Vol. 76 No. 1 -- Winter 2020/2021

     

    Articles

    Business & Corporate

    Caremark at the Quarter-Century Watershed: Modern-Day Compliance Realities Frame Corporate Directors’ Duty of Good Faith Oversight, Providing New Dynamics for Respecting Chancellor Allen’s 1996 Caremark Landmark

    E. Norman Veasey and Randy J. Holland

    Chancellor Allen’s famous and prescient 1996 opinion in Caremark will soon be twenty-five years of age. It has more than stood the test of time. Indeed, it has become gospel as an enduring corporate governance doctrine and a dynamic driver of modern-day oversight and compliance requirements. Although it did not become enshrined as a major Delaware Supreme Court precedent until the Stone v. Ritter Delaware Supreme Court decision in 2006, Chancellor Allen’s 1996 Caremark dictum enjoyed from the outset the international respect of a precedent that had the imprimatur of a Delaware Supreme Court holding.

    Business & Corporate

    Toward Fair Gain Sharing and a Quality Workplace for Employees: How a Reconceived Compensation Committee Might Help Make Corporations More Responsible Employers and Restore Faith in American Capitalism

    Leo E. Strine, Jr. and Kirby M. Smith

    In the three decades after World War II, workers and stockholders shared equitably in the nation’s growing wealth. But over the last several decades, this fair gainsharing has diminished as the power of the stock market, in the form of institutional investors, has grown as the comparative voice and leverage of workers has declined. As a result of these and other factors, a much greater share of the gains from increased corporate profitability and productivity has gone to stockholders and top management, on the one hand, and much less to employees, on the other.

    Business & Corporate

    Putting Benefit Corporation Statutes into Context by Putting Context into the Statutes

    Frederick H. Alexander

    Ever since Adam Smith described the efficiency of markets in an age where freedom and property rights were coming to be seen as key elements of the good society, capitalism has honored the concept that capital return at individual enterprises is a good heuristic for their social return. In a complex and interdependent global economy, however, that concept is being challenged, as many question whether the costs of unfettered profit seeking outweigh its benefits. This has led some to challenge the utility of the shareholder primacy doctrine, and others to challenge the utility of capitalism itself.

    Business & Corporate

    LLC Default Rules Are Hazardous to Member Liquidity

    Donald J. Weidner

    Simply by forming LLCs, entrepreneurs now unwittingly lock themselves in to perpetual entities that offer them no liquidity and present them with costly procedural obstacles to enforcing both their agreement among themselves and their statutory rights. Even in atwill LLCs that are member-managed, recent LLC acts deny members both a right to dissolve and a right to be bought out. While thus locking members in, these acts deny them standing to bring many if not most of their claims among themselves or against the firm.

    Business & Corporate

    The Treatment of Derivatives Under the SEC’s Net Capital Rule

    Michael P. Jamroz

    Every broker or dealer conducting a general securities business registered with the Securities and Exchange Commission (Commission) must comply with SEC Rule 15c3-1, the Net Capital Rule. The Net Capital Rule is designed to ensure that broker-dealers will have adequate liquid assets to meet their obligations to investors and liabilities to other creditors. The rule is complex and specifically addresses the liquidity, market, and counterparty credit risks associated with the proprietary positions of the broker-dealer.

    Reports

    Business & Corporate

    PEB Commentary No. 19—Hague Securities Convention’s Effect on Determining the Applicable Law for Indirectly Held Securities

    Permanent Editorial Board for the Uniform Commercial Code

    The Permanent Editorial Board for the Uniform Commercial Code acts under the authority of the American Law Institute and the Uniform Law Commission (also known as the National Conference of Commissioners on Uniform State Laws). In March 1987, the Permanent Editorial Board resolved to issue from time to time supplementary commentary on the Uniform Commercial Code to be known as PEB Commentary.

    Business & Corporate

    PEB Commentary No. 22—Status of a Disposition Under Section 9-610 of the Uniform Commercial Code if the Transferee Does Not Act in Good Faith (August 24, 2020)

    Permanent Editorial Board for the Uniform Commercial Code

    The Permanent Editorial Board for the Uniform Commercial Code acts under the authority of the American Law Institute and the Uniform Law Commission (also known as the National Conference of Commissioners on Uniform State Laws). In March 1987, the Permanent Editorial Board resolved to issue from time to time supplementary commentary on the Uniform Commercial Code to be known as PEB Commentary.

    Survey

    Survey

    Business & Corporate

    Survey - Cyberspace Law

    Cyberspace Law Committee, ABA Business Law Section

    The COVID-19 pandemic that erupted during the last three months of the survey period has transformed the world, and cyberlaw has registered some of its impacts. The massive and almost instantaneous shift from face-to-face interactions to remote videoconferencing technologies will continue to create cyberlaw issues that will draw the attention of courts and legislatures for years to come. This survey covers the year ending May 2020.

    Business & Corporate

    Survey of the Law of Cyberspace: An Introduction

    John A. Rothchild

    The COVID-19 pandemic that erupted during the last three months of the survey period has transformed the world, and cyberlaw has registered some of its impacts. The massive and almost instantaneous shift from face-to-face interactions to remote videoconferencing technologies will continue to create cyberlaw issues that will draw the attention of courts and legislatures for years to come. This survey covers the year ending May 2020.

    Business & Corporate

    An Early Evaluation of the Privacy Impacts of the COVID-19 Pandemic

    David Sella-Villa

    At the time of this writing in mid-2020, the COVID-19 pandemic has gripped the world and frustrated health experts. In the interest of “flattening the curve” of new cases, state and local government officials have implemented a variety of legal measures including stay-at-home orders, social distancing requirements, and mandates to wear masks in public. These legal responses to the pandemic have created both new sources of data about people and new avenues for accessing existing data that may have been difficult to access before the pandemic.

    Business & Corporate

    Recent Developments in Privacy Law

    Meg Strickler

    Privacy and data security remain top concerns for companies and their counsel as the vast privacy law landscape is constantly evolving with new trends, laws, and emerging issues. This year’s update addresses significant legal developments in privacy and data security: private litigation, record-breaking class action settlements, and federal regulation and enforcement actions. Part II discusses data misuse cases brought using a patchwork of laws in the absence of clear statutory guidance. Part III provides an update on biometric privacy, specifically discussing litigation under the Illinois Biometric Information Privacy Act.

    Business & Corporate

    New York Shows Two Sides of the Same SHIELD Act

    David Payne

    The New York SHIELD Act reaches beyond the jurisdiction of New York and is more expansive than the privacy laws of many other states. The Act protects “private information,” which is defined to encompass more than “personal information.” The definition of a reportable “breach” was expanded to that of other state data breach notification laws, but the situations in which a business is excused from disclosing a breach are narrower than in other state laws. Many state laws require reasonable data security for personal information, but the SHIELD Act is more specific, listing security measures that are deemed reasonable.

    Business & Corporate

    Recent Developments in Copyright Law

    Timothy C. Bradley

    It has been an interesting year for cyberlaw copyright issues. Part II discusses cases analyzing whether social media content sharing features, such as retweets, can give rise to actionable copyright claims. Part III looks at secondary liability claims against Internet service providers for their handling of takedown notices under the Digital Millennium Copyright Act (“DMCA”), while Part IV discusses a case upholding a statutory damages award against an online seller.

    Business & Corporate

    Developments in Advertising and Consumer Protection

    Richik Sarkar

    Even before the country’s COVID-19 confinement forced many of us to become “at home consumers,” regulators and courts were in the habit of scrutinizing online transactions, endorsements, and marketing tactics. During the survey period, courts addressed several issues under the Telephone Consumer Protection Act (“TCPA”) (Part II), including vicarious liability, what constitutes injury for the purpose of Article III standing, and the definition of an “automatic telephone dialing system” (“ATDS”).

    Business & Corporate

    Developments in Intermediary Liability

    Chase J. Edwards

    The Communications Decency Act (“CDA”) was crafted at the dawn of the Internet Age to provide immunity for any “interactive computer service” (“ICS”) from liability based on information provided by third parties. Colloquially known by its section number in Title 47 of the U.S. Code, Section 230 shielded the nascent industry by greatly limiting federal claims against an ICS and preempting conflicting state claims.

    Business & Corporate

    New Developments in Digital and Wrap Contracts

    Nancy S. Kim

    This essay discusses legal developments involving digital and other wrap contracts. Last year’s essay explained that courts were continuing to articulate the standard of reasonable or constructive notice and manifestation of assent but that their application of the standard was evolving. This year’s cases include a trio in Part II involving Uber which, read together, provide further clarity regarding what presentation features are likely to result in a finding of reasonable notice and what features when absent are likely to result in a finding that the notice was not conspicuous and therefore not effective.