Ann Lipton reports:
Elizabeth Pollman has a new Comment, published in the Harvard Law Review, on what she calls “The Supreme Court’s Pro-Business Paradox.” She makes several very well-argued points. First, that by weakening corporate regulation, the Supreme Court has put greater pressure on corporate governance to constrain antisocial corporate behavior; second, the Court’s rulings are arguably at odds with the preferences of corporate shareholders, whose interests the Court clams to be furthering; and third, that in its zeal to insulate corporations from liability, the Supreme Court has turned corporate governance concepts upside-down – by, for example, holding that the Alien Tort Statute makes corporations less responsible for the “decisionmaking” that occurs in boardrooms than for the actions of employee-agents lower down in the hierarchy.
First, "decisionmaking" is not a word. "Decision making" is a word. As is the compound adjective, "decision-making." But I quibble.
Second, I agree that Elizabeth's article is well worth reading. But must respectfully dissent from of her arguments.
Is the Supreme Court "pro-business"? I refer you to Business and the Roberts Court, edited by friend Jonathan Adler, about which I wrote that:
"It is commonplace for politicians, journalists, and the public at large to debate whether the Supreme Court is 'pro-business.' As the essays in this outstanding volume demonstrate, however, this is not just the wrong question-it is an inherently incoherent question. One cannot analyze Supreme Court decisions by simply totting up wins and losses from a single term, as many mindless end-of-term articles try doing. Instead, one must take a longer view over many terms. But even if one does so it is rarely obvious that specific decisions can be easily categorized as pro- or anti-business."
Why should we care about the preferences of corporate shareholders? As famed Delaware Chancellor William Allen observed:
Our “corporation law does not operate on the theory that directors, in exercising their powers to manage the firm, are obligated to follow the wishes of a majority of shares. In fact, directors, not shareholders, are charged with the duty to manage the firm.” Paramount Communications Inc. v. Time Inc., 1989 WL 79880 at *30 (Del. Ch. 1989), aff’d, 571 A.2d 1140 (Del. 1990).
