Current Affairs

Subscribe to Current Affairs via RSS

[The following post comes to us from Lawrence E. Mitchell, Joseph C. Hostetler – Baker & Hostetler Professor of Law at Case Western Reserve University School of Law.  All formatting errors should be attributed to me, Stefan Padfield.]

The March 5, 2014 oral argument in Halliburton Co. v. Erica P. John Fund, Inc.1 made clear that one of the issues being considered by the Supreme Court is whether to supplant the “market efficiency” analysis currently required at the class certification stage in securities fraud class action cases with a “price impact” analysis instead. Our purpose is not to debate the relative merits of that potential change. Rather, it is to identify a critical point that seemed to get lost in the argument: neither the Justices nor the advocates addressed what a price impact analysis would look like in the context of the most common securities fraud scenario—the making of false statements designed to mask bad news. While some of the briefing before the Court touches on the issue, the authors of a working paper cited by proponents of both sides have supplemented their views with a recent blog post that, while brief, discusses potential approaches to measuring the …

Regular readers know of my view that energy and energy law are closely related to business and business law.  Further to that point: Last week, a group of 20 organizations, including those representing the interests of business, oil, coal, aggregate, farm, and power sent an open letter to Pennsylvania state legislators stating their concerns about the state supreme court’s decision in Robinson Township v. Commonwealth of Pennsylvania.  That decision overturned Act 13, which largely eliminated local government’s ability to prevent oil and gas operations in their jurisdictions through zoning.  The letter explains:

The opinion undermines the traditional and long-recognized authority of the Legislature to balance environmental and economic interests on a statewide basis, leading to the spectra of multiple levels of government and a myriad of agencies second guessing each other in deciding whether to approve particular developments and how to manage natural resources. This expansive, broad and vaguely case-by-case application of the Environmental Rights Amendment threatens to reestablish the very uncertainty and ambiguity that Act 13 and many other statutes were originally intended to address through adoption of a holistic, comprehensive regulatory program that carefully balances the Commonwealth twin interests in economic progress and environmental stewardship. 

The plurality opinion opens the door to a myriad of litigation, at all levels of government, attempting to thwart virtually any type of industrial, agricultural, commercial or residential facility and development. The affects of this ruling will be felt by employers in all industries and will certainly adversely impact efforts to promote job creation throughout the state.

I agree with these organizations on a number of issues here.  First, I think they are right the state legislature had the power to pass Act 13,  or at least something similar. I also agree that the plurality opinion unnecessarily invites litigation in a variety of contexts that could negatively impact both business and the environment.  On the other hand, I think that the legislature took an unnecessarily heavy-handed approach to the legislation when a more modest version of the act could have been similarly effective. 

As I have explained previously, though there are very real risks related to hydraulic fracturing for oil and gas, much of the public, many politicians, and (in this case) judges are too easily distracted by risks that seem like they could be associated with the process, but aren’t. When judges assume facts, bad law (and bad policies) are very likely to follow. Building on that assessment, I have posted my article, Facts, Fiction, and Perception in Hydraulic Fracturing: Illuminating Act 13 and Robinson Township v. Commonwealth of Pennsylvania on here on SSRN.  Please click below to continue reading.

Last week the DC Circuit Court of Appeals generally upheld the Dodd-Frank conflict minerals rule but found that the law violated the First Amendment to the extent that it requires companies to report to the SEC and state on their websites that their products are not “DRC Conflict Free.” The case was remanded back to the district court on this issue.

As regular readers of the blog know I signed on to an amicus brief opposing the law as written  because of the potential for a boycott on the ground and the impact on the people of Congo, and not necessarily because it’s expensive for business (although I appreciate that argument as a former supply chain professional). I also don’t think it is having a measurable impact on the violence. In fact, because I work with an NGO that works with rape survivors and trains midwives and medical personnel in the eastern Democratic Republic of Congo, I get travel advisories from the State Department. Coinicidentally, I received one today as I was typing this post warning that “armed groups, bandits, and elements of the Congolese military [emphasis mine] remain security concerns in the eastern DRC….[they] are known to pillage, steal…

In March, the Fourth Circuit held in Carnell Construction Corp. v. Danville Redevelopment & Housing Authority, that racial identity can be imputed to a corporation for purposes of standing under Title VI, citing to case precedent from the several circuits allowing 1981 claims to be raised by corporations. 

“[W]e observe that several other federal appellate courts have considered this question, and have declined to bar on prudential grounds race discrimination claims brought by minority-owned corporations that meet constitutional standing requirements.” 

The Fourth Circuit had to deal with the following language in Arlington Heights, 429 U.S. 252, 263 (1977): “As a corporation, MHDC has no racial identity and cannot be the direct target of the petitioners’ alleged discrimination. In the ordinary case, a party is denied standing to assert the rights of third persons.” In Arlington Heights, the Supreme Court however did not need to “decide whether the circumstances of this case would justify departure from that prudential limitation and permit MHDC to assert the constitutional rights of its prospective minority tenants. For we have at least one individual plaintiff who has demonstrated standing to assert these rights as his own.” (citations omitted).  The dicta in Arlington Heights was…

Over at realclearpolitics.com, a number of leading thinkers, including some leading business law folks such as Richard Epstein and Jonathan Adler, among others, have signed a public statement: Freedom to Marry, Freedom to Dissent: Why We Must Have Both.  Following is a portion of the statement:

The last few years have brought an astonishing moral and political transformation in the American debate over same-sex marriage and gay equality. This has been a triumph not only for LGBT Americans but for the American idea. But the breakthrough has brought with it rapidly rising expectations among some supporters of gay marriage that the debate should now be over. As one advocate recently put it, “It would be enough for me if those people who are so ignorant or intransigent as to still be anti-gay in 2014 would simply shut up.”

The signatories of this statement are grateful to our friends and allies for their enthusiasm. But we are concerned that recent events, including the resignation of the CEO of Mozilla under pressure because of an anti-same-sex- marriage donation he made in 2008, signal an eagerness by some supporters of same-sex marriage to punish rather than to criticize or to persuade

…

They really don’t. 

To be clear, this is not a post bashing corporations (or government). It’s not really extolling the virtues of corporations, either. Instead, it’s just to make the point that, notwithstanding Citizens United or Hobby Lobby and other cases of their ilk, the idea that corporations are people is still a legal fiction.  A useful and important one, but a fiction nonetheless.  

On April 11, Corey Booker posted the following on Facebook:

In awful years past, corporations polluted the Passaic river to the point that it ended the days where people could eat from it, swim in it, and use it as a thriving recreation source. Today we announced a massive initiative to clean the Passaic river and bring it back to life again. The tremendous clean up effort will create hundreds of jobs and slowly over time restore one of New Jersey’s great rivers to its past strength and glory.

The river needs the clean-up, and I applaud the effort. Still, the reality is corporations did not pollute the Passaic River, at least not literally.  People working for the corporation did. It is agency law that allows a corporation to act in the first place, because the…

In an opinion released earlier today, the D.C. Circuit Court struck down the SEC’s Dodd-Frank Conflict Mineral Rule under the compelled speech doctrine for failing the least restrictive alternative prong.  

We therefore hold that 15 U.S.C. § 78m(p)(1)(A)(ii) & (E), and the Commission’s final rule, 56 Fed. Reg. at 56,362-65, violate the First Amendment to the extent the statute and rule require regulated entities to report to the Commission and to state on their website that any of their products have “not been found to be ‘DRC conflict free.’”

Not striking down the need for information about conflict minerals, but rather the required approach, the Court suggested that: 

[A] centralized list compiled by the Commission in one place may even be more convenient or trustworthy to investors and consumers. The Commission has failed to explain why (much less provide evidence that) the Association’s intuitive alternatives to regulating speech would be any less effective.

In August, 2012, the SEC released final Dodd-Frank rules for conflict minerals “requir[ing] companies to publicly disclose their use of conflict minerals that originated in the Democratic Republic of the Congo (DRC) or an adjoining country.”

-AT

[I]t is counterproductive for investors to turn the corporate governance process into a constant Model U.N. where managers are repeatedly distracted by referenda on a variety of topics proposed by investors with trifling stakes. Giving managers some breathing space to do their primary job of developing and implementing profitable business plans would seem to be of great value to most ordinary investors. –Hon. Leo E. Strine Jr., Can We Do Better by Ordinary Investors? A Pragmatic Reaction to the Dueling Ideological Mythologists of Corporate Law, 114 COLUMBIA L. REV. 449, 475 (2014).

When was the last time you remember the U.S. Chamber of Commerce, the National Association of Corporate Directors, the National Black Chamber of Commerce, American Petroleum Institute, the Latino Coalition, Financial Services Roundtable, Center On Executive Compensation, and the Financial Services Forum joining forces on an issue? Well yesterday they signed on to a petition for rulemaking that was submitted to the SEC regarding the resubmission of shareholder proposals that “fail to elicit meaningful shareholder support.” 

Shareholders who own at least $2,000 worth of a company’s stock for at least one year may require a company to include one shareholder proposal in the company’s proxy statement…

As regular readers of this blog may know, I sit on the Department of Labor’s Whistleblower Protection Advisory Committee. The Occupational Health and Safety Administration, a division of the Department of Labor, may not be the first agency that many people think of when it comes to protecting whistleblowers, but in fact the agency enforces almost two dozen laws, including Sarbanes-Oxley and the Consumer Financial Protection Bureau’s law on whistleblowers.  The Consumer Financial Protection Act was promulgated on July 21, 2010 to protect employees against retaliation by entities that offer or provide consumer financial products.

Today OSHA released its interim regulations for protecting CFPB whistleblowers.  The regulation defines a “covered person” as “any person that engages in offering or providing a consumer financial product or service.” A “covered employee” is “any individual performing tasks related to the offering or provision of a consumer financial product or service.” A “consumer financial product or service” includes, but is not limited to, a product or service offered to consumers for personal, family, or household purposes, such as residential mortgage lending and servicing, private student lending and servicing, payday lending, prepaid debit cards, consumer credit reporting, credit cards and related activities. The Consumer Financial …

Alberto Gonzales has been named the new dean of Belmont University’s College of Law.  He is currently on the Belmont law school faculty, and his appointment is effective June 1, 2014.

The Tennessean story is here.

While Alberto Gonzales is certainly a controversial figure in some circles, I believe that people should be given multiple chances in life.  He brings a wealth of high level experience to his new position, including:

  • Partner at Vinson & Elkins, 
  • Justice on the Texas Supreme Court,
  • Texas Secretary of State,
  • General Counsel to the Governor of Texas,
  • Counsel to the President of the United States,
  • 80th Attorney General of the United States, and
  • Visiting Professor at Texas Tech University

My office is across campus at Belmont University’s business school, but I will teach Business Associations in the law school this fall (in addition to my courses in the business school), and I look forward to interacting with our new law school dean.