17 chapters
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Chapter 11: The Story of Allis-Chalmers, Caremark, and Stone: The Directors’ Evolving Duty to Monitor 51 results (showing 5 best matches)
- On a general level, the story of is the story of Delaware’s evolving view of the appropriate role of directors. More specifically, it is the story of how dramatic changes in federal criminal law and practice transformed the question of corporate compliance with federal criminal laws into a corporate governance issue warranting serious attention by the Delaware courts.
- This chapter explores the evolution of Delaware’s law governing directors’ duties to oversee legal compliance. It is a story of how changes in federal criminal law induced Delaware to reform its approach to directors’ oversight duties. It also is the story of the struggle between the Delaware Chancery Court and the Delaware Supreme Court over how broad to make directors’ oversight duties and liability.
- For an insightful discussion of the norm-providing function of Delaware law,
- Corporate Crime and Punishment: An Update on Sentencing Practice in the Federal Courts, 1988–1990
- C. Transformation of Federal Corporate Criminal Law
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Introduction 9 results (showing 5 best matches)
- In the book that follows, the contributors—distinguished corporate-law scholars all—each explore the story behind a prominent opinion. They pick cases where the story matters. They then detail the intriguing facts that generated the dispute, and shaped the law that the court invoked. Courts apply law, but they apply it to facts. Necessarily, the facts they perceive influence the law that they choose to apply. In the book that follows, we detail some of the cases where the facts did indeed affect the law.
- The stories behind the cases often matter. Even in corporate law, they matter.
- If so, we have done our field a disservice. Like most of the law, corporate law concerns the myriad ways that men and women take advantage of each other. And as in most other legal fields, they sometimes take advantage ingeniously. Properly appreciated, ingenuity intrigues. Holmes (Sherlock, not Oliver) found aesthetic pleasure in Moriarty’s devious brilliance. Cultivate a similar sensibility in the law, and corporate law offers a beauty second to none.
- Learn the story behind the case, however, and the opinion starts to make sense. Mind you, it does not make any better legal sense. Legally, it borders on the outrageous, the silly, or perhaps the both. But in a late–20th century variant on legal realism, the story does start to clarify the judicial psychology involved.
- have been a story behind Mrs. Palsgraff and the bouncing scales on the railroad station. There have been a story behind Mr. Hawkins’ hairy hand. And just who was that lawyer John Mitchell behind Pennoyer’s faulty land grant anyway?
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Contributors to Corporate Law Stories 13 results (showing 5 best matches)
- Corporate Law Stories
- Leo E. Strine, Jr., is Vice Chancellor, Delaware Court of Chancery; Austin Wakeman Scott Lecturer on Law, Harvard Law School; Adjunct Professor of Law, University of Pennsylvania Law School and Vanderbilt University School of Law; and Henry Crown Fellow, Aspen Institute.
- Jennifer Arlen is Norma Z. Paige Professor of Law, New York University School of Law.
- Jeffrey N. Gordon is Alfred W. Bressler Professor of Law, Columbia Law School.
- M. Todd Henderson is Assistant Professor of Law, The University of Chicago Law School.
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Corporate Law Stories 13 results (showing 5 best matches)
- CORPORATE LAW STORIES
- Contributors to Corporate Law Stories
- Chapter 6: The Story of Francis v. United Jersey Bank: When a Good Story Makes Bad Law
- Chapter 8: The Story of Unocal v. Mesa Petroleum: The Core of Takeover Law
- Chapter 1: The Story of Stokes v. Continental Trust Co.: What’d I Say?
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Chapter 4: The Story of Meinhard v. Salmon: Fiduciary Duty’s Punctillo 37 results (showing 5 best matches)
- (1989). Geoff Miller tells more of the story of Mr. Webb and the development of the property, including litigation between Mr. Webb and the Livingstons about the renewal of the lease in the 1880s when Elbridge Gerry served as lawyer for his in-laws, in his compelling story of
- Disclosure and the substance of fiduciary duty have long been intertwined in American corporate and securities law, in ways that complicate our ability to provide a clear answer to the disclosure hypothetical. Nondisclosure regulated by federally-promulgated Rule 10b–5 was sometimes an indirect way for federal courts to provide shareholders additional protection than what seemed to be available under substantive state corporate law. The Supreme Court called a halt to such a development in the late 1970s but a federal remedy remains where nondisclosure has cost a shareholder the opportunity to pursue a state remedy. In such cases, nondisclosure could provide the wronged party a federal remedy for the substantive harm measured by the position it would have been in had the disclosure duty been met, or state law itself could provide a remedy because of the nondisclosure.
- 298 U.S. 1 (1936). The story of , the first securities case to come before the Supreme Court, and the last significant loss for the SEC for almost four decades, is told within the broader context of the impact of the New Deal justices on securities law in Adam C. Pritchard & Robert B. Thompson,
- note 17, at 10 (describing his acquisition of leases in 1901 of #21 42nd street (20 X 100 feet), in 1905 of #11,13,15 and 17 with frontage of 80 feet, each four-story brownstones that had been remodeled, in 1905 of #27 and 29, six-story building adjoining the West Presbyterian church, and in 1906 of #23 and 25 42d Street).
- The chapter first situates the case geographically at the center of modern Manhattan and introduces the key participants who provide its memorable story. Subsequent parts address the law of the case and the frame it continues to provide for modern legal discussion.
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Chapter 2: The Story of Dodge v. Ford Motor Company: Everything Old Is New Again 35 results (showing 5 best matches)
- But there is much more to this case than meets the eye. Many of the practices common today in venture capital transactions and corporate reorganizations appear vividly in the back-story of this case and show students of law that seemingly new ideas are not always so. The case’s history also foreshadows the nature of ubiquitous conflicts between majority and minority investors that would animate corporate law litigation for decades to come. In addition, it demonstrates how modern techniques for allocating control rights separately from economic rights would have helped the parties here avoid costly and acrimonious litigation. Perhaps most interestingly, however, the backstory of the case shows that it is not clear at all that the parties
- court did, and to offer a new way of thinking about where the case fits in our modern understanding of corporate law.
- Corporate law then and now permits tremendous leeway for firms to decide how to organize firms and what strategies to follow because outsiders (shareholders and courts) are unlikely to have better information or better incentives to get the right answer. There is also the potential for certain shareholders to misuse judicial scrutiny for self-serving and opportunistic ends that actually may destroy firm value.
- This sort of second-guessing is completely foreign to modern corporate law.
- The Iconic Cases in Corporate Law
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Chapter 9: The Story of Blasius Industries v. Atlas Corp.: Keeping the Electoral Path to Takeovers Clear 83 results (showing 5 best matches)
- [T]his case involves one in considering an anomaly. Public tender offers are … change in control transactions that are functionally similar to merger transactions with respect to the critical question of control over the corporate enterprise. Yet, under the corporation law, a board of directors which is given the critical role of initiating and recommending a merger to the shareholders (
- When students take Corporate Law and are instructed in the key takeover decisions of the 1980s and the mid–1990s, the arc of the story often runs from the “big three” (
- , 564 A.2d at 663 (“It may be that the Blasius restructuring proposal was or is unrealistic and would lead to injury to the corporation and its shareholders if pursued … [but a] majority of the shareholders, who were not dominated in any respect, could view the matter differently than did the board. If they do, or did, they are entitled to employ the mechanisms provided by the corporation law and the Atlas certificate of incorporation to advance that view.”); (a board could buy time and spend corporate funds to tell its story, but once it had that chance, stockholders had to be allowed to decide for themselves whether to elect a new board).
- at 662–63 (emphasizing that the Atlas board had adequate time to tell its story and understood that it had such time when it appointed Winters and Devaney); Stahl v. Apple Bancorp, Inc., 579 A.2d 1115, 1124 (Del. Ch. 1990) (subsequent Chancellor Allen decision permitting a board to delay a corporate election in order to ensure that the electorate was adequately informed about what would result if the insurgents won the election, namely that a tender offer was tied to the proxy contest).
- Paramount argues that, assuming its tender offer posed a threat, Time’s response was unreasonable in precluding Time’s shareholders from accepting the tender offer or receiving a control premium in the immediately foreseeable future. Once again, the contention stems, we believe, from a fundamental misunderstanding of where the power of corporate governance lies. Delaware law confers the management of the corporate enterprise to the stockholders’ duly elected board representatives. 8 § 141(a). The fiduciary duty to manage a corporate enterprise includes the selection of a time frame for achievement of corporate goals. That duty may not be delegated to the stockholders. Directors are not obliged to abandon a deliberately conceived corporate plan for a short-term shareholder profit unless there is clearly no basis to sustain the corporate strategy.
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Chapter 6: The Story of Francis v. United Jersey Bank: When a Good Story Makes Bad Law 48 results (showing 5 best matches)
- Justice Pollock, writing for a unanimous court, prefaced his decision with an acknowledgment that “directors are accorded broad immunity and are not insurers of corporate activities,” and that “[i]ndividual liability of a corporate director for acts of the corporation is a prickly problem.” But, after this perfunctory nod to prior law, Justice Pollock confronted—and rejected—the unspoken rule of omissions cases: that the duty of care is to be affirmed but not enforced against clueless directors.
- Section 102(b)(7) authorizes corporate charter provisions eliminating directors’ personal liability for breach of fiduciary duty, except for: (1) breaches of the duty of loyalty; (2) acts not in good faith or which involve intentional misconduct or knowing violations of law; (3) transactions in which the director derives an improper personal benefit; and (4) unlawful payment of dividends, stock purchases or redemptions.
- featured a colorful article on the Pritchards in its left-hand, front-page column. For students of corporate law, however, Pritchard & Baird’s collapse holds lasting interest because of its breathtaking expansion of traditional legal doctrine on a director’s duty of care in omission (or “nonfeasance”) cases, and because of its coincidence with the rise of the so-called “monitoring model” of the corporate board.
- The Revolution in Corporate Governance, the Monitoring Board, and the Director’s Duty of Care
- The Iconic Cases in Corporate Law
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Chapter 3: The Story of Martin v. Peyton: Rich Investors, Risky Investment, and the Line Between Lenders and Undisclosed Partners 33 results (showing 5 best matches)
- For most ordinary people—and even those who have chosen law as their career—legal doctrine can seem (dare I say it?) dull. For law students and teachers, fortunately, the case method offers some relief. Wholly apart from its special pedagogical value (if any ), it can make the study of legal doctrine far more interesting than it would otherwise be. Each case tells a short story—some, to be sure, less interesting than others. The stories can in turn bring to the study of law a bit of liveliness and even a sense of involvement. Unfortunately, for this element of case-law study, authors of judicial opinions, quite commendably,
- Judicial opinions generally limit the statement of facts to those necessary to decide the case. That is, generally, a good thing. Law school casebook authors sometimes truncate the facts even further, and that too is generally a good thing. Yet, the full story of a case—its characters, its general background, its aftermath, and other nonessential facts—can make the study of its doctrine livelier and more interesting. It can give students a sense of the messy realities of practice, where the facts don’t come to the lawyer in a tidy bundle. Life is short, as are student attention spans. Presenting the full story of every case, or even of more than a few cases, would waste student time and incur their resentment. But an occasional diversion into an interesting story, like that of the people and events of Martin v. Peyton, may be a tonic for the apathetic and the disengaged.
- is a good example. The present essay seeks to present some of its background facts. The story begins around 1920. The principal characters are a small group of wealthy and socially prominent New Yorkers. Their interaction and its legal consequences could have come from the pages of a novel by their near-contemporaries Henry James or Edith Wharton. Beyond being an intriguing story, the case presents, for law teachers and their students, an opportunity to examine the legal meaning of partnership and the puzzling legal doctrine that makes a silent partner liable for the debts of the partnership—just as an undisclosed employer is liable for the tort damages, and the contract debts, of his or her employee. Further, the opinion in the case nicely illustrates how a superficially neutral analytic framework may decisively affect the outcome of a case—that is, how stating the question, or framing the central issue, can, as litigators are well aware, tip the balance of perception and persuasion.
- This has been an important element in tax law, where corporate shareholders, especially in the case of closely held corporations, have attempted to characterize their investments in the corporation as debt, rather than equity, so that (among other reasons) distributions could be treated as tax-deductible interest rather than nondeductible dividends.
- , http://heritage.dupont.com/floater/fl_eugenedupont/floater.shtml, visited 7/23/2007. This source is part of the du Pont corporate website, available at http://www2.dupont.com/DuPont_Home/en_US/index.html.
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Chapter 1: The Story of Stokes v. Continental Trust Co.: What’d I Say? 32 results (showing 5 best matches)
- Corporate Law
- V. Enduring Lessons from Stokes for Corporate Law
- Corporate Law
- The Court of Appeals agreed with the prior opinions rendered by the Special Term and Appellate Division that, with no mention of preemptive rights in Continental’s corporate charter, and in the absence of common-law or statutory consideration of the issue applicable to New York, existing shareholders did have preemptive rights when new corporate shares were issued. Indeed, the Court of Appeals explained, the tension between shareholder rights and board duties in the context of shareholders’ preemptive rights
- case is interesting in its own right. But its interest is more than merely historical. The case usefully illustrates an aspect of corporate life that is just as relevant today as it was a hundred years ago. In particular, it demonstrates the dual role of shareholders in the corporation, and the difficulties corporate firms may encounter in reconciling those two very different roles.
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Chapter 8: The Story of Unocal v. Mesa Petroleum: The Core of Takeover Law 13 results (showing 5 best matches)
- For more on the story of the rise of junk bonds in the “Dead Decade” of the 1980s, including some of the unsavory aspects, see Connie Bruck,
- is one of the most important corporate law cases of the past 50 years, with far-reaching doctrinal and economic consequences.
- was, ironically, never used again, despite its effectiveness against Mesa. In part this was for doctrinal reasons. Unocal’s exchange offer stirred a sharp controversy, partially because of its challenge to a longstanding norm of state corporate law but also because of its novel use of a tender offer to shift the management/shareholder balance in the takeover wars. The protests were taken up by the Reagan-era SEC, a friend to hostile takeovers, which adopted Rule 14d–10, the “all holders rule,” which prohibited discriminatory tender offers.
- is a landmark, one of the cases that would be chiseled onto a corporate law Mt. Rushmore. It established a doctrinal framework for evaluating target board behavior in responding to a hostile bid, and thus helped establish the playing field on which all merger negotiations would take place. It opened the way to a particularly important defensive measure, the flip-in poison pill, which almost completely replaced defensive measures in contemporary use, such as “crown jewel” asset sales, defensive acquisitions to create antitrust or regulatory issues, and various “scorched earth” tactics, and which also restructured negotiations in a hostile bid to put the target board at the center. Finally, the case also helped to promote the growth of the junk bond market, which spurred new waves of acquisitions by newcomers to the mergers game.
- The Court’s valorization of the majority independent board strongly influenced the direction of corporate governance. Managements that in the past had resisted independent directors as encroaching on managerial prerogatives now embraced them as providing shelter from hostile bids and thus enhancing, not restricting, managerial autonomy. strengthened the image of independent directors as the solution to a host of corporate governance problems in the takeover arena and outside it.
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Chapter 10: The Story of Paramount Communications v. QVC Network: Everything Is Personal 33 results (showing 5 best matches)
- The three-way fight between Paramount, Viacom, and QVC is a textbook example of non-pecuniary motivations at work. All of the key players in the story seemed to have had them: Sumner Redstone was willing to pay almost any price to own a film studio; Barry Diller was willing to go to great lengths to get back at Martin Davis for pushing him out of Paramount; Martin Davis was willing to leave a lot of money on the table and cede control of his empire to stop Barry Diller. This is also consistent with claims that control is especially valuable to corporate decision-makers in the media sector, presumably because it comes with access to non-pecuniary benefits such as visibility, influence, and glamour.
- A Corporate Courtship Gone Sour
- Instead, it included Chief Justice E. Norman Veasey, who had joined the court in the previous year after thirty-five years of practicing corporate law at one of the state’s largest law firms, Richards, Layton & Finger. The two other members of the panel were Justice Andrew G.T. Moore II and Justice Randy J. Holland—who had also been on the panel that decided
- Moreover, the court added, this rule was nothing new. It was “established Delaware law” under the very precedents the Court of Chancery had cited, in perspective. The difference was that the Supreme Court talked about these precedents with much less tentativeness than the Court of Chancery. To the Court of Chancery, they “contained language that supported the proposition that a change of corporate control triggers duties under that the Chancellor’s conclusion was “correct as a matter of law” and that it used a different test “without excluding other possibilities.”
- State case law at the beginning of the 1980s recognized two forms of corporate mismanagement: breach of the duty of loyalty, and breach of the duty of care. Duty-of-loyalty breaches were relatively easy to spot because they involved a direct transfer of wealth from the corporation to those controlling it. Accordingly, while the legal standard governing these breaches left room for judicial discretion, courts generally did not tolerate them. Breaches of the duty of care, in contrast, presented a challenge for the courts because they involved no visible conflict of interest between the board and the shareholders. The judicial response to this difficulty was to back all decisions of conflict-free boards as long as the boards were informed.
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Chapter 7: The Story of Smith v. Van Gorkom 51 results (showing 5 best matches)
- The business judgment rule is corporate law’s core doctrine, pervading every aspect of state corporate law, from the review of allegedly negligent decisions by directors to self-dealing transactions to board decisions to seek dismissal of shareholder litigation and so on.
- Federalism and Corporate Law: Reflections upon Delaware
- , 2000 Wis. L. Rev. 573, 573 (observing that “thousands of pages of corporate law scholarship and commentary have been devoted to” the business judgment rule).
- Note that the issue here is distinct from the problem of board oversight discussed above. In oversight cases, corporate employees have committed some criminal act and the board is charged with having failed to prevent those acts. Here we ask a different question; namely, what happens when the board affirmatively instructs its subordinates to violate the law?
- Michael P. Dooley, Two Models of Corporate Governance, 47 Bus. Law. 461, 478–79 n.58 (1992).
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Chapter 5: The Story of Ringling Bros. v. Ringling: Nepotism and Cycling at the Circus 26 results (showing 5 best matches)
- Corporate Law
- An Economic Analysis of the Oppression Remedy: Working Toward a More Coherent Picture of Corporate Law
- The root of the Ringling dispute lay not in irrationality but in the failure of the law effectively to enforce duty-of-loyalty standards. The duty does not just mandate “fairness.” If effectively enforced, it promotes corporate performance (and the aggregate welfare of all investors) by removing the private incentives to appoint less able kin, and the tendency of management teams to cycle. The Ringling circus did not degenerate into the chaos in which it found itself because the investors were irrational. It degenerated because the law could not enforce the duty of loyalty.
- To put it thus is to miss the point, for the women were not suing over the number of directors they controlled. They were suing over the board meeting that followed the shareholders’ meeting—a meeting at which the daughter-in-law and nephew fired the widow’s lackluster son. The widow had wanted her son in control to freeze-out the other two. The daughter-in-law had wanted her second husband in office for the same reason. And the firm had cycled through one administration after another because the chance to freeze-out rivals prevented its investors from forming a stable alliance. When the law works as it should, fiduciary duties perform two functions: they remove the incentive to appoint corporate officials by kinship rather than ability, and prevent the “empty core” cycling that would otherwise plague so many close corporations. Here they performed neither.
- John North and Edith Ringling continued with their 51–49 split, but as many Corporate Law exams illustrate, 51 percent does
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Acknowledgements 4 results
- J. Mark Ramseyer gratefully acknowledges the helpful comments and suggestions of Stephen Bainbridge, William Klein, Eric Rasmusen, and Geoffrey Miller, and the generous financial assistance of the John M. Olin Center for Law, Economics & Business at the Harvard Law School.
- Robert B. Thompson is grateful for the excellent research assistance of Liz Evans of the NYU Law Library and Stephen Jordan and Martin Cerjan of the Vanderbilt University Law Library, and for the helpful comments of John Goldberg, Ethan Leib, and Hillary Sale.
- Jennifer Arlen thanks William T. Allen, Stephen Bainbridge, Samuel Buell, Robert Lee Hotz, William Klein, Marcel Kahan, Mark Ramseyer, and Vice Chancellor Leo Strine, Jr. for helpful comments, Daniel Priest for excellent research assistance, and the D’Agostino/Greenberg Fund of the New York University School of Law for financial support.
- Ehud Kamar thanks William Allen, Jack Jacobs, Theodore Mirvis, Charles Richards, Barry Ostrager, and Norman Veasey for helpful conversations, Adam Emmerich and Mark Ramseyer for valuable comments, Karen Grus for able research assistance, and University of Southern California Gould School of Law for financial support.
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Copyright Page 1 result
- This publication was created to provide you with accurate and authoritative information concerning the subject matter covered; however, this publication was not necessarily prepared by persons licensed to practice law in a particular jurisdiction. The publisher is not engaged in rendering legal or other professional advice and this publication is not a substitute for the advice of an attorney. If you require legal or other expert advice, you should seek the services of a competent attorney or other professional.
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- Publication Date: April 3rd, 2009
- ISBN: 9781599414218
- Subject: Business Organizations
- Series: Law Stories
- Type: Overviews
- Description: Using 11 pivotal cases that have shaped the evolution of corporate law, internationally renowned scholars explore the people behind the disputes and the forces that led the judges to decide the cases the way they did. From Meinhard v. Salmon to Paramount v. QVC, they unravel the logic (and, often, apparent illogic) of the opinions. Simultaneously amusing and clarifying, the resulting chapters make sense of cases that have puzzled students and scholars for decades.
