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

Regular readers know that I monitor courts and other legal outlets for improper references to LLCs as “limited liability corporations” when the writer means “limited liability companies.” I get a Westlaw update every day. Really. Every day. So while it may seem that I write about examples a lot, I tend to think I am showing great restraint.  

At times, this is just a semantic issue, or at least a more amorphous “how one thinks about entities” issue.  Usually, at a minimum such cases can cause confusion about entity type and what laws apply, which may eventually lead courts to an improper analysis and application of the wrong laws.  It certainly leads some lawyers to incorrectly characterize their clients and their cases.  

For example, a recent case from the United States District Court for the Western District of Washington gets the law right, but still creates some potential confusion. Consider this excerpt: 

Cash & Carry asserts that the court’s jurisdiction is based on diversity of citizenship. (Not. at 2.) For purposes of assessing diversity, the court must consider the domicile of all members of a limited liability company. Johnson v. Columbia Props. Anchorage, LP, 437 F.3d 894, 899 (9th Cir. 2006) (“[A]n LLC

…

Last weekend, retired NFL receiver Calvin Johnson made news when he revealed that he was not pleased with the Detroit Lions and how they handled his retirement. Johnson is apparently frustrated that the Lions required him to pay back about 10% of the  unearned $3.2 million remaining on his $16 million signing bonus from his 2012 contract. This is apparently a thing for the Lions, who sought all of the unearned signing bonus money remaining on Barry Sanders’ contract when he abruptly retired in 1999.

This is in contrast to Tony Romo’s retirement, in which the Dallas Cowboys released him, making the $5 million remaining on the signing bonus Romo’s.  Cowboys owner Jerry Jones said he was following the “Do Right Rule” when he allowed the team to release him.  The Seattle Seahawks made a similar decision with Marshawn Lynch.  

Some have argued that Johnson is being “pettier” than the Lions in this spat.  Mike Florio, a sports writer and graduate of WVU College of Law, where I teach, argued that “while Johnson has every right to be miffed at the Lions, Johnson also should be miffed at himself. Or at whoever advised him to retire instead of biding his time until…

This past week was a big one for loyalty stories.  First, we have the New York Times reporting that President Trump asked former FBI director James Comey for his pledge of loyalty, to which Comey apparently promised “honesty.”  (The White House disputes this report.) 

Then, we have a high school quarterback in Illinois being forced to decommit from the University of Wisconsin’s, apparently because he tweeted that the University of Georgia had offered him a scholarship.  The student called Wisconsin Coach Budmayr, telling him he had the offer and said he was “still 100% committed to the Badgers.” The next day Budmayr apparently told him that he was no longer a good fit for Wisconsin and that he should keep looking.  The reason: lack of loyalty.  

Obviously, I only have the facts as they have been portrayed in these articles, and there are two sides to every story.  Nonetheless, these anecdotes got me to thinking about loyalty and how people tend to perceive the concept. 

To some, loyalty means fidelity.  This can be in the physical or emotional sense, as in the marriage context.  Some view extend it to ideological loyalty.  And to some, it means undying, uncompromising agreement and support.  It…

Back in 2013, Tomas Chamorro-Premuzic wrote Why Do So Many Incompetent Men Become Leaders? on the Harvard Business Law Review site.  He argues,

the main reason for the uneven management sex ratio is our inability to discern between confidence and competence. That is, because we (people in general) commonly misinterpret displays of confidence as a sign of competence, we are fooled into believing that men are better leaders than women. In other words, when it comes to leadership, the only advantage that men have over women (e.g., from Argentina to Norway and the USA to Japan) is the fact that manifestations of hubris — often masked as charisma or charm — are commonly mistaken for leadership potential, and that these occur much more frequently in men than in women.

He further notes that the qualities that the same traits that often lead to a male manager to get hired (i.e., be perceived as a leader) are the characteristics that get in the way of being an effective and successful leader.  ( “[L]eaderless groups have a natural tendency to elect self-centered, overconfident and narcissistic individuals as leaders, and that these personality characteristics are not equally common in men and…

It’s exam-grading time, so my focus is largely on that.  I did do my usual peruse of the news, though, and I found a whole host of news outlets discussing President Trump’s tax plan, which proposes to lower income tax rates on pass-through entities.  As one of the pieces explains: 

Pass-through income, for those of you who aren’t tax nerds, is business income that’s reported on a personal return. It comes from partnerships, limited-liability corporations and other closely held businesses, including Trump’s own family real estate operation.

First of all, knowing about pass-through income does not make you a tax nerd. I don’t think. 

Beyond that, though, limited liability corporations are not a thing.  And, limited liability companies (LLCs) are generally chosen for pass-though tax status, but they don’t have to be. They can chose to be taxed as C corporations at the federal level, if they wish.  Furthermore, partnerships, such as MLPs, and LLCs don’t have to be closely held. They can be publicly traded.  

Multiple outlets got on the incorrect”limited-liability corporations” bandwagon. Even Barron’s! Oh, well.. For now, I guess I will just continue to note that LLCs are still limited liability companies.  …

More than a few legal blogs and scholars have taken note of a recent paper by Adam Bonica (Stanford University), Adam S. Chilton (University of Chicago), Kyle Rozema (Northwestern University) and Maya Sen (Harvard University), “The Legal Academy’s Ideological Uniformity.”  The paper finds that those in the legal academy are more liberal than those in legal profession generally.  Anecdotally, I have to say I am not surprised. 

The abstract of the piece is as follows:

We find that approximately 15% of law professors are conservative and that only approximately one out of every twenty law schools have more conservative law professors than liberal ones. In addition, we find that these patterns vary, with higher-ranked schools having an even smaller presence of conservative law professors. We then compare the ideological balance of the legal academy to that of the legal profession. Compared to the 15% of law professors that are conservative, 35% of lawyers overall are conservative. Law professors are more liberal than graduates of top 14 law schools, lawyers working at the largest law firms, former federal law clerks, and federal judges. Although we find that professors are more liberal than the alumni at all but a handful of law schools, there is a strong relationship between

…

Before I became a lawyer, I had the privilege of working with a number of great people at a public relations firm in Los Angeles. That firm was founded by Al Golin, who passed away last week, and by all accounts, he will be missed. Mr. Golin was the PR person behind McDonald’s, and it was a very symbiotic relationship.

I did not meet Mr. Golin, personally, but his vision was definitely part of the firm culture. Early on, his vision of good business was on display. As the New York Times reported:

Before corporate social responsibility and cause-related marketing became fashionable, Mr. Golin was instrumental in creating what he called a trust bank. He encouraged the McDonald’s Corporation to sponsor Ronald McDonald Houses for children with life-threatening illnesses, an All-American High School Marching Band, an All-American High School Basketball Game and the Jerry Lewis Muscular Dystrophy Telethon — all to build good will that could be drawn upon when the company needed public support.

I can’t say Mr. Golin is the reason I believe firms can be good corporate citizens without laws requiring them to do so, but I frankly like the idea that firms can compete to …

The Uniform Law Commission is in the process of considering the Limited Liability Company Protected Series Act (f/k/a Series of Unincorporated Business Entities Act), and the final reading is schedule to take place in July 2017.  (Draft is here.) I have been discussing the challenges of Series LLCs with a variety of folks, and it strikes me that a consistent theme about the Series LLC is a concern about asset protection between each LLC in there Series. That is, there is concern that some courts may disregard the separateness of each LLC in the Series and treat the entire Series as a single entity.  I share this concern, but it strikes me that it is a rather outlandish concern that a court would do so without some significant level of fraud or other injustice to warrant whatever the state version of veil piercing would mandate. 

One source goes so far as to state: 

Case law has not been developed on Series LLCs yet, and there is much fear in the professional world that the assets may not be as protected as when the entity is formed. What is clear is that the “corporate formalities” must be carefully followed, such that:

…

The Washington Post reports: 

Back in 2015, Salesforce CEO Marc Benioff admitted something many CEOs wouldn’t: The company had found a pay gap between the men and women who worked for the cloud computing giant, and it was spending $3 million to fix it. Now after acquisitions and rampant growth at the company brought in 7,000 new employees in the past year, he’s doing it again, announcing Tuesday that the company has spent another $3 million to adjust for a pay gap that affects 11 percent of its more than 25,000 employees.

In an interview with The Washington Post, Benioff said he believed the re-opened gap was largely because of the company’s acquisitive streak — it bought 14 companies in its last fiscal year, the largest in its history. When companies acquire others, Benioff said, “you buy their pay practices, and this pay practice — of, basically, gender discrimination — is quite dramatic through our industry and other industries,” he said.

If one cares about equal pay, and I think people should (beyond just today), one needs to account for it in the purchase price of another entity.  This is a great reminder about the due diligence process. We need to think about all the things that…

The Oakland/Los Angeles/Oakland Raiders are soon to become the Las Vegas Raiders. This has fans in an uproar, with some saying the move is like losing “family.”  Moves of sports teams are rarely well received in the place the team leaves, and this move is no different.  

Teams move for a variety of reasons, though the primary reason comes down to money.  And there’s nothing wrong with that.  Although it is a loss for long-time fans, the team will get new fans in the locations (if history is any indication), and it’s certainly the right of the business owners to decide what is best for their business.  In the judgment of Raiders’ ownership, it’s time for Vegas Baby.  

The structure of the NFL is such that team owners need approval of the league to make such a move, which makes sense because a sports league is necessarily dependent on other teams.  As such, the teams have created some obligations to one another and agreed to give up some level of control for the good of the league.  All but one team voted to support the move to Vegas (the Miami Dolphins dissented), giving the Raiders 31 votes…