b'\nCommunity Property \xe2\x80\x93 Checklist\n\n   1) Basic Presumptions [you MUST put this at the top of EVERY community\n      property essay]\n\n\n        California is a community property state.  All property acquired\n        during the marriage is presumed to be CP, while all property\n        acquired before marriage or after permanent separation, or by gift\n        or inheritance is presumed to be SP.  Property acquired in a SP\n        state by either H or W before they became domiciled in CA is quasi-\n        CP.  Upon death or divorce quasi-CP is treated as CP.\n\n\n        The characterization of an asset as either CP or SP depends on\n        three factors: (1) the source of the asset, (2) any actions by the\n        parties that may have altered the character of the asset, and (3)\n        any statutory presumptions that apply to the asset.\n\n        In order to determine the character of any asset, the courts will\n        trace back to the source of funds used to acquire the asset.  A\n        mere change in form of an asset does not change its\n        characterization.  E.g., capital gain from the sale of SP is SP.\n\n\n   2) Characterize each asset\n\n|Personal injury  |CP if cause of action arose during marriage, but awarded to   |\n|awards           |injured spouse @ divorce                                      |\n|Personal injury  |SP of the tortfeasor spouse unless occurred while acting for  |\n|liability        |the benefit of the community                                  |\n|Retirement       |CP if earned during the marriage \xe2\x86\x92 apply the time rule to     |\n|benefits         |apportion between CP and SP.                                  |\n|Disability       |CP if taken in lieu of retirement benefits \xe2\x86\x92 apply the time   |\n|pay/workers\xe2\x80\x99 comp|rule.                                                         |\n|                 |SP if intended to replace future earnings.                    |\n|Severance pay    |Split in authority \xe2\x86\x92                                          |\n|                 |CP b/c result of work done during marriage.  SP b/c replaces  |\n|                 |future wages                                                  |\n|Stock options    |CP b/c form of employee compensation.  \xe2\x86\x92 apply the time rule  |\n|Business/professi|CP to the extent earned during the marriage                   |\n|onal good will   |                                                              |\n|Education and    |Not property.  But, community is entitled to reimbursement for|\n|training         |educational expenses paid by CP funds if the the educated     |\n|                 |spouse\xe2\x80\x99s earning potential increased as a result of the       |\n|                 |education.  However, there will be no reimbursement if (1) the|\n|                 |community substantially benefited from the education (10+     |\n|                 |years) or (2) both spouse received community funded education.|\n|Assets purchased |CP.  But, look to the primary intent of the lender            |\n|on credit during |                                                              |\n|marriage         |                                                              |\n|Business owned   |Community labor used to enhance value of a SP business \xe2\x86\x92 the  |\n|before marriage, |community entitled to a share of the increased value.  Two    |\n|which increased  |ways to calculate the community\xe2\x80\x99s share                       |\n|in value during  |Pereira accounting \xe2\x86\x92 increased value primarily due to         |\n|marriage.        |community labor.               Value of business at beginning |\n|                 |+ fair rate of return = SP, the rest is CP                    |\n|                 |Van Camp accounting \xe2\x86\x92 increased value due to the unique nature|\n|                 |of SP asset             Fair salary for community labor x     |\n|                 |years of marriage \xe2\x80\x93 salary already received \xe2\x80\x93 amounts already |\n|                 |paid to community expenses = CP, the rest is SP.              |\n\n   3) Altering the Character of an Asset\n        a. Pre-marital agreement: must be in writing, voluntarily signed by\n           both parties\n              i. Voluntary? Bonds case v. 2001 statute\n             ii. Unconscionable? Full, fair and reasonable disclosure.\n                 Waiver of spousal support \xe2\x86\x92 must be represented by counsel.\n        b. Transmutations:\n              i. Pre-1985 \xe2\x86\x92 oral permitted\n             ii. Post 1/1/85 \xe2\x86\x92 must be in writing, signed by the party whose\n                 interests affected, express\n   4) Effect of How Title is Taken\n        a. Married Woman\xe2\x80\x99s Special presumption: Property taken in W\xe2\x80\x99s name\n           alone pre 1975 = her SP unless (1) H shows other reason or (2)\n           w/out H\xe2\x80\x99s knowledge or consent.\n              i. Property taken as H & W pre 1975 = SP, TIC\n             ii. Property taken as H & W post 1975 = CP\n        b. Property taken in joint title:\n              i. At death: Lucas provisions apply\n                    1. Property taken in joint title = CP, unless contra\n                       agreement (oral or written)\n                    2. Any contribution of SP = gift \xe2\x86\x92 no reimbursement\n             ii. At divorce: Lucas provisions do not apply\n                    1. Pre-1984: Property taken in joint tenancy = SP of\n                       each spouse \xc2\xbd interest each\n                    2. Post-1984: California family law applies \xe2\x86\x92 property\n                       taken in joint title = CP unless contra written\n                       agreement.\n                         a. But, may seek reimbursement for contributions\n                            of SP to DIP.\n                    3. A spouse who deeds SP into jointly titled property is\n                       entitled to a right of reimbursement for the fair\n                       market value of the property at the time it was\n                       deeded into joint tenancy.  Note: conflict with\n                       transmutation rule.\n        c. Property taken in separate title (post 1975) \xe2\x86\x92 apply source\n           rule.  Exhaustion or direct tracing.\n\n   5) Effect of Parties Actions on Characterization\n        a. Pro rata rule: community takes a pro rata portion of the\n           property measured by the % of principal debt reduction\n           attributable to CP.  Applies to:\n              i. Installment purchase made before marriage, and subsequent\n                 payments made w/ CP\n             ii. Land inherited during marriage, mortgage paid off w/ CP\n            iii. Whole life insurance purchased before marriage, premiums\n                 paid w/ CP\n        b. Reimbursement Rules:\n              i. CP used to improve SP \xe2\x86\x92 improvements become part of the SP.\n                 May seek reimbursement for greater of cost of improvement\n                 or increased value attributable to CP unless one spouse\n                 uses CP to improve other souses SP, then usually presumed a\n                 gift.\n             ii. SP used to improve CP\n                    1. At death \xe2\x86\x92 Lucas rule \xe2\x86\x92 presumed gift \xe2\x86\x92 no\n                       reimbursement unless contra agreement\n                    2. At divorce \xe2\x86\x92 anti-Lucas statute \xe2\x86\x92 reimbursement for\n                       DIP\n        c. Commingled Bank Accounts:\n              i. Does not transform or transmute SP into CP, but burden on\n                 spouse claiming SP to show that each asset acquired was\n                 purchased w/ SP funds (tracing or exhaustion)\n             ii. Family expenses presumed paid w/ CP\n   6) Management & Conveyances of CP\n        a. During the marriage, each spouse has equal management and\n           control of all community assets.  Thus, each spouse has full\n           power to buy or sell CP and contract debts w/out the other\n           spouse\xe2\x80\x99s joinder or consent.  Note: does not apply to quasi-CP.\n        b. Exceptions:\n              i. Spouse managing CP business has primary management and\n                 control\n             ii. One spouse cannot encumber personal property used in the\n                 family dwelling or clothing w/out written consent from\n                 other spouse.  Trx is voidable at any time.\n            iii. Both spouses required to convey community real property.\n                 (1 yr SoL if sale to a BFP.  If not a BFP, voidable at any\n                 time.  Must refund purchase price).\n             iv. Neither spouse can make an inter vivos gift of CP w/out the\n                 other spouse\xe2\x80\x99s consent.  Voidable until death of gifting\n                 party, then non-consenting spouse may only recover \xc2\xbd CP.\n   7) CP & Creditors\n        a. All CP and the debtor\xe2\x80\x99s SP are liable for the debt of one spouse\n           incurred before or during the marriage.  Except earnings of the\n           non-debtor spouse cannot be reached for premarital debts if held\n           in a separate account and not commingled w/ CP funds.\n        b. SP of non-debtor spouse can only be reached for satisfaction of\n           the necessary debts of the other.\n   8) Distribution\n        a. At divorce: 50/50 unless the interest of justice requires\n           otherwise.\n        b. At death:\n              i. May devise all SP and \xc2\xbd CP by will\n             ii. No will, survivor entitled to all CP, 1/3 \xe2\x80\x93 all of SP.\n        c. Quasi-CP treated as CP\n        d. Quasi-marital property (putative spouse) treated as CP\n   9) Preemption\n        a. Supremacy clause \xe2\x86\x92 fed law preempts inconsistent state law.  In\n           some instances, fed law preempts CA from applying community\n           property principals to certain assets: US savings bonds, federal\n           homestead claims, military life insurance benefits.\n'


b'\n                             CORPORATIONS ATTACK\n\n                         ORGANIZATION OF CORPORATION\nFormation Requirements (people + paper + act)\n      One or more incorporators + articles of incorporation (K b/w corp &\nSH, corp & state) + filing\n\nLegal Significance\n      Internal Affairs Doctrine: internal affairs of corp are governed by\nthe law of the state of incorp\n      Limited Liability: D&Os not personally liable for acts of corp; SH\nnot PL for debts\n\nDe Facto Corp: parties make good faith, colorable attempt to compy with\nrelevant incorp statute, and some exercise of corp privileges(treated as a\ncorp (SH not PL) even if fail to achieve de jure corp status. Treat as corp\nfor all purposes except in an action by state for exceedings its powers\n(action \xe2\x80\x9cquo warranto\xe2\x80\x9d)\n\nCorp by Estoppel: one dealing with business as a corp and treating it as\nsuch may be estopped from denying the business\xe2\x80\x99 corp status.  (1) invoked\nagainst those who dealt directly with business as a corp; (2) prevent comp\nfrom avoiding an obligation by asserting its own lack of valid formation.\nBased on course of dealing = not tort creditor\n\nPre-Incorporation Contracts\n      Promoter: person acting on behalf of a corp not yet formed.  Might\nenter into a K on behalf\n      Liability on Pre-Incorporation Contracts: Corp not liable until\nadopts((1) express (BoD) or (2) implied (knowing use or receipt of\nbenefits).  Promoter liable unless K clearly provides otherwise until\nnovation (adoption makes corp liable too, but doesn\xe2\x80\x99t relieve promoter)\n\nSecret Profit Rule: Promoter cannot make a secret profit on his dealing\nwith the corp.  NOT liable if not secret\xe2\x80\x94i.e. full and adequate disclosure\nof all  material facts\n      Sale to corp of prop he acquired before becoming a promoter: Profit =\nPrice paid by corp minus FMV\n      Sale to corp of prop he acquired after becoming a promoter: Profit =\nPrice paid by corp mins price paid by promoter\n\nForeign Corps: one incorporated outside this state.  Foreign corps can\xe2\x80\x99t\ntransact business in this state without qualifying.  \xe2\x80\x9cTransacting business\xe2\x80\x9d\n= regular course of intrastate (not interstate) business activity.  Qualify\nby getting a \xe2\x80\x9ccertificate of authority\xe2\x80\x9d from Sec of State, pay fees, and\nappoint registered agent\n\n\nISSUANCE OF STOCK (corp sells / trades its own stock)\nConsideration (amount + form)\n      Form: split of auth((1) Trad\xe2\x80\x99l: money | (in)tangible prop | services\nalready performed | NO future services or PN.  (2) Modern: any (in)tangible\nprop or benefit to the corp (including PN and future services)\n      Amount: Par = min issuance price.  Corp must get par value.  No\npar(BoD sets price.\n            Treasury stock (reacquired stock): no min!  treat selling out\nof treasury as no par!\n      Consequences of issuing par stock for < par value (\xe2\x80\x9cwatered stock\xe2\x80\x9d):\nDs liable if knowingly authorized issuance.  Purchaser of watered stock\nliable for the water\xe2\x80\x94must pay par value for the shares.  BUT if purchaser\ntransfers stock to 3rd party, he is not liable if acted in good faith\n(didn\xe2\x80\x99t know watered)\n\nPreemptive Rights: right of an existing SH to maintain her $ of ownership\nby buying stock whenever issuance of new stock for money (cash or\nequivalent).  Some states exclude sale of treasury stock and originally\nauthorized but previously unissued shares.\n      Trad\xe2\x80\x99l: exist unless articles provide otherwise.  Modern: don\xe2\x80\x99t exist\nunless articles provide for\n\n\n                            DIRECTORS & OFFICERS\nDIRECTORS\nStatutory Reqs: 1+ adult natural persons.  Elected by SH.  SH can remove\nbefore terms expire w/ or w/o cause (req maj of shares entitled to vote).\n\nBoard Action: only TWO ways the BoD can take valid act((1) unanimous\nwritten consent to act without a meeting, OR (2) a meeting that satisfies\nquorum and voting reqs.  If neither, then act is void unless later ratified\nby a valid corp act.  Quorum: maj of all Ds to do business (unless diff %\nin bylaws)(if quorum present, passing a resolution requires only a maj of\nvotes present.  Quorum broken if Ds leave!\n\nRole: BoD manages business of corp (big picture stuff).  Can delegate\nsubstantial management functions to a committee, but it can\xe2\x80\x99t amend\nbylaws/declare dividends/recommend fundamental corp change to SH\n\nDuty of Care\n      Standard: D owes the corp a duty of care as a matter of law.  He must\nact in good faith and act as an ordinarily prudent person under similar\ncircumstances (with regard to his own business)\n      Nonfeasance: D does nothing(liable only his breach causes harm to the\ncompany (causation!)\n      Misfeasance: BoD does something that hurts corp(NOT liable is meets\nBJR\n\nBusiness Judgment Rule (\xe2\x80\x9cexercise informed decisionmaking in good faith\xe2\x80\x9d)\n      A court will not second-guess a business decision if it was made in\ngood faith, was informed, and had a rational basis.\n\nDuty of Loyalty\n      Standard: D owes the corp a duty of loyalty.  He must act in good\nfaith and with a reasonable belief that what he does is in the corp\xe2\x80\x99s best\ninterest.\n      Interested Director Transaction: will be set aside UNLESS D shows((1)\ndeal was fair to the corp when entered, OR (2) his interest and the\nrelevant facts were disclosed or known + deal was approved by either a maj\nof disinterested Ds or maj of disinterested shares.  Fair when made PR\ndisclosure + approval!\n      Competing Ventures: D must act in the best interest of corp = canNOT\ncompete directly with her corp.  Remedy: constructive trust on profits and\npossibly damages for harm to corp\n      Corp Opportunity (Expectancy): D cannot usurp a corporate opportunity\n= D can\xe2\x80\x99t take it until he (1) tells the BoD\xe2\x80\x94disclosure + (2) waits for BoD\nto reject the opp.  Remedy: D has it, must sell it to corp at his cost.  If\nsold it at profit, corp gets profit (constructive trust).\n            Corp opp = anything the company could reasonably be expected to\nbe interested in\n\nUltra Vires Acts: Responsible D&Os are liable for ultra vires losses (if go\ninto ultra vires activity and lose money, on the hook!). Remember: if takes\nact beyond scope of the articles, then K is still valid and enforceable BUT\nSH may seek injunction.\n\nImproper Loans: no clear maj view((1) loan must be approved by majority of\nshares.  (2) clear modern trend\xe2\x80\x94loans OK if BoD finds that it\xe2\x80\x99s reasonably\nexpected to benefit the corp.\n      Sarbanes-Oxley: prohibits most loans to execs  in registered,\npublicly traded corps\n\nWhich Ds are Liable: D is presumed to have concurred with BoD action unless\nher dissent/abstention is noted in writing in corp records = (1) in the\nminutes; (2) in writing to corp secretary at mtg; or (3) registered letter\nto corp secretary immediately after mtg.  Oral dissent is NOT enough!!!\n      Exceptions: (1) absent directors not liable (some states require\ndissent in writing after learning of BoD action); (2) good faith reliance\non book value of assets prepared by CFO | opinion of competent\nEE/officer/prof/ comm.. of which relying D not member | financial stmts by\nauditors.  Reasonable belief in competence of persons providing such\ninfo!!!\n\nOFFICERS\nSame Duties of Care and Loyalty as Ds\n\nStatus: agents of corp = can bind the corp by acts for which they have\nauthority to bind it\n      Actual authority: given in artices, bylaws, or BoD act\n      Apparent authority: corp holds officer out as having authority to\nbind it, so 3rd parties rely\n      Inherent/Implied authority: by virtue of the office held (prez has\ninherent auth to enter Ks binding on corp)\nSelection and removal: by BoD, not SH.  Directors also set officer comp.\n      BoD can remove officer if lose faith in hia ability to run corp, but\nwill have to cut a check (typically sue for enforcement of employ\xe2\x80\x99t agmt)\n\nINDEMNIFICATION OF D&Os\nIndemnification: persons sued in capacity as D or O has incurred\ncosts/attys fees/fines/judgment/settlement, and seeks reimbursement from\nthe corp.  Sued in representative capacity as D/O(reimbursement claim\n\nNo indemnification: corp barred from indemnifying when D/O is (1) held\nliable to the corp, or (2) held to have received an improper personal\nbenefit.  MUST have finding of liability!  Against public policy to\nreimburse\n\nMandatory indemnification: corp required to indemnify(\n      Some states: if D was \xe2\x80\x9cwholly successful\xe2\x80\x9d (on the merits or\notherwise) in defending an action\n      Others: to the extent D was successful\n\nPermissive indemnification: corp permitted to indemnify((1) anything not\nsatisfying bar or requirement of indemnification (i.e. settlements!!!); (2)\neligibility standards determined by disinterested Ds or disinterested\nshares or independent legal counsel (D must show acted in GF + w/ reas\nbelief that actinos were in corp\xe2\x80\x99s best interests)\n\nCourt Order: ct where D/O was sued can order indemnification if it\xe2\x80\x99s\njustified in view of all the circs (usually limited to costs and attys\nfees)\n\nArticles: can provide for limitation or elimination of liability for\ndamages, but NOT for breach of duty of loyalty, intentional misconduct, or\nwrongful personal benefit.  i.e. can eliminate for honest GF mistake in\njudgment\n\n\n                                SHAREHOLDERS\nSHAREHOLDER AS DEFENDANT (Generally, SH not liable for acts/debts of corp)\n\nBut ct might pierce the corp veil (PCV) and hold SH personally liable if\n(1) they\xe2\x80\x99ve abused the privilege of incorporating, and (2) fundamental\nfairness requires it.\n\nPCV Standard: most cts will PCV to avoid fraud or fundamental fairness\n(never automatic)\n\nAlter Ego (identity of interests): commingling of funds or failure to\nobserve corporate formalities (SH treats corp as his alter ego by treating\nthe corp and his personal assets as interchangeable).  Failure to respect\nthe separateness of the corp.  Must be SERIOUS failure, not just sloppy\nadmin\n\nUndercapitalization: SH fail to invest enough to cover prospective\nliabilities = undercapitalized when formed\n      Courts are generally more willing to PCV for a tort victim than for a\nK claimant.\n\nRelated Corp Situation: parent corp forms sub to avoid obligations(creditor\nof parent not getting paid.  Court will PCV to get to sub\xe2\x80\x99s assets.\n\nSHAREHOLDER AS MANAGER (Public policy says BoD and not SH manages a corp)\nClosely Held Corporation = few SH + shares not publicly traded: SH can\nmanage a corp directly here(must be a unanimous SH agmt that provides for\nSH management.  In some states: statement in articles to that effect.  This\nmeans corp need not have a BoD.  Managing SH owe duties of care and\nloyalty.\n      Clear trend: SH in a close corp owe each other fiduciary duties\n(watch for controlling SH oppressing)\n\nProfessional Corp: SH must be licensed profs and generally it may practice\nonly one profession.  Remain personally liable for their own\nmalpractice/misconduct, BUT generally not liable for each other\xe2\x80\x99s\n\nSH AS PLAINTIFF (Derivative or Direct Suits)\nDerivative suit: SH suing to enforce the corp\xe2\x80\x99s claim, not his own personal\ndirect claim.  ASK: could the corp have brought this suit?\n      Consequences of success: recovery in derivative suit goes to corp.\nSH may receive costs and atty\xe2\x80\x99s fees, usually from the corp (conferred\nbenefit to it)\n            Exception: sometimes ct may allow SH to recover directly if a\nrecovery by corp would simply return $ to the bad guys\n      Consequences of failure: SH canNOT recover costs and attys fees.  SH\nLIABLE to D for its costs and attys fees IF SH sued without reasonable\ncause\n\nRequirements for Derivative Suit\n      Contemporaneous stock ownership: SH must have owned stock at the time\nthe claim arose OR have gotten it by operation of law (inheritance/divorce\ndecree) from someone who did own stock when claim arose.  MUST own the\nstock throughout the litigation.\n      Standing: must adequately represent the interest of the corp\n      Written demand: must make a written demand on Ds that the corp bring\nsuit UNLESS demand would be futile\n      Plead with particularity: e.g. why written demand is futile\n      Post security bond for costs: (some states) to avoid strike suits\n      Corporation (BoD or committee) can move to dismiss: if disinterested\nDs find it\xe2\x80\x99s not in the corp\xe2\x80\x99s best interest (low chance of success or cost\nof litigation would exceed recovery).\n            Some states: the court will also scrutinize the process used\nand make an independent determination of whether dismissal is in the corp\xe2\x80\x99s\nbest interest.\n\nLitigation: corp must be joined initially as a defendant\n      No dismissal or settlement without court approval: ct can give notice\nto those who would be affected, and get their input on whether dismissal or\nsettlement should be approved.\n\nSHAREHOLDER VOTING\nGeneral Rule: the record SH as of record date has the right to vote\n      Record SH: the person shown as the owner in the corporate records.\nThe record date is a voter eligibility cut-off.\n      Exceptions: (1) the corp does not vote treasury stock even if it was\nthe record owner not he record datate (shares held in treasury do not\nvote); (2) if SH dies, SH\xe2\x80\x99s executor can vote the shares even if executor\nwasn\xe2\x80\x99t record owner on record date; (3) proxies\n\nProxy: a writing signed by record SH directed to secretary of corp\nauthorizing another to vote the shares\n      Rule on duration: proxy good for 11 months!!!\n      Revocation: \xe2\x80\x9cthe law favors the free revocability of proxies\xe2\x80\x9d = SH\ncan revoke her proxy even though it states it\xe2\x80\x99s irrevocable\n      Irrevocability: \xe2\x80\x9cProxy Coupled with an Interest\xe2\x80\x9d\n            (1) Irrevocable on its face + (2) Proxyholder has some interest\nin the shares other than the mere interest in voting = (i) beneficial owner\neven if not record owner | (ii) option to purchaser the shares | (iii)\npledge on the shares in connection with a loan\n\nVoting Trusts & Voting Agreements (block voting)\n      Requirements for voting trust: (1) written trust agmt controlling how\nshares will be voted; (2) give copy to corp; (3) transfer legal title of\nshares to voting trustee; (4) OG SH typically receive trust certificates\nand retain all SH rights except voting.  Max duration is 10 yrs!!!\n      Requirements for voting (pooling) agreement: K (signed writing).\nSplit of auth re: SP(CL no, modern yes\n\nSH: Valid Corporate Act.  2 ways((1) unanimous written consent of the\nholders of all voting shares, OR (2) a meeting that satisfies quorum and\nvoting rules\n\nNotice: must given written notice to every SH entitled to vote, for every\nmeeting (annual or special)\n      Contents: when + where +state the purpose (this is the only business\nthat can be transacted at meeting)\n      Failure to give proper notice: action taken at mtg is void unless\nthose not sent notice waive the notice defect\n            Express waiver: in writing and signed any time | Implied\nwaiver: attend mtg w/o objection\nQuorum: must be a quorum represented at mtg(# of shares represented, not #\nof SH.  Generally, a quorum requires a maj of outstanding shares.  SH\nquorum is NOT broken if people leave the mtg!\n\nMajority: if quorum req is met, maj can act to bind the corp unless the\narticles/bylaws require supermaj vote\n      Trad\xe2\x80\x99l: maj of shares present | Modern: maj of shares that actually\nvoted on a particular proposal\n\nCumulative Voting: only when electing directors.  (# shares) x (# of\ndirectors to be elected)\n      Exists inmost states only if articles provide.\n\nRIGHT OF SH TO INSPECT RECORDS\nStanding: Trad\xe2\x80\x99l view((1) must have owned stock at least 6 months or (2)\nown at least 5% of outstanding shares.  Modern: any SH!\n\nProcedure: written demand stating a proper purpose (related to role as SH).\n May be hostile to management\n      If corp disallows after proper demand, SH can move for ct order +\nrecover costs/attys fees incurred in making the motion.\n\nDISTRIBUTIONS (dividend, repurchase of stock or redemption)\nBoD Discretion: distributions are declared in BoD\xe2\x80\x99s discretion.  Can only\nwin on a very strong showing of abuse of discretion (consistent profits +\nno dividend + BoD pays itself bonus)\n\nPreferred: pay first\nParticipating: pay again\nCumulative: add them up (a cumulative dividend accrues year to year)\n\nSource of Funds\n      Earned Surplus: retained earnings, generated by business activity.\nALL can be used for distribution\n            Earned Surplus = all earnings \xe2\x80\x93 all losses \xe2\x80\x93 distributions\npreviously paid\n      Stated Capital: generated by issuing stock.  NEVER used for\ndistributions\n            Par issuance: par value of issuance goes to stated capital\n            No-Par: BoD allocates\xe2\x80\x94if no allocation, all goes into stated\ncapital\n      Capital Surplus: generated by issuing stock.  CAN be used for distrib\nif tell SH where $ is coming from\n            Capital Surplus = payments in excess of par + amts allocated on\na no-par issuance\n      Nimble Dividend: paid out of current earnings when there is not\nsufficient surplus for a dividend\n\nWhen: corp can make distrib even tho it lost money previous yr BUT canNOT\nmake distribution if it\xe2\x80\x99s insolvent OR is the distrib would render it\ninsolvent!!!  Insolvency = unable to pay debts as they come due OR assets\n<M liabilities, including liquidation preferences (balance sheet\ninsolvency)\n\nDirectors: personally liable for unlawful distributions, as are SH who knew\ndistribution was unlawful when received it.  Only time on the bar exam you\nhold SH liable!\n      Trad\xe2\x80\x99l view: SL(director liability is strict\n      Modern: directors only liable if the distrib is made in breach of a\nduty (negligence)\xe2\x80\x94remember possible defense of good faith reliance\n\n\n                        FUNDAMENTAL CORPORATE CHANGES\nCharacteristics: require BoD action + approval by maj of share entitled to\nvote (absolute maj vote!)\n\nRight of Appraisal: right of a dissenting SH to force the corp to buy his\nshares at fair value.  This may be SH\xe2\x80\x99s exclusive remedy re: fundamental\nchange unless fraud.\n      Trigger: (1) merger or consolidation.  (2) sell or transfer of\nsubstantially all assets not in the ordinary course of business.  (3)\ntransfer of shares in a share exchange.\n      Perfection of Right: (1) b4 SH vote, file with corp written notice of\nobjection and intent to demand payment.  (2) abstain or vote v. proposed\nchange.  (3) after vote, make a written demand to be bought out\n      Some states don\xe2\x80\x99t grant the right of appraisal if stock is publicly\ntraded.\n\nAmendment of the Articles: requires BoD action + notice to SH\n      SH approval: requisite # is absolute maj (# of shares entitled to\nvote)\n            If approved, file amended articles with sec of state\n      No dissenting SH rights of appraisal, but class voting: if amendment\nharms class of stock, the amendment must be approved by the shares of that\nclass itself as well as by absolute maj\n\nMergers or Consolidations: requires BoD action of both corps + notice to SH\n      SH approval: generally both corps.  Absolute majority!\n            Exception: no SH approval req in \xe2\x80\x9cshort form\xe2\x80\x9d merger (90% or\nmore owned sub merges into parent)\n            If approved, file articles of merger or consolidation with sec\nof state.\n      Dissenting SH right of appraisal: for SH of both corps in a regular\nmerger.  SH of sub in short-form\n      Effect: surviving corp succeeds to all rights and liabilities of the\nconstituent companies.  Creditor of merged corp can sue survivor\n\nTransfer of All or Substantially All of the Assets No in Ordinary Course of\nBusiness, or Share Exchange\n      Share exchange: one comp acquires all the stock of another\n(fundamental corp change for the transferring corp only!  BoD action of\nboth corps + notice to selling corp\xe2\x80\x99s SH\n      Transferring corp\xe2\x80\x99s SH approval: absolute maj vote\n      Dissenting SH right of appraisal: for SH of transferring corp only\n      Effect: corp acquiring assets is not liable for debts of acquired\ncomp unless deal says otherwise, or unless the comp purchasing assets is\nmerely a continuation of the selling corp\n\nDissolution (corporate death)\n      Voluntary: BoD resolution + approval by absolute maj\n            Some states: unanimous written SH agmt\n      Involuntary: judicially supervised ct order\n            SH can petition: grounds((1) director abuse, waste of assets,\nmisconduct | (2) director deadlock that harms the comp | or (3) SH deadlock\nand failure for at least 2 annual mtgs to fill a vacant board position\n            Alternative: ct may order buy-out of the complaining SH (esp in\nclose corp)\n            Creditor can petition: corp is insolvent + credit either has an\nunsatisfied judgment v. corp or the corp admits debt in writing\n      Effect: after filing articles of voluntary dissolution or after ct\norder of involuntary dissolution, corp stays in existence to wind up = (a)\ngathering all assets. (b) converting them to cash. (c) paying off\ncreditors. (d) distributing any remainder to SH (recover pro-rata by share\nunless dissolution preference = just means pay 1st in the context of\nliquidation of corp)\n\n\n                         SECURITIES & RELATED TOPICS\nSTATE LAW (CL) LIABILITIES\nSale of Controlling SH: controlling SH = one w/ maj of shares or minority\nin a situation giving effective working control(can sell her control bloc\nfor control premium.  CANNOT use his control to obtain a special advantage\nor to cause the corp to take action that unfairly prejudices the minority\nSH.\n      Sale to Looters: CSH liable is he sells to looters w/o making a reas\ninsvestigation of buyer(liable for damage caused to corp, including amt\nlooted + other harm (damage to earnings).  What will put him on notice that\nbuyer is looter((1) undisclosed principal, and (2) very high purchase\nprice)\n      Disguised Sale of Corp Asset: buyer pays premium to CSH to get to\ncorp asset(CSH has no right to sell a corp asset (all SH should share in\nthe premium).  Disgorge the premium!!!\n      Sale of a BoD Position: fiduciary cannot get paid to relinquish\nposition.  Watch for SH selling control shares and then resigning from BoD\nalong with her pals.  Board seat is not CSH\xe2\x80\x99s to sell = violates public\npolicy to let her be paid for it.\n\nCSH Oppression: esp prob in close corp(cts may protect minority SH since no\npublic market for stock\n      Fraud: CL fraud may apply to representations in the sale of\nstock(allows suit by defrauded buyer or seller.  This covers the overt lie\n(affirmative misrep), but not the half-truth or failure to disclose.\n      Nondisclosure of \xe2\x80\x9cSpecial Facts\xe2\x80\x9d/Common Law Insider Trading: many cts\nimpose upon D&Os affirmative duty to disclose \xe2\x80\x9cspecial facts\xe2\x80\x9d\n            \xe2\x80\x9cSpecial Facts\xe2\x80\x9d: those a reasonable investor would consider\nimpt in making an investment decision.\n            Standing: those in privity = SH w/ whom the insider deals.\nSome say prospective SH may sue\n            Measure of Damage: difference between price paid and the value\nof the stock a reas time after public disclosure\n            Significant Minority View: corp can sue the insider to recover\nprofits he made in market trading on inside info\n\nFEDERAL RULE 10b-5 (aimed at deceit/fraud)\nRule: illegal to use any fraudulent scheme in connection with the purchase\nor sale of any security using an instrumentality of interstate commerce\nElements:\n     1. Jurisdiction(\xe2\x80\x9cInstrumentality of Interstate Commerce\xe2\x80\x9d: transaction\n        must employ an instrumentality of interstate commerce (phone, mail,\n        national exchange)\n     2. Possible Defendants: \xe2\x80\x9cany person\xe2\x80\x9d (human or entity!)\n           a. Company that issues a misleading press release\n           b. Buyer or seller of sec who misrepresents material info\n           c. Buyer or seller of sec who fails to disclose material inside\n              info when there is a duty to abstain or disclose\n              (relationship of trust and confidence with SH of the corp)\n           d. Tipper and tippee\n     3. Possible Plaintiffs: very narrow\n           a. SEC\n           b. Actual private buyer or seller of sec\n     4. Conduct: Possible \xe2\x80\x9cBad Acts\xe2\x80\x9d by Defendant\n           a. Fraud: misrepresentation of material info\n                 i. BOTH state law liability and 10b-5 liability!!!\n           b. Nondisclosure of material inside info when duty to disclose\n              exists\n                 i. Classic insiders (D&O) can\xe2\x80\x99t trade on secrets(must\n                    abstain or disclose\n                ii. Temporary insiders: (i) in possession of material\n                    nonpublic info + (ii) have independent source of a duty\n                    to disclose\n           c. Tipping: passing along material inside info for a wrongful\n              purpose\n                 i. Tipper: breach of duty + benefit (after Dirks, enough if\n                    insider makes a gift or enhances rep (no $ gain nec)\n                ii. Tippee: traded on tip + knew/should\xe2\x80\x99ve known info was\n                    improperly passed\n               iii. IF NO TIPPER, NO TIPPEE!!!  \xe2\x80\x9ccasual eavesdropper\xe2\x80\x9d\n     5. In Connection with the Purchase or Sale of Any Sec!!!  Meaning debt\n        or equity securities!!!\n     6. Materiality:  misrep or omission must concern a \xe2\x80\x9cmaterial\xe2\x80\x9d fact =\n        one that a reasonable investor would consider impt in making an\n        investment decision\n     7. Scienter:  D must have an intent to deceive | manipulate | defraud.\n         Recklessness may suffice but not negligence!\n     8. Reliance: separate element in fraud cases BUT presumed in cases of\n        nondisclosure and open market public misrep!\n\nMISAPPROPRIATION THEORY\nWithout a breach of duty, you have no 10b-5 violation BUT many cts still\nhold D liable under this theory (not fair to use info entrusted to you that\nway\xe2\x80\x94steal/misappropriate it)\n\n      Under this theory, the govt can prosecute a person under rule 10b-5\nfor trading on market information in breach of a duty of trust and\nconfidence owed to the source of the information.  The duty need not be\nowed to the issuer or the SHs of the issuer.\n      Thus, anyone who has breached a fiduciary duty owed to anyone else is\nliable on this theory when brought by the government.\n\n\nSECTION 16B (aimed at speculation by D&Os, and 10% SH)\nFed law: recovery by corp of profits gained by certain insiders from buying\nand selling the comp\xe2\x80\x99s stock (roundtrip trading).  Theory: bad for market\nconfidence to have insiders buying/selling their own corp\xe2\x80\x99s stock\n\nWhen applicable: \xe2\x80\x9creporting corp\xe2\x80\x9d = (1) listed on national exchange OR (ii)\nat least 500 SH + 10mil in assets\n\nType of Defendant: D&O (either when bought or sold), OR SH with more than\n10% (above 10% mark both when bought and sold)\n      10% SH: to determine if he is above 10%, take snapshot of ownership\nlevel immediately BEFORE the event!  SH at 17% sells all(sale covered cuz\nimmediately before event he was above 10%!\n\nType of Transaction: short swing trading(buying and selling stock within a\nsingle six-month period\n      Fraud not required.  No req of inside info\n      Defendant must have bought and sold equity sec (stock)\n\nEffect: all profits from short-swing trading are recoverable by the corp\n      (If, within 6 months before or after any sale, there was a purchase\nat a lower price, there is a profit!!!  So it\xe2\x80\x99s a profit even if you buy\nafter you sell, so long as you buy at a lower price than that at which you\nsell!!!\n      Matching Principle: largest # of shares that defendant both bought\nand sold within the 6 month period\n'


b'\n                       Performance Test \xe2\x80\x93 Methodology\n\nApproach\n\n   1) Read general directions\n   2) Read task memo\n   3) Outline task memo\n   4) Tear out task memo\n   5) Read the library; put key words in the TOC\n   6) Read the file; put key words in the TOC\n   7) Re-focus on the big picture\n   8) Write your answer\n\n|Document                  |Skill Tested|Notes                             |\n|Memo of law               |Legal       |Objective                         |\n|                          |analysis    |Issue-by-issue                    |\n|Memo or points &          |Legal       |Persuasive                        |\n|authorities               |analysis    |To the judge                      |\n|(brief in support of      |            |Argument-by-argument              |\n|motion)                   |            |Jurisdictional statement: \xe2\x80\x9cThis   |\n|(persuasive memo)         |            |court has jurisdiction over the   |\n|                          |            |subject matter of this action     |\n|                          |            |because\xe2\x80\xa6\xe2\x80\x9d                         |\n|Trial brief               |Legal       |Persuasive                        |\n|                          |analysis    |Tell the judge what law to apply  |\n|Appellate brief           |Legal       |Persuasive                        |\n|                          |analysis    |                                  |\n|Memo to judge             |Legal       |Persuasive if representing client |\n|                          |analysis    |Object if clerk for the judge     |\n|Client letter             |Legal       |Objective                         |\n|                          |analysis    |Make recommendations              |\n|Letter to opposing counsel|Legal       |Must be persuasive                |\n|                          |analysis    |                                  |\n|Position Paper            |Legal       |Persuasive                        |\n|(persuasive letter to     |analysis    |                                  |\n|agency)                   |            |                                  |\n|Theory of the Case Memo   |Legal       |How the case law and facts fit    |\n|                          |analysis    |Part persuasive, part objective   |\n|Case Plan                 |Legal       |Steps in handling the case from   |\n|                          |analysis    |start to finish.  Overall goal    |\n|                          |            |first, then id and examine legal  |\n|                          |            |issues and facts accompanying the |\n|                          |            |issue                             |\n|Opening statement         |Fact        |Persuasive \xe2\x80\x93 tell a story         |\n|                          |analysis    |Promise of what evidence will show|\n|                          |            |Analyze/Argue facts w/in the      |\n|                          |            |structure of                      |\n|                          |            |the law                           |\n|                          |            |Element-by-element                |\n|                          |            |Rebut bad facts                   |\n|Closing statement         |Fact        |Persuasive \xe2\x80\x93 sum up your case and |\n|                          |analysis    |convince jury to accept your      |\n|                          |            |interpretation                    |\n|                          |            |Analyze/Argue facts (from trial   |\n|                          |            |transcript)                       |\n|                          |            |w/in the structure of the law     |\n|                          |            |Element-by-element                |\n|                          |            |Rebut bad facts                   |\n|Document                  |Skill Tested|Notes                             |\n|Bench memo                |Fact        |Judge acting as fact finder \xe2\x80\x93     |\n|                          |analysis    |generally just analyze facts      |\n|                          |            |unless appears that judge wants   |\n|                          |            |fact and law                      |\n|Jury instructions         |Fact        |Be persuasive, but not            |\n|                          |analysis    |argumentative                     |\n|                          |            |3-parts: theory, elements,        |\n|                          |            |particularized to the facts of the|\n|                          |            |case                              |\n|Declaration / Affidavit   |Fact        |Numbered paragraphs w/ fact       |\n|                          |analysis    |statements                        |\n|                          |            |\xe2\x80\x9cI ______, am _______\xe2\x80\x9c            |\n|                          |            |state basis for D\xe2\x80\x99s knowledge     |\n|Witness cross-examination |Fact        |Plan on how to cross-examine in   |\n|plan                      |analysis    |opposing party.                   |\n|Will, Contract, etc       |Fact        |Regulate behavior to meet certain |\n|                          |analysis    |goals.                            |\n|                          |            |Organization:                     |\n|                          |            |Title                             |\n|                          |            |Identify the parties              |\n|                          |            |State the purpose or description  |\n|                          |            |of the situation (keep it short)  |\n|                          |            |Identify the terms of the document|\n|                          |            |(fact specific)                   |\n|Fact gathering            |Fact        |Focus on what you need to         |\n|                          |gathering   |prove/disprove                    |\n|                          |            |Elements or factors               |\n|                          |            |Gather all types of facts         |\n|                          |            |(documentary, physical,           |\n|                          |            |testimonial)                      |\n|                          |            |Every person/document/item        |\n|                          |            |mentioned in the file is          |\n|                          |            |important.                        |\n|                          |            |Verify major facts w/ a second    |\n|                          |            |source                            |\n|                          |            |Discovery devises \xe2\x80\x93 only if asked |\n|Ethical dilemma           |Ethical     |Identify the ethical dilemma      |\n|                          |lawyering   |Suggest alternative ways of       |\n|                          |            |resolving the issue               |\n|                          |            |Select on of your options         |\n|Problem Solving           |Problem     |Identify the problem in terms of  |\n|                          |Solving     |the client\xe2\x80\x99s goals                |\n|                          |            |Identify options (alternatives;   |\n|                          |            |courses of action)                |\n|                          |            |Identify and analyze consequences |\n|                          |            |for each option (legal & non      |\n|                          |            |legal)                            |\n|                          |            |If requested \xe2\x80\x93 select and         |\n|                          |            |implement best option             |\n\n\n-----------------------\n\n\n\n85 min    (2-3:25)\n\n\n\n5 min          (3:25-3:30)\n90 min    (3:30-5)\n\n\n'


b'\nIs The Evidence Admissible?\n\n   1) Proper form? Leading?\n   2) Proper purpose?\n        a. Logical relevance \xe2\x80\x93 must tend to prove or disprove a material\n           issue in dispute.  Remember similar happenings.\n        b. Legal relevance \xe2\x80\x93 should relevant evidence nonetheless be\n           excluded?\n              i. Judicial Discretion: probative value substantially\n                 outweighs risk of unfair prejudice, confusing the issues,\n                 wasting time, misleading the jury.\n             ii. Public Policy: liability insurance, subsequent remedial\n                 conduct, settlement offers, payment or offer to pay medical\n                 expenses, guilty pleas.\n        c. Character evidence\n              i. Civil case: generally inadmissible to prove negligence,\n                 fault, or a person\xe2\x80\x99s conduct on a given occasion.  But,\n                 admissible if character is in issue or for impeachment.\n             ii. Criminal case: generally admissible to show MIMIC or for\n                 impeachment.   But, evidence of the D\xe2\x80\x99s bad character is\n                 inadmissible at the prosecution\xe2\x80\x99s initiative to show\n                 propensity to commit a crime unless and until the D opens\n                 the door by presenting evidence of his good character to\n                 show innocence of the crime.  Then and only then may P may\n                 present evidence of D\xe2\x80\x99s bad character the specific trait\n                 mentioned by the D.\n            iii. V\xe2\x80\x99s bad character: admissible when it is relevant to show\n                 D\xe2\x80\x99s innocence.\n                    1. Note special rules for rape cases.\n   3) Proper presentation?\n        a. Documentary evidence:\n              i. Authenticated?\n             ii. Best evidence rule: In proving the contents of a writing,\n                 the original writing itself must be produced or shown to be\n                 unavailable, unless the writing refers to a collateral\n                 matter.\n        b. Testimonial evidence: witness must be reliable \xe2\x80\x93 must have\n           personal knowledge\n              i. Opinion - Expert or Lay?\n             ii. Privilege?\n            iii. Impeachment?\n                    1. Character evidence for truth or veracity.\n                         a. Prior felony conviction or crime involving\n                            truth (no foundation needed)\n                         b. Specific acts of deceit of lying (only on\n                            cross; no extrinsic evidence)\n                    2. Prior inconsistent statements (need opportunity to\n                       explain)\n                    3. Evidence of bias, falsity (first need opportunity to\n                       explain or deny)\n             iv. Refresh recollection (can use anything)\n              v. Recorded recollection (read writing into evidence)\n        c. Other concerns: judicial notice, burdens of proof, presumptions\n   4) Hearsay?\n        a. Out of court statement?\n        b. Offered to prove the truth of the matter asserted?\n              i. Non-hearsay use?\n                    1. State of mind (to show impact on the hearer or\n                       declarant\xe2\x80\x99s state of mind)\n                    2. Impeachment/rehabilitation?\n                    3. Verbal act?\n        c. Exempted from the hearsay rule?\n              i. Prior inconsistent statements made under oath?\n             ii. Prior consistent statements offered to rebut charge of\n                 bias?\n            iii. Identification?\n             iv. Admission?\n        d. Does an exception apply?\n              i. Former testimony?\n             ii. Statements against interest?\n            iii. Dying declaration?\n             iv. Spontaneous statements: then existing state of mind;\n                 excited utterance; present0sense impression; then existing\n                 physical condition; past physical condition\n              v. Business records?\n\n-----------------------\nDeclarant must be unavailable\n\n\n'


b'\nConstitutional Law \xe2\x80\x93 Opening Paragraphs\n\n   1) Standing\n\nArticle III provides that the federal courts only have jurisdiction where\nthere is an actual case and controversy.  Thus, in order to properly assert\nher claims in federal court, a plaintiff must have standing.  There is\nstanding where the plaintiff alleges (1) an actual or imminent injury, (2)\nwhich was caused by the defendant\xe2\x80\x99s conduct, and (3) which is redressible\nby the court.\n\n\nAn association may sue on behalf of its members if (1) the members would\nhave standing to sue on their own, (2) the interests of the litigation are\ngermane to the organization\xe2\x80\x99s purpose, and (3) the members would not need\nto participate in the suit.\n\nA taxpayer has standing if (1) the law he seeks to challenge was enacted\nunder Congress\xe2\x80\x99s taxing and spending power, and (2) he alleges that\nCongress has exceeded some specific limitation on that power.\n\n   2) Ripeness\n\nFor proper federal jurisdiction, the claim must be ripe for review.  A\nclaim is ripe where the plaintiff would suffer harm if review were denied.\n\n   3) Mootness\n\nFor proper federal jurisdiction, there must be an actual controversy at\nevery stage of the litigation.  Thus if events after the filing of the\nlawsuit end the plaintiff\xe2\x80\x99s injury, the claim should be dismissed as moot.\nHowever, there is an exception to the mootness doctrine where the wrong is\ncapable of repetition yet evading review, or where the defendant has\nvoluntarily ceased the conduct which caused the plaintiff\xe2\x80\x99s harm.\n\n   4) SSI\n\nThe 11th Amendment prohibits private individuals from bringing suits in\nfederal courts against state government.  However, a state may waive its\nsovereign immunity.  Also, the 11th Amendment does not bar suits against\nstate officers for injunctive relief.  Moreover, Congress may abrogate SSI\nunder sec. 5 of the 14th Amendment when it is acting to remedy / prevent an\nalready recognized constitutional violation, and when the law is\nproportional and congruent to the constitutional violation.\n\n   5) Dormant Commerce Clause\n\nThe Commerce Clause gives Congress plenary power to regulate interstate\ncommerce.  However, where Congress is silent on an issue, the states are\nfree to regulate local transactions affecting interstate commerce.  But,\nstate regulations which unduly burden interstate commerce are\nunconstitutional.\n\nWhere a state regulation discriminates against out-of-staters, there is a\npresumption that the regulation unduly burdens interstate commerce.  Thus,\nthe state must show that the regulation is necessary to serve an important\ngovernment interest, and that there are no less restrictive means\navailable.  However, there is an exception when Congress has approved the\nregulation or where the state is acting as a market-participant.\n\nWhere the state regulation is non-discriminatory, the Court will balance\nthe state\xe2\x80\x99s interest in maintaining the regulation against the burden on\ninterstate commerce.\n\n   6) Privileges and Immunities Clause\n\nThe Privileges and Immunities Clause of the 4th Amendment prohibit a state\nfrom denying non-citizens the privileges and immunities afforded to its own\ncitizens.  Thus a state or local law which discriminates against out-of-\nstaters with regards to civil liberties or an individual\xe2\x80\x99s ability to earn\na living will be struck down as unconstitutional unless the state\ndemonstrates that the law is necessary to serve an important government\npurpose.  But, the P&I clause does not apply to corporations or aliens.\n\n\n\n   7) State Action\n\nThe 14th Amendment only applies where there is action by the state or local\ngovernment, or by an individual who is performing a function which is\ntraditionally performed exclusively by the state.\n\n   8) Equal Protection\n\nThe Equal Protection Clause of the 14th Amendment prohibits state\ngovernments from denying any person within its jurisdiction the equal\nprotection of the laws.  While the 14th Amendment applies exclusively to\nstate governments, grossly unreasonably discrimination by the federal\ngovernment is prohibited by the Due Process Clause of the 5th Amendment.\nUnder either provision, the analysis is the same.\n\nTo successfully assert an equal protection claim, the plaintiff must first\nshow that she is a member of a class of persons who is being treated\ndifferently from others.  The discrimination may appear on the face of the\nlaw, or where the law is facially neutral, the plaintiff must show that\nthere is both a discriminatory intent for the law and a discriminatory\nimpact for the law.\n\nWhere there is a classification, the level of scrutiny to be applied\ndepends on classification at issue or the right being limited.\n\nClassifications based on race, national origin, or alienage generally must\nmeet strict scrutiny \xe2\x80\x93 necessary to achieve a compelling government\npurpose.  So must regulations which implicate a fundament right \xe2\x80\x93 travel,\nvoting or Free Speech.\n\nClassifications based on gender or illegitimacy must meet intermediate\nscrutiny \xe2\x80\x93 substantially related to an important government purpose.\n\nWhere the law does not affect a suspect class nor implicate a fundamental\nright, the law need only meet rational basis review.  That is the\nchallenger must demonstrate that the law is not rationally related to a\nlegitimate government interest.  E.g. Age, disability, wealth and other\nclassifications.\n\n   9) Procedural Due Process\n\nThe Due Process Clause of the 14th Amendment requires that a state provide\nits citizens fair process and procedures before the government may deprive\none of life, liberty or property interest.  Procedural due-process invokes\na two-step inquiry.\n\nFirst, there must be a deprivation of life, liberty, or property.  There is\na liberty deprivation when the state takes away a significant freedom\nsecured by the Constitution or statute.  There is a property deprivation\nwhen the state takes away an entitlement to the continued receipt of a\nbenefit.  Note also that the deprivation must be intentional or at least\nreckless.  A deprivation that results from negligence is an insufficient\nbases for a procedural DP violation.\n\nIf there is a deprivation, the next step is to consider what process is\ndue.  Here, the court will balance (1) the importance of the interest to\nthe individual, (2) the ability of additional procedures to increase the\naccuracy of the fact-finding process, and (3) the government\xe2\x80\x99s interest in\nfiscal and administrative efficiency.\n\nThe final step is to consider whether the government has provided the\nappropriate process.\n\n  10)   Substantive Due Process\n\nWhere the law limits the ability of all persons to engage in an activity,\nsubstantive due process may apply.  The Due Process Clause of the 5th\nAmendment applies to the federal government, which the due process clause\nof the 14th Amendment applies to the states.  The inquiry is whether the\ngovernment has an adequate reason to take away a persons life, liberty or\nproperty interest.\n\nHere, the analysis depends on the right being impaired.  Where the law\nlimits a fundamental right, such as the right to vote, travel, privacy or\nfreedom of speech, strict scrutiny applies.  In all other cases, the\nrational basis test applies.\n\n\n  11)   Free Speech\n\nA law which seeks to regulate speech is presumptively unconstitutional.  To\njustify content-based regulation of speech, the government must show that\nthe ordinance is necessary to serve a compelling state interests and it is\nnarrowly drawn to achieve that end. [Discuss whether the regulation is\ncontent-based]\n\nContent-neutral regulations on speech are subject to intermediate scrutiny,\nand will be upheld if the government can show that (1) they advance an\nimportance interest unrelated to the suppression of speech, and (2) they do\nnot burden substantially more speech than necessary to further those\ninterests.\n\n        a. Time, Place and Manner Restrictions\n\nTo be valid, government regulation on speech in public forums must be (1)\ncontent neutral, (2) narrowly tailored to serve a significant government\ninterest, and (3) leave open alternative channels of communication.\n\nRegulations on speech in designated public forums \xe2\x80\x93 places where the\ngovernment could close speech, but chooses to open \xe2\x80\x93 must meet the same\nstandard as applies to public forums.\n\nRegulations on speech in private forums must (1) be viewpoint neutral and\n(2) reasonably related to a legitimate government interest.\n\n        b. Prior Restraints\n\nPrior restraints on speech must meet strict scrutiny.  The restraint must\nbe necessary to serve a compelling government interest.\n\n        c. Vagueness & Overbreadth\n\nA law is unconstitutionally vague if a reasonable person cannot tell what\nspeech is prohibited and what is allowed.  A law is unconstitutionally\noverbroad if it regulates substantially more speech than the constitution\nallows.\n\n        d. Symbolic Speech\n\nThe government can regulate conduct that communicates if it has an\nimportant interest unrelated to suppression of the message and if the\nimpact on communication is no greater than necessary to achieve the\ngovernment\xe2\x80\x99s purpose.\n\n        e. Commercial Speech\n\nCommercial speech which inherently risks deception is not protected by the\nFirst Amendment, so the government may regulate such speech as it pleases.\nRegulations on commercial speech which is not inherently deceptive must\nmeet intermediate scrutiny.\n\n        f. Obscenity\n\nObscene speech is not protected by the First Amendment.  Speech is obscene\nif (1) it appeals to the prurient interest, (2) the material is patently\noffensive under the law prohibiting obscenity, and (3) taken as a whole,\nthe material must lack serious redeeming artistic, literary, political or\nscientific value.\n\n  12)   Freedom of Association\n\nLaws that prohibit or punish group membership must meet strict scrutiny.\nTo punish group membership, the government must prove that the person (1)\nactively affiliated with the group, (2) knowing of its illegal activities,\n(3) with the specific intent of furthering those illegal activities.\n\n  13)   The Free Exercise Clause\n\nThe Free Exercise Clause prohibits the state from imposing restrictions on\nsomeone on the basis of the person\xe2\x80\x99s religious beliefs.  The state may\nimpose a restriction if it necessary to achieve a compelling state\ninterest.  However, the Free Exercise Clause cannot be used to challenge a\nneutral law of general applicability\n  14)   The Establishment Clause\n\nThe Establishment Clause prohibits laws respecting the establishment of\nreligion.  If government regulation or activity gives preference to one\nreligious sect over another, it is invalid unless it is narrowly tailored\nto serve a compelling state interest.\n\nIf a government regulation or action contains no sect preference, it is\nvalid under the Establishment Clause if (1) it has a secular purpose, (2)\nit neither advances nor inhibits religion, and (3) it does produce\nexcessive governmental entanglement with religion.\n\n  15)   Taking\n\nThe government may take property, though the power of eminent domain, but\nonly if (1) it does so for the public use, and (2) it provides just\ncompensation to the owner.  Physical takings must meet this test, as must\nuse restrictions which deprive the owner of all economic value.\n\n  16)   Contracts\n\nThe Contracts Clause prohibits state or local interference with existing\ncontracts.  Interference with government contracts must meet strict\nscrutiny.  Interference with private contracts must meet intermediate\nscrutiny.\n\n  17)   State Taxation\n\nWhere state taxation laws conflict with federal laws, the state laws are\npreempted by the Supremacy Clause.  Discriminatory taxes are invalid under\nthe Commerce Clause.  Where a state tax law is not preempted and is not\ndiscriminatory, it will be upheld if (1) there is a substantial nexus\nbetween the activity and the state, and (2) state tax on interstate\nbusinesses must be fairly apportioned.\n\n  18)   Access to Courts\n\nA state must waive court filing fees imposed on indigents when the\nimposition of a fee would deny a fundament right to the indigent.  The\ninability to pay a fee cannot be the sole basis upon which a person is\ndeprived of a fundamental constitutional right.  (Raises equal protection\nissue \xe2\x80\x93 discrimination based on wealth; but note, access to courts is not a\nfundamental right).\n\n\n'