Corporations

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A recent California court order granting a motion for final settlement in an antitrust class action suit appears to have left LLCs out as “person(s)” in the definitions.  Here’s the clause, which is repeated a few times in the Settlement Agreement: 

(w) “Person(s)” means an individual, corporation, limited liability corporation, professional corporation, limited liability partnership, partnership, limited partnership, association, joint stock company, estate, legal representative, trust, unincorporated association, government or any political subdivision or agency thereof, and any business or legal entity and any spouses, heirs, predecessors, successors, representatives or assignees of any of the foregoing.

IN RE: LITHIUM ION BATTERIES ANTITRUST LITIGATION, 2019 WL 3856413, Slip Copy (N.D.Cal. Aug. 16, 2019) (emphasis added). 

A “limited liability corporation” and a “corporation” are the same thing.  I am certain the “limited liability corporation” language was intended to cover “limited liability companies” or LLCs.  But it doesn’t cover LLCs, which are different entities. Of course, the fact that the definition includes all “unincorporated associations,” LLCs are included, but this is sloppy and in my humble view, should never have been approved. 

California has been know to make this distinction murky (see here) and some California courts like to just plain get…

The City University of New York (CUNY) School of Law seeks highly-qualified candidates for a tenured or tenure-track faculty appointment to begin in Fall 2020. The principal responsibility of this faculty member will be to teach business law related courses, including Business Associations, U.C.C. Survey, and Contracts. All faculty are also expected to teach our first-year Lawyering course on a rotating basis, and all faculty are expected to teach in both the day and evening programs on a rotating basis.

CUNY SCHOOL OF LAW: “LAW IN THE SERVICE OF HUMAN NEEDS“

CUNY School of Law is a national leader in progressive legal education: we are ranked first in the country for public interest law and third in the county for clinical programs, and we are one of the most diverse law schools in the nation.

Our mission at CUNY School of Law is two-fold: training public interest attorneys to practice law in the service of human needs; and providing access to the profession for members of historically underrepresented communities. The Law School advances that mission though an innovative curriculum that brings together the highest caliber of clinical training with traditional doctrinal legal education to train lawyers prepared to serve…

     Last week, I led a “legal hack” for some of the first year students during orientation. Each participating professor spoke for ten minutes on a topic of our choice and then answered questions for ten minutes. I picked business and human rights, my passion. I titled my brief lecture, “Are you using a product made by slaves, and if you are, can you do anything about it”?

     In my ten minutes, I introduced the problem of global slavery; touched on the false and deceptive trade practices  litigation levied against companies; described the role of shareholder activists and socially responsible investors in pressuring companies to clean up supply chains; raised doubts about the effectiveness of some of the disclosure regimes in the US, EU, and Australia; questioned the efficacy of conscious consumerism; and mentioned blockchain as a potential tool for provenance of goods. Yes. In ten minutes. 

     During the actual hack later in the afternoon, I had a bit more time to flesh out the problem. I developed a case study around the Rana Plaza disaster in which a building collapse in Bangladesh killed over 1,000 garment workers six years ago. Students brainstormed solutions …

This is my fifth year compiling a list of open business law professor positions in law schools and other settings (mostly business schools).

See the 2018-19, 2017-18, 2016-17, 2015-16 (law schools; business schools), and 2014-15 (law schools, business schools) lists to get a sense of what the market for business law professors has looked like over the past few years.

I will likely update this list from time to time; feel free to e-mail me with additions. Updated 9/30/19.

Law School Professor Positions – Business Area Identified

  1. American University (business law program director)
  2. Chicago-Kent
  3. City University of New York (CUNY)
  4. Emory University 
  5. Northeastern University
  6. Ohio State University
  7. Pennsylvania State University
  8. Samford University
  9. Southern Illinois University
  10. Suffolk University (transaction legal clinic)
  11. University of Akron
  12. University of California-Davis (transaction legal clinic)
  13. University of Cincinnati
  14. University of Dayton
  15. University of Kansas
  16. University of Kentucky
  17. University of Massachusetts – Dartmouth
  18. University of Memphis
  19. University of Nebraska
  20. University of Richmond
  21. University of Wisconsin
  22. Vanderbilt University
  23. Washington University (St. Louis)
  24. Wayne State University

Legal Studies Professor Positions (Mostly Business Schools)

  1. Boise State University
  2. California State University-Los Angeles (real estate law focus)
  3. California State University-Northridge
  4. Christopher Newport University

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I decided to track the path of “limited liability corporation” (which should be “limited liability company” when referring to an LLC) in a recent court case.  It’s my thing.  Anyway, this gem popped up today: 

This Court previously held “although wage, investment, and other economic losses may flow to an individual from discriminatory harm suffered by a corporation, those injuries are not ‘separate and distinct’ from those suffered by that corporation.” Club Xtreme, Inc. v. City of Wayne, 2010 WL 1626415 at *5 (E.D. Mich. Apr. 21, 2010). Under Michigan law, rules with respect to corporations apply equally to limited liability corporations. Hills and Dales General Hosp. v. Pantig, 295 Mich.App. 14, 21 (2011). As such, a limited liability company is its own “person,” separate and distinct from its owners. Id. Here, Darakjian is separate and distinct from his LLC, TIR.

Darakjian v. City of Birmingham, 2019 WL 3412883 (E.D.Mich.) at * 4. 
 
First, “Club Xtreme?”  Yeah, that’s my Michigan. 
 

Second, “Under Michigan law, rules with respect to corporations apply equally to limited liability corporations.” True as to LLCs, but, um, no, LLCs are not corporations. So where did that come from? 

Well, this part

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For last year’s Business Law Prof Blog symposium at UT Law, I spoke on issues relating to the representation of business firms classified or classifiable as social enterprises.  Last September, I wrote a bit about my presentation here.  The resulting essay, Lawyering for Social Enterprise, was recently posted to SSRN.  The SSRN abstract follows.

Social enterprise and the related concepts of social entrepreneurship and impact investing are neither well defined nor well understood. As a result, entrepreneurs, investors, intermediaries, and agents, as well as their respective advisors, may be operating under different impressions or assumptions about what social enterprise is and have different ideas about how to best build and manage a sustainable social enterprise business. Moreover, the law governing social enterprises also is unclear and unpredictable in respects. This essay identifies two principal areas of uncertainty and demonstrates their capacity to generate lawyering challenges and related transaction costs around both entity formation and ongoing internal governance questions in social enterprises. Core to the professionalism issues are the professional responsibilities implicated in an attorney’s representation of social enterprise businesses.

To illuminate legal and professional responsibility issues relevant to representing social enterprises, this essay proceeds in four parts.

I’m at the tail end of teaching my summer transactional lawyering course. Throughout the semester, I’ve focused my students on the importance of representations, warranties, covenants, conditions, materiality, and knowledge qualifiers. Today I came across an article from Practical Law Company that discussed the use of #MeToo representations in mergers and acquisitions agreements, and I plan to use it as a teaching tool next semester. According to the article, which is behind a firewall so I can’t link to it, thirty-nine public merger agreements this year have had such clauses. This doesn’t surprise me. Last year I spoke on a webinar regarding #MeToo and touched on the the corporate governance implications and the rise of these so-called “Harvey Weinstein” clauses. 

Generally, according to Practical Law Company, target companies in these agreements represent that: 1) no allegations of sexual harassment or sexual misconduct have been made against a group or class of employees at certain seniority levels; 2) no allegations have been made against  independent contractors; and 3) the company has not entered into any settlement agreements related to these kinds of allegations. The target would list exceptions on a disclosure schedule, presumably redacting the name of the accuser to preserve…

In 2010, an Illinois court reviewed Delaware business law making the following observations:

With respect to a limited liability corporation, Delaware law states that “[u]nless otherwise provided in a limited liability company agreement, the management of a limited liability company shall be vested in its members….” 6 Del.C. § 18–402. Thus, pursuant to Delaware law, directors are generally provided with authority for managing the corporation and members are generally provided with authority for managing the limited liability company. The bankruptcy court therefore properly found that a member of a LLC would be an analogous position to a director of a corporation under Delaware law.

Longview Aluminum, L.L.C. v. Brandt, 431 B.R. 193, 197 (N.D. Ill. 2010), aff’d sub nom. In re Longview Aluminum, L.L.C., 657 F.3d 507 (7th Cir. 2011).

Well, initially, it must be noted that an LLC is not a corporation at all.  As the quoted Delaware law observes, it is a “limited liability company.” Corporations and LLCs are distinct entities. 

I’ll also take issue with adopting the bankruptcy court’s finding “that a member of an LLC would be an analogous position to a director of a corporation under Delaware law.”  I will concede…

A recent Tennessee court decision subtly notes that limited liability companies (LLCs) are not, in fact corporations. In a recent Tennessee federal court opinion, Judge Richardson twice notes the incorrect listing of an LLC as a “limited liability corporation.”  

First, the opinion states:

The [Second Amended Complaint] alleges that Defendant Evans is a resident of Tennessee, Defendant #AE20, LLC is a California limited liability company, and Defendant Gore Capital, LLC is a Delaware limited liability “corporation.”3

3 Gore Capital is in fact a limited liability company.

FERNANDO CAMPS, Pl., v. GORE CAPITAL, LLC, KARL JAMES, ANGELA EVANS, and #AE20, LLC, Defendants., 3:17-CV-1039, 2019 WL 2763902, at *1 and n.3 (M.D. Tenn. July 2, 2019) (emphasis in original). 

Judge Richardson later notes, in footnote 11:

Plaintiff states that he was sent documents that listed Gore’s (not #AE20’s) principal place of business as being in Chattanooga, Tennessee, although the SAC lists Gore as a “Delaware limited liability corporation (sic)[.]”
Id. 2019 WL 2763902, at *6 n.11 (M.D. Tenn. July 2, 2019). 
 
Given all the times I have complained about courts not correcting such mistakes, I figured I should give this opinion a well-deserved shout out for getting this

Veil piercing continues its randomness. Back in April, in Hawai’i Supreme Court decision, Calipjo v. Purdy, 144 Hawai’i 266, 439 P.3d 218 (2019), the court determined that there was evidence to support a trial court jury’s decision to pierce the veil of an multiple entities and hold the sole member/shareholder of the entities liable.  (An appellate court had determined that there was insufficient evidence to support veil piercing.)

The decision may be sound, but the evidence for the decision makes the outcome seemingly inevitable. In determining there was evidence to support the jury’s decision, the court notes the plaintiff’s allegations were that “sole ownership and control is one of many factors that can establish alter ego and, therefore, evidence of Purdy’s ownership and control was pertinent to this claim.”  The court then explains, 

In this case, the jury was presented with evidence that Purdy exercised exclusive ownership and control over Regal Corp. and Regal LLC. Purdy testified that he was the sole shareholder, director, and officer of Regal Corp. and the sole member and manager of Regal LLC. This court has held that “sole ownership of all of the stock in a corporation by one individual” is one relevant factor to determine alter ego. Id. (quoting Associated

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