It’s no secret that Tesla has weathered some … ahem … criticism of its governance structure, and in particular, the (lack of) board supervision over Elon Musk.  After Musk’s antics landed him in trouble with the SEC, the company proposed two charter amendments that would make the board more responsive to shareholders: first, to amend the charter so that future charter amendments will require only majority rather than 2/3 vote of the outstanding stock, and second, to amend the charter to reduce director terms from 3 years to 2. 

Management sponsored proposals – especially those that hand more power to shareholders – are usually kind of a done deal.  But this week, Tesla announced that even though the vast majority of voting shareholders favored the proposals, the proposals had failed to pass.  Now, to be sure, the proposals needed a 2/3 vote of the outstanding stock – that was, after all, one of the things sought to be amended! – but it was still a bit of a surprise to see that the threshold hadn’t been met, given the amendments’ popularity.

I know that I wasn’t the only one who suspected some kind of Musk-related shenanigans, like perhaps Musk got cold feet about relinquishing power at the last minute, and withheld votes on his approximately 21% stake.  The Wall Street Journal article reporting on the vote pointedly highlighted Musk’s ability to block changes he disliked.  Plus, when it was originally posted online, the article reported that a spokeswoman for Tesla did not answer a question about how Musk voted, though later the article was revised to say that the company claimed Musk did not withhold his votes.

But still, I was suspicious about how exactly the proposals managed to fail, so I tried to do some back of the envelope calculations once Tesla filed its 8-K disclosing the tally.

And here’s what I figure.  First, based on proxy disclosures and the 8-K, about 80% of the total voting shares made some kind of appearance at the meeting (in many cases, via broker non-votes).  That compares to about 83% last year, when there were about 4 million fewer shares eligible to vote.

Second, broker non-votes this year exceeded last year’s tally by 11 million – but even if all of those shares had voted in favor of the proposals, it wouldn’t have been enough to change the outcome given the 20% of shares that never made an appearance.

Why so many non-votes/nonappearances as compared to last year?  Well, I’m not sure if this means anything, but it also seems there was a lot higher volume of trading after the record date this year as compared to last year.  Now, Tesla sold 3 million new shares in early May, so I only looked at the first two weeks after the record date of 2018 as compared to 2019, but it seems there was double the amount of trading in 2019.  So, if I’m thinking about this correctly – and someone please feel free to weigh in if I’m getting this wrong, and disclaimer: I did not actually do a statistical analysis so I might be overstating the differences, but – it seems (1) the disparity in trading is not surprising given Tesla’s scandals this year and (2) the increased volume could potentially mean that otherwise-eligible voters sold their shares after the record date; so they didn’t bother to vote, and the new buyers weren’t able to do so.

So it’s definitely possible that all of this is just what it looks like: Tesla’s charter requires a high threshold to amend and the vagaries of public company voting made that threshold difficult to meet, even if most voting shareholders would prefer the amendment.  But what we we don’t have is rock solid certainty that there wasn’t some kind of last-minute management change-of-heart.

And that takes me back to my post last year about the need for disclosure of how insiders vote (holders of high vote shares, high ranking officers, directors).  We don’t have that now;  absent actual class voting, the votes are just disclosed as an undifferentiated block.  Which is what sent me on my bout of amateur sleuthing.

Now, not every company is Tesla and most of the time you can probably look at the vote total and, using other disclosures, figure out how insiders voted relative to other shareholders.  But my point is, I shouldn’t have to open my creaky copy of Excel and consult multiple SEC filings to suss this information out.  A clear statement, and separate totals, matter. They matter in terms of how the public understands the vote – reporting like this is downright misleading – and I think they probably matter in terms of how (some) shareholders understand their votes.  Voting isn’t like efficient markets; whether or not information is “priced in,” actual votes have to be cast with knowledge in mind.  Voters either understand the dynamics, or they don’t, and not everyone is going to do the math.  Shareholders should be able to clearly understand the impact of their votes before and after the ballots are cast.  Plus, I believe for certain kinds of close votes, insiders will be sensitive to how their ballots will be reported publicly, and that will affect their behavior.

Bottom line: Insider votes (and votes cast by high vote shares) should be broken out and reported separately.

With the thought that more than a few of you reading this post may be starting off in a law teaching job for the first time in just a few short months, several of us on the BLPB have decided to offer some tips and general advice to you as you prepare.  Since I have recently spoken to a few new folks who are still in the process of choosing textbooks, I will start there.  

Set forth below are my reflections on important matters related to choosing an appropriate textbook.  If anything I say here does not make sense to you (or, of course, if you have additional or different thoughts), please leave a comment.  And if you already have ordered your textbook and started planning your course, please don’t rethink everything because of this post!

First and foremost, it is important to know the institutional teaching objectives at your law school.  How does the business law course you are teaching contribute to the school’s program of legal education?  What attributes of your course may help build the law school’s infrastructure for institutional success?

Then, consider the learning objectives you have for your students—taking care to meet institutional objectives, but adding more scaffolding.  Apart from what the institution needs, what do you want to make sure you effectively impart to your students?  Consider theory, policy, and skills, as well as the scope and depth of substantive legal doctrine.

Those general matters aside, I next work from the premise that one should teach from his or her strengths.  So, engage in self-assessment to pinpoint those strengths.  My core advice?  Do not try to be someone you are not through the choice of your textbook (or in any other aspect of your teaching, btw).  If you are not a law and economics expert or disciple, a casebook founded on economic theory is likely not a good choice for you . . . .  Be yourself.  Isolate factors to look for in textbooks that will help you to teach from your knowledge, experience, and overall comfort zone.

Consult with colleagues in and outside your law school. If you are teaching a course that others in your institution also teach, find out what books they use and why.  If you are teaching a course that is part of a sequence (e.g., Business Associations and Advanced Business Associations), find out what books are used by others in your institution who teach the other course(s) in the sequence.  Ask a number of folks what their recommendations are, but understand that you can go your own way (as long as you work with colleagues in your school to help ensure that transitions among related courses will be smooth).

Having ordered review copies of books that take into account information gained from the foregoing, pick up the books and read them. Not the whole of each, of course. I start with the table of contents, if I haven’t already looked at that online.  I then read the first chapter.  Does this chapter set the tone for myfirst class?  Does it establish the core values of my course?  Finally, I pick a few key chapters—maybe one that covers a weak point in my knowledge of the subject matter, one that covers a particularly difficult aspect of the doctrine, one that covers a favorite topic, etc.  I use these readings to find the book that has the best vibe, all in.

Then, make your choice!  Know that it is not irrevocable.  Sure, it is a pain in the neck to organize a syllabus around a book and then give all that up and draft a syllabus incorporating readings from a new book.  Students seem to know if I am teaching from a suboptimal book.  That distraction can affect the learning process as well as the overall student-teacher relationship.

However you choose your textbook, make sure you have at least one copy in hand in plenty of time to create your syllabus.  Generating a syllabus is an entirely different—but related—process.  Perhaps one of us will write about that in a future post . . . .

When I decided to leave the law firm for a teaching fellowship in hopes that I might one day find a job as a law professor, I had no real clue what I was doing.  I struggled with the decision and the risk, but eventually just decided to go for it, even knowing that the entry-level hiring market was brutal.

One thing that would have helped enormously would have been something like this conference at Villanova.  They’ve put together an incredibly strong group of people to talk about how to do this.  Many of these folks would be great friends and mentors to get to know if you’re going to join this field and community.  They have a registration link here if this is something you’re interested in.

 

Future Business Law Professors Conference

Presented by the John F. Scarpa Center for Law and Entrepreneurship

Friday, September 6, 2019
9:00 a.m. – 3:00 p.m.

 The John F. Scarpa Center for Law and Entrepreneurship will host the Future Business Law Professors Conference on Friday, September 6. All visiting assistant professors, fellows, researchers, law clerks, practitioners and others who are considering entering the higher education academic teaching market in business law – including business associations, securities regulation, corporate finance and business ethics – are invited to attend.

Participants will learn more about the business law teaching market, receive advice on how to be a successful candidate and meet future colleagues. Attendees will have the opportunity to participate in mock interviews and get a sneak-peak into the hiring process from current business law faculty. Some will be able to present their job talk paper to leaders in the field and receive feedback.

Appointments committee members from any law school potentially hiring in the business law field are also invited to attend.

Senior faculty tentatively scheduled to attend include:

·                     Albert Choi (University of Michigan Law School)

·                     Jill Fisch (University of Pennsylvania Law School)

·                     Arthur Laby (Rutgers University Law School)

·                     Tom Lin (Temple University, Beasley School of Law)

·                     Andrew Lund (Villanova University, Charles Widger School of Law)

·                     Jennifer O’Hare (Villanova University, Charles Widger School of Law)

·                     Urska Velikonja (Georgetown University Law Center)

Another new case provides fun with entity issue spotting. Here’s today’s gem from Wade v. Touchdown Realty Group, LLC, 2019 WL 2403193 (D.Mass.), 1 (D.Mass., 2019):

Plaintiffs Gregg and Karin Wade allege that the home they purchased from Defendant Touchdown Realty Group, LLC (“Touchdown”) did not comply with building codes in breach of the purchase agreement and that Touchdown and Defendant Thomas Clayton falsely represented that the home was a three-bedroom house, not a two-bedroom house, and that it was code-compliant. …

Touchdown is a Rhode Island limited liability corporation, with its principal place of business at 12 E. Cottage Street, Smithfield, Rhode Island. Touchdown is in the business of buying and renovating residential real estate for resale. Clayton’s wife, Kelly Clayton, is Touchdown’s sales manager and sole shareholder. The company address is also the Claytons’ home address in Rhode Island.

At a quick glance, we see that an LLC has been called a “corporation.”  And we have an LLC with a “sole shareholder,” as opposed to a member. 

In addition, the court does a jurisdictional analysis of the LLC without actually specifically assessing the residency of the LLC member, which is how LLC jurisdiction is determined. In fairness, the residency of the LLC’s “sole shareholder” is identified earlier in the opinion. 

If nothing else, cases like this make me proud of my students, who are largely able to avoid such mistakes. Very proud. 

I do plan to write a bit about the Law and Society Association and Grunin Center conferences that I attended over the past two weeks.  But today, I am compelled to briefly post about a newly decided U.S. Supreme Court case and a recent blog post.  The connection?  Both reference in relevant part postal delivery services, public and private.

I was alerted to the Supreme Court opinion (in Return Mail v. U.S. Postal Service) by Tom Norris, one of our fabulous BLPB readers in Nashville.  The subject of the case is the U.S. government’s attempt to assert patent invalidity as a defense to a claim of infringement.  The Court finds that the government is not a “person” for purposes of the relevant provisions of the U.S.  Patent and Trademark Act.  The National Law Journal article to which Tom pointed me offers a nice summary.  I really enjoy legal actions that focus on the “person” definitions in statutes and decisional law.  This one offers some interesting policy arguments (as do most)–in both the opinion of the Court and the dissent.

The blog post (Modern Mailmen) is coauthored by Leonid Sirota and Akshaya Kamalnath, the latter of whom I met at the Law and Society Association annual meeting and conference in Washington, DC.  The post compares and contrasts the regulation of social media providers to the regulation of postal services.  Key points follow.

As lawmakers are talking about regulating speech on social media platforms, a comparison with postal services is instructive. The postal service is not required or even allowed to scrutinize people’s mail and make decisions about whether or not to deliver it. So why should its technologically more advanced relatives have to identify and remove misinformation or statements supposed to be “hate speech”? Of course, social media can be used to commit crime, including engaging in hate speech as defined in the criminal law of some countries including Canada. The post collaborated with law enforcement where necessary to investigate fraud and other criminal activities and social media companies should do the same. Social media companies should obviously comply with court orders if someone is found to have committed a crime. The issue is whether they should be expected to engage in preventive enforcement.

The further question about whether we should require these tech platforms to service all users equally, like the postal service is expected to, is more complicated. This is because the dominant postal service is usually run by the state, while the tech platforms like Facebook are run by corporations in the private sector. While we can ask a state-run enterprise to provide services to all equally, more thought needs to be given before private enterprises are held to the same standard. Yet, government regulation is being considered because, among other things, there are complaints about the spread of what activists deem to be “hate speech”, and also complaints about the silencing of conservative voices on social media.

Ultimately, the coauthors conclude that the regulatory touch on social media providers should be light and focused.

Parenthetically, it also seems appropriate to note that all of this attention to postal services comes at a time when the U.S. Postal Service’s business model is subject to possible change.  This testimony offers some detail.  As the testimony notes, the U.S. Postal Service has been losing money for a number of years and may need a substantial operating overhaul to survive.  That will be an interesting matter to follow as restructuring plans are formulated and implemented.

In last week’s post, I wrote that a common theme – largely based upon industry feedback – at a recent conference I attended was the importance of having and teaching good communication skills to our students.  Given their training, professors teaching law are particularly well-positioned to promote this objective.  Today, I happened across a relatively recent article on Inc.com (via LinkedIn) reinforcing this theme, and wanted to share it with readers.  In sum, Tommy Mello’s LinkedIn CEO says There’s 1 Professional Skill You Should Pick Up to Boost Your Resume (It Has Nothing to Do with Tech) shares that Jeff Weiner, CEO of LinkedIn, argues that “soft skills, including oral communication, team-building, and leadership skills” are what employers are most looking for these days.  Mello provides an interesting list of questions he asks “hiring managers to ask when conducting interviews,” which are designed to test: willingness to learn, commitment, communication, humility and self-awareness, and task management.  It’s a quick, worthwhile read that I think is also both an opportunity for reflection on how the importance of communication skills are incorporated into our courses and a bit of a counterbalance to concerns about increasing job automation.       

AALS Section on Professional Responsibility

2020 AALS Annual Meeting

Call for Papers Announcement

The AALS Section on Professional Responsibility invites papers for its program

“Professional Responsibility 2020 Works In Progress Workshop”

at the AALS Annual Meeting in Washington, DC.  

WORKSHOP DESCRIPTION:

This workshop will be an opportunity for junior scholars to receive substantive critique and feedback on a work in progress.  Each junior scholar will be paired with a more senior scholar in the field who will lead a discussion of the piece and provide feedback. Successful papers should engage with scholarly literature and make a meaningful, original contribution to the field or professional responsibility or legal ethics.

ELIGIBILITY:

Full-time faculty members of AALS member law schools are eligible to submit papers. Preference will be given to junior scholars focusing their work in the area of professional responsibility and legal ethics. Pursuant to AALS rules, faculty at fee-paid law schools, foreign faculty, adjunct and visiting faculty (without a full-time position at an AALS member law school), graduate students, fellows, and non-law school faculty are not eligible to submit. Please note that all faculty members presenting at the program are responsible for paying their own annual meeting registration fee and travel expenses.

PAPER SUBMISSION PROCEDURE:

Two papers will be selected by the Section’s Executive Committee for presentation at the AALS annual meeting.

There is no formal requirement as to the form or length of proposals. However, the presenter is expected to have a draft for commentators one month prior to the beginning of the AALS conference.

The paper MUST be a work in progress and cannot be published at the time of presentation. It may, however have been accepted for publication and be forthcoming.

DEADLINE:

Please email submissions to Veronica Root Martinez, Associate Professor, Notre Dame Law School, vrootmartinez@nd.edu on or before September 10, 2019. The title of the email submission should read: “Submission – 2020 AALS Section on Professional Responsibility.”

The AALS Section on Agency, Partnership, LLCs, and Unincorporated Entities is pleased to announce a Call for Papers from which up to three presenters will be selected for the section’s program to be held during the AALS 2020 Annual Meeting in Washington, DC. The program will explore decisions and strategies for choice of business form. As unincorporated business forms have matured and those who use them have learned their advantages and disadvantages, key decisions about choice of form have changed in important and interesting ways. In addition, accelerating advances in technology promise to play surprising roles in the formation and operation of unincorporated firms. 

Submission Information: 

Please submit an abstract or draft of an unpublished paper to Kelli Alces Williams at kalces@law.fsu.edu before August 5, 2019.  Please remove the author’s name and identifying information from the submission. Please include the author’s name and contact information in the submission email. 

Papers will be selected after review by members of the Executive Committee of the Section. Authors of selected papers will be notified by August 30, 2019. The Call for Paper presenters will be responsible for paying their registration fee, hotel, and travel expenses. 

Any inquiries about the Call for Papers should be submitted to: Kelli Alces Williams, Florida State University College of Law, kalces@law.fsu.edu or (850) 644.5079.