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As everyone knows by now, in In re Tesla Motors Stockholder Litigation, VC Slights refrained from engaging all the meaty doctrinal issues.  He did not decide whether Elon Musk is a controlling shareholder of Tesla; he refused even to decide whether a “controller” is a different thing than a “controlling shareholder,” see Op. at 81 n.377.  He didn’t decide whether the Board was majority independent, going so far as to raise the possibility that even a board that operates under serious conflicts may nonetheless “prove” their independence at trial, see Op. at 81 n.378.   He did not decide whether passive investors’ stakes on both sides of a merger may render them not disinterested for cleansing purposes, see Op. at 63 n.311.  Instead, he found it easier to conclude that Tesla’s acquisition of SolarCity was entirely fair, rather than engage with all the thorny legal questions the case raised.

That was sort of a surprise (though you can’t help but wonder how much of that was hindsight, see Op. at 126-27).  Yet in many respects, it was ultimately a very Delaware sort of decision. 

It has long been observed that while liability is rarely imposed on Delaware fiduciaries, the Delaware…

Dear BLPB Readers:

“The American Business Law Journal invites article submissions on a year-round basis. We encourage submissions outside of the traditional July/August and February submission cycles.

The ABLJ is ranked in the top 6% by Impact Factor of all publications listed in the 2016 Washington & Lee Submissions and Rankings.

The ABLJ is a highly selective faculty-edited, internationally peer-reviewed journal that welcomes manuscripts that comprehensively explore and analyze legal and ethical issues that affect businesses, not only within the United States but also across the globe. We seek to publish only top-quality law review articles that make a significant scholarly contribution to the field of business law.

Manuscripts that enter our review process are sent to at least two faculty reviewers who are experts in the subject matter of the manuscript. The review is triple-blind. The reviewers are not told the identity of the author, the assigned Articles Editor is not told the identity of the author until a review decision has been reached, and the author is not told the identity of the reviewers. This is a time-intensive but worthwhile process. Reviewers read the manuscript, review the relevant literature, and provide commentary and critique to our Articles Editors…

Below is an interesting and perhaps Twitter-relevant excerpt from Charles Korsmo & Minor Myers, What Do Stockholders Own? The Rise of the Trading Price Paradigm in Corporate Law, 47 J. Corp. L. 389, 394 (2022).

Expressed in the conventional analytical framework, Delaware now protects the stockholder’s entitlement in a public corporation with a liability rule, where the stockholder’s entitlement may be taken in a non-consensual exchange like a merger at any price exceeding the prevailing trading price.

This paradigm shift augurs dramatic change not simply in appraisal, but in all of merger law. Most obviously, the shift will necessarily affect the basic measure of damages in other contexts. Indeed, the Court of Chancery has already confronted this scenario: a breach of fiduciary duty that gave rise to no damages because the transaction was at a premium to the market price. But perhaps the most notable doctrinal reckoning involves Unocal and its progeny, which afford directors the power to defend against the threat of acquisitions where the price is “too low.” That power reached is fullest expression in the 2011 Air Products v. Airgas decision, a ruling that remains controversial. The board of Airgas blocked a $70 acquisition offer from…

I recently posted (here) a link to, and brief overview of, a letter from twenty-two of the nation’s leading professors of law and finance urging the SEC to withdraw its climate disclosure proposal. Brett McDonnell submitted an interesting comment to that post, highlighting a potential tension between espousing views that prioritize shareholder wealth maximization while at the same time rejecting the calls of some of the world’s largest shareholders for greater climate-related disclosures. (Please be sure to read his full comment.) In response, Lawrence Cunningham suggested I post an additional excerpt from the letter, which addresses this issue in more detail. You’ll find that excerpt below. However, this all reminded me of a recent article by Amanda Rose, and so I’ll start my excerpts with a quote from that article.

Traditional asset managers claim their commitment to ESG is motivated by a desire to improve long-term fund performance for the benefit of investors. But agency costs offer an alternative potential explanation: embracing the ESG movement may help asset managers curry political favor, enabling them to fend off greater regulation of the industry; it may advance the personal sociopolitical commitments of those who ran them; or it may offer a way to attract investors to fund offerings without imposing any meaningful limitations on how a fund is managed.

Amanda M. Rose, A Response to Calls for SEC-Mandated ESG Disclosure, 98 Wash. U.L. Rev. 1821, 1824–25 (2021).

Now, on to the letter (the full version is here):

Look, I know the Tesla/SolarCity decision just came down, and I’m, like, contractually obligated to blog about it, but to tell you the truth, this was the last week of classes, exams are next week, and I just got back from a conference thing, so comments on the Tesla decision will have to wait (though, yes, I did appreciate the wink in footnote 377).

So, proxy solicitations.  Specifically, the Eighth Circuit’s decision in Carpenters’ Pension Fund of Illinois v. Neidorff, 30 F.4th 777 (8th Cir. 2022), which I was alerted to by the Deal Lawyers’ blog.

In Neidorff, the plaintiffs brought a derivative Section 14(a)/Rule 14a-9 claim alleging that Centene Corporation solicited a vote in favor of a merger by way of a misleading proxy statement that failed to disclose known problems with the target company. Rule 14a-9 prohibits proxy statements from:

containing any statement which, at the time and in the light of the circumstances under which it is made, is false or misleading with respect to any material fact, or which omits to state any material fact necessary in order to make the statements therein not false or misleading or necessary to correct

…

As per the relevant press release (via Lawrence Cunningham): “Twenty-two of the nation’s leading professors of law and finance this week wrote the Securities and Exchange Commission (SEC) to dispute the agency’s authority to adopt a new far-reaching climate disclosure regime and to urge an immediate withdrawal of the proposal.” You can find the full letter here. Here is a hopefully useful excerpt:

The following analysis raises concerns that the Proposal is neither necessary nor appropriate for either investor protection or the public interest and will not promote other statutory goals. The SEC would do better to withdraw the Proposal and revisit the subject with a fresh approach focused on America’s ordinary investors rather than an elite global subset. The three parts of this letter address each statutory issue in turn, as follows:

I. “Investor Demand” versus “Investor Protection”
    A. Investor Varieties: Diverse Institutions and Individuals
    B. Climate Shareholder Proposals: Few Are Made, Most Lose, Many Are Political
    C. The Ample Supply of Climate Disclosure
    D. Correlation of Climate Practices with Economic Performance Is Not Causation
II. Authority of Others and the “Public Interest”
    A. The Environmental Protection Agency’s Statutory Jurisdiction
    B. State Corporate Law Prerogatives on Purposes…

I guess we’re talking about Elon Musk again.

If you’re like me, you’re kind of gratified by the general public’s new fascination with corporate law, but, of course, to those of us who live here, it’s obvious that while all of the maneuvering so far is colorful, it’s bog standard legally, and the Twitter board’s actions in adopting a poison pill were not only totally unremarkable, but arguably necessitated by their fiduciary duties.  (So that they would have time to explore other alternatives; so that they could assess the seriousness of Musk’s offer and attempt to negotiate a higher one; so that they could prevent Musk from obtaining control – or sufficient control to block superior alternatives – simply through open market purchases, etc).  Nonetheless, that has not prevented a lot of people who should know better from saying silly things:

…

As reported by The American Civil Rights Project (here):

After months of pressure from concerned stockholders, Coca-Cola’s General Counsel Monica Howard Douglas recently let it be known that the illegal discriminatory outside-counsel policies Coke announced with great fanfare last year “have not been and are not policy of the company.” …

In January 2021, Douglas’s predecessor, Bradley Gayton, published the policies in a highly publicized open letter addressed to “U.S. Firms Supporting The Coca-Cola Company.” Under it, Coke’s law firms were required to staff Coke matters so that that “diverse” attorneys performed at least 30% of all hours billed, with “Black attorneys” performing “at least half [15%] of that amount” …. The letter stated that non-compliance for two successive quarters “will result” in Coke’s unilateral reduction of a firm’s future legal fees and that all future consideration for both new legal work and inclusion in Coke’s preferred-vendor list would turn on compliance….

[T]he ACR Project wrote to Coke, its officers, and its directors, on behalf of several shareholders, demanding the public retraction of the discriminatory policies. If Coke had refused, these shareholders would hold Coke’s officers and directors personally liable for breaching their fiduciary duties to investors.

After…

AALS Professional Responsibility Section – 2023 Annual Meeting New Voices

The AALS Professional Responsibility Section invites papers for its program “2023 New Voices Workshop.” The goal of this audience interactive workshop is to provide a forum for new voices and new ideas related to professional responsibility (PR), broadly defined. Many scholars might address PR without realizing it. We are interested in your potential contributions whether you are an evidence scholar writing about the attorney-client privilege, a feminist interested in gender dynamics that affect lawyering, a critical race scholar commenting on how power plays out in legal systems, an ethicist exploring the moral foundations of the rules governing lawyering, or something entirely different. Toward that end, we encourage you to submit a proposal even if you are pursuing scholarship on PR for the first time, even if you question whether your ideas really do relate to PR, and even if you are reticent to submit for some other reason. 

The selected papers will be presented at the AALS Annual Meeting in January of 2023

WORKSHOP DESCRIPTION:

The Workshop will be an opportunity to nurture the growth of a broad scholarly community in the field of Professional Responsibility and Legal Ethics. As…

The following comes to us from the Law & Economics Center at the Antonin Scalia Law School at George Mason University.

The Law & Economics Center is pleased to announce that we are now accepting applications to the Workshop for Law Professors on Teaching Capitalism. This program will be held at the Park Hyatt Beaver Creek Resort and Spa in Beaver Creek, Colorado with attendees arriving on Sunday, July 10 and departing on Thursday, July 14.

The Workshop for Law Professors on Teaching Capitalism is a five-day program that will deepen law professors’ understanding of the fundamentals of capitalism, educate the participants in methods and techniques for teaching about capitalism as a stand-alone course in their own law schools, and help guide these professors in ways to integrate lessons learned from capitalism and discussions around the topic into their subject-specific doctrinal courses like corporations, constitutional law, or on common law subjects. The workshop is designed to enrich the curricula of law schools across the country by encouraging a more robust discussion of capitalism and its relationship with the law in courses, by giving its attendees the tools necessary to take this instructional guidance back to their home institutions.  Across…