ProfessorBainbridge.com

Conundrum (California) 2014

One of our favorite inexpensive white wines. It's an undisclosed mix of white varieties that almost certainly includes some muscat variety and Sauvignon Blanc. Lots of peach and apricot, with some herbs and grass on the finish. Suggestion of some residual sugar. Not profound, but tasty even with pretty spicy food. Grade: 86

The Tilapia Tower

This was a fun and easy recipe that used my Adjustable Food Presentation Rings:

Gently combine in a mixing bowl:

• Flesh of one avocado diced
• Juice of 1 lime
• ½ cup cooked corn kernels
• ½ cup canned black beans, rinsed and drained
• 1 5-ounce package of pico de Gallo, drained
• Salt and pepper to taste

Heat a skillet over medium-high heat. Dust both sides of a large tilapia filet with your favorite Cajun spice mix and spray both sides with a bit of your favorite non-stick cooking spray. Add to skillet and cook for about 3 minutes per side. Allow to cool slightly, flake into small pieces, add to the mixing bowl, and toss.

Spray the interior of the rings with nonstick cooking spray.

Spoon the mix into your rings, pressing down on the top periodically to pack the mixture in and force out any air pockets. Top with a dab of salsa. Unmold and serve with a green salad.

Serve with a white wine. (I chose the 2014 Conundrum.)

Delaware VC Laster cites yours truly

The Frederick Hsu Living Trust v. ODN Holding Corp.:

Delaware’s default standard of review is the business judgment rule. The rule presumes that “in making a business decision the directors of a corporation acted on an informed basis, in good faith and in the honest belief that the action taken was in the best interests of the company.” Aronson, 473 A.2d at 812. Unless a plaintiff rebuts one of the elements of the rule, “the court merely looks to see whether the business decision made was rational in the sense of being one logical approach to advancing the corporation’s objectives.” Dollar Thrifty, 14 A.3d at 598. Only when a decision lacks any rationally conceivable basis will a court infer bad faith and a breach of duty. The business judgment rule thus provides “something as close to non-review as our law contemplates.” Kallick v. Sandridge Energy, Inc., 68 A.3d 242, 257 (Del. Ch. 2013) (Strine, V.C.). This standard of review “reflects and promotes the role of the board of directors as the proper body to manage the business and affairs of the corporation.” Trados I, 2009 WL 2225958, at *6. See generally Stephen M. Bainbridge, The Business Judgment Rule as Abstention Doctrine, 57 Vand. L. Rev. 83 (2004).

I am most gratified.

UND STEP 2-Week 1-The Theme of Salvation in the Old Testament-A Reader Responds

A longtime reader responded to my earlier post about the paschal lamb and the scapegoat with this very helpful comment:

I can’t speak for how various Christian denominations understand these verses but  I wanted to share with you the Jewish tradition.  Azzazal is understood to be a cliff in the wilderness off which the Goat to Azzazel was pushed.  The goat died from the fall.  There is a description of how this service occurred in the temple in the tractate Yuma in the Talmud.  Also regarding the Pesach lamb, you only reference the one that was brought in Eygpt prior to the Exodus.  However, there was another Pesach offering that was brought every year on Pesach eve and eaten after nightfall and the onset of the holiday as part of the Seder.  The shankbone on the Seder plate is a reminder of this offering and that when the Messsiah comes and the temple is rebuilt we will again include this offering in the Seder.

These are fundamentals in orthodox Judaism. There are plenty of primary sources you could quote.   Here are some quick links.

http://www.chabad.org/library/bible_cdo/aid/9917#showrashi=true (Leviticus with the standard explanation  of Rashi)

https://en.wikipedia.org/wiki/Rashi (Rashi is considered THE standard explanation of the simple meaning of the bible.  He may be the most important Rabbi that ever lived since the redacting of the Talmud)

http://juchre.org/talmud/yoma/yoma4.htm (cant vouch for the translation but this was a quick link I found to the Talmud in English)

A description of the services of the High Priest in the temple on Yom Kippur is part of the standard liturgy in most orthodox communities on Yom Kippur and thus the basic procedure familiar to most orthodox Jews.

I'm not going to open comments on these posts because of the high troll risk. But I will welcome and publish thoughtful comments like this one. If you send me email comments, let me know if I can quote you by name or anonymously.

UND STEP 2: Week 1: The Theme of Salvation in the Old Testament: Assignment Memo

As previously explained, I've enrolled in the University of Notre Dame's Satellite Theological Education Program (STEP) to pursue their Certificate in Doctrine and am currently taking my second of the required courses: The Doctrine of Salvation in Jesus Christ. This week's topic is The Theme of Salvation in the Old Testament. In this post, I'm posting my responses the week's assignment questions

• Reflect on Exodus 3:1-17:
  • Why is it significant that God heard “the cry of the Israelites” and willed to liberate them?
  • What did their liberation (salvation) consist of?

As a Christian and Catholic, I see this passage as a metaphor for the salvation we experience in Christ.

God did not abandon the Hebrews during their captivity in Egypt. “After the fall, [God] buoyed them up with the hope of salvation, by promising redemption; and he has never ceased to show his solicitude for the human race. For he wishes to give eternal life to all those who seek salvation by patience in well-doing.” (Catechism para. 55.)

Their salvation consisted of God's initiative in offering the Hebrews a way of surviving the 10th plague, the Hebrew's free choice to respond and their participation in the salvific process by putting the blood of the lamb on the doorposts and lintels of their homes, and God's resulting grace in causing the angel of death to pass over their homes.

The process of unmerited grace calling the Hebrews to take action followed by the Hebrew's freely chosen decision to accept that offer, followed by liberation echoes the Catholic beliefs that salvation is a process that begins with God's gratuitous and supernatural grace, man's cooperation in his salvation, and the resulting justification and sanctification.

UND STEP 2: Week 1: The Theme of Salvation in the Old Testament: Discussion questions

As previously explained, I've enrolled in the University of Notre Dame's Satellite Theological Education Program (STEP) to pursue their Certificate in Doctrine and am currently taking my second of the required courses: The Doctrine of Salvation in Jesus Christ. This week's topic is The Theme of Salvation in the Old Testament. In this post, I'm posting my responses to some of the discussion questions.

Remember: These are the musings of a student based on the assigned readings, lecture, and class discussion.

1. What is the significance of the Paschal Lamb? How is it significant to the Exodus story?​

The first thing that comes to mind is the need to distinguish the paschal lamb and the scapegoat. Leviticus 16 explains that Aaron was to receive two goats from the Israelite people. He cast lots, choosing one goat for the Lord and one for Azazel. (The notes to the NAB state that Azazel is "a name for a demon (meaning something like “angry/fierce god”).") 

Verses 21-22 then explain that:

Laying both hands* on its head, he shall confess over it all the iniquities of the Israelites and their trespasses, including all their sins, and so put them on the goat’s head.i He shall then have it led into the wilderness by an attendant. The goat will carry off all their iniquities to an isolated region.

In contrast, the passover lamb was sacrificed the provide the blood that marked the homes of the Israelites so that the angel of death would pass over their homes in the 10th plague.

All of which raises a question for which I don't have an answer: Which is how did Christianity adopt the paschal lamb as a metaphor for Christ's work in salvation from sin, whereas the passover lamb was sacrificed to save the earthly life of the eldest child. In contrast, it was the scapegoat that bore the sins of the people and whose expulsion into the desert atoned for those sins. 

It may have something to do with the fact that the scapegoat was allowed to live, while Hebrews 9:22 tells us that "without the shedding of blood there is no forgiveness." More musing seems needed.

2. What do most people think of when they think of “salvation?” Based on your reading, what do you now think?

I casually equated salvation with the afterlife; specifically, will salvation from hell. But upon reflection on the readings and lecture this week, I wonder whether eternal life is rather the result of salvation rather than being part of God's salvific act.

The Catechism (para. 55) suggests this is correct by explaining that: 

“After the fall, [God] buoyed them up with the hope of salvation, by promising redemption; and he has never ceased to show his solicitude for the human race. For he wishes to give eternal life to all those who seek salvation by patience in well-doing.”

In other words, eternal life is the gift God gives all those who have been saved.

In the story of Exodus, we have a metaphor for salvation as liberation. God liberated the Hebrews from Egypt, as a consequence of which their (earthly) lives were rescued.

The Old Testament story, of course, doesn't end with the Exodus. God repeatedly must liberate the Hebrews from one mess after another. This speaks to an aspect of salvation with which I struggle; namely having the hope versus the assurance of salvation.

When I was brought up as a Protestant, I was taught salvation was a one-time thing. You prayed the sinner's prayer and then you were saved. Period. So we had the "assurance of salvation." When I took RCIA preparing to become Catholic, I was disconcerted to learn Catholics have "only" the "hope of salvation." But the metaphor to the Old Testament story helps make sense of the Catholic view. Just as God had to repeatedly liberate the Hebrews after they got themselves into trouble and called on him for help, so to God must repeatedly liberate us from sin.

STEP 2: The Doctrine of Salvation in Jesus Christ

As previously explained, I've enrolled in the University of Notre Dame's Satellite Theological Education Program (STEP) to pursue their Certificate in Doctrine. My second of the required courses started this week: The Doctrine of Salvation in Jesus Christ:

Pope Benedict XVI began his encyclical God Is Love (2006) with these moving words: “‘God is love, and he who abides in love abides in God, and God abides in him’ (1 John 4:16). These words from the First Letter of John express with remarkable clarity the heart of the Christian faith: the Christian image of God and the resulting image of mankind and its destiny.” The pope has immediately added that “I wish in my first Encyclical to speak of the love which God lavishes upon us and which we in turn must share with others” (#1).

The sacred message that God is love undergirds the Church’s teachings on God’s intention “to redeem” or “to save” creation. As the pope has mentioned in his encyclical, the God of the Bible is intent on bringing about our redemption, our freedom from sin and death. Or to put it another way, God wills our salvation, our healing for eternal life. Again, to quote Benedict XVI: “The one God in whom Israel believes . . . loves with a personal love” (#9). In other words, God knows us by name and wants us to attain the fullness of life forever. Each of this course’s lectures or units explores a major topic within the Church’s teachings on redemption or salvation.

Week 1's theme is: 

1. The Theme of Salvation in the Old Testament

As usual, there are a series of discussion questions followed by a written assignment memo. In the first course, there was a 150-200 word limit. This course has no such limit, but I'll try to keep to those limits anyway. As before, I'll post my answers on the blog.

Remember: These are the musings of a student based on the assigned readings, lecture, and class discussion.

My latest for WLF Legal Pulse: Recently Argued “Kokesh” SCOTUS Case Will Impact SEC’s Use of Potent Disgorgement Authority

Is available here and begins:

Disgorgement of ill-gotten gains long has been a basic tool in the Securities and Exchange Commission’s (SEC) penalty toolkit, despite a paucity of statutory authorization. The equitable nature of disgorgement has meant courts have had to resolve many questions without the benefit of statutory guidance. In Kokesh v. SEC, the US Supreme Court took up the seemingly technical—but surprisingly important—question of what statute of limitations applies to SEC disgorgement actions.

"Corporate Directors in the UK" cracks top ten list

No brag, just fact:

Dear Stephen Mark Bainbridge:

Your paper, "CORPORATE DIRECTORS IN THE UNITED KINGDOM", was recently listed on SSRN's Top Ten download list for: LSN: Corporate Law (Topic).

As of 24 April 2017, your paper has been downloaded 95 times. You may view the abstract and download statistics at: https://ssrn.com/abstract=2935388.

Top Ten Lists are updated on a daily basis. Click the following link(s) to view the Top Ten list for:

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Your paper may be included in future Top Ten lists for other networks or eJournals. If so, you will receive additional notices at that time.

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Here's what it's about:

Abstract

In the United States, state corporation law uniformly provides that only natural persons may serve as directors of corporations. Corporations, limited liability companies, and other entities otherwise recognized in the law as legal persons are prohibited from so serving. In contrast, the United Kingdom allowed legal entities to serve as directors of a company. In 2015, however, legislation came into force adopting a general prohibition of these so-called corporate directors, albeit while contemplating some exemptions. This article argues that there are legitimate reasons companies may wish to appoint corporate directors. It also argues that the transparency and accountability concerns that motivated the legislation are overstated. The requisite enhancement of transparency and accountability can be achieved without a sweeping ban. Accordingly, this article proposes that Parliament either repeal the ban or, at least, authorize liberal exemptions.

Keywords: board of directors, directors, corporate directors, United Kingdom, natural persons, legal persons

Bainbridge, Stephen M., Corporate Directors in the United Kingdom (March 17, 2017). UCLA School of Law, Law-Econ Research Paper No. 17-04. Available at SSRN: https://ssrn.com/abstract=2935388

Les Forts de Latour (Pauillac) 2007

Deep ruby but shading slightly at the rim. Big bouquet. Plums, currants, blackberries, tobacco, cedar. Still has some rough tannins that need to subside, but it's drinkable. Vegetal elements emerge on the finish. Grade: 88

Behrens & Hitchcock Herrick-Moulds Cabernet Sauvignon (Napa Valley) 2003

This is a huge, jammy, fruit forward wine. Deep purple. Nose full of black cherry, blackcurrant, cassis, and chocolate. Ditto the palate. Big tannins suggest continued aging potential. Grade: 91

House Dodd-Frank reform bill would sharply limit shareholder proposals

Bloomberg Securities Regulation and Law Report advises that:

House Financial Services Chairman Jeb Hensarling (R-Texas) wants to require anyone seeking to put a proposal on the corporate ballot to hold a minimum of 1 percent of a company's outstanding stock for three years. Currently, shareholders with as little as $2,000 in shares for a year or more can do so.

The shareholder proposal rule (SEC Exchange Act Rule 14a-8), of course, has been abused by so-called gadflies for years who put forward proposals that often have little to do with the company's business and sometimes are even inimical to the company's interests. It also has been a sometime tool of activist hedge and pension funds for legitimate corporate governance changes, but left-leaning state and local pension funds and union pension funds have often used it to achieve political or social ends not shared by other investors. The Manhattan Institute's Jim Copland's  written testimony to the House in 2016 gives an excellent explanation of how the rule gets abused and ways it could be reformed.

I certainly favor significantly increasing the ownership threshold, but I also believe that the rule needs substantive changes to prevent activists from meddling in matters that are appropriately the responsibility of the board and management rather than shareholders. I have proposed tightening the ordinary business exclusion to do so:

Who decides what products a company should sell, what prices it should charge, and so on? Is it the board of directors, the top management team, or the shareholders? In large corporations, of course, the answer is the top management team operating under the supervision of the board. As for the shareholders, they traditionally have had no role in these sort of operational decisions. In recent years, however, shareholders have increasingly used SEC Exchange Act Rule 14a-8 (the so-called shareholder proposal rule), to not just manage but even micromanage corporate decisions.

The rule permits a qualifying shareholder of a public corporation registered with the SEC to force the company to include a resolution and supporting statement in the company’s proxy materials for its annual meeting. In theory, Rule 14a-8 contains limits on shareholder micro-management. The rule permits management to exclude proposals on a number of both technical and substantive bases, of which the exclusion in Rule 14a-8(i)(7) of proposals relating to ordinary business operations is the most pertinent for present purposes. Rule 14a-8(i)(7) is intended to permit exclusion of a proposal that “seeks to ‘micro-manage’ the company by probing too deeply into matters of a complex nature upon which shareholders, as a group, would not be in a position to make an informed judgment.”

Unfortunately, court decisions have largely eviscerated the ordinary business operations exclusion. Corporate decisions involving “matters which have significant policy, economic or other implications inherent in them” may not be excluded as ordinary business matters, for example, which creates a gap through which countless proposals have made it onto corporate proxy statements.

This article proposes an alternative standard that is grounded in relevant state corporate law principles, while also being easier to administer than the existing judicial tests. Under it, courts first look to the state law definition of ordinary business matters. The court then determines whether the matter is one of substance rather than procedure. Only proposals passing muster under both standards should be deemed proper.

Bainbridge, Stephen M., Revitalizing SEC Rule 14a-8's Ordinary Business Exemption: Preventing Shareholder Micromanagement by Proposal (March 29, 2016). UCLA School of Law, Law-Econ Research Paper No. 16-06. Available at SSRN: https://ssrn.com/abstract=2750153

It seems unlikely that the requisite reforms could get through the Senate, where Democratic obstructionism and spineless Republicans seem likely to derail Dodd-Frank reform. Fortunately, however, the SEC has full power to rewrite the rule--it is after all an SEC rule, not a statute--and should do so.

Genetic engineering humans to live on water worlds: Maybe James Blish was right after all

I saw this interesting news story:

A new study published in The Monthly Notices of the Royal Astronomical Society suggests that most habitable planets are wet. Like, extremely wet. Using computer models, astronomer Fergus Simpson from the Institute of Cosmos Science at the University of Barcelona found that habitable exoplanets, at least simulated ones, tend to be overrun by water, in most cases accounting for 90 percent or more of the total surface area.

Being a science fiction fan of a certain age, the story immediately called to mind James Blish's classic short story Surface Tension, which you can find in The Science Fiction Hall of Fame, Vol. 1: 1929-1964, in which space scientists stranded on a water world genetically engineered their miniaturized descendants (more or less) to live underwater. It's a great story. Go read it.

Might Nevada avoid the mistake of extending alter ego liability to LLCs?

Probably not. Keith Paul Bishop explains:

The Nevada Supreme Court has not expressly held that the laws for piercing the corporate veil under the alter-ego doctrine apply to LLCs, but it has applied those rules in the LLC context, “assum[ing] without deciding that” the corporate analysis applies.

Pharmaplast S.A.E. v. Zeus Medical Holdings, LLC, et al. Case No. 2:15-cv-002432-JAD-PAL. (D. Nevada, March 14, 2017) (footnote omitted citing Webb v. Shull, 270 P.3d 1266, 1271 n.3 (Nev. 2012) and JSA, LLC v. Golden Gaming, Inc., 2013 Nev. Unpub. LEXIS 1449 (Nev. 2013)).  Judge Dorsey could have, but did not mention, that the Ninth Circuit Court of Appeals has similarly assumed, but not decided, that members of a Nevada LLC at risk of alter ego liability. Volvo Constr. Equip. Rents, Inc. v. NRL Rentals, LLC, 614 Fed. Appx. 876, 878 n. 1 (9th Cir. Nev. 2015).  Nonetheless, the legislative history to Nevada’s LLC law supports the proposition that members may be liable under the alter ego doctrine as noted in Bishop and Zucker on Nevada Corporations and Limited Liability Companies § 16.4[A].

Of course, I have argued against extending veil piercing and alter ego to the LLC setting, most recently in Todd Henderson's and my book Limited Liability: A Legal and Economic Analysis.

Does the lack of ideological diversity in law schools matter?

Jonathan Adler makes the case that it does here.