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 following is a guest post from Bernard S. Sharfman*:

The foundation of my understanding of corporate governance rests on a small but growing number of essays, articles, and books.  These writings include Henry Manne’s Mergers and the Market for Corporate Control, Michael Dooley’s Two Models of Corporate Governance, Stephen Bainbridge’s Director Primacy: The Means and Ends of Corporate Governance and The Business Judgment Rule as Abstention Doctrine, Kenneth J. Arrow, The Limits of Organization, Frank H. Easterbrook & Daniel R. Fischel, The Economic Structure of Law, Zohar Goshen & Gideon Parchomovsky’s The Essential Role of Securities Regulation, and Alon Brav, Wei Jiang, Frank Partnoy & Randall Thomas’ Hedge Fund Activism, Corporate Governance, and Firm Performance.  Recently, I have added to this esteemed list Zohar Goshen and Richard Squire’s Principal Costs: A New Theory for Corporate Law and Governance.

Goshen and Squire put forth a new theory, the “principal-cost theory,” which posits that a firm’s optimal corporate governance arrangements result from a calculus that seeks to minimize total control costs, not just agency costs (“the economic losses resulting from managers’ natural incentive to advance their personal interests even when those interests conflict with…

From our friend and BLPB colleague, Anne Tucker, following is nice workshop opportunity for your consideration: 

Dear Colleagues,

We (Rob Weber & Anne Tucker) are submitting a funding proposal to host a works-in-progress workshop for 4-8 scholars at Georgia State University College of Law, in Atlanta, Georgia in spring 2018 [between April 16th and May 8th].  Workshop participants will submit a 10-15 page treatment and read all participant papers prior to attending the workshop.  If our proposal is accepted, we will have funding to sponsor travel and provide meals for participants. Interested parties should email amtucker@gsu.edu on or before November 15th with a short abstract (no more than 500 words) of your proposed contribution that is responsive to the description below. Please include your name, school, and whether you will require airfare, miles reimbursement and/or hotel. We will notify interested parties in late December regarding the funding of the workshop and acceptance of proposals.  Please direct all inquiries to Rob Weber (mailto:rweber@gsu.edu) or Anne Tucker (amtucker@gsu.edu).

Call for Proposals: Organizing, Deploying & Regulating Capital in the U.S.

Our topic description is intentionally broad reflecting our different areas of focus, and hoping to…

UNIVERSITY OF NEW MEXICO SCHOOL OF LAW

BUSINESS LAW AND/OR INTELLECTUAL PROPERTY

OPEN RANK FACULTY POSITION

The University of New Mexico (“UNM”) School of Law invites applications for a faculty position in Business Law and/or Intellectual Property. The faculty position is a full-time tenured or tenure-track position starting in Fall 2018. Entry-level and experienced teachers are encouraged to apply. Courses taught by this faculty member could include general business courses, intellectual property courses, and commercial law courses. Candidates must possess a J.D. or equivalent legal degree. Preferred qualifications include a record of demonstrated excellence or the promise of excellence in teaching and academic scholarship and who demonstrate a commitment to diversity, equity, inclusion, and student success, as well as working with broadly diverse communities. Academic rank and salary will be based on experience and qualifications. For best consideration, applicants should apply by October 22, 2017. The position will remain open until filled. For complete information, visit the UNMJobs website: https://unmjobs.unm.edu/. The position is listed as Open Rank – Business Law Requisition Number 2761.

The University of New Mexico is an Affirmative Action/Equal Opportunity Employer.

Direct Link to Job: https://unm.csod.com/ats/careersite/jobdetails.aspx?site=1&c=unm&id=2761&m=-1&u=16023

Yesterday, Professor Bainbridge posted “Is there a case for abolishing derivative litigation? He makes the case as follows: 

A radical solution would be elimination of derivative litigation. For lawyers, the idea of a wrong without a legal remedy is so counter-intuitive that it scarcely can be contemplated. Yet, derivative litigation appears to have little if any beneficial accountability effects. On the other side of the equation, derivative litigation is a high cost constraint and infringement upon the board’s authority. If making corporate law consists mainly of balancing the competing claims of accountability and authority, the balance arguably tips against derivative litigation. Note, moreover, that eliminating derivative litigation does not eliminate director accountability. Directors would remain subject to various forms of market discipline, including the important markets for corporate control and employment, proxy contests, and shareholder litigation where the challenged misconduct gives rise to a direct cause of action.

If eliminating derivative litigation seems too extreme, why not allow firms to opt out of the derivative suit process by charter amendment? Virtually all states now allow corporations to adopt charter provisions limiting director and officer liability. If corporate law consists of a set of default rules the parties generally should be

…

The United States District Court for the Northern District of Mississippi seems to understand that LLCs are different than corporations, but they don’t really want to keep them separate. See this passage, to which I have added notes: 

Regarding complete diversity, the citizenship of a limited liability corporation [no, limited liability company]  is determined by the citizenship of all its members. Tewari De-Ox Sys., Inc. v. Mtn. States/Rosen, Ltd. Liab. Corp., 757 F.3d 481, 483 (5th Cir. 2014). The “citizenship of an unincorporated [yes!] association must be traced through each layer of the association, however many there may be.” Deep Marine Tech., Inc. v. Conmaco/Rector, L.P., 515 F.Supp.2d 760, 766 (S.D. Tex. 2007). Further, “§ 1332(c)(1), which deems a corporation [wait, what?] of ‘every State and foreign state’ in which it is incorporated and the ‘State or foreign state’ where it has its principal place of business, applies to alien corporations.” Vantage Drilling Co. v. Hsin-Chi Su, 741 F.3d 535, 537 (5th Cir. 2014). The defendants submitted an upstream analysis of their organizational structure, tracing through each layer of association, to properly allege the citizenship of each member, ultimately establishing that they and Tubwell are citizens

…

A recent New Republic article states: 

The Community Law Center, a local legal services group, launched an investigation into 1906 Boone and hundreds of other vacant properties around Baltimore. The hunt took more than a year. In many cases, the identity of a property owner was hidden behind a maze of shell companies; an operation called Baltimore Return Fund LLC, for example, had purchased 1906 Boone at a city tax sale for $5,452. Eventually, the investigation revealed a Texas-based web of nearly a dozen LLCs—limited liability corporations, a form of legal tax shelter—that controlled more than 300 properties in Baltimore. Nearly all had been purchased at tax sales, often online, between 2001 and 2010. Most sold for less than $5,000. Many were vacant and in bad shape.

Okay, so we all know LLCs are not limited liability corporations (right?). But the entity form is a “legal tax shelter?”  As a pass-through entity?  What does this word salad mean?  Would this be less of a scourge if some guy owned them instead of the magical LLC?  I don’t understand what the entity form has to do with any such concerns at all.  

Suppose they did the research and found out…

A reader of the Business Law Prof Blog, Kevin Fandl, from Temple University’s Fox School of Business asked that I share this. It looks like a great opportunity, so please get in touch with him if you’re interested. 

Call for Contributors/ Chapter Authors: Law and Public Policy Textbook

The field of public policy has exploded in recent years as our regulatory environment becomes more complex and challenging for individuals and businesses to navigate. Law schools, business schools, and schools in related disciplines are developing seminars on the policy environment that discuss issues such as economic policy, social policy, and foreign policy. However, in many cases, the linkages between government policies and the laws and precedent that interpret (or in some cases create) them are not made clear. But as we know, laws and policies do not exist in a vacuum—they must be understood in their contextual environment. Currently, no single text offers a complete picture of the law and policy environment, depriving students across many disciplines of the deeper understanding necessary to operate in today’s business and legal environment.  That is the impetus for this new book.

If you would like to contribute to the drafting of this new…

Reading closely is a highly valuable skill for both lawyers and law students.  But reading closely is not the only key to getting the most out of reading materials.  Often, knowing what to look for can help us discern what we’re really being told. An article at LawFare, How to Read a News Story About an Investigation: Eight Tips on Who Is Saying What, by Benjamin Wittes, does a nice job of providing some tools to help read news stories more carefully, and perhaps accurately, especially when it comes to sources.  Note that this piece applies to reputable reporters, not everyone who has written something about current events.  

One solid takeaway: 

Reporters publish what they know. If a story describes a series of interactions between a witness or a subject of an investigation and the investigators and the story contains information about one side’s thinking but not the other’s, that’s a powerful sign of where the disclosure came from.

Many of the skills here would translate into other settings, too.  For example, Wittes’ first rule: The Words Describing a Source Should Be Presumed Accurate.  He says, “Always start with the precise words the journalist is using to describe…

And so it continues:

In a recent case in the United States District Court, District of Columbia, a court messes up the entity (referring to one of the parties as “Howard Town Center Developer, LLC, is a limited liability corporation (‘LLC’)”) and also does a fine job of improperly stating (or really, failing to state) the law for veil piercing. 

I took the initiative to pull the initial complaint and the answer to see if either of the parties were responsible for calling the LLC a corporation. Both sides properly referred to the LLC as a “limited liability company,” so it appears the corporation reference is a court-created issue.

In the case, a property developer brought action to require a university landowner to reinstate a ground lease and development agreement between developer and university, after the university sent notices of termination. The University counterclaimed to recover unpaid rent. The court determined, among other things, that the university was entitled to the damages it sought of $1,475,000 for unpaid rents and to attorney fees related to the developer’s breach of a ground lease and development agreement. But the opinion doesn’t stop there.

It is quite clear that the developer LLC does not have…

So, don’t. Over at Above the Law, Prof. Kerriann Stout wrote 10 Things That Will Absolutely Piss Off Your Law Professor.  She notes it is not an exhaustive list, but it is a good one and worth a read.  This year, I added a new bit of information to my first day of class about how to interact with me about absences and workload.  (I often discuss this in class at some point, but I don’t recall ever doing it in both of my classes on day one.) 

So, here’s the deal.  In my classes, I allow a certain number of absences (depending on number of credits and days we meet) without questions for personal reasons, interviews, etc.  Here is an example of my attendance clause: 

Students are expected to attend every class.  Students are permitted to miss up to four classes for other obligations without explanation.  This number is to include virtually all absences, including sickness, out-of-town interviews, etc. (but does not include classes missed for religious observance).  If classes in excess of four are missed, to avoid withdrawal from the course, a written explanation may be required, including the reason for missing additional classes, the student’s

…