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In 2007, J. W. Verret (George Mason) and then Chief Justice Myron Steele authored an article entitled Delaware’s Guidance: Ensuring Equity for the Modern Witenagemot, which discussed “some of the extrajudicial activities in which members of the Delaware judiciary engage to minimize the systemic indeterminacy resulting from the resolution of economic disputes by a court of equity.”

One of these extrajudicial activities is authoring or co-authoring law review articles.  In this post, I am not going to weigh in on whether Delaware judges should be authoring law review articles, but rather, I simply note that there are two recent law review articles and one recent book chapter by Delaware judges that warrant our attention. 

Vice Chancellor Travis Laster – Evidence-Based Corporate Law.

John Maynard Keynes is said to have observed, “When the facts change, I change my mind. What do you do, sir?” In Delaware’s Choice, Professor Subramanian argues that the facts underlying the constitutionality of Section 203 have changed. Assuming his facts are correct, and the Professor says that no one has challenged his account to date, then they have implications for more than Section 203. They potentially extend to Delaware’s jurisprudence regarding a board’s ability to

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(Note:  This is a cross-posted multiple part series from WVU Law Prof. Josh Fershee from the Business Law Prof Blog and Prof. Elaine Waterhouse Wilson from the Nonprofit Law Prof Blog, who combined forces to evaluate benefit corporations from both the nonprofit and the for-profit sides.  The previous installment can be found here (NLPB) and here (BLPB).)

What It Is:   So now that we’ve told you (in Part I) what the benefit corporation isn’t, we should probably tell you what it is.  The West Virginia statute is based on Model Benefit Corporation Legislation, which (according to B Lab’s website) was drafted originally by Bill Clark from Drinker, Biddle, & Reath LLP.  The statute, a copy of which can be found, not surprisingly, at B Lab’s website, “has evolved based on comments from corporate attorneys in the states in which the legislation has been passed or introduced.”  B Lab specifically states that part of its mission is to pass legislation, such as benefit corporation statutes.

As stated by the drafter’s “White Paper, The Need and Rationale for the Benefit Corporation: Why It is the Legal Form that Best Addresses the Needs of Social Entrepreneurs, Investors, and, Ultimately, the Public” (PDF here), the benefit corporation was designed to be “a new type of corporate legal entity.”  Despite this claim, it’s likely that the entity should be looked at as a modified version of traditional corporation rather than at a new entity. 

To read the rest of the post, please click below. 

West Virginia is the latest jurisdiction to adopt benefit corporations – the text of our legislation can be found here.   As with all benefit corporation legislation, the thrust of West Virginia’s statute is to provide a different standard of conduct for the directors of an otherwise for-profit corporation that holds itself out as being formed, at least in part, for a public benefit.  (Current and pending state legislation for benefit corporations can be found here.)

As WVU Law has two members of the ProfBlog family in its ranks (Prof. Josh Fershee (on the Business Law Prof Blog) and Prof. Elaine Waterhouse Wilson (on the Nonprofit Law Prof Blog)), we combined forces to evaluate benefit corporations from both the nonprofit and the for-profit sides.  For those of you on the Business Prof blog, some of the information to come on the Business Judgment Rule may be old hat; similarly, the tax discussion for those on the Nonprofit Blog will probably not be earth-shaking.  Hopefully, this series will address something you didn’t know from the other side of the discussion!

Part I: The Benefit Corporation: What It’s Not:  Before going into the details of West Virginia’s…

At West Virginia University College of Law, we started classes yesterday, and I taught my first classes of the year: Energy Law in the morning and Business Organizations in the afternoon.  As I  do with a new year coming, I updated and revised my Business Organizations course for the fall.  Last year, I moved over to using Unicorporated Business Entities, of which I am a co-author.  I have my own corporations materials that I use to supplement the book so that I cover the full scope of agency, partnerships, LLCs, and corporations.  So far, it’s worked  pretty well.  I spent several  years with  Klein, Ramseyer and Bainbridge’s Business Associations, Cases and Materials on Agency, Partnerships, and Corporations (KRB), which is a great casebook, in its own right.

I did not make the change merely (or even mostly) because I am a co-author. I made the change because I like the structure we use in our book. I had been trying to work with KRB in my structure, but this book is designed to teach in with the organization I prefer, which is more topical than entity by entity.  I’ll note that a little while ago, my co-blogger Steve…

The Hobby Lobby decision states:

No known understanding of the term “person” includes some but not all corporations. The term “person” sometimes encompasses artificial persons (as the Dictionary Act instructs), and it sometimes is limited to natural persons. But no conceivable definition of the term includes natural persons and nonprofit corporations, but not for-profit corporations. 20 Cf. Clark v. Martinez, 543 U. S. 371 , 378 (2005) (“To give th[e] same words a different meaning for each category would be to invent a statute rather than interpret one”).

The decision continues:

Under the Dictionary Act, “the wor[d] ‘person’ . . . include[s] corporations, companies, associations, firms, partnerships, societies, and joint stock companies, as well as individuals.” Ibid .; see FCC v. AT&T Inc., 562 U.S. ___, ___ (2011) (slip op., at 6) (“We have no doubt that ‘person,’ in a legal setting, often refers to artificial entities. The Dictionary Act makes that clear”). Thus, unless there is something about the RFRA context that “indicates otherwise,” the Dictionary Act provides a quick, clear, and affirmative answer to the question whether the companies involved in these cases may be heard. 

Thus, unless otherwise stated, any place a person can recover claims…

Greetings from Salvador, Bahia, one of the twelve cities hosting the World Cup. Apologies in advance for any spacing issues. I am typing on an iPad with spotty internet service in Brazil so editing is an issue.
The long plane ride gave me some time to reflect on the Law and Society Conference I attended two weeks ago. It was my second time and once again, it didn’t disappoint. I served as the discussant on a panel on Theorizing the Corporation with Elizabeth Pollman, Charlotte Garden and Sarah Haan. All of the papers talked about a right to speak. The common theme was the question of who is speaking, the basis of that right and whose interests are being served by the speech. I found them particularly interesting given my background. Prior to joining academia I was a deputy GC and our PAC and lobbying activities reported to me.
Elizabeth Pollman presented “The Derivative Nature of Corporate Constitutional Rights”, which she co-authored with Margaret Blair. She started off by providing us with a 200-year history of the corporation which I plan to incorporate in my BA class next fall. Her paper provided a framework for the court to think about…

The Louisiana Supreme Court recently denied the state’s attempt to collect sales tax on the sale of an RV to a Montana LLC. Thomas v. Bridges, No. 2013-C-1855 (La. 2014).  The LLC was formed for the sole purpose of avoiding RV sales tax (saving the buyer as much as $47,000).  The state argued that the LLC veil should be pierced and the tax should be assessed to the LLC’s sole member claiming fraud. The court disagreed, explaining that “taking actions to avoid sales tax does not constitute fraud. Although tax evasion is illegal, tax avoidance is not.” 

There were problems with the state’s attempt from the outset.  First, the sale occurred  in Louisiana, but the RV was housed in Mississippi.  Even if the LLC were to be disregarded, Mississippi, it seems to me, would be the state that should be asserting the claim.  Second, the state attempted to collect from the LLC’s member before ever trying to collect from the LLC.  Thus,  the veil-piercing claim was being used as a post hoc justification for the attempt to recover from the LLC’s member and was not properly raised below.  

This “legal loophole” (which is redundant because if it’s a loophole, it’s legal and…

The Supreme Court of Appeals of West Virginia recently had the opportunity to address the role (if any) of veil piercing in West Virginia LLCs.  The state statute is silent on the subject, but the court determined veil piercing was there, anyway.  It was close, though, as the West Virginia Circuit Court took on the following question with the corresponding answer: 

Does West Virginia’s version of the Uniform Limited Liability Company Act, codified at W. Va. Code § 31B el seq., afford complete protection to members of a limited liability company against a plaintiff seeking to pierce the corporate veil?

ANSWER: YES

 Kubican v. The Tavern, LLC, 2012 WL 8523515 (W.Va.Cir.Ct.)

Under West Virginia LLC law:

[T]he debts, obligations and liabilities of a limited liability company, whether arising in contract, tort or otherwise, are solely the debts, obligations and liabilities of the company. A member or manager is not personally liable for a debt, obligation or liability of the company solely by reason of being or acting as a member or manager. . . . The failure of a limited liability company to observe the usual company formalities or requirements relating to the exercise of its company

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Earlier this spring, I posted about transactional resources  (the current source list is available here: Download Transactional Law Resources).

Continuing with the theme, I want to highlight a new hybrid resource, JURIFY, which is a mostly-free, online transactional law resource. 

“Jurify provides instant access to high-credibility, high-relevance legal content, including forms and precedent in Microsoft Word® format written by the world’s best lawyers, white papers and webinars from top-tier law firms, articles in prestigious law journals, reliable blog posts and current versions of statutory, regulatory and case law, all organized by legal issue.”

Here are the stats:  Jurify, launched in 2012, covers 5 broad transactional areas:  General Corporate, Governance, Mergers & Acquisitions, Securities and Startup Companies.  The 11,000+ sources that the website currently contains have been verified by transactional attorneys and generated from free on-line platforms or submitted by private attorneys who are voluntarily sharing their work.  Documents are organized according to 586 tags.  Three transactional attorneys started this website (husband/wife duo and their former law-firm colleague); none take compensation from editors, publishers or law firms. 

Jurify is a unique transactional law resource for the following reasons: 

  • FREE (mostly). Website contents including primary law, secondary sources

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With oral arguments today in the Hobby Lobby case, I thought I’d pile on a few last thoughts:

(1) As I explained here, entities should be able to take on a racial, religious, or gender identity in discrimination claims.  I would add that I feel similarly about sexual orientation, but (though I think it should be) that is still not generally federally protected. To the extent the law otherwise provides a remedy, I’d extend it to the entity. 

(2) It is reasonable to inquire, why is discrimination different than religious practice?  For me, I just don’t think religious exercise by an entity is the same as extending discrimination protection to an entity.  There is something about the affirmative exercise of religion that I don’t think extends well to an entity.   That is, discrimination happens to a person or an entity. Religious practice is an affirmative act that is different.  Basically, reification of the entity to the point of religious practice crosses a line that I think is unnecessary and improper because discrimination protection should be sufficient.

As a follow up to that, I also think it’s a reasonable question to ask: Why is religion different than speech?