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This has been a banner week for embarrassing corporate manager stories.  In addition to the sudden resignation of Texas Instruments CEO Brian Crutcher for unspecified code-of-conduct violations (echoing the earlier, sudden firing of Rambus CEO, also for unspecified conduct violations) and Paramount’s firing of Amy Powell for racist commentary, Tesla’s Elon Musk ran into public relations trouble after a revelation that he donated to a Republican PAC, from which he cannily diverted attention by accusing one of the Thai cave diving rescuers of pedophilia.  Meanwhile, Papa John’s Founder and Chair John Schnatter – who previously was forced to resign as CEO after white nationalists were too enthusiastic about his condemnation of the NFL and protesting football players – was revealed to have used a racist slur on a conference call designed to prevent his racism from creating PR disasters.  That incident caused the Board to strip him of his chairperson title and remove his face from marketing materials, while the University of Louisville took his name off of its stadium.  Later, Forbes published an expose on the sexist and unprofessional culture at Papa John’s that he enabled – which incidentally confirms Ben Edwards’s…

Deal lawyers are not often framed as storytellers.  UNLV’s Lori Johnson has a new article in the St. John’s Law Review explaining why deal lawyers may also need to hone their ability to understand and present the essential “story” behind a  transaction or a client’s business.  She explains that getting clarity on the narrative behind the deal may improve overall outcomes:

This approach can enhance completeness and truthfulness in transactional documents.  As a result, lawyers create more holistic and ethical outcomes.  Relying on the narrative paradigm. . . narrative theory can improve a transactional lawyer’s approach to lawyering, relationships with clients, overall persuasiveness, and client outcomes.

Others have written about the gaps between the deals struck by clients and the documents and contracts memorializing these deals.  Although no approach will result in perfect contracts, a narrative-focused approach may help generate greater coherence in deal documents.

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Several months ago, I posted about the Chancery decision finding Elon Musk to be a controlling shareholder of Tesla for the purposes of Corwin v. KKR Financial Holdings, 125 A.3d 304 (2015), despite the fact that he held only a 22% stake.  The decision took into account both Musk’s stock holdings and his other mechanisms of influence.

One of the reasons the decision stood out was because, while there is a long history in Delaware of considering both voting power and other factors to determine controlling shareholder status, after a certain point, you have to wonder whether the “stockholder” piece is doing any work, and whether instead the question should just be whether someone has effective control, either of the corporation generally or of a particular business decision.

Well, last week, we took a few steps more toward answering that question in Basho Technologies Holdco B, LLC et al v. Georgetown Basho Investors, LLC et al.  There, plaintiffs contended that a minority stockholder was a “controller” for purposes of owing fiduciary duties to the corporation.  Vice Chancellor Laster agreed, based on a holistic inquiry that took into account, among other things, the stockholder’s contractual rights via preferred…

The Huffington Post has a gripping article detailing alleged sexual harassment at HSBC.  The case has been covered before and featured allegations about a boss instructing a female subordinate to:

• Dress provocatively on the job
• “…have sex with male HSBC executives and clients at company-sponsored events”
• Specifically, “have sex with an unnamed senior executive at the bank’s Mexico unit”

In addition to:

• “…falsely t[elling] co-workers that Doe was having sex with clients when they traveled to bank functions outside the U.S.”
• “… attempt[ing] to pull down Doe’s blouse and expose her breasts in the presence of male HSBC employees.”

The new story on this HSBC case resonates because it also seems to suggest a link between sexual harassment and other compliance concerns:

Mike couldn’t shake the feeling that he was being retaliated against for elevating sexual harassment complaints—and that the retaliation also conveniently sidelined his questioning of compliance issues. Moving him into what was essentially a junior position limited his exposure to HSBC’s internal operations and contained his objections, at a time when pressure on the bank was intensifying.

HSBC has had other compliance problems in the past and only recently exited a deferred prosecution…

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