Call for Papers

AALS Section on Business Association

New Voices in Business Law

January 2-6, 2019, AALS Annual Meeting

The AALS Section on Business Associations is pleased to announce a “New Voices in Business Law” program during the 2019 AALS Annual Meeting in New Orleans, Louisiana. This works-in-progress program will bring together junior and senior scholars in the field of business law for the purpose of providing junior scholars with feedback and guidance on their draft articles.

FORMAT:  Scholars whose papers are selected will provide a brief overview of their paper, and participants will then break into simultaneous round tables dedicated to the individual papers.  Two senior scholars will provide commentary and lead the discussion about each paper.

SUBMISSION PROCEDURE:  Junior scholars who are interested in participating in the program should send a draft or summary of at least five pages to Professor Jessica M. Erickson at jerickso@richmond.edu on or before August 10, 2018.  The cover email should state the junior scholar’s institution, tenure status, number of years in his or her current position, whether the paper has been accepted for publication, and, if not, when the scholar anticipates submitting the article to law reviews.  The subject line of the email should read: “Submission—Business Associations WIP Program.”

Junior scholars whose papers are selected for the program will need to submit a draft to the senior scholar commentators by December 14, 2018.

ELIGIBILITY:  Junior scholars at AALS member law schools are eligible to submit papers.  “Junior scholars” includes untenured faculty who have been teaching full-time at a law school for ten or fewer years.  The Committee will give priority to papers that have not yet been accepted for publication or submitted to law reviews. 

Pursuant to AALS rules, faculty at fee-paid non-member 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 presenters at the program are responsible for paying their own annual meeting registration fees and travel expenses.  

The #MeToo movement has shone a spotlight not only on sexual harassment, but also on the NDAs and arbitration agreements that allow it to flourish undetected for many years – until, in some cases, it finally explodes into a full-grown corporate crisis.

Part of the explanation is that victims choose to enter into settlements rather than conduct lengthy, expensive, and potentially humiliating court battles – which is understandable and a problem for which there is no obvious immediate solution.

But the other part of the explanation is that women (and men, who are harassed at lower rates but still may be targeted) are frequently forced to sign agreements to arbitrate claims confidentially as a condition of employment or the use of various services, and the Supreme Court – with its muscular interpretation of the Federal Arbitration Act – has held that states are virtually powerless to regulate these agreements.  These agreements, it is well understood, are less about providing a venue for resolution of claims than about preventing claims at all, if for no other reason than most prohibit class actions.  So until Congress is willing to modify the FAA (which, well, I’m not going to hold my breath), the situation continues.

Or does it?

Public pressure has now caused some companies to abandon their arbitration agreements.  Microsoft ostentatiously announced it would no longer require them for sexual harassment claims.   There was a bit of a tempest when it was discovered that Munger Tolles had them in their employment agreements; after some angry Tweeting – including requests for school-wide boycotts by elite law students and faculty – many firms agreed to withdraw them.  

And now it seems the fight has moved to Uber.

Uber’s user agreement with its riders has long contained an arbitration clause, and of course, we all know of the horror stories where Uber drivers are accused of assaulting passengers, sexually or otherwise.  (Law Prof Nancy Leong reported a terrifying close call recently).   It’s been my habit in my basic business organizations class to show students Uber’s user agreement, including the part on safety – where, to paraphrase, Uber instructs riders they should tell a friend where they’re going and sit near the car door in case they have to run.  

Now, a group of women who allege they were sexually assaulted by Uber drivers have publicly released a letter to Uber’s board demanding that the board waive the arbitration clause.  Their attorney argues that the board cannot claim it genuinely cares about women’s rights while forcing these claims into confidential arbitration.

Uber’s been plagued by a tsunami of poor press recently, all casting a shadow on its hopes for an IPO next year.  Given that, the women’s demand strikes me as a well-timed, savvy move. I don’t know if it can succeed – Uber may depend too heavily on keeping the misconduct of its drivers out of the spotlight – but on the other hand, as Twitter has demonstrated, there’s only so much silencing it can manage.  I look forward to seeing whether these straws are what finally break the back of widespread arbitration clauses in consumer contracts.

Music star/clothing designer Kanye West stirred up controversy on Wednesday when he began tweeting about his support of Donald Trump, calling him his “brother,” discussing their shared “dragon energy,” and showing off his  MAGA hat, autographed by President Trump himself. The President thanked West for the support, and some level of outrage ensued among liberal pundits and many in the black community about West’s actions. A number of marketing experts opined that West’s vocal support had the potential to adversely affect sales of his Yeezy line of clothing and sneakers, which had already suffered a decline of late, even though earlier releases of his product sold out in minutes online. In the past, Yeezy sneakers’ assoication with Adidas helped that company double its stock price.

As fans threatened to get rid of their Yeezy gear, news outlets wondered if West had killed his brand. But a funny thing happened. GQ Magazine reported today that Yeezy sales are actually up and West has even more Twitter followers than ever. The article described the backlash and boycott threats that other sneaker companies faced after their executives supported President Trump. Even Kim Kardashian, West’s wife and marketing, urged him to cease his public support. 

What’s the explanation? Is West a marketing genius? Are a number of Yeezy consumers secret Trump supporters? It’s actually likely more simple than that. As a founder of a sneaker retailer stated in October 2017 during earlier threats of boycotts of high end sneakers, “Our consumer is pretty superficial. They’re driven by hype, so I think a very small margin of our consumer base is insightful enough to come up with their own opinions on these types of things. Most would rather just see a trend happening on social media and go by that.”

Yeezy shoppers tend to be millennial with a lot of disposable income. A recent study indicated that 60% of millennials buy on the basis of their beliefs. The West/Trump saga provides an example to challenge some of those statistics. As I have written in the past, people often claim that ethical consumerism drives them (not that supporting Trump is unethical), but in practice, most consumers actually purchase what they  want. Perhaps West’s consumer base is just more transparent. Will other CEOs follow West’s example and voice  their support of President Trump? It’s doubtful, especially if they run public companies, but I will be watching. 

 

The current Department of Labor has shown little interest in continuing to defend its fiduciary rule after the Fifth Circuit struck it down.  The AARP and three different state attorney generals recently sought to intervene to request review by the entire Fifth Circuit.  The AARP has a substantial interest in the rule.  It argues that “the panel’s decision also presents an exceptionally important issue because it robs workers, retirees, and their families of crucial protections for their retirement investments.” 

Even though the SEC recently launched its investment-advice initiative by proposing  regulation Best Interest, Labor’s rule remains critical.  Insurance pitchmen now characterize themselves as “financial advisers” and sell a variety of insurance products.  In many instances, these “financial advisers” sell annuities or whole life insurance to people with little need for the products, causing them to miss out on substantial gains over time.   Without the Labor rule, there may be few restraints on improper insurance sales.

 

As I am inclined to do with cases and statutes, I spent some time this week chasing down incorrect definitions of the LLC (correctly defined as a “limited liability company”).  I did some perusing of the Code of my home state of West Virginia for incorrect uses of “limited liability corporation,” where limited liability company was intended.  As I expected, there are multiple errors. Take, for example: 

§ 31D-11-1109. Conversion of a domestic corporation to a domestic limited liability company.

. . . .

(i) When a corporation has been converted to a limited liability corporation pursuant to this section, the limited liability company shall, . . . .

This part of the Code uses “limited liability company” correctly throughout this provision, except in this one spot.  This should be cleaned up, but it appears to be an error related to repeated use of corporation and company in the same statute (as opposed to a misunderstanding of the concept).

 The West Virginia Code has adopted the use of “limited liability corporation” in place of “limited liability company” in a couple definitions provisions, too, which could be a little more problematic. 

In the Motor Fuel Excise Tax portion of the Code, we have this, § 11-14C-2. Definitions:

     (66) “Person” means an individual, firm, cooperative, association, corporation, limited liability corporation, estate, guardian, executor, administrator, trust, business trust, syndicate, partnership, limited partnership, copartnership, organization, limited liability partnership, joint venture, receiver and trustee in bankruptcy. “Person” also means a club, society or other group or combination acting as a unit, a public body including, but not limited to, this state and any other state and an agency, commissioner, institution, political subdivision or instrumentality of this state or any other state and, also, an officer, employee or member of any of the foregoing who, as an officer, employee or member, is under a duty to perform or is responsible for the performance of an act prescribed by the provisions of this article.

Literally, anyway, LLCs are not defined as persons in this Code section.  I am confident that the intent here is quite clear, even if the execution is flawed, but still, this exhaustive list leaves out the West Virginia limited liability company created in WV Code § 31B, the Uniform Limited Liability Company Act.

 A similar error occurs in Code Chapter 16, Public Health. Code § 16-2D-2 provides:

(29) “Person” means an individual, trust, estate, partnership, limited liability corporation, committee, corporation, governing body, association and other organizations such as joint-stock companies and insurance companies, a state or a political subdivision or instrumentality thereof or any legal entity recognized by the state.

Here, at least, the catch-all “any legal entity” does include LLCs, but LLCs are still not listed specifically. 

This definition language is being repeated in draft legislation, as well, so the error is spreading.  See, e.g., House Bill 2873, Budget and Spending Transparency Act (“(c) “Entity” or “recipients” means any corporation, association, union, limited liability corporation, limited liability partnership, legal business entity including nonprofit organizations, grantee, contractor or any county, municipal or other local government entity . . ..”) 

I am planning to spend some time this summer sending proposed fixes to some key legislators to see if we can get this corrected. Though I concede this is a small fix, it is also an easy fix, and I see no reason not to get it right.  Maybe if I do the legwork, it can get done. 

Call for Papers for the

Section on Business Associations Program on

Contractual Governance: the Role of Private Ordering

at the 2019 Association of American Law Schools Annual Meeting

The AALS Section on Business Associations is pleased to announce a Call for Papers from which up to two additional presenters will be selected for the section’s program to be held during the AALS 2019 Annual Meeting in New Orleans on Contractual Governance: the Role of Private Ordering.  The program will explore the use of contracts to define and modify the governance structure of business entities, whether through corporate charters and bylaws, LLC operating agreements, or other private equity agreements.  From venture capital preferred stock provisions, to shareholder involvement in approval procedures, to forum selection and arbitration, is the contract king in establishing the corporate governance contours of firms?  In addition to paper presenters, the program will feature prominent panelists, including SEC Commissioner Hester Peirce and Professor Jill E. Fisch of the University of Pennsylvania Law School.

Our Section is proud to partner with the following co-sponsoring sections: Agency, Partnership, LLC’s and Unincorporated Associations; Contracts; Securities Regulation; and Transactional Law & Skills.

Submission Information:

Please submit an abstract or draft of an unpublished paper to Anne Tucker, amtucker@gsu.edu on or before August 1, 2018.  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 25, 2018. The Call for Papers presenters will be responsible for paying their registration fee, hotel, and travel expenses.

Any inquiries about the Call for Papers should be submitted to: Anne Tucker, Georgia State University College of Law, amtucker@gsu.edu or (404) 413.9179.

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[Editorial note: As some may recall, the BLPB hosted a micro-symposium on aspects of this issue in the limited liability company context in anticipation of a program held at the 2016 AALS annual meeting.  The initial post for that micro-symposium is here, and the wrap-up post is here.  This area–especially as writ broadly in this proposal–remains a fascinating topic for study and commentary.]

Last week, I blogged blogged about lawsuits against chocolate makers alleging unfair and deceptive trade practices for failure to disclose that the companies may have used child slaves to harvest their products. Today, I want to discuss steps that the Business Law Section of the American Bar Association is taking to provide more transparency in supply chain practices.

In 2014, the ABA House of Delegates adopted Model Principles on Labor Trafficking and Child Labor developed by over 50 judges, in-house counsel, outside counsel, academics, and NGOs. The Model Principles address the UN Guiding Principles on Business and Human Rights and other hard and soft law regimes. At last week’s ABA Business Law Spring Meeting, academics David Snyder and Jennifer Martin presented on human rights issues in supply chains alongside practicing lawyers and in-house executives. Many of them (and several others) had formed a Working Group to Draft Human Rights Protections in Supply Contracts. The Group aims to provide contract clauses that are “legally effective” and “operationally likely.”

As a former Deputy GC for a supply chain management company, I can attest that the ABA’s focus is timely as companies answer questions from customers, regulators, shareholders, and other stakeholders. Human rights issues play out in dozens of regulations, including, but not limited to: the Foreign Corrupt Practices Act, Trafficking Victims Protection Act, Dodd-Frank Conflict Minerals Act, California Transparency in Supply Chains Act, the UK Modern Slavery Act, the Trade Facilitation and Trade Enforcement Act, and the updated Federal Acquisition Regulations. Australia and at least seven EU countries are currently working on their own regulations. Savvy lawyers have use the Alien Tort Statute, RICO, negligence, and false advertising allegations to state claims, with varying success.

The following statistics may provide some context. Thanks to e. Christopher Johnson, Jr., CEO of the Center for Justice, Rights, and Dignity.
– there are 21 million victims of human trafficking
– Human trafficking provides $150 billion in profit
– Women and girls are 55% of the victims, and children 17 and under are 26%

To help companies mitigate their supply chain risks, the Business Law and UC Article 1 and Article 2 Committees have drafted more specific model clauses to incorporate human rights provisions in certain contracts. The Committees are also establishing an information exchange with NGOs and developing a Toolkit for Canadian lawyers.

One of the most practical features of the Group’s work is Schedule P, the warranties and remedies to protect human rights in the supply chain. The Working Group’s Report provides guidance on how to use the clauses as well as potential limitations. It’s a long read but I recommend that you look at the report and consider whether the model clauses and Schedule P, an appendix to supplier agreements, will help in the fight to combat human trafficking and forced labor.