The people at New Media Rights, a non-profit affiliated with the California Western School of Law,   have developed an interesting new legal app called The Fair Use App.  It is designed to help filmmakers and video editors understand the fair use doctrine in U.S. copyright law. The app runs users through a series of questions about their use of others’ content and explains how their answers to each question affect the availability of the fair use doctrine. In effect, it’s a digital flowchart.

Fair use is a complicated, multi-factor analysis, so there is no final yes-no answer. But this app would be a good start for a filmmaker trying to understand the law.

The app’s not perfect. For example, at one point, it asks if the content being used is in the public domain, with no explanation of what that means. I doubt most lay people would know exactly what that means. And I’m not a copyright expert, so I can’t say whether it’s substantively correct on all points. But, assuming it is, it’s a good tool. Consulting with an experienced copyright lawyer would be better, but most of the people using this app wouldn’t consult a lawyer anyway because they can’t afford a lawyer. This app is better than their alternative—no help at all.

I think there should be more tools like this, aimed at people who can’t afford lawyers. For some time, I have been thinking about developing something similar to explain the Securities Act registration requirements and exemptions to startup entrepreneurs raising capital. Many of those people start raising funds without consulting a securities lawyer, and many of them inadvertently violate the law (one reason I think there should be an unconditional de minimis exemption for offerings below a certain amount). An app like this could at least warn them of the dangers.
Legislators and regulators often forget that there is a tier of regulated people out there who can’t afford counsel and won’t understand the regulations. Thanks to people like New Media Rights for doing something to serve those people.

It doesn’t take long to run through the app. If you’re interested, it’s available here.

UGA

The University of Georgia’s Terry College of Business has posted information about a legal studies lecturer position they are seeking to fill this fall.

I know UGA’s legal studies faculty, and they have a bright, collegial group. Also, UGA’s current president, Jere Morehead, previously taught legal studies courses in UGA’s Terry College of Business.

More information about the position, provided by UGA, is available after the break.

Continue Reading University of Georgia, Terry College of Business – Legal Studies Lecturer Position

A few days ago, Vice Chancellor Laster issued an interesting opinion in In re Appraisal of Dell.  He held that Delaware’s “continuous holder” requirement for appraisal litigation applies at the record holder level – that is, the level of DTC.  Because in this case, due to a technical error, DTC transferred the ownership of the shares to the beneficial owners’ brokers’ names – the street names – the beneficial owners could not maintain their appraisal petition. 

[More under the jump]

Continue Reading All Your Stock Are Belong to DTC

Aspen

Earlier this week, I listened to The Aspen Institute’s Does Maximizing Shareholder Value Endanger America’s Great Companies, featuring Lynn Stout (Cornell Law), Tom Donaldson (Penn-Wharton), Howard Schultz (Starbucks), and Shelly Lazarus (director of Merck & GE).

The panel discussion is over a year old, but still relevant. Among other things, I found the exchange between a Georgetown professor in the audience and Howard Schultz of Starbucks to be interesting (starting at 46 minutes).

Georgetown Professor: [Asks a roughly 2-minute long question about creating and choosing appropriate metrics for measuring social responsibility.]

Howard Schultz: “I certainly understand that you are a professor and you want a metric, but this is not the real world. We don’t sit in a room and measure metrics. Let me tell you a very brief story…[tells a story about Starbucks’ company meeting of parents of employees in China]…you can’t put a metric on that; there is no metric….it is a narrative…” 

Personally, I think Schultz was a bit too quick to dismiss the need for social metrics, and, in practice, I am sure Starbucks has some social metrics that it uses. Without any social metrics, however, even the best intentioned management can deceive itself and the stakeholders. That said, Schultz’s basic point is a fair one. Social responsibility is notoriously difficult to measure, and stories are likely needed to give a full sense of the impact. Also, carefully measuring and disclosing social impact can be costly. Using social metrics may even be counter-productive, if the measuring takes focus off of high-impact practices that are more difficult to measure, and moves the focus to other, lower-impact (but easily quantifiable) practices. 

One of my summer projects centers around benefit corporation reporting, so I am thinking about social reporting a good bit and welcome any thoughts. Currently, while I fully recognize the limitations and dangers of social metrics, I don’t think abandoning metrics altogether is wise due to the possibility of self-deceit and stakeholder-deceit.

In short, with social responsibility, I don’t think it is metrics or narrative; I think it is metrics and narrative. Deciding the balance, and the appropriate metrics, however, is quite difficult.  

Love him or hate him, you can’t deny that President Obama has had an impact on this country. Tomorrow, I will be a panelist on the local public affairs show for the PBS affiliate to talk about the President’s accomplishments and/or failings. The producer asked the panelists to consider this article as a jumping off point. One of the panelists worked for the Obama campaign and another worked for Jeb Bush. Both are practicing lawyers. The other panelist is an educator and sustainability expert. And then there’s me.

I’ve been struggling all week with how to articulate my views because there’s a lot to discuss about this “lame duck” president. Full disclosure—I went to law school with Barack Obama. I was class of ’92 and he was class of ’91 but we weren’t close friends. I was too busy doing sit-ins outside of the dean’s house as a radical protester railing against the lack of women and minority faculty members. Barack Obama did his part for the movement to support departing Professor Derrick Bell by speaking (at minute 6:31) at one of the protests. I remember thinking then and during other times when Barack spoke publicly that he would run for higher office. At the time a black man being elected to the president of the Harvard Law Review actually made national news. I, like many students of all races, really respected that accomplishment particularly in light of the significant racial tensions on campus during our tenure.

During my stint in corporate America, I was responsible for our company’s political action committee. I still get more literature from Republican candidates than from any other due to my attendance at so many fundraisers. I met with members of Congress and the SEC on more than one occasion to discuss how a given piece of legislation could affect my company and our thousands of business customers. My background gives me what I hope will be a more balanced set of talking points than some of the other panelists. In addition to my thoughts about civil rights, gay marriage, gun control, immigration reform, Guantanamo, etc., I will be thinking of the following business-related points for tomorrow’s show: 

1) Was the trade deal good or bad for American workers, businesses and/or those in the affected countries? A number of people have had concerns about human rights and IP issues that weren’t widely discussed in the popular press.

2) Dodd-Frank turns five next week. What did it accomplish? Did it go too far in some ways and not far enough in others? Lawmakers announced today that they are working on some fixes. Meanwhile, much of the bill hasn’t even been implemented yet. Will we face another financial crisis before the ink is dried on the final piece of implementing legislation? Should more people have gone to jail as a result of the last two financial crises?

3) Did the President waste his political capital by starting off with health care reform instead of focusing on jobs and infrastructure?

4) Did the President’s early rhetoric against the business community make it more difficult for him to get things done?

5) How will the changes in minimum wage for federal contractors and the proposed changes to the white collar exemptions under the FLSA affect job growth? Will relief in income inequality mean more consumers for the housing, auto and consumer goods markets? Or has too little been done?

6) Has the President done enough or too much as it relates to climate change? The business groups and environmentalists have very differing views on scope and constitutionality.

7) What will the lifting of sanctions on Cuba and Iran mean for business? Both countries were sworn mortal enemies and may now become trading partners unless Congress stands in the way.

8) Do we have the right people looking after the financial system? Is there too much  regulatory capture? Has the President tried to change it or has he perpetuated the status quo?

9) What kind of Supreme Court nominee will he pick if he has the chance? The Roberts court has been helpful to him thus far. If he gets a pick it could affect business cases for a generation.

10) Although many complain that he has overused his executive order authority, is there more that he should do? 

I don’t know if I will have answers to these questions by tomorrow but I certainly have a lot to think about before I go on air. If you have any thoughts before 8:30 am, please post below or feel free to email me privately at mnarine@stu.edu.

I read with interest the recently released opinion of the U.S. Court of Appeals for the Third Circuit in Trinity Wall Street v. Walmart Stores, Inc.  The Wall Street Journal covered the publication of the opinion earlier in the month, and co-blogger Ann Lipton wrote a comprehensive post sharing her analysis on the substance of the decision over the weekend.  (I commented, and Ann responded.)  Of course, like Ann, as a securities lawyer, I was interested in the court’s long-form statement of its holding and reasoning in the case.  But I admit that what pleased me most about the opinion was its use of legal scholarship written by my securities regulation scholar colleagues.

Tom Hazen‘s Treatise on the Law of Securities Regulation is cited frequently for general principles.  This is, as many of you likely already know, an amazing securities regulation resource.  I also will note that many of my students find Tom’s hornbook helpful when they are having trouble grappling with securities regulation concepts covered in the assigned readings in my class.

Donna Nagy‘s excellent article on no-action letters (Judicial Reliance on Regulatory Interpretation in S.E.C. No-Action Letters: Current Problems and a Proposed Framework, 83 Cornell L. Rev. 921 (1998)) also is cited by the court.  This piece is not praised enough, imho, for the work it does in the administrative process area of securities law.  I see the citations in the opinion as an element of needed praise.

And finally, Alan Palmiter‘s scholarship also is cited numerous times in the opinion.  Specifically, the court quotes from and otherwise cites to The Shareholder Proposal Rule: A Failed Experiment in Merit Regulation, 45 Ala. L. Rev. 879 (1994).  Again, this work represents an important, under-appreciated scholarly resource in securities law.

At least one other law review article is cited once in the opinion.

[Note: Alison Frankel also points out that Vice Chancellor Laster cites formatively to a paper co-authored by Jill Fisch, Sean Griffith, and Steve Davidoff Solomon in a recent opinion.  More evidence that our work matters, at least to the judiciary.]

As Ann’s post notes, the Trinity opinion also is worth reading for its substance.  In addition to the matters Ann mentions, the opinion includes, for example, a lengthy, yet helpful, history of the ordinary business exclusion under Rule 14a-8.  And the analysis is instructive, even if unavailing (unclear in its moorings and effect in individual cases).

Finally, it’s worth noting that the opinion is drafted with a healthy, yet (imv) professional, dose of humor.  The opinion begins, for example, as follows:

“[T]he secret of successful retailing is to give your customers what they want.” Sam Walton, SAM WALTON: MADE IN AMERICA 173 (1993). This case involves one shareholder’s attempt to affect how Wal-Mart goes about doing that.

And the conclusion of the opinion includes the following passage that made me smile:

Although a core business of courts is to interpret statutes and rules, our job is made difficult where agencies, after notice and comment, have hard-to-define exclusions to their rules and exceptions to those exclusions. For those who labor with the ordinary business exclusion and a social-policy exception that requires not only significance but “transcendence,” we empathize.

(This is part of the “scolding” Ann references in her post.)

Read the concurring opinion of Judge Shwartz, too.  It is thoughtful (even if not entirely helpful, as Ann notes) in making some nice additional points worth considering.

Scott Killingsworth, a corporate attorney at Bryan Cave who specializes in compliance and technology matters and is a prolific writer (especially for one who still has billable hour constraints!) recently wrote a short and thought-provoking article: How Framing Shapes Our Conduct. The article focuses the link between framing business issues and our ethical choices and motivations noting the harm in thinking of hard choices as merely “business” decisions, viewing governing rules and regulations as a “game” or viewing business as “war.”  Consider these poignant excerpts:

We know, for example, that merely framing an issue as a “business matter” can invoke narrow rules of decision that shove non-business considerations, including ethical concerns, out of the picture. Tragic examples of this ‘strictly business’ framing include Ford’s cost/benefit-driven decision to pay damages rather than recall explosion-prone Pintos, and the ill-fated launch of space shuttle Challenger after engineers’ safety objections were overruled with a simple ‘We have to make a management decision.’ (emphasis added)

Framing business as a game belittles the legitimacy of the rules, the gravity of the stakes, and the effect of violations on the lives of others. By minimizing these factors, the game metaphor takes the myopic “strictly business” framing a step further, into a domain of bendable rules, acceptable transgressions, and limited accountability. (emphasis added)

The war metaphor conditions our thinking in a way distinct from the game frame, but complementary to it. War is a matter of survival: the stakes are enormous, the mission urgent, and all’s fair. Exigent pressures grant us wide moral license, releasing us from adherence to everyday rules and justifying extreme tactics in pursuit of a higher goal; we must, after all, kill or be killed. If business is war, survival is at stake, and competitors, customers, suppliers, rivals or authorities are our enemies, then not only may we do whatever it takes to win, it’s our duty to do so. (emphasis added)

The full article is available here.

In light of the new ABA regulations on Learning Outcomes and Assessment, including the requirement that students have competency in exercising “proper professional and ethical responsibilities to clients and the legal system” this article seems like a great addition to a business organizations/corporations course line up.  I know that I will be including it in my corporate governance seminar this coming year.  And if I were responsible for new associate training, this would definitely merit inclusion in the materials.

-Anne Tucker

A while back, I wrote about CVS’s choice to eliminate tobacco products from its stores.  I noted that it seemed clear to me that CVS could make that choice, even thought it would mean lower short-term profits, because it was a decision that is clearly protected (or should be) by the business judgment rule. 

Today, according to an LA Times piece, 

[CVS] stood up for its principles.

The pharmacy giant announced it was quitting the U.S. Chamber of Commerce after reports that the influential business organization was lobbying against anti-smoking laws around the world.

CVS bolted because of the Chamber’s views on tobacco sales.  In 2009, Apple and Nike made waves with the Chamber of its policy position on climate change. I find this interesting, and I have no reason to doubt that all of these companies are following their corporate values, though I also think they see public relations value in the noisy withdrawal.  

That some big companies have stepped away from the Chamber is less surprising to me than the fact that the Chamber has maintained such strength with small business owners, while advocating for many big business positions that don’t help, and may hurt, small businesses.  I can’t help but wonder if the Chamber’s success it not so much in promoting policies that benefit of member businesses, and instead that it promotes policies that are consistent with the ideologies of many who work for or own businesses.

If the latter is the case, as I suspect it is, that’s a good business model for the Chamber, but not necessarily for the entities it represents.  Of course, if business owners, officers, and directors remain aligned with the Chamber, despite a lack of clear benefit to the entity, well, that too is protected by the business judgment rule. 

UPDATE: The deadline for submissions has been extended to July 21.

[The following is a copy of the official workshop announcement.  I have moved the “Guiding Questions” to the top to highlight the business law aspects.  Registration and submission details can be found after the break.]

A Vulnerability and the Human Condition Initiative Workshop at Emory Law

Guiding Questions:

This workshop will use vulnerability theory to explore the implications of the changing structure of employment and business organizations in the new information age. In considering these changes, we ask:

• What kind of legal subject is the business organization?
• Are there relevant distinctions among business and corporate forms in regard to understanding both vulnerability and resilience?
• What, if any, should be the role of international and transnational organizations in a neoliberal era? What is their role in building both human and institutional resilience?
• Is corporate philanthropy an adequate response to the retraction of state regulation? What forms of resilience should be regulated and which should be left to the ‘free market’?
• How might a conception of the vulnerable subject help our analysis of the changing nature of the firm? What relationships does it bring into relief?
• How have discussions about market vulnerability shifted over time?
• What forms of resilience are available for institutions to respond to new economic realities?
• How are business organizations vulnerable? How does this differ from the family?
• How does the changing structure of employment and business organization affect possibilities for transformation and reform of the family?
• What role should the responsive state take in directing shifting flows of capital and care?
• How does the changing relationship between employment and the family, and particularly the disappearance of the “sole breadwinner,” affect our understanding of the family and its role in caretaking and dependency?
• How does the Supreme Court’s willingness to assign rights to corporate persons (Citizen’s United, Hobby Lobby), affect workers, customers and communities? The relationship between public and private arenas?
• Will Airbnb and Uber be the new model for the employment relationships of the future?

Continue Reading CALL FOR PAPERS: A Workshop on Vulnerability at the Intersection of the Changing Firm and the Changing Family (October 16-17, 2015 in Atlanta, GA)