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fall 2020 archive

Fall 2020 materials

[I add the material to this page at the top so the beginning of the semester appears at the bottom]

Here is my Memo on Fall 2020 Business Associations Exam, and here is the Fall 2020 Business Associations Exam.

I have scheduled some office hours from 2-4 pm on Wednesday 25 November and Friday 27 November and have emailed you the zoom information for the Wednesday session and will provide the Friday information later. These are times for you to be able to drop in to ask me questions you may have rather than a more organized review. I am also happy to answer questions by email.

Happy Thanksgiving


I am teaching 2 sections of this class this semester, with class meetings on Tuesdays from 10.10-11.50 am and on Thursdays from 2.00 to 3.40pm. I will set up some office hours sessions to address questions individually.

Week 14: November 16-20:

Tuesday’s class will focus on review. We can discuss questions you may have and please prepare to discuss the Spring 2019 exam

I will schedule some review sessions and office hours for later next week. I am also happy to answer questions by email or arrange individual or small group zoom sessions to discuss your questions.

I scheduled a review session for Thursday morning at 10 am. I will also schedule office hours for Thursday afternoon and will notify you. On Thursday at 10 I will go over the Spring 2020 exam.

Week 13: November 9-13:

If I lose power and am not able to run class on Tuesday because of the storm I will schedule a session at another time. If I have class there will be a recording available to those of you who lose power. And please do ask me your questions (which I will get to when I hacve power! Stay safe.

Here is my outline Memo on the Midsemester Assignment.

Please Note: The final exam will be a take-home exam, and you will be able to decide when you take it during the entire exam period. You will have a period of 8 hours in which to complete the exam.

Tuesday class: The last reading assignment for the semester is pages 468-526 of the Casebook, but in class we will focus on the insider trading material.


Securities Regulation: Santa Fe v Green

Securities Regulation: examples of claims

Securities Regulation: Insider Trading (Goodwin v Agassiz; Texas Gulf Sulphur)

Securities Regulation: Insider Trading (Insiders and Tipping)

Securities Regulation: Insider Trading (Misappropriation)

Thursday class: The class this week will focus on review. We can discuss questions you may have and please prepare to discuss the Spring 2019 exam

I do not propose to discuss this in class on Thursday November 12, but here is the Spring 2020 exam which I am happy to discuss in a later review session.

Week 12: November 2-6 The last reading assignment for the semester is pages 468-526 of the Casebook, but in class we will focus on the insider trading material. If you are in the Thursday class the discussion session on this material will be on November 5, and if you are in the Tuesday class it will be on November 10. The last class for each group will focus on review and I will schedule some additional times to focus on review in the week beginning November 16.


Securities Regulation: Santa Fe v Green

Securities Regulation: examples of claims

Securities Regulation: Insider Trading (Goodwin v Agassiz; Texas Gulf Sulphur)

Securities Regulation: Insider Trading (Insiders and Tipping)

Securities Regulation: Insider Trading (Misappropriation)

Please Note: November 4: The final exam will be a take-home exam, and you will be able to decide when you take it during the entire exam period. You will have a period of 8 hours in which to complete the exam.

Week 11: October 26-30: For next week please read pages 410-468 of the Casebook.


Securities Regulation: Definition of a security

Securities Regulation: registration and liability

Securities Regulation: §10(b) and Rule 10b-5

Week 10: October 19-23 In the discussion sessions we will begin with a recap of Mindbody and discuss any questions you may have. Then we will be focusing on derivative litigation. So please read CB pages 358-410 and In re Oracle Corporation Derivative Litigation (Del. Ch. 2019) and this Derivative Complaint (Quaalcom).

In the class discussion sessions, as well as focusing on any questions you have about the material I would like to think about the claims in the Qualcomm complaint and consider how likely the plaintiffs are to be able to pursue the legal theories in the complaint successfully. For example, what are the barriers the plaintiffs face, and does the complaint suggest a way around or through those barriers? I am not providing a recorded lecture on this complaint.


Corporations: Derivative litigation- direct and derivative claims

Corporations: Derivative litigation: demand

Corporations: Derivative Litigation: SLCs

Corporations: derivative Litigation: Sanchez and China Agritech

Corporations: Derivative Litigation: Oracle

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) is an example of a direct claim by shareholders.

There are more complicated: situations with a mix of direct and derivative claims (e.g. Benihana (duty of loyalty and dilution – the duty of loyalty claims would be derivative, the dilution claims are direct)).

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).

Cases involving self-dealing by controlling stockholders are complicated: Sinclair Oil is brought as a derivative suit, but the idea in these cases is that harm is caused to the minority shareholder, which looks like a direct claim.

Because of the remedy part of the test some cases could be brought either as a direct or as a derivative claim. For example a case involving a challenge to an executive compensation agreement could claim as a remedy a declaration that the agreement was invalid because the Board abdicated its responsibility to shareholders (Grimes v Donald). If the plaintiff sought damages for breach of the directors’ duties the case would be brought as a derivative suit.

With respect to the Mindbody litigation, Robert Smith, the founder of Vista Equity Partners, which was the acquiror of Mindbody in the case you read, entered into a Non-Prosecution Agreement for tax evasion this week.

Week 9:October 12-16 Next week we will begin with Stone v Ritter and Marchand v Barnhill. I also want to look at some cases involving questions of control, and the different procedures the Delaware Courts have mandated, depending on whether a controlling stockholder is involved. So I am also asking you to read In re Tesla Motors, Inc. Stockholder Litigation (Del. Ch. 2020). In the powerpoint lecture on this case I will discuss Kahn v M & F Worldwide Corp (Del. 2014, noted in the Tesla decision at fn 54) and Corwin v KKR Financial Holdings LLC (Del. 2015) which I am not requiring you to read (although Kahn is in your casebook at p 752). Please do read In Re Mindbody, Inc. Stockholders Litigation (Del. Ch. 2020).

In 2018 Vice Chancellor Slights found that it was reasonably conceivable that Elon Musk, as a controlling stockholder, controlled the Tesla Board when it approved the acquisition of Solarcity, a corporation set up by Musk and 2 cousins which had been experiencing financial difficulties. The idea of Musk being a controlling stockholder was based partly on his 22.1% shareholding at the time and also on other factors, including Musk’s significance to Tesla (the VC noted that Musk might be the minority blockholder who could rally other stockholders to bridge the gap between the 22.1% and a majority holding and that the Plaintiffs had alleged that investments in Tesla represented investments in Musk and his vision for Tesla’s future (this was not enough on its own)), his willingness in the past to facilitate the ouster of senior management which might have influenced the Tesla directors, and the fact that practically no steps were taken to separate Musk from the Board’s consideration of the acquisition (for example there was no independent committee).

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).

In the discussion sessions we will discuss these cases and address any questions you may have about the material. Please do reach out to me if you have questions you would like to ask me outside our general discussion sessions.


Corporations: Oversight Liability

Corporations: Corwin, Kahn, Tesla, Mindbody

You may find this essay by Nemonte Nequino interesting: This is my message to the western world – your civilisation is killing life on Earth because it raises the issue that multinational corporations, as profit-maximizing entities, cause damage in the places where they work.

Comment: Silvia Jelo di Lentini – October 15, 2020: Good morning Professor Bradley, I did not understand what was that technically supported the idea that Musk is a controlling stockholder (having him only 21.1%) and how was Musk so influent for the Board of Directors? Thank you. Bradley – October 15, 2020: So far we do not know that after trial Musk would be found to be a controlling stockholder. What we know is that the claim has been sufficiently well pleaded and argued to survive a motion to dismiss and a request for summary judgment by the defendants. The question whether he is a controlling stockholder is a factual question. In answering that the issue is not just does he have the right to exercise the majority of the voting rights of shareholders but are there other factors that mean that he may in fact be in control (such as the idea of the investors’ investment being one in Musk rather than Tesla,his past willingness to oust people from management, and the fact he was involved in the approval of the Solarcity transaction). And the reason we are asking the question about control is to know how much and what sort of process should be required.

Week 8: October5-9: This week we will study the material on the duty of loyalty in corporations, and the duty of good faith (including the issue of liability for failure to monitor). So please read Casebook pages 303-358 and Marchand v Barnhill (Del. Supr. 2019).

Here is a question to think about for next week:

Anna, the CFO and a director of Beta, Inc, agrees to go on an all-expenses paid trip to the Gammaco investment banking trip in a luxury resort with her family. Anna’s cousin is the CEO of Gammaco. Their families have always been very close, vacationing together every summer on the family farm for as long as they can both remember.

Three other members of the (7 member) Beta board also go on the trip to the luxury resort. After the trip, Anna recommends to the board that Beta hire Gammaco as its investment banker for Beta’s planned acquisition of Targetco. With no discussion the board agrees to the recommendation on the terms proposed by Gammaco. The attempt to acquire Targetco fails, but Beta is contractually obliged to pay a very large fee to Gammaco for its work.

Della, a shareholder in Beta, learns about Anna’s relationship with the CEO of Gammaco and wants to know if there is a basis to challenge the contract between Beta and Gammaco.


Corporations: Conflicting Interest Transactions; Corporate Opportunities

Corporations: Controlling Stockholders

Corporations> Walt Disney

Week 7: September 28-October 2: Please read to page 303 of the Casebook. We are a week behind my original syllabus right now (but pretty well exactly where I usually am at this stage of the semester- I was ambitious about how much we might be able to cover in this virtual environment!).


LLCs Part 1

LLCs Part 2

Corporations: Duty of Care

On the CSR/ESG issues we talked about last week, you may have seen some news stories about Alphabet Inc’s (parent company of Google) settlement of shareholder suits which complained about Alphabet hiding generous severance payments to executives who left after complaints of sexual harassment of employees. Alphabet is incorporated in Delaware, has its principal executive offices in Mountain View, California, and its common stock is listed on Nasdaq. Here is a link to its Code of Conduct (employees should do the right thing). In the settlement Alphabet has agreed to spend (itself) $310 million on diversity, equity and inclusion initiatives, with an Advisory Council for these initiatives with outside experts and Alphabet executives, including Sundar Pichai, the CEO.In addition Alphabet companies will not require arbitration for employee complaints of harassment, discrimination and retaliation, and will limit the use of NDAs relating to these matters. The SEC filing on the se4ttlement is available here (you are not required to read this)

Here are links to the Alphabet Inc Certificate of Incorporation and Bylaws.

There’s a good article on the lawsuit and settlement at the New York Times: Alphabet Settles Shareholder Suits Over Sexual Harassment Claims (available via this page). And here is a piece about the litigation at D&O Diary, an excellent resource.

Here is the Business Associations Fall 2020 Writing Assignment (Sep. 8 I fixed a typo). Please submit your answer in a file with your AGN clearly marked (and without your name on the document) to Claire Amador camador@law.miami.edu by October 1, 2020. I have identified two specific questions fro you to answer arising out of the hypothetical facts and it probably makes sense to spend more time on these questions than on any other issues you see, but please do also raise other legal issues you identify.

Week 6: September 21-25: Please read pages 214-276 of the Casebook: role and purposes of corporations; LLCs. In the discussion sessions this week we will start with questions you may have about veil piercing, then think about the corporate purpose materials (do you think about ethical/social impact issues in making purchasing decisions?) and LLCs.


Corporations: Veil Piercing

Corporations:Role and Purposes

LLCs Part 1

Tuesday 22 September: The article I mentioned this morning is Jonathan Macey and Joshua Mitts, Finding Order in the Morass: The Three Real Justifications for Piercing the Corporate Veil, 100 Cornell L. Rev. 99 (2014),

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 Statue 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.”

With respect to the break up of relationships in an LLC., as well as focusing on dissolution you should be aware that, in contrast to the partnership default rules, LLC rules may result in a member of an LLC who leaves being stuck with a financial interest in the LLC which they are unable to liquidate. The Florida statute provides for dissociation of a member to occur, but there is not a statutory buy-out. Under §605.0603 “a transferable interest owned by the person in the person’s capacity immediately before dissociation as a member is owned by the person solely as a transferee.” The ex-member loses management rights but retains financial rights. But unless there is a provision in the operating agreement this does not include a right to be bought out. And although the statute provides for dissolution, including court orders for dissolution which apply in a range of circumstances including deadlock, these provisions can be invoked by members and managers but not by ex-members. If those running the LLC decide not to make financial payments to the ex-member there may not be anything the ex-member can do about the situation – there’s a risk of being financially locked in but frozen out of decision-making and information. In the corporate context this sort of situation could be addressed by remedies for oppression. In the partnership context there would be a buyout right under RUPA. In the LLC typically this is an issue that is only resolved if there is a provision in the operating agreement.

I would also like to focus briefly on digital organizations. The Vermont LLC Act includes the following definitions:

Operating agreement” means any form of description of membership rights and obligations … stored or depicted in any tangible or electronic medium, which is agreed to by the members, including amendments to the agreement. “Meeting” means any structured communications conducted by participants in person or through the use of electronic or telecommunications medium permitting simultaneous or sequentially structured communications for the purpose of reaching a collective agreement.

If you are interested you might want to read Shawn Bayern, Of Bitcoins, Independently Wealthy Software, and the Zero-Member LLC, 108 NWU L. Rev 1485 (2014); Lynn M LoPucki, Algorithmic Entities, 95 Wash. U. L. Rev. 887 (2018); Shawn Bayern, Are Autonomous Entities Possible?, 114 Nw. U. L. Rev. Online 23 (2019).

Week 5: September14-18: Please read Casebook pages 166-211, also Salzberg v. Sciabacucchi (Del. Sup. 2020) (the case belongs on page 198 just after the discussion of the ATP Tour case). We will look at limited liability partnerships (see Florida Statutes § 620.8306), and we will also look at Florida Statutes § 620.8103 (which addresses the issue of contracting around default rules).

In the discussion sessions this week we can address any questions you may have, and let’s also consider this hypo:

Ally and Billy set up a partnership in Florida five years ago and filed as a LLP immediately. In the second year of the business they forgot to file the required annual report and pay the filing fee by the deadline, and the Department of State notified them that they were no longer a LLP as of the 4th Friday in September. They were very busy at the time and did not get around to applying for reinstatement (including filing the missing annual report) until the following January. In the December before they applied for reinstatement some of their customers sued them for injuries they claim were caused by the partnerships’s products which the customers had acquired at the beginning of November. In what circumstances will Ally and/or Billy face personal liability for any damages?

Lectures for this week:

Partnership Part 6

Corporations: Promoters; Controlling Litigation

Corporations: Veil Piercing

Week 4: September 7-11: For this week please read to page 166 of the Casebook, This is a bit behind where the syllabus suggests we should be at this point. And this is partly because we did not address the partnership management material in week 3. It is also because I am making some adjustments to my lecture plans for this week in response to the Scholar Strike, As you know, one of the issues that I have been focusing on this semester is the relationship between business and society, and I plan to spend some of next week’s time on issues of economic inequality as they relate to our Business Associations material (with respect to agency and partnership issues of access to capital, and access to franchising opportunities for example). So there will be another video lecture on these issues in addition to powerpoints on the Casebook material.

Partnership Part 4 (with audio)

Partnership Part 5 (with audio)

In the class sessions this week we will look at the hypothetical on page 134 and then work through the dissolution/dissociation material.

Here is the Business Associations Fall 2020 Writing Assignment (Sep. 8 I fixed a typo). Please submit your answer in a file with your AGN clearly marked (and without your name on the document) to Claire Amador camador@law.miami.edu by October 1, 2020. I have identified two specific questions fro you to answer arising out of the hypothetical facts and it probably makes sense to spend more time on these questions than on any other issues you see, but please do also raise other legal issues you identify.

Week3: August 31-September 4: Please read the Florida Revised Uniform Partnership Act (the Florida version of the Revised Uniform Partnership Act)and Casebook pages 83-139 for this week. For now please focus on §§ 620.8101-8405 although I will identify specific provisions to focus on in more detail in the lectures. We will look at dissociation and dissolution in week 4.

Partnership Part 1 (with audio)

Partnership Part 2(with audio)

Partnership Part 3 (with audio)

Here are Questions for discussion for week 3

These lectures cover the material to page 128 and I am going to roll over pages 128-139 to week 4.

September1, 2020: This week in our discussion sessions I am going to be mentioning a lawsuit just filed against McDonald’s claiming that Black franchisees are treated less well than white franchisees. Jim Ferraro’s law firm is representing the plaintiffs (he is a UM Law alumnus) and you can read about the case, and access the complaint here.

Week 2: August 24-28 I moved the material that was previously on this page to the archive page. I will do this each week.For this week please read pages 35-82 of the Casebook.

Here are the lectures for week 2:

Agency Part 3 (with audio)

Agency Part 4 (with audio)

Agency Part 5 (with audio)

Agency Part 6 (with audio)

Here are Agency hypotheticals for week 2 for discussion on Tuesday/Thursday.

First Class Assignment for classes on Tuesday August 18 and Thursday August 20. Please read pages 1-35 in the Casebook. By August 10th I will also post to this blog the video lectures for the first week (on class organization and policies, Casebook pages 1-35 and on the relationship between business and society), and the syllabus and class policies.

If you do not manage to acquire a copy of the Casebook before next week’s 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 17-21: Reading Assignment: Casebook pages 1-35 (Gorton v Doty, A,. Gay Jenson Farms v Cargill, Inc., Mill Street Church of Christ v Hogan, Three-Seventy Leasing Corporation v Ampex Corp., Watteau v Fenwick, Botticello v Stefanovicz, Hoddeson v Koos, Atlantic Salmon v Curran) 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 (via the quick link) and then find the American Law Institute Library). Assignment for Class Discussion: Introduction to Business & Society and Agency (discussion based on Gorton v Doty, Cargill and authority)

Here is the BA Syllabus Fall 2020 (August). You will see that I have divided up the course material week by week so that we will mostly be concentrating on specific topics during that week. When I teach this class in person I do not stick rigidly to a syllabus but cover the material at a pace that seems to me to fit where the class is. At the same time this syllabus is quite close to what I normally cover in the class. As you can see from the syllabus, my plan is to have time at the end of the semester to review what we have learned during the semester.

Here is my first short video: Welcome to Business Associations

And here are the video/audio lectures for the first week:

Business and Society

BA Introduction

Agency Part 1 (note that there is audio narration)

Agency Part 2 (with audio narration)

Although I assigned pages 1-35 for reading for this week I am going to provide lectures for pages 25-25 during this coming week,