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Pro bono legal representation may be available to University of California job candidates who were rejected because their diversity, equity, and inclusion statements scored too low

Brian Leiter has the story:

Pro bono legal representation may be available--read on.

As we've noted on several occasions, schools in the UC System have begun requiring applicants for faculty positions to submit a diversity statement. In most searches, these statements have been evaluated holistically as part of an overall application. However, several UC schools have participated in Advancing Faculty Diversity Pilot Programs where contribution to diversity statements have been evaluated as a threshold requirement. In other words, for these searches, if you didn’t get a passing score on your diversity statement, you were not considered further.

This methodology has had an enormous impact. As we discussed last month, for a 2018-2019 search in the Life Sciences, UC Berkeley rejected 76% of the applicants without even considering their research, teaching skills, or academic merits (out of 893 qualified applicants, 679 were eliminated solely because their diversity statements were deemed inadequate). ...

If you applied to and were rejected to one of these searches, or are planning to apply to one of the upcoming searches, you can help to challenge UC’s unlawful policies. Daniel Ortner from the Pacific Legal Foundation is looking for individuals who were impacted by these searches to potentially offer free pro bono representation. You can reach him at dortner@pacificlegal.org.

No word yet on whether I'll need him. In any case, maybe this is what the UC Regents are discussing in their closed door meeting today. 

Incorporating Catholicism: Dioceses are changing their secular legal forms to conform to canon law and insulate assets

Crux reports: 

As dioceses across the country continue to face multi-million dollar payouts related to clerical sex abuse, some bishops have relied on advice from lawyers to reconfigure the property of their dioceses into charitable trusts.

The practice - which has been implemented by several dioceses after the clerical sex abuse revelations of the early 2000s - creates significantly different outcomes for dioceses and abuse victims in the case of bankruptcies.

Critics say the moves shield assets that could be paid to victims of clerical abuse and may even be illegal. However, Church officials defend the practice, saying their actions were intended to better align the dioceses’ corporate status with canon law. Other dioceses say they acted to ensure the long-term viability of the Church.

It strikes me that both the critics and the defenders are correct. In an article I coauthored with former student Aaron Cole, I argued that the corporation sole--a common form of legal organizations used by Catholic dioceses in the US was incompatible with canon law:

… the Church, as a matter of doctrine and canon law, is composed of numerous united but distinct entities, subject in varying ways and degrees to ecclesiastical control.  Each separate entity possesses rights (including rights of ownership) that are enforceable, under church law, against the other entities.  The assets of the Catholic Church, under canon law, thus do not belong to a single owner. Instead, Church assets “belong to many owners: the Apostolic See, individual dioceses, institutes of consecrated life, societies of apostolic life , parishes, other public juridic persons, private juridic persons, and natural persons individually and in association.”

Accordingly, centralization of “ownership and control of all church property within a diocese is contrary to the law of the Church.”  The use of a corporation sole to hold title to the ecclesiastical property of the juridic persons within the diocese’s territory thus is a significant distortion of the Church’s polity. Indeed, in 1911, the Holy See told the American bishops that it disapproved of using a single corporation sole as some legal owner of all property within a diocese; indeed, the Holy See encouraged the separate incorporation of individual parishes.  Presumably, the same would be true where a diocese civilly incorporated using some other statutory form, such as a nonprofit or religious corporation, holds secular legal title to the ecclesiastical property of all juridic persons within the diocese.

Second, incorporation as a corporation sole exposes the assets of parishes and other juridic persons, which in canon law are the property of such persons, to the claims of creditors of the diocese. Conversely, by centralizing civil ownership in a single entity, the corporation sole also exposes “all parochial and other church-related assets within a diocese to satisfy creditors’ claims against any individual parish or institution.”  Again, the same concerns would arise where a diocese civilly incorporated as a nonprofit or religious corporation claiming secular legal title to the ecclesiastical property of parishes and other juridic persons within the diocese.

The reorganization into a trust format thus is an appropriate response to a longstanding canon law problem. 

But the reorganization also responds to the liability exposure the corporation sole created:

… bishops whose dioceses are incorporated as a corporation sole have argued that they hold legal title to parish assets in trust and for the benefit of the parish.  This line of defense was prominently tested in the Archdiocese of Portland’s bankruptcy case.  The Archdiocese had been incorporated as a corporation sole under Oregon law.  Only one of the 124 parishes with the Archdiocese had been separately incorporated.  The three Catholic high schools within the Archdiocese were not separately incorporated.  When the Archdiocese declared bankruptcy under the weight of numerous priest sex abuse claims, the Archbishop claimed that the bulk of the Archdiocese’s assets were in fact held in trust for the benefit of the unincorporated parishes and other juridic persons within the diocese.

The Bankruptcy Court first held that the freedom of religion clauses of the First Amendment did not deprive the court of jurisdiction over the question of whether the assets purportedly held in trust were properly part of the bankruptcy estate and thus subject to the claims of the Archdiocese’s creditors.  The court then held that those same clauses did not require the court to defer to canon law in determining the ownership of the assets in question.  Next the court held that Oregon state corporation law likewise did not require the court to defer to canon law in determining the ownership of the assets in question.

Turning to the merits, the court noted that “[e]ven debtor’s own canon law expert acknowledges that being a separate juridic person under canon law does not give that juridic person a civil law identity.”

In fact, unincorporated religious associations are not legal persons that may take title to real property in their names. Because the parishes are not separately incorporated, as they could be under Oregon religious corporations law, they cannot hold title to real property. They are not separate from, but are merely a part of debtor.

The court also rejected the Archbishop’s argument “that, even if the parishes are not legal entities that can hold title to real property, they have sufficient legal existence to allow them to be beneficiaries of a trust.”

The reorganization presumably is intended to solve that problem by creating real trusts.

Is there anything wrong with what the Church is doing? The tragic dilemma of the priest sex abuse scandal is the inherent tension between providing just compensation for victims and preventing litigation from creating an existential threat to the Church. 

As Cole and I explained:

In many dioceses, there are hundreds of separate juridic persons, each ministering to numerous worshippers and even non-Church members. If a court were to treat all of those juridic persons as alter egos of the diocese, the assets of many parishes and other ministries that had no connection with priest sex abuse would be made available to satisfy the claims of sex abuse plaintiffs. Inevitably, execution of a judgment against their assets would impede, if not destroy, the ability of these ministries to serve the needs of their congregants. Indeed, the mere threat of liability might do so: “Both church and society will suffer if the continuation of ministries prompted by compassion—ministries often involving risks—is stopped short by the nervous calculation of legal liabilities.” 

 

What is the "Faculty Diversity Item" Litigation Matter the University of California Regents are Discussing Today?

The UCLA Faculty Association spotted an interesting item on the UC Regents agenda for today (their emphasis):

The full Board’s second meeting in the open session on January 23 includes discussion of the “State of Title IX” and “Faculty Recruitment, Retention and Diversity.” But there seems to be a follow-up in the closed session that comes after the open one regarding “Legal Considerations Relating to Faculty Diversity Item.” In that seeming follow-up, it appears that some kind of litigation is pending or potentially pending. Whether the reference is to faculty diversity statements that are now being required at UC in many academic personnel actions is unclear. As prior posts on this blog have noted, there has been controversy about those diversity statements in national news media.* Are the statements being challenged through possible litigation? It would be nice to know, although it appears we won't. Note that there is a recent history of "surprise" items popping up on the Regents' agenda.

The Regent's agenda states:

Board (closed session)

Location: Robertson Auditorium

B6X  Discussion  Legal Considerations Relating to Faculty Diversity Item

Closed Session Statute Citation: Litigation [Education Code §92032(b)(5)]

Note: This section of the Education Code refers to “matters involving litigation, when discussion in open session concerning those matters would adversely affect, or be detrimental to, the public interest.”

It would be very nice to know what's going on here.

Apparently I've become a "case to watch" with respect to the University of California mandatory diversity, equity, and inclusion statements

Regular readers will recall my post about my diversity statement, which I was required by the UC system to submit as part of the package for a pending merit raise review. You'll also recall my posts (e.g., here) expressing concern that these statements effectively impose a mandatory political litmus test. The post setting out my statement went viral, ending up in the Wall Street Journal's Notable and Quotable column.

I'm not the only UC faculty member pushing back, of course. Abigail Thompson, chair of the mathematics department at the University of California–Davis, famously described the problem in a Wall Street Journal editorial:

To score well [on a diversity statement], candidates must subscribe to a particular political ideology, one based on treating people not as unique individuals but as representatives of their gender and ethnic identities. . . . This system specifically excludes those who believe in a tenet of classical liberalism: that each person should be treated as a unique individual, not as a representative of an identity group. Rather than helping achieve inclusion, these [rubrics] act as a filter for those with nonconforming views.

Now the story has been picked up by Forbes. Michael Poliakoff explains:

The University of California stipulates that departments at its campuses must require faculty applicants to submit “diversity statements,” in which applicants affirm their commitment to diversity and inclusion as social ideals, detail their contributions to diversity in academia, and outline their plans for cultivating a diverse community on campus. The requirement for a diversity statement seems reasonable, given the imperative of understanding students of different backgrounds and teaching them effectively. This is particularly important given UC’s rich mixture of cultures and backgrounds. Different University of California campuses have used the diversity statements in different ways in hiring and promotion, some, so far, in relatively benign ways.

Some, however, in quite dangerous ways.

What has emerged most clearly at Berkeley is likely to have catastrophic implications for the intellectual life of the University of California, especially if such practices find homes at other campuses. A new “Initiative to Advance Faculty Diversity” adopted by several departments at Berkeley is the use of a rubric as a screening process to eliminate all applicants who do not conform to the approach to diversity that Berkeley’s Office for Faculty Equity and Welfare might have in mind. A candidate who describes, in the language of the rubric, “only activities that are already the expectation of Berkeley faculty (mentoring, treating all students the same regardless of background, etc.)” is deemed to have given an unacceptable answer. And there are real consequences for the candidate. In pilot programs, the rubric, to repeat, has been used—and continues to be used—as a screening tool, deployed before the faculty hiring committee can give due consideration to the academic merits of the candidate.

... News flash from Berkeley: A 2018–19 search for a professor in life sciences cut the applicant pool from 894 to 214 based solely on the diversity rubric. Who were the scientists whose academic credentials were never reviewed? What other UC academic programs are now preparing to adopt such practices? 

... If the likes of Albert Einstein or Enrico Fermi or any other great scholar and teacher did not craft a diversity statement judged satisfactory in light of standards devised by a campus inclusion and equity bureaucracy, his or her application could stop cold. 

At this point the story takes a personal turn:

In this regard, Stephen Bainbridge, professor of law at the University of California–Los Angeles, will be a test case. Professor Bainbridge shared the diversity statement that he submitted for his merit raise, which emphasizes the importance of differing viewpoints in forming a diverse community. If the university cherishes intellectual diversity, then it will value his perspective to support students of faith and conservative political views. It is a case to watch.

Some University of California faculty are pushing back against mandatory diversity statements

Regular readers will recall my post about my diversity statement, which I was required by the UC system to submit as part of the package for a pending merit raise review. You'll also recall my posts (e.g., here) expressing concern that these statements effectively impose a mandatory political litmus test. As I pointed out:

Even the relentless liberal Daily Bruin student newspaper recognized this basic fact (emphasis supplied):

UCLA is a public, academic setting, an environment meant to support a diverse range of ideas and viewpoints towards all issues – within reason – with the knowledge that they enrich our campus. EDI statements stifle this diversity by limiting qualified new hires to social activists who mirror administrators’ agendas. Even if these activists are doing good, exclusively hiring them is a subtraction from the marketplace of ideas and a slippery slope toward further homogenization of dialogue – an unavoidable end incongruent with the diversity goals UCLA claims to be striving for. ...

The “EDI Statement FAQs” document claims the statements are “not about penalizing faculty who do not promote EDI,” but that’s difficult to substantiate when they’re quite literally metricizing someone’s quality based on these standards.

The post setting out my statement went viral, ending up in the Wall Street Journal's Notable and Quotable column.

I don't know if my speaking out had any impact, but I have heard the at UC Davis a group of faculty is gathering signatures in support of the following resolution:

Resolved: 'Diversity, Equity and Inclusion Statements shall not be mandatory for the appointment or for the advancement of faculty. ‘  

The proponents have set up a website with background information and university documents on how these statements are to be evaluated. The documentation makes it clear that the diversity statements are being scored and that a low score will be disqualifying. 

It also looks like the pushback may have gotten the attention of the Regents. The agenda for the closed session of their next meeting includes an item on "Legal Considerations Relating to Faculty Diversity Item." The UCLA Faculty Association blog speculates:

The full Board’s second meeting in the open session on January 23 includes discussion of the “State of Title IX” and “Faculty Recruitment, Retention and Diversity.” But there seems to be a follow-up in the closed session that comes after the open one regarding “Legal Considerations Relating to Faculty Diversity Item.” In that seeming follow-up, it appears that some kind of litigation is pending or potentially pending. Whether the reference is to faculty diversity statements that are now being required at UC in many academic personnel actions is unclear. As prior posts on this blog have noted, there has been controversy about those diversity statements in national news media.* Are the statements being challenged through possible litigation? It would be nice to know, although it appears we won't. Note that there is a recent history of "surprise" items popping up on the Regents' agenda.

Two thoughts on possible legal challenges. First, Brian Leiter posted that he had been contacted by lawyers looking to challenge these statements and inviting faculty to contact him. Second, several conservative public interest law firms contacted me after my post went viral. They are definitely interested.

So watch this space.

PS: No news yet on whether I'll get that merit raise.

The Big Three Institutional Investors and Climate Change: Slackers or Activists?

Bloomberg:

Environmental and consumer groups, for example, accuse index managers of shirking their broader social responsibilities, such as by not divesting the shares of fossil fuel companies or by not blocking lavish CEO pay. BlackRock CEO Larry Fink was met by protesters at an October black-tie gala at the Museum of Modern Art, where he sits on the board. (The fund companies say the passive investment model means they can’t divest from companies listed on indexes.) Other detractors say companies may not be competing aggressively because their common owners—the funds that hold them all—don’t want or need them to. 

NY Times:

Laurence D. Fink, the founder and chief executive of BlackRock, announced Tuesday that his firm would make investment decisions with environmental sustainability as a core goal. ...

Mr. Fink’s annual letter to the chief executives of the world’s largest companies is closely watched, and in the 2020 edition he said BlackRock would begin to exit certain investments that “present a high sustainability-related risk,” such as those in coal producers. His intent is to encourage every company, not just energy firms, to rethink their carbon footprints.

If Fink means that BlackRock's index funds will divest from fossil fuel companies, that's going to make a huge change in how index fund work. Put bounty, it would eviscerate the very meaning of indexing.

Academics add value to corporate boards (so why aren't I on one?)

Recently posted to SSRN:

This paper investigates the value of academic independent directors’ (ADs’) services by exploring an unexpected policy shock that forces ADs to resign from Chinese listed firms. Empirical results show that around the announcement of this policy, the stock prices of firms with ADs drop by 2.2%, which can be translated to a 135M RMB loss. These results suggest a likely causal relation between AD presence and firm value. ADs with academic backgrounds related to the firms’ primary line of business, with connections to an industry association, and holding top positions in a prestigious university are more valuable to firms. For ADs with business backgrounds, their services are more valuable when sitting on some specific board subcommittees. Moreover, ADs are more hardworking as they miss fewer meetings. Consistent with the market reactions, firm fundamentals and the efficiency of independent director monitoring and advising deteriorate significantly after ADs actually resign.

Liu, Bibo and Wei, Wei and Zhou, Zhen, The Value of Academic Independent Directors (December 1, 2019). Available at SSRN: https://ssrn.com/abstract=3504140 or http://dx.doi.org/10.2139/ssrn.3504140

"SEC Proxy-Firm Rules Spur YouTube Call to Stop ‘Liberal Agenda’"

Bloomberg:

The YouTube video encourages “real Americans” to urge Securities and Exchange Commission Chairman Jay Clayton to clamp down on proxy advisory firms that, they say, are imposing a liberal agenda on corporate America.

“We’re seeing abortion, climate change, sanctuary cities, gun control,” Holly Turner, a frequent guest on Fox News, says on the video, sitting next to her conservative-activist husband, Chris Turner. “These are all issues now that these companies are being forced to deal with.”

The usual suspects are calling the Turners "sock puppets." Here's the video:

Why does the Government Keep Picking on The Little Sisters of the Poor

From The Becket Foundation:

The Supreme Court will once again weigh in on the case of the Little Sisters of the Poor in their legal battle against the HHS contraceptive mandate. The Supreme Court has twice protected the Catholic nuns, and an HHS rule issued in 2018 protects religious non-profits, but several states have dragged the Little Sisters of the Poor back to court. In Little Sisters of the Poor v. Commonwealth of Pennsylvania, the Little Sisters are defending their hard-won religious exemption from a lawsuit by the Pennsylvania Attorney General and a recent Third Circuit ruling against them threatening their ministry of serving the elderly poor.

The HHS contraceptive mandate required the Little Sisters to provide services such as the week-after pill in their health care plans or pay millions of dollars in fines. In 2016, the Supreme Court unanimously overturned lower court rulings against the Little Sisters, granting them an exemption from the mandate, and in 2018, HHS announced a new rule protecting religious non-profits, including the Little Sisters. Yet several states, including Pennsylvania and California, immediately sued the federal government to take that protection away, forcing the Little Sisters back to court. After a loss in the Third Circuit Court of Appeals, the Sisters now turn to the High Court to finally put an end to their long legal journey.

Commissioner Robert Jackson leaving the SEC to return to NYU Law

Bloomberg:

Robert Jackson Jr. said he will step down from the U.S. Securities and Exchange Commission next month to return to teaching, leaving Wall Street’s main regulator with an open Democratic seat as Republicans push to dial back rules before November’s elections.

Since joining the SEC in January 2018, Jackson has often led opposition to policies pushed by Chairman Jay Clayton, including last year’s landmark move to overhaul conduct standards for brokers and investment advisers. At the same time, he and Clayton -- both political independents -- worked together to approve enforcement actions in the face of objections from the commission’s two Republicans.

Christianity and Bankruptcy

My friend David Skeel (Penn Law) has posted Christianity and Bankruptcy, which is forthcoming in CHRISTIANITY AND MARKET REGULATION (Daniel Crane & Samuel Gregg eds., Cambridge University Press 2020). Available at SSRN: https://ssrn.com/abstract=3514841

Although the term “bankruptcy” is nowhere to be found in the Bible, debt and the consequences of default are a major theme both in the Hebrew Bible and in the New Testament. In Israel, as in the ancient Near East generally, a debtor who defaulted on his obligations was often sold into slavery or servitude. Biblical law moderated the harshness of this system by prohibiting Israelites from charging interest on loans to one another, thus diminishing the risk of default, and by requiring the release of slaves after seven years of service. Jesus alluded to the lending laws at least once, and he frequently used economic illustrations in his teaching, linking forgiveness of sins to debt relief in the Lord’s Prayer and in one of his parables.

In this essay, I very briefly describe the evolution of bankruptcy, focusing most extensively on a proposal by the early novelist Daniel DeFoe to reform English insolvency law. I then turn to the essay’s principal focus: the implications of Biblical teaching on debt and debt relief for modern bankruptcy law, especially American bankruptcy law. The past century has seen a significant expansion of personal bankruptcy law, the emergence of corporate bankruptcy, and most recently a debate over whether over-indebted countries should have access to bankruptcy relief. I consider whether each of these developments can be seen as reflecting Christian principles, and what a more fully Christian vision of bankruptcy law might look like.

Recommended reading. I love that he starts with Daniel DeFoe.

Joan Heminway identifies some common mistakes Business Associations students make

Good advice to BA students:

• Agency rules and management rules in business associations law are often confused. Agency rules express the authority of a person to act on behalf of the firm in transactions with third parties--those who enter into transactions with the firm. For example, by default under the RUPA, each partner in a RUPA partnership is an agent of the partnership that can bind the partnership to contracts with others. Management rules, by contrast address the governance and control authority of a particular firm constituent within the governance structure of the firm. Thus, agency rules relate to authority that is outward-facing (pertaining to transactional parties) and management rules relate to authority that is inward-facing (pertaining to internal constituents of the firm). For example, by default under the RUPA, each partner has an equal right to manage the partnership.
  
  
• Similarly, the concept of "limited liability" is commonly understood to refer to the limited liability of a firm owner for the firm's obligations. For example, under the RUPA, each partner is jointly and severally liable for the obligations of the partnership, whereas under corporate law, shareholders are not personally liable for the corporation's obligations to third parties. Exculpation, which eliminates the monetary liability of directors in the corporate context, relates to corporate governance claims--legal actions for breach of the fiduciary duty of care. This is internal governance litigation that does not relate to corporate obligations to third parties. So, while exculpation does limit (eliminate) a director's personal liability for a breach of the duty of care, it is not part of what people generally refer to as "limited liability" in a corporate context.
  
  
• Fiduciary duties are typically understood to instill or increase trust in relationships. Accordingly, they are commonly employed to provide a benefit in circumstances involving untrustworthy business associates. Yet a number of you seemed to think they were an undue burden to business venturers in circumstances where trust may be lacking (i.e., where fiduciary duties should be useful). You will need to make a solid argument to most folks to justify that the detriments outweigh the benefits.