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Benjamin P. Edwards

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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

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

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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

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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

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The following posting looks like an incredible opportunity to take a year to work with the Air Force cadets in Colorado Springs and maybe even check out the Olympic Training Center.  

Visiting Faculty Position:  Business Law

The Department of Law at the U.S. Air Force Academy in Colorado Springs, Colorado, offers an undergraduate Legal Studies Program.  We seek a career employee at an American graduate or undergraduate institution or government agency to fill a 10.5 month position as a visiting faculty member to teach, among other things, an undergraduate Business Law course.  This visiting position will be from July 2018 to May 2019. 

In addition to being a fulltime career employee at an academic institution or federal agency, applicants must have a J.D. degree from an accredited law school and at least five years fulltime teaching experience.  Preference will be given to experience teaching Business Law and related courses as well as on-going scholarship and practice-related activities.  Visiting Faculty responsibilities in addition to teaching include development, review, and assessment of related learning outcomes, courses and programs, and engagement with students and faculty.  The successful applicant may also teach the core (required) course, Law for Air Force Officers, a survey…

Earlier this week, Professor Bainbridge posted California court completely bollixes up business law nomenclature, discussing Keith Paul Bishop’s post on Curci Investments, LLC v. Baldwin, Cal. Ct. App. Case No. G052764 (Aug. 10, 2017).  The good professor, noting (with approval) what he calls my possibly “Ahabian” obsession with courts and their LLC references, says that “misusing terminology leads to misapplied doctrine.”  Darn right.

To illustrate his point, let’s discuss a 2016 Colorado case that manages to highlight how both Colorado and Utah have it wrong. As is so often the case, the decision turns on incorrectly merging doctrine from one entity type (the corporation) into another (the LLC) without acknowledging or explaining why that makes sense.  To the court’s credit, they got the choice of law right, applying the internal affairs doctrine to use Utah law for veil piercing a Utah LLC, even though the case was in a Colorado court. 

After correctly deciding to use Utah law, the court then went down a doctrinally weak path.  Here we go:

Marquis is a Utah LLC. (ECF No. 1 ¶ 7.) Utah courts apply traditional corporate veil-piercing principles to LLCs. See, e.g., Lodges at Bear Hollow Condo. Homeowners Ass’n, Inc.

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Call for Papers (DEADLINE: August 24, 2017)

AALS Section on Business Associations

Institutional Investors and Corporate Governance

AALS Annual Meeting, January 5, 2018

The AALS Section on Business Associations is pleased to announce a Call for Papers for a joint program to be held on Friday, January 5, 2018 at the 2018 AALS Annual Meeting in San Diego, California.  The topic of the program is “Institutional Investors and Corporate Governance.”

In thinking through the difficulty of agency costs within the public corporation, corporate law academics have turned repeatedly to institutional investors as a potential solution.  The agglomeration of shares within a large investing firm, together with ongoing cooperation amongst a large set of such investors, could overcome the rational apathy the average shareholder has towards participation in corporate governance.  Alternatively, activist investors could exert specific pressure on isolated companies that have been singled out—like the weakest animals in the herd—for extended scrutiny and pressure.  In these examples, the institutionalization of investing offers a counterbalance to the power of management and arguably provides a systematized way of reorienting corporate governance.  These institutional-investor archetypes have, in fact, come to life since the 1970s and have disrupted the stereotype of the passive investor.  But…