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[Please keep in mind as you read this post that my daughter is a Starbucks partner.  Any pro-Starbucks bias in this post is unintended.  But you should factor in my affiliation accordingly.]

Maybe it’s just me, but the publicity around the recent suit against Starbucks for putting too much ice in their iced beverages made me think of Goldilocks and her reactions to that porridge, those chairs, and those beds.  First it was McDonald’s, where the coffee was too hot.  Now it’s Starbucks, where the coffee is too cold–or, more truthfully, is too watered down from frozen water . . . .  (And apparently I missed a Starbucks suit earlier this year on under-filing lattes . . . .)  

Different types of tort suits, I know.  I always felt bad about the injury to the woman in the McDonald’s case, although the fault issue was truly questionable.  The recent Starbucks case just seems wrong in so many ways, however.  This is a consumer dispute that is best addressed by other means.  I admit to believing this most recent suit is actually an abuse of our court system.

How might a customer who is truly concerned about a substandard beverage attempt to remedy the wrong?

Thought Josephine Sandler Nelson’s recent Oxford Business Law Blog post on Volkswagen might be of interest to our readers. It is reposted here with permission.

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Fumigating the Criminal Bug: The Insulation of Volkswagen’s Middle Management

New headlines each day reveal wide-spread misconduct and large-scale cheating at top international companies: Volkswagen’s emissions-defeat devices installed on over eleven million cars trace back to a manager’s PowerPoint from as early as 2006. Mitsubishi admits that it has been cheating on emissions standards for the eK and Dayz model cars for the past 25 years—even after a similar scandal almost wiped out the company 15 years ago. Takata’s $70 million fine for covering up its exploding air bags in Honda, Ford, and other car brands could soon jump to $200 million if a current Department of Justice probe discovers additional infractions. The government has ordered Takata’s recall of the air bags to more than double: one out of every five cars on American roads may be affected. Now Daimler is conducting an internal investigation into potential irregularities in its exhaust compliance.

A recent case study of the 2015-16 Volkswagen (‘VW’) scandal pioneers a new way to look at these scandals…

Last week, Hamdi Ulukaya, founder and CEO of Chobani, announced a 10% company stock grant to all company employees.  Chobani joined the ranks of high profile stock grants including Whole Foods, Starbucks, Apple and Twitter.  Stock grants, while more common in tech industries, are a part of hybrid corporate law-employment law conversation on shared ownership.  Employee ownership in companies can occur in several different forms such as ERISA-governed benefit plans where the company stock issued or bought as a part of a retirement saving plan. Alternatively, a stock grant may be structured as a bonus plan, a standard compensation, or a vesting employee benefit eligible after threshold years and types of service.  All of these plans fall under the rubric of shared ownership.  In 2015, the National Center for Employee Benefits estimated that over 9000 companies participated in some form of shared ownership.

In a similar vein, actors in the hit (and record-breaking with 16 Tony Nominations) musical Hamilton have entered into a profit-sharing agreement with producers.  The deal is different for these actors, but the sentiment is the same in sharing profits, aligning interests, and promoting employee loyalty.

Shared ownership plans, especially the ERISA-governed ones can…

Earlier this month, B Lab, the 501(c)(3) nonprofit organization that oversees the certification of B corps, announced that it will move its October 2016 retreat from North Carolina because of North Carolina’s controversial House Bill 2 (“HB2”).

In an April 12 e-mail to “Friends of the B Corp Community,” the B Lab team wrote:

Standing for inclusion, the global B Corp community has decided to relocate the 2016 B Corp Champions Retreat and related events from North Carolina in light of the newly-enacted State law HB2 which limits anti-discrimination protections, particularly for members of the LGBT community.

Immediately, B Lab will work with the North Carolina B Corp community and others to get HB2 off the books and make North Carolina more inclusive and business-friendly.

B Lab also linked to this longer statement in that e-mail.

The Model Benefit Corporation Legislation and the laws following the Model require that a third-party standard be used by benefit corporations to measure their social and environmental impact. B Lab’s standard is currently the most popular standard, but it is not required or even mentioned by the benefit corporation statutes. Allowing for various third-party standards helps prevent the benefit corporation law from being…

Today in my Business and Human Rights class I thought about Ann’s recent post where she noted that socially responsible investor Calpers was rethinking its decision to divest from tobacco stocks. My class has recently been discussing the human rights impacts of mega sporting events and whether companies such as Rio Tinto (the medal makers), Omega (the time keepers), Coca Cola (sponsor), McDonalds (sponsor), FIFA (a nonprofit that runs worldwide soccer) and the International Olympic Committee (another corporation) are in any way complicit with state actions including the displacement of indigenous peoples in Brazil, the use of slavery in Qatar, human trafficking, and environmental degradation. I asked my students the tough question of whether they would stop eating McDonalds food or wearing Nike shoes because they were sponsors of these events. I required them to consider a number of factors to decide whether corporate sponsors should continue their relationships with FIFA and the IOC. I also asked whether the US should refuse to send athletes to compete in countries with significant human rights violations. 

Because we are in Miami, we also discussed the topic du jour, Carnival Cruise line’s controversial decision to follow Cuban law, which prohibits certain Cuban-born citizens…

Five years ago I blogged about Massey Energy, one of most tragic mining disasters in US history. Just a few minutes ago its CEO Donald Blankenship was sentenced to the maximum one year in prison. The prison term is unusual for a corporate executive, but should it be?

The Department of Justice under Eric Holder came under fire for prosecuting thousands of low level mortgage brokers and analysts but no C-Suite individuals after the financial crisis. Perhaps in response to that, the DOJ released the Yates Memo, which I blogged about in September. There are already some interesting takeaways on the Memo, which you can read about here or you can hear about when I present if you attend the International Legal Ethics Conference in New York in July.  

I’m not sure whether the Yates memo will prevent corporate crime or get the “right” people to go to jail. Actually, I am pretty sure that it won’t. According to news reports, the Massey CEO was unusually involved in daily operations, which made convicting him easier (that along with hours of taped conversations). I do believe that the Yates Memo (if it’s even constitutional) will fundamentally change the relationship between…

AP reported yesterday:

NEW ORLEANS (AP) — A federal judge in New Orleans granted final approval Monday to an estimated $20 billion settlement over the 2010 BP oil spill in the Gulf of Mexico, resolving years of litigation over the worst offshore spill in the nation’s history.

The settlement, first announced in July, includes $5.5 billion in civil Clean Water Act penalties and billions more to cover environmental damage and other claims by the five Gulf states and local governments. The money is to be paid out over roughly 16 years. The U.S. Justice Department has estimated that the settlement will cost the oil giant as much as $20.8 billion, the largest environmental settlement in U.S. history as well as the largest-ever civil settlement with a single entity.

The settlement with the government (private claims remain) reminds me of a post I made almost six years ago, where I argued that it was not the federal government’s job to avoid the harm of such an oil spill, and it was neither advisable nor reasonable to expect that the government could handle such an event.  I explained my thinking: 

Just imagine what would have happened six months [before the oil

…

I feel badly for Chipotle. When I have taught Business Associations, I have used the chain’s Form 10-K to explain some basic governance and securities law principles. The students can relate to Chipotle and Shake Shack (another example I use) and they therefore remain engaged as we go through the filings. Chipotle has recently been embroiled in a public relations nightmare after a spate of food poisonings occurred last fall and winter, a risk it pointed out in its February 2015 10-K filings. The stock price has fluctuated from $750 a share in October to as low as $400 in January and then back to the mid $500 range. After some disappointing earnings news the stock is now trading at around $471.

Clean Yield Group, concerned that the company will focus only on bringing its stock back to “pre-crisis levels,” filed a shareholder proposal March 17th asking the company to link executive compensation with sustainability efforts. The proposal claims that the CEO was overpaid by $40 million in 2014 and states in part:

A number of studies demonstrate a firm link between superior corporate sustainability performance and financial outperformance relative to peers. Firms with superior sustainability performance were more likely…

I usually look forward to the Olympics for months, if not years, before they start.

This year, however, all of the doping news, and buzz around Rule 40 has left me less enthusiastic.

For now, I am going to leave the doping news to one side, and focus on Rule 40.

From July 27 to August 24, 2016, Rule 40, prohibits Non-Olympic Commercial Partners from using the word “Olympics” and (depending on context) “Olympic-related terms,” including:

  • 2016
  • Rio/Rio de Janeiro
  • Gold
  • Silver
  • Bronze
  • Medal
  • Effort
  • Performance
  • Challenge
  • Summer
  • Games
  • Sponsors
  • Victory
  • Olympian

Now, I understand why the International Olympic Committee (“IOC”) and the U.S. Olympic Committee (“USOC”) might want these restrictions (given the large sums of money official sponsors pay), and from what I understand from experts in this specific area, the IOC & USOC may have a defensible legal stance.

This, however, seems one of the many areas where (1) the law has not kept up with advances in technology, namely social media, and (2) even if the IOC & USOC are right on the law, they may lose in the court of public opinion. Here, it seems, there is a good bit of difference between a company running a detailed TV-ad noting that it sponsors…

Legal commentators and the media have been abuzz with news of President Obama’s nomination of Judge Merrick Garland to the Supreme Court.  If there was ever reason to be abuzz, in the world of legal news, this is it.  Try to find a summary of Judge Garland’s record in dealing with business law issues, however, and you are met with a silent, dark internet.  Aside from mentions of Judge Garland having taught anti-trust at Harvard there is little discussion of his business jurisprudence.  The D.C. Circuit court hears an administratively heavy caseload, but Judge Garland has been on the bench for nearly 20 years! I set out to uncover his business law barometer.   My initial searches produced  19 opinions that he authored on business law matters, which are mostly securities cases but also include a piercing the corporate veil and contracts claims among others.  While I am no online search wizard and am positive that I have missed some relevant cases, this is what I produced after such wide-net casting as “business law”, “corporations”, “partnership”, “board of directors”, “shareholders” etc.  You get the idea, I ran several undeniably broad searches.  The initial case list is provided below, and was generated (along with annotations) through WestLaw.  Please comment if you have relevant cases to add.  I may add commentary on the cases in a future post if there is interest… (and time).

Securities Law Cases 

  1. Horning v. S.E.C., 570 F.3d 337 (D.C. Cir. 2009)

SECURITIES REGULATION – Brokers and Dealers. Mid-trial correction of sanction the SEC sought did not deprive broker-dealer firm’s former director of due process.

  1. Graham v. S.E.C., 222 F.3d 994 (D.C. Cir. 2000)

SECURITIES REGULATION – Fraud. Registered representative aided and abetted customer’s fraud.

  1. Katz v. S.E.C., 647 F.3d 1156 (D.C. Cir. 2011)

SECURITIES REGULATION – Brokers and Dealers. Former registered representation made unsuitable investment recommendations for her customers.