Corporations

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I am putting together a panel or discussion group (depending on how many folks respond positively) for the SEALS conference for next summer, which is scheduled to be held August 5-11, 2018, at the Marriott Harbor Beach Resort & Spa in Fort Lauderdale, Florida (details here).

Here is the proposed title and a brief draft description (which may have to be shortened for the submission):

The Role of Corporate Personhood in Masterpiece Cakeshop

The United States Supreme Court is scheduled to hear arguments in the case of Masterpiece Cakeshop, Ltd. v. Colorado Civil Rights Commission on Dec. 5, 2017 (SCOTUSblog summary here). The issue presented in that case is: “Whether applying Colorado’s public accommodations law to compel the petitioner to create expression that violates his sincerely held religious beliefs about marriage violates the free speech or free exercise clauses of the First Amendment.” A group of corporate law professors have filed an amicus brief in support to the CCRC (available here). One of the two arguments in that brief is: “Because Of The Separate Legal Personality Of Corporations And Shareholders, The Constitutional Interests Of Shareholders Should Not Be Projected Onto The Corporation.” This [panel] [discussion group] features…

My friend and colleague at West Virginia University, Jena Martin, has posted her new paper, Hiding in the Light: The Misuse of Disclosure to Advance a Business and Human Rights Agenda. The paper is forthcoming in the Columbia Journal of Transnational Law and can be accessed at https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3028826 

It’s worth a read. Here’s the abstract:

In June 2017, Waitrose, a top UK supermarket, pulled its cans of corned beef off the shelves after an investigation revealed that the meat might have been produced with slave labor. At the time of the recall, Waitrose was in compliance with the UK Modern Slavery Act (MSA), a 2015 law enacted to prevent human trafficking and modern-day slavery. Under the MSA, corporations are required to file annual reports disclosing what action they had taken to eradicate slavery and human trafficking in their supply chains. The Modern Slavery Act, in turn, was a much-lauded law that is part of the growing trend of States to move the international business and human rights agenda forward. A key component of that agenda involves disseminating the UN’s Protect, Respect and Remedy Framework and implementing the UN Guiding Principles, which have been praised by States around the

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Every year, the United Nations holds a symbolic but important vote on a resolution condemning the U.S. embargo against Cuba and every year the United States and Israel are the only two countries to vote against it. Last year, the United States abstained in accordance with the rapprochement that the Obama administration began in 2014. A few hours ago, the U.S. and Israel stood alone and voted once again against the UN resolution, while 192 other nations voted for it. Ambassador Haley explained that the vote demonstrated, “continued solidarity with the Cuban people and in the hope that they will one day be free to choose their own destiny.” Prior to the vote she announced to the General Assembly that “today, the crime is the Cuban government’s continued repression of its people and failure to meet even the minimum requirements of a free and just society… The United States does not fear isolation in this chamber or anywhere else. Our principles are not up for a vote … We will stand for respect for human rights and fundamental freedoms that the member states of this body have pledged to protect, even if we have to stand alone.” The United States…

The distinction between limited liability companies (LLCs) and corporations is one that remains important to me. Despite their similarities, they are distinct entities and should be treated as such.

When the indictment for Paul Manafort and Richard Gates was released yesterday, I decided to take a look, in part because I read that the charges included claims that the defendants “laundered money through scores of United States and foreign corporations, partnerships, and bank accounts.”  (Manafort Indictment ¶ 1.)

It did not take long for people to note an initial mistake in the indictment.  The indictment states that Yulia Tymoshenko was the president of the Ukraine prior to Viktor Yanukovych. (Id. ¶ 22.) But, Dan Abrams’ Law Newz notes, “Tymoshenko has never been the president of the Ukraine. She ran in the Ukrainian presidential election against Yanukoych in 2010 and came in second. Tymoshenko ran again in 2014 and came in second then, too.” Abrams continues: 

The Tymoshenko flub is a massive error of fact, but it doesn’t impinge much–if any–on the narrative contained in the indictment itself. The error doesn’t really bear upon the background facts related to Manafort’s and Gates’ alleged crimes. The error also doesn’t bear whatsoever

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A former student brought this fundraising website to my attention: To the Stars Academy of Arts and Sciences (“TTS Academy). (Image above from a Creative Commons search).

This article describes TTS Academy as follows: “Former Blink-182 singer and guitarist Tom DeLonge is taking his fascination with/conspiracy theories about UFOs to their logical conclusion point: He’s partnering with former government officials on a public benefit corporation studying ‘exotic technologies’ from Unidentified Aerial Phenomenon (UAP) that the consortium says can ‘revolutionize the human experience.'” 

Remember the Blink-182 song Aliens Exist? 

I couldn’t make this up. And I did spend some time trying to determine if it was a joke, but TTS Academy’s 63-page offering circular suggests that it is no joke. And TTS Academy appears to have already raised over $500,000. 

According to the organization’s website, Tom DeLonge of Blink-182 fame is in fact the CEO and President. Supposedly, DeLonge has teamed with former Department of Defense official Luis Elizondo who confirmed to HuffPost that the TTS Academy is planning to “provide never before released footage from real US Government systems…not blurry, amateur photos, but real data and real videos.” Rolling Stone reports that “DeLonge has long been …

Today I sat through a panel at the ABA International Law Section Meeting entitled, I, Robot – The Increasing Use and Misuse of Technology by In-House Legal Departments. I have already posted here about Ross and other programs. I thought I would share other vendors that in-house counsel are using according to one of the panelists: 

  • Deal point – virtual deal room.
  • Casetext – legal research.
  • Disco AI; Relativity; Ringtail – apply machine learning to e-discovery.
  • Ebrevia; Kira Systems; RAVN – contract organization and analysis.
  • Julie Desk – AI “virtual assistant” for scheduling meetings.
  • Law Geex – contract review software that catches clauses that are unusual, missing, or problematic.
  • Legal Robot – start-up uses AI to translate legalese into plain English; flags anomalies; IDs potentially vague word choices.
  • LexMachina – litigation analytics.
  • NeotaLogic – client intake and early case assessment.
  • Robot Review – compares patent claims with past applications to predict patent eligibility.
  • Ross Intelligence – AI virtual attorney from IBM (Watson).

These and their future competitors lead to new challenges for lawyers, law professors, and bar associations. Will robots engage in the unauthorized practice of law? What are the ethical ramifications of using artificial intelligence in legal engagements? How…

A recent magistrate judge’s recommendation on a motion to strike in Hawaii alerted me to a problem with the Hawaii Local Rules of Practice for the United States District Court for the District of Hawaii.  The mistake is not the judge’s; it is in the rules.  The recommendation explains: 

[An] LLC must be represented by an attorney. See Local Rule 83.11 (“[b]usiness entities, including but not limited to … limited liability corporations … cannot appear before this court pro se and must be represented by an attorney”) . . . .

THE BANK OF NEW YORK MELLON FKA THE BANK OF NEW YORK, AS TRUSTEE FOR THE CERTIFICATE HOLDERS OF THE CWMBS INC., CHL MORTGAGE PASS-THROUGH TRUST 2006-OA5, MORTGAGE PASS THROUGH CERTIFICATES, SERIES 2006-OA5, a Delaware corporation, Plaintiffs, v. LEN C. PERRY JR.; NATHAN JON LEWIS; 3925 KAMEHAMEHA RD PRINCEVILLE, HI 96722, LLC, Defendants., No. CV 17-00297 DKW-RLP, 2017 WL 4768271, at *1 (D. Haw. Oct. 2, 2017), report and recommendation adopted sub nom. THE BANK OF NEW YORK MELLON fka THE BANK OF NEW YORK, AS TRUSTEE FOR THE CERTIFICATE HOLDERS OF CWMBS INC.; CHL MORTGAGE PASS-THROUGH TRUST 2006-OA5, MORTGAGE PASS THROUGH CERTIFICATES, SERIES 2006-OA5, a Delaware corporation, …

The Harvard Law School Forum on Corporate Governance and Financial Regulation recently contained a notice about the Delaware Corporate Law Resource Center, which I thought might interest our readers as well. The post is reproduced below the line.

The oral histories of iconic Delaware cases are the most interesting, and useful, part of the website to me, though some of the cases do not appear to have materials yet. In addition to the cases, there is an oral history on 102(b)(7) to which my judge (VC Stephen Lamb) and others contributed. I hope the existing materials will be added to and expanded over time.  

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The University of Pennsylvania Law School Institute for Law and Economics (ILE) is pleased to announce the creation and public availability of a new website devoted to resources relating to the development of the Delaware General Corporation Law and related case law. This website (the Delaware Corporation Law Resource Center) has two principal components. The first is a compilation of resources relating to the Delaware General Corporation Law itself, including a link to the text of the statute, and links to the bills to amend the statute since its general revision in 1967.

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…

Earlier this week, my two-year old daughter was in the pediatric ICU with a virus that attacked her lungs. We spent two nights at The Monroe Carell Jr. Children’s Hospital at Vanderbilt (“Vanderbilt Children’s). Thankfully, she was released Wednesday afternoon and is doing well. Unfortunately, many of the children on her floor had been in the hospital for weeks or months and were not afforded such a quick recovery. There cannot be many places more sad than the pediatric ICU.

Since returning home, I confirmed that Vanderbilt Children’s is a nonprofit organization, as I suspected. I do wonder whether the hospital would be operated the same if it were a benefit corporation or as a traditional corporation.

Some of the decisions made at the hospital seems like they would have been indefensible from a shareholder perspective, if the hospital had been for-profit. Vanderbilt Children’s has a captive market, with no serious competitors that I know of in the immediate area. Yet, the hospital doesn’t charge for parking. If they did, I don’t think it would impact anyone’s decision to choose them because, again, there aren’t really other options, and the care is the important part anyway. The food court…