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70(1): 1-32 (Winter 2014/2015)
We evaluate the U.S. Supreme Court’s controversial decision in the Hobby Lobby case from the perspective of state corporate law. We argue that the Court is correct in holding that corporate law does not mandate that business corporations limit themselves to pursuit of profit. Rather, state law allows incorporation for any lawful purpose. We elaborate on this important point and also explain what it means for a corporation to “exercise religion.” In addition, we address the larger implications of the Court’s analysis for an accurate understanding both of state law’s essentially agnostic stance on the question of corporate purpose and also of the broad scope of managerial discretion.
70(1): 33-60 (Winter 2014/2015)
Delaware corporate law embraces a “board-centric” model of governance contemplating that, as a general matter, all directors will participate in a collective and deliberative decision-making process. Rather than serving as a justification for a board majority to disempower directors elected or appointed by or at the direction of a particular class or series of stock or an insurgent group—which we refer to as “blockholder” directors—this system recognizes the need for a balancing of both majority and minority rights. In this article, we review the rights and duties of all directors and highlight cases where both board majorities and blockholder directors have overstepped their bounds. We caution that board majorities should deliberate carefully before taking action that limits a blockholder director’s rights or excludes the blockholder director from participation in fundamental corporate matters. At the same time, we caution that blockholder directors should take care when exercising their rights, given that their affiliation with investors may make them vulnerable to duty of loyalty claims. We urge both sides to proceed with a sense of empathy toward the other and seek to make reasonable accommodations, and we emphasize the role that experienced corporate counsel can play in mediating disputes, resolving tensions, and striking the appropriate balance in the boardroom.
70(1): 61-120 (Winter 2014/2015)
Non- and Deferred Prosecution Agreements (N/DPAs) are controversial because prosecutors, not judges or the legislature, are changing the governance of leading public corporations and entire industries. To analyze N/DPAs’ corporate governance implications and provide policy makers with guidance, we code all publicly available N/DPAs (N=271) from 1993 to 2013, identifying 215 governance categories and subcategories. We find evidence that the execution of N/DPAs is associated with significant corporate governance changes. The study categorizes mandated corporate governance changes for entities that executed an N/DPA as follows: (1) Business Changes, (2) Board Changes, (3) Senior Management, (4) Monitoring, (5) Cooperation, (6) Compliance Program, and (7) Waiver of Rights. We supplement the analysis of governance changes in these categories with a more in depth evaluation of the respective subcategories of governance changes. We also code and analyze preemptive remedial measures, designed by corporations to preempt the execution of an N/DPA or corporate criminal indictment. The article evaluates the implications of the empirical evidence for boards, management, and legal practitioners.
70(1): 121-160 (Winter 2014/2015)
As a condition to the closing of many types of business transactions, one or more of the parties may be required to provide written opinion letters of counsel for the benefit of other parties to the transaction. These opinions are often referred to as “third-party” opinions because the opinion giver renders them to a party or parties other than the opinion giver’s own client. These opinions may cover a range of issues, including, among others, the entity status and power of, the due authorization, execution, and delivery of the transaction documents by, and the enforceability of those documents against, the opinion giver’s own client in the transaction. Oftentimes the discussions regarding the scope of these opinions and the extent to which they will be qualified are time-consuming, and the resulting costs, borne by the client whose counsel is asked to render the opinions, increase substantially as negotiations proceed. This article, focusing on third-party opinions rendered in the context of U.S. commercial loan transactions, considers a number of qualifications that for various reasons, in the experience of the authors, opinion givers commonly include and opinion recipients and their counsel commonly accept. The authors believe that the identification of commonly used and accepted qualifications in the U.S. commercial loan market can help to streamline the opinion process in many transactions.
70(1): 161-174 (Winter 2014/2015)
Recent Delaware case law explores and extends what the author describes as the “doctrine of corporate consent,” under which a stockholder is deemed to consent to changes in the corporate relationship that are adopted pursuant to statutory authority (such as by directors adopting bylaws). This essay examines whether and to what extent there may be limits on the application of the doctrine of corporate consent and whether fee-shifting bylaws exceed those limits.
70(1): 175-176 (Winter 2014/2015)
The Corporate Laws Committee of the ABA Business Law Section from time to time makes changes to the Model Business Corporation Act.
70(1): 177-216 (Winter 2014/2015)
In 2009, the Opinions Committee of the BLS of the State Bar of California (the Committee) published a commentary on customary practice with respect to third party legal opinions given in venture capital financing transactions. The sample opinion augments the 2009 Report by providing an illustration of what an opinion letter given in a venture capital financing transaction might look like. The Committee chose as the transaction model a private offering, not involving general solicitation or general advertising, of Series B Preferred Stock by a Delaware corporation under transaction documents governed by California law. The sample opinion is annotated and discusses both California and Delaware laws.
70(1): 217-318 (Winter 2014/2015)
The complete annual survey of cyberspace law.
70(1): 217-222 (Winter 2014/2015)
The introduction to the Winter 2014/2015 Cyberspace Survey, as well as a discussion on the communal definition of “cyberspace law.”
70(1): 223-230 (Winter 2014/2015)
Cyber damage from intrusions into an enterprise’s information and operations networks will not surprise anyone but the ill-informed and those with their heads in the same or in the “cloud.” What may be surprising is the coherence of legal decisions issued in the wake of cyber damage and the clarification of cyber responsibilities that clients and counsel will need to reckon with.
70(1): 231-246 (Winter 2014/2015)
Survey and analysis of 2013-2014 decisions in cases arising from data security breaches. The survey addresses potential liability for omissions from and representations in information privacy policies, also claims against banks.
70(1): 247-252 (Winter 2014/2015)
Evolving technologies and philosophies have informed recent Federal Trade Commission privacy enforcement actions. The FTC has looked beyond the traditional notion of a deceptive commercial practice and now brings actions against “unfair” security practices.
70(1): 253-260 (Winter 2014/2015)
This article explores recent developments in European Union data privacy and data protection law, through an analysis of European Union advisory guidance, independent administrative agency enforcement action, case law, and legislative reform in the areas of digital technologies, the internet, telecommunications and personal data.
70(1): 261-270 (Winter 2014/2015)
This survey covers developments in four areas of payments law and consumer lending between June 1, 2013 and June 1, 2014.
70(1): 271-276 (Winter 2014/2015)
This section of the annual survey focuses on recent decisions, particularly those from the U.S. Supreme Court, in patent law relevant to cyberspace.
70(1): 277-288 (Winter 2014/2015)
Scanning the past year of cyberspace trademark law, one is left with a distinct impression that the U.S. legal system has matured and is more “caught up” to the real (albeit virtual) world in its understanding and treatment of all things internet.
70(1): 289-298 (Winter 2014/2015)
This year’s survey starts with the U.S. Supreme Court’s recent decision in American Broadcasting Cos. v. Aereo, Inc. before shifting to the Ninth Circuit’s opinion in Garcia v. Google Inc. litigation and the trial court’s dismissal of the Google Books lawsuit on its merits.
70(1): 299-306 (Winter 2014/2015)
Summary of recent case law and legislative efforts affecting Internet intermediaries hosting user-generated content. Covers 47 U.S.C. Section 230 and 17 U.S.C. Section 512, as well as other peripheral issues.
70(1): 307-312 (Winter 2014/2015)
Though the speed is slow, India is witnessing a change in the laws concerning service provider and website owners' liability regarding user generate content. The article provides a summary of developments in the law concerning website owner and service provider liability, as on date and the developments which are expected in future.
70(1): 313-318 (Winter 2014/2015)
This survey is about the Brazilian Internet Legal Framework (“Lei do Marco Civil da Internet”), which entered into force on June 23, 2014. Said Law concerns the regulation of Brazilian cyberspace and also includes provisions about webusers privacy.