In Safari browser, the navigation tools (return to listing, next document, etc....) used to remain at the top of the frame when you scrolled down. Now they don't and that's really inconvenient. Is that happening in other browsers? Anybody know what happened?
Anne Tucker reports:
In early January, the Second Circuit Court of Appeals ruled in Cent. Laborers’ Pension Fund v. Dimon to affirm the dismissal of purported shareholder derivative claims alleging that directors of JP Morgan Chase--the primary bankers of Bernard L. Madoff Investment Securities LLC (“BMIS”) for over 20 years--failed to institute internal controls sufficient to detect Bernard Madoff’s Ponzi scheme. The suit was dismissed for failures of demand excuse. Plaintiffs contended that the District Court erred in requiring them to plead that defendants “utterly failed to implement any reporting or information system or controls,” and that instead, they should have been required to plead only defendants’ “utter failure to attempt to assure a reasonable information and reporting system exist[ed].” (emphasis added). The Second Circuit declined, citing to In re General Motors Co. Derivative Litig., No. CV 9627-VCG, 2015 WL 3958724, at *14–15 (Del. Ch. June 26, 2015), a Chancery Court opinion from earlier this year that dismissed a Caremark/oversight liability claim. In In re General Motors the Delaware Chancery Court, found that plaintiffs' allegations that:
[T]he Board did not receive specific types of information do not establish that the Board utterly failed to attempt to assure a reasonable information and reporting system exists, particularly in the case at hand where the Complaint not only fails to plead with particularity that [the defendant] lacked procedures to comply with its . . . reporting requirements, but actually concedes the existence of information and reporting systems. . . .
In other words, the Plaintiffs complain that [the defendant] could have, should have, had a better reporting system, but not that it had no such system.
Caremark and Enterprise Risk Management | Hide Abstract | Download This Paper | Open PDF in Browser |
UCLA School of Law, Law-Econ Research Paper No. 09-08
Number of Pages in PDF File: 33
|Bainbridge, Stephen M.
University of California, Los Angeles (UCLA) - School of Law
The financial crisis of 2008 revealed serious and widespread risk management failures throughout the business community. Shareholder losses attributable to absent or poorly implemented risk management programs are enormous.
Efforts to hold corporate boards of directors accountable for these failures likely will focus on so-called Caremark claims. The Caremark decision asserted that a board of directors has a duty to ensure that appropriate information and reporting systems are in place to provide the board and top management with timely and accurate information. Although post-Caremark opinions and commentary have focused on law compliance programs, risk management programs do not differ in kind from the types of conduct that traditionally have been at issue in Caremark-type litigation.
Risk management failures do differ in degree from law violations or accounting irregularities. In particular, risk taking and risk management are inextricably intertwined. Efforts to hold directors accountable for risk management failures thus threaten to morph into holding directors liable for bad business outcomes. Caremark claims premised on risk management failures thus uniquely implicate the concerns that animate the business judgment rule's prohibition of judicial review of business decisions. As Caremark is the most difficult theory of liability in corporate law, risk management is the most difficult variant of Caremark claims.
board of directors, risk management, enterprise risk management, oversight, Caremark
The Convergence of Good Faith and Oversight | Hide Abstract | Download This Paper | Open PDF in Browser |
UCLA School of Law, Law-Econ Research Paper No. 07-09
Number of Pages in PDF File: 52
|Bainbridge, Stephen M.
University of California, Los Angeles (UCLA) - School of LawLopez, Star
University of California, Irvine - School of Social SciencesOklan, Benjamin
University of California, Los Angeles - School of Law
In Stone v. Ritter, 911 A.2d 362 (Del. 2006), two important strands of Delaware corporate law converged; namely, the concept of good faith and the duty of directors to monitor the corporation's employees for law compliance. As to the former, Stone puts to rest any remaining question as to whether acting in bad faith is an independent basis of liability under Delaware corporate law, stating that although good faith may be described colloquially as part of a 'triad' of fiduciary duties that includes the duties of care and loyalty, the obligation to act in good faith does not establish an independent fiduciary duty that stands on the same footing as the duties of care and loyalty. Only the latter two duties, where violated, may directly result in liability, whereas a failure to act in good faith may do so, but indirectly. 911 A.2d at 370. Nevertheless, this holding may not matter much, because the Stone court makes clear that acts taken in bad faith breach the duty of loyalty. As a result, instead of being split out as a separate fiduciary duty, good faith has been subsumed by loyalty. In this sense, Stone looks like a compromise between those scholars and jurists who wanted to elevate good faith to being part of a triad of fiduciary duties and those who did not, with the former losing as a matter of form, and the latter losing as a matter of substance.
As to the duty of oversight, Stone confirmed former Chancellor William Allen's dicta in Caremark Int'l Inc. Deriv. Litig., 698 A.2d 959 (Del. Ch. 1996), that the fiduciary duty of care of corporate directors includes an obligation for directors to take some affirmative law compliance measures. In Stone, the Delaware Supreme Court confirmed that Caremark articulates the necessary conditions for assessing director oversight liability. Stone, 911 A.2d at 365.
This article argues that the convergence of good faith and oversight is one of those unfortunate marriages that leaves both sides worse off. New and unnecessary doctrinal uncertainties have been created. This article identifies those uncertainties and suggests how they should be resolved.
corporation, corporate governance, board of directors, good faith, oversight, Caremark, Delaware corporate law
The Corporate Counsel Blog informs us that:
In response to this new GAO report on board gender diversity, Rep. Carolyn Maloney (D-NY) sent a letter to SEC Chair White earlier this month urging amendments to the proxy statement rules to require that companies disclose each board nominee’s gender, race, and ethnicity – as was proposed by nine large public pension funds in a March 2015 petition to the SEC.
That petition seeks this amendment to Item 407(c)(2)(v) of Regulation S-K (proposed new text underlined):
Describe any specific minimum qualifications that the nominating committee believes must be met by a nominating committee-recommended nominee for a position on the registrant’s board of directors, and describe any specific qualities or skills that the nominating committee believes are necessary for one or more of the registrant’s directors to possess. When the disclosure for this paragraph is presented in a proxy or information statement relating to the election of directors, these qualities, along with the nominee’s gender, race, and ethnicity should be presented in a chart or matrix form.
At the risk of committing one or more micro-aggressions, I can't help but note that the Rep. Carolyn Maloney's list of qualities to be disclosed is several generations of politically correct/multicultural thought behind the times. Here at UCLA, for example, we define diversity to include:
Maybe Rep. Maloney needs to attend a diversity workshop.
I love watching Cam Newton play. That grin is infectious. Haters are going to hate but I think he's putting the fun back in the #NoFunLeague— Stephen Bainbridge (@ProfBainbridge) January 25, 2016
I've never been a Carson Palmer fan but I'm starting to really feel sorry for him. He's got to be wondering which train he got hit by.— Stephen Bainbridge (@ProfBainbridge) January 25, 2016
Congratulations to Fordham Law Professor Sean Griffith, whose outstanding crusade against the pernicious wave of disclosure-only settlements is now coming to fruition. As Forbes reports:
Plaintiff lawyers were warned last year, and now a Delaware judge has delivered a potentially crippling blow to “disclosure-only” settlements that reward lawyers with rich fees but give their clients nothing.
In a detailed, 42-page ruling issued today, Chancery Court Judge Andre Bouchard formally rejected a settlement lawyers at Rigrodsky & Long and several other firms negotiated with Zillow last year over its $3.5 billion takeover of Trulia. That settlement, as is typical with these sorts of cases, provided nothing for their shareholder clients except for “supplemental disclosures” of information beyond the 200-page proxy statement they had already received detailing the terms of the merger. It did promise something of great value to Zillow: a global release of all claims stemming from the merger, including “unknown claims” the plaintiffs weren’t even aware of yet.
Going forward, plaintiff lawyers won’t be able to staple such broad releases to their settlement deals. And that means those lawyers won’t have nearly as much leverage to negotiate their fees, since one of the main things they had to offer in exchange was court-approved protection from any further litigation.
“From the perspective of some defendants in some cases, this isn’t so good because they just lost their $400,000 global release,” said Sean Griffith, a professor at Fordham Law School who successfully challenged the Zillow settlement. “But for defendants overall, it will mean fewer cases challenging mergers.”
I think Prof. Griffith is right that this decision may be a game changer. A new study of takeover litigation by Matthew Cain and Steven Davidoff Solomon finds that:
Takeover litigation was substantially disrupted in 2015 by the Delaware courts' willingness to challenge "disclosure only" settlements. For the full year, lawsuits were brought in 87.7% of completed takeovers versus 94.9% in 2014. However, the lawsuit rate dropped precipitously in the fourth quarter of 2015 to 21.4% of all transactions in the wake of Delaware's challenge. There were also substantial delays in the approval of litigation settlements and attorneys' fee awards. Multi-jurisdictional litigation continued its sharp decline, falling approximately 50% from its 2012 high. Despite the higher rates of dismissals, large awards and settlements were give in litigation arising from the Rural/Metro, Dole and Freeport-McMoRan transactions, among others.
Another likely outcome will be accelerated adoption of forum selection clauses. Indeed, investors now have a strong incentive to insist that companies adopt such bylaws, so that their companies are less subject to meritless litigation and so that there is less incentive for plaintiff lawyers to settle meritorious cases on terms that benefit only themselves and the defendants who get global releases in return for a few worthless disclosures. And that's a good thing, because as Chancellor Bouchard observed, under the current regime:
... far too often such litigation serves no useful purpose for stockholders. Instead, it serves only to generate fees for certain lawyers who are regular players in the enterprise of routinely filing hastily drafted complaints on behalf of stockholders on the heels of the public announcement of a deal and settling quickly on terms that yield no monetary compensation to the stockholders they represent.
So how will these cases be handled in the future? Bouchard explained the problem to which he was responding as follows:
In such lawsuits, plaintiffs’ leverage is the threat of an injunction to prevent a transaction from closing. Faced with that threat, defendants are incentivized to settle quickly in order to mitigate the considerable expense of litigation and the distraction it entails, to achieve closing certainty, and to obtain broad releases as a form of “deal insurance.” ...
Once the litigation is on an expedited track and the prospect of an injunction hearing looms, the most common currency used to procure a settlement is the issuance of supplemental disclosures to the target’s stockholders before they are asked to vote on the proposed transaction. The theory behind making these disclosures is that, by having the additional information, stockholders will be better informed when exercising their franchise rights. Given the Court’s historical practice of approving disclosure settlements when the additional information is not material, and indeed may be of only minor value to the stockholders, providing supplemental disclosures is a particularly easy “give” for defendants to make in exchange for a release.
Once an agreement-in-principle is struck to settle for supplemental disclosures, the litigation takes on an entirely different, non-adversarial character. Both sides of the caption then share the same interest in obtaining the Court’s approval of the settlement. ...
It is beyond doubt in my view that the dynamics described above, in particular the Court’s willingness in the past to approve disclosure settlements of marginal value and to routinely grant broad releases to defendants and six-figure fees to plaintiffs’ counsel in the process, have caused deal litigation to explode in the United States beyond the realm of reason. ... [PB: Kudos to the Chancellor for taking accountability and responsibility for his court having helped create the problem.]
So here's the solution:
... practitioners should expect that disclosure settlements are likely to be met with continued disfavor in the future unless the supplemental disclosures address a plainly material misrepresentation or omission, and the subject matter of the proposed release is narrowly circumscribed to encompass nothing more than disclosure claims and fiduciary duty claims concerning the sale process, if the record shows that such claims have been investigated sufficiently. In using the term “plainly material,” I mean that it should not be a close call that the supplemental information is material as that term is defined under Delaware law.
In addition, Bouchard specifically endorsed the emergent practice of mootness dismissals in which "defendants voluntarily decide to supplement their proxy materials by making one or more of the disclosures sought by plaintiffs, thereby mooting some or all of their claims." The defendants then move to dismiss the case on mootness grounds. In response, it is increasingly common for the plaintiffs to dismiss their actions without prejudice to the other members of the putative class (which has not yet been certified)." The Chancery Court then "reserves jurisdiction solely to hear a mootness fee application." As Bouchard pointed out, "[i]n that scenario, where securing a release is not at issue, defendants are incentivized to oppose fee requests they view as excessive."
The Supreme Court has granted cert in Salman v. United States, posing the following question for argument:
Whether the personal benefit to the insider that is necessary to establish insider trading under Dirks v. SEC requires proof of “an exchange that is objective, consequential, and represents at least a potential gain of a pecuniary or similarly valuable nature,” as the Second Circuit held in United States v. Newman, or whether it is enough that the insider and the tippee shared a close family relationship, as the Ninth Circuit held in this case.
The WSJ reports:
In the New York case, U.S. v. Newman, an appeals panel said prosecutors had to prove the insider disclosed the information for a personal benefit that included something valuable being exchanged. The decision upended multiple convictions and top prosecutors complained that the ruling could make it legal for traders to obtain and use confidential information from friends.
Mr. Salman, citing Newman, argued that evidence of a family relationship between the tipper and the tip recipient wasn’t enough to demonstrate that the insider received a personal benefit.
The San Francisco-based Ninth U.S. Circuit Court of Appeals rejected that argument in a ruling last July. The Supreme Court will review the decision and could hear oral arguments as soon as April. Mr. Salman has been serving his prison sentence since August 2014.
Salman and Newman have been frequent topics. Here's some posts that may be of interest:
In my essay Catholic Social Thought and the Corporation (available at SSRN: http://ssrn.com/abstract=461100), I wrote:
In Toward a Theology of the Corporation, for example, Novak asserted that Christian theologians tend to be poorly trained in economics and inexperienced with the business world: They “are likely to inherit either a pre-capitalist or a frankly socialist set of ideals about political economy.” Consequently, theologians “are more likely to err in this territory than in most others.”
A persistent error “in this territory” is the tendency towards what Milton Friedman called “the collectivist moral strain” in Catholic social thought. Indeed, it is fair to assert that some documents in the social teaching more closely resemble “the platforms of European social democratic parties” than Biblical exegesis.
So it was refreshing to read Cardinal Pell's keynote address to the Global Foundation roundtable on the global economy:
He began by observing that:
... it remains true that market economics have brought unprecedented prosperity and represent, despite their many faults and deficiencies, an extraordinary human achievement.
Dr Johnson famously remarked that when a dog walks on its hind legs, it walks badly. But, he continued, “you are surprised to find it done at all”. So too with the market economy.
Granted, that's not the most spirited defense of capitalism a Catholic ever penned. (That would be Michael Novak's The Spirit of Democratic Capitalism.) Indeed, it calls to mind Churchill's defense of democracy. And he goes on to detail some of market capitalism's admitted foibles.
But then we get to some good stuff:
I like to quote Maggie Thatcher who pointed out that if the Good Samaritan had been without capital he could not have paid for the care of the man who was beaten and robbed on the road to Jericho. It was also useful that the innkeeper trusted him sufficiently to accept his promise to cover any extra costs when he returned (Lk 10:25-37).
Even more usefully the parable of the talents shows that Jesus understood that money should be used profitably to produce income. The man with one talent who was condemned had not wasted his money or thrown it away. He was condemned for burying it and not generating a proper return.
(Watch this space for more on the parable of the talents.)
He also went on to recall Pope Francis' comments on business as a vocation:
“Business is a noble vocation, directed to producing wealth and improving the world. It can be a fruitful source of prosperity for the area in which it operates, especially if it sees the creation of jobs as an essential part of its service to the common good”. (Laudato Si', 129)
(On the vocational aspects of business, see Novak's book Business as a Calling.) Pell went out of his way to praise the entrepreneurial spirit:
We should work to encourage among our young men and women the emergence of effective entrepreneurs who will contribute to sustainable growth, especially through job creation.
Just finished Declare by Tim Powers for $15.53 https://t.co/cCmr1PwWhu Loved it. Wash up of religion, horror, and spy thriller. Well done.— Stephen Bainbridge (@ProfBainbridge) January 18, 2016
Oops.I meant "Mash up." January 18, 2016
Speaking about the intellectual climate on campus, Summers says, "The main thing that’s happening [on campus] is what always happens, professors teach courses, students take courses, students aspire to graduate, they make friends, they plan their lives… That said, whether it's the President of Princeton negotiating with people as they took over his office over the names of schools at Princeton, whether it is attacks on very reasonable free speech having to do with adults' right to choose their own Halloween costumes at Yale, whether it's the administration using placemats in the dining hall to propagandize about what messages students should give their parents about Syrian refugee policy, there is a great deal of absurd political correctness. ...
Summers also blasts "microagressions" as crazy. "The idea that somehow microaggressions in the form of a racist statement contained in a novel should be treated in parallel with violence or actual sexual assault seems to me to be crazy. I worry very much that if our leading academic institutions become places that prize comfort over truth—that prize the pursuit of mutual understanding over the pursuit of better and more accurate understanding—then a great deal will be lost."
A senior cardinal chosen by Pope Francis to manage the Vatican’s finances has launched into a spirited defence of free markets, countering the perception that the Catholic church under the Argentine pontiff has turned against capitalism and business.
George Pell, the head of the Holy See’s secretariat for the economy, told a conference hosted by The Global Foundation in Rome on Sunday that “no better model is available at the moment” than market economies, citing their capacity to “rejuvenate” after the Great Depression and recent global financial crisis, and their failure to produce the “massive alienation” predicted by Karl Marx.
Apparently the University of Louisville law school has decided to meet declining enrollments and dwindling funds not by upping their game, but by "branding" itself as a "progressive" institution committed to "social justice."
UofL professor Russell Weaver observes:
In a recent commentary, one of my colleagues attempted to portray the law school’s decision to embrace “social justice” and “compassion” as benign, and having nothing to do with a “liberal agenda.” He viewed these concepts as essential in a modern society.
I agree with the idea that compassion is a worthwhile and understandable objective. Indeed, it is an essential part of life. If the movement toward a “compassionate organization” were nothing more than that, who could object? However, to suggest that the law school has not adopted a partisan social agenda, and that it has not labeled non-liberals “outsiders,” is (at the very least) wrong and misleading.
There is ample evidence that the law school has veered to a partisan agenda. In a prior commentary, I discussed the diversity training conducted by the law school in collaboration with the Vice President for Diversity. At those events, faculty, staff and students were instructed to identify their religious beliefs, sexual orientation and disabilities, and attendees were ordered to clap enthusiastically (it was made quite clear that silence or even polite clapping was simply not acceptable).
Even more troubling, Professor Milligan is absolutely correct about the fact that a leftist agenda affects the classroom environment at the Brandeis School of Law. ...
Indeed, as Weaver goes on to explain, U of L's interim dean has filed trumped up charges against someone who limply objected to the project by encouraging his students to think for themselves. Which is obviously heresy in the left-liberal reeducation camp U of L has become.
The real tragedy, however, is that what's happening at U of L is just an express embracing of the leftist hegemony that pervades American legal education. Conservatives, libertarians, people of faith ... heck, anybody to the right of Hillary Clinton are hugely underrepresented in the legal academy and our students who profess such values have learned to hide their light under a bushel lest they be sent off to the Vice Chancellor for Diversity, Tolerance, and Goodness (higher education's version of the Ministry of Love).
Ultimately, of course, this is why U of L's branding effort will fail miserably. Virtually every other law school the country--with very few honorable exceptions--has precisely the same identity, they just don't advertise it. And why should they when everybody knows the dirty little secret, except the parents and state legislators who fund this cuckoo in their nest.
I'm really glad we decided to go to 12:30 Mass instead of 10:30, because I'm loving watching the Panthers blow out the Seahawks. Cam Newton is playing (to quote Bull Durham) with joy, verve, and poetry. Of course, since Pete Carroll has sold his soul to the devil, the Seahawks could still launch a comeback, but it'd have to be the second best of all time.
For dinner tonight I wanted Chinese and a cabernet sauvignon, which I admit is not always a propitious mix. But I ended up opting for Beef with Broccoli from Cook's Illustrated and a 2003 Caymus, which ended up being a very pleasant match.
The Caymus had shed most of its tannin, leaving behind a mix of soft fruit and a few markers of a mature cabernet. Cassis, blackberry, star anise, mint, cedar. Grade: 89
This is an exceptional Pinot Noir. Very drinkable now, but should improve for at least the next 5 years or so. Medium ruby color. Big bouquet, suggesting red berries, black tea, pepper, and a complex mix of warm spices. On the palate, I tasted strawberries, grape stems steeped in black tea, mushrooms, and a lot of spice. Excellent match for mushroom risotto. Grade: 93