On July 27, 2015, WLF asked the Eighth Circuit to overturn a district court decision that would impose a term of imprisonment on two executives of Quality Egg LLC under the “responsible corporate officer” (RCO) doctrine—a rare instance of strict supervisory liability in the criminal law. In a brief filed in the case, WLF argued that although the Supreme Court has sanctioned the imposition of strict criminal liability in the absence of mens rea in the narrow category of public welfare offenses, it has done so only with the understanding that penalties imposed in such cases will be relatively small and the conviction will not gravely damage defendant’s reputation. The government’s position in this appeal, WLF contended, asks the appeals court to expand such strict supervisory liability far beyond the constitutional bounds the Supreme Court first articulated when adopting the RCO doctrine over seventy years ago.
UCLA SJD alum Martin Petrin has the leading article on the RCO doctrine:
The recent oil spill disaster in the Gulf of Mexico and ensuing questions of accountability have brought a controversial legal tool to the forefront, the “responsible corporate officer doctrine.” This doctrine allows courts to hold individuals that exercise control over business policies or activities personally liable for failing to prevent statutory offenses by subordinates, even if they themselves were not aware of any wrongdoing.
For corporate officials, the RCO doctrine is dangerous because of its ability to sidestep the usual requirements that apply to holding corporate agents responsible. Moreover, from their viewpoint, the doctrine is troubling in that it extends statutory duties of legal entities to their “responsible corporate officers” as an additional class of defendants. Examined from a broader perspective, the RCO doctrine may also result in additional costs, contribute to overdeterrence, and undermine the notion of limited liability.
This Article explains how the RCO doctrine runs contrary to established tort, criminal, and corporate law principles and why it represents an unwarranted augmentation of corporate agents’ duties. It then proceeds to explain that current justifications of the doctrine are not convincing and explores the doctrine’s negative effects. Finally, the Article advances the idea of a “cautious approach” to applying the RCO doctrine, arguing that legislatures and courts should reduce the RCO doctrine to rare and clearly delineated instances of statutory liability for intentional or knowing misconduct.
Petrin, Martin, Circumscribing the ‘Prosecutor’s Ticket to Tag the Elite’ – A Critique of the Responsible Corporate Officer Doctrine (2012). Temple Law Review, Vol. 84, No. 2, p. 283, Winter 2012. Available at SSRN: http://ssrn.com/abstract=1808344
According to a working paper from Dominic P. Parker of the University of Wisconsin and Bryan Vadheim of the London School of Economics, there's strong evidence to suggest that "conflict mineral" regulations in Section 1502 of Dodd-Frank directly led to an increase in looting in affected regions of the Congo. ...
n economics terms, Parker says, conflict mineral regulations converted many of the DRC's militia groups from "stationary" bandits, which extract taxes from people but otherwise do little harm, into what are known as "roving" bandits.
This, it turns out, is much worse for the people on the ground.
"The roving bandit doesn’t have a long-run stake in the economic productivity of a place," Parker says, "so he takes what he can get now with little regard for how his [ransacking and stealing] will affect future productivity."
Meanwhile, stationary bandits have every incentive not to hurt too many people.
Kindly go read the whole thing.
Update: Hans Bader also has a helpful summary analysis of the conflict minerals question.
My colleagues Steven Bank and George S. Georgiev teach executive compensation and corporate governance at the University of California, Los Angeles School of Law and are affiliated with UCLA’s Lowell Milken Institute for Business Law and Policy. They've got an op-ed in The Globe and Mail on how the SEC's new executive compensation rules will affect not just USA but also Canadian corporations:
The primary U.S. market regulator, the Securities and Exchange Commission, served up ... far-reaching rules on bonuses and other incentive-based compensation for all firms listed on U.S. stock exchanges, which include about 300 of Canada’s best-known multinational companies as well as more than 600 other international companies. This was a curious choice since the United States has traditionally allowed non-U.S. companies to follow their home-country rules on executive compensation and corporate governance instead of the SEC’s rules.
Even worse than the geographic overreach, however, is the fact the SEC’s new rules are likely to prove expensive, counterproductive and easy to manipulate. ...
Unlike U.S. companies, Canadian and other international companies have an even easier way out. They can simply choose to delist from U.S. exchanges and rely solely on their home-market listing. In fact, many non-U.S. companies did just that when they were faced with complex new corporate governance rules under the Sarbanes-Oxley Act in the wake of the Enron and WorldCom scandals of the early 2000s. Studies show that a U.S. listing confers advantages on non-U.S. companies, but the burden from the new rules may well outweigh these advantages, especially at a time when international markets are becoming increasingly competitive.
Of course, this is just one more example of the general phenomenon of which I wrote in Corporate Governance and U.S. Capital Market Competitiveness (October 22, 2010). Available at SSRN: http://ssrn.com/abstract=1696303:
During the first half of the last decade, evidence accumulated that the U.S. capital markets were becoming less competitive relative to their major competitors. The evidence reviewed herein confirms that it was not corporate governance as such that was the problem, but rather corporate governance regulation. In particular, attention focused on such issues as the massive growth in corporate and securities litigation risk and the increasing complexity and cost of the U.S. regulatory scheme.
Tentative efforts towards deregulation largely fell by the wayside in the wake of the financial crisis of 2007-2008. Instead, massive new regulations came into being, especially in the Dodd Frank Act. The competitive position of U.S. capital markets, however, continues to decline.
This essay argues that litigation and regulatory reform remain essential if U.S. capital markets are to retain their leadership position. Unfortunately, the article concludes that federal corporate governance regulation follows a ratchet effect, in which the regulatory scheme becomes more complex with each financial crisis. If so, significant reform may be difficult to achieve.
An administrator leading a workplace diversity seminar Friday told the 70 or so scholars and others in attendance that they should subtly correct peers who use vocabulary that some have deemed hurtful or offensive.
Attendees at the voluntary seminar were also given a four-page “inclusive terminology” document that instructs them on what words to use while interacting with others. The handout includes dozens of words and definitions deemed acceptable by campus leaders and diversity gurus. ...
“Since we strive for a culture of inclusion, here at Mizzou it is important that we are conscious of the language that we use in talking about or describing people,” a description of the event states. “This facilitated discussion will provide you with currently appropriate terminology …”
The administrative advice came just three days after students at Missouri’s public colleges were given a free pass to say whatever they want, wherever they want, through the Campus Free Expression Act. ...
The trial lawyers whose oxen Sean is seeking to gore fought back by asking for the court's permission to depose Sean on his standing and the basis of his legal opinions. This sort of harassment is common when you've got rich lawyers going up against an underdog opponent (it's the discovery equivalent of a SLAPP suit). They try to make it too expensive for the underdog to vindicate his rights. (In my humble, First Amendment-protected opinion, of course.)
Last week, I told you about Sean Griffith, a law professor from Fordham who is quite literally putting his money where his mouth is when it comes to M&A class action settlements that result only in additional deal proxy disclosures(and fees for plaintiffs lawyers). Since the beginning of the year, Griffith has invested in shares in 30 newly acquired companies - the very corporations that are likely to be targeted in shareholder M&A class actions. Griffith, who coauthored a 2015 paper for the Texas Law Review casting doubt on the benefits to shareholders from disclosure-only settlements, told me he acquired the stock portfolio with the express purpose of establishing standing to object to class action deals he considers inadequate.
Go get 'em, tiger, I'd say, as would any other right thinking person. ... But wait, the trial bar strikes back:
"Make no mistake," the brief [filed by Gucci-clad trial lawyers in the first suit in which Griffith filed an objection] said. "The objector's brief is not a disinterested amicus submission from a neutral academic. It is a slanted, partisan piece of advocacy that relies on half-truths, exaggerations and misleading omissions." Griffith's "scheme" of acquiring shares in recently acquired companies is "an attack on core Delaware policies" against buying shares in order to sue, plaintiffs said. And the professor's filing is part of "a promotional campaign ... to force a debate on his policy ideas (and, perhaps, to highlight his expert-witness credentials and fortify a supplemental income stream)."
Me thinks the sharks doth protest too much.
Personally, I'm rooting for Sean and I hope more people decide to start taking on the trial lawyers pezzonovante. They're been on Easy Street far too long.
The American Bar Association Section on Legal Education and Admissions to the Bar has published a series of proposed changes to the rules for law schools. One of them is a change to "Interpretation 305-2" (current 305-3), a change that would repeal the current ban on law schools giving academic credit for field placements (i.e., externships) for which law students are paid. The current Interpretation prohibits your law school from giving you credit for paid work experience, no matter how practical the experience gained or how closely related to your proposed area of practice. The proposed change would lift this prohibition to allow law schools to decide whether to offer such credit.
I don't think I need to remind you that law school is expensive and that most students graduate with debt, often substantial debt. One of the best things a law student can do during law school is to work at a law firm to gain practical experience and defray some of the costs of tuition and living expenses. I have found that students' paid work experience often provides them with deep and valuable understanding in areas of the law that I teach, and often when a student has a truly interesting insight in one of my classes, it came from that student's paid law firm work. The opportunity to combine paid work and law school credit would be an ideal "bridge" to practice that would give students valuable contacts and experience in the real world while decreasing the cost of law school.
Unfortunately, a small but organized minority of law professors don't want you to be able to be paid for work and receive academic credit at the same time, and they are the ones being heard by the ABA. The Clinical Legal Education Association (CLEA) and the Society of American Law Teachers (SALT), which are special interest groups that advocate for the interests of law school professors, are lobbying the ABA to try to stop it from allowing you to receive pay and credit for the same externship. CLEA is very experienced at this sort of lobbying, regularly pressuring the ABA to add requirements to accreditation that pile on more tuition cost for law school students. These groups are adding insult to injury by depriving law students of the opportunity to defray some of the cost they themselves have created by preventing students from taking paying jobs and simultaneously earning law school credit.
Go read the whole thing and then take Prof Anderson's advice:
I encourage all interested law students and recent graduates to make their voices heard (whether you agree with me or not) by submitting a comment to email@example.com, even though the "deadline" for comment has passed.
Law professor Adam Pritchard of the University of Michigan has done Judge Rakoff one better. In a draft version of a paper to be published later this year in the SMU Law Review, Pritchard delved into the papers of Justice Lewis Powell, author of the Supreme Court’s Dirks opinion, to conclude that the 2nd Circuit’s interpretation of what constitutes a personal benefit for tipsters “is consistent with, if not compelled by, the rule laid down in Dirks.”
Kindly go read the whole thing and then follow the link to Pritchard's paper.
So asks a new paper, in which I--speaking as a Packer's shareholder--took interest:
The Green Bay Packers are an oft-misunderstood organization — not in the decisions that the Packers make, but in their legal status and structure. Scholars, commentators, and even the general public refer to the Packers as “community-owned.” While this characterization is true — to a degree — the specifics of this unique ownership structure in professional sports have never been comprehensively documented and analyzed. Perhaps this is the reason that some political pundits have termed the Packers “socialists.” However, such commentators also seem to not fully appreciate the historical development, and contemporary understanding, of this social, economic, and political ideology. This confluence of confusion has led to the misapplication of the term socialism to the Green Bay Packers. This article seeks to set the record straight.
Parlow, Matthew J. and Mittal, Anne-Louise, Are the Green Bay Packers Socialists? (July 8, 2015). Virginia Sports and Entertainment Law Journal, Vol. 14, No. 2, 2015; Marquette Law School Legal Studies Paper No. 15-2. Available at SSRN: http://ssrn.com/abstract=2628250