April 2022

Look, I know the Tesla/SolarCity decision just came down, and I’m, like, contractually obligated to blog about it, but to tell you the truth, this was the last week of classes, exams are next week, and I just got back from a conference thing, so comments on the Tesla decision will have to wait (though, yes, I did appreciate the wink in footnote 377).

So, proxy solicitations.  Specifically, the Eighth Circuit’s decision in Carpenters’ Pension Fund of Illinois v. Neidorff, 30 F.4th 777 (8th Cir. 2022), which I was alerted to by the Deal Lawyers’ blog.

In Neidorff, the plaintiffs brought a derivative Section 14(a)/Rule 14a-9 claim alleging that Centene Corporation solicited a vote in favor of a merger by way of a misleading proxy statement that failed to disclose known problems with the target company. Rule 14a-9 prohibits proxy statements from:

containing any statement which, at the time and in the light of the circumstances under which it is made, is false or misleading with respect to any material fact, or which omits to state any material fact necessary in order to make the statements therein not false or misleading or necessary to correct

…

Earlier this month, the U.S. Senate Committee on Banking, Housing, and Urban Affairs held a hearing on the Insider Trading Prohibition Act (ITPA), which passed the house with bipartisan support in May of last year. Some prominent scholars, like Professor Stephen Bainbridge, have criticized the ITPA as ambiguous in its text and overbroad in its application, while others, like Professor John Coffee, have expressed concern that it does not go far enough (mostly because the bill retains the “personal benefit” requirement for tipper-tippee liability).

My own view is that there are some good, bad, and ugly aspects of the bill. Starting with what’s good about the bill:

  • If made law, the ITPA would end what Professor Jeanne L. Schroeder calls the “jurisprudential scandal that insider trading is largely a common law federal offense” by codifying its elements.
  • The ITPA would bring trading on stolen information that is not acquired by deception (e.g., information acquired by breaking into a file cabinet or hacking a computer) within its scope. Such conduct would not incur Section 10b insider trading liability under the current enforcement regime.
  • The ITPA at least purports (more on this below) to only proscribe “wrongful” trading, or trading

…

As per the relevant press release (via Lawrence Cunningham): “Twenty-two of the nation’s leading professors of law and finance this week wrote the Securities and Exchange Commission (SEC) to dispute the agency’s authority to adopt a new far-reaching climate disclosure regime and to urge an immediate withdrawal of the proposal.” You can find the full letter here. Here is a hopefully useful excerpt:

The following analysis raises concerns that the Proposal is neither necessary nor appropriate for either investor protection or the public interest and will not promote other statutory goals. The SEC would do better to withdraw the Proposal and revisit the subject with a fresh approach focused on America’s ordinary investors rather than an elite global subset. The three parts of this letter address each statutory issue in turn, as follows:

I. “Investor Demand” versus “Investor Protection”
    A. Investor Varieties: Diverse Institutions and Individuals
    B. Climate Shareholder Proposals: Few Are Made, Most Lose, Many Are Political
    C. The Ample Supply of Climate Disclosure
    D. Correlation of Climate Practices with Economic Performance Is Not Causation
II. Authority of Others and the “Public Interest”
    A. The Environmental Protection Agency’s Statutory Jurisdiction
    B. State Corporate Law Prerogatives on Purposes…

The IMF recently released its Global Financial Stability Report April 2022.  The Executive Summary provides an informative overview of the financial risks facing markets in these turbulent times.  I was particularly interested in Box 1.1 of the Report: Extreme Volatility in Commodities: The Nickel Trading Suspension.  For those readers who might be unaware, the London Metal Exchange (LME) halted nickel trading “on March 8 after prices doubled over the course of a day to a record $100,000 (£76,200) a tonne”  and cancelled all nickel transactions that day.  Nickel is a key metal for electric car batteries.  Not surprisingly, the LME’s actions proved controversial and are now the subject of several regulatory investigations.  As the end of the Executive Summary highlights: “Recent measures taken in markets and exchanges in response to elevated volatility in commodity prices highlight the need for regulators to examine the broader implications, including exchange governance mechanisms, resiliency of trading systems, concentration of risk, margin setting, and trading transparency in exchange and over-the-counter markets” (p. xiv).    

Mainelaw_logo-e1447856548945

The University of Maine School of Law, in the coastal city of Portland, Maine, invites applications for a one- or two-semester position as a visiting professor during the 2022-2023 academic year. Specific curricular needs include Property, Real Estate Transactions, and Land Use. The visiting appointment may be at the Professor, Associate Professor, Assistant Professor, or Professor of Practice level. Salary will be commensurate with qualifications and experience. Members of minority groups, women, and others whose background would contribute to the
diversity of the Law School are encouraged to apply.

Required: Applicants must possess a J. D. degree or its equivalent, an excellent academic record, and a record or promise of successful teaching and student mentoring, including an ability and willingness to incorporate innovative teaching approaches into the curriculum.

Applications must be submitted to the University of Maine System Hire Touch portal at: https://maine.hiretouch.com/admin/jobs/show.cfm?jobID=75546. You will need to create an applicant profile, locate the Visiting Professor of Law position in Hire Touch, and complete an application. Please upload a cover letter which fully describes your qualifications and experiences with specific reference to the required and preferred qualifications, your resume or c.v., and contact information for three…

I’m doing what may seem crazy to some- teaching Business Associations to 1Ls. I have a group of 65 motivated students who have an interest in business and voluntarily chose to take the hardest possible elective with one of the hardest possible professors. But wait, there’s more. I’m cramming a 4-credit class into 3 credits. These students, some of whom are  learning the rule against perpetuities in Property and the battle of the forms in Contracts while learning the business judgment rule, are clearly masochists. 

If you’re a professor or a student, you’re coming close to the end of the semester and you’re trying to cram everything in. Enter Elon Musk. 

I told them to just skim Basic v. Levenson and instead we used Rasella v. Musk, the case brought by investors claiming fraud on the market. Coincidentally, my students were already reading In Re Tesla Motors, Inc. Stockholder Litigation because it was in their textbook to illustrate the concept of a controlling shareholder. Elon’s pursuit of Twitter allowed me to use that company’s 2022 proxy statement and ask them why Twitter would choose to be “for” a proposal to declassify its board, given all that’s going on. Perhaps…

I guess we’re talking about Elon Musk again.

If you’re like me, you’re kind of gratified by the general public’s new fascination with corporate law, but, of course, to those of us who live here, it’s obvious that while all of the maneuvering so far is colorful, it’s bog standard legally, and the Twitter board’s actions in adopting a poison pill were not only totally unremarkable, but arguably necessitated by their fiduciary duties.  (So that they would have time to explore other alternatives; so that they could assess the seriousness of Musk’s offer and attempt to negotiate a higher one; so that they could prevent Musk from obtaining control – or sufficient control to block superior alternatives – simply through open market purchases, etc).  Nonetheless, that has not prevented a lot of people who should know better from saying silly things:

…

As reported by The American Civil Rights Project (here):

After months of pressure from concerned stockholders, Coca-Cola’s General Counsel Monica Howard Douglas recently let it be known that the illegal discriminatory outside-counsel policies Coke announced with great fanfare last year “have not been and are not policy of the company.” …

In January 2021, Douglas’s predecessor, Bradley Gayton, published the policies in a highly publicized open letter addressed to “U.S. Firms Supporting The Coca-Cola Company.” Under it, Coke’s law firms were required to staff Coke matters so that that “diverse” attorneys performed at least 30% of all hours billed, with “Black attorneys” performing “at least half [15%] of that amount” …. The letter stated that non-compliance for two successive quarters “will result” in Coke’s unilateral reduction of a firm’s future legal fees and that all future consideration for both new legal work and inclusion in Coke’s preferred-vendor list would turn on compliance….

[T]he ACR Project wrote to Coke, its officers, and its directors, on behalf of several shareholders, demanding the public retraction of the discriminatory policies. If Coke had refused, these shareholders would hold Coke’s officers and directors personally liable for breaching their fiduciary duties to investors.

After…

AALS Professional Responsibility Section – 2023 Annual Meeting New Voices

The AALS Professional Responsibility Section invites papers for its program “2023 New Voices Workshop.” The goal of this audience interactive workshop is to provide a forum for new voices and new ideas related to professional responsibility (PR), broadly defined. Many scholars might address PR without realizing it. We are interested in your potential contributions whether you are an evidence scholar writing about the attorney-client privilege, a feminist interested in gender dynamics that affect lawyering, a critical race scholar commenting on how power plays out in legal systems, an ethicist exploring the moral foundations of the rules governing lawyering, or something entirely different. Toward that end, we encourage you to submit a proposal even if you are pursuing scholarship on PR for the first time, even if you question whether your ideas really do relate to PR, and even if you are reticent to submit for some other reason. 

The selected papers will be presented at the AALS Annual Meeting in January of 2023

WORKSHOP DESCRIPTION:

The Workshop will be an opportunity to nurture the growth of a broad scholarly community in the field of Professional Responsibility and Legal Ethics. As…

Position Number: 350124 / 20-256
Apply to: http://apply.interfolio.com/105805

Duquesne University School of Law, located in Pittsburgh, Pennsylvania, invites applications and nominations for a Visiting Assistant Professor of Law to teach during the 2022-2023 academic year. This position is a nine-month visiting position, beginning in the summer of 2022 with the possibility of one additional nine-month term. The successful candidate will be responsible for teaching three courses: one course during the fall semester and two courses the spring semester. The successful candidate will have ample time to focus on scholarship, be afforded to the Law School’s library and related resources, have no administrative or faculty committee duties.

DUTIES AND RESPONSIBILITIES:

Our curricular needs include: Business Associations, Property, Contracts, Emerging Technologies, Intellectual Property, Health Law, and related elective courses. Candidates must be available to teach in-person, although the public health situation may require occasional remote and/or hyflex teaching.

REQUIRED QUALIFICATIONS:

Juris Doctor from an ABA-accredited law school.

PREFERRED QUALIFICATIONS:

Experience teaching in legal education.

Evidence of significant practical experience in an area of curricular need.

Alternately, the successful candidate may possess any equivalent combination of experience and training, which provides the knowledge, skills and abilities required to perform the essential job…