I’ve completed two of the six courses I need for my Certificate in Doctrine from the @NotreDame STEP program. pic.twitter.com/Uhw2frKNfu
— Professor Bainbridge (@ProfBainbridge) June 13, 2017
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I’ve completed two of the six courses I need for my Certificate in Doctrine from the @NotreDame STEP program. pic.twitter.com/Uhw2frKNfu
— Professor Bainbridge (@ProfBainbridge) June 13, 2017
Posted at 11:06 AM in Dept of Self-Promotion, Religion | Permalink
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The usual suspects are quite worried:
Shareholder Proposals Threatened by Financial Reform Bill the House Passedhttps://t.co/d704jUuihc pic.twitter.com/RmlZLLSGYV
— Consumer Reports (@ConsumerReports) June 12, 2017
Me? Not so much. I made the case for pruning the rule in my article 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:
As many courts and commentators have recognized, the SEC proxy rules seek to effectuate a scheme of “corporate democracy.”[1] SEC Rule 14a-8—the so-called shareholder proposal rule—is a central tool for accomplishing that goal.[2] In brief, 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.[3] To be sure, most of these proposals are phrased as recommendations,[4] but they nevertheless have become a powerful tool for influencing corporate decision making.[5]
The SEC’s efforts in this area are wholly inconsistent with the corporate governance structure created by state law. To be sure, the SEC and its supporters claim that the proxy rules simply make effective rights shareholders have under state law,[6] but in fact shareholder control rights under the latter are extremely limited.[7] Indeed, under state law, the shareholders’ “play an essentially passive and reactive role.”[8] Instead, decision-making authority is vested in the board of directors, which typically delegates much of that authority to corporate officers and employees.[9] As such, the corporation can hardly be described as a democracy.[10]
As I have argued elsewhere at book length, the separation of ownership and control is not a bug, but rather an essential feature of corporate governance.[11] Indeed, numerous commentators now accept that “corporate governance is best characterized as based on ‘director primacy.’”[12] In particular, there is growing agreement that “Delaware jurisprudence favors director primacy in terms of the definitive decision-making power, while simultaneously requiring directors to be ultimately concerned with the shareholders’ interest.”[13] Once again, it seems appropriate to recount the basic normative argument in favor of director primacy for the benefit of new readers, while keeping the statement as brief as possible and incorporating by reference works in which the argument is laid out in detail.[14]
As Kenneth Arrow explained in work that provided the foundation on which the director primacy model was constructed, all organizations must have some mechanism for aggregating the preferences of the organization’s constituencies and converting them into collective decisions.[15] These mechanisms fall out on a spectrum between “consensus” and “authority.”[16] Consensus-based structures are designed to allow all of a firm’s voting stakeholders to participate in decision making.[17] Authority-based decision-making structures are characterized by the existence of a central decision maker to whom all firm employees ultimately report and which is empowered to make decisions unilaterally without approval of other firm constituencies.[18] Such structures are best suited for firms whose constituencies face information asymmetries and have differing interests.[19] It is because the corporation demonstrably satisfies those conditions that vesting the power of fiat in a central decision maker—i.e., the board of directors—is the essential characteristic of its governance.[20]
Shareholders have widely divergent interests and distinctly different access to information.[21] To be sure, most shareholders invest in a corporation expecting financial gains, but once uncertainty is introduced shareholder opinions on which course will maximize share value are likely to vary widely.[22] In addition, shareholder investment time horizons vary from short-term speculation to long-term buy-and-hold strategies, which in turn is likely to result in disagreements about corporate strategy.[23] Likewise, shareholders in different tax brackets are likely to disagree about such matters as dividend policy, as are shareholders who disagree about the merits of allowing management to invest the firm’s free cash flow in new projects.[24]
As to Arrow’s information condition, shareholders traditionally lacked incentives to gather the information necessary to actively participate in decision making.[25] A rational shareholder will expend the effort necessary to make informed decisions only if the expected benefits outweigh the costs of doing so.[26] In light of the length and complexity of corporate disclosure documents, the effort incurred by shareholders in making informed decisions is quite high (as are the opportunity costs).[27] In contrast, the expected benefits of becoming informed are quite low, as most shareholders’ holdings are too small to have significant effect on the vote’s outcome.[28] Accordingly, corporate shareholders are rationally apathetic.[29]
Many commentators argue that the rise of institutional investors radically changes the foregoing analysis, arguing that such investors have greater abilities to gather information and superior incentives to do so vis-à-vis retail investors.[30] There is no doubt that institutional investors—or, more precisely, a subset thereof—have become more active in corporate governance.[31] Yet, many classes of institutional investors remain mostly passive or, at best, followers.[32] In addition, important classes of the most active institutions—most notably government and union pension funds—have strong incentives to pursue private benefits at the expense of other investors.[33] Finally, as discussed below, hedge fund activism increasingly tends to entail micromanagement of decisions they are poorly equipped to make.[34]
In sum, the public corporation succeeded in large part because it provides a hierarchical decision-making structure well suited to the problem of operating a large business enterprise with numerous employees, managers, shareholders, creditors, and other inputs. [35] In such an enterprise, someone must be in charge: “Under conditions of widely dispersed information and the need for speed in decisions, authoritative control at the tactical level is essential for success.”[36] As we have seen, that someone is the board of directors, not the shareholders.[37]
Strong limits on shareholder control are essential if that optimal allocation of decision-making authority is to be protected.[38] This includes both limits on direct shareholder decision making and limits on shareholder oversight of the board, because giving shareholders a power of review differs little from giving them the power to make management decisions in the first place.[39] As Arrow explained:
Clearly, a sufficiently strict and continuous organ of [accountability] can easily amount to a denial of authority. If every decision of A is to be reviewed by B, then all we have really is a shift in the locus of authority from A to B and hence no solution to the original problem. [40]
In principle, Rule 14a-8 contains protections designed to prevent it from being used as a tool for effectuating a shift in the locus of corporate decision making from the board to the shareholders. As the D.C. Circuit explained, the rule’s drafters recognized that “management cannot exercise its specialized talents effectively if corporate investors assert the power to dictate the minutiae of daily business decisions.”[41] Accordingly, the Rule contains several eligibility requirements designed to ensure that shareholder proponents have some minimum amount of skin in the game.[42] In addition, the Rule contains 13 substantive bases for excluding a proposal.[43]
The substantive ground for exclusion most directly relevant for present purposes is Rule 14a-8(i)(7), which permits exclusion of proposals relating to ordinary business operations.[44] This exemption is intended to “to relieve the management of the necessity of including in its proxy material security holder proposals which relate to matters falling within the province of management.”[45] Specifically, Rule 14a-8(i)(7) permits 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.”[46]
Continue reading "The case for pruning the shareholder proposal regime" »
Posted at 04:38 PM in Securities Regulation, Shareholder Activism | Permalink
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I thought about doing a big thought piece on the House passage of the Dodd-Frank reform bill. But what's the point? It'll never get past the inevitable Democratic filibuster in the Senate. For that matter, the Republican moderates in the Senate might suffice to keep it from getting 50 votes, let alone 60.
Posted at 03:32 PM in Wall Street Reform | Permalink
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Bloomberg BNA is another case in point:
The U.S. Supreme Court put sharp new limits on a favorite tool used by securities regulators to recoup money from people found to have violated federal laws ( Kokesh v. SEC, U.S., No. 16-529, opinion 6/5/17).
The justices unanimously said the Securities and Exchange Commission is bound by a five-year statute of limitations when it seeks “disgorgement,” or the return of illegal profits.
For Pete's sake. It's a five YEAR statute of limitations, which BTW remains subject to the usual tolling rules. It scarcely requires the speed of a striking cobra. More like that of a tortoise.
Posted at 03:29 PM in SCOTUS and Con Law, Securities Regulation | Permalink
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There's an important new paper out on the misbegotten birth of the responsible corporate officer doctrine:
This article analyzes the origins of the “responsible corporate officer” doctrine: the trial of Joseph Dotterweich. That doctrine holds that an officer may be personally liable for the criminal act of a subordinate if the officer was, in some indefinite way, able to prevent the violation. Applying this doctrine, the prosecution of Dotterweich entailed strict liability for a strict liability offense. The underlying offenses — the interstate sale of one misbranded and adulterated drug and one misbranded drug — were said to be strict liability offenses. And then, with respect to Dotterweich as the corporation’s general manager, the government argued that he was strictly liable because he stood in “responsible relation” to the company’s acts. The government never tried to prove that the company, Buffalo Pharmacal, was negligent, nor did it try to prove that Dotterweich was negligent in his supervision of the employees of Buffalo Phamacal. The prosecutor and judge were candid about this theory throughout the trial, although the judge conceded that it seemed bizarre and unfair. The defense lawyer repeatedly sought to inject what became known throughout the trial as “the question of good faith,” but was circumvented at almost every turn. What would thus seem to be the crux of any criminal trial — the personal fault of the defendant — was carefully shorn from the jury’s consideration. The government’s theory was so at odds with intuitive notions of liability and blame that as one probes into the case, and looks at the language used in the government’s appellate briefs, imputations of moral fault inevitably creep in. Yet the government was not entitled to make such accusations, as it had pruned moral considerations from the trial.
The article argues that the “responsible corporate officer” doctrine can never enjoy a secure place in our legal system. First, the doctrine is at a minimum in tension with, and often in direct opposition to, basic principles of the criminal law; and second, the doctrine fails, when followed to its logical conclusions, to accord with basic notions of fair play. The article concludes that the responsible corporate officer doctrine is either unnecessary, in cases in which the evidence establishes personal fault, or unjust, in cases in which it creates liability in the absence of personal fault through the unspecified notion of “responsibility.” The Dotterweich case illustrates what is contemplated by the latter possibility, and why it is problematic in any judicial system that purports, in the words of the Model Penal Code, “to safeguard conduct that is without fault from condemnation as criminal.”
Lerner, Craig S., The Trial of Joseph Dotterweich: The Origins of the 'Responsible Corporate Officer' Doctrine (June 6, 2017). Criminal Law and Philosophy, V. 11, 2017 Forthcoming; George Mason Legal Studies Research Paper No. LS 17-09. Available at SSRN: https://ssrn.com/abstract=2981143
Posted at 03:19 PM in Corporate Law | Permalink
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Posted at 07:09 PM in SCOTUS and Con Law, Securities Regulation | Permalink
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Here.
Posted at 10:22 AM in SCOTUS and Con Law, Securities Regulation | Permalink
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Crux reports:
In a decision that has religiously affiliated hospitals cheering, the Supreme Court ruled that federal pension rules don’t apply to them.The 8-0 ruling reverses lower court decisions that sided with hospital workers who argued that the exemption from pension laws should not extend to hospitals affiliated with churches.
Monday’s (June 5) Supreme Court ruling in favor of the hospitals - two with Catholic and one with Lutheran ties - could also affect other religiously affiliated institutions and their employees.
“The Supreme Court got it right,” said Eric Rassbach, deputy general counsel at Becket, a religious liberty law firm that filed a friend-of-the-court brief on behalf of the hospitals.
“Churches - not government bureaucrats and certainly not ambulance chasers - should decide whether hospitals are part of the church. It is simple common sense that nuns, soup kitchens, homeless shelters, seminaries, nursing homes, and orphanages are a core part of the church and not an afterthought.”
This is a key decision, which is going to at least temporarily derail the secularist project. The aggressive secularists have been using a legal strategy intended to minimize the scope of constitutional protections, by denying them to religiously affiliated institutions like hospitals and schools. They want Catholic hospitals to perform abortions and SRS operations, to cite an example. This decision is at least a step in the right direction.
Posted at 05:08 PM in Religion, SCOTUS and Con Law | Permalink
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Theresa Gabaldon notes:
Since 1970, the SEC has successfully sought the remedy of disgorgement from violators of the federal securities laws. In 2015 alone, the amount recovered exceeded $3 billion. Although there have been glimpses in legislation along the way that Congress is aware of the existence of the remedy, it has never been expressly authorized – if it had been, there might have been explicit attention paid to whether it was subject to a statute of limitations.
I think the glimpses to which she refers are probably section 304(a) of the Sarbanes-Oxley Act, whose clawback regime arguably could be characterized as a disgorgement type penalty:
Section 304(a) of SOX establishes that if a publicly traded company restates financials because of material noncompliance with securities laws, the chief executive officer and chief financial officer of that issuer are required to reimburse *352 the issuer for: 1) any bonus, incentive-based, or equity-based compensation received from the issuer during the twelve months following the announcement of the restatement or filing with the SEC; and 2) any profit realized from sales of that issuer's securities during that same twelve-month period. Moreover, section 305(b) authorizes federal courts to grant “any equitable relief that may be appropriate or necessary for the benefit of investors.”
Elaine Buckberg, Frederick C. Dunbar, Disgorgement: Punitive Demands and Remedial Offers, 63 Bus. Law. 347, 351–52 (2008). In addition, "The SEC is authorized to seek disgorgement in administrative proceedings under the Securities Enforcement Remedies and Penny Stock Reform Act of 1990." Id.
She may also be referring to Sarbanes-Oxley § 305(b), which states that “[i]n any action or proceeding brought or instituted by the Commission under any provision of the securities laws, the Commission may seek, and any Federal court may grant, any equitable relief that may be appropriate or necessary for the benefit of investors.” Some folks believe this provision "emboldened the SEC and courts to cite it as statutory authority for ordering disgorgement."
In any case, however, as Professor Gabaldon correctly points out, there has been no general express Congressional approval of the disgorgement sanction.
Instead, the SEC asked and the courts agreed to create the disgorgement penalty by judicial fiat:
The power to effectuate the equitable decree is part of the court's ancillary jurisdiction and exists in all cases absent a specific statutory denial. It is the necessary means to protect the authority of the court by assuring that its decrees are meaningful. To the extent that the remedies requested by the SEC serve specifically to effectuate the terms of the injunction, that is, to prevent future wrongdoing, they are surely well within the ancillary power of the court.
A somewhat broader basis for the exercise of judicial power has emerged in the wake of the successful imposition of the disgorgement-of-profits remedy in SEC v. Texas Gulf Sulphur Co. Initially there was some doubt whether a remedy which was not truly ancillary to the injunction could be imposed in an enforcement action. Thus, in Texas Gulf Sulphur the relief requested was purely compensatory and remedial and could not, in a formal sense, be considered necessary to effectuate the provisions of the injunction, which was directed at the abatement of future wrongdoing. The court there nonetheless refused to read the Act to exclude this remedy. Relying on Supreme Court cases dealing with governmental enforcement in other regulatory areas and the recent decisions under the securities acts clarifying the scope of remedies in favor of private litigants, the court held “that the SEC may seek other than injunctive relief in order to effectuate the purposes of the Act, so long as such relief is remedial relief ....”
Power to impose the disgorgement-of-profits remedy, which is not strictly ancillary to the issuance of an injunction, derives from the general power of the federal courts to fashion federal common law in order to effectuate legislative programs.
Equitable Remedies in Sec Enforcement Actions, 123 U. Pa. L. Rev. 1188, 1189–90 (1975).
This is, of course, the same sort of argument that was used to justify things like the implied private right of actions created by the Warren and Burger era Supreme Courts under the securities laws. As such, it's a like of argument that has long been discredited.
At the same time, however, most authorities regard the issue as well settled. See, e.g., S.E.C. v. Yun, 148 F. Supp. 2d 1287, 1290 (M.D. Fla. 2001) ("As the SEC notes, disgorgement is usually considered rather routine; if a person is found to have violated the securities laws, and profited from the ensuing transaction, courts simply order the disgorgement of those profits."); S.E.C. v. Novus Techs., LLC, No. 2:07-CV-235-TC, 2010 WL 4180550, at *13 (D. Utah Oct. 20, 2010), aff'd sub nom. S.E.C. v. Thompson, 732 F.3d 1151 (10th Cir. 2013) ("It is well settled that the SEC may seek, and courts may order, disgorgement of ill-gotten gains in SEC injunctive actions.").
But then along came Kokesh, in which Justice Sotomayor, writing for a unanimous court, saw fit to observe that:
At oral argument, several Justices had raised that issue, noting the potential for prosecutorial abuse thereby created:
... the justices also expressed concern about the SEC’s ability to abuse the disgorgement remedy by bringing stale claims, especially because that remedy is not expressly authorized or governed by statute.
This matters because the securities laws are creatures of statute. ...
The lack of statutory authorization also raises concerns about due process and fairness, which the court emphasized in Gabelli. Justice Elena Kagan asked the SEC’s attorney whether, in the 50 years that the SEC has sought disgorgement, anyone at the agency had “ever set down in writing what the guidelines are for how the SEC is going to use disgorgement and what’s going to happen to the monies collected?” It had not. Justice Kagan found it “unusual that the SEC has not given some guidance to its enforcement department ... that everything is just sort up to the particular person at the SEC who decides to bring such a case.” That discretion is cause for further concern when disgorgement awards are ordered not by Article III courts but rather by the SEC’s own administrative courts, which themselves have come under constitutional attack.
Picking up on the theme, Chief Justice Roberts noted that the government has argued disgorgement is punitive when it has been advantageous to do so (in the area of tax and bankruptcy) but nonpunitive when it is not (securities enforcement). That inconsistency, coupled with complete discretion to bring disgorgement claims at any time without any internal guidelines, governing statute, or regulatory framework, makes disgorgement ripe for abuse, which is only compounded by the absence of any limitations period.
Kokesh solves the problem posed by the absence of a statute of limitations (by imposing one), but leaves open these other potential concerns.
What I'm not sure is who's pushing this idea.In other words, did it spring from the Sumrepe Court's collective skulls as Athena sprang from Zeus'? Or is somebody out there banging this drum?
Posted at 04:09 PM in Securities Regulation | Permalink
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I will have a WLF Legal Pulse post up soon on the Supreme Court's decision in Kokesh v. SEC. In the meanwhile, I urge to you to take a look at Theresa Gabaldon's thorough analysis of the case at SCOTUSblog. She makes 5 broad points:
First and most obviously, the court’s decision, in an opinion written by Justice Sonia Sotomayor, is going to be an expensive one for the government, which urged the Supreme Court to review the case.
Second, the opinion features one of those portentous footnotes, suggesting that the threshold matter of whether courts should be ordering disgorgement in Securities Exchange Commission enforcement actions at all might be up for grabs.
Third, even without that footnote (number 3, by the way), the court’s reasoning suggests – probably even logically demands – that disgorgement be characterized as a civil monetary penalty (something that previously was different from disgorgement) and thus subject to the schedules of penalties the commission generally is required to follow.
Fourth, the analysis should cause a bit of a stir in insider-trading jurisprudence.
Fifth, the court appears to have said more definitively than ever before that, in the context of government enforcement, deterrence is punitive in nature. The resulting sound bite very well may resonate through the federal law of crime and punishment, and elsewhere.
But go read the whole thing.
Posted at 03:31 PM in SCOTUS and Con Law, Securities Regulation | Permalink
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The Supreme Court has decided Kokesh v. Securities and Exchange Commission. In a unanimous opinion authored by Justice Sotomayor, the Court held that SEC disgorgement actions are subject to the standard 5-year statute of limitations set forth in 28 U. S. C. §2462, which applies to any “action, suit or proceeding for the enforcement of any civil fine, penalty, or forfeiture.”
The Hill played this as the Supreme Court turning loose future waves of Bernie Madoffs on the unsuspecting public:
The Supreme Court issued a ruling Monday that curbs the power of the Securities and Exchange Commission to recoup profits earned in securities fraud. ...
The SEC often uses disgorgement as means of penalizing those alleged of financial crimes beyond a penalty for specific crime. While the SEC could fine a person or business for violating a crime, disgorgement is meant to seize profits earned from the criminal activity.
The agency fielded 868 enforcement actions against investment advisers and companies, lawyers and firms involved in trading and public finance in 2016, scoring more than $4 billion in penalties and disgorgement.
The comments this elicited from The Hill's readers were even less informed and, in.a way, more amusing:
And so on.
In experience, these sort of folks (and I include the reporters here) are largely ineducable, but let's try. The SEC essentially claimed that disgorgement actions were subject to no statute of limitations. In the SEC's view, there was no temporal limit on how far back it could stretch a disgorgement proceeding. As I explained in a blog post before the court ruled, the SEC's view offended the basic policies behind statutes of limitation:
Criminal statutes of limitations are laws that limit the time during which a prosecution can be commenced. These statutes have been in operation for over 350 years and are deeply rooted in the American legal system. There are several rationales underlying statutes of limitations. First, they ensure that prosecutions are based upon reasonably fresh evidence—the idea being that over time memories fade, witnesses die or leave the area, and physical evidence becomes more difficult to obtain, identify or preserve. In short, the possibility of erroneous conviction is minimized when prosecution is prompt.
Civil statutes of limitations such as those at issue in Kokesh are supported by precisely the same principle. Indeed, although the Court did not reach the issue in Gabelli, that earlier decision’s discussion of the importance of repose under statutes of limitations seems directly relevant to the problem at hand. The Court held that statutes of limitation—both criminal and civil—are “vital to the welfare of society.” Gabelli, 133 S. Ct. at 1221 (quoting Wilson v. Garcia, 471 U.S. 261, 271 (1985)).
This is a decision that reflects a longstanding tradition of fairness and due process. But The Hill and its Occupy Wall Street readers seem uninterested in that basic truth.
Posted at 02:04 PM in SCOTUS and Con Law, Securities Regulation | Permalink
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Audited financial statements long have been accompanied by a report from the independent auditor attesting that, in its opinion, the financial statements are presented fairly in all material respects.[1] On June 1, 2017, the PCAOB adopted Auditing Standard 3101, governing the information an independent auditor must include in its report:
The final standard retains the pass/fail opinion of the existing auditor's report but makes significant changes to the existing auditor's report, including the following:
[1] Where the auditor determines that the issuer’s financial statements are not fairly presented in accordance with GAAP, the auditor may issue a qualified opinion, an adverse opinion, or a disclaimer of opinion. Under PCAOB Auditing Standard 3105, a “qualified opinion states that, except for the effects of the matter(s) to which the qualification relates, the financial statements present fairly, in all material respects, the financial position, results of operations, and cash flows of the entity in conformity with generally accepted accounting principles. … An adverse opinion states that the financial statements do not present fairly the financial position, results of operations, or cash flows of the entity in conformity with generally accepted accounting principles. … A disclaimer of opinion states that the auditor does not express an opinion on the financial statements.”
[2] PCAOB Release No. 2017-001 (June 1, 2017).
Posted at 03:13 PM in Securities Regulation, Wall Street Reform | Permalink
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UCLA School of Law has made the following announcement:
William Warren, a former dean of UCLA School of Law who left a lasting imprint on the school and the nation's commercial laws, died on May 30, 2017. He was 92.
UCLA Law grew into its current position as one of the nation's premier law schools during Warren's tenure as its fourth dean, from 1975 to 1982. Those pivotal years were marked by expansion of the school's trailblazing clinical education program, stronger ties to the firms and institutions that hire law school graduates, and a growing reputation as a place where rigorous scholarship, public service and a collegial atmosphere are prized attributes.
People from all corners of the UCLA Law community unanimously recalled Warren as a humble and kind leader, as well as a beloved professor who was one of the nation's leading scholars in bankruptcy and commercial law.
"He was a legend, a real institutional giant, and a truly lovely human being," says Jennifer L. Mnookin, UCLA Law's dean and David G. Price and Dallas P. Price Professor of Law. "The spirit of community he instilled here and the initiatives he set in motion are what make our law school tick today. All that, plus he was an outstanding scholar and teacher. The frequency with which the alumni I meet reminisce about Bill, both as a professor and as dean, is both heartwarming and striking."
Warren, who was also the school's Michael J. Connell Distinguished Professor of Law, embraced faculty, staff and students alike as wise peers, and strove to rid legal education of what he deemed "the old, sadistic, humiliating type of classroom harassment from teachers."
Generations of students responded in kind. Warren was chosen as Professor of the Year by the UCLA Law classes of 1965, 1969, 1971, 1982, 1984, 1986 and 1991. He won the same honor while teaching at the University of Illinois College of Law in 1959 and at Stanford in 1973. Warren also received UCLA Law's Rutter Award for Excellence in Teaching in 1984 and the UCLA Distinguished Teaching Award in 1985.
"His talent as a teacher was unparalleled," says Judge Sandra Ikuta '88 of the U.S. Court of Appeals for the Ninth Circuit. "I still find myself drawing on the fundamentals of bankruptcy law and the law of real estate secured transactions that I learned from him. His teaching talent was matched by his kindness and patience to his students struggling with this complex material."
Longtime law school staff members also recall a "sweet man" who met every colleague on a personal level. "Every time I ran into him in the halls, even after he stopped teaching, he would take the time to stop and chat," says Sean Pine Treacy, assistant dean for curriculum and registration at UCLA Law. "It was clear that Bill cared deeply about the school and the people he worked with."
Warren was born in Mount Vernon, Illinois, and served in the Army Air Force on the island of Saipan in World War II. He attended the University of Illinois on the G.I. Bill and earned his undergraduate degree in 1948. Inspired by Irving Stone's seminal biography Clarence Darrow for the Defense, Warren pursued a law degree at Illinois and graduated in 1950. After several years as a law professor at the Ohio State University, Vanderbilt University and Illinois, he received a J.S.D. from Yale Law School in 1957.
Already an academic of high stature when he joined UCLA Law's faculty two years later, Warren's work, especially with longtime collaborator Robert Jordan, formed the foundation of contemporary commercial law and made UCLA Law the leading center for the study of that field and bankruptcy. He authored numerous influential articles and books, including two definitive casebooks: Commercial Law with Jordan and, later, Steven D. Walt; and Bankruptcy with Jordan and, later, Daniel J. Bussel and David A. Skeel Jr.
Warren, again along with Jordan, was also the drafter of Articles 3, 4 and 4A of the Uniform Commercial Code, statutes that continue to govern payments law across the country.
"The system works," says UCLA Law professor Bussel, who took over lead authorship of the Bankruptcy casebook after his mentor retired. "Every day, billions and billions of dollars are transferred through the system, and Bill created the legal architecture pursuant to which those transactions are effectuated.
"I feel special because of my relationship with him, but I wasn't special," Bussel continues. "There were so many people who benefited from his mentorship. He was a role model for everybody on the faculty."
Warren left to join Stanford's law faculty in 1972, but he returned to UCLA Law to accept the position of dean in 1975. In 1994, UCLA Law established the William D. Warren Chair in Law in his honor, and his many other accolades included a lifetime achievement award from the State Bar of California in 2000.
"He was a man of immense accomplishments who justifiably could have acted like the cock of the walk, but he was far too much the gentleman to ever be anything but gracious and kind," says Stephen Bainbridge, the William D. Warren Distinguished Professor of Law at UCLA Law. "He was a font of good advice and a role model for how to conduct oneself both at work and in life."
Colleagues recall Warren as a jogger, avid reader and classical music enthusiast who continued to join his former coworkers at simulcast Metropolitan Opera performances well into retirement.
Jonathan Varat, dean emeritus and professor of law emeritus at UCLA Law, recalls Warren's dry wit. "When we faculty attributed too much of our students' success to ourselves and our teaching, Bill would always say, 'We're in the business of making silk purses out of silk purses.' He had a strong sense of our very privileged position, teaching extremely bright people."
Warren is survived by his wife, Sue; sister, Shirley; children Dr. John Warren (Dr. Silvana Volpe) and Sarah Warren; two grandchildren and two great-grandchildren. The family requests that any donations in Warren's honor be directed to UCLA School of Law.
In a lengthy interview in 2000, Warren reflected on his career, the school's achievements and aspirations, and the ups and downs of teaching and being an administrator. "I've been a very fortunate person," he said. "Unlike nearly everyone else I know, I've spent my life doing exactly what I always hoped to do."
Posted at 02:39 PM in Law School | Permalink
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