The summer before I entered law school, I worked in the legal department of a major international business firm.  I learned a lot.  But I realized by the end of the summer that most of the interesting legal questions and matters that the business firm generated (requiring transactional and litigation work) were farmed out to a veritable stable of law firms that represented the business firm on a regular basis.  I then determined (based on my very unscientific single-firm study) that in-house work was not for me.  That was 1982.

Fast-forward 15-or-so years.  By then, I had been working at a major international law firm for twelve years doing transactional work I enjoyed.  A client asked me to interview for an open in-house position.  I did.  I was ready to focus my attention on one business and had a good relationship with the in-house lawyers at the client firm.  Many friends had successfully moved to in-house jobs and were happy and well-adjusted in them (some after trying several to get the right fit).  I was in line to get the job.  But the client then determined to downsize and eliminated the open position.  

Several years later, I resolved to pursue a different path.   I decided to spend my second career teaching and writing about business law–a road well suited to me in many ways but less traveled by business law colleagues.  This was a harder decision to reach in many ways.  But I knew it was right, and in the end, I jumped in with two feet.  In 2000, The University of Tennessee College of Law gave me that opportunity.  The rest is a history that readers likely already know well.

What of the in-house road not taken?  

Continue Reading The In-House Business Law Practice Alternative, A Personal Reflection

 

The Association of American Law Schools (AALS) Annual Meeting will be held Tuesday, January 3 – Saturday, January 7, 2017, in San Francisco.  Readers of this blog who may be interested in programs associated with the AALS Section on Socio-Economics & the Society of Socio-Economics should click on the following link for the complete relevant schedule: 

Download Socio-Economic AALS Participants + Descriptions 161018

Specifically, I’d like to highlight the following programs:

On Wednesday, Jan. 4:

9:50 – 10:50 AM Concurrent Sessions:

  1. The Future of Corporate Governance:
    How Do We Get From Here to Where We Need to Go?
    andre cummings (Indiana Tech)                            Steven Ramirez (Loyola – Chicago)
    Lynne Dallas (San Diego) – Co-Moderator        Janis Sarra (British Columbia)
    Kent Greenfield (Boston College)                        Faith Stevelman (New York)
    Daniel Greenwood (Hofstra)                                 Kellye Testy (Dean, Washington)
    Kristin Johnson (Seton Hall)                                 Cheryl Wade (St. John’s ) Co-Moderator
    Lyman Johnson (Washington and Lee)
  2. Socio-Economics and Whistle-Blowers
    William Black (Missouri – KC)                                 Benjamin Edwards (Barry)
    June Carbone (Minnesota) – Moderator             Marcia Narine (St. Thomas)

1:45 – 2:45 PM Concurrent Sessions:

1. What is a Corporation?
Robert Ashford (Syracuse) Moderator                             Stefan Padfield (Akron)
Tamara Belinfanti (New York)                                             Sabeel Rahman (Brooklyn)
Daniel Greenwood (Hofstra)

On Thursday, Jan. 5:

3:30 – 5:15 pm:
Section Programs for New Law Teachers
Principles of Socio-Economics
in Teaching, Scholarship, and Service
Robert Ashford (Syracuse)                                                     Lynne Dallas (San Diego)
William Black (Missouri – Kansas City)                             Michael Malloy (McGeorge)
June Carbone (Minnesota)                                                     Stefan Padfield (Akron)

On Saturday, Jan. 7:

10:30 am – 12:15 pm:
Economics, Poverty, and Inclusive Capitalism
Robert Ashford (Syracuse)                                                     Stefan Padfield (Akron)
Paul Davidson (Founding Editor                                          Delos Putz (San Francisco)
Journal of Post-Keynesian Economics)                             Edward Rubin (Vanderbilt)
Richard Hattwick (Founding Editor,
Journal of Socio-Economics)

The Economist recently published an opinion piece arguing that bigotry has become a lucrative business.  As the magazine puts it:

The country is in an unusually flammable mood. This being America, there are plenty of businesspeople around to monetise the fury—to foment it, manipulate it and spin it into profits. These are the entrepreneurs of outrage and barons of bigotry who have paved the way for Donald Trump’s rise….

Breitbart News, in particular, has excelled in pushing boundaries. … It has provided platforms in its comment section for members of far-right hate groups who rail against immigration and Jews.

The outrage industry has clearly reached a milestone with Donald Trump’s presidential campaign. …He won the hearts of 13m Republican primary voters by recycling conservative media hits such as “build a wall” and “ban all Muslims”. …

There are big bucks in bigotry

Twitter has been a particularly virulent source of online bigotry and abuse.  Buzzfeed recently published an article on Twitter’s 10-year failure to halt hate speech – often targeted at particular users – that stems from a combination of corporate dysfunction, failure of (white, male) corporate leadership to recognize the problem, and business exigencies that emphasized user growth.  In this election season, Twitter has become a famous platform for bigoted trolling, often aimed at journalists who oppose Donald Trump.

But it appears that bigotry as a profit-center only goes so far.  Twitter has been plagued recently by a stagnant user base and correspondingly declining stock price; as a result, it has been seeking an acquirer.  But according to recent news reports, Twitter’s troll problems are driving away potential bidders.

So, it seems there’s at least a built-in limit as to how far bigotry can take you.

Sadly, I am still in the midst of grading business associations and civil procedure midterms so I cannot finish my substantive post on Wells Fargo yet. WF is the gift that keeps on giving from a teaching perspective, though. Yesterday I showed students some of the litigation that has come out of the debacle to illustrate the difference between a direct and derivative suit (and to reinforce some civil procedure principles too).

Last night I took a break from grading to go to a Meetup called Ask a Start Up Lawyer. I hope to teach a 2-credit skills course on legal issues for startups, small businesses, and entrepreneurs next semester and I have found that going to these sessions and listening to actual entrepreneurs ask their questions helpful. Last night’s meetup was partcularly enlightening because a number of international entrepreneurs here in Miami for a State Department initiative attended. While in the past some of these sessions have focused on funding options and entity selection, last night’s “students” mainly wanted to learn about intellectual property and international protection. Many of them come from countries with no copyright law, for example. Others come from countries where owning shares is a rarity. Although my course will focus on domestic entities, given the South Florida market in which I teach, I may need to add some of these comparative components to my already ambitious draft syllabus covering tax, employment, entity selection, governance, IP, business torts, basic securities regulation, social entrepreneurship, and exit strategies. 

If you have taught a course like this or have any ideas on materials to use, please comment below or send me a message at mnarine@stu.edu. 

Belmont University College of Law in Nashville, TN has posted a professor opening and the school’s areas of interest include business law. My appointment is in Belmont’s business school, but I also occasionally teach in the law school, and I could not recommend the school (or the city of Nashville) more highly. I have updated my business law professor openings post here and am happy to add other postings. 

—————-

Belmont University College of Law, located in vibrant Nashville, Tennessee, invites applications from entry- to mid-level candidates for a tenure-track faculty position to begin in 2017-18.  Our primary areas of recruiting focus include criminal law, business law, and health law.

Applicants should have an exemplary academic record and should demonstrate outstanding achievement or potential in scholarship and teaching.  Our goal is to recruit dynamic, bright, and highly motivated individuals who are interested in making significant contributions to our law school and its students.  Practice experience is preferred, and teaching experience is desirable.  For more information about the College of Law, visit our website at www.belmont.edu/law.

Belmont University College of Law is an ABA accredited law school with approximately 300 students in the heart of Nashville, one of the fastest growing and most culturally rich cities in the country.  In 2015, graduates of the College of Law had the highest bar passage rate in Tennessee, and the school continues to produce strong employment outcomes for its students.  For more information about the College of Law, visit our website at www.belmont.edu/law.

Belmont University is a private, coeducational university in a quiet area convenient to downtown Nashville and adjacent to Music Row.  It is the largest Christian-centered university in Tennessee and among the fastest growing in the nation.  Among its student body of over 7,500 are students from nearly every state and more than 25 countries. In addition to seven baccalaureate degrees in over 50 areas of study, Belmont offers master’s degrees in Business Administration, Accountancy, English, Education (including Sports Administration), Music, Nursing and Occupational Therapy, and doctorates in Occupational Therapy, Physical Therapy, Pharmacy, and Law.

The successful candidate will also share the University’s values and support our mission and vision of promoting Christian values by example.  To apply, please contact lawfaculty.recruitment@belmont.edu.

A comprehensive, coeducational university, Belmont is a student-centered, teaching university focusing on academic excellence.  The university is dedicated to providing students from diverse backgrounds an academically challenging education.  Belmont is an EOE/AA employer under all applicable civil rights laws.  Women and minorities are encouraged to apply.

 

*The guest post is contributed by Itai Fiegenbaum who teaches corporate law at Tel Aviv University and Ramat Gan College of Law and Business.  

Today’s post continues the discussion started by Anne’s informative post regarding the law of controlling stockholders. Anne astutely notes that the MFW “enhanced ratification” framework was rendered in connection with a going private merger. Although I recognize the intuitive appeal, I wish to call into question the impact of MFW’s holding on other manners of controlling shareholder transactions.

Going private transactions differ from going concern transactions in that their successful completion wipes out the minority float. This distinction accelerates stockholders’ divergent incentives and raises the possibility for minority stockholder abuse. An unscrupulous controller might structure the transaction in a manner that captures all unlocked value for later private consumption. Going private transactions allow controlling stockholders to shed the restrictions of the public market, thereby evading future retribution by minority stockholders. Policy considerations accordingly call for superior protection of minority stockholders participating in a going private transaction.

Since MFW establishes a procedure for achieving less intrusive judicial review for going private transactions, it stands to reason that this procedure should apply to all transactions involving a controlling stockholder. Indeed, without addressing the distinction between going private and going concern transactions in this context, a fairly recent Chancery Court decision has explicitly opined that the MFW framework applies to all controlling stockholder transactions (In re Ezcorp Inc. Consulting Agreement Derivative Litig., 2016 WL 301245, at *28 (Del. Ch. Jan. 25, 2016)).

In a forthcoming article at the Delaware Journal of Corporate Law, I argue that the borders of “MFW-Land” are not as clear-cut as they appear. The Delaware Supreme Court decision does not create a universally-applicable safe harbor procedure for all manner of controlling stockholder transactions. Two main arguments form the basis of this contention. 

The dual tenets of doctrinal clarity and cohesion underpin the first argument. A careful reading of the MFW decision fails to detect any mention of competing precedent or a general proclamation regarding its applicability to other types of controlling stockholder transactions. MFW is clearly situated on a path of doctrinal evolution of judicial inspection of going private transactions with controlling stockholders. Canons of judicial interpretation counsel against an indirect reversal or modification of established precedent.

Additionally, the theoretical justifications for the MFW decision hold significantly less weight in the going concern context. MFW’s doctrinal shift is grounded on the twin pillars representing the competency of independent directors and non-affiliated stockholders. Whatever the validity of these mechanisms in the freeze out context, the legal and financial scholarship does not validate an extension to going concern transactions. Serious flaws hamper the ability of independent directors and non-affiliated stockholders to pass meaningful judgment on going concern transactions. In the final tally, MFW does not produce an all-encompassing framework for all controlling stockholder transactions.

 

Last week, I explained that the “War on Coal” Is Really A Competition Issue, with cheap natural gas prices as a major reason coal production and use have declined. Beyond the impact of natural gas on coal jobs, technology is also an issue. Technology is making mining more efficient, but it is making the market harder for coal miners. Following is a chart I created from Energy Information Administration data that shows coal production and employment statistics for 2013 and 2014.

Coal Production Data

  2014 2013 Percent Change
Coal-Producing Number of Mines Production Number of Mines Production Number of Mines Production
State and Region1
             
Appalachia Total 804 266,979 877 269,672 -8.3 -1
— Underground 292 193,434 339 188,090 -13.9 2.8
— Surface 512 73,545 538 81,582 -4.8 -9.9
Powder River Basin (surface) 16 418,156 16 407,567 – 2.6

Coal-Related Employment Data

Coal-Producing Underground Surface Total Underground Surface Total Underground Surface Total
State and Region
                   
Appalachia Total 32,545 12,141 44,686 35,740 14,115 49,855 -8.9 -14 -10.4
Powder River Basin – 6,592 6,592 – 6,635 6,635 – -0.6 -0.6

The data show the coal-production and employment figures for 2013 and 2014.  Surface mining in the Powder River Basin (the highest producing region in the country) increased coal production 2.6% and employment dropped 0.6%, while underground mining production for Appalachia increased 2.8% even though employment dropped 8.9%.  For the United States, overall coal production increased 1.5% between 2013 and 2014, while the number of employees dropped 6.8%. Thus, even as coal production increased modestly, the number of employees holding those jobs declined significantly. 

This doesn’t deter politicians from making other claims, though.  As I noted last week, the presidential race has included rhetoric claiming anti-coal regulations are what really hurt coal jobs. And it’s not just at the presidential level.  Coal states often feature politicians promising to bring back coal jobs. In my home state of West Virginia, for example, both candidates for governor are making such a promise.  

As an aside, in the Ohio U.S. Senate race between Rob Portman and Ted Strickland, Sen. Portman has made use of this similar line of attack, claiming that former Ohio and governor and U.S. Representative Strickland “turned his back” on Ohio by not supporting coal jobs. The advertisement, available here, features workers from (at least for a West Virginian) an interesting choice of mine: Rosebud Mining.  (A perceptive former student, Ken Bannon, alerted me to the ad or I would have missed it.)  

People outside of West Virginia may not recall the chemical spill in January 2014 that contaminated the Elk River and left 300,000 West Virginians without drinking water.  As I noted in a post back then, the company that owned the chemical site was Freedom Industries, which listed as its sole owner, Chemstream Holdings, a company owned by J. Clifford Forrest.  Forrest also owns the Pennsylvania company (that also has Ohio operations) Rosebud Mining, which was located at the same address Chemstream Holdings listed for its headquarters. It appears that Portman has a solid lead in the race, and if I were part of the campaign, I’d probably not feature a mining company that had been linked (through an executive) to such a major recent environmental disaster.  

Despite the data (and the economic realities), claims of a war on coal continue. Even where there is some truth to the idea — recent regulations are not especially coal friendly — there are simply too many hurdles to overcome for coal employment numbers to go back to prior levels.  One can conceivably win a war on regulations, but technology and the marketplace are far less forgiving. It’s time we embrace that reality.  

 

    Does a partner have actual authority, simply as a matter of his “partner” status, to bind the partnership to an ordinary business transaction?  On the one hand, RUPA § 401(j) states that “[a] difference arising as to a matter in the ordinary course of business of a partnership may be decided by a majority of the partners.”  That suggests that a partner is not authorized to act absent a majority vote.  On the other hand, RUPA § 301(1) states that “[e]ach partner is an agent of the partnership,” and comment 2 states that “[t]he effect of Section 301(1) is to characterize a partner as a general managerial agent having both actual and apparent authority co-extensive in scope with the firm’s ordinary business” (emphasis added)).

    The comment to § 301 has always struck me as an odd place for discussing actual authority.  Actual authority is based on a partner’s relationship to the other partners and the partnership.  Section 301, however, is in the Article dealing with a partner’s relationship to non-partner outsiders.  Section 301(1) in particular is about apparent authority.  What supports the assertion in the comment, therefore, that a partner has ACTUAL authority co-extensive in scope with the firm’s ordinary business?

 

Continue Reading Do Partners Have Actual Authority as a Matter of Status?

Assume a state trial court issues an opinion in a particular case and the case is not appealed.  Should a legal scholar using the opinion to support or refute a key point (in the text of a written work) characterize the weight or status of the opinion (e.g., noting that it is a trial court opinion and that is has not been appealed)?  Justify your answer.

If the trial court at issue is the Delaware Chancery Court and the opinion addresses matters under the Delaware General Corporation Law, does that alter your answer?  Why?  Why not?

I am having fun considering these issues today in connection with my work on a symposium paper.  I have not yet decided how to handle the specific matter that raises the questions.  Accordingly, it seemed like a good idea at this juncture to share my questions and seek collaboration in answering them . . . .

The following post comes to us from Prof. J. Scott Colesanti and a former student of his, Karen Eng. Scott is a Professor of Legal Writing at the Maurice A. Deane School of Law at Hofstra University, a former co-editor of this blog, and author of “Legal Writing, All Business.”

F.A.A. VACATUR IN THE SECOND CIRCUIT: NOW THAT TOM BRADY HAS SAT, WHERE DO WE STAND?

By J. Scott Colesanti and Karen Eng (October 12, 2016)

  1. Introduction

Late in the summer, New England Patriots quarterback Tom Brady announced that he would not further appeal the discipline imposed against him by the National Football League (“NFL”). That decision ended an 18-month ordeal which highlighted, among other things, the unpredictability of sports league sanctions, in general, and the finality of penalties under NFL Collective Bargaining Agreement (“CBA”) Article 46, in particular. This article examines the resulting state of the law in the Second Circuit regarding review of arbitrations under Sections 10(a)(2) and (3) of the Federal Arbitration Act (“F.A.A.”), which provided – in part – the means for Brady’s appeal.

Continue Reading Colesanti & Eng on Federal Arbitration Act Vacatur in the Second Circuit