Photo of Benjamin P. Edwards

Benjamin P. Edwards

Subscribe to Benjamin P. Edwards's Posts

Benjamin Edwards joined the faculty of the William S. Boyd School of Law in 2017. He researches and writes about business and securities law, corporate governance, arbitration, and consumer protection.

Prior to teaching, Professor Edwards practiced as a securities litigator in the New York office of Skadden, Arps, Slate, Meagher & Flom LLP. At Skadden, he represented clients in complex civil litigation, including securities class actions arising out of the Madoff Ponzi scheme and litigation arising out of the 2008 financial crisis. Read More

The Federalist Society has posted a review of the oral argument in Mallory v. Norfolk Southern (here):

Under Pennsylvania law, a foreign corporation “may not do business in this Commonwealth until it registers” with the Department of State of the Commonwealth. State law further establishes that registration constitutes a sufficient basis for Pennsylvania courts to exercise general personal jurisdiction over that foreign corporation. Norfolk Southern Railway objected to the exercise of personal jurisdiction, arguing that the exercise violated the Due Process Clause of the Fourteenth Amendment. The trial court agreed and held Pennsylvania’s statutory scheme unconstitutional. The Pennsylvania Supreme Court affirmed. The Supreme Court is to decide if a state registration statute for out-of-state corporations that purports to confer general personal jurisdiction over the registrant violates the Due Process Clause of the Fourteenth Amendment.

My Akron Law colleague Camilla Hrdy recently published The Value in Secrecy in the Fordham Law Review.  You can find the SSRN version here.  Below is the abstract.

Trade secret law is seen as the most inclusive of intellectual property regimes. So long as information can be kept secret, the wisdom goes, it can be protected under trade secret law, even if patent and copyright protections are unavailable. But keeping it a secret does not magically transform information into a trade secret. The information must also derive economic value from being kept secret from others. This elusive statutory requirement–called “independent economic value”–might at first glance seem redundant, especially in the context of litigation. After all, if information had no value, why would the plaintiff have bothered to keep it secret, and why would the parties be arguing over the right to use or disclose it? Surely, well-kept secrets that end up in court must be valuable.

That assumption is pervasive. But it is wrong. Secrecy does not demonstrate value. Even a company’s best-kept secrets might be commercially worthless if vetted against what is known in the rest of the industry. Nor does the decision to pursue litigation indicate

…

At our wonderful BLPB conference a week ago (details here), I presented “An Introduction to Anti-ESG Legislation.” Thus, news that Louisiana Treasurer John Schroder plans to liquidate all BlackRock investments within three months over Blackrock’s ESG policies caught my eye. Here are some notable excerpts from the FOXBusiness article (here) on the news:

Louisiana Treasurer John Schroder penned a letter to BlackRock CEO Larry Fink, explaining the state would liquidate all BlackRock investments within three months and, over a period of time, divest nearly $800 million from the bank’s money market funds, mutual funds or exchange-traded funds. The state treasurer blasted Fink’s pursuit of so-called environmental, social and governance (ESG) standards that promote green energy over traditional fossil fuels. “Your blatantly anti-fossil fuel policies would destroy Louisiana’s economy,” Schroder wrote to Fink in the letter …. “Consumers’ Research applauds Treasurer Schroder’s commendable decision to withdraw the state’s assets from BlackRock’s misuse,” Will Hild, the executive director of Consumer’s Research, told FOX Business in a statement. “As noted in his letter, BlackRock is using the people of Louisiana’s money to advance a destructive agenda that raises costs for consumers in the state and across the country. The seeds

…

When I teach business law and corporations, I teach that a corporation’s “board of directors has full control over the affairs of the corporation.”  If a dispute breaks out between the CEO of a corporation and the board of directors, the board’s view controls because the board is ultimately in charge of the corporation’s affairs.  Of course, there may be room for questioning whether a valid board meeting occurred or the composition of the board for some reason, but the basic point that the board of directors gets to make these decisions struck me as largely settled law.

But you never know exactly what courts will do when a dispute ends up before them.  This brings me to the governance dispute that broke out at Vinco Ventures, Inc. (NASDAQ: BBIG).  According to its most recent 10-K, Vinco’s business involved “digital media and content technologies.”  As of April, “[f]ive directors comprise[d] [Vinco’s] board of directors: Lisa King, Roderick Vanderbilt, Elliot Goldstein, Michael J. DiStasio and Philip A. McFillin.”  King served as the CEO and Vanderbilt served as chair of the board.  An 8-K filed on July 8th, stated that Theodore Farnsworth was appointed as co-CEO and made a member…

SCOTUS will begin hearing oral arguments for its next term tomorrow. One of the cases of particular interest to BLPB readers will be 303 Creative LLC v. Elenis. As noted on SCOTUSblog (here), the issue in 303 Creative is: “Whether applying a public-accommodation law to compel an artist to speak or stay silent violates the free speech clause of the First Amendment.” The case promises to resolve important issues left open by the Masterpiece Cakeshop decision. For whatever it may be worth, I predict that the following excerpt from the 10th Circuit’s decision below will be critical to the Supreme Court’s analysis — with SCOTUS rejecting the 10th Circuit’s conclusions.

Excepting Appellants from the Accommodation Clause would necessarily relegate LGBT consumers to an inferior market because Appellants’ unique services are, by definition, unavailable elsewhere…. To be sure, LGBT consumers may be able to obtain wedding-website design services from other businesses; yet, LGBT consumers will never be able to obtain wedding-related services of the same quality and nature as those that Appellants offer. Thus, there are no less intrusive means of providing equal access to those types of services…. This case does not present a competitive market. Rather,

…

Wentong Zheng has published Corporations As Private Regulators, 55 U. Mich. J.L. Reform 649. The paper can be downloaded here. Below is an excerpt.

In August 2018, technology giant Microsoft made headlines by announcing that it would soon require its suppliers and contractors with more than fifty employees to offer workers at least twelve weeks of paid parental leave.1 Microsoft’s new policy closely mirrors a Washington state law requiring that workers in the state receive twelve weeks of paid family leave; it is an effort to extend that same level of benefit to workers outside of the company’s home state.2

While groundbreaking for the world of paid family leave, Microsoft’s move was only one example of an increasingly common trend of corporations weighing in on public policy through corporate action. Following the 2018 mass shooting at Marjory Stoneman Douglas High School in Parkland, Florida, Dick’s Sporting Goods banned sales of assault-style weapons and raised the minimum age for purchase of firearms and ammunition in its stores to twenty-one.3 Citigroup placed restrictions on their new retail business clients, prohibiting them from selling guns to customers who have not passed a background check and are under the…

From what I can tell, law schools are seemingly falling over one another to hire this season. Following an understandable period of dormancy, lots of schools are apparently looking to fill a lot of slots — perhaps restocking to get back to pre-pandemic student-faculty ratios. But there appear to be some dark clouds looming. The news on college enrollments is not great (cf. “First-year and transfer enrollment at Rutgers-Camden is down 27%, and faculty are concerned“), hiring is slowing in some areas (cf. “Some law firms are ‘pulling back the throttle’ on hiring as expenses rise and deal work slows“), winter is coming (cf. “Europe’s household electrical bills could surge by $2 trillion by next year amid a worsening energy crisis“), and some smart market watchers are predicting a long period of significant economic pain ahead (cf. “Chamath Palihapitiya goes into detail on the 2022 economic crisis and warns about an imminent and very prolonged recession.“). Of course, these sorts of predictions are fraught with peril, and — despite the click-bait title of this post — I’m not arguing that newly-hired faculty will be fired even if the gloomy predictions pan out…

I received the following in an email and thought it might be of interest to BLPB readers.

MEDIA ADVISORY

MONDAY: NCLA Presents Oral Argument in Case Challenging Nasdaq Board Diversity Rules  

WHO: NCLA Senior Litigation Counsel Peggy Little, NCLA Litigation Counsel Sheng Li

WHAT: NCLA will appear before Judges Carl E. Stewart, James L. Dennis, and Stephen A. Higginson, in the U.S. Court of Appeals for the Fifth Circuit for a hearing in the case of National Center for Public Policy Research v. SEC.

On August 6, 2021, SEC narrowly approved a Rule requiring disclosure of the aggregate race, gender, and sexual preference of Nasdaq-listed companies, with two of five Commissioners dissenting. The Board Diversity Rule subjects Nasdaq-listed companies to the following requirements: (a) they must disclose information about their board’s self-identified gender, race, and sexual preference; and (b) either (i) meet minimum quotas of individuals of a certain gender, racial, and sexual preference, or (ii) publicly explain why the board does not meet such quotas.

The Board Diversity Rules fall outside of the agency’s regulatory authority.

WHERE: Room 209 of the Wisdom Courthouse, 600 S Maestri Pl, New Orleans, LA 70130

The hearing is open to the public.…

FINRA has returned to the SEC with a new proposed rule change to address problems with its expungement system.  Although the proposal continues to use arbitration to facilitate stockbroker expungements, the new proposal makes some significant changes over prior proposals.

A bit of history may help put this in context.  Two years ago, FINRA released a proposal to reform its expungement process. I wrote two comment letters in response to that proposal, prompting FINRA to amend the proposal twice.   The twice-revised proposal was ultimately withdrawn so FINRA could study the issue before returning with another proposal.  That new proposal is now here.  I put together this chart to track some of my recommendations to see what has been adopted and what has not.

Changes to FINRA Expungement Proposal Over Time

Edwards’ Request

Initial Rulemaking

2022 Rulemaking

Abandon Arbitration-facilitated expungement

Denied

Denied

Allow Non-Party Investor Advocate  Participation

Denied

Accepted

Require Expanded Duties of Candor

 

Denied

Denied

Improve Customer Notice

Accepted

Accepted

Provide Non-Party Customers With Full Pleadings

Accepted

Accepted

Specify Attorney Fees For Successful Opposition

Denied

Denied

Allow Non-Party Customers to Access Docket Online

Accepted

Accepted

Allow Non-Party Customers to Participate in Scheduling Decisions

Accepted

Accepted

Provide Notice After Filing,

…

I’m currently working on a piece on anti-ESG legislation for our upcoming BLPB Symposium. According to The Heartland Institute (here), as of April 5, 2022, twenty-eight states have initiated some form of “anti-ESG action.” So, recent news of Florida Governor Ron DeSantis pushing for further action in this area caught my eye. Here is an excerpt from relevant coverage by WFSU (go read the full piece here):

DeSantis plans to have the State Board of Administration, which oversees investments, direct pension-fund managers against “using political factors when investing the state’s money.” So-called ESG policies have drawn criticism from Republicans across the country…. Renner, who will become House speaker after the November elections, called the corporate practices a national-security issue and a pocketbook issue. “What we have is these large corporations and banks that are pursuing a woke agenda that is artificially driving up our costs in energy,” Renner said. “There’s a reason why we haven’t built new refineries. There’s a reason why we’re not drilling for oil even though we have more reserves in this country than any other place in the world, it’s because the banks and this woke agenda is choking off their ability to

…