A few weeks ago, I described to you a really special extracurricular project undertaken by one of my students, Brandon Whiteley, now an alum, this past year.  The project?  Proposing and securing legislative passage of Invest Tennessee, a Tennessee state securities law exemption for intrastate offerings that incorporates key features of crowdfunding.  The legislation became effective on January 1.

In that first post, I described the project and Brandon’s observations on the legislative process.  This post highlights his description of the influences on the bill that became law.  Here they are, with a few slight edits (and hyperlink inserts) from me.

Continue Reading Key Influences on Invest Tennessee – Student-Initiated Intrastate “Crowdfunding” Legislation

The following comes to us from Lee Epstein, the Ethan A.H. Shepley Distinguished University Professor at Washington University in St. Louis. (I should note that I attended this conference a few years ago and, while I ended up taking my scholarship in a different direction, I can highly recommend the workshop to anyone interested in doing empirical legal scholarship.)

The 15th annual workshop on Conducting Empirical Legal Scholarship, co-taught by Lee Epstein and Andrew D. Martin, will run from June 15-June 17 at Washington University in St. Louis. The workshop is for law school faculty, lawyers, political science faculty, and graduate students interested in learning about empirical research and how to evaluate empirical work. It provides the formal training necessary to design, conduct, and assess empirical studies, and to use statistical software (Stata) to analyze and manage data.

Participants need no background or knowledge of statistics to enroll in the workshop. Registration is here. For more information, please contact Lee Epstein.

I had very limited time at AALS this year (unfortunately) but I still walked away with some great ideas (and a chance to say hello to a few, but not enough, friendly faces).  I am borrowing from many ideas shared in the panel cited below, as well as a few of my own.  As many of you prepare to teach BA/Corporations for the spring (or making notes on how to do it next time), here are a few fun new resources to help illustrate common concepts:

  • HBO’s The Newsroom.  A hostile takeover, negotiations with a white knight– all sorts of corporate drama unfolded on HBO’s Season 3 of The Newsroom.   I couldn’t find clips on youtube, but episode recaps (like this) are available and provide a good reference point/story line/hypo/exam problem for class.
  • This American Life– Wake Up Now Act 2 (Dec. 26, 2014).  This brief radio segment/podcast tells the story of two investors trying to reduce the pay of a company CEO.  The segment discusses board of director elections, board duties, board functions and set up some large questions about whether or not shareholders are the owners of the corporation and their profit maximization is the ultimate goal for a company.  This could be followed with Lynn Stout’s 2012 NYT Dealbook article proposing the opposite view.
  • HBO’s Silicon Valley.  For all things tech, start up, entrepreneurship and basic corporate formation, clips (you will want to find something without all of the swears, I suspect) and episode recaps from this popular show illustrate concepts and connect with students.  Again, great for discussion, hypos, and exam fact patterns.
  • The Shark Tank!.  I have to thank Christyne Vachon at UD for this idea.  There are tons of clips on youtube and most offer the opportunity to talk about investors bringing different things to the table, how to apportion control, etc.  Here is an episode involving patent issues. I think that I am going to open my experiential Unincorporated/Drafting class with a Shark Tank clip on Monday.  
  • Start Up Podcasts.  These 30-minute episodes cover a wide range of topics. Here is one podcast on how to value a small business.   At a minimum, I will post some of these to my course website this spring.  (Thank you Andrew Haile at Elon for this recommendation.).
  • Planet Money.  The podcasts are a great resource, but what I love is the Planet Money Twitter page because it is a great way to digest daily news, current events and topical developments that may be incorporated into your class.
  • Wall Street Journal–TWEETS.  (that felt like an oxymoron to write). Aside from the obvious, I find the Twitter feed to be the most useful way to use/monitor the WSJ.  I will admit it, I don’t “read” it every day, but this is my proxy.

    • Special thanks to the participants in the Agency, Partnership & the Law’s panel on Bringing Numbers into Basic and Advanced Business Associations Courses: How and Why to Teach Accounting, Finance, and Tax

    Moderator: Jeffrey M. Lipshaw, Suffolk University Law School
    Speakers:
    Lawrence A. Cunningham, The George Washington University Law School
    Andrew J. Haile, Elon University School of Law
    Usha R. Rodrigues, University of Georgia School of Law
    Christyne Vachon, University of North Dakota School of Law
    Eric C. Chaffee, University of Toledo College of Law
    Franklin A. Gevurtz, University of the Pacific, McGeorge School of Law

    And Happy New Year BLPB Readers!

    -AT

    Over at The Conglomerate, Usha Rodrigues says, “Larry Ribstein was wrong.” Usha argues that she’s right to teach LLCs at the end of the course, and Larry was of the mind that LLCs should play a more prominent role in the business entities course.  

    For my teaching, I’m with Larry on this, though I am also of the mind that Usha (and other teachers) may have different goals, so taking another tack is not wrong.  I’m pretty sure we’re all better teachers when we are true to ourselves and our thinking.  For me, anyway, I am, without a doubt, at my worst in the classroom (and probably out) when I try to mimic someone else. 

    So here’s how Usha explains her thinking:

    I don’t leave LLCs til the end of the semester because I think they’re unimportant.  It’s because the cases are so damn thin.  It’s still such a new form, I just don’t see much there there.  Most of them wind up being trial courts who read the statute in completely stupid ways.  Blech.

     

    So I teach corporations and partnerships emphasizing fiduciary duty, default vs. mandatory rules, and the importance of the code.  In fact, one semester I confess that I would ask a question and then intone, “Look to the code!” so often I felt like a Tolkien refugee.  By the time I get to the LLCs cases, which are pretty basic, the class is ready for my message: the LLC is a new form.  When dealing with something new, judges look both to the organizational statutes and to the organizational forms they know as they shape the law.  Plus the LLC is such an interesting mix between the corporate and partnership form, it just makes sense to get through them both before diving in.

    It’s hard to argue with Usha’s rationale.  Like Larry, she’s smart, and this is a reasonable take.  For me, though, it doesn’t work toward my goals, so I have a different point of view.  I think it’s more in line with where Larry was coming from, though I admit I don’t know.  

    Here’s why:  I want students (and lawyers and courts) to treat LLCs as unique entities.  Leaving them to the end of the course reinforces the idea that LLCs are hybrid entities the combine partnerships and corporations.  I just don’t think that’s the right way to think about LLCs.  

    Certainly, it is true that LLCs share characteristics of partnerships and corporations.  But partnerships and corporations can have similarities, too. We can, for example, refer back to the partnership case of Meinhard v. Salmon when discussing corporate fiduciary duties and corporate opportunity.

    In my experience, teaching LLCs at the end of the course seemed to frame the LLC as an entity that is just pulling from partnership or corporate law.  As such, it seemed the students were thinking that the real challenge for LLCs was figuring out whether to pull from partnership law or corporate law for an analogy.  Part of the reason for that, I think, is that so many of the LLCs cases seem to think so, too.  See, e.g., Flahive.  As Usha would say, “Blech.”

    The LLC is prominent enough in today’s world that I think it warrants a more prominent role in the introductory business organizations course.  If we don’t bring the LLCs more to the fore, we allow courts to continue to misconstrue the entity form, in part because we aren’t giving students the tools they need to ensure courts understand the unique nature of the LLC. 

    I figure Usha can get students where she needs to on this regardless of how she teaches business associations.  She is a lot smarter than I am.  Given my goals and how I think about the LLC, though, I’ll keep starting my class with an introduction to LLC formation, and I’ll keep teaching LLC cases and issues throughout the semester.  

    I just left the Association of American Law Schools annual meeting this morning.  I came back to a flat tire at the airport, but let’s not dwell on that . . . .  The conference was a good one, as these zoo-like mega conferences go.  

    I presented at the conference as part of a panel that focused on teaching courses and topics at the intersection of animals and the law.  (Thanks for the plug, Stefan!)  Yes, although it is a little known fact, I do teach courses involving animals and the law.  Regrettably, it is a somewhat rare thing for me, since I always have to teach these courses as an overload.  However, I also am the faculty advisor to our campus chapter of the Student Animal Legal Defense Fund and UT Pro Bono’s Animal Law Project (which compiled and annually updates a Tennessee statutory resource used by animal control and other law enforcement officers, as well as other animal-focused professionals, in the State of Tennessee).  In addition, I coach our National Animal Law Competitions team.  These non-classroom activities  give me ample time to teach in different ways . . . .

    I will not rehash all of my remarks from the panel presentation here.  In fact, I want to make a very limited point in this post.  While my calling to legal issues involving non-human animals is rooted in large part in being the “animal mom” of a rescue dog and rescue cat, I also participate in educational efforts in this area because I see it as my professional responsibility as a lawyer–and in particular, as a business lawyer.

    Continue Reading Animal Law Is (Or At Least Can Be) Business Law

    Last week, I gave you a list of the best fiction books I read in 2014. Here’s a list of the best non-law, non-fiction I read in 2014. I hope you find something that interests you. I read much more non-fiction than fiction, so this list is a little longer. As with my list of fiction, they’re in no particular order.

    1. Rose George, Ninety Percent of Everything: Inside Shipping, the Invisible Industry that Puts Clothes on Your Back, Gas in Your Car, and Food on Your Plate. An extremely well-written look at the global shipping industry—not the FedEx and UPS type of shipping, but actual ships. The author traveled over 9,000 miles on a container ship. The book discusses that voyage, interlaced with a boatload of material (pun intended) about the history of shipping, the regulation of shipping, shipwrecks, piracy, and a number of other subjects.

    2. Rich Cohen, Monsters: The 1985 Chicago Bears and the Wild Heart of Football. I’m neither a Chicago Bears fan nor a Mike Ditka fan, but this was an interesting book. For those who are young and familiar with the current Bears, yes, the Bears actually won back in 1985. Cohen covers more than just that 1985 team. The book looks at the history of the team back to the early days of the NFL and also the aftermath of the 1985 championship—what happened to the team and the players afterwards.

    3. Adam Minter, Junkyard Planet: Travels in the Billion-Dollar Trash Trade. A look at trash and recycling. Recycling makes more sense economically than I thought; apparently, much of our recycled materials make their way to China for use in Chinese manufacturing. I never knew that trash could be so interesting.

    4. William Easterly, The Tyranny of Experts: Economists, Dictators, and the Forgotten Rights of the Poor. Easterly, an economist at N.Y.U., discusses anti-poverty programs and their effect on the third world. He argues that the technical solutions proposed by experts haven’t worked and that the real key to development is bottom-up: giving poor people economic freedom. I previously recommended this book here. My co-blogger Haskell Murray reviews it here.

    5. Jang Jin-Sung, Dear Leader: Poet, Spy, Escapee—A Look Inside North Korea. The author worked in the propaganda arm of the North Korean government and was honored by Kim Jong-Il for his epic poetry. This book is the story of his escape from North Korea, but also an account of life among the privileged in Pyongyang.

    6. Louisa Lim, The People’s Republic of Amnesia: Tiananmen Revisited. An amazing account of how China has been able to recast, and even erase, from its history the events in Tiananmen Square in 1989. The scary part is how they have used nationalism to supplant the yearnings for freedom that prompted Tiananmen.

    7. Mark Miodownik, Stuff Matters: Exploring the Marvelous Materials that Shape Our Man-Made World. An introduction to how materials are made and how they’re put together, down to the atomic level. He discusses for instance, why diamonds and graphite are so incredibly different, even though they’re both carbon-based. For those who have a heavy scientific background, there won’t be much new here, but he explains the science in ways that a non-scientist like me can understand.

    8. Jenny Lawson, Let’s Pretend This Never Happened: A Mostly True Memoir. A hilarious autobiography of a Texas woman who now writes a blog at TheBloggess.com. Parts of it made my literally laugh at loud. I was constantly reading parts of the book to my wife.

    9. Ben Macintyre, A Spy among Friends: Kim Philby and the Great Betrayal. The story of Kim Philby, perhaps the best-known Russian spy ever. An interesting look at the good-old-boys’ network that was British intelligence at the time and their unwillingness to believe that one of their own would actually betray them.

    10. Steven Pinker, The Sense of Style: The Thinking Person’s Guide to Writing in the 21st Century. I tend to be a grammar prescriptivist; Pinker is not. I’m a big fan of Strunk & White; Pinker is not. But I nevertheless enjoyed this guide to grammar, punctuation, and sentence and paragraph structure. Pinker’s suggestions are sensible. He also explains why things should be written as he suggests and why grammar and structure matter.

    11. Hampton Sides, In the Kingdom of Ice: The Grand and Terrible Polar Voyage of the U.S.S. Jeannette. An account of an attempt to sail to the North Pole from the Pacific Ocean and on to the Atlantic. At the time, many people thought that there was a great polar sea beyond the ice. The Jeannette was stuck in the ice for two years before it sank and the crew had to try to make their way through the ice and eventually overland through Russia.

    12. Ian Leslie, Curious: The Desire to Know and Why Your Future Depends on It. I have already blogged about this one. See here.

    13. Kim Zetter, Countdown to Zero Day: Stuxnet and the Launch of the World’s First Digital Weapon. The story of the Stuxnet computer worm which someone, apparently the U.S. government, used to disrupt Iran’s uranium enrichment program.  Zetter tells the story primarily from the viewpoint of the computer experts who discovered and then unraveled the virus. He also discusses the ethical and practical implications. Among other things, what’s the risk to “us” now that we’ve unleashed this weapon on someone else?

    Okay, fine, that’s not what the Second Circuit formally held, but to be honest, I can’t read this decision any other way.

    I’ve blogged about this issue before here, here, and here.  Basically, the situation is this:  In the class action context, there is frequently an issue as to whether the named plaintiff’s own individual claims against the defendant are sufficiently similar to the claims of the rest of the class so as to allow the named plaintiff to sue in a representative capacity.  Historically, these issues have been resolved via Rule 23 of the Federal Rules of Civil Procedure, which, among other things, requires a court to decide whether there is “commonality” among the class members, whether the common issues predominate over the individual ones, whether the named plaintiffs’ claims are typical of those of absent class members, and whether the named plaintiff will serve as an adequate representative for the absent class members.  Rule 23, of course, is only invoked after there has been substantial discovery, and certification determinations under Rule 23 frequently include expert analysis.

    In the wake of the mortgage crisis, more and more courts began making these determinations on the pleadings, framing the question not in terms of class certification, but in terms of whether the named plaintiff has “standing” to bring claims on behalf of absent parties, as I discussed in more detail here.  The issue has basically been that if an investment bank underwrites multiple RMBS offerings, and I buy an RMBS issued by a particular trust backed by a particular pool of mortgages, how can a court be certain that my claims are similar enough to purchasers of different RMBS issued by a different trust, backed by different mortgages, such that I should be permitted to represent those purchasers in a securities class action against the underwriter? 

    Courts have been unwilling to go the traditional route and wait until a class certification hearing to make this decision; instead, they have been seeking to limit a named plaintiff’s ability to represent absent RMBS purchasers.  They have been fundamentally troubled by the idea that a purchaser of one RMBS could represent all purchasers not only of that RMBS, but of multiple other RMBS, with face values totaling in the billions of dollars.  Courts have come up with a variety of bright-line rules limiting how the class can be defined, at the pleading stage – for example, some courts have held that plaintiffs may only represent purchasers of RMBS from the same trust; others have held that plaintiffs may only represent purchasers of RMBS from the same tranche within a trust.

    That orientation has spread to other kinds of claims – similar disputes have arisen in the context of false advertising, for example, where a single misrepresentation is alleged to have been plastered across multiple similar products.  (Say, a false representation that ice cream flavors are “natural,” appearing on chocolate, vanilla, and strawberry – is it necessary that the plaintiff have purchased neapolitan in order to represent absent purchasers of all three flavors?).

    [More under the jump]

    Continue Reading Second Circuit Holds that Class Certification Decisions Should Be Made on the Pleadings

    To the extent you will be attending the Association of American Law Schools Annual Meeting in DC, here are a couple of panel recommendations that come with the added benefit of meeting a BLPB blogger in person:

    1. Keeping it Current: Animal Law Examples Across the Curriculum (01/03/2015, 5:15-6:30 pm)

    Moderator: Katherine M. Hessler, Lewis and Clark
    Speaker: Susan J. Hankin, Maryland
    Speaker: Joan M. Heminway, Tennessee
    Speaker: Courtney G. Lee, McGeorge
    Speaker: Kristen A. Stilt, Harvard

    2. The Role of Corporate Personality Theory in Regulating Corporations (1/5/2015, 2:00-3:00 pm)

    Moderator: Stefan Padfield, Akron
    Speaker: Margaret Blair, Vanderbilt
    Speaker: Elizabeth Pollman, Loyola
    Speaker: Lisa Fairfax, George Washington
    Speaker: David Yosifon, Santa Clara

    PS–For more information on the day-long program of the AALS Section on Socio-Economics on Monday, Jan. 5, as well as the day-long Annual Meeting of the Society of Socio-Economists on Tuesday, Jan. 6, go here.

    One of my new year’s resolutions for 2015 is to fast from e-mail every Saturday. Now that I have posted this, my co-bloggers and readers can keep me accountable. Currently, I probably check my e-mail 20+ times a day, every day — a habit formed during law firm life.  

    I thought about fasting from the internet/electronics entirely on Saturdays, and I am still going to try to avoid the internet/electronics on Saturdays as much as possible, but I wanted to set a realistic goal. 

    An acquaintance of mine in New York City, Paul Miller, went without the internet for an entire year (with less promising results than he had hoped). While I remember a time before the internet — and a time when the internet was so slow it was almost useless — it is hard for me to imagine going without the internet for a week, much less for a year.  That said, I think it healthy to loosen the electronic leash a bit every once in a while.  

    I’d also like to cut back the number of times I check e-mail and the amount of time I spend responding to e-mails in general. If any readers, have suggestions on the appropriate amount of time on e-mail (for a professor), I would be interested. Obviously, it may vary a bit from week to week, but I am thinking about moving to checking e-mail twice a day during the week for 15 minutes each. I think this will allow me to continue being “responsive” to students and colleagues,  but will also free up a great deal of time. Most of the longer e-mails I write could probably be much shorter or would be better as conference calls or in-person meetings. 

    What are your 2015 resolutions, or are you among the roughly 55% who do not set new year’s resolutions?

    Sadly, according to one study, only about 8% of people keep their new year’s resolutions. For those of you who have set new year’s resolutions, here is Professor Cass Sunstein with advice for keeping resolutions. Also, StickK.com (co-created by Yale University economics professor Dean Karlan) is a website where you can create commitment contracts, appoint a referee, and set the stakes for achieving or failing to reach your goals.