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Roman Catholicism, Religious Assent, and Private Reason: The Case of the Gospel of Life

Longtime regular readers have probably figured out that I am pro-life. Over on Facebook, I posted something expressing a certain amount of dissatisfaction with Chief Justice Roberts' recent decision in June Medical Services v. Russo, the SCOTUS's latest pronouncement on abortion.

This prompted a friend to post the following reply:

Putting abortion to one side for a moment, do you favor things that would reduce the number of unwanted pregnancies? And what exactly? Do you favor free or subsidized contraception? Sex education broadly available to kids? Free or subsidized health care for pregnant moms, and free or subsidized help for young families? More adoptions? Put simply, while we all struggle to find agreement on abortion, are there other things we can do to collectively address your heartfelt objections? I do not agree with you, but I do not want to ignore your heartfelt view. What other policies can I support that you would view as helping here?

These are great questions, fairly asked, and deserve a fair answer. Such an answer, of course, requires more room than the usual Facebook reply. Hence, this blog post.

At least insofar as the question about contraception is concerned, I would respectfully suggest that its phrasing is problematic. I am, as you know, a Roman Catholic who tries (but all too often fails) to adhere to the faith. A core tenet of Roman Catholicism is the doctrine of religious assent:

Divine assistance is also given to the successors of the apostles, teaching in communion with the successor of Peter, and, in a particular way, to the bishop of Rome, pastor of the whole Church, when, without arriving at an infallible definition and without pronouncing in a "definitive manner," they propose in the exercise of the ordinary Magisterium a teaching that leads to better understanding of Revelation in matters of faith and morals. To this ordinary teaching the faithful "are to adhere to it with religious assent"which, though distinct from the assent of faith, is nonetheless an extension of it. (Catechism § 892.)

In his encyclical Evangelium Vitae, Saint Pope John Paul II affirmed that "direct abortion ... always constitutes a grave moral disorder." He specifically stated that this teaching is part of "the Church's Tradition and taught by the ordinary and universal Magisterium." (§ 62) In addition, JPII confirmed that "despite their differences of nature and moral gravity, contraception and abortion are often closely connected, as fruits of the same tree." (§ 13) In so doing, he disappointed those who hoped he would overturn or at least modify the ban on contraception set out in Pope Paul VI's encyclical Humanae Vitae (§ 14).

Although neither encyclical possesses the degree of infallibility Vatican I attributed to papal definitions, both possess the infallibility which Vatican II attributed to the teaching of the "ordinary and universal magisterium." (See Sullivan). As such, both command religious assent.

So what does that mean? The Dogmatic Constitution on the Church (Lumen Gentium) teaches that religious assent requires we acknowledge the teachings "with reverence" and "sincerely" adhere thereto. Despite the arguments of some Cafeteria Catholics I can't see any way around my obligation to adhere to the Church's position on contraception.

By the way, let me touch on an issue that often comes up at this point. Some critics of the doctrine of religious assent, especially as applied to issues involving the Gospel of Life, contend that it treats Catholics as unthinking automatons marching to the dictates of the Church hierarchy. The relationship between individual reason and religious assent is extremely complex. It is worth pointing out, however, that the church encourages lay initiative “especially when the matter involves discovering or inventing the means for permeating social, political, and economic realities with the demands of Christian doctrine and life.” (Catechism § 899) The Church also acknowledges that:

In the work of teaching and applying Christian morality, the Church needs the dedication of pastors, the knowledge of theologians, and the contribution of all Christians and men of good will. Faith and the practice of the Gospel provide each person with an experience of life "in Christ," who enlightens him and makes him able to evaluate the divine and human realities according to the Spirit of God.Thus the Holy Spirit can use the humblest to enlighten the learned and those in the highest positions. (Catechism § 2038) 

Hence, it is the task of Catholic intellectuals to exercise critical reflective judgment with respect to society, the Church, and the relationship between the two. An an active and critical role for the laity seems especially important with respect to economic life, as to which JPII emphasized that “church has no models to present." (Centesimus Annus § 43) I note in passing that this is why my scholarship is increasingly focused on using Catholic social teaching to critique corporate law.

But I digress.

As for my friend's other proposals, they all strike me as reasonable and desirable. The Gospel of Life teaches that we have to respect life from its beginning at conception to its end at natural death. Hence, my problem with the American political duopoly is that too many Republicans appear to care about life only until birth and that too many Democrats appear to only care about life after birth. In contrast, a polity founded on Catholic social thought would recognize that the "starting point for a correct and constructive relationship between the family and society is the recognition of the subjectivity and the social priority of the family. Their intimate relationship requires that 'society should never fail in its fundamental task of respecting and fostering the family.'" (Compendium § 252)

Accordingly, I am in substantial agreement with the platform of the American Solidarity Party:

• Federal and state governments must enact constitutional and legal measures establishing the right to life from conception until natural death. These measures specifically include a constitutional amendment clarifying that there is no right to abortion, as well as laws that prohibit or restrict abortion. Because human life begins at conception, the intentional destruction of human embryos in any context must end.
• Federal, state, and local governments must end taxpayer funding of organizations that provide, promote, or facilitate abortions, and of health-care plans that include abortion coverage. Such funding should be redirected to organizations that promote healthy pregnancies and prenatal care.
• Federal and state governments must end capital punishment in light of its disproportionate use against those with fewer legal resources, the impossibility of reversal, and the existence of alternative ways to ensure protection for the rest of society.
• We support efforts to help prevent the tragedy of suicide, including universal access to affordable mental-health care and the destigmatization of mental illness. Assisted suicide and euthanasia are a violation of disability rights, medical ethics, and human dignity, and must be prohibited in every state.
• Federal and state governments should collaborate to guarantee universal healthcare by diverse means, including single-payer initiatives, direct subsidization of provider networks, subsidized education for medical professionals willing to work in rural areas, support for cost-sharing programs and mutual aid societies, home care grants, simplified regulation, and the easing of restrictions on the importation of prescription drugs.
• Health policy must include protections for those with preexisting, chronic, and terminal conditions. We must include those who have no means to save for an emergency, people at every stage of life from prenatal care to hospice care, and people who find themselves in need of medical assistance while away from their home network.

Does that answer the question?

Brainstorming re Remote Teaching

On the assumption that some or all of my teaching will be done remotely in the fall 2020 semester, I've been thinking about how to do it better. Here's some preliminary thoughts and some questions for further reflection. Feedback from recent or current law students especially welcome. (Note that I sent the bulk of this post by email to the students I taught remotely in Advanced Corporation Law last spring and to the students who I taught in person last fall in Mergers & Acquisitions. I figure the former can tell me what needs improvement from a pedagogic style perspective and the latter can anticipate how to adapt that course to the remote setting. After all, why not go to the proverbial horses' mouth?)

Preliminary Notes

• I teach exclusively using lecture. A comprehensive PowerPoint presentation accompanies each lecture, although the text on the slides is a pretty bare-bones outline.
• My remote learning base is my home office, which is equipped with a Mac with built-in camera and microphone. Any software or hardware must be Mac-compatible.
• I am familiar with using Zoom to share my desktop so that students can see me, the PowerPoint presentation, the Zoom chat room, and perhaps one other open window at a time.
• My students uniformly turn off their video and mute their audio, so I cannot see their faces and can only hear them when they unmute to ask a question.
• I will lay down a set of class rules about issues like muting microphones, raising one’s hand, and so on at the start of the semester with periodic reminders.

Questions

• Attendance during the remote learning in the spring 2020 semester was low; about 50%. While part of that may have been attributable to various pandemic-related factors, it is also possible that some students—knowing the sessions were recorded and posted to the law school intraweb—may have decided to view the lectures asynchronously.
• Is that cause for concern?
• Do I need to do anything to make sure the lectures are accessible for students with hearing or visual difficulties?
• One common suggestion I have seen for enlivening remote learning lectures is to have a second speaker break in for a short presentation.
• Would colleagues be willing to do that?
• Good idea?

Learning Goals

• The lighting in my office is very unsatisfactory.
  • Find someone knowledgeable to assess and recommend lighting, camera, and microphone setups.
• Are there alternatives to Zoom?
• Find out if it is possible to connect an iPad to the Mac to use as a whiteboard.
  • If not, is there a pen-based alternative whiteboard application/technology?
• There is data suggesting that the typical college student’s attention span in class is about ten minutes. I recall seeing data—but cannot now find it—suggesting that the typical attention span of university students in remote learning is about 7 minutes.
  • Note that part of the popularity of TED talks may be the 18 minute limit, which ensures they do not tax the participants’ attention span.
  • Find ways of breaking remote lectures into segments of no more than 10 minutes, with some alternative activity in the breaks.
• I have wanted for some time to include some sort of student feedback during a lecture. (I have planned for years to learn how to use clickers in our classrooms and am ashamed to admit I have let it slide.) Pop ungraded quizzes might be a good way of checking student comprehension and also a segment break activity.
  • Having some sort of feedback is especially important because one cannot see the students’ faces and thus cannot assess their attention level.
  • Learn how to use Zoom’s poll function.
    • Can Zoom’s poll function be incorporated into a PowerPoint presentation?
  • Find out if there are alternatives to Zoom’s poll function that might be a superior way of having students “answer” questions.
  • One possibility I am considering is assigning a few students ahead of each class to each give a 5-minute presentation on a topic relevant to the lecture that day.
• How to deal with students learning asynchronously?
• PowerPoint presentations tend to be static.
  • Find out if there is software available that could be used to create animations (easily) and then embed them in a PowerPoint deck (easily)?
  • If so, learn how to use it.

• In my fall class (Mergers & Acquisitions), there is a great deal of attention paid to looking at specific Word documents (such as merger contracts) and parsing them.
• Is there a better way of showing them than Word or a PDF viewer?
• If so, learn how to use it.
• Some websites recommend building in time pre-class for social chatter and community building.
• Our schedule does not currently contemplate allowing that.

A very cautious return to Twitter

I gave up Twitter back in April after a stupid and insensitive tweet gave offense to a large number of our students. At that point, I intended it to be permanent. 

I am VERY CAUTIOUSLY dipping my toe back into Twitter (I used to be @ProfBainbridge). I expect to use Twitter very differently this time. It will mainly serve as a feed for my blog posts. These days it's hard to publicize blogs without using social media and, frankly, my blog visitor stats have dropped very considerably since I left Twitter. One does hope to attract an audience, after all. Or, as Bertie Wooster put it in The Code of the Woosters, "I mean, while one lives for one's Art, so to speak, and cares little for the public's praise or blame and all that sort of thing, one can always do with something to paste into one's scrap-book, can one not?"

 

I'll probably also use it to communicate with web friends, do some evangelizing, and a little occasional self-promotion (I recognize the incongruity of the last two uses).

 

You can follow me at @PrawfBainbridge

 

Mainly, I intend to be as noncontroversial as possible. I do not with to break faith with the students I offended with my past tweets. And I am very aware that my previous participation in Twitter impeded my ability to educate and to act as a witness for Christ. It is my hope and intent not to let that happen again.

VC Laster's Dell Decision Gives a Very Director Primacy Spin on MFW

In his recent opinion in In re Dell Techs. Inc. Class V Stockholders Litig., 2020 WL 3096748 (Del. Ch. June 11, 2020), Vice Chancellor Laster gave a very board-centric spin on the MFW rule. Tyler O'Connell's Morris James blog post explains:

The Delaware Supreme Court’s MFW decision provides a safe harbor for controlling stockholder buyouts that are conditioned upon approval of a special committee of independent directors and a majority-of-the-minority vote, provided, inter alia, “there is no coercion of the minority.” Kahn v. M & F Worldwide Corp. (MFW), 88 A.3d 635, 645 (Del. 2014). The Court of Chancery’s recent decision in In re Dell Tech. Inc. Class V. S’holders Litig., 2020 WL 3096748 (Del. Ch. Jun. 11, 2020), held that a redemption of minority stockholders’ shares failed to satisfy MFW due to the company’s decisions to give the special committee an impermissibly narrow mandate and then bypass it to negotiate directly with minority stockholders. 

The Vice Chancellor didn't cite my work on director primacy, but the opinion is very much in the spirit of director primacy:

MFW’s dual protections contemplate that the Special Committee will act as the bargaining agent for the minority stockholders, with the minority stockholders rendering an up-or-down verdict on the committee’s work. Those roles are complements, not substitutes. A set of motivated stockholder volunteers cannot take over for the committee and serve both roles.

The MFW framework contemplates that the special committee will act as “an independent negotiating agent whose work is subject to stockholder approval.” Flood, 195 A.3d at 767. Through the involvement of the special committee, the MFW framework ensures that there are “independent, empowered negotiating agents to bargain for the best price and say no if the agents believe the deal is not advisable for any proper reason ....” MFW, 88 A.3d at 644 (internal quotation marks and emphasis omitted). Like a board of directors in an arm’s-length transaction, the committee has superior access to internal sources of information, can deploy it’s the Board’s statutory authority under Section 141(a) as delegated to the committee under Section 141(c), and can “act as an expert bargaining agent.” In re Cox Commc’ns, Inc. S’holders Litig., 879 A.2d 604, 618 (Del. Ch. 2005); see 8 Del. C. § 141(c). Like a board of directors, the committee “does not suffer from the collective action problem of disaggregated stockholders” and is therefore well positioned “to get the last nickel.” Id. at 619; see also In re Pure Res., Inc. S’holders Litig., 808 A.2d 421, 441 (Del. Ch. 2002) (“Delaware law has seen directors as well-positioned to understand the value of the target company, to compensate for the disaggregated nature of stockholders by acting as a negotiating and auctioning proxy for them, and as a bulwark against structural coercion.”).

He then described the shareholders' role in the MFW framework as being "more limited":

They have “the critical ability to determine for themselves whether to accept any deal that their negotiating agents recommend to them.” MFW, 88 A.3d at 644 (internal quotation marks omitted). But “the ability of disaggregated stockholders to reject by a binary up or down vote obviously ‘unfair’ deals does not translate to their ability to do what an effective special committee can do, which is to negotiate effectively and strike a bargain much higher in the range of fairness.” Cox Commc’ns, 879 A.2d at 619.

Laster's interpretation of the relative board and shareholder roles is consistent with the approach I outlined in The Geography of Revlon-Land, 81 Fordham L. Rev. 3277 (2013):

In their efforts to decide who decides, the Delaware courts have grappled with the limits of a target corporation's board of directors' power to act as a gatekeeper in corporate acquisitions. In other words, to what extent can the target's board of directors prevent the target's shareholders from deciding whether the company should be acquired?

In a merger, two corporations combine to form a single entity. In an asset sale, the selling corporation transfers all or substantially all of its assets to the buyer. In both transactions, approval by the target board of directors is an essential precondition.

In both major forms of statutory acquisitions, the board thus has a gatekeeping function. Shareholders have no power to initiate either a merger or asset sale, because the statute makes board approval a condition precedent to the shareholder vote. If the board rejects a merger proposal, the shareholders thus have no right to review that decision. Instead, the shareholder role is purely reactive, coming into play only once the board approves a merger proposal.

The board also has sole power to negotiate the terms on which the merger will take place and to enter a definitive merger agreement embodying its decisions. Shareholders have no statutory right to amend or veto specific provisions, their role typically being limited to approving or disapproving the merger agreement as a whole . . . .

If the board disapproves of a prospective acquisition, the would-be acquirer therefore must resort to one of the nonstatutory acquisition devices. The proxy contest, share purchase, and tender offer all allow the bidder to bypass the target board and make an offer directly to the target's shareholders. Since the 1960s, the tender offer has been the most important and powerful of these tools. Almost as soon as the hostile tender offer emerged as a viable acquirer tactic, however, lawyers and investment bankers working for target boards began to develop defensive tactics designed to impede such offers. If validated by the courts, these takeover defenses promised to reassert the board's primacy by extending its gatekeeping function to the nonstatutory acquisition setting.

Consider the poison pill, for example, which has been called the “de rigeur tool of a board responding to a third-party tender offer.” … Proponents of pills contend that these plans thus do not deter takeover bids, but rather simply give the target board leverage to negotiate the best possible deal for their shareholders or to find a competing bid. In any case, it is clear that “the poison pill has made the board the ‘gatekeeper’ instead of the shareholders.” As a result, target boards have been empowered to play an active--and often determinative--role in the very class of transactions originally designed to bypass them entirely.

California budget deal offers bad news for state employees and higher education

UCLA Faculty Association:

LOSERS

State workers

The budget would save about $3.6 billion per year by cutting state workers’ pay by roughly 10 percent and canceling the raises many are scheduled to receive in July. The deal gives Newsom the authority to impose two furlough days per month if pay-cut deals can’t be reached with unions that haven’t yet negotiated with the state.

Universities

California’s university systems will each lose about half a billion from their budgets under the deal announced Monday. The budget cuts $470 million from the University of California and $500 million from California State University, although that funding could be restored if the federal government provides more aid money. Some programs and departments, however, will get money originally included in Newsom’s January budget proposal, including $25 million for UC Riverside School of Medicine and $5 million for the UC Davis Grant Program for Animal Shelters.

Berkeley and Harvard law schools to be on-line Fall 2020

UCLA Faculty Association:

The University of California, Berkeley School of Law will remain fully online for the fall semester. Dean Erwin Chemerinsky informed students by email Friday of the decision, which he wrote was made with “great reflection and study.” That makes Berkeley the second law school to unveil plans to stay remote amid the COVID-19 pandemic. Harvard Law School made a similar announcement June 3.

I'm not sure whether UCLAW has publicly announced its plans for the 2020-21 academic year, soI shall remain mum. I will note that the campus as a whole plans on a hybrid approach:

UCLA anticipates that 15% to 20% of courses will be offered on site or in an on-site and remote hybrid format. ...

Recommended infection-control procedures will be in place on campus, including physical distancing, de-densifying classrooms and other spaces, frequent cleaning of classrooms and facilities, and the wearing of face coverings while on campus, consistent with guidance from the Los Angeles County Department of Public Health. In addition, daily symptom checks will be required for everyone coming to campus or living in campus housing. Testing and contact tracing protocols for COVID-19 will also be in place.

Caleb Griffin on ESG Voting by the Big Three

Back in April, I noted a very useful paper by Caleb Griffin on ESG voting trends by Blackrock, Vanguard, and State Street. 

Professor Griffin has now posted a very useful and concise summary of his findings and conclusion at the CLS bog. I recommend it.

One of his findings strikes me as particularly troubling:

An analysis of the Big Three’s ownership and voting control over Fortune 250 companies reveals that they have the power to determine the outcome of as many as 49.1 percent of environmental proposals, that Vanguard and BlackRock combined (the “Big Two”) have sufficient voting control to determine the outcome of up to 35.1 percent of such proposals, and that Vanguard alone has sufficient voting control to determine the outcome of up to 15.8 percent of such proposals.

What doubles me about that finding is the power it shows the big three increasingly wield as the dominant investors of our time. Bigness by itself is not a crime, but Leviathans can wreak vast harm even unintentionally. It's past time for the SEC and the antitrust regulators to take a serious look at the big three.

The Supreme Court tames but does not end disgorgement in SEC cases: Liu v. SEC

By an 8-1 vote (with Justice Thomas dissenting), the Supreme Court in an opinion by Justice Sotomayor upheld--while limiting--the SEC's power to seek disgorgement in fraud cases. (For prior coverage see this post.)

Sotomayor sets the stage as follows:

In civil actions, the SEC can seek civil penalties and “equitable relief.” See, e.g., §78u(d)(5) (“In any action or proceeding brought or instituted by the Commission under any provision of the securities laws, . . . any Federal court may grant . . . any equitable relief that may be appropriate or necessary for the benefit of investors”); see also §78u(d)(3) (“Money penalties in civil actions” (quotation modified)).

Congress did not define what falls under the umbrella of “equitable relief.” Thus, courts have had to consider which remedies the SEC may impose as part of its §78u(d)(5) powers.

Starting with SEC v. Texas Gulf Sulphur Co., 446 F. 2d 1301 (CA2 1971), courts determined that the SEC had authority to obtain what it called “restitution,” and what in substance amounted to “profits” that “merely depriv[e]” a defendant of “the gains of . . . wrongful conduct.” Id., at 1307–1308. Over the years, the SEC has continued to request this remedy, later referred to as “disgorgement,” and courts have continued to award it. ...

In Kokesh, this Court determined that disgorgement constituted a “penalty” for the purposes of 28 U. S. C. §2462, which establishes a 5-year statute of limitations for “an action, suit or proceeding for the enforcement of any civil fine, penalty, or forfeiture.”  ... But the Court did not address whether a §2462 penalty can nevertheless qualify as “equitable relief ” under §78u(d)(5), given that equity never “lends its aid to enforce a forfeiture or penalty.” Marshall v. Vicksburg, 15 Wall. 146, 149 (1873). The Court cautioned, moreover, that its decision should not be interpreted “as an opinion on whether courts possess authority to order disgorgement in SEC enforcement proceedings.” Kokesh, 581 U. S., at ___, n. 3 (slip op., at 5, n. 3). This question is now squarely before the Court.

Sotomayor began her analysis by explaining that:

In interpreting statutes like §78u(d)(5) that provide for “equitable relief,” this Court an- alyzes whether a particular remedy falls into “those categories of relief that were typically available in equity.”

She then goes on to claim that various remedies available at equity resembled disgorgement. The problem with that argument, of course, is that the SCOTUS in Kokesh itself had acknowledged that disgorgement is a relatively new penalty that was created by judicial fiat at SEC’s behest:

Initially, the only statutory remedy available to the SEC in an enforcement action was an injunction barring future violations of securities laws. … In the absence of statutory authorization for monetary remedies, the Commission urged courts to order disgorgement as an exercise of their “inherent equity power to grant relief ancillary to an injunction.”

Sotomayor later argues that:

In Tull v. United States, 481 U. S. 412 (1987), the Court described “disgorgement of improper profits” as “traditionally considered an equitable remedy.”

But so what? As I explained in my article Kokesh Footnote 3 Notwithstanding: The Future of the Disgorgement Penalty in SEC Cases:

There is general agreement that the penalty phase of Texas Gulf Sulphur was the first time a court determined that the SEC had authority to seek disgorgement of a defendant’s ill-gotten gains.

As I further explained in that article, "all of the Court’s arguments about the nature of disgorgement apply with equal force to the issue of SEC authority and judicial power as they do to that of statutes of limitation. Disgorgement as practiced in SEC proceedings acts as a punitive sanction intended to deter, regardless of whether we are considering applicable statutes of limitation or the authority and power issues."

Sotomayor tried to avoid this problem by equating disgorgement with various equitable remedies that did exist in 1789. She compared it to an accounting, for example. But the analogy does not hold water. Accounting was a remedy only available against persons who has breached a fiduciary duty and cannot be ordered against a mere wrongdoer.

She also equated disgorgement to restitution. Yet, again, the analogy is flawed. Restitution is a generic term that can be characterized as legal or equitable depending on the nature of the claim and the relief being sought. As a result, as Francesco A. DeLuca has commented, "the analogy to ‘restitution’ is circular and unhelpful.”

In sum, I find Sotomayor's argument utterly unpersuasive.

Having erroneously preserved disgorgement, she did at least try taming it.

1. Because the statute authorizing the SEC to pursue equitable remedies requires any remedy be “appropriate or necessary for the benefit of investors,” and the equitable nature of the profits remedy generally requires the SEC to return a defendant’s gains to wronged investors. Accordingly, without so deciding, she cast doubt on whether disgorgement orders requiring that the defendant pay sums over to the US Treasury are valid. Disgorgement “must do more than simply benefit the public at large by virtue of depriving a wrongdoer of ill-gotten gains,” she wrote.
2. Courts must deduct legitimate expenses before awarding disgorgement.

For discussion of Liu, see Ronald Mann's analysis at SCOTUSblog. As he explains:

Two threads dominate her reasoning. One is that the remedy must be “tethered to a wrongdoer’s net unlawful profits,” ensuring that the wrongdoer “should not be punished by” (in the words of another 19th century opinion) “‘pay[ing] more than a fair compensation to the person wronged.’” The second is the “‘protean character’ of the profits-recovery remedy,’” which the court has sometimes compared to restitution and at other times to an accounting for profits. In her view, though, even if the label of disgorgement is relatively new, the body of authority establishes that “equity courts habitually [have] awarded profits-based remedies” as a matter of general first principles of equity.

He also points out that:

The closing section of the opinion points out that the SEC’s pursuit of disgorgement in general, and arguably in this case, has transgressed each of [the limits she imposes in this opinion]. Sotomayor notes that the SEC “does not always return the entirety of disgorgement proceeds to investors, instead depositing a portion of its collections in a fund in the Treasury.” ...

Similarly, the opinion criticizes the SEC’s common imposition of “joint-and-several liability” in disgorgement cases, which Sotomayor finds to be “at odds with the common-law rule requiring individual liability for wrongful profits” because it “could transform any equitable profits-focused remedy into a penalty.” ...

Finally, Sotomayor flatly rejects the practice (followed by the lower court here) of ordering disgorgement of all revenues, explaining that “courts must deduct legitimate expenses before ordering disgorgement.”

First Experiment with our new KettlePizza for the Gas Grill

Since our no delivery of restaurant food policy has been in effect, the only pizza we've had has been a couple of Chicago-style frozen pizzas. Rather than breaking policy, I opted to buy something I've wanted for a longtime; namely, the KettlePizza oven. It's primary purpose is making pizza, of course, but when coupled with a smoker tube it should make a decent substitute for a wood-fired oven.

We made our first pizzas last night. Mushroom and onion for Helen and pepperoni for me. They turned out pretty well for a first try. I gave them a B- for results and a B+ for effort. Helen gave them B+ for both.

We learned several things. First, you definitely need to put something on the peel to make it easier to shake the pizza off the peel and onto the stone. Second, don't use cornmeal. Some of it gets on the stone or falls through the grill onto the heating elements. In either case, it burns and generates some nasty smoke. Use Wondra flour instead. Third, use mozzarella slices instead of pearls. The round pearls don't stay put when you're shaking the pizza off the peel.

We agreed that we'd need many more trials before we'd do it for company. But as a proof of concept, I thought it was a success.

BTW, we drank a 2017 Pio Cesare Barbera d'Alba. Big for a Barbera, but that seems to be the trend these days. Blackberry. Plum. Medium bodied. Plenty of acid. Good structure. Nice match. If I had it to do over again, I probably would have double decanted the wine so as to promote aeration. Grade: B+

Judicial Watch has Standing to Bring Suit Against the California Board of Director Gender Quota Law

Keith Paul Bishop reports:

Last August, I reported on the filing of a taxpayer challenge to California's Board Gender Quota Law.  Crest v. Padilla, Cal. Super. Ct. Case No. 19STCV27561.  California's Secretary of State, Alex Padilla, was named as the defendant in his official capacity.  The plaintiffs allege that the law (SB 826) violates Articles 7 and 31 of the California Constitution.  In October of last year, Secretary Padilla filed a demurrer to the suit, arguing that the plaintiffs lack standing and that the action is not ripe.  Last week, Superior Court Judge Maureen Duffy-Lewis overruled the Secretary of State's demurrer ....

The Secretary of State, who is represented by the Attorney General, will be required to answer the complaint and we may all eventually get an answer to the question of the law's constitutionality.

Regular readers will recall that I have argued that the internal affairs doctrine has constitutional status and that the California statute is an unconstitutional violation thereof.

Padfield on "the Omnipresent Specter of Political Bias" in Corporate Decision-Making

Stefan Padfield has posted to SSRN a very interesting new paper Corporate Governance and the Omnipresent Specter of Political Bias: The Duty to Calculate ROI:

Abstract Corporate decision-makers are duty-bound to maximize shareholder value. However, there is reason to believe corporate decision-makers are allowing their political biases to corrupt their decision-making. This essay posits two related fact patterns that should concern advocates of good corporate governance. The first occurs when decision-makers expressly disavow any duty to maximize shareholder value, such as when Apple CEO Tim Cook told shareholders, “When we work on making our devices accessible by the blind, I don’t consider the bloody ROI [return on investment],” or when Ed Stack, the chairman and chief executive of Dick’s Sporting Goods, decided that Dick’s should “take a stand” on gun violence by foregoing the sale of assault-style weapons, and said in connection therewith, “I don’t really care what the financial implication is.” This type of situation arguably breaches at least the duties of care and good faith without any change to current law. Importantly, breach of the duty of good faith may not be immunized by the seemingly ubiquitous contractual waivers of the duty of care. The second relevant fact pattern occurs when a decision-maker does not expressly disavow shareholder wealth maximization, but rather points to other arguably political goals as the basis for the decision, and is silent as to the impact on shareholder value. For example, when Gillette launched its advertising campaign challenging “toxic masculinity,” it publicly justified the decision not on the basis of an expectation of increasing sales, but rather on the grounds that it wanted to spark "a lot of passionate dialogue" and get people "to stop and think about what it means to be our best selves." In order to address the corrupting influence of political bias to the extent it is manifest in this latter type of conduct, a change in the law may be required. This Essay argues that a ready blueprint for such a change already exists in the response of the Delaware judiciary to the omnipresent specter of directorial self-interest in the context of anti-takeover defenses. Specifically, cases like Unocal Corp. v. Mesa Petroleum Co. apply enhanced judicial scrutiny in such cases before granting decision-makers the benefit of the deferential business judgment rule. Finally, this Essay addresses criticisms of the proposed approach, including the view that the challenged proclamations should be treated as mere puffery or are perhaps even necessary to maximize shareholder value.

Padfield, Stefan J., Corporate Governance and the Omnipresent Specter of Political Bias: The Duty to Calculate ROI (June 9, 2020). Marquette Law Review, Forthcoming. Available at SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3623407 

Tweaking Hello Fresh's Bavette Steak & Sherry Shallot Sauce

Helen and I use Home Chef and Hello Fresh for dinners Monday through Thursday. At first, we stuck pretty faithfully to the provided recipes. Increasingly, however, we do tweaks. Last night's "Bavette Steak" is a case in point.

"Sirloin bavette' is a fancy name Hello Fresh and other purveyors use for a cut that comes from the Bottom Sirloin Butt. It's often compared to flank steak, but lacks flank steak's flavor and texture.

Previous experiences with pan searing Hello Fresh's sirloin bavette, as they usually recommend, had resulted in tough and chewy steaks. So I decided to toss out the recipe and try a different approach. I began by whacking the heck out of the steak with my Jaccard 48-blade meat tenderizer.

I then marinated the steaks for 4 hours in some balsamic vinegar salad dressing I had in the refrigerator. 

After the steaks marinated, I transferred them to a plate and patted them dry with paper towels. Next I seasoned both sides of each with salt and pepper. I then bagged and vacuum sealed them using my Weston vacuum sealer. Then they went into a sous vide bath powered by my Joule set at 131° for two hours.

After the steaks came out of their bags I again dried them thoroughly with paper towels. I then seared them in a 10-inch skillet. I set the steaks aside to rest while I made a pan sauce per the recipe directions. Meanwhile, the recipe had called for roasted potato rounds, but I made mashed potatoes instead.

The steaks turned out great. They were so tender you didn't even need a knife and they had a ton of flavor.

We drank a 2016 Jayson Cabernet Sauvignon (Napa Valley). It was very young, but as I get older I'm liking my wines younger. Deep dark purple-ruby color. Good bouquet of blackberry and black cherry. Ditto the palate. Will improve. Consider double decanting to aerate it in the meanwhile. Grade: A-

 

With application to the current debate over Confederate memorials

 

In re naming stuff after Confederate generals:

Posted by Stephen Bainbridge on Thursday, June 11, 2020

Was Paul Koppell a good agent but bad citizen? Guest Post from McDonnell and Hill

I recently read a really interesting paper by Brett McDonnell, Claire Hill, and Aaron Stentz. It struck a particular cord because I had just watched a rerun of the Law & Order episode House Counsel, in which the great Ron Liebman plays a mob lawyer who crosses the line from zealous representation to participation. I queried Brett about whether their paper spoke to the episode and, in light of that discussion, I invited Brett and Claire to do a guest post about their article. It follows:

Professor Bainbridge has very kindly asked us to post about our new article, Bad Agent, Good Citizen? Law and economics have related but distinct concepts of “agent.”  In economics, when someone acts as an agent, she must act for the benefit of her principal, not for her own or another’s benefit.  In law, this is also so – except that there is an override when an agent is acting for the benefit of her principal, but is helping the principal break the law. For instance, a law-breaking board breaches its fiduciary duties to the corporation even where the law-breaking benefited the corporation.  

But what about cases where action may help the principal but hurt society without breaking the law? Our paper considers four possible cases: good agent/good citizen, good agent/bad citizen, bad agent/good citizen and bad agent/bad citizen.  The first and the last are not that interesting analytically.

Our interest lies in the other two categories. The good agent/bad citizen lawyer might help Greece design financial instruments that would conceal the extent of its debt. The bad agent/good citizen might exaggerate possible perils to the client of environmental non-compliance in order to get the client to comply more maximally as per the lawyer’s own preferences. 

In the less interesting cases, we know where we stand, both from a legal point of view, and from an economics point of view.  The mixed cases are murkier, with law introducing a tension, and another party in interest, into the agency relationship—something we conclude we favor, and suggest ways to promote. That is, legal ethics should leave some (though limited) space for lawyers to act as better citizens at the cost of being less good agents.

While the context for our paper was a symposium on corporate law, Professor Bainbridge asked us how it applies to criminal law, drawing our attention to an episode of Law and Order, House Counsel.  The lawyer aggressively uses procedural devices to shield his crime boss client from being held criminally liable.   Eventually, the DA is able to counter those devices, and indeed, obtain a conviction of the lawyer himself, who has crossed the line and participated in heinous crimes in furtherance of his client’s crimes. At that point, the lawyer was clearly a bad citizen, but also a bad agent in the legal sense, since legal ethics forbids helping clients break the law. (The lawyer was, though, a good agent in the economic sense.)

But what of a typical representation, where a lawyer defends a crime boss against allegations based on the client’s (past) behavior? We will assume, to make it a harder case than the one in House Counsel, that a lawyer suspects the client may be guilty but does not have direct knowledge of the client’s guilt. What makes such a lawyer not a bad citizen when the law is working as intended is that he is opposed by an equally aggressive advocate on the other side.  Of course, in the real world, the law often does not work as intended.  Prosecutors will often do better than law intends them to: Poor defendants will not have advocates whose aggressive advocacy equals that of the prosecutor, and hence are at a disadvantage.  And they may do worse than law intends them to, insofar as (well-resourced) defendants may be able to take advantage of certain structural features designed to ‘let a thousand guilty men go free to avoid convicting an innocent one.’ Thus the problem remains: criminal defense lawyers should zealously advocate for their clients, consistent with law's imposition of various ‘good citizenship’ requirements on lawyers, who, after all, are ‘officers of the court.’  So, our bottom line is perhaps to duck the question of whether aggressive use of procedural devices to get someone who is probably guilty off the hook makes the ‘good agent’ a bad citizen.  

The Presumably Unintended Consequences of the "Defund the Police" Rhetoric