Last spring, in the wake of Justice Scalia’s passing, I blogged about Justice Scalia’s final business law case: Americold Realty Trust v. ConAgra Ltd. The oral argument signaled that the Court’s preference for a formalistic, bright line test that asked whether the entity involved was an unincorporated entity, in which case the citizenship of its members controlled the question of diversity, or whether it was formed as an corporation, in which a different test would apply.  The Supreme Court issued its unanimous (8-0) opinion in March, 2016 holding that the citizenship of an unincorporated entity depends on the citizenship of all of its members. Because Americold was organized as a real estate investment trust under Maryland law, its shareholders are its members and determine (in this case, preclude) diversity jurisdiction.   

S.I. Strong, the Manley O. Hudson Professor of Law at the University of Missouri, has a forthcoming article, Congress and Commercial Trusts: Dealing with Diversity Jurisdiction Post-Americold, forthcoming in Florida Law Review.  The article addresses the corporate constitutional jurisprudential questions of how can and should the Supreme Court treat business entities.  What is the appropriate role of substance and form in business law?  Her article offers a decisive reply:

Commercial trusts are one of the United States’ most important types of business organizations, holding trillions of dollars of assets and operating nationally and internationally as a “mirror image” of the corporation. However, commercial trusts remain underappreciated and undertheorized in comparison to corporations, often as a result of the mistaken perception that commercial trusts are analogous to traditional intergenerational trusts or that corporations reflect the primary or paradigmatic form of business association.

The treatment of commercial trusts reached its nadir in early 2016, when the U.S. Supreme Court held in Americold Realty Trust v. ConAgra Foods, Inc. that the citizenship of a commercial trust should be equated with that of its shareholder-beneficiaries for purposes of diversity jurisdiction. Unfortunately, the sheer number of shareholder-beneficiaries in most commercial trusts (often amounting to hundreds if not thousands of individuals) typically precludes the parties’ ability to establish complete diversity and thus eliminates the possibility of federal jurisdiction over most commercial trust disputes. As a result, virtually all commercial trust disputes will now be heard in state court, despite their complexity, their impact on matters of national public policy and their effect on the domestic and global economies.

Americold will also result in differential treatment of commercial trusts and corporations for purposes of federal jurisdiction, even though courts and commentators have long recognized the functional equivalence of the two types of business associations. Furthermore, as this research shows, there is no theoretical justification for this type of unequal treatment.

This Article therefore suggests, as a normative proposition, that Congress override Americold and provide commercial trusts with access to federal courts in a manner similar to that enjoyed by corporations. This recommendation is the result of a rigorous interdisciplinary analysis of both the jurisprudential and practical problems created by Americold as a matter of trust law, procedural law and the law of incorporated and unincorporated business associations. The Article identifies two possible Congressional responses to Americold, one involving reliance on minimal diversity, as in cases falling under 28 U.S.C. §§1332(d) and 1369, and the other involving a statutory definition of the citizenship of commercial trusts similar to that used for corporations under 28 U.S.C. §1332(c). In so doing, this Article hopes to place commercial trusts and corporations on an equal footing and avoid the numerous negative externalities generated by the Supreme Court’s decision in Americold.

A special thanks to Professor Strong who read the blog’s coverage of Americold and shared her scholarship with me.

-Anne Tucker

I think, by now, most people have heard about Colin Kaepernick’s protest, which he manifested by his refusal to stand for the national anthem before the 49ers’ August 26 preseason game against the Green Bay Packers.  Kaepernick explained his actions as follows: 

I am not going to stand up to show pride in a flag for a country that oppresses black people and people of color. To me, this is bigger than football and it would be selfish on my part to look the other way. There are bodies in the street and people getting paid leave and getting away with murder.

Many were offended by his decision; others have applauded it.  What is it that makes people (particularly white people) so upset about someone choosing not to stand for the national anthem? I thought the anthem and flag were supposed to stand for freedom, which includes the freedom to dissent and disagree. It fascinates me that one football player could get this much press for deciding not to do something he was under no obligation to do (as his employer made clear). But it certainly explains why he did it. If nothing else, Colin Kaepernick reminded of us both of our ability to speak freely and that there are potential costs when doing so. He got people to talk about an important issue, and he used his platform to focus on a necessary conversation.

Free speech can, though, have consequences. And in many ways, it should. The Bill of Rights just protects our right to speech and limits the government’s ability to impose consequences for exercising that right. The Denver Broncos’ Brandon Marshall lost a credit union sponsorship for his actions in support of Kaepernick’s protest. Personally, if I did business with that sponsor, they’d lose my money because I support his Marshall’s right to protest and because I think the the protest, conducted in a peaceful way, raised issues worthy of discussion.  (I will note that the sponsor cut ties in what appears to be a respectful and above-board way. I just disagree with the decision).  That’s the free market working in a (mostly) free country.  I don’t have any problem with the sponsor acting as they did, either.  They, too, were exercising their rights (assuming they did not breach a contract, and I have seen no evidence they did). I am not mad the credit union made the decision it did; I just disagree with the decision, and I would let them know that by walking away. 

Most striking to me about this uproar is the apparently binary way so many people view protests. One can love this country and hate injustice. We can protest as we try to reach our ideals. And we can disagree about the method of protest or the ideals themselves. But let’s consider the point and be respectful of one another as we try to work through our differences. Brandon Marshall stated this position especially well. He explained, “I’m not against the military. I’m not against the police or America. I’m just against social injustice.”

Businesses, like people, have the right to associate with those they choose, and consumers (in turn) have a right to respond.  That is not just free speech, it is how a free market operates. 

Th United States, to me, is a great, yet greatly flawed, nation. The flag (and our national anthem) can represent the best of this nation and its people. The song and flag, like almost anything related to this nation that is more than 200 years old, also has ties to some of our very worst history, including slavery. That is also a reality. We have real and significant remaining institution problems related to race and gender, even if we’re better than we used to be.  

No matter what, the national anthem and the flag are neither bigger than, nor more important than, the citizens they are intended to represent. Speaking freely, even when it is not popular, is honoring the best of what the flag should represent, the best of this nation’s history, and (I sincerely hope) a sign of a great future. Free speech is not a liberal or conservative issue, and exercising our right to speak should be celebrated, whether you agree with the speech or not.  Free speech begets free markets. 

“All we say to America is, ‘Be true to what you said on paper.’ If I lived in China or even Russia, or any totalitarian country, maybe I . . . could understand the denial of certain basic First Amendment privileges, because they hadn’t committed themselves to that over there. But somewhere I read of the freedom of assembly. Somewhere I read of the freedom of speech. Somewhere I read of the freedom of press. Somewhere I read that the greatness of America is the right to protest for right.”
— Martin Luther King, Jr., Civil Rights Leader

 

“We are so concerned to flatter the majority that we lose sight of how very often it is necessary, in order to preserve freedom for the minority, let alone for the individual, to face that majority down.”
— William F. Buckley Jr., founder of National Review magazine

 

“We cannot have a society half slave and half free; nor can we have thought half slave and half free. If we create an atmosphere in which [people] fear to think independently, inquire fearlessly, express themselves freely, we will in the end create the kind of society in which [people] no longer care to think independently or to inquire fearlessly.”
— Henry Steele Commager, U.S. historian

 

Interesting research has been done on overconfidence in business leadership (see, e.g., here, here, and here) and political behavior (see, e.g., here and here).  I periodically consult the literature in this area for use in my work.  It is fascinating and often helpful.

In my continuing career development advice to law students, and as a member of our faculty appointments committee at UT Law this year, however, I recently have come to notice and be concerned about overconfidence in job searches.  Specifically, I see law students who, in testing out a new confidence in their knowledge and skills, overdo it a bit and over-claim or come across as unduly self-important.  I also see faculty candidates who have registered for the Association of American Law Schools Faculty Appointments Register (FAR) puff and oversell–using the comment areas to make cringe-worthy self-aggrandizing statements about their teaching or scholarly background or abilities.

Most of us prefer to associate with confident people.  Confidence in a leader or colleague is an attractive trait–one that we associate with strong governance and high levels of performance.  Confidence wins appointments, elections, and jobs.  Yet overconfidence, if recognized, is unattractive and often means lost opportunities.

Overconfidence is common.  Don Moore, a faculty member at Berkeley’s Haas School of Business, notes this in a recent blog post on Overconfidence in Politics.

I study overconfidence among all sorts of people, from business leaders and politicians to college students and office workers. And my research shows that most people are vulnerable to overconfidence. We are excessively confident that we know the truth and have correctly seen the right path forward to prosperity, economic growth and moral standing. Research results consistently show that people express far more faith in the quality of their judgment than it actually warrants. . . .

How do those of us who advise law students enable them to be confident and show confidence without becoming overconfident–or projecting overconfidence?  In his post on résumés and interviews two years ago, co-blogger Haskell Murray advised students to avoid overstating their accomplishments.

Lawyers, perhaps more than other professionals, will call you out on any overstated items on your resume. While I have met plenty of arrogant lawyers, and perhaps was one, arrogance isn’t going to win you many supporters in the interview. Avoid vague self-congratulations (e.g., “provided excellent customer service.”). Stick to the specific, verifiable facts (e.g., “voted employee of the month in April 2012” or “responsible for a 35% increase in revenue from my clients.”).

I totally agree.  I also made a related point regarding the written word in my post on cover letters back in January.

. . . I see a significant number of cover letters that use strident adjectives and adverbs to help make their points. The sentences in these letters tend to smack of over-claiming. Also, in many cases, these adjectives and adverbs represent poor substitutes for well-chosen . . . stories. Most employers are likely to be more favorably disposed to the documentation of specific facts substantiating an applicant’s suitability for an open position than they would be to sentences consisting of self-selected (and sometimes over-blown) characterizations of the applicant’s suitability for that position.

But I have learned that the line between confidence and overconfidence, as important as it is in the job search process, can be a thin one.  And decisions about how to confidently–but not overconfidently–communicate with contacts, mentors, and prospective employers (among others) often must be made on one’s own and quickly.  So, my bottom line advice to students is to focus generally in all communications, oral and written, on being other-regarding.  This article written by a Forbes Contributor makes some great observations and offers tips along those lines.  And if you can ask a trusted mentor to help you prepare for common questions or review the text of emails or letters, that’s great.  

What else?  You tell me.  I am not confident that I know more . . . .  :>)

I’m finding the controversy over the Epipen price increases fascinating, because of its hoist-by-their-own-petard quality.

When Mylan acquired Epipen in 2007, it wasn’t a particularly popular product.  Then Mylan started a heavy marketing push, which included increasing awareness of the dangers of allergies, publicizing how Epipen could save lives in emergencies, and lobbying for legislation requiring that Epipens be stocked in public places as an emergency health device, like defibrillators.  Because Mylan did a tremendous job of persuading the public that the Epipen was a critical medical device, it was able to raise prices dramatically – and now, having convinced everyone and his mother that Epipens are indispensable, the company is getting backlash for price gouging on this life-saving technology (not to mention becoming the target of investigations and lawsuits over, among other things, Medicaid fraud and state law antitrust violations).

Haskell previously posted about the Epipen situation, and connected the issue to the shareholder wealth maximization norm in corporate law.  Going further, he asked whether, from a policy perspective, we particularly want to encourage some other sort of stakeholder model for the healthcare industry.

I guess my point is, the issue is not just price increases; it extends to profit motive in determining what counts as a health threat in the first place.

Further to that, it’s worth highlighting that the FDA has been easing its prior restrictions on off-label drug marketing, out of concerns that suppressing the dissemination of truthful information may violate corporate free speech rights.  That has ominous implications for the pharmaceutical industry – why would companies go through extensive hoops to expand a drug’s labeling when they can get it approved for a single use, and then just market it for everything else? – and it also makes me wonder when we’re going to see more First Amendment challenges to securities regulation.

As many of you already know, I regularly advise students (as so many of us do) on career planning and job searches.  This advice extends to communications in connection with career planning and job searches.  And I have blogged about all this.  I have posted in the past, for example, on networking letters (my post is here) and cover letters, for example (my most recent post is here). 

Yesterday, I got an email message from a student with a great question related to all this.  Here is the question: “What would you recommend as the subject line of an email to a contact you have been referred to by someone else?”  Nice.  Here’s what I ended up writing back, in pertinent part.

 . . . Email titles are tricky.

The first thing I would do is ask if the person making the connection can e-introduce you with an email message and copy you in.  I have done that many times.  My script usually goes something like this:

[X], e-meet [Y].  As I explained to you earlier today, [Y] is the [title & affiliation].

[Y], [X] is a [year] at UT Law who is considering [career goal].  [X] is especially interested in working with [specific practice interest].  S/he has M/W/F time free in her/his academic schedule this fall, and she/he would love to find a targeted internship involving all or part of that time.  I thought you might be able to help me identify opportunities for [X}.  So, I offered to introduce you to each other by email in the hopes that you could help [X] find something suitable.

[Y], I know that you are always busy.  If this request is unduly burdensome, I fully understand.  Just let us know.  But if you have a little bit of time to make some suggestions to me and [X] on this, I hope that you will do so.

Best to all,

Joan Heminway

If that doesn’t work, we’re back to you sending the email on your own.  You may want to ask the person who gave you the connection if it’s OK to copy him or her on the message you send, btw.  I think that adds credibility and can have other advantages, too.

As with many things, the answer to your question about recommended email subject lines is “it depends.”  More specifically, it depends on the precise content, the context, and your style.  Sometimes, and this is consistent with my style, I will entitle an email like this–one to a stranger with whom I have some affinity–by referring to this affinity relationship in some way.  So, if the person is, e.g., an alum of UT Law, I might entitle the message: “Greetings from the UT College of Law.”  If the only affinity is the mutual friendship, a similar approach might lead to a title like:  “E-introduction with Regards from Joan Heminway.”

Do those kinds of suggestions resonate with you?  Let me know.  We can consider this the start of a conversation . . . .

I am not wholly satisfied with this response.  The first suggested subject line may be too generic (even though I have used it in the past) and the second sounds a bit formal for most students.  Maybe the second one is better cast this way: “E-introduction (and Warm Regards from Joan Heminway).”  At any rate, your ideas are most welcomed.  As I noted in my response to the student, I think this is an ongoing conversation . . . .

Last year, on the suggestion of an ALSB colleague, I did a post on promotion, tenure, and administrative appointment news for legal studies professors in business schools. I continue that series this year, below. I am happy to add to this list, as I am sure it is incomplete. Congrats to all!

Robert Bird (UConn) – promoted to full professor

De Vee Dykstra (South Dakota) – appointed associate dean of Beacom School of Business

Marc Edelman (CUNY) – promoted to full professor and awarded tenure

Josh Perry (Indiana-Kelley School of Business) – appointed to Dean of Undergraduate Affairs

Jamie Prenkert (Indiana-Kelley (Bloomington Campus)) – appointed Associate Vice Provost

Scott Shackelford (Indiana-Kelley) – promoted to associate professor and awarded tenure

 

I recently received the following information regarding two positions at The Harvard Law School Program on Corporate Governance. Many readers, I assume, will be familiar with their co-sponsored excellent blog, The Harvard Law School Forum on Corporate Governance and Financial Regulation. 

————-

Executive Director

The Harvard Law School Program on Corporate Governance invites applications for the position of Executive Director. Together with the Faculty Director and others, the Executive Director of the Program works on building, developing, and managing the full range of activities of the Program. Under the Faculty Director’s oversight, the Executive Director manages the wide range of the Program’s operations; collaborates with major corporations, law firms, investors, advisers, and other organizations; participates in developing and directing conferences and other events for the Program; and manages the administration and personnel of the program, including fellows, research assistants, and staff. The Executive Director also collaborates with constituent groups and other professionals; participates in fundraising activities; interacts with donors and visitors; and takes on other management roles within the Program as needed. The Executive Director is involved in overseeing the Program’s website and other media outreach efforts, as well as the Program’s blog, the Harvard Law School Forum on Corporate Governance and Financial Regulation.

Applications will be considered on a rolling basis. Candidates should have a J.D. or another graduate degree in law, policy, or social science, and 3+ years of experience in a relevant field of law or policy. This is a full-time term appointment.Start date is flexible. Additional information on the Executive Director position, as well as detailed instructions on how to apply, is available through ASPIRE.

Academic Fellow

The Harvard Law School Program on Corporate Governance invites applications for Post-Graduate Academic Fellows. Candidates should be interested in spending two or three years at Harvard Law School in preparation for a career in academia or policy research, and should have a J.D., LL.M. or S.J.D. from a U.S. law school (or expect to have completed most of the requirements for such a degree by the time they commence their fellowship). During the term of their appointment, Post-Graduate Academic Fellows work on research and corporate governance activities of the Program, depending on their interests and Program needs. Fellows may also work on their own research and publishing, and some former Fellows of the Program now teach in leading law schools in the U.S. and abroad.

Applications are considered on a rolling basis. Interested candidates should submit a CV, list of references, law school grades, and a writing sample and cover letter to the coordinator of the Program, Ms. Jordan Figueroa, atcoordinator@corpgov.law.harvard.edu. The cover letter should describe the candidate’s experience, reasons for seeking the position, career plans, and the kinds of Program projects and activities in which they would like to be involved. The position includes Harvard University benefits and a competitive fellowship salary. Start date is flexible.

Many thanks to the Business Law Prof Blog for giving me the opportunity to post here.

I’d like to start off with a brief observation: corporations are more international than they have ever been.  Just in the last week, we have witnessed the European Commission ordering Apple to pay $14 billion in back taxes to Ireland, Samsung recalling its Galaxy Note phones from 10 countries due to battery fires in the devices, and Caterpillar announcing a global restructuring that could lead to the closing of its factory in Belgium in favor of a location in Grenoble, France.

While the globalization of international business today benefits society in a number of ways, it also has costs.  One of these costs is the increasing difficulty of regulating globalized companies.  When companies can easily restructure and relocate in order to avoid burdensome regulation, government regulators face a stark choice: they can pursue their policy priorities and risk causing companies to flee their jurisdiction (see the inversion craze of the last few years), or they can abandon those priorities in the hopes of attracting and retaining corporate business.  Neither of these is a particularly attractive option.

International cooperation provides one resolution to this dilemma.  By binding countries to particular regulatory frameworks, multilateral agreements can prevent the kind of “race to the bottom” dynamic that government regulators fear.  And indeed, a growing number of scholars have argued that international agreements are necessary to solve the regulatory problems associated with the internationalization of business.  But multilateralism suffers from a number of well-known flaws, including the difficulty of negotiating, monitoring and enforcing international agreements. 

In my forthcoming article, Unilateral Corporate Regulation, due out next semester in the Chicago Journal of International Law, I argue that the emphasis on multilateral solutions obscures the extent to which individual countries, and in particular large economic powers like the United States, China and the European Union, can unilaterally impose their domestic regulations on international firms.  This kind of unilateral corporate regulation can solve, or at least mitigate, many of the global problems that government decisionmakers face.  The United States, for example, imposes its corruption norms (the FCPA) and banking rules (FATCA) on foreign companies, even when those companies have minimal ties to the US.  The European Union does the same with its data privacy rules. 

At the same time, the rise of unilateralism raises a number of important questions for the future of corporate regulation.  How can we ensure that unilateral regulation by individual countries is fair and balanced?  How can we prevent biased and conflicting regulation from sprouting up around the world?  And what are the ethical limits on a country’s imposing its laws on businesses outside its borders?  These are difficult questions, and ones that are largely overlooked in the current debate.