Here at BLPB, Joan Heminway has written a couple of posts discussing comparisons between norms in corporate theory, and norms in democratic theory.   A few months ago, she discussed the potential conflicts between Donald Trump’s private business interests, and his role as a “fiduciary” for the United States.  As she pointed out, in corporate law, we have procedures to address potential conflicts, which include fully informed approval by the principal or unconflicted fiduciaries, and external review to determine fairness.  But there is no similar procedure to address conflicts in the political realm.

Well, it appears that Joan’s not the only one thinking along these lines.  I read with interest this amicus brief submitted in the Supreme Court case of Gill v. Whitford, posted by Professor D. Theodore Rave at the University of Houston.  The case itself is about political redistricting, but Prof. Rave makes the intriguing argument that redistricting should be addressed the same way we address conflicts of interest in business law.  Specifically – and drawing on his earlier article in the Harvard Law Review, Politicians as Fiduciaries – he proposes that districts drawn by independent commissions receive a lower level of scrutiny than districts drawn by “interested” political actors, in much the same way that we scrutinize interested business transactions more closely than disinterested ones.  Under such a system, as in corporate law, political actors would retain the flexibility to draw districts as they see fit, but they would be encouraged to use certain practices over others. 

From a precedential standpoint, we may have traveled too far from this path for the Supreme Court to change course now, but it’s a fascinating idea that I would love to see the Court seriously entertain.

I also note that in their article Beyond Citizens United, Nicholas Almendares and Catherine Hafer make the related argument that statutes should receive heightened judicial scrutiny if they implicate the interests of major campaign contributors.  They don’t draw the comparison to corporate law directly, but they offer the same idea: conflicts in the political realm can be identified just as they are in business, and receive a closer look as a result.

From August 31 to September 10, I participated in an excellent 6-week online boot camp called Miler Method. The camp is led by 2x Olympic medalist in the 1500m, Nick Willis, and his wife Sierra. The camp led up to the New Balance 5th Avenue Mile in NYC. 

As I have posted about before, I have enjoyed taking some massive open online courses (MOOCs), and I think all educators should familiarize themselves with this form, as the online world is already impacting even the most traditional courses.

The Miler Method, like MOOCs, taught me not only valuable substantive information, but also further instructed me on the art of online education. Below are a few reflections on the pros and cons of the online format as applied to the Miler Method running training camp. My thoughts follow below the page break.

Continue Reading Miler Method and Online Education

A reader of the Business Law Prof Blog, Kevin Fandl, from Temple University’s Fox School of Business asked that I share this. It looks like a great opportunity, so please get in touch with him if you’re interested. 

Call for Contributors/ Chapter Authors: Law and Public Policy Textbook

The field of public policy has exploded in recent years as our regulatory environment becomes more complex and challenging for individuals and businesses to navigate. Law schools, business schools, and schools in related disciplines are developing seminars on the policy environment that discuss issues such as economic policy, social policy, and foreign policy. However, in many cases, the linkages between government policies and the laws and precedent that interpret (or in some cases create) them are not made clear. But as we know, laws and policies do not exist in a vacuum—they must be understood in their contextual environment. Currently, no single text offers a complete picture of the law and policy environment, depriving students across many disciplines of the deeper understanding necessary to operate in today’s business and legal environment.  That is the impetus for this new book.

If you would like to contribute to the drafting of this new textbook either by submitting a chapter or insights for an existing chapter, please get in touch with me promptly. The fields in which authors might contribute include (but are not limited to):

If any of these topics are within your area of expertise and you are interested in contributing, or if you have questions about how you might contribute, please contact me at Kevin.Fandl@Temple.edu. Thank you.

Last Thursday, Jay Brown filed an amicus brief with the U.S. Supreme Court coauthored by him, me, Jim Cox, and Lyman Johnson.  The brief was filed in Leidos, Inc., fka SAIC, Inc., Petitioners, v. Indiana Public Retirement System, Indiana State Teachers’ Retirement Fund, and Indiana Public Employees’ Retirement Fund, an omission case brought under Section 10(b) of and Rule 10b-5 under the Securities Exchange Act of 1934, as amended.   An abstract of the brief follows.

This Amicus Brief was filed with the U.S. Supreme Court on behalf of nearly 50 law and business faculty in the United States and Canada who have a common interest in ensuring a proper interpretation of the statutory securities regulation framework put in place by the U.S. Congress. Specifically, all amici agree that Item 303 of the Securities and Exchange Commission’s Regulation S-K creates a duty to disclose for purposes of Rule 10b-5(b) under the Securities Exchange Act of 1934.

The Court’s affirmation of a duty to disclose would have little effect on existing practice. Under the current state of the law, investors can and do bring fraud claims for nondisclosure of required information by public companies. Thus, affirming the existence of a duty to disclose will not significantly alter existing practices or create a new avenue for litigants that will lead to “massive liability” or widespread enforcement of “technical reporting violations.”

At the same time, the failure to find a duty to disclose in these circumstances will hinder enforcement of the system of mandatory reporting applicable to public companies and weaken compliance. Reversal of the lower court would reduce incentives to comply with the requirements mandated by the system of periodic reporting. Enforcement under Section 10(b) of and Rule 10b-5(b) under the Securities Exchange Act of 1934 by investors in the case of nondisclosure will effectively be eliminated. Reversal would likewise reduce the tools available to the Securities and Exchange Commission to ensure compliance with the system of periodic reporting. In an environment of diminished enforcement, reporting companies could perceive their disclosure obligations less as a mandate than as a series of options. Required disclosure would more often become a matter of strategy, with issuers weighing the obligation to disclose against the likelihood of detection and the reduced risk of enforcement.

Under this approach, investors would not make investment decisions on the basis of “true and accurate corporate reporting. . . .” They would operate under the “predictable inference” that reports included the disclosure mandated by the rules and regulations of the Securities and Exchange Commission. Particularly where officers certified the accuracy and completeness of the information provided in the reports, investors would have an explicit basis for the assumption. They would therefore believe that omitted transactions, uncertainties, and trends otherwise required to be disclosed had not occurred or did not exist. Trust in the integrity of the public disclosure system would decline.

The lower court correctly recognized that the mandatory disclosure requirements contained in Item 303 gave rise to a duty to disclose and that the omission of material trends and uncertainties could mislead investors. The decision below should be affirmed.

More information about the case (including the parties’ briefs and all of the amicus briefs) can be found here.  The link to our brief is not yet posted there but likely will be available in the next few days.  Also, I commend to you Ann Lipton’s earlier post here about the circuit split on the duty to disclose issue up for review in Leidos.  

Imv, this is a great case for discussion in a Securities Regulation course.  It involves mandatory disclosure rules, fraud liability, and class action gatekeeping.  As such, it allows for an exploration of core regulatory and enforcement tools of federal securities regulation.

My family has been touched by terrorism.  My cousin, Scott Marsh Cory, died on Pan Am Flight 103–the Lockerbie flight–on December 21, 1988.  He was a Syracuse University student coming home from a semester abroad in England.  Every December 21, with Christmas and grading on my mind, I stop for a moment to remember him.  I think of him at various other times, too.  My son Scott is named after him.

The events of September 11, 2001 are irrevocably connected in my mind to all that.  I taught that morning after both World Trade Center towers had been hit.  I gave students permission to come and go in my class that day.  But I felt that I had to teach that class.  I vowed that I was not going to let terrorists have power over me and rule my life–which is, after all, what they want to do.  I did not teach my afternoon class.  I had learned after my morning class that my brother was scheduled to be down near the World Trade Center towers that morning–and we could not reach him.  I was too emotional to be able to teach, and almost everyone had cancelled their classes at that point.  Luckily, my brother and a colleague got stuck in the traffic trying to get into Manhattan from New Jersey that morning, and they were turned back after the bridges and tunnels were closed.

I paused at the beginning of both of my classes today to reflect on that day 16 years ago.  I gave my students permission to come and go, as I had that morning.  Some of them were quite young when the September 11 attacks occurred.  I cannot imagine what they remember of that day.  No doubt some remember little, if anything; but some may have been deeply affected by the violence of that day.

Today, many of us, each in our own way, stop to remember.  I wanted to take a minute to do that here, too.

It’s Saturday morning, and I’m guessing a lot of us are watching apprehensively as Irma heads for Florida (others of us are probably trying desperately to escape the storm’s path, possibly receiving an impromptu lesson in dynamic pricing).  Meanwhile, Jose and Katia are close behind, even as Houston faces years-long recovery efforts from Harvey, and then there’s, well:

Resize golf

It’s impossible to consider these events – which, in addition to the human toll, will inflict billions if not trillions of dollars of damage – without thinking that this is what climate change looks like.

The reason I mention it on this blog is that climate change is an increasingly popular subject for shareholder proposals.  More and more, shareholders are seeking information from companies about how they are responding to climate change, including the precautions being taken, and the expected costs of disasters. 

Considering that we are now being treated to a dramatic demonstration of just how climate change can have a devastating impact on economies generally and individual companies in particular, isn’t it time for critics of the shareholder proposal mechanism to at least admit that climate change proposals belong in the “corporate governance” category, and not the oft-derided “social policy” category, the latter of which is alleged to have only an”attenuated connection to shareholder value”?

Gabriel (“Gabe”) Azar and I graduated one year apart, from the same law school. He has an undergraduate degree in electrical engineering from Georgia Tech and started his legal career as an associate practicing patent law at Finnegan, Henderson, Farabow, Garrett & Dunner, LLP. He moved from Finnegan to Paul Hastings and from there to an in-house position with FIS. Currently, he is Senior Patent Counsel at Johnson & Johnson. I’ve admired, mostly from a distance (he lives in Jacksonville, FL now), how Gabe has balanced family, work, and health. We recently reconnected on Strava, and it has been inspiring to see a dedicated husband/father/attorney taking his fitness seriously.   

 

The interview is below the page break.

Continue Reading Law & Wellness: Interview with Gabe Azar (Sr. Patent Counsel at Johnson & Johnson)

As previously mentioned, I am always looking for good podcasts. I listen to podcasts while mowing our lawn and on road trips. 

StartUp is the latest podcast series that I have uncovered, thanks to a recommendation from my sister Anna who works for a media/marketing start up herself.

From what I have uncovered so far, StartUp seems to be quite like NPR’s How I Built This, which I mentioned in a previous post. Hosts of both podcasts interview entrepreneurs about the founding of their businesses and the ups and downs thereafter. The biggest difference I see is that StartUp seems to focus on smaller companies (a number that I had never heard of), while How I Built This seems to focus on companies that are now quite large and successful. In early seasons of StartUp there appear to be a number of the podcasts that depart from the entrepreneur-interview model, but I haven’t dug into the early seasons yet. I am mainly focused on the recent podcasts. 

Perhaps most interestingly, I recently listened to a podcast on StartUp about Mokhtar Alkhanshali and his specialty coffee. Mokhtar sources his coffee beans from war-torn Yemen and a cup of his coffee sells for $16 a cup. At first, this seemed like a ridiculous price for a cup of coffee, but after hearing how Mokhtar risked his life for his business in Yemen (bombings, escaping on a tiny boat, being captured, etc.) and listening to the specialty coffee to wine comparison, the pricing does make more sense. I might pay $16 once, just for the story, but I couldn’t see a $16 cup of coffee becoming even a semi-regular purchase for me. That said, I know people who are getting increasingly serious about their coffee and perhaps it can be sustained in some cities.