ProfessorBainbridge.com

Bishop Robert Barron's Five Favorite Books of All Time

Bishop Robert Barron's podcasts, books, and videos have become an important art of my regular devotional life. Sometimes he speaks to cultural issues, about which he always speaks cogently. In this interesting video, he discusses his five favorite books of all time.

The bizarre lack of specificity regarding the timing of Schedule 13D: Calendar or business days?

Under § 13(d), the acquirer has 10 days before it must file a Schedule 13D disclosure statement. The 10–day window begins to run on the day the acquiring person makes an acquisition that puts his holdings over the five percent threshold. Where a group is formed, the 10–day window begins to run on the day they enter into the requisite agreement to act in concert, provided their aggregate holdings exceed 5% on that date.

Curiously, neither § 13(d) nor the rules thereunder specify whether the days in question are calendar or business days. The courts that have addressed the issue held that filers have ten business days within which to file.[1] Commentators are divided, with some stating that filers have ten calendar days to file[2] and others claiming that it is business days that are relevant.[3] Bizarrely, the SEC has used both in litigation releases.[4] In one of the few efforts to resolve the issue, a Wachtell Lipton associate cogently argued that calendar days is the correct interpretation.[5]

He reviewed the text of the SEC’s rules and its governing statute, the statutory history of the Williams Act, and the prudential concerns which underlie the disclosure requirements more generally, and concluded that all of these factors favor the calendar-day approach.

Across regulation 13d-G, the SEC rule that governs investors’ disclosure obligations, the term “day” is preceded by the term “business” on three occasions, but is not preceded by the term “calendar” at all. Using the line of interpretive logic laid out above, the SEC’s semantic choices are telling: when the agency wants to describe a “business day,” it utilizes those words specifically. Thus, even though the agency is on record as adopting both the business-day and calendar-day approaches, the text of its own rules makes clear that only the latter interpretation is correct. ...

Even if one were to find the text of the governing law too terse, the legislative history of the Williams Act makes clear that the Act contemplates prompt disclosure. This again suggests that the ambiguous term “days” should be read in its shorter varietal—i.e., calendar, not business. ...

Finally, as has been catalogued in a long-running debate elsewhere, there are significant prudential reasons to favor the calendar-day approach. ...

First, a calendar-day approach forces investors to disclose their positions sooner, rather than later. ...

Second, changes in technology have rendered even the 10-day timeline outdated.

It's bizarre that so few observers have commented on the lack of clarity in the statute and rules. It's especially bizarre that the SEC itself seemingly cannot make up its mind.

Woke capitalism is no capitalism at all

Andrew Abela, dean of the Busch School of Business at the Catholic University of America, in today's WSJ:

In practice, “woke capital” does little more than pay tribute to progressive causes through marketing and posturing. The problem for companies that play along is that the proponents of many progressive causes are hostile to free enterprise itself. The best that such companies can hope for is short-term appeasement. ...

Another problem with woke capitalism is that it simply doesn’t work. One of my students recently reviewed 30 cases of companies engaging in political activism. Twenty-seven generated a “negative outcome,” or backlash. This shouldn’t be surprising. The U.S. is sharply divided on political and social issues. There isn’t much upside for a company to take a stand on abortion, same-sex marriage or complex racial issues, especially when such themes are irrelevant to its business.

Managers flee to ESG when their company is underperforming for shareholders

Ryan Flugum and Matthew Souther:

Our study examines what factors lead managers to cite stakeholder objectives when explaining their firm’s performance. We analyze all manager communications during the two weeks following an earnings release, including on analyst calls, in news coverage, and during investor and analyst conferences. We look for managers that explicitly mention that their firm considers the interests of stakeholders as opposed to shareholders, citing terms such as “stakeholder value,” “the benefit of stakeholders,” or “stakeholder interests.”

Based on an analysis of public communications around earnings announcements, we find that managers are 34 to 43 percent more likely to cite stakeholder value maximization during periods following earnings announcements that fall short of market expectations. This finding is consistent with concerns that the inability to measure stakeholder value may reduce managers’ accountability for firm performance. ...

Throughout all of our tests, our findings are uniformly consistent with the concerns around stakeholder objectives; managers push to be evaluated by nebulous stakeholder-based standards when the more traditional (and easily measured) shareholder standards are unfavorable. Managers therefore become less accountable for firm performance as measured by traditional, market value-based metrics. In essence, the stakeholder focus becomes an excuse to explain away poor earnings performance while providing no way to measure whether stakeholders are actually receiving value.

Go read the whole thing.

Is a Cardinal an Employee of the Vatican?

1/ New lawsuit raises question of whether Cardinal McCarrick was an employee of the Vatican for purposes of the foreign sovereign immunity act. #lawtwitter #catholictwitter https://t.co/qFKGmfvxqW

— Steve Bainbridge (@PrawfBainbridge) November 25, 2020

2/ "We agree with the Fourth and Ninth Circuits that an agent's acts conducted with the apparent authority of the state is insufficient to trigger the commercial exception to FSIA." Dale v. Colagiovanni, 443 F.3d 425, 429 (5th Cir. 2006).

— Steve Bainbridge (@PrawfBainbridge) November 25, 2020

3/ So it looks like plaintiffs will have to make two moves. (A) Establish McCarrick is an agent of the Vatican. (b) Establish that he had actual authority to commit the torts in question. Both look tough but the latter looks really hard.

— Steve Bainbridge (@PrawfBainbridge) November 25, 2020

4/ See also English v. Thorne, 676 F. Supp. 761, 764 (S.D. Miss. 1987): "any of the alleged acts or omissions by the Vatican would not have occurred within the jurisdiction of the United States, but rather within the confines of the Vatican. pic.twitter.com/ywJ1KNvlDq

— Steve Bainbridge (@PrawfBainbridge) November 25, 2020

The Parable of the Talents: A Law and Economics Analysis

The Gospel reading for yesterday was The Parable of the Talents. As a law professor who uses old style narrative law and economics in his work, this passage has always intrigued me. A couple of years ago, I finally got around to subjecting it to a careful reading from legal and economic perspectives:

On its surface, Jesus’ Parable of the Talents is a simple story with four key plot elements: (1) A master is leaving on a long trip and entrusts substantial assets to three servants to manage during his absence. (2) Two of the servants invested the assets profitably, earning substantial returns, but a third servant — frightened of his master’s reputation as a hard taskmaster — put the money away for safekeeping and failed even to earn interest on it. (3) The master returns and demands an accounting from the servants. (4) The two servants who invested wisely were rewarded, but the servant who failed to do so is punished.

Neither the master nor any of the servants make any appeal to legal standards, but it seems improbable that there was no background set of rules against which the story plays out. To the legal mind, the Parable thus raises some interesting questions: What was the relationship between the master and the servant? What were the servants’ duties? How do the likely answers to those questions map to modern relations, such as those of principal and agent? Curiously, however, there are almost no detailed analyses of these questions in Anglo-American legal scholarship.

This project seeks to fill that gap.

Stephen M. Bainbridge, The Parable of the Talents (August 15, 2016). Available at SSRN: https://ssrn.com/abstract=2787452

The article was ultimately published in Research Handbook on Fiduciary Law

Can a Corporation Contract Out of (or Around) Appraisal? Updated

A friend (who uses my casebook, which gets him extra points) sent along this email:

I assume it is possible for a corporation to contract around appraisal in some meaningful way, but I'm having trouble finding a supporting citation.  Any suggestions?

For those joining us late, I explain in my book Mergers and Acquisitions

Mergers and sales of all or substantially all corporate assets can be likened to a form of private eminent domain. If the requisite statutory number of shares approves the transaction, dissenting shareholders have no statutory basis for preventing the merger. Granted, some of the minority shareholders may believe that the merger that is being forced upon them is unfair. They may want to retain their investment in the target or they may believe that the price is unfair.

Corporate statutes give hold-out shareholders no remedy where they simply want to keep their target shares—the statutes permit majority shareholders to effect a freeze-out merger to eliminate the minority. All the statute gives disgruntled shareholders is a right to complain about the fairness of the price being paid for their shares; namely, the appraisal remedy.

In theory, appraisal rights are quite straightforward. Briefly, they give shareholders who dissent from a merger the right to have the fair value of their shares determined and paid to them in cash, provided the shareholders comply with the convoluted statutory procedures.

Obviously, appraisal crops up in purchase agreements. Practical Law tells us that buyers sometimes "demand appraisal-rights closing conditions in their merger agreements. An appraisal-rights closing condition places a maximum limit on the percentage of common stock that can demand appraisal before the buyer can refuse to close." In addition, sellers sometimes offer a representation that appraisal rights are not available in connection with the transaction.

Also, of course, appraisal statutes commonly provide a "market" out that eliminates appraisal rights in certain transactions. Again, we turn to Practical Law:

Delaware, along with several other states (such as California, New Jersey, Texas, and Pennsylvania), maintains an exception to a stockholders' right to an appraisal. This exception, commonly known as the "market-out" exception, is based on whether a stockholder owns shares of a public company or stock that is held by a significant number of stockholders.

The market-out exception presumes that stockholders do not need appraisal rights when they are not being cashed out in the merger and there is a public and liquid market for their stock. If they disagree with a transaction, stockholders can sell their stock in the open market for the fair market value rather than involve the courts.

In Delaware, the market-out exception is only available if stockholders hold stock that is either:

• Listed on a national securities exchange.
• Held of record by more than 2,000 holders. (8 Del. C. § 262(b)(1).)

As of August 1, 2018, the market-out exception applies equally to two-step mergers conducted as front-end tender offers under Section 251(h) of the DGCL. ...

In Delaware, a stockholder owning public company shares listed on a national securities exchange regains the right to a statutory appraisal if the stockholder has to accept anything in the transaction other than:

• Stock of the surviving corporation.
• Stock of any other corporation that is or will be listed on a national securities exchange or held by more than 2,000 stockholders.
• Cash in lieu of fractional shares.
• Any combination of the above. (8 Del. C. § 262(b)(2)(a)-(d).)

None of this, however, speaks to the query. The question was whether you can get out of appraisal by contract. Before we can answer that query, however, we need to further refine it. Could the corporation include a provision in the articles of incorporation eliminating or limiting appraisal rights? Could the shareholders enter into a shareholder agreement that limited or eliminated appraisal rights? Does it matter whether we are talking about a public or a closely held corporation?

I start by looking at DGCL § 262, the appraisal statute. I don't see anything therein that provides a contractual out.

I then turned to the Model Business Corporation Act, which devotes an entire chapter (13) to what it calls dissenter rights. Section 13.02(c) provides a limited option to limit or eliminate appraisal rights:

... the articles of incorporation as originally filed or any amendment to the articles of incorporation may limit or eliminate appraisal rights for any class or series of preferred shares, except that (i) no such limitation or elimination shall be effective if the class or series does not have the right to vote separately as a voting group (alone or as part of a group) on the action or if the action is a conversion under section 9.30, or a merger having a similar effect as a conversion in which the converted entity is an eligible entity, and (ii) any such limitation or elimination contained in an amendment to the articles of incorporation that limits or eliminates appraisal rights for any of such shares that are outstanding immediately before the effective date of such amendment or that the corporation is or may be required to issue or sell thereafter pursuant to any conversion, exchange or other right existing immediately before the effective date of such amendment shall not apply to any corporate action that becomes effective within one year after the effective date of such amendment if such action would otherwise afford appraisal rights.

If you think of the articles as a contract (as I do), we have here a limited contract out. But it's very limited. In particular, it doesn't apply to common stock.

So I then turned to MBCA § 7.32, which governs shareholder agreements. It effectively only applies to close corporations, since it requires unanimity among the shareholders.

Nothing in § 7.32 expressly authorizes contracting out of appraisal, but there is a fairly broad catchall:

(a) An agreement among the shareholders of a corporation that complies with this section is effective among the shareholders and the corporation even though it is inconsistent with one or more other provisions of this Act in that it: ...

(8) otherwise governs the exercise of the corporate powers or the management of the business and affairs of the corporation or the relationship among the shareholders, the directors and the corporation, or among any of them, and is not contrary to public policy.

The commentary explains that:

Although the limits of section 7.32(a)(8) are left uncertain, there are provisions of the Act that may not be overridden if they reflect core principles of public policy with respect to corporate affairs. For example, a provision of a shareholder agreement that purports to eliminate all of the standards of conduct established under section 8.30 might be viewed as contrary to public policy and thus not validated under section 7.32(a)(8). Similarly, a provision that exculpates directors from liability more broadly than permitted by section 2.02(b)(4), or indemnifies them more broadly than permitted by section 2.02(b)(5), might not be validated under section 7.32 because of strong public policy reasons for the statutory limitations on the right to exculpate directors from liability and to indemnify them. The validity of some provisions may depend upon the circumstances. For example, a provision of a shareholder agreement that limited inspection rights under section 16.02 or the right to financial statements under section 16.20 might, as a general matter, be valid, but that provision might not be given effect if it prevented shareholders from obtaining information necessary to determine whether directors of the corporation have satisfied the standards of conduct under section 8.30. The foregoing are examples and are not intended to be exclusive.

Do dissenter rights "reflect core principles of public policy with respect to corporate affairs," such that they would fall within the non-exclusive list of provisions that may not be modified by contract? I was unable to find anything in the MBCA text or commentary that spoke to that issue.

Interestingly, however, Florida's version of § 7.32 formerly provided that:

For purposes of this paragraph, agreements contrary to public policy include, but are not limited to, agreements that reduce the duties of care and loyalty to the corporation as required by ss. 607.0830 and 607.0832, exculpate directors from liability that may be imposed under § 607.0831, adversely affect shareholders' rights to bring derivative actions under s. 607.07401, or abrogate dissenters' rights under §§ 607.1301-607.1320.30

Since Florida is an MBCA state, that sent me back to the history of § 7.32. The statutory comparison included in the MBCA Annotated says that Florida's version of § 7.32(a)(8) was unique.

A Westlaw search for the phrase "public policy" /s "dissent! right!" turned up noting pertinent except for a few references to the Florida statute. A search for the phrase "public policy" /s "appraisal! right!" kicked up one case claiming that courts have "have found a de facto merger or a continuation of the enterprise [where they] have involved public policy considerations which favor compensating tort victims or appraisal rights to minority shareholders." Atlas Tool Co., Inc. v. C. I. R., 614 F.2d 860, 871 (3d Cir. 1980). But the court cited only one case, Knapp v. N. Am. Rockwell Corp., 506 F.2d 361, 367 (3d Cir. 1974), which was a tort case not an appraisal case. A few courts have quoted Atlas, but without useful elaboration. 

A Westlaw search for (contract! /5 (around out)) /s "appraisal! right!" found only two results. The first was an article by Ian Ayres from 1991, in which he asserted that:

In the corporate context, for example, most states allow shareholders to contract around the default of preemption rights in the corporation's articles of incorporation, but minority appraisal rights are an immutable part of any corporate form of business. See Black, Is Corporate Law Trivial?: A Political and Economic Analysis, 84 NW. U.L. Rev. 542 (1990); see generally Bebchuk, The Debate on Contractual Freedom in Corporate Law, 89 Colum. L. Rev. 1395 (1989) (discussing mandatory and enabling aspects of corporate law).

Ian Ayres, Back to Basics: Regulating How Corporations Speak to the Market, 77 Va. L. Rev. 945, 999 (1991). As far as I could find, however, neither the Black nor the Bebchuk article speaks to contracting out of appraisal.

The other reference was a 1999 article by John Coates, in which he wrote that:

Some commentators have noted an alternative method for corporations in many jurisdictions to effectively avoid appraisal rights through the choice of transaction structure. See, e.g., Roberta Romano, Answering the Wrong Question: The Tenuous Case for Mandatory Corporate Laws, 89 Colum. L. Rev. 1599, 1600 (1989) (noting that the ability to choose transaction structure makes the rule that shareholders must vote on mergers “completely optional”). For example, the sale of substantially all of a Delaware corporation's assets does not trigger appraisal rights, while a merger does. Compared to “fair price” charter provisions, buy/sell agreements, and redeemable common stock (“discount contracts”), transaction choice is a blunt weapon. Discount contracts vary from traditional corporate structures only by specifying how the “fair value” will be determined. In addition, transaction choice only permits contracting around appraisal rights.

John C. Coates IV, "Fair Value" As an Avoidable Rule of Corporate Law: Minority Discounts in Conflict Transactions, 147 U. Pa. L. Rev. 1251, 1353 n.130 (1999). But this is not the sort of contracting out with which we are concerned. Instead, it's a transactional engineering out by opting for a transaction structure for which the law does not grant appraisal rights.

Turning back to Delaware law, it turns out that there are cases holding that preferred stockholders can waive appraisal rights. In Matter of Appraisal of Ford Holdings, Inc. Preferred Stock, 698 A.2d 973, 977 (Del. Ch. 1997), the certificate of designation governing the rights of the preferred stock in question purportedly limited appraisal rights by contractually specifying the price to be paid the preferred in the event a cash-out merger. Famed Delaware Chancellor William Allen began his analysis by noting that "preferred stock is a very special case." He went on to explain that:

All of the characteristics of the preferred are open for negotiation; that is the nature of the security. There is no utility in defining as forbidden any term thought advantageous to informed parties, unless that term violates substantive law. ...

It is my judgment ... that the terms of the Designations of the Cumulative Preferred clearly describe an agreement between the shareholders and the company regarding the consideration to be received by the shareholders in the event of a cash-out merger. There is no ambiguity ... regarding the value to be paid to shareholders if they are forced to give up their shares in a cash-out merger. The shareholders can not now come to this court seeking additional consideration in the merger through the appraisal process. Their security had a stated value in a merger which they have received.

See also In re Appraisal of Metromedia Intern. Group, Inc., 971 A.2d 893, 900 (Del. Ch. 2009) ("Given the contractual nature of preferred stock, a clear contractual provision that establishes the value of preferred stock in the event of a cash-out merger is not inconsistent with the language or the policy of § 262.").

But what about common shareholders?

At this point, I heard from a couple of friends who are experienced M&A practitioners. One pointed me to Manti Holdings, LLC v. Authentix Acq. Co., Inc., CV 2017-0887-SG, 2019 WL 3814453 (Del. Ch. Aug. 14, 2019). The shareholders of Authentix, Inc., a Delaware corporation, negotiated a merger with The Carlyle Group (a private equity fund manager). Under the terms of the deal, the former Authentix shareholders would remain shareholders of the post-merger entity, but with Carlyle now as a majority shareholder. The former Authentic shareholders, with the advice of counsel, unanimously entered into a shareholder agreement (SA) that waived any appraisal rights the shareholders might have in connection with the merger. In an unpublished opinion, Vice Chancellor Glasscock explained that:

The SA was not a contract of adhesion. As provided in the supplemental Joint Stipulation of Fact, the Petitioners—who were, I find, sophisticated parties—were represented by counsel, who exchanged drafts of the proposed SA before agreeing to a final contract. In other words, the sole owners of Authentix, Inc., with the help of counsel, negotiated the terms of the SA, as part of the 2008 merger with the Carlyle entity, Authentix, which merger was, I presume, valuable to the Petitioners. One of the provisions in that negotiated contract was, as I have found, a waiver of appraisal rights at issue here. The SA also rigorously limits the Petitioners' rights to sell their shares: the Carlyle majority must approve any sale, and the buyer must consent in writing to be bound by the SA's terms, including the waiver of appraisal rights. Presumably, the Petitioners have enjoyed the benefit of their bargain, through the time of the sale of Authentix.

The Vice Chancellor went on to hold that:

The SA is a clear, unambiguous contract, created as part of a merger, that was entered into by sophisticated parties, including the Petitioners here, who owned the entire interest in the entity to be merged. Modification of a statutory right to appraisal “must be express or at least very clearly implied.” This reasoning—that waiver of a party's rights is permitted, but must be clear—is found elsewhere in our law.

Here, Authentix Inc. was a private company (as is Authentix), and the Petitioners were its sole stockholders. There is no record evidence that the Petitioners were not fully informed; to the contrary, there is evidence that the Petitioners are sophisticated investors who were fully informed and represented by counsel when they signed the SA, under which they obtained some rights and relinquished others, and then accepted the benefits of that contract for seven years. The SA clearly and unambiguously waives appraisal rights; therefore, it should be enforced. I need not decide whether a waiver of appraisal would be upheld in other circumstances.

Notice the emphasis on four points: (1) this was a privately held company; (2) there was unanimity among the shareholders; (3) the parties were sophisticated investors represented by counsel; and (4) the terms are clear. To the extent Manti stands for the proposition that you can contract out of appraisal, it provides a very limited contractual out. 

My other friend sent along this detailed note:

... venture capital investors routinely waive appraisal rights. The standard National Venture Capital Association form of Voting Agreement provides, in pertinent part, that the investor agrees "to refrain from (i) exercising any dissenters’ rights or rights of appraisal under applicable law at any time with respect to such Sale of the Company, (ii) asserting any claim or commencing any suit (x) challenging the Sale of the Company or this Agreement, or alleging a breach of any fiduciary duty of the Requisite Parties or any affiliate or associate thereof (including, without limitation, aiding and abetting breach of fiduciary duty) in connection with the evaluation, negotiation or entry into the Sale of the Company, or the consummation of the transactions contemplated thereby...."

So it looks like you can ex ante waive appraisal via a unanimous shareholder agreement in a closely held corporation (possibly excepting Florida corporations), and at least limit appraisal rights of preferred stock in the certificate of designation. As for common shareholders of public corporations, however, it seems doubtful.

In closing, I feel constrained to ask: What other casebook author gives you this sort of service?

Update: A friend sent along a link to an article by Jill Fisch:

A judicial determination of fair value in a private company can be a difficult and imprecise process. This difficulty coupled with variations in way mergers are negotiated and structured and the potential for conflicts of interest lend uncertainty to appraisal proceedings. As a result, corporate participants have powerful reasons to seek to limit the uncertainty associated with an appraisal proceeding ex ante. The response has been the growing use of shareholder agreements that limit appraisal rights.

Appraisal waivers also offer a potentially attractive solution to a somewhat different concern, the growth of appraisal litigation in publicly traded companies. As with private companies, public companies face the problem that appraisal proceedings involve substantial cost and uncertainty. Although courts and commentators have grappled with how best to calculate fair value and the impact of that methodology on the incentives of participants in the merger process, they have failed to reach consensus. Appraisal waivers provide an alternative approach - a market-based mechanism to determine the efficient level of merger litigation.

Public companies have not followed the lead of private companies, however, in using appraisal waivers. As this Article explains, the likely reason is the impracticality of using shareholder agreements in public companies and a concern that appraisal waivers in a charter or bylaw would be invalid.

This Article considers both the normative and legal case for appraisal waivers. It argues that, with appropriate procedural protections – specifically the requirement that such waivers take the form of charter provisions -- appraisal waivers are normatively desirable. It then questions whether distinguishing between the use of appraisal waivers in private and public companies is appropriate and argues that it is not. The source of this distinction is a potential difference in the scope of private ordering available through shareholder agreements as opposed to the charter or bylaws, a difference that this Article critiques.

The Article concludes that, under current law, the legal status of appraisal waivers is unclear. Given the potential value that such waivers provide, and the particular value that market discipline would bring to the scope and structure of such waivers, the Article argues for legislation validating a corporation’s authority to limit or eliminate appraisal rights in its charter.

Fisch, Jill E., Appraisal Waivers (August 2, 2020). U of Penn, Inst for Law & Econ Research Paper No. 20-47, European Corporate Governance Institute - Law Working Paper No. 537/2020, Available at SSRN: https://ssrn.com/abstract=3667058 or http://dx.doi.org/10.2139/ssrn.3667058

Recommended reading: Ramseyer on Contracting for Compassion in Japanese Buddhism

My friend and coauthor Mark Ramseyer is a Japanese law polymath, as well as a brilliant writer. I always enjoy his stuff, even when the legal issues in question are outside my wheelhouse. In this case, however, when I spent May 199 teaching at a Japanese law school, Helen and I had occasion to visit one of the temples about which Mark writes. They were incredibly poignant and heart breaking. The gardens were filled with these little statutes with knit hats.

Abstract: In the 1960s, Japanese women began asking temples to perform commemorative ceremonies for the fetuses or children they had aborted. They still do. Physicians have been able to perform abortions legally since 1952, and many women have had them. The ceremonies do not fit within the classic rituals offered by the temples, but many Japanese women find them helpful. They ask for the services. The temples respond.

The temples charge for these memorial services. They rely on such fee-for-service arrangements for an increasingly important segment of their finances. Traditionally, priests had stood ready to offer their parishioners counseling and ritual as needed during the existentially troubling passages in their lives. In exchange, their local communities had effectively kept the temple on retainer. This no longer works. The temples stand in low levels of tension with the surrounding society (as Stark put it). As such, they cannot trust their parishioners to give voluntarily. Instead, they had counted on the constraining power of the tightly intertwined social network within the local community.

Over the course of the 20th century, Japanese migrated out of these tightly structured villages to the often anomic cities. Without a coercive village structure to enforce giving, the low-tension temples found themselves without their effective retainer. With the first-best contract unavailable, many temples have turned to fee-for-service arrangements — of which the abortion-related ritual is merely the most notorious. Ironically, the new environment presents an entirely different challenge: temples now find themselves competing with internet-based priest-dispatch services.

Ramseyer, J. Mark, Contracting for Compassion in Japanese Buddhism (September 10, 2020). Harvard Law School John M. Olin Center Discussion Paper No. 1039, 2020, Available at SSRN: https://ssrn.com/abstract=3688691 or http://dx.doi.org/10.2139/ssrn.3688691

Recommended reading: Pope Francis’ Constitutionalism and Catholic Politics

Neri, Marcello, Pope Francis’ Constitutionalism and Catholic Politics (October 14, 2020). University of Milano-Bicocca School of Law Research Paper No. 20-04, Available at SSRN: https://ssrn.com/abstract=3720735 or http://dx.doi.org/10.2139/ssrn.3720735

Abstract: To understand better impulses and conflicts that are characterizing the Catholic Church under pope Francis, it could be helpful to look back at the dialectical relation between Catholicism and Modernity in the context of the European constitutional history. The legislative activity of pope Francis concerning the Vatican City State has in fact a profound constitutional nature, intending to modernize State institutions of the Holy See. Pope Francis' constitutionalism goes together with an unprecedented endorsement and appreciation of the European Union as a supra-national institution and political body. Drawing on these two key issues, and looking at the modern European constitutional history, the article tries to outline some main aspects of a Catholic politics to come within the European context.

Embracing the Entire Gospel of Life

Jonathan Merritt writes:

The “pro-life” term was once a moral call to arms, but it’s now a mere political checkbox. Opposition to abortion is a non-negotiable for many conservatives, and a number of evangelical friends proudly admit to being “single-issue voters” who support only pro-life candidates. Other moral and political positions don’t factor into their decisions.

This faulty political ideology ignores, trivializes and even disregards dozens of issues of profound human consequence, such as police brutality, environmental degradation, state-sanctioned torture, unjust wars, alleviation of poverty and the mistreatment of minority groups.

Obviously, the Gospel of Life applies from natural conception to natural death. It means--as Democrats often ignore--protecting the unborn from abortion and the aged from euthanasia. But it also means--as Republicans often ignore--opposing the death penalty. As the American Solidarity Party platform stated, capital punishment should end because 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."

It also means looking for ways to protect the most vulnerable. Increasing the availability of affordable quality healthcare. Reducing homelessness. Criminal justice reform. Providing a social safety net. Adopting sensible immigration policies.

I disagree with Fr. James Martin on a lot of issues, but he was right when he said that "the problem with the term ‘pro-life’ is that it’s often used just to talk about the unborn, but pro-life means being pro-all lives, not just pro-some lives, because all lives are sacred.”

It is right and proper that those of us who are conservative pro-lifers have disagreements with our liberal friends about how to operationalize what the Church calls the preferential option for the poor. It is especially right and proper that we stand in opposition to those of our liberal friends who support abortion rights. It is not right and proper, however, that we limit our concern to the unborn. We need to be actively engaged in both the private and public squares in seeking solutions.

Law and Science Fiction: The Tax Man by Stephen Robinett

I’ve been reading a bunch of old Analog Science Fiction magazines from my youth. Tonight I was reading the February 1975 Analog and a short story by Stephen Robinett entitled The Tax Man amused me. It would make a fun case study for a Law and Science Fiction seminar. There are going to be links to the story and other pertinent stuffs on my blog. So, if you want to read the story, stop here.

 

 

 

 

 

 

SPOILER WARNING 1

 

 

 

 

 

 

In the story, there is a massive wall between the USA and Mexico. But it’s not intended to keep people out. Instead, it’s intended to keep people in. (That'd trigger some class discussion, I suspect.)

 

You see, the Tax Reform Act of 1987 created a flat tax rate of 98 percent and made tax evasion a capital offense. The Supreme Court through that out as a violation of the 8th Amendment. Initially, Congress changed the penalty to life imprisonment, but that was too expensive due to the vast number of tax evaders. (There’s a law and economics subtext there.)

 

So they amended the Constitution to bring back the concept of Civil Death (with a citation to Blackstone’s Commentaries in the story, no less).

 

Our hero is visited by an IRS agent who informs Larry that he has been convicted of nonpayment of income taxes for 1998 in a trial conducted entirely by computers. There is no appeal. In three hours, Larry will declared civilly dead and anyone can kill him, after which he will buried in the middle of the road.

 

Larry’s a long distance trucker and decides to take his rig on a run from LA to the Mexican border. The IRS agent chases him and they argue over CB radio about tax policy.

 

In case you've decided to go get the link to the story, I've put another spoiler warning to avoid springing the ending on you.

 

 

 

 

SPOILER WARNING 2

 

The Chancery Daily Takes Note of Ann Lipton and Yours Truly's Commentary on Aronson and Rales

Thanks to my friend and fellow corporate law blogger Francis G.X. Pileggi who sent along an excerpt from The Chancery Daily that picked up on some of my recent blog work:

Fprtunately, TCD is more interested in learned exploration of Delaware case law than it is in claiming credit for have discovered anything. Accordingly, we are more than happy to direct subscribers to the learned analyses of others -- and we are aware of two such analyses of VCL's Facebook decision, which takes the great big Capital "O" step of proposing the retirement of the demand futility test under Senior Aronson, et al. v. Harry Lewis, No. 203, 1983, opinion (Del. Mar. 1, 1984), and adoption of the demand futility test under Steven M. Rales, et al. v. Alfred Blasband, No. 210, 1993, opinion (Del. Dec. 22, 1993; rev. Dec. 23, 1993), as the single standard applicable under Delaware law. Zuckerberg explains the reasoning for this in characteristic VCL deep-dive fashion, but we also note Professor Steven Bainbridge's A brief essay on Delaware Vice Chancellor Laster's Argument for Replacing Aronson with Rales, and Professor Ann Lipton's Not All Heroes Wear Capes -- both of which strike TCD as well-considered and informed by a kindred "don't let the door hit you in the *** on your way out, Aronson" sentiment. As TCD revisits those posts for purposes of retrieving hyperlinks, we note that Professor Bainbridge responded to one aspect of Professor Lipton's post with Professor Lipton asks "What about Blasius?" Well, what about it? TCD recalls Blasius having been referenced to a limited degree earlier this year in Marion Coster v. UIP Companies, Inc., et al., C.A. No. 2018-0440-KSJM (consol.), memo. op. (Del. Ch. Jan. 28, 2020), but we are unaware of it being an issue of current active litigation . . . so it's probably best that we just leave it at that.

Thanks much. But I do wish they had spelled my name correctly. It's Stephen, not Steven.

Cheesy Spoonbread

I made this Friday night as a side dish with some BBQ pork ribs.

• 10 ounces of Bob's Red Mill corn bread mix
• ¾ cup whole milk
• 1 egg
• ¼ cup melted butter
• thinly sliced green parts of 2 green onions
• 1 14.5 ounce can creamed corn
• 1 cup grated Cheddar

Preheat oven to 275°.

Mix batter briskly for about 30 seconds. Pour batter into a buttered Le Creuset stoneware casserole dish (1.8 qt.).

Bake for about 25 minutes or until the top is light brown. Serve warm with maple syrup or honey and butter.

One Pot Cheeseburger Cavatappi with a 2017 Turtle Rock Westberg Red

I made this version of cheeseburger macaroni for dinner Thursday night. I like cavatappi better than elbow macaroni for this dish (and most others). The ridges seem to help the pasta grip the cheese sauce. I particularly like the De Cecco brand, because the bronze extrusion plates create a rougher surface that also helps hold sauce.

• 1 lb ground beef
• 1 medium shallot, diced
• 4 green onions, sliced thinly, whites and greens separated
• 1 clove garlic, minced
• 1 tablespoon tomato paste
• 187 ml white wine (I buy those little four packs of Robert Mondavi Woodbridge to cook with)
• 3 cups beef stock
• 1 cup heavy cream
• 1 teaspoon paprika
• 8 ounces cavatappi pasta
• 4 ounces cheddar cheese, grated (5 ounces if you really like it cheese, as I do)
• 4 ounces Velveeta, diced (ditto)
• salt and pepper to taste

I cooked it in my Culina 12-inch electric skillet, which Amazon sadly no longer sells. It is an excellent tool for dishes like this.

Heat the pan to 350°. (The Culina thermostat is reasonably accurate, but I like to check it with an infrared thermometer gun.)  Add just enough vegetable oil to very thinly coat the pan. Add the ground beef. Season the beef with salt and pepper. Cook until pieces begin browning. Remove the ground beef to a paper towel lined plate to drain. Wipe out the pan and reheat to 325°. Again, lightly coat the pan with oil. Sauté the shallot and white parts of the green onions until they begin to color (do NOT let them burn). Add garlic and tomato paste. Sauté for about 30 seconds.  Return meat to pan. Add wine, raise temperature to 350° and bring to a boil. Reduce heat to a simmer. Allow wine to reduce towards a glaze. Add stock and cream, stirring briskly. Add paprika. Taste and add salt and/or pepper as needed. Add cavatappi and cover.  Cook pasta about 9 minutes, stirring occasionally, checking so that you can turn the heat down to low just after the pasta becomes al dente. Add cheeses and stir until they melt. Mix a loosely packed ½ cup of the green parts of the green onions. Taste and adjust the seasoning as necessary. Serve. 

Do NOT get all foodie and snobby about the Velveeta. It lets great and adds that American cheese flavor you need for a real cheeseburger-like result. Trust me.

We drank a 2017 Turtle Rock Westberg Red. Big. Yummy. Raspberry. Cherry. Pepper. Earthy, meaty, savory especially on the finish.

What Josh Fershee Believes

Fershee, Joshua Paul, This, I Believe: A New Look at Corporate Purpose, Director Primacy and the Business Judgment Rule (September 8, 2020). Transactions: The Tennessee Journal of Business Law, , Vol. 21, pp. 301-10, 2020, Available at SSRN: https://ssrn.com/abstract=3689236

I believe in the theory of Director Primacy. I believe in the Business Judgment Rule as an abstention doctrine, and I believe that Corporate Social Responsibility is choice, not a mandate. I believe in long-term planning over short-term profits, but I believe that directors get to choose either one to be the focus of their companies. I believe that directors can choose to pursue profit through corporate philanthropy and good works in the community or through mergers and acquisitions with a plan to slash worker benefits and sell-off a business in pieces. I believe that a corporation can make religious-based decisions — such as closing on Sundays — and that a corporation can make worker-based decisions — such as providing top-quality health care and parental leave — but I believe both such bases for decisions must be rooted in the directors’ judgment such decisions will maximize the value of the business for shareholders for the decision to get the benefit of business judgment rule protection. I believe that directors, and not shareholders or judges, should make decisions about how a company should pursue profit and stability. I believe that public companies should be able to plan like private companies, and I believe the decision to expand or change a business model is the decision of the directors and only the directors. I believe that respect for directors’ business judgment allows for coexistence of companies of multiple views — from CVS Caremark and craigslist to Wal-Mart and Hobby Lobby — without necessarily violating any shareholder wealth maximization norms. Finally, I believe that the exercise of business judgment should not be run through a liberal or conservative filter because liberal and conservative business leaders have both been responsible for massive long-term wealth creation. This, I believe.

It's not a bad creed.