May 2023

As many of you know, I have had the honor and privilege of being the Interim Director of the Institute for Professional Leadership (IPL) at The University of Tennessee College of Law for the past three academic years.  The IPL is a special part of UT Law.  As the home of an academic program that ties various parts of the traditional law curriculum together, the IPL benefits students with a wide variety of post-graduation goals–helping them to prepare themselves for the inevitable leadership spaces they will occupy in their professional and personal lives.

I have served as Interim Director at the IPL while continuing with a full teaching schedule, scholarship agenda, and service load.  It now is time for me to step back and allow someone else to lead the IPL–someone who will devote full time to carrying out its mission.  Accordingly, we are looking for a permanent Director for the IPL.  The position announcement can be found here.  

As you can see from the position announcement, the permanent Director will be a member of the law faculty, either tenure-track or non-tenure-track.  The qualifications section of the announcement is copied in below, for your ease of reference.

Qualifications…

This week, VC Laster upheld Caremark claims against Facebook’s board in a telephonic ruling.  The nub of the allegations was that the board allowed Facebook to violate an FTC consent decree, resulting in a massive $5 billion fine.

The transcript is not yet available so I don’t have the details, but I believe this is the legal theory I blogged about long ago here and here.  Namely, in addition to traditional oversight claims, the plaintiffs alleged that this was actually a conflicted controller transaction, in that the company agreed to accept a larger penalty in order to spare Zuckerberg personally.  Because the company did not use MFW procedures to cleanse that arrangement, the argument goes, the settlement is subject to entire fairness review.  And VC Laster upheld those claims, as well as the more traditional oversight claims.

Edit: I’ve now seen the transcript, and VC Laster does treat the settlement as an uncleansed-conflict transaction, but he does not invoke Zuckerberg’s controlling shareholder status; he just says the approving directors were not disinterested/independent.

So, this is obviously a fascinating new extension of the definition of a conflict transaction – and, to be clear, I don’t think anyone is…

Regular readers may have noticed that I was, perhaps, intrigued by the Twitter v. Musk dispute.  Obviously, I could not allow all that time spent studying a single case to go to waste, so I finally managed to get a paper out of it (which, I will confess, borrows in major parts from earlier blog posts on the subject, so some of you will find it old hat).

The paper, Every Billionaire is a Policy Failure, is now available on SSRN.  Here is the abstract:

Twitter

(No, for real, that’s the abstract; SSRN doesn’t currently allow me to insert images in the abstract field, but I’m committed to the bit.)

So. For anyone who’s not Twitter v. Musk‘ed out, here’s more.

In 2021 and again in 2022, I blogged about Well-Being Week in Law.  The first week in May bears this title, offering a chance for all of us to focus on how to best ensure that those involved in legal service work can flourish in our work and in the rest of our lives.  As the website notes:

When our professional and organizational cultures support our well-being, we are better able to make good choices that allow us to thrive and be our best for our clients, colleagues, organizations, families, and communities. It is up to all of us to cultivate new professional norms and cultures that enable and encourage well-being.

I agree with all of that.  And as an instructor and researcher and public servant who dedicates significant time to lawyer leadership, I focus a lot of attention on the legal profession and developing the whole lawyer.  So, count me in as a fan.

But this year, I did not post on Well-Being Week in Law, which was last week.  I carry a small amount of guilt for that (and for not getting this post up yesterday, too, when I had originally planned to publish it), since…

A few months ago, I asked whether people in the tech industry were the most powerful people in the world. This is part II of that post.

I posed that question after speaking at a tech conference in Lisbon sponsored by Microsoft. They asked me to touch on business and human rights and I presented the day after the company announced a ten billion dollar investment in OpenAI, the creator of ChatGPT. Back then, we were amazed at what ChatGPT 3.5 could do. Members of the audience were excited and terrified- and these were tech people. 

And that was before the explosion of ChatGPT4. 

I’ve since made a similar presentation about AI, surveillance, social media companies to law students, engineering students, and business people. In the last few weeks, over 10,000 people including Elon Musk, have called for a 6-month pause in AI training systems. If you don’t trust Musk’s judgment (and the other scientists and futurists), trust the “Godfather of AI,” who recently quit Google so he could speak out on the dangers, even though Google has put out its own whitepaper on AI development. Watch the 60 Minutes interview with the CEO of…

In re Edgio, Inc. Stockholders Litigation, decided by VC Zurn this week, presented the unsettled question whether Corwin cleansing would apply to post-closing shareholder actions seeking injunctive relief for defensive/entrenchment measures.  Interestingly, she held it would not.

The set up: A company was in distress and its stock price was tumbling.  It became afraid that it might be targeted by activist investors.  It also had the opportunity for a very favorable deal: It could buy a business unit owned by Apollo for a large number of newly-issued shares.  The contract specified that Apollo would get one-third of the board seats, but would be required to vote its shares in favor of existing board members.  It would also be prohibited from selling for two years, and after that, it would not be able to sell to “any investor on the most recently published ‘SharkWatch 50’ list for twelve months.”

This was not a transaction that required shareholder approval under Delaware law, but the share issuance did require shareholder approval under NASDAQ rules, and the shareholders voted overwhelmingly in favor.

Post-closing, shareholders brought an action seeking to enjoin the entrenchment measures – not the deal itself – arguing that they…

A great joy in my law practice over the years has been to work on a pro bono basis with creative and social enterprises.  For the 2021 Business Law Prof Blog symposium, Connecting the Threads, I offered some wisdom from my work with creatives in legally organizing and funding their projects.  I wrote briefly about that presentation here.

I recently posted the article that I presented back then, Choice of Entity: The Fiscal Sponsorship Alternative to Nonprofit Incorporation, 23 Transactions: Tenn. J. Bus. L. 526 (2022), on SSRN.  The associated abstract follows.

For many small business ventures that qualify for federal income tax treatment under Section 501(a) of the U.S. Internal Revenue Code of 1986, as amended, the time and expense of organizing, qualifying, managing, and maintaining a tax-exempt nonprofit corporation under state law may be daunting (or even prohibitive). Moreover, the formal legal structures imposed by business entity law may not be needed or wanted by the founders or promoters of the venture. Yet, there may be distinct advantages to entity formation and federal tax qualification that are not available (or not as easily available) to unincorporated not-for-profit business projects. These advantages may include, for example, exculpation…