Did 19 Law Professors Get The Business Judgment Rule Wrong?

In yesterday’s post, I wrote about the amicus curiae brief filed by 19 law school professors in Friedrichs v. California Teachers Ass’n, a case now pending before the United States Supreme Court.  Being a California corporate lawyer, I was interested in the following description of a California Court of Appeal case: A rare example, in which the

What 19 Eminent Law Professors Would Have You Believe

UCLA Law School Professor Stephen Bainbridge yesterday highlighted an amicus curiae brief filed recently by 19 law professors in Freidrichs v. California Teachers Ass’n.  That case, which is now pending before the U.S. Supreme Court, is concerned with the constitutionality of agency-shop arrangements.  The law professors argue: Because of how capital is saved and invested in corporations, most

Why The Capitol Is In The Capital


Article III, Section 2 of the California Constitution provides that “Sacramento is the capital of California”.  The building in which the legislators meet, however, is denominated the “capitol” building.  Thus, the state capitol can be found in the state capital.  But why the variant spelling? Both words are derived from the Latin word for head

I’m Guessing That The DOL Didn’t Have in Mind Negative Weighing Of ESG Factors

In this post, I noted a recent study by Professor Tracie Woidtke at the University of Tennessee concluding that social-issue shareholder-proposal activism appears to be negatively related to firm value.  I therefore raised the question of whether the administrators of public pension funds, such as CalPERS and CalSTRS, breaches their fiduciary duty when making investments based on environmental, social and governance

A Hollow Nickel, Hollywood And Texas Gulf Sulphur


If you’ve taken a course in securities law, you’ve undoubtedly heard of, and I hope have read, SEC v. Texas Gulf Sulphur Co., 401 F.2d 833 (2d Cir.), cert. denied, 394 U.S. 976 (1968).  That case is famous for the Second Circuit Court of Appeals’ adoption of the “disclose or abstain” rule for corporate insiders.  The

What’s So Special About An 80% Doing Business Threshold?

In yesterday’s post, I dipped into the SEC’s proposed amendments to Rule 147, a safe harbor for intrastate offerings exempt from registration pursuant to Section 3(a)(11) of the Securities Act of 1933.  Among other things, the SEC is proposing to jettison the current requirement of Rule 147 that limits the availability of the rule to issuers organized

Rule 147 Changes May Cause Uptick In California Securities Qualifications

As has been widely noted, the Securities and Exchange Commission has proposed amending Rule 147 under the Securities Act of 1933.  That Rule provides a safe harbor for compliance with the Section 3(a)(11) exemption from registration for intrastate securities offerings.  Among other things, the SEC is proposing to eliminate the current requirement in Rule 147 that issuers to

ISS Proposes To Go Overboard In Proposed Policy Change

Institutional Shareholder Services Inc. (ISS) is a very influential purveyor of proxy advisory services.  As part of ISS’ annual policy update procedure, ISS recently released a proposed policy change with respect to directors who sit on too many boards.  The following table summarizes ISS’ current and proposed policy with respect to recommending votes against directors

Nevada Supreme Court Opines On Scope Of Debtor’s Exemption For Stock

NRS 78.746 provides that, with several qualifications, the exclusive remedy of judgment creditors with respect to the stock in a relatively closely held corporation is to charge a stockholder’s shares.  To the extent so charged, the creditor only has the rights of an assignee of the shares.  This means that a judgment creditor has rights

Chancellor Bouchard Rules There Can Be No Ratification Without Works

In reading Chancellor Andre G. Bouchard’s ruling yesterday in Espinoza v. Zuckerberg, 2015 Del. Ch. LEXIS 273 (Del. Ch. 2015), I was reminded of the theological debate among Christians concerning justification by faith.  The case involved a stockholder challenge to the decision by the board of directors of Facebook, Inc. to approve the compensation of