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Steve Bainbridge
Interests: Law, corporate governance, economics, politics, religion, education, books, food, and wine
Recent Activity
An earlier post touched on the validity of mandatory arbitration clauses in corporate bylaws or articles of incorporation, noting Ann Lipton's skepticism about them. It turns out that Kevin LaCroix has also been musing on this topic: As Alison Frankel points out on here On the Case blog (here), mandatory arbitration of shareholder claims is not a new idea. Academics have been debating the possibility for decades. And as I noted in a post a few years ago, several courts did uphold the enforceability of one company’s bylaw provision requiring arbitration of shareholder claims. Nevertheless, at least until now, the... Continue reading
Posted 2 days ago at ProfessorBainbridge.com
Reuters reported last week that President Trump plans to renominate Hester Pierce to be an SEC Commissioner. That would leave one seat open, which by law would have to go to a Democrat. President Obama had nominated Pierce and (my friend) Lisa Fairfax. Their nominations got hung up on election year politics, but also (reportedly) because Senator Elizabeth Warren reportedly nixed Fairfax because Lisa refused to commit to voting in favor of disclosure of corporate political spending. I still think Fairfax is incredibly qualified for the job. Elizabeth Warren used to think so too. I hope Trump sends Lisa's name... Continue reading
Posted 2 days ago at ProfessorBainbridge.com
Friend of the blog Francis Pileggi posts: For my latest column in Directorship, the publication of the National Association of Corporate Directors, I discuss a recent Delaware Supreme Court decision that addresses fiduciary duties as modified in the context of a limited partnership agreement. The case of Brinckerhoff v. Enbridge Energy Company was previously highlighted on these pages, but the opinion remains required reading for any lawyer who needs to know the latest Delaware law regarding how fiduciary duties can be modified by agreement in non-corporate entities, and the interfacing of those modified duties with the implied covenant of good... Continue reading
Posted 2 days ago at ProfessorBainbridge.com
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Keith Paul Bishop reports that a US District Court, applying California law, declined to pierce the veil of a LLC to reach the entity's President: However, the Trust Funds present no evidence or even an allegation that Murphy is a member of Show Ready; they merely allege that he is the “President” of Show Ready. (Compl. ¶ 6.) Thus, this statute [§ 17703.04] does not establish Murphy’s personal liability for Show Ready’s debts. In our book, Limited Liability: A Legal and Economic Analysis , Todd Henderson and I discuss both the law governing LLC veil piercing and the policy arguments... Continue reading
Posted 2 days ago at ProfessorBainbridge.com
Good stuff, which concludes: My view of entity purpose remains committed to the principle of director primacy. Director are obligated to run the entity for the benefit of the shareholders, but, absent fraud, illegality, or self-dealing, the directors decide what actions are for the benefit of shareholders. Period, full stop. Ditto. (But you already knew that, didn't you?) Continue reading
Posted 2 days ago at ProfessorBainbridge.com
Ann Lipton discusses: So Michael Piwowar inspired a bit of heartburn in the plaintiffs’ bar this week when, during a speech to the Heritage Foundation, he encouraged corporations to add mandatory arbitration provisions in their charters prior to an IPO. This is a subject on which I’ve frequently posted, but since it’s in the news again I can’t let it go by without comment. Mandatory arbitration is an idea that terrifies plaintiffs’ attorneys because arbitration clauses typically come with a class action waiver, and that could sound the death-knell for federal securities litigation. Moreover, because the Supreme Court has interpreted... Continue reading
Posted 2 days ago at ProfessorBainbridge.com
When Dodd-Frank was passed, the Democrats had control of Congress, the White House, and the SEC. Despite that preponderance, Leviathan moved ever so slowly. As a result, seven years after Dodd-Frank became law there are a slew of rule making requirements imposed by the statute that remain unfulfilled. Now, of course, the GOP controls the White House, Congress, and the SEC. The new Wall Street cops clearly have a deregulatory focus. But can they just ignore the Dodd-Frank requirements? Bloomberg reports that the GOP is ignoring a number of Dodd-Frank regulatory mandates. Assuming Congress doesn't try twisting the SEC's arm,... Continue reading
Posted 3 days ago at ProfessorBainbridge.com
Richard Posner, pp. 72-73 of his new book. Actual quote says "of those states," refers back to "states of the deep South" in prev sentence. https://t.co/5braUI1rYK — Ed Whelan (@EdWhelanEPPC) July 20, 2017 Continue reading
Posted 6 days ago at ProfessorBainbridge.com
I've wanted a pressure cooker for a long time but hadn't gotten around to getting one. When I finally decided to do so, I discovered the new wave of multi-cookers. In theory, they do it all: brown, sauce, simmer, slow cook, pressure cook, rice cooker, warm, etc. Research suggested that the Fagor LUX Multi Cooker was the one to get. It won the Cook's Illustrated test (albeit with a middling review), USA Today called it the one for the "organized home chef," and it won Good Housekeeping's test beating out the more popular Instant Pot: It came up to pressure... Continue reading
Posted 6 days ago at ProfessorBainbridge.com
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Professor David Milman of the School of Law at the University of Lancaster reviewed Bainbridge & Henderson's Limited Liability: A Legal and Economic Analysis in vol. 28 of the International Company and Commercial Law Review (P. 243), writing that: This new text represents scholarship in its finest form. Professors Bainbridge and Henderson provide, in succinct form, a masterly coverage of the central corporate law concept of limited liability. ... This is a “must have” component for the personal library of any serious scholar of corporate law in the developed world. Students at all levels will benefit from the insights on... Continue reading
Posted 6 days ago at ProfessorBainbridge.com
I use PowerPoint in my law school lectures. My PowerPoint slides often have speakers notes. I give my students copies of the slides, but I don't want them to have access to the notes. I could just give them the slides as PDFs, but then they complain that they can't easily convert the slides into a Word outline. So I want to give them the slides without the notes. Unfortunately, Microsoft has not seen fit to give PowerPoint for Mac such an obviously useful tool as an out of the box mechanism for removing all files from all slides with... Continue reading
Posted Jul 13, 2017 at ProfessorBainbridge.com
My friend, UCLAW colleague, and now coauthor Iman Anabtawi and I have submitted to Foundation Press the teacher's manual to accompany our new casebook Mergers and Acquisitions: A Transactional Perspective. The manual is a whopping 232 pages (which compares quite favorably to the text's 766 pages) and provides answers to every question, problem, and exercise in the text, detailed descriptions of the facts and holdings of all principle cases, and many suggestions for how to cover the material in class. I think it is fair to say that it is the most detailed teacher's manual in this subject matter area.... Continue reading
Posted Jul 13, 2017 at ProfessorBainbridge.com
Sometimes the best thing an academic can do is admit that a project is never going to amount to anything and pull the plug. When that happens, I recommend permanent file deletion of all relevant materials so as to eliminate the temptation to try to resuscitate it. Shred any paper documents. Kill it. Burn the carcass. And move on. Continue reading
Posted Jul 12, 2017 at ProfessorBainbridge.com
Julie Gorte and Tim Smith offer a Harvard corporate law blog post claiming three things about SEC Rule 14a-8: Shareholder resolutions usually focus on material issues aimed at improving corporate financial performance. Shareholder proposals under the current SEC rules are not burdensome, and in the vast majority of cases, are not even binding. The voice of shareholders is valuable both to companies and to investors alike. All three are demonstrably false. (Unless otherwise indicated, the following comes from Proxy Monitor.) In 2016, 51% of all shareholder proposals related to social policy rather than corporate governance or executive compensation. Over the... Continue reading
Posted Jul 11, 2017 at ProfessorBainbridge.com
There is a burgeoning literature that treats fiduciary obligations as a unitary subject and, accordingly, posits various unified field theories that explain all of fiduciary duties and relationships. I am skeptical of the idea that law is amenable to unified theories. "Physicists have long sought a unified field theory, which would provide a single set of simple laws that explain the four interactions or forces that affect matter--i.e., the strong, electromagnetic, weak, and gravitational forces. To date, they have failed, which provides a strong cautionary tale for anyone seeking a unified field theory of social interactions among fallible humans, whose... Continue reading
Posted Jul 6, 2017 at ProfessorBainbridge.com
I think so. In working up an article for a symposium on the 50th anniversary of the seminal insider trading decision in SEC v. Texas Gulf Sulphur Co., 401 F.2d 833 (2d Cir.), cert. denied, 394 U.S. 976 (1968), I've found something rather interesting. The TGS opinion declares that Rule 10b-5 “is based in policy on the justifiable expectation of the securities marketplace that all investors trading on impersonal exchanges have relatively equal access to material information.”[1] In support of that proposition, the court did not cite the text of the statute, which is hardly surprising because Securities Exchange Act... Continue reading
Posted Jul 5, 2017 at ProfessorBainbridge.com
Bernard Sharfman discusses the evolving issues associated with the exploding voting power of index fund managers: It can be argued that mega-mutual fund advisors have been drawn into an alliance with the shareholder empowerment movement on the issues of proxy access and dual class share structures created through IPOs like Snap Inc.’s, which resulted in a class of non-voting shares, simply because of the business opportunity such an alliance represents. That opportunity is to attract or retain the business of public pension funds and union related funds (which control approximately $3 trillion in assets), the institutional leaders in the shareholder... Continue reading
Posted Jul 5, 2017 at ProfessorBainbridge.com
Keith Paul Bishop reports that a new Nevada statute is implicitly intended to nix court decisions suggesting that Nevada law will track Delaware corporate law. Continue reading
Posted Jul 5, 2017 at ProfessorBainbridge.com