From friend-of-the-BLPB Jessica Erickson:

The University of Richmond School of Law is looking for a visitor next spring (2025) in the business law area.  Specifically, we are looking for coverage for our Mergers & Acquisitions course, as well as either Securities Regulation or Business Associations. If you might be interested, please reach out to Kristen Osenga, our Associate Dean for Academic Affairs, at kosenga@richmond.edu.  I am also happy to answer any questions about the school and our fabulous students and faculty.

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I have the privilege and honor to be in Detroit today to present the second annual Baiardi lecture at Wayne State University Law School.  Wayne Law is a bit of a second home for me (a status it enjoys with several other law schools).  I have presented at two symposia here (publishing twice, as a result, with the Wayne Law Review).  Also, Wayne Law was the academic pied à terre of Peter Henning, who was a trusted and dear mentor (and an accomplice in reasoning through insider trading and applied corporate governance questions) until his untimely death.

My lecture addresses aspects of a joint project I previewed at the National Business Law Scholars Conference at Tennessee Law last June.  The project is the brainchild of my Tennessee Law colleague Tomer Stein and involves taking a new approach to the ongoing debate about federalizing corporate law.  The talk offers some practical applied thoughts on the project and is entitled “Visioning (Not Advocating or Discounting) Federal Corporate Law.” I undoubtedly will have more to say on this topic as our work on the project progresses.  But if you think of or come across anything you deem relevant to the cause and have time to contact me or Tomer, I know we would be grateful for your insights and suggestions.

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[Please note that, although the notice above says the day of the week is a Thursday, I am speaking today–Monday.]

POSITION OVERVIEW

Position title: Executive Director of the Lowell Milken Institute for Business Law and Policy

Salary range: A reasonable estimate for this position is $200,000 to $250,000

APPLICATION WINDOW

Open date: October 30, 2023

Most recent review date: Sunday, Jan 7, 2024 at 11:59pm (Pacific Time)
Applications received after this date will be reviewed by the search committee if the position has not yet been filled.

Final date: Sunday, Mar 31, 2024 at 11:59pm (Pacific Time)
Applications will continue to be accepted until this date, but those received after the review date will only be considered if the position has not yet been filled.

POSITION DESCRIPTION

The Lowell Milken Institute for Business Law and Policy (“Institute”) is seeking an Executive Director with substantial practical experience in business law and policy to plan, oversee and execute the work of the Institute. The Institute is, by design, a dynamic one and the Executive Director will have significant opportunity to creatively shape the Institute’s mission and initiatives together with key faculty and leaders at UCLA School of Law. The Institute supports and expands educational opportunities, job-search support, academic scholarship, and policy analysis in business law and tax law. The goals of the Institute are to train the next generation of leaders in business law and to be an important resource for both scholars and practitioners in analyzing current issues in business law and tax law and developing policy solutions in response to those issues. The Executive Director will lead a talented team, and will oversee the Institute’s core programs, fundraising, and operation.

The full position description can be found here. Hat tip to friend-0f-the-BLPB Andrew Verstein.

The University of Cincinnati College of Law is currently undertaking a search for a new director of our Corporate Law Center. A description is below.  Hat tip to Kate Jackson.

About the Center

The Corporate Law Center at the University of Cincinnati College of Law was founded in 1987.  Its mission is to carry out  programs related to the education and training of students and others in the field of corporate law.  The Center has historically fulfilled its mission in a variety of ways, including the following: Awarding CLC fellowships to incoming law students, hosting an annual symposium devoted to trending topics in business law, supporting research, coursework, and other academic activities related to corporate law, sponsoring the student-led Business Law Society at the College of Law, supporting the Entrepreneurship and Community Development Clinic, which provides transactional legal services to start-ups, small businesses, and non-profit organizations; supporting the Patent & Trademark Clinic, which provides intellectual property legal services to individuals and businesses throughout the Cincinnati entrepreneurial ecosystem, and administering the Business Law Concentration for current law students.

Many of these activities continue to be enormously valuable. As part of the creation of a vision and strategic plan, the new Director will undertake a full programmatic review of the CLC and determine what kind of restructuring and reimagining is necessary to bring the CLC to the next level, as the leading national center of its kind.  Additional activities in this regard may include the creation of additional educational opportunities for students, a mentoring program, the establishment of an advisory board, and roundtables and seminars for members of the bar.

Job Overview

The College of Law seeks an innovative and dynamic leader to reinvigorate and reimagine its storied Corporate Law Center (“CLC”).  Reporting directly to the Dean and working closely with its Academic Director, the new Director of the CLC will be responsible for defining a vision for the CLC, developing the resources to carry the vision out, and raising the profile of the CLC so that it is properly recognized as one of the premier centers of the College of Law. 

The ideal candidate will be collaborative and visionary, with experience in transactional law and a passion for the educational mission of the College of Law.  The candidate’s background will reflect the potential to build strong and lasting partnerships with various constituencies both within and outside the institution to advance the mission of the Corporate Law Center.  The ideal candidate will also demonstrate the capacity to tailor academic and nonacademic programming to meet the unique needs of law students interested in transactional law.  Finally, the candidate will have a demonstrated track record of bringing a vision from its original conception through to full implementation.  

The position is structured as a two-year term, with the potential for extensions if the CLC is successful in obtaining funding to support the position for a longer period. 

Standard Days Worked: M-F
Type of Appointment: Full-Time (12 Months)
Work Location:  In-person.  The office location is University of Cincinnati College of Law, 2925 Campus Green Drive, Cincinnati, Ohio 45221.

Essential Functions

  • Undertake a full programmatic review of the CLC’s current activities.
  • Create a vision and a long-term strategic plan for the CLC.
  • Develop the resources necessary to carry out the plan. 
  • Build partnerships across campus and to the Cincinnati business community.
  • Research, design, and implement high quality programming in the area of corporate law.
  • Provide educational outreach to the transactional legal community through events, workshops, and collaboration with applicable partners.
  • Collaborate with College of Law leadership, faculty, and staff, as well as campus and community members.
  • Maintain data and provide reports on Center activities, as well as assessment of outreach and other efforts.
  • May provide direct and/or indirect supervision to exempt and non-exempt staff (i.e., hiring/firing, performance evaluations, disciplinary action, approve time off, etc.).
  • Perform related duties based on the needs of the Corporate Law Center.

Minimum Requirements

  • Demonstrated capacity for developing a vision and creating and carrying out a strategic plan.
  • Substantial capacity for fundraising.
  • Commitment to working collaboratively and building partnerships to advance the mission of the CLC and the College.
  • Strong communication skills.
  • Deep commitment to creating a culture of inclusive excellence and belonging.
  • Five years post-J.D. work experience in corporate legal practice or a related field.
  • Juris Doctor.

Additional Qualifications Considered

  • Experience with law teaching.
  • A record of published scholarship in corporate law and related fields.

Application Information

  • Interested and qualified applicants must apply online and include (i) a cover letter of interest, and (ii) a resume.  
  • Applications without a cover letter and resume will not be considered for the position. Please use the additional documents feature as needed for these items.

Fights over advance notice bylaws are becoming more common; I previously posted about Paragon Technologies v. Cryan, and right after that, VC Will decided Kellner v. AIM Immunotech.  In both situations, boards were found to have been overly aggressive in drafting and enforcing their bylaws, and VC Will went case by case to determine which actions were permissible and which were not.  And since the dissidents had not fully complied with even the permissible bylaws, VC Will would not order that their nominees be permitted to stand for election.

This strikes me as such a difficult problem.  On the one hand, there are good reasons for these bylaws, as both the Paragon and AIM disputes make clear.  In Paragon, the dissident really was playing games about providing information regarding its plans; in AIM, the contest was a continuation of one spearheaded a year earlier by a convicted felon who tried to conceal his involvement.  So yeah, boards have really legitimate interests in ensuring that shareholders have full information.

On the other hand, the blue pencil approach – where the noncompliant bylaws are severed and the legitimate ones remain standing – strikes me as having the same problem that’s been identified in the context of noncompetition agreements.  In the employment context, Chancery does not blue pencil, because:

To blue-pencil the provision creates a no-lose situation for employers, because the business can draft the covenant as broadly as possible, confident that the scope of the restriction will chill some individuals from departing. If someone does challenge the provision, then the worst case is that the court will blue-pencil its scope so that it is acceptable. It also enables employers to extract benefits at the expense of employees by including unenforceable restrictions in their agreements. The logical result of such a system is sprawling restrictive covenants.  Accordingly, “[w]hile, in some circumstances, a court may use its discretion to blue pencil an overly broad non[1]compete to make its restrictions more reasonable, this court has also exercised its discretion in equity not to allow an employer to back away from an overly broad covenant by proposing to enforce it to a lesser extent than written.”

Obviously, the employment context is not the same as an advance notice bylaw – dissidents are not nearly as vulnerable as employees – but there is, I think, a similar set of concerns.  If Delaware courts blue pencil the bylaws back to what – ex post – is determined to be reasonable, then boards have no incentive not to draft the most lengthy and unreasonable bylaws they can.  The dissident then has to guess at which ones are and are not permissible, and comply with the right set of bylaws – reveal too much and make themselves vulnerable, too little and disqualify themselves – while mounting an expensive court challenge that won’t necessarily create useful precedent for the next set of creative bylaws.

One aspect of the AIM case highlights the problem.  In 2016, the board had adopted a bylaw requiring disclosure of “all arrangements or understandings between such stockholder and each proposed nominee and any other person or persons (including their names) pursuant to which the nomination(s) are to be made.”  In 2023, after having dealt with the convicted felon’s earlier contest, the board amended the bylaw to broaden that provision and capture associates and family members in a manner that VC Will found was unreasonable.  When the dissidents challenged the amended bylaw, rather than strike it entirely, Will decided to restore it to the narrower, 2016 version, and measured the dissidents’ compliance against that bylaw – the one that did not exist anymore.  The dissidents had not complied with the bylaw that did not exist, and that was one of the reasons why VC Will affirmed the board’s decision not to permit them to advance their nominees. 

Now, given the peculiar facts of this case, I’m not troubled by that result, but notice the bind this would have placed on a good-faith dissident slate.  They would have found it nearly impossible to guess what information was actually required of them.

I wonder, then, if the solution is to set some kind of blanket rule that certain types of bylaws are almost always going to be permissible.  If the board adopts bylaws that go beyond that floor, it does so at its own risk – if any additions are deemed unreasonable, all are struck, but the floor (to the extent adopted by the board) remains intact.  That way, dissidents know what the floor is for compliance, and there is no risk that, say, a felon gets through without any disclosure just because the board was overzealous.  Meanwhile, if the board has genuine need for information beyond the floor, it has an incentive to be judicious in crafting its additional requirements.

National Business Law Scholars Conference (NBLSC) 

June 24-25, 2024 

Call for Papers 

The National Business Law Scholars Conference (NBLSC) will be held on Monday and Tuesday, June 24-25, 2024, at The University of California, Davis School of Law. 

This is the fifteenth meeting of the NBLSC, an annual conference that draws legal scholars from across the United States and around the world. We welcome all scholarly submissions relating to business law. Junior scholars and those considering entering the academy are especially encouraged to participate. If you are thinking about entering the academy and would like to receive informal mentoring and learn more about job market dynamics, please let us know when you make your submission. 

Submission Guidelines: 

Please fill out this form to register and submit an abstract by Friday, March 15, 2024. Please be prepared to include in your submission the following information about you and your work: 

• Name 

• E-mail address 
• Institutional Affiliation & Title 
• Paper title 
• Paper description/abstract 
• Keywords (3-5 words) 
• Dietary restrictions 
• Mobility restrictions 

If you have any questions, concerns, or special requests regarding the schedule, please email Professor Eric C. Chaffee at eric.chaffee@case.edu. We will respond to submissions with notifications of acceptance a few weeks after the submission deadline. We anticipate the conference schedule will be circulated in late April. 

Conference Organizers: 

Afra Afsharipour (University of California, Davis, School of Law) 
Tony Casey (The University of Chicago Law School) 
Eric C. Chaffee (Case Western Reserve University School of Law) 
Steven Davidoff Solomon (University of California, Berkeley School of Law) 
Benjamin Edwards (University of Nevada, Las Vegas Boyd School of Law) 
Joan MacLeod Heminway (The University of Tennessee College of Law) 
Nicole Iannarone (Drexel University Thomas R. Kline School of Law) 
Kristin N. Johnson (Emory University School of Law) 
Elizabeth Pollman (University of Pennsylvania Carey Law School) 
Jeff Schwartz (University of Utah S.J. Quinney College of Law) 
Megan Wischmeier Shaner (University of Oklahoma College of Law) 

Look, it’s not like I want to post about Elon Musk every week, it’s just that he keeps doing things that result in interesting corporate governance conundrums.  So this week’s post covers several things, only one of which is a Musk thing.

The Musk Thing

After Chancellor McCormick struck down his Musk’s 2018 pay package, one bit of speculation that floated about was whether Musk could sue Tesla to recover the package, on some kind of restitution/quantum meruit theory.  My suspicion is that such a claim would be unlikely to succeed because Musk’s own fiduciary breaches are what led to the original forfeiture, and he who comes into equity must do so with clean hands.  Or, as the famous jurist Leo Rosten put it, it would be like “a man who, having killed his mother and father, throws himself on the mercy of the court because he is an orphan.”

But despite the dubious merit such a claim would have, given the close ties McCormick identified between Tesla’s board and Elon Musk, there would be a risk that the board would take a dive and settle unnecessarily.

(More under the cut)

Continue Reading This Post is Not (Just) About Elon Musk

My coauthor, SMU Law Professor James W. Coleman, recently posted a draft of our article, Metals Derivatives Markets and the Energy Transition, on SSRN.  It’s forthcoming in Transactions: The Tennessee Journal of Business Law, and was written in connection with Business Transactions: Connecting the Threads VII, the BLPB-related conference at the University of Tennessee Law School.  I had a wonderful time at the event, which has become one of my yearly favorites, and am truly grateful for UT Law School’s consistently outstanding hospitality! 

Here’s the abstract of our article:

Despite their escalating importance, thus far, there has been minimal legal scholarship on metals derivatives markets. Given the key role of these markets in the transition to a clean energy future, increased focus on them is imperative. Hence, it is not surprising that the agendas for the last four meetings of the Commodity Futures Trading Commission’s Energy and Environmental Markets Advisory Committee each dedicated a significant portion of the meeting to metals derivatives markets and their role in the transition to a clean energy future.

Fundamentally, the United States and the world are moving from their long-term dependence on the fossil fuels that built the modern world, to dependence on new commodities such as copper and lithium. Coal and then natural gas made the modern economy possible by providing heat, power, and electricity to growing industries and populations in the world’s growing urban centers. Then oil made globalization possible by powering international sea and air travel as well as overland vehicles. As electric vehicles increasingly displace fossil fuel vehicles and renewable energy sources increasingly replace fuels in heating and industry, the economic and geopolitical stakes of metals markets will grow higher and higher. The criticality of metals derivatives markets, such as the dysfunctional market for nickel, will also escalate as governments, businesses, and others seek to hedge risks related to the increasing global dependency on metals.

Our article makes at least two contributions. First, it expands the minimal analysis of metals derivatives markets in the legal scholarship. Indeed, to the best of the authors’ knowledge, this is the first law review article to focus primarily on these markets. Second, it explores the role of metals derivatives in preparing for the transition to a clean energy future. We provide a brief overview of metals derivatives, including new markets in development, and their regulation in Parts I and II, respectively. In Part III, we explore the central role of metals derivatives markets in securing a clean energy future.  

I had the opportunity to attend one of the sessions in the Interdisciplinary Workshop on Corporations, Private Ordering, and Corporate Law last week.  The program was co-hosted by Foundations of Law and Finance (Goethe University Frankfurt, Center for Advanced Studies) and Columbia Law School.  Luckily for me, the piece of the program I attended featured Nizan Geslevich Packin presenting a work-in-progress she is co-authoring with Anat Alon-Beck entitled Board Observers: Shadow Governance in the Era of Big Tech.

Although a draft of the paper is not yet posted, here is the SSRN abstract:

This Article examines the rise in corporate governance practice of appointing board observers, especially in the context of private equity, venture capital (VC), and corporate venture capital (CVC). Board observers are non-voting members attending board meetings to gain knowledge and insight. They arguably also provide valuable feedback, an outside perspective, and can even help ensure corporate operations. In recent years, board observer seats – a notion also existing in the nonprofit sector – have become increasingly popular in the for-profit business world, where investors have various market and business justifications for using board observers, including corporate governance considerations, minimizing litigation exposure, navigating antitrust issues, CFIUS regulation, and ERISA concerns. It was not until November 2023 that mainstream media started paying more attention to the concept of board observers, after OpenAI, the corporate entity that brought the world ChatGPT, gave Microsoft a board observer seat following the drama in OpenAI’s boardroom. But what the mainstream media did not explore in its coverage of the board observer concept was its seemingly less interesting nature as a non-voting board membership, which was an important element in the complex relationship between OpenAI and Microsoft. This signaled deepening ties between the two companies that also eventually got the attention of the DOJ and FTC, as well as the influential role of CVC in funding and governing the research and development of OpenAI.

This Article makes several contributions. First, it provides an account of the board observer phenomenon, which has significantly developed and become a common practice in recent years given antitrust and national security considerations and scrutiny. Second, it presents fresh insights, groundbreaking empirical findings, and data on the scope of this corporate governance vehicle. Third, it considers the theoretical circumstances and implications of these developments. It argues for a shift in contractual innovation in deal-making and regulatory reviews, necessitating the development of corporate culture norms emphasizing disclosure and prioritizing company interests, communication, and trust-building as crucial elements in service of board observers. Finally, the Article considers the practical implications of these developments and explains why more empirical data collection and further research are necessary to determine whether current corporate governance mechanisms require modification in connection with liability, accountability, and fiduciary duties for board observers.

As someone who had to deal with board observer requests and provisions in an earlier corporate finance era, I was fascinated by the work.  So much of what their research is revealing felt familiar (even though much also has changed): what is old can be new again.  I look forward to reading the draft and learning more.

Given all the news about Governor Abbott’s pitch to create a business law infrastructure that will compete with Delaware, and Musk’s threat to decamp there, it’s worth pointing out that this is an amendment that was recently proposed to the Texas Business Organizations Code:

BURDEN OF PROOF IN CERTAIN DERIVATIVE PROCEEDINGS. Notwithstanding any other law, in a derivative proceeding by a shareholder that alleges an act or omission related to the improper consideration of environmental, social, and governance criteria in the performance of the act or omission, the burden of proof is on the corporation to prove the act or omission was in the best interest of the corporation.

In 2022, Texas legislators proposed amending its law to permit shareholders to bring a fiduciary duty claim against the managers of any public company that provided women employees with travel benefits for abortion care (though, to be fair, in that case, the proposal would have applied even to non-Texas organized companies).

Texas Attorney General Ken Paxton has been very vocal about his objections to ESG – he is among those suing to block a Department of Labor rule, among other things – and as Attorney General, he would, as I understand it, have the power to seek involuntary dissolution of Texas entities.

We can also throw in Texas’s refusal to do business with financial institutions it perceives as “boycotting” oil companies, with “boycott” defined both capaciously and idiosyncratically.

I think it would be very difficult for Governor Abbott to assure companies that if they organize in Texas, their business decisions will not be second-guessed on political grounds.