Dear BLPB Readers:

I wanted to help spread the word about various ways in which law students can begin connecting with the American Bar Association (ABA) and encourage interested readers – especially the professors! – to also assist in getting the word out! 

First, law students can join the ABA for FREE!  They can find out more here.  

Second, the annual Banking Law Committee meeting will be in Washington D.C. on January 18-20, 2024.  This year, it’s an in-person only event (other meetings this year will offer virtual options).  Law students can attend this and other meetings for FREE (to do so, a student must become a member of the ABA and the Business Law Section)! 

Of course, the ABA has many committees in addition to the one on banking, including consumer financial services, bankruptcy, corporate governance, antitrust etc. and resources and opportunities for students interested in a variety of professional legal paths (transactional, litigation, regulatory etc.).

Third, the Banking Law Committee will also have full day meetings at two ABA conferences later in 2024 (Orlando, April 4-6 and San Diego, September 12-14).  Both meetings will have in-person and online options.  Additionally, the April meeting (and perhaps the…

Looking back, it’s funny how the issue of litigation limits in corporate constitutive documents has really been a throughline throughout my academic career; my first paper on the subject, Manufactured Consent: The Problem of Arbitration Clauses in Corporate Charters and Bylaws, was written when I was still a VAP.  So now it’s like a theme.

Anyhoo, as you all know, the latest set of developments occurred when the Delaware Supreme Court decided Salzberg v. Sciabacucchi, 227 A.3d 102 (Del. 2020), and approved the use of litigation limiting bylaws and charter provisions even for non Delaware claims, specifically, federal securities and antitrust claims.

That was part of what inspired my latest paper on the subject, Inside Out (or, One State to Rule them All): New Challenges to the Internal Affairs Doctrine, arguing, among other things, that other states pay too much deference to Delaware by automatically treating these provisions as contracts governed by Delaware law, rather than asking which law to apply, and whether the elements of contract are met.

Well, a new case has come up, EpicentRx, Inc. v. Superior Court, 95 Cal.App.5th 890.

EpicentRx is private, organized in Delaware but headquartered in California.  Its charter…

Delaware’s Caremark cases continue to be catnip for me.

The latest is the Delaware Supreme Court’s Lebanon County Employees’ Retirement Fund v. Collis, reversing VC Laster’s decision from last year.

Plaintiffs alleged that AmerisourceBergen’s board of directors violated opioid drug laws by failing to monitor suspicious prescriptions, to the point where they altered their internal reporting systems so that fewer prescriptions would be flagged.  Ultimately, this conduct caused severe damage to the company, through a $6 billion global settlement, as well as other settlements and litigation costs.

VC Laster explored the allegations in detail, ultimately determining that, standing alone, the complaint stated a claim against the AmerisourceBergen board for a violation of Caremark duties. 

But!  Plot twist.  Because in mid 2022, after the plaintiffs’ complaint was filed, a federal West Virginia court cleared AmerisourceBergen of misconduct.  The case was filed by a city and county in West Virginia – areas that were ground zero for the opioid crisis – and among thousands of similar cases consolidated for pretrial proceedings in a larger multidistrict litigation.  After a bench trial, the judge found that the plaintiffs had failed to prove that AmerisourceBergen did not maintain an effective control system.  According…

As I’ve mentioned before, the Department of Labor is now taking another go at improving advice standards for retirement accounts.  I put a quick letter together to give some reasons why I think it’s important to have high standards for advice in this context.

Although written to the Department of Labor, I tried to put the letter together in a way that would help journalists and others understand some of the critical issues facing Labor and the need to put some real protections in place.

One of the talking points often deployed by the industry here is that people should understand that they are in a sales environment and not rely overmuch on the insurance producer deploying every known psychological trick to generate trust.  In reality, many people–particularly older Americans do not understand that the advice is not free.  

My sense is that the rulemaking will probable go through and then we’ll find out how much room the courts will give to protect people here.

After Twitter v. Musk concluded, there remained a bit of satellite litigation in the form of a claim brought by Twitter shareholder Luigi Crispo, who alleged that his lawsuit against Musk – filed in the midst of the dispute with Twitter – had in fact materially contributed to the Twitter v. Musk settlement, and therefore he should be entitled to attorneys’ fees. 

(Pause for laughter.)

Anyway, the legal merit of that claim turned on whether Crispo’s claims against Musk – as a stockholder, for breaching the merger agreement with Twitter – themselves ever had any merit to begin with.  In October of this year, Chancellor McCormick held that they did not, but the way she got there put merger planners in something of a bind.

One issue that came up during the whole … thing … was what kind of damages Twitter could get if it prevailed in its claim that Musk breached the merger agreement, but if specific performance was for some reason unavailable.  (And yes, sorry, I can’t help but mention, this is an issue I discuss in more detail in my paper, Every Billionaire is a Policy Failure).  The merger agreement had a damages cap…

You may already have seen the news that Judge Charles Breyer refused to dismiss claims against Elon Musk arising out of l’affaire Twitter.  Specifically, a class of shareholders alleged that Musk’s desperate efforts to get out of the deal – including his accusation of spam and his insistence that Twitter violated its contractual obligations by refusing to provide him with information – depressed the price of Twitter stock by creating uncertainty regarding closing.  As a result, some investors were harmed by selling stock too soon.  In Pampena v. Musk, 2023 WL 8588853 (N.D. Cal. Dec. 11, 2023), Judge Breyer dismissed claims based on several of Musk’s statements, but sustained others.  He reasoned:

The May 13 tweet reads as follows: “Twitter deal temporarily on hold pending details supporting calculation that spam/fake accounts do indeed represent less than 5% of users.” … Defendant represented to a reasonable investor that the Twitter deal was on hold—and would not close—until Twitter provided information supporting its bot calculations. Or, put another way, a reasonable investor could have plausibly understood that Twitter was obligated to provide Defendant with the requested information for the deal to close…. The Court finds that Defendant’s statement did give an

…

Two interesting matters related to the internal affairs doctrine came up recently, and since I just wrote a whole paper on this subject, I can’t resist mentioning them here.

First, VC Laster issued an opinion in Sunder Energy v. Jackson et al,.  The question was whether certain LLC members and employees violated noncompetes included in the LLC agreement, but Laster began by railing against the trend of companies attempting to avoid the employment law of states where they do business by writing employment-related terms into entity organizational documents, and then issuing equity compensation to employees.  The companies do so apparently in hopes that the employment-related terms will then be treated as entity internal affairs matters governed by the state of organization (Delaware), rather than employment terms governed by the employee’s home state.  Sunder Energy was not the first time Laster objected to the practice; earlier, he gave a long speech on the matter in his transcript ruling in Strategic Funding Source Holdings LLC v. Kirincic, which I quoted extensively in my paper. 

Anyway, that’s not the only thing of interest in the case; it also presents an interesting cautionary tale that will work well in the…