As in past years, I will maintain lists of law professor openings in the business areas (excluding commercial law-only posts) and legal studies professor openings outside of law schools. If your school has an opening that you would like posted, feel free to contact me. 

The law professor openings list uses the PrawfsBlawg spreadsheet, if an alternate link is not provided. Positions added after today will include the date added.

Law School Professor Positions (Business Law Areas)

Legal Studies Professor Positions (Outside of Law Schools, Mostly in Business Schools)

The position notice setting forth the details is set forth below.  Please feel free to email me with any questions you may have.  I will be serving on the Appointments Committee for these searches.

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POSITION NOTICE

FACULTY POSITIONS

The University of Tennessee
College of Law

THE UNIVERSITY OF TENNESSEE COLLEGE OF LAW invites applications from both entry-level and lateral candidates for two full-time, tenure-track faculty positions to commence in the 2017 Fall Semester.  Candidates should have a particular interest in either business law teaching, including business associations and contracts, or transactional clinical teaching in business, taxation, intellectual property, community economic development, or health care that offers students transferable legal skills.  

A J.D. or equivalent law degree is required.  Successful applicants must have a strong academic background, expertise and experience relevant to the position, and a strong commitment to excellence in teaching, scholarship, and service.

In furtherance of the University’s and the College’s fundamental commitment to diversity among our faculty, student body, and staff, we strongly encourage applications from people of color, persons with disabilities, women, and others whose background, experience, and viewpoints would contribute to a diverse law school environment.

The Faculty Appointments Committee will interview applicants who are registered in the 2016 Faculty Appointments Register of the Association of American Law Schools at the AALS Faculty Recruitment Conference in Washington, D.C. Applicants who are not registered in the AALS Faculty Appointments Register are advised to send a letter of intent, resume, and the names and contact information of three references by September 30, 2016 to:

Sean Gunter
On behalf of Michael Higdon, Chair, Faculty Appointments Committee
The University of Tennessee College of Law
1505 W. Cumberland Avenue
Knoxville, TN 37996-1810

All qualified applicants will receive equal consideration for employment and admissions without regard to race, color, national origin, religion, sex, pregnancy, marital status, sexual orientation, gender identity, age, physical or mental disability, or covered veteran status. Eligibility and other terms and conditions of employment benefits at The University of Tennessee are governed by laws and regulations of the State of Tennessee, and this non-discrimination statement is intended to be consistent with those laws and regulations. In accordance with the requirements of Title VI of the Civil Rights Act of 1964, Title IX of the Education Amendments of 1972, Section 504 of the Rehabilitation Act of 1973, and the Americans with Disabilities Act of 1990, The University of Tennessee affirmatively states that it does not discriminate on the basis of race, sex, or disability in its education programs and activities, and this policy extends to employment by the University. Inquiries and charges of violation of Title VI (race, color, and national origin), Title IX (sex), Section 504 (disability), ADA (disability), Age Discrimination in Employment Act (age), sexual orientation, or veteran status should be directed to the Office of Equity and Diversity (OED), 1840 Melrose Avenue, Knoxville, TN  37996-3560, telephone (865) 974-2498.  Requests for accommodation of a disability should be directed to the ADA Coordinator at the Office of Equity and Diversity.

BA is a required 4-credit class where I teach. Our school has a social mission and many of the students want to work in criminal defense, family law, immigration, human rights, or anything other than business. I shudder to think of how many (few) students would take the course if the school didn’t force them.

Before the course begins, I send a survey to get an idea of whether they have any business knowledge or experience, and what they hope to learn from the course. Throughout the semester I send them short YouTube videos by law firms and entrepreneurs so that they can understand some of the basics (from what is a stock to what is Reg A+). These videos were produced for lay people and I want my students to learn how to explain complex concepts in plain English- a key asset for any lawyer. To give them extra help and also see what they have learned, I have one extra credit assignment that requires them to write on a television show or movie that addresses business issues and spot what the show gets legally wrong.

Prior to the start of the semester, I also send a list of helpful tips (which they are free to ignore) so they can get used to the language of business. Below are some of my suggestions:

1) Watch CNBC, Bloomberg Business or Fox Business. Once we get into publicly-traded companies, we start watching clips from CNBC at the beginning of every class in the “BA in the News” section.
2) Read/skim the Wall Street Journal, NY Times Business Section or Daily Business Review.
3) Subscribe to the Investopedia word of the day- it’s free. You can also download the free app.
4) Watch Shark Tank or The Profit (both are a little unrealistic but helpful).
5) Watch the show American Greed if you’re going to work for the SEC, DOJ or will be a defense lawyer dealing with securities fraud.

6) ) Listen to The Start Up podcast available onITunes
7) Watch Silicon Valley or Billions
8) Read anything by Michael Lewis related to business
9) Watch anything on 60 Minutes related to the financial crisis

10) Watch the Oscar-winning documentary “Inside Job.”
11) Listen to Planet Money on NPR on the weekends
12) Listen to Marketplace on NPR (it’s on weekday evenings around 6 pm)
13) Read Inc, Entrepreneur, or Fast Company magazines.

14) Follow certain companies that you care about (or hate) or government agencies on Twitter. Key agencies include the IRS, SEC, DOJ, FCC, FTC etc. If you have certain passions such as social enterprise try #socent; for corporate social responsibility try #csr; for human rights and business try #bizhumanrights; for entrepreneurs try #startups. If you’re interested in corporate governance use #corpgov.
14) Join LinkedIn and find groups related to companies or business areas that interest you and monitor the discussions so that you can keep current on breaking issues.

15) Start reading blogs on topics that interest you. Many are written by law firms, professors, non-profits, and business leaders.

Any tips that you have that I missed? Please share them below so that I can add them to my list for the first day of class. I’m happy to say that I manage to “convert” a few skeptics every year into actually enjoying business and even changing career paths. More gratifying is that most years, a self-described “terrified” student who knows nothing about business scores the highest grade in the class, so some of these tips must be working. 

Just in case you haven’t gotten the message yet:  Delaware law means fiduciary duty freedom of contract for alternative entities.  In May 2016, the Delaware Chancery Court upheld a waiver of fiduciary duties in a master limited partnership.  In Employees Retirement System of the City of St. Louis v. TC Pipelines GP, Inc., Vice Chancellor Glasscock upheld challenges to an interested transaction (sale of a pipeline asset to an affiliated entity) that was reviewed, according to the partnership agreement, by a special committee and found to be fair and reasonable.  The waiver has been described as “ironclad” to give you a sense of how straight forward this decision was. No close call here.  

Vice Chancellor Glasscock’s letter opinion starts:

Delaware alternative entity law is explicitly contractual;1 it allows parties to eschew a corporate-style suite of fiduciary duties and rights, and instead to provide for modified versions of such duties and rights—or none at all—by contract. This custom approach can be value enhancing, but only if the parties are held to their bargain. Where equity holders in such entities have provided for such a custom menu of rights and duties by unambiguous contract language, that language must control judicial review of entity transactions, subject only to the cautious application of the implied covenant of good faith and fair dealing. Such is the case in the instant matter, which involves a master limited partnership (“MLP”) created with interested transactions involving the general partner as part of its business model…..

The Defendants point out that the [transaction] was approved by a special committee (the “Conflicts Committee”), which approval, in accordance with the partnership agreement, creates a conclusive presumption that the transaction is fair and reasonable to the Partnership. I find that the Conflicts Committee’s approval, in these circumstances, precludes judicial scrutiny of the substance of the transaction and grant the Defendants’ Motion.

Importantly, the contractual safe harbor for interested transactions established a process which, if followed, created a fair and reasonable transaction outside of judicial scrutiny and without recourse by the other partners.  The court found that the partnership agreement precluded a good faith analysis of the Conflicts Committee’s review and limited the court’s review purely to matters of process.

The relevant portions of the Special Approval provision, importantly, are silent as to good faith…..According to the contractual language, the Special Approval of a duly constituted and fully informed Conflicts Committee is conclusive evidence that such transaction is fair and reasonable, and such approval is, therefore, preclusive of further judicial review. The Plaintiff does not allege that the Conflicts Committee was not duly constituted—that is, directors who are neither security holders nor employees or officers of the General Partner or its affiliates. Nor does the Plaintiff allege that the Conflicts Committee was not fully informed. Thus, the approval here is conclusive that the [transaction] is “fair and reasonable” to TCP. According to the explicit language of the LPA, when a conflicted transaction is deemed “fair and reasonable” by the terms of the agreement, such conflicted transaction is incapable of breaching the LPA.

Get the message? LOUD and CLEAR!

The opinion contains more analysis and excerpts of the relevant portions of partnership agreement.  Look for an excerpt on this case in my ChartaCourse (electronic platform) Business Organizations casebook. 

-Anne Tucker

Anyone who reads this blog knows that I have issues with how people mess up the distinction between LLCs (limited liability companies) and corporations. In some instances, it is a subtle, likely careless, mistake.  Other cases seem to be trolling me.  Today, I present you such a case: Sky Cable, LLC v. Coley, 2016 WL 3926492 (W.D.Va., July 18, 2016).  H/T: Jay D. Adkisson. The case describes the proceedings as follows: 

DIRECTV asks the court to reverse-pierce the corporate veil and declare that Randy Coley is the alter ego of his three limited liability companies, such that the assets held by those LLCs are subject to the judgment in this case.

Okay, so claiming to pierce the “corporate veil” of an LLC is wrong (it doesn’t have a “corporate” anything), but it’s also exceedingly common for lawyers and courts to make such an assertion. This case takes the improper designation to the next level.  

First, the court describes the LLCs in questios as “the Corporate Entities.”  It then goes on to discuss “Coley’s limited liability companies.”  Ugh.  The court further relates, “DIRECTV stated that in a forthcoming motion, it would ask the court to reverse-pierce the corporate veil given Coley’s abuse of the corporate form.”  No such form, but perhaps we can now blame DIRECTV’s counsel, in part, for this hot mess.  

Here’s the court’s Legal Framework: 

Generally, corporations are recognized as entities that are separate and distinct from their officers and stockholders. [Author’s note: THERE ARE NO SHAREHOLDERS IN LLCS!] “But this concept of separate entity is merely a legal theory, ‘introduced for purposes of convenience and to subserve the ends of justice,’ and the courts ‘decline to recognize [it] whenever recognition of the corporate form would extend the principle of incorporation “beyond its legitimate purposes and [would] produce injustices or inequitable consequences.’ “” DeWitt Truck Brokers, Inc. v. W. Ray Flemming Fruit Co., 540 F.2d 681, 683 (4th Cir. 1976) (citations omitted). When appropriate, and ” ‘in furtherance of the ends of justice,’ ” a court may pierce the corporate veil and treat the corporation and its shareholders as one, id. (quoting 18 Am. Jur. 2d at 559), if it finds a corporation and its shareholders have misused or disregarded the corporate form, United States v. Kolon Indus., Inc., 926 F. Supp. 2d 794, 815 (E.D. Va. 2013). This is often referred to as an “alter ego theory.”

The court continues: “Delaware courts take the corporate form and corporate formalities very seriously…. ” Case Fin., Inc. v. Alden, No. CIV. A. 1184-VCP, 2009 WL 2581873, at *4 (Del. Ch. Aug. 21, 2009).” The opinion then states that veil piercing concepts”apply equally to limited liability companies which, like corporations, have a legal existence separate and distinct from its members.”  The concept may, but LLCs do not have to follow the same formalities as corporations to maintain separate existence.  Even if veil piercing were appropriate here, the entire case continues to misstate the law of veil piercing LLCs. Note: Delaware courts do hold some blame here: Westmeyer v. Flynn, 382 Ill. App. 3d 952, 960, 889 N.E.2d 671, 678 (2008) (“[U]nder Delaware law, just as with a corporation, the corporate veil of an LLC may be pierced, where appropriate.”).

Based on the opinion, it does seems as though the defendant here was being shady, at best, and perhaps outright fraudulent.  I don’t suggest that, based on the facts presented, the defendant shouldn’t be held accountable for his debts. Still, in addition to the misstatements of the law, I am not sure veil piercing was necessary.  As the court notes, “veil piercing is an equitable remedy and an extraordinary one, exercised only in exceptional circumstances “when ‘necessary to promote justice.'”  It seems to me, then, the court (and the plaintiff) should discuss other remedies first, relying only on veil piercing where “necessary.” 

As such, I’d like to see a discussion of fraudulent or improper transfer before veil piercing — did the defendant improperly move assets that should have been available to the plaintiff into an entity? Before veil piercing three entities, it seems to me the court should determine what should have been available to the plaintiff — if the answer is “nothing” then no amount of shady behavior should support veil piercing.  If there should be assets, then the question should still be “which ones?”  If the answer is all of the assets in all of then entities, then okay.  But if the court is veil piercing three entities merely to ensure adequate recovery, that’s an overreach, it seems to me.  In addition, how about reviewing if there was actual fraud in how the defendant acted?  That, too, could support recovery without the extraordinary veil piercing remedy.  

Ultimately, it’s possible the court got the outcome right here.  But it clearly got the law wrong.  A lot.  

 

In a recent decision of the Tennessee Supreme Court, Keller v. Estate of Edward Stephen McRedmond, Tennessee adopted Delaware’s direct-versus-derivative litigation analysis from Tooley v. Donaldson, Lufkin, & Jenrette, Inc., 845 A.2d 1031 (Del. 2004), displacing a previously applicable test (that from Hadden v. City of Gatlinburg, 746 S.W.2d 687 (Tenn. 1988)).  Although this is certainly significant, I also find the case interesting as an example of the way that a court treats different types of claims that can arise in typical corporate governance controversies (especially in small family and other closely held businesses).  This post covers both matters briefly.

The Keller case involves a family business eventually organized as a for-profit corporation under Tennessee law (“MBI”).  As is so often the case, after the children take over the business, a schism develops in the family that results in a deadlock under a pre-existing shareholders’ agreement.  A court-ordered dissolution follows, and after a bidding process in which each warring side of the family bids, the trustee contracts to sell the assets of MBI to members of one of the two family factions as the higher bidder.  These acquiring family members organize their own corporation to hold the transferred MBI assets (“New MBI”) and assign their rights under the MBI asset purchase agreement to New MBI

Prior to the closing, the losing bidder family member, Louie, then an officer and director of MBI who ran part of its business (its grease business), solicited customers and employees, starved the MBI grease business, diverted business opportunities from MBI’s grease business to a corporation he already had established (on the MBI property) to compete with MBI in that business sector, and engaged in other behavior disloyal to MBI.  Louie’s actions were alleged to have contravened a court order enforcing covenants in the MBI asset purchase agreement. They also were allegedly disloyal and constituted a breach of his fiduciary duty of loyalty to MBI.  Finally, they constituted an alleged interference with New MBI’s business relations.  

Continue Reading Direct v. Derivative under the Tennessee Business Corporation Act

It looks like the Fifth Circuit is becoming increasingly isolated.

After the Supreme Court decided Dura Pharmaceuticals, Inc. v. Broudo, 544 US 336 (2005), a circuit split developed as to how plaintiffs can satisfy the element of loss causation in a Section 10(b) action.

All circuits agree that loss causation can be shown via “corrective disclosures” – some kind of explicit communication to the market that prior statements were false, followed by a drop in stock price.

However, as I’ve discussed before, there has been an alternative theory that plaintiffs can use to show loss causation, even without an explicit corrective disclosure.  The theory is usually described as “materialization of the risk.” It requires the plaintiff to show that the fraud concealed some condition or problem that, when revealed to the market, caused the stock price to drop, even if the market was not made aware that the losses were due to fraud.  For example, a company may report a slowdown in sales, causing its stock price to fall, while concealing the fact that the slowdown was due to an earlier period of channel stuffing.  By the time the channel stuffing is revealed, it may communicate no new information about the company’s prospects, so the stock price remains unmoved.  Under a materialization of the risk theory, the price drop upon disclosure of the fall in sales would be sufficient to allege loss causation.

The Fifth Circuit has rejected materialization of the risk theory, requiring some kind of communication to the market that the earlier statements were false.  The Ninth Circuit generally has done the same, but there’s enough wiggle room in its caselaw that it agreed to hear an interlocutory appeal in Mineworkers’ Pension Scheme, et al v. First Solar Incorporated, et al, No. 15-17282, to resolve the issue.

And this week, in Ohio Public Employees Ret. Sys. v. Federal Home Loan Mortgage Corporation et al. – the long-running crisis-era case alleging that Freddie Mac concealed its exposure to bad mortgage loans – the Sixth Circuit joined the vast majority of circuits in holding that materialization of the risk is sufficient to satisfy the element of loss causation (quietly glossing over earlier caselaw that had seemed to endorse the corrective disclosure standard). Among other things, the Sixth Circuit expressed concern that companies will easily be able to evade liability if liability is functionally predicated on a corporate confession of wrongdoing.  That’s a reasonable concern: as Barbara A. Bliss, Frank Partnoy, and Michael Furchtgott have found, in the wake of Dura, corporations have adopted disclosure strategies aimed at masking the cause of stock price reactions, allowing them to reduce litigation risk. (I blogged about an earlier version of the paper here).

As loyal readers may have noticed, I am excited about the upcoming Summer Olympic Games in Rio.

While the Olympics is sure to be heavily watched, the Games are not that lucrative for many of the participants. The average Olympian supposedly only makes around $20,000 a year from sponsorships and has significant travel, medical, and coaching costs.

On the GoFundMe website alone, there are over 140 campaigns in their “Athletes Competing in Rio” category. Collectively, the campaigns have raised over $680,000.

Here are a few stories about Olympic athletes using crowdfunding. (Inc., Forbes, USA Today).

For those who will be attending the SEALS Conference and are interested in crowdfunding, my co-blogger Joan Heminway is moderating a discussion group on “The Legal Aspects of Small Business Finance in the Crowdfunding Era” on Tuesday, August 9 from 9am-12pm, which promises to be interesting. Most of the Olympic athletes appear to be using gift-based crowdfunding, but in the SEALS discussion group, I will present on a proposal for firms to use equity crowdfunding in connection with building athletic communities that could include Olympic athletes.