractitioners. The conference has previously convened in 2007 (London), 2009 (Portland),2011 (Denver), 2013 (London), Seattle (2015), and Washington D.C. (2017). We are veryexcited to bring it back to the Mountain West (Boulder) in July 2019.

Applied Legal Storytelling (AppLS) examines the use of stories—and of storytelling or narrative elements—in law practice, legal education, and the law.

This definition is intentionally broad in order to allow people creativity in the way theythink and present on the topic. Such topics may include: the ways in which fiction-writing techniques or narrative theory can inform legal storytelling; stories in the law, or law as stories; legal storytelling and metaphor; client story advocacy; legal storytelling and cognitive science; and ethical considerations in legal storytelling.

In an effort to continue the storytelling conversation for this seventh conference, and to welcome new attendees, we are providing resources for those interested in submitting a proposal and who wish to generate ideas or respond to others’. The first is a list of topicsfrom past conferences, available athttps://www.lwionline.org/sites/default/files/TopicsfrompastAppLSconferences.pdf. The second is a link to a bibliography on AppLS, including articles that have emerged from previous storytelling conferences, available at http://www.alwd.org/wp-contentuploads20151108-rideout_article2015-pdf/. We are also happy to answer questions and offer you suggestions—if you are a newcomer and interested in becoming involved, please reach out.

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I posted about Lorenzo v. Securities & Exchange Commission when the SEC first granted certioriari; you can read my long thoughts about it here.  Now that the Court held oral argument, I’ll offer my quick comments (and I’ll probably say still more when the decision comes down; this is a bountiful source of blogging material).

Picking up where I left off in my earlier post (I’ll assume you’ve either read that or are otherwise familiar with the issues in this case):

Lorenzo poses a quandary because the Supreme Court backed itself into a corner in Janus Capital Group, Inc. v. First Derivative Traders, 564 U.S. 135 (2011).  There, the Court narrowly construed what it means to “make” a statement for the purposes of Rule 10b-5(b), but then went further and suggested – via its invocation of Central Bank of Denver v. First Interstate Bank of Denver, 511 U.S. 164 (1994) – that a wide range deceptive conduct falling outside of that definition not only would not involve making statements, but also would not be prohibited by Section 10(b) at all.

All of which has come back to bite the Court in Lorenzo.  There, Lorenzo – acting…

In January 2018, Larry Fink of Blackrock, the world’s largest asset manager, shocked skeptics like me when he told CEOs:

In the current environment, these stakeholders are demanding that companies exercise leadership on a broader range of issues. And they are right to: a company’s ability to manage environmental, social, and governance matters demonstrates the leadership and good governance that is so essential to sustainable growth, which is why we are increasingly integrating these issues into our investment process. Companies must ask themselves: What role do we play in the community? How are we managing our impact on the environment? Are we working to create a diverse workforce? Are we adapting to technological change? Are we providing the retraining and opportunities that our employees and our business will need to adjust to an increasingly automated world? Are we using behavioral finance and other tools to prepare workers for retirement, so that they invest in a way that will help them achieve their goals?

In October 2018, Blackrock declared, “sustainable investing is becoming mainstream investing.” The firm bundled six existing ESG EFT funds and launched six similar funds in Europe and looked like the model corporate citisen.

So does Blackrock…

In Hexion Specialty Chemicals, Inc. v. Huntsman Corp., 965 A.2d 715, 730 (Del. Ch. 2008) – a case I worked on as a judicial clerk – the court wrote, “[m]any commentators have noted that Delaware courts have never found a material adverse effect to have occurred in the context of a merger agreement.”

That statement is no longer true.

Today–in a 3 page opinion–the Delaware Supreme Court affirmed the 240+ page opinion by Vice Chancellor Travis Laster in Akorn, Inc. v. Fresenius Kabi, AG, et al., which held that Akorn triggered the Material Adverse Effect (“MAE”) clause of the merger agreement at issue.

As the Chancery Daily reports, and as is clear looking at the recent opinions, the Delaware Supreme Court opinion does not provide much reasoning for its decision to affirm, but the Court of Chancery opinion does provide plenty of guidance. In the first few pages, the Court of Chancery notes that Akorn experienced a “dramatic, unexpected, and company-specific downturn in…business that began in the quarter after signing.” The Court of Chancery also notes the importance of whistleblower letters and issues with Akron and the FDA. 

Also of interest, the court notes that this…