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fall 2022 archive

Each week I move material from the BA front page to this page. I add the material to this page at the top so the beginning of the semester appears at the bottom.

Assignment for week beginning November 14 [Section A: November 14; Section B: November 16] For this week please read Casebook pages 423-458 (Goodwin v Agassiz, SEC v Texas Gulf Sulphur, Dirks v SEC, Salman v US, US v O’Hagan). Please also read this settlement agreement (Assurance of Discontinuance) between the NY State Attorney General and CBS and Leslie Moonves. New York’s Martin Act here is seen to cover much of the same ground as the Federal Securities Laws.
You should also note that the SEC and DOJ have recently taken action with respect to “insider trading” in cryptocurrencies (this is what news stories refer to) where the specific charges brought related to wire fraud (e.g., US v Wahi (there is a link on this page to the indictment although I am not requiring you to read the indictment)) (and NFTs (US v Chastain).
Tesla shares have suffered a steep decline since Musk’s acquisition of Twitter (the share price was trending upwards from the beginning of 2020 to November 2021 and has been trending down with some spikes over the last year), but there has also been a new vehicle recall, and Musk himself has sold shares.

Lectures: Securities: Claims under §10(b) and Rule 10b-5 ; Securities: Goodwin v Agassiz & Texas Gulf Sulphur; Securities: Insiders and Tippees; Securities: Misappropriation

Assignment for week beginning November 7 [Section A: November 7; Section B: November 9]
We will finish up the semester by focusing on disclosure, and in particular disclosure, fraud liability and insider trading under the federal securities laws. This is a major area where legal malpractice occurs, so it is useful to have a sense of the issues. While we will focus on securities law issues relating to business entities be aware that a range of investment schemes can be securities schemes and therefore involve legal risks.
For this week please read Casebook pages 365-422 (Robinson v Glynn, Doran v Petroleum Management Corp., Escott v Bar-Chris Construction Corp., Halliburton Co. v Erica P John Fund, Inc., West v Prudential Securities, Inc., Santa Fe Industries v Green, Deutschman v Beneficial Corp.)

Lectures: Securities Regulation: Definition of a Security; Securities Regulation: Registration of Issues and Liability; Securities Regulation: §10(b) and Rule 10b-5 ; Securities Regulation: Santa Fe v Green

Assignment for week beginning October 31 [Section A: October 31; Section B: November 2]
For this week please read Casebook pages 335-365 which will allow us to finish the derivative litigation material [Auerbach v Bennett, Zapata v Maldonado, Delaware County Employees Retirement Fund v Sanchez, City of Birmingham Ret. and Relief System v Good]. In the asynchronous lectures I will also discuss some litigation involving Oracle (in particular with respect to special litigation committees). I am not going to require you to read the 2021 Oracle decision I will discuss.
We will also discuss a hypothetical I will post to the blog addressing the issues we have been studying recently.
Here is the Hypothetical for October31/November2

Lectures:Corporations: Derivative Litigation (Special Litigation Committees); Corporations: Independence (Sanchez, Zuckerberg);
Corporations: Derivative Litigation (City of Birmingham v Good); Corporations: Derivative Litigation (SLCs- Oracle)

Assignment for week beginning October 24 [Section A October 24, Section B October 26]
We will begin in class with the Weinberger etc material held over from last week. To the initial materials please add In Re Mindbody, Inc. Stockholders Litigation (Del. Ch. 2020)(partial settlement in 2022). In the asynchronous lectures I discuss some litigation involving Tesla although I am not requiring you to read the decisions (I will link to the decisions in the lecture).
We will then start to study derivative litigation. Please read Casebook pp. 314-365 (In Re Medtronic Inc. Shareholder Litigation, Grimes v Donald, Marx v Akers, Auerbach v Bennett, Zapata v Maldonado, Delaware County Employees Retirement Fund v Sanchez, City of Birmingham Ret. and Relief System v Good). And please also read Brookfield Asset Management v Rosson (Del. 2021) and United Food and Commercial Workers Union v. Zuckerberg (Del. 2021).

Here are some examples of derivative suits from the cases we studied earlier: Kamin v Amex (dividend policy rather than a shareholder’s claim to be entitled to dividends), Shlensky v Wrigley, Walt Disney, Stone v Ritter.

A corporate opportunities case would be a derivative claim if brought by a shareholder, but whereas E-bay is a derivative claim, Broz is a case brought after a change in control of the corporate decision-making process (Pricellular acquisition, change in board composition).

Smith v Van Gorkom (transactions in corporate control unfairly affecting the plaintiff shareholder where directors have a duty to shareholders) is an example of a direct claim by shareholders. The directors’ duty to ensure the highest price reasonably obtainable for the shares is a duty owed to the shareholders.

Some issues (think, for example about Caremark-type situations) can be analyzed either as breaches of directors’ duties (derivative) or as securities claims, focusing on failures with respect to disclosure (direct).

Before Brookfield Asset Management I would have told you that dilution claims (e.g. think Benihana) could be stated as direct claims.

Note on Corwin and Kahn (for week beginning October 24): Corwin holds that the business judgment rule applies to a transaction decision made by the Board which is approved by a majority of disinterested, fully informed and uncoerced stockholders, so long as there is no conflicted controlling stockholder. Kahn provides that a transaction involving a controlling stockholder will be subject to the business judgment rule if it is both (i) negotiated by a well-functioning special committee of independent directors and (ii) conditioned on the approval of a majority of the minority shareholders. This is another example of the focus on process we have noticed before. The involvement of a controlling stockholder has implications for how much process is necessary to ensure that the business judgment rule applies. Tesla shows how flexible the definition of control is.

Where Board members want to rely on stockholder approval it is important to note that the stockholder vote must be by disinterested, fully informed, and uncoerced stockholders. Material misstatements and/or omissions in disclosures to the stockholders will remove the protective effect of the stockholder vote. Where negotiation of the transaction by a special committee is required (where there is a controlling stockholder) the directors who are members of the committee must be independent (and this is another area of uncertainty, like the definition of control).

Lectures:Corporations: Weinberger v UOP; Corwin; Kahn; Tesla Corporations: Mindbody; Corporations: Derivative Litigation (direct or derivative); Corporations: Derivative Litigation (demand)

Assignment for week beginning October 17 [Section A: October 17; Section B: October 19]
Reading Assignment: Casebook pages 273-313 (Sinclair Oil Corp. v Levien, Zahn v Transamerica, Fliegler v Lawrence, In re Investors Bancorp, Inc. Stockholder Litigation, In Re the Walt Disney Co. Derivative Litigation, Stone v Ritter) also: Marchand v Barnhill (Del. Supr. 2019)]
Casebook pages 686-716 (Weinberger v UOP, Kahn v M&F Worldwide) and 778-782 (Corwin v KKR Financial Holdings LLC)
Lectures: Corporations: Duties, BJR, Exculpation; Corporations: Loyalty; Dominant Shareholders; Ratification; Corporations: Investors Bancorp; Walt Disney; Corporations: Oversight Liability I; Corporations: Oversight Liability II.

Mid-semester Review
I hope you all have a great Fall Break. As we arrive at the mid point of the semester I think it makes sense to engage in some review of what we have learned so far.

I am providing here the assignments I wrote for the last 2 years in this class, together with memos I wrote about the questions. This allows you to see the sorts of questions I have written in the past about some of the material we have studied so far (note that there were some minor variations in the cases included in the last edition of the casebook).

Business Associations Fall 2021 Mid-Semester Writing Assignment (Memo on the Fall 2021 Mid Semester Assignment)

Business Associations Fall 2020 Writing Assignment, and here is my outline Memo on the Midsemester Assignment.

WEEK 6 [Section A: October 3; Section B: September 28]
Reading Assignment: Casebook pages 225-273 (corporations- duty of care, duty of loyalty) (Kamin v American Express Company, Smith v Van Gorkom, Francis v United Jersey Bank, Bayer v Beran, Benihana of Tokyo v Benihana, Broz v Cellular Information Systems Inc., In Re eBay Inc. Shareholders Litigation).
Here are links to the Corporations Statutes we will be focusing on:
Florida Business Corporation Act
Delaware General Corporation Law

Lectures: Corporations: Duty of Care (note amendment of DGCL §102(b)(7) in 2022 to allow for officer exculpation, although not where the claim is a derivative claim); Corporations: Loyalty: Conflicting Interest Transactions and Corporate Opportunities

WEEK 5 [Section A: September 26; Section B: September 21]
Reading Assignment: Casebook pages 179-224 ( Boilermakers Local 154 Retirement Fund v Chevron Corp., [add Salzberg v. Sciabacucchi (Del. Sup. 2020)- (the case belongs on page 190 just after the discussion of the ATP Tour case).] Walkovsky v Carlton, Sea-Land Services Inc. v Pepper Source , Frigidaire Sales Corp. v Union Properties Inc., A.P. Smith Manufacturing Co. v Barlow, Dodge v Ford Motor Co, Shlensky v Wrigley)
As a footnote to the Boilermakers case, the Florida Corporations Statute allows for bylaws or articles of incorporation to contain exclusive forum provisions see FL. Stats.§§ 607.0206, 607.0208 but prohibits fee-shifting bylaws. The Florida Statute also expressly addresses the arbitration issue in §607.0208(3): “No provision of the articles of incorporation or the bylaws may prohibit bringing an internal corporate claim in all courts in this state or require such claims to be determined by arbitration.”
Here is a link to the Florida Business Corporation Act
Assignment for Class Discussion: I am not assigning a hypothetical for this week’s class.
Lectures: Corporations: Promoters; Controlling Litigation; Corporations: Veil Piercing (on the last slide I say this is the lst lecture for this week- that is not the case); Corporations: Role and Purposes

WEEK 4 [Section A: September 19; Section B: September 14]
Reading Assignment: Casebook pages 150-178 (Giles v Giles Land Company, Kovacik v Reid, G&S Investments v Belman, In Re El Paso Pipeline Partners LP Derivative Litigation); also Casebook pages 871-931 (LLCs and add digital organizations)( Duray Developments LLC v Perrin, Elf Atochem North America Inc. v Jaffari, Fisk Ventures LLC v Segal, Netjets Aviation Inc. v LHC Communications LLC, McConnell v Hunt Sports Enterprises, Racing Investment Fund 2000 LLC v Clay Ward Agency, Inc., VGS v Castiel, Reese v Newman, Haley v Talcott)
Assignment for Class Discussion: Question for discussion for Week 4
Lectures:Partnership Part 5; Partnership Part 6

WEEK 3 [Monday September 5th is Labor Day. Section A: September 12; Section B: September 7]
I hope you all have a good Labor Day weekend!
Reading Assignment: Please read the Florida Revised Uniform Partnership Act (the Florida version of the Revised Uniform Partnership Act). It is a good idea to have a sense of the entire statute although we will focus on some specific provisions. Please also read Casebook pages 92-149 (Fenwick v Unemployment Compensation Commission, Martin v Peyton, Southex Exhibitions v Rhode Island Builders Association, Young v Jones, Meinhard v Salmon, Sandvick v LaCrosse, Meehan v Shaugnessy, Lawlis v Kightlinger & Gray, In Re Fulton, National Biscuit Company v Stroud, Summers v Dooley, Day v Sidley & Austin)
Assignment for Class Discussion: : Questions for discussion for week 3
Lectures: Partnership Part 1; Partnership Part 2; Partnership Part 3; Partnership Part 4; RUPA

WEEK 2 [Section A: August 29; Section B: August 31]
I have moved material that was previously on this page into the archive page.

Reading Assignment: Casebook pages 34-82 (Botticello v Stefanovicz, Hoddeson v Koos, Atlantic Salmon v Curran, Humble Oil v Martin, Hoover v Sun Oil, Murphy v Holiday Inns, Miller v McDonald’s, Ira S Bushey & Sons v US, Manning v Grimsley, Arguello v Conoco, Majestic Realty v Toti Contracting, Reading v Regem, Rash v JV Intermediate, Town & Country House & Home Service v Newbery)
Assignment for Class Discussion: Here are Agency hypotheticals for week 2 for discussion on Monday/Wednesday.

Lectures for week 2:
Before posting these lectures I do review them and make amendments. However. you will notice that where the only changes I have made have been to the page numbers in the Casebook there are times when I have not re-recorded the audio. Page number references in the text are correct. Paula Potter Question, pp 33-4; Agency Part 3; Agency Part 4; Agency Part 5; Agency Part 6.

First Class Assignment for classes on Monday August 22 and Wednesday August 24. Please read pages 1-34 in the Casebook. By August 16 I will also post to this blog the lectures for the first week (on class organization and policies, Casebook pages 1-34 and on the relationship between business and society) and the syllabus and class policies. Please note that most of my asynchronous lectures for this class are in powerpoint format but they are narrated so that you can hear me talk through the slides.

If you do not manage to acquire a copy of the Casebook before the first class you could read the cases online (I have listed them) or just rely on my lectures where I am outlining the main points I would like you to take from the cases. The issues we should cover in class in week 1, in addition to any questions you may have so far, really relate to the question of the risk that a relationship will be characterized as an agency relationship, and drawing distinctions between implied actual authority and apparent authority

WEEK 1: August 22-26
Reading Assignment: Casebook pages 1-34 (Gorton v Doty, A. Gay Jenson Farms v Cargill, Inc., Mill Street Church of Christ v Hogan, Ackerman v Sobol Family Partnership LLP, Watteau v Fenwick)
Note: You can access the Restatement 3rd of Agency via the Hein Online link on the Law School Library web page (look in Hein Online and then find the American Law Institute Library).
Assignment for Class Discussion: Introduction to Business & Society and Agency (discussion based on Gorton v Doty): Agency questions for week 1

Lectures for week 1: Welcome; An Introduction to Business And Society; Agency Part 1; Agency Part 2

A couple of people have asked whether the 10th Edition would work for the class. I think there have been more changes than usual between the 10th and 11th edition of the Casebook so am not recommending this. I have tried to reduce your expenses by not assigning a statutes book.

If you don’t have the Casebook yet, here is a copy of the first chapter of the 10th edition. The difference here (for the first week) is the substitution of Ackerman v Sobol Family Partnership LLP 298 Conn. 495 (2010) for the 370 Leasing case: Chapter 1.

With apologies for the delay, here is my Syllabus.