Source: https://www.professorbainbridge.com/professorbainbridgecom/2013/06/index.html
Timestamp: 2019-04-26 09:47:58+00:00

Document:
The German Corporate Governance Code Commission opposes federal legislation mandating a binding annual shareholder vote on executive remuneration. In a statement, Commission Chairman Klaus-Peter Müller expressed doubt whether a decision made by the shareholders at the annual general meeting will prevent excessively high management board remuneration. The German Corporate Governance Code instead places emphasis on greater transparency and an improved basis for decisions by supervisory boards as a means of putting a stop to excesses in management board remuneration.
While further regulatory and legislative intervention in setting management remuneration may satisfy certain expectations in some quarters of society, noted the Chairman, it would place fetters on global companies. More broadly, Chairman Müller appealed to policy-makers to trust in the self-regulating force of the German Corporate Governance Code, adding that it is neither necessary nor desirable for every aspect of business life to be governed by binding legislation.
First, I completely agree with the particular decision. Mandatory say on pay would be a horrible idea.
Second, wouldn't it be great if our regulators took Chairman Müller's appeal to heart?
In Grafton Partners L.P. v. Superior Court, 36 Cal.4th 944 (2005), the California Supreme Court interpreted this provision as rendering unenforceable pre-dispute contractual jury trial waivers. The Delaware Court of Chancery is a court of equity and doesn’t generally have jury trials. These plaintiffs will likely have to contend with AJZN, Inc. v. Yu, 2013 U.S. Dist. LEXIS 2943 (Jan. 7, 2013), in which Judge Lucy H. Koh rejected a challenge to forum selection clauses on this basis. However, that case involved transferring the case to the U.S. District Court in Delaware, a court that does hold jury trials.
Trust relationships are premised on equitable principles. (See McMahon v. New Castle Associates (Del.Ch.1987) 532 A.2d 601, 604; *1556 Jones v. H.F. Ahmanson & Co., supra, 1 Cal.3d at p. 107, 81 Cal.Rptr. 592, 460 P.2d 464.) In addition, “entire fairness” is about adjusting equities. (See C & K Engineering Contractors v. Amber Steel Co., supra, 23 Cal.3d at p. 11, 151 Cal.Rptr. 323, 587 P.2d 1136 [court is required to exercise equitable principles when it adjusts rights, equities, and interests].) The test requires weighing various considerations in order to reach a just result. ( Cinerama, Inc. v. Technicolor, Inc., supra, 663 A.2d at pp. 1162–1163 [explaining entire fairness test].) That standard illustrates a court's equitable power to weigh various considerations in order to reach a just result. The sole method of obtaining damages in this case is by application of equitable principles. It follows that this action, under California law, is properly classified as an equitable action.
See also Dodds v. Meng, 2012 WL 5208561 (Cal.App. 4 Dist. 2012) (unpublished and hence uncitable in court) ("We have no difficulty concluding that the case before us is a shareholder derivative lawsuit. ... Such a case is essentially equitable in nature.").
Since many--if not most--of the suits that would be affected by forum selection bylaws will involve such claims, and since California would not grant a jury trial as a matter of right in such cases, I see no reason why a California court would not enforce a Delaware corporatio's forum selection bylaw in such cases.
In saving the mandate’s penalty provision as a tax, he followed his head. In denouncing the very notion that Congress might require people to buy health insurance, he followed his heart. In the term that just ended, head and heart were no longer at war.
First, there's the implicit claim that she is able to divine the inner workings of Roberts' decision making processes. She knows what's in his "head" and "heart," as if she were some psychic shrink. In fact, as has been her pattern over the years, this column reflects her complete inability to understand the thoughts and feelings of anyone to the right of William Brennan.
Second, there's the implication that oppositon to the Obamacare mandate must be emotional rather than logical. Apparently, no thinking person using their noggin instead of their gut could possibly oppose that mandate.
It's this sort of nonsense that makes Greenhouse unreadable.
After considering the parties‟ contending arguments on Count I of the complaints, the court finds that the bylaws are valid under our statutory law. 8 Del. C. § 109(b) provides that the bylaws of a corporation “may contain any provision, not inconsistent with law or with the certificate of incorporation, relating to the business of the corporation, the conduct of its affairs, and its rights or powers or the rights or powers of its stockholders, directors, officers or employees.” The forum selection bylaws, which govern disputes related to the “internal affairs” of the corporations, easily meet these requirements.5 The bylaws regulate the forum in which stockholders may bring suit, either directly or on behalf of the corporation in a derivative suit, to obtain redress for breaches of fiduciary duty by the board of directors and officers. The bylaws also regulate the forum in which stockholders may bring claims arising under the DGCL or other internal affairs claims. In other words, the bylaws only regulate suits brought by stockholders as stockholders in cases governed by the internal affairs doctrine. Thus, the bylaws, by establishing these procedural rules for the operation of the corporation, plainly relate to the “business of the corporation[s],” the “conduct of [their] affairs,” and regulate the “rights or powers of [their] stockholders.” Because Delaware law, like federal law, respects and enforces forum selection clauses, the forum selection bylaws are also not inconsistent with the law.6 For these reasons, the forum selection bylaws are not facially invalid as a matter of statutory law.
In its ruling, the Court of Chancery relies heavily on decisions of the United States Supreme Court recognizing the internal affairs doctrine, as well as the general validity of forum selection clauses in contracts. In addition, the court relies on the scholarship of Professor Joseph Grundfest who is one of the leading scholars advocating forum selection clauses as part of the organic documents of a corporation.
It is also noteworthy to clarify and emphasize what this decision did not address and did not opine on. For example, this opinion did not rule on the validity of a forum selection clause in a certificate of incorporation. Nor does the decision specifically address the fiduciary obligations of boards in adopting such provisions. It also remains to be seen whether courts outside of Delaware addressing the same issue will follow suit.
But go read the whole thing. Also be sure to read Alison Frankel's post exploring whether Strine's opinion could lead to mandatory arbitration bylaws being validated.
Claudia Allen's study of the various approaches Delaware corporations have taken to forum selection clauses takes on additional importance in light of Strine's opinion. Check it out.
I think these provisions should be upheld. Contracts routinely include exclusive jurisdicton provisions and they are routinely enforced. The corporation's organic documents (i.e., the articles of incorporation and bylaws) represent a contract between the corporation and its shareholders. Hence, like any other contract, an exclusive jurisdiction provision in those documents should be enforced by the courts.
Keeping these cases in Delaware courts [via exclusive jurisdiction provisions] strikes me as preferable [to allowing plaintiff to select any forum it wants]. Expert judges. No juries. No home state bias in favor of one side or the other, since usually both sides will have their principal place of business elsewhere. Promotes consistency of outcomes. Delaware courts more rigorous than most in policing plaintiff lawyers bringing suits not in the best interests of the corporation or its shareholders as a whole.
In a recent decision, In re Revlon, Inc. Shareholders Litig., newly-appointed Vice Chancellor Laster suggested a solution. In dicta, he endorsed a Delaware entity’s right to mandate in its governance documents a chosen forum for the resolution of state law-based shareholder class actions, derivative suits and other intra-corporate disputes. Vice Chancellor Laster stated that “if boards of directors and stockholders believe that a particular forum would provide an efficient and value-promoting locus for dispute resolution, then corporations are free to respond with charter provisions selecting an exclusive forum for intra-entity disputes.” Presumably, the Vice Chancellor had Delaware in mind.
Nathan goes on to discuss the legal issues at some length. In any case, assuming Laster wasn't simply trying to build up business for Delaware courts, there's no immediately obvious policy reason why the same result would not apply to mandatory arbitration provisions.
“I love the name of that party — the ‘Freedom Party,’” Palin said.
The Freedom Party was founded in Richmond, Virginia in 1917, immediately after the Great War by a man named Anthony Dresser. Its rather vague ideology, which was made Party policy after Jake Featherston took control, encompassed extreme Confederate nationalism and white supremacy, and hatred for blacks, socialists, the United States, and the Southern aristocracy that dominated the political and military establishments.
Of course, that was in Harry Turtledove's alternate history. I'm sure Palin/Mark Levin's Freedom Party will be very different. Right?
I probably made a mistake serving this wine with an intensely peppery steak au poivre. The heat of the pepper and the richness of the sauce probably swamped what the wine had to offer. With all that said, however, I wasn't crazy about it. To be clear, it was a decent wine, but I expect better from B&H.
It may also need more time. The color was an intense purple and the wine had thrown only a modest amount of light sediment.
Lots of dark fruit, especially blackberry, but also lots of tannins, high acidity, and pretty high alcohol.
I've got two bottles left in the cellar. Maybe they'll come around. But maybe not. I'll let you know about the next one in about 5 years.
As a legal matter, the corporation is an entity wholly separate from the people who own it and work for it. For most purposes the corporation is treated as though it were a legal person, having most of the rights and obligations of real people, and having an identity wholly apart from its constituents. Accordingly, a corporation has most of the constitutional rights possessed by natural persons. See, e.g., First Nat’l Bank of Boston v. Bellotti, 435 U.S. 765, 784 (1978) (corporation has First Amendment right of free speech); Hale v. Henkel, 201 U.S. 43 (1906) (corporation gets Fourth Amendment protection against unreasonable searches and seizures but not protected by Fifth Amendment privilege against self-incrimination); Blake v. McClung, 172 U.S. 239 (1898) (corporation not covered by the privileges and immunities clause of the Fourteenth Amendment or of the comity clause of Article IV); Minneapolis & St. Louis Ry. Co. v. Beckwith, 129 U.S. 26, 28 (1888) (corporation entitled to due process of law under the Fifth and Fourteenth Amendments); Santa Clara County v. Southern Pacific Railroad Co., 118 U.S. 394, 416 (1886) (corporation entitled to equal protection of the law under the Fourteenth Amendment).
A divided federal appeals court said Thursday that companies, whether for profit or not, have religious rights.
The ruling came in a challenge by arts and crafts chain Hobby Lobby Stores Inc. and Christian bookstore chain Mardel Inc. to a part of President Barack Obama‘s 2010 healthcare overhaul — namely, a requirement that employee health insurance plans include free contraceptive coverage.
The companies say the requirement violates their First Amendment right to the free exercise of religion, as well as the Religious Freedom Restoration Act, which guards against laws that substantially burden that right.
The U.S. Court of Appeals for the 10th Circuit ruled Thursday that Hobby Lobby and Mardel could likely make their case but stopped short of blocking the contraceptive mandate. The court instead sent the case back to a federal district judge for further consideration.
But five of the eight judges made a strong statement about corporate personhood — the idea that companies share some legal rights and protections with in-the-flesh people.
We begin with the statutory text. RFRA contains no special definition of “person.” Thus, our first resource in determining what Congress meant by “person” in RFRA is the Dictionary Act, which instructs: “In determining the meaning of any Act of Congress, unless the context indicates otherwise * * * the word ‘person’ . . . include[s] corporations, companies, associations, firms, partnerships, societies, and joint stock companies, as well as individuals.” 1 U.S.C. § 1. Thus, we could end the matter here since the plain language of the text encompasses “corporations,” including ones like Hobby Lobby and Mardel.
Because Hobby Lobby and Mardel express themselves for religious purposes, the First Amendment logic of Citizens United, 558 U.S. at 342–55, where the Supreme Court has recognized a First Amendment right of for- profit corporations to express themselves for political purposes, applies as well. We see no reason the Supreme Court would recognize constitutional protection for a corporation’s political expression but not its religious expression.
This is a huge development. It opens the door to people of faith whose business is incorporated being able to launch a major assault on Obamacare. If so, of course, it'll give the left even more reason to hate Citizens United.
I think my approach would be a lot less controversial than that of the 10th Circuit majority. Having said that, however, the majority's approach does strike me as a logical extension of Citizens United. But then again, having said that, I still think the Supreme Court's corporate personhood jurisprudence is entirely lacking in anything remotely resembling a coherent theory.
Sometimes you feel like standing over a hot stove slaving over a pot of risotto in the traditional way. And sometimes you don't. Tonight was one of the latter nights. So I started out by soaking an ounce of organic lobster mushrooms in hot water for 20 minutes. Next I poured a package of Alessi Risotto Milanese into my trusty Cuisinart rice cooker. I added the requisite 2 and a half cups of water and tablespoon of EVOO. I drained a 14.5 can of organic, low sodium diced tomatoes and added them to the cooker. Chopped the mushrooms roughly and added them to the cooker. Meanwhile, I took some frozen peeled and deveined shrimp out of the icebox and soaked them in milk for about 15 minutes (gets rid of any off odors for some reason). When the "risotto" had about 5 minutes left to go, I added the shrimp. When the cooker dinged, I added some parmesan cheese and a dash of half-and-half. Served it up. Yum.
Despite today's sweltering heat (>100 in the shade on my porch according to my trusty weather station) and the shrimp in the dish, I wanted a red wine. Of course, as those who know me know well, I pretty much always want a red wine.
So I pulled this Zinfandel-based red out of my wine cellar (maintained at a constant 55 degrees) about half an hour before dinner. It was still cool when we ate.
So how exactly did this massive bill come to be law? Robert Kaiser, a 50-year veteran of the Washington Post, has the answer in his new book: An Act of Congress. The problem, he says, is Washington.
Although some have viewed Kaiser’s reporting as congratulating Washington for “doing something,” in fact, Kaiser's good reporting paints a picture of the Dodd-Frank legislation as a prime example of what happens when you mix an economic crisis with political ambition and lobby power: bad policy. The mixture of what he describes as “politics-obsessed mediocrities who know little about the policy they're purportedly crafting and voting on,” and outcry for action in Washington following the subprime mortgage crisis, created the perfect storm for Dodd-Frank to blossom; an immaculate “policy window” ripe for Congress to seize upon.
Kaiser is also not the first in his field to insinuate such a notion. In 2010, the same year Dodd-Frank was enacted, Professor Stephen Bainbridge (UCLA School of Law), suggested a similar hypothesis. In his research he compared Dodd-Frank to the Sarbanes Oxley Act of 2002, which was quickly enacted following the burst of the IT crisis in 1997.
Bainbridge defines both Dodd-Frank and Sarbanes Oxley as “Bubble Acts,” characterized by the following attributes: (1) enacted in response to a major negative economic event; (2) enacted in a crisis environment; (3) a response to a populist backlash against corporations and/or markets; (4) adopted at the federal rather than state level; (5) transfers power from the states to the federal government; (6) interest groups that are strong at the federal level but weak at the Delaware [corporation mecca] level support it; (7) typically, not a novel proposal, but rather a longstanding agenda item of some powerful interest group; (8) and the empirical evidence cited in support of the proposal is, at best, mixed and often shows the proposal to be unwise.
The academic work of Stephen Bainbridge and the compelling new book by Robert Kaiser make an unwittingly strong case for the repeal of Dodd-Frank and a drastic change in Washington’s legislative process away from “not letting a crises go to waste,” and moving toward the deliberative process of what used to be known as “regular order.” Voters, consumers, and the millions of Americans seeking jobs should demand that Washington scrap the massive Dodd-Frank regulatory scheme before it does any more damage to the recovery, and instead focus on the real problems facing the American economy.
The first decade of the new millennium was bookended by two major economic crises. The bursting of the dotcom bubble and the extended bear market of 2000 to 2002 prompted Congress to pass the Sarbanes-Oxley Act, which was directed at core aspects of corporate governance. At the end of the decade came the bursting of the housing bubble, followed by a severe credit crunch, and the worst economic downturn in decades. In response, Congress passed the Dodd-Frank Act, which changed vast swathes of financial regulation. Among these changes were a number of significant corporate governance reforms.
Corporate Governance after the Financial Crisis asks two questions about these changes. First, are they a good idea that will improve corporate governance? Second, what do they tell us about the relative merits of the federal government and the states as sources of corporate governance regulation? Traditionally, corporate law was the province of the states. Today, however, the federal government is increasingly engaged in corporate governance regulation. The changes examined in this work provide a series of case studies in which to explore the question of whether federalization will lead to better outcomes. The author analyzes these changes in the context of corporate governance, executive compensation, corporate fraud and disclosure, shareholder activism, corporate democracy, and declining US capital market competitiveness.
The members of the Commission are: Cardinal Raffaele Farina, President; Cardinal Jean-Louis Pierre Tauran, Member; Bishop Juan Ignacio Arrieta Ochoa de Chinchetru, Coordinator; Monsignor Peter Bryan Wells, Secretary; Professor Mary Ann Glendon, Member.
Professor Glendon is an interesting choice. At the outset, let me emphasize that I am a huge admirer of Professor Glendon. She sets the standard to which all of us who seek to integrate our faith with our vocation as legal academics aspire. She obviously knows the ins and outs of the Vatican, having served as a former U.S. Ambassador to the Holy See and has represented the Holy See at various conferences including the 1995 U.N. Women's conference in Beijing where she headed the Vatican delegation.
But business law is not exactly her forte. Her scholarly expertise is in the areas of human rights, comparative law, constitutional law, and political theory. In those areas her credentials are impeccable, of course. Glendon is a member of the American Academy of Arts and Sciences, the International Academy of Comparative Law, a past president of the UNESCO-sponsored International Association of Legal Science, former Vice-Chair of the U.S. Commission on International Religious Freedom, and served two terms as a member of the U.S. President's Council on Bioethics (2001-2004). She is deservedly one of the most highly decorated and respected legal academics of our time.
But I still can't help wondering whether the Vatican Curia couldn't have found someone with expertise in business law and financial regulation. Perhaps not someone possessing Professor Glendon's sterling credentials (after all, who among us does?). But say a professor of business and financial law, who is also a devout Roman Catholic, and possessing of some not insignificant standing in the field? Perhaps someone who has been named one of the top 100 corporate governance influencers three times?
My point is simply this: We're not seeing much respect for neutral principles by anybody this week. Instead, whether you think they are 5 unelected old farts in robes or heroes depends on which side of the case you're on. It's pretty hypocritical.
The Supreme Court ducked deciding the validity of Prop 8, which repealed gay marriage in California, which leaves the lower court ruling striking down Prop 8 intact and thereby de facto restores gay marriage in California.
Not surprised, but I still think--for the reasons discussed here--that the Court should have left the whole set of cultural issues to the political process.
I have posted to my blog's files a memorandum entitled The Case Against California Senate Bill No. 131, which you can download here. The memorandum discusses reasons why the California Assembly should reject SB 131, which would eliminate the statute of limitations for certain childhood sexual abuse claims. The memorandum is © Stephen M. Bainbridge 2013, but I am granting a license for opponents of SB 131 to make such use of it as they will provided that the uses are noncommercial and give me full attribution.
The Case Against California Senate Bill No. 131 by Stephen M. Bainbridge is licensed under a Creative Commons Attribution-NonCommercial-NoDerivs 3.0 Unported License.

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