ProfessorBainbridge.com

Martin Lipton's still peddling the bogus "New Paradigm"

Over on the Harvard Corporate Governance Forum, Martin Lipton and some of his Wachtell acolytes blithely brush off the rise of anti-woke capitalism investors and politicians and the growing resistance to ESG. Instead, he clings to the so-called "New Paradigm," which purports to offer "a  pragmatic and balanced approach to preserving open market capitalism, while also creating economic prosperity that will benefit all, not just a few," by embracing stakeholder capitalism. 

I'm deeply skeptical about all of this nonsense. I don't think Lipton is a woke capitalist. To the contrary, he's embraced ESG as the latest way of marketing his services to corporate managers. As I explain in my book, The Profit Motive: Defending Shareholder Value Maximization:

Martin Lipton rose to fame by defending Imperial CEOs from the raiders.  Lipton’s invention of what he called the shareholder rights plan—better known as the poison pill—was a major reason the brief hostile takeover era fizzled out by the early 1990s. . . .

Martin Lipton has morphed from anti-takeover warrior into a vigorous advocate of what he calls “the New Paradigm,” which “conceives of corporate governance as a collaboration among corporations, shareholders and other stakeholders working together to achieve long-term value ….” . . .

But it is difficult to take Lipton’s arguments at face value.

When you look closely at The New Paradigm it quickly becomes apparent that Lipton is still in the business of defending corporate managers. The only difference is that the corporate raiders of the 1980s have been replaced by hedge fund activists. Accordingly, one suspects that Lipton’s goal is not to empower his CEO clients to be more prosocial, but to use stakeholder capitalism as a lever for restoring the CEO’s former imperial powers.  Those suspicions find confirmation in Bebchuk’s study of deals negotiated during the COVID-19 pandemic. Lipton’s law firm, Wachtell, Lipton, Rosen & Katz, represented target companies in 15% of the studied deals. Despite Lipton’s frequent pronouncements about the need to embrace stakeholder capitalism, none of the Wachtell Lipton deals contained any contractual protections for labor, customers, creditors, or the environment.

Hypocrisy?

SEC Staff Continues to Allow Shareholder Proposals Amounting to Micromanagement of the Company

As I detailed at some length in my article, Revitalizing SEC Rule 14a-8’s Ordinary Business Exclusion: Preventing Shareholder Micromanagement by Proposal, 85 Fordham L. Rev. 705 (2016), the SEC shareholder proposal was never intended to allow shareholders to manage--let alone micro-manage--the corporations in which they invest. Yet, in recent decades, the SEC staff has basically eviscerated those safeguards. Skadden Arps lawyers Marc Gerber and Ryan Adams' review of the 2023 proxy season concludes that that trend continues:

The SEC Staff continues to grant no-action requests in some cases where companies argue that a shareholder proposal relates to ordinary business matters, would result in micromanagement or suffers from a procedural defect, among other things.

Nonetheless:

Companies were slightly more successful in excluding proposals under the micromanagement prong of the ordinary business exclusion in the 2023 season than in the previous season.

 

 

 

Smith-Madrone Chardonnay (Spring Mountain District) 2018

As longtime readers know, I'm a big fan of Smith-Madrone, which I think is one of the (what's the right word? small, boutique?) wineries in Napa. We've visited their facility on the top of Spring Mountain a couple of times and always enjoyed spending time with Chuck and Stu. We've drunk a lot of their wine over the years and have never had one that wasn't excellent. Their wines are usually drinkable on release but have the potential to age well. On top of which, they're very reasonably priced given the quality.

As it approaches its fifth birthday, the 2018 is drinking really well. This is a very well balanced wine. Buttery oak/rich fruit/good acidity all play well together with none dominating. The color is a rich yellow-gold. On the nose and palate, one notices toast, vanilla, oak, Meyer lemon, and peach. I served it with pan-seared scallops and pea risotto, for which it was a great match.

Highly recommended.

Guest Post from Jeffrey Lipshaw: Who owns the corporation?

[My friend and occasional sparring partner Jeff Lipshaw sends along a reaction to my post on “who owns the corporation?”]

Typical of most Quora questions, that one is slightly inane, because whether the shareholders "own" the corporation is at least worthy of a thoughtful response like yours, but before you explain to somebody that the CEO doesn't own it, you might need to disabuse them first of a couple Q-Anon theories on the deep state.

So I agree with your legal analysis of "ownership" of the corporation.  I agree, for example, that nobody other than a shareholder (not the union, not the government, not customers) has legal standing to complain about whether a board decision is in the best interest of the corporation.

Nevertheless, you ought to include a disclaimer when you say, "the corporation is an aggregation of people bound together by a complex web of contractual relationships."  In other words, "the web of contracts" concept is meaningful if you are looking at it through a legal lens.  And the legal lens itself imports what a sociologist might call a Gesellschaft view - a modern institution built on ownership rights embodied in law (per Ferdinand Tönnies, in contrast to the tribe or community Gemeinschaft).

Humor me with an analogy.  Who owns Detroit?  Residents?  Taxpayers?  Voters?  Is a city a thing? Ownership is as illusive a concept there as with the corporation.  One way of looking at the city is as an aggregation of people bound together by a complex web of constitutional, statutory, regulatory, and contractual relationships.  That is a pretty limited view.  There are myriad sociological, historical, political, psychological, anthropological relationships and norms that also have some explanation oomph in characterizing a city.  See, e.g., Susan Silbey on snow day placeholders.  I agree that most of them don't matter if, for example, the question is whether you are a resident for the purpose of the city income tax.

To hit closer to (your) home, who owns the Roman Catholic Church?  I actually litigated something like that years ago regarding some church property in Detroit.  Assume the deed to the church property says, “any transfer of this property to one not a true believer in the holy Roman Catholic catechism is void ab initio.” There is a schism in the congregation. The trustees sell the property to Group A.  Group B sues to void the transfer on the grounds that the members of Group A do not satisfy the condition.  The constitutional law principle is that the court will only look at legal title, and will not enforce a provision that would require it to decide a religious question.  So law will give a result, but is that really the right answer in light of all the norms that govern that community?

The same applies to a corporation, which I'd suggest is more than the sum of its legal contracts in the same way that a corporate acquisition is far more than the contracts that document it. (I speak from some personal experience. The lawyers think that they are running things because the funds don’t transfer or the certificate of merger doesn’t get filed until all the conditions of the contract get satisfied, but trust me when I say that the business unit and functional leaders responsible for deriving the synergies don’t see it that way. The documents are the metaphor skeleton of the transaction, but the business consists of organs, muscle, and tissue not reflected there.)  

I concede you didn’t take it that far, but I think the “web of contracts” approach makes easier for you to justify the shareholder wealth maximization principle, something about which we have had a nice debate.  The utilitarian approach only measures a certain kind of welfare in a certain kind of way and thus itself bespeaks the answer.  It’s not a given that it has to be that way:  compare European codetermined corporate governance. It’s fair to argue that the SWMP is normatively the way to go, but if you argue it purely from law and economics premises, you should be forthright about the implicit assumptions you’ve made.  And the corporation as “web of contracts” invokes those assumptions.

Who owns a company, the CEO or the shareholders?

I saw this question over on Quora and thought I'd offer an answer. It is one, of course, that long time readers know I've touched on often.

In the colloquial sense of the word “ownership,” shareholders own the corporation. In a technical legal sense, however, “[s]hareholders own neither the property nor the earnings of the corporation. Shareholders own only stock, from which their income is derived upon the liquidation of assets or the declaration of dividends by directors.” Nelson v. Anderson, 72 Cal. App. 4th 111, 126 (1999) (internal citations omitted).

The technical legal sense is conceptually more accurate. Ownership implies a thing capable of being owned. To be sure, we often talk about the corporation as though it were such a thing, but when we do so we engage in reification. While it may be necessary to reify the corporation for semantic convenience, it can mislead. Conceptually, the corporation is not a thing, but rather simply a set of contracts between various stakeholders pursuant to which services are provided and rights with respect to a set of assets are allocated.

Because shareholders are simply one of the inputs bound together by this web of voluntary agreements, ownership is not a meaningful concept. Someone owns each input, but no one owns the totality. Instead, the corporation is an aggregation of people bound together by a complex web of contractual relationships.

As I explain in detail in my article The Board of Directors as Nexus of Contracts, the shareholders' contract with the firm has some ownership-like features, including the right to vote and the fiduciary obligations of directors and officers.

Even so, however, shareholders lack most of the incidents of ownership, which we might define as the rights to possess, use, and manage corporate assets, and the rights to corporate income and assets. For example, shareholders have no right to use or possess corporate property. Cf. W. Clay Jackson Enterprises, Inc. v. Greyhound Leasing and Financial Corp., 463 F. Supp. 666, 670 (D. P.R. 1979) (stating that “even a sole shareholder has no independent right which is violated by trespass upon or conversion of the corporation’s property”). Management rights, of course, are assigned by statute solely to the board of directors and those officers to whom the board properly delegates such authority. Indeed, to the extent that possessory and control rights are the indicia of a property right, the board is a better candidate for identification as the corporation?s owner than are the shareholders. As an early New York opinion put it, “the directors in the performance of their duty possess [the corporation’s property], and act in every way as if they owned it.” Manson v. Curtis, 119 N.E. 559, 562 (N.Y. 1918).

Can shareholders replace a CEO or Chairman?

I saw the titular question over at Quora and thought I'd offer up an answer. Unless the bylaws so provide, shareholders have no right to remove a CEO. Delaware General Corporation Law sec. 142, for example, provides that: “Officers shall be chosen in such manner and shall hold their offices for such terms as are prescribed by the bylaws or determined by the board of directors ….”

In general, the practice is that the Chairman of the Board of Directors must be a member of the board of directors. In a few states (such as Ohio, if memory serves), this is statutorily required. In most, it is an understood best practice. At its first organizational meeting of a new year, the board will select one of its members to serve as Chairman. The chair serves at the pleasure of the board and can be removed from that position by the board at any time. But there is no provision under Delaware law for the board of directors to remove one of its members. Indeed, there is case law specifically holding that the board lacks power to remove one of its own members. See, e.g., Dillon v. Berg, 326 F. Supp. 1214 (D. Del. 1971). Hence, while the board may deprive the chairman of his position as chair, the removed chair will remain a member of the board.

Conversely, the shareholders may not remove a sitting chair from the chairman’s position they can remove a sitting chairman from the board. Under Delaware General Corporation Law § 141(k) shareholders are authorized to remove a board member. that right cannot be revoked in either the bylaws or articles.

VC Zurn rejects settlement in the AMC APEs litigation

I'm analyzing the opinion over on Twitter. Here's a link to the thread and the first tweet in the thread (which is now up to about 10+ tweets and growing): https://twitter.com/PrawfBainbridge/status/1682493057894350848

#AMCAPES #APES VC Zurn rejected the settlement in the @AMCTheatres $AMC litigation. https://t.co/GVr82eN00U

— Steve Bainbridge (@PrawfBainbridge) July 21, 2023

Stuff and Nonsense about Suing Woke Corporate Directors

From the website of an outfit called "The Association of Mature American Citizens" (it came up on the RCP news aggregator):

In early June, Elon Musk wrote on Twitter that it “won’t be long before there are class-action lawsuits by shareholders against the company and board of directors for destruction of shareholder value,” referencing the rise of corporate wokeism and so-called “environmental, social, and governance,” or ESG policies.

The prospect held out by Musk is one that, according to former Assistant Secretary of State and experienced litigator and congressional counsel Robert Charles, could indicate a coming flurry of lawsuits against individual board members and directors for breaching their fiduciary duty to shareholders. In an interview with AMAC Newsline, Charles said that the recent spate of boycotts against woke corporations such as Anheuser-Busch and Target are not enough on their own, and litigation should also be on the table.

Shareholders should “pierce the corporate veil,” Charles said, by taking aim at members of the corporate boards themselves—arguing that in some cases, board members should be held personally liable for violating their legal obligation to act in the best financial interests of their shareholders.

Let's start with the idea that piercing the corporate veil is somehow relevant to the fiduciary duties of directors (woke or otherwise). It isn't. Not even a little bit.

As Todd Henderson and I explained in our book Limited Liability: A Legal and Economic Analysis, piercing the corporate veil is an equitable doctrine pursuant to which creditors of the corporation may under some circumstances disregard the corporation's separate legal personality in order to hold the corporation's shareholders personally liable. The general rule, of course, is that shareholders have limited liability. If a corporation cannot pay its debts, the creditors cannot go to the shareholders and collect the debt out of the shareholders' personal assets. If the shareholders have used the corporation as their alter ego and respecting the limited liability rule would promote fraud or injustice, the creditors cqn pierce the vail to reach the shareholders' personal assets. Note, by the way, that in addition to being doctrinally irrelevant the empirical studies discussed in our book make clear that no one has ever pierced the corporate veil to hold public corporation shareholders liable.

Second, as I discuss in my book The Profit Motive: Defending Shareholder Value Maximization, while it is true that directors have a fiduciary obligation to maximize shareholder value it is also true that the law generally gives directors great discretion in how they pursue that goal. And that brings us to the business judgment rule, the central doctrine of corporate law and which makes no appearance in the column.

Let us therefore turn to one of my favorite corporate law cases: Shlensky v. Wrigley. 

Shlensky, a minority shareholder in the Chicago Cubs, challenged the decision by Wrigley, the majority shareholder, not to install lights at Wrigley Field. Shlensky claimed the Cubs were persistent money losers, which he attributed to poor home attendance, which in turn he attributed to the board’s refusal to install lights and play night baseball. According to Shlensky, Wrigley was indifferent to the effect of his continued intransigence on the team’s finances. Instead, Shlensky argued, Wrigley was motivated by his beliefs that baseball was a day-time sport and that night baseball might have a deteriorating effect on the neighborhood surrounding Wrigley Field.

Despite Shlensky’s apparently uncontested evidence that Wrigley was more concerned with interests other than those of the shareholders, the court did not even allow him to get up to bat. Instead, the court presumed that Wrigley’s decision was in the firm’s best interests. Indeed, the court basically invented reasons why a director might have made an honest decision against night baseball. The court opined, for example, “the effect on the surrounding neighborhood might well be considered by a director.” Again, the court said: “the long run interest” of the firm “might demand” protection of the neighborhood. Accordingly, Shlensky’s case was dismissed for failure to state a claim upon which relief could be granted.

So imagine a woke director who is accused of putting her personal political preferences ahead of shareholder value maximization. She will invoke the business judgment rule. She could defend her decision by arguing that business "have profit maximizing reasons for aligning themselves with woke coastal millennials, who are at the core of the supposedly most desirable marketing demographic." But she won't need to do so. The court will defer to the board's decision under the business judgment rule, absent evidence that a majority of the board (not an individual director) acted out of a conflict of interest.

Charles apparently thinks one could find such evidence:

Charles stressed that there are limits to a company’s freedom, comparing a company’s duty to its shareholders to a game of bowling.

“You can’t have a director bowl in the opposite direction or keep guttering the ball if the goal is to hit the pins. And so the bottom line here is if these directors—or any one of them—is vocal in board meeting minutes about the fact that they want to divert money to their personal political agenda, and this is not really being articulated to the investors, then I think you could make the [legal] argument that there’s been a breach of trust—that there’s been a breach of fiduciary duty.”'

I've been a corporate lawyer, consultant, and academic since 1986. In those 37-odd years, I have never seen a director so dumb as to put such a statement in the board minutes (or a corporate counsel so dumb as to include such a statement in the minutes). Remember that the minutes are not a word-by-word transcript of the meeting. They are carefully edited documents prepared in the knowledge that they could well be the subject of future litigation.

Also, notice Charles says you only need "any one of" the directors to make such a statement. As noted above, however, to rebut the business judgment rule you need to show that a majority of the board engaged in self-dealing, fraud, or some similar misconduct. See, e.g., Krasner v. Moffett, 826 A.2d 277, 287 (Del. 2003) ("when the majority of a board of directors is the ultimate decisionmaker and a majority of the board is interested in the transaction the presumption of the business judgment rule is rebutted").

In any case, even assuming that the tainted minutes exist and that they reflect the majority of the board laughing hysterically while spending money on woke causes their shareholders oppose, how does Charles think one would get one's hand on these tainted minutes? In Delaware (the home of most corporations that matter), you'd need to do a Section 220 books and records inspection. And our shareholder would thus bump up against the recent Disney decision.

In Simeone v. Walt Disney Co., 2022-1120-LWW, 2023 WL 4208481, at *1 (Del. Ch. June 27, 2023), a longtime Disney shareholder agreed to act as a nominal plaintiff so that some conservative activist lawyers could sue Disney's board of directors for opposing Florida's House Bill 1557, titled the “Parental Rights in Education” bill. Plaintiff's theory was that "that officers and directors of Disney may have breached their fiduciary duties to the Company and its stockholders by, inter alia, failing to appreciate the known risk that the Company's political stance would have on its financial position and the value of Disney stock.” (Sound familiar?)

Because (1) any lawsuit doubtless would have been derivative in nature, (2) the complainant in a derivative suit must allege facts with particularity, and (3) ine does not get pre-filing discovery in these cases, the plaintiff would have had to gather the requisite facts using what the Delaware courts call "the tools at hand." In other words, a shareholder request under DGCL 220 to inspect Disney's books and records. Which is what the plaintiff did.

(By the way, notice that I haven't even gotten into the problems that would be created for Charles' lawsuit by virtue of the suit being derivative in nature. It introduces a whole slew of procedural obstacles.)

The court began by observing that:

Delaware law vests directors with significant discretion to guide corporate strategy—including on social and political issues. Given the diversity of viewpoints held by directors, management, stockholders, and other stakeholders, corporate speech on external policy matters brings both risks and opportunities. The board is empowered to weigh these competing considerations and decide whether it is in the corporation's best interest to act (or not act).

This mattered because a Section 220 demand must state a proper purpose for inspecting the books and records. Shareholders are not allowed to paw through corporate files at will. They must get a judicial order and in order to do so they must demonstrate that they have a proper purpose for asking for the records in question, The court explained that:

The plaintiff's demand identifies four purposes; all center around the same desire to investigate wrongdoing. The second and fourth purposes—to determine whether Disney's opposition to HB 1557 was harmful to the company and to “explore possible remedial measures”—are derivative of and dependent upon whether there was mismanagement in the first place. ...

The plaintiff's theory is that Disney's “decision to express public opposition” to HB 1557 despite “the [G]overnor's warning” amounts to a possible breach of fiduciary duty by the Board and certain Disney officers.

But the problem was that:

The plaintiff is not describing potential wrongdoing. He is critiquing a business decision. “A stockholder cannot obtain books and records simply because the stockholder disagrees with a board decision, even if the decision turned out poorly in hindsight.” ...

At bottom, the plaintiff disagrees with Disney's opposition to HB 1557. He has every right to do so. But “disagreement with [a] business judgment” is not “evidence of wrongdoing” warranting a Section 220 inspection.Such an inspection would not be reasonably related to the plaintiff's interests as a Disney stockholder; it would intrude upon the “rights of directors to manage the business of the corporation without undue interference.”

Long time readers will recall that I've been accused of being a RINO as far back as the Gang of 14 filibuster deal. Maybe so. But this not about politics. It is about law. And the law is that suits claiming woke directors breached their fiduciary duties by their decisions about how the corporation behaves in the political arena are non-starters.

Delaware Merges Blasius and Unocal: Commentary on Coster v. UIP Cos., Inc.

In Coster v. UOP Cos., Inc., the Delaware Supreme Court finally addressed the longstanding debate over the validity of the Blasius doctrine. (The following is based in part on the discussion of Blasius and Unocal in my books Mergers and Acquisitions (Concepts and Insights) and Corporate Law (Concepts and Insights).)

In Unocal v. Mesa Petroleum,[1] the Delaware Supreme Court laid out what has been called an “intermediate” or “enhanced business judgment” standard of judicial review, but is perhaps best described as a “conditional business judgment rule,”[2] to govern target board of director actions taken in. response to an unsolicited takeover offer. In Unocal, the Delaware Supreme Court reaffirmed the target’s board general decision-making primacy, which includes an obligation to determine whether the offer is in the best interests of the shareholders. In light of the board’s potential conflict of interest vis-à-vis the shareholders, however, judicial review was to be somewhat more intrusive than under the traditional business judgment rule: “Because of the omnipresent specter that a board may be acting primarily in its own interests, rather than those of the corporation and its shareholders, there is an enhanced duty which calls for judicial examination at the threshold before the protections of the business judgment rule may be conferred.”

The initial burden of proof is on the directors, who must first show that they had reasonable grounds for believing that a danger to corporate policy or effectiveness existed. The directors satisfy this burden by showing good faith and reasonable investigation. The good faith element requires a showing that the directors acted in response to a perceived threat to the corporation and not for the purpose of entrenching themselves in office. The reasonable investigation element requires a demonstration that the board was adequately informed, with the relevant standard being one of gross negligence.[3] Assuming the directors carry their initial burden, they next must prove that the defense was reasonable in relationship to the threat posed by the hostile bid.

Because unsolicited takeover bids often end up involving a shareholder vote, such as when the acquirer conducts a proxy contest to elect a new board of directors for the target in hopes that the new board will remove any takeover defenses that may be impeding the offer, there long was a question about how Unocal applied when the target board’s actions allegedly disenfranchised target shareholders.

The problem was that in that context Unocal bumped up into another line of cases arising out of Blasius Industries, Inc. v. Atlas Corp.[4] In Blasius, the Delaware Chancery Court held that where the board of directors takes actions for the “primary purpose” of interfering with the free exercise of the shareholder franchise, the board must demonstrate that it had a “compelling justification” for doing so. Taken by itself, Blasius proved to be “an unworkable standard of review, as once a court triggers Blasius, it would seem impossible for the directors to provide a compelling justification for disenfranchising their shareholders.”[5]

When a board action affecting the shareholder franchise takes place in other contexts, such as a simultaneous tender offer and proxy contest, Unocal provide the basic standard of review for the board’s actions. In applying Unocal’s proportionality prong, however, the courts treated board action that purposefully disenfranchises the shareholders as “strongly suspect.”[6] Attempting to merge the two created an even more untenable standard.

I have never been a fan of Blasius.[7] (See my post Professor Lipton asks "What about Blasius?" Well, what about it?) So I pleased to learn that the Delaware Supreme Court has finally more or less killed off Blasius by essentially merging it into Unocal. See Coster v. UIP Cos. Inc.

I’m going to skip over the facts and the case’s convoluted procedural history, as Ann Lipton has a great post on the Chancery Court opinion and an excellent post on the Supreme Court decision.

The key passage is at 31-32:

First, the court should review whether the board faced a threat “to an important corporate interest or to the achievement of a significant corporate benefit.” The threat must be real and not pretextual, and the board’s motivations must be proper and not selfish or disloyal. As Chancellor Allen stated long ago, the threat cannot be justified on the grounds that the board knows what is in the best interests of the stockholders.

Second, the court should review whether the board’s response to the threat was reasonable in relation to the threat posed and was not preclusive or coercive to the stockholder franchise. To guard against unwarranted interference with corporate elections or stockholder votes in contests for corporate control, a board that is properly motivated and has identified a legitimate threat must tailor its response to only what is necessary to counter the threat. The board’s response to the threat cannot deprive the stockholders of a vote or coerce the stockholders to vote a particular way.

Critics of Unocal have long complained that it is an essentially toothless standard.[8] Assuming arguendo that they are correct, does this mean that judicial review of shareholder disenfranchisement will now be reviewed with a lenient eye?

There are suggestions in the opinion that Unocal is to be applied contextually. See Coster at 31 (stating that “the court’s review is situationally specific and is independent of other standards of review”). There are also suggestions that, as applied to shareholder disenfranchisement, the standard may not be Unocal but rather what might be called Unocal+. See Coster at 31 (“Unocal can also be applied with the sensitivity Blasius review brings to protect the fundamental interests at stake – the free exercise of the stockholder vote as an essential element of corporate democracy.”); id. at 33 (“Applying Unocal review in this case with sensitivity to the stockholder franchise is no stretch for our law.”). In other words, it is at least possible that Unocal will be applied in this context with a more skeptical eye than it is in other situations.[9]

There are also suggestions that the new Unocal/Blasius standard and the sensitivity it supposedly demands will be more limited in scope than early Blasius decisions suggested. Some 15 years ago, a New York court suggested that Blasius is now limited to proxy contests involving director elections:

Blasius has been largely limited to disputes over the election of directors. Accordingly, “courts will apply the exacting Blasius standard sparingly, and only in circumstances in which self-interested or faithless fiduciaries act to deprive stockholders of a full and fair opportunity to participate in the matter.” Of particular significance here, “the reasoning of Blasius is far less powerful when the matter up for consideration has little or no bearing on whether the directors will continue in office.”[10]

There are a few passages in the Supreme Court decision suggesting that the new standard is in fact limited to proxy contests over the election of directors and similar situations:

• Describing the standard as calling for “enhanced judicial scrutiny of board action that interferes with a corporate election or a stockholder’s voting rights in contests for control.” Coster at 30.
• “When a stockholder challenges board action that interferes with the election of directors or a stockholder vote in a contest for corporate control, the board bears the burden of proof.” at 31.
• Noting the need “[t]o guard against unwarranted interference with corporate elections or stockholder votes in contests for corporate control . . ..” at 32.

The key question here is whether by “corporate elections” the court meant all proxy contests or only proxy contests involving election of directors. If Unocal/Blasius is in fact now so limited, it will have important implications for cases like the current litigation involving the AMC APES shares, in which the AMC board allegedly interfered with the shareholder vote but not in the context of a proxy contest for electing directors. If so, is the standard of review now applicable to such matters the business judgment rule?

Finally, on a personal note, let me vigorously object to the Supreme Court’s claim that there are “fundamental interests at stake”; i.e., “the free exercise of the stockholder vote as an essential element of corporate democracy.” As regular readers know, much of my scholarly output over the last several decades has been devoted to the proposition that corporations are not democracies.[11] And I am not alone in saying that corporations are not democracies.[12]

Kalbi (Beef) Tacos Sous Vide with Ridge Vineyards Buchignani Ranch (Alexander Valley) Zinfandel 2017

• ¾ cup soy sauce
• 1 tablespoon Worcestershire sauce
• 1 tablespoon mirin
• 1 tablespoon honey
• 2 tablespoons toasted sesame oil
• Several grinds black pepper
• ½ medium pear, peeled and diced
• ½ cup canned diced pineapple
• 2 cloves garlic, diced

Combine marinade ingredients in bowl of a food processor and pulse until fairly smooth.

Brush both sides of 1-¾ pounds flanken style beef short ribs with marinade. Reserve remaining marinade in a small jar in the refrigerator. Place in a 1 gallon vacuum seal bag. Using the pulse setting on your vacuum sealer get as much air out of the bag as possible without pulling the marinade into the sealer. Use the seal setting to seal the bag. Note: this is not a recipe with which I would use the immersion method to get the air out of the bag. I worry about leakage and the zip-loc bag holding up for such a long sous vide session.

Around breakfast a day before you want eat the tacos, place bag in a very large pot (it just fit in my 12 quart stockpot). Put your sous vide machine in the pot. Set the temperature to 130° and the timer to 36 hours.

About an hour before you want to serve dinner, put reserved marinade in a small saucepan over high heat. Bring to a boil and reduce heat to low. Allow to reduce to a glaze. Remove from heat and set aside.

When marinade has cooled add 1 tablespoon to ¾ cup Sriracha Aioli and mix well. 

Heat a grill pan over high heat. Remove ribs from water bath. Open bag. Transfer ribs to a paper towel lined cutting board and pat dry. Brush both sides of the ribs with marinade glaze. Sear ribs on both sides in the grill pan and transfer back to the cutting board (sans paper towels). Allow to rest briefly. If the meat fails to fall of the bones, cut meat from them. Chop meat roughly. 

Serve with warmed taco size soft flour tortillas, the aioli, steamed rice, and my Asian Slaw or my Asian slaw with pears. 

I assemble my tacos by smearing some aioli on the tortilla, topping it with rice, beef, and slaw in that order. Helen goes beef, rice, slaw, drizzle of aioli.

We drank a Ridge Vineyards Buchignani Ranch (Alexander Valley) Zinfandel 2017, which was a great match. Medium strength bouquet. Good depth with medium finish. Dark red and black fruits. Blackberry, raspberry, and spice and dill (American oak). A dash of pepper on the finish. Very very good. In prime drinking form now and probably will last another 3-4 years.