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CALIFORNIA CORPORATE & SECURITIES LAW

Can Shareholders Sue CEOs For Corporate Social Activism?

In an August 17, 2017 opinion piece published in The Wall Street Journal, Jon L. Pritchett and Ed Tiryakian had the following message for shareholders: Our message to small shareholders of companies like Starbucks, Merck and Target: You can sue when a CEO decides to institute a corporate social-responsibility program that has no benefit to the business.…

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What The Delaware Supreme Court Overlooked In Gantler v. Stephens

I have never been reconciled to the Delaware Supreme Court’s pronouncement in Gantler v. Stephens, 965 A.2d 695, 709 (Del. 2009) that “the fiduciary duties of officers are the same as those of directors”.  Officers are, as I’ve previously noted, agents of the corporation while directors are not.  This means that an officer’s duties are…

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Court Of Appeal Voids Jury Trial Waiver Notwithstanding New York Choice of Law

A New York state of mind, but California dreaming A sophisticated lender and borrower negotiate a loan agreement in New York, the lender disburses the loan proceeds in New York, and both parties agree that New York law governs.  This choice-of-law is memorialized in bold face type and capital letters in the loan agreement.  In…

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New California Law Threatens To Destroy Plan Uniformity

Companies often include a choice of law provision in their equity and other compensation plans.  Some companies include a choice of law  in the award agreement, either in lieu of, or in addition to, the plan document.  Specifying applicable law helps to ensure that plans are consistently interpreted and applied.  Uniformity may be particularly important…

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Which Comes First, Rescission Or Choice Of Forum?

A recent ruling by U.S. District Court Judge Arthur D. Spatt raises the interesting question of whether a choice of law provision can be vitiated by rescission.  The case, Hatteras Enterprises, Inc. v. Forsythe Cosmetic Group, Ltd., 2016 U.S. Dist. LEXIS 100352 (July 30, 2016), involved six separate agreements, each containing a New York choice of law…

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What Law Governs A Foreign General Partnership?

The California Uniform Partnership Act of 1994 defines a “partnership” to mean “an association of two or more persons to carry on as coowners a business for profit formed under [Cal. Corp. Code] Section 16202, predecessor law, or comparable law of another jurisdiction . . .”.  Cal. Corp. Code § 16101(9).  The California act does not define…

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Study Concludes That California’s Lending Laws Are Number One

In a recently published paper, Colleen Honigsberg, Sharon P. Katz, and Gil Sadka examine the relationship between debt contracts and state law.  Perhaps only Captain Renault will be shocked by their finding that “California represents the most pro-debtor state and New York the most pro-lender.”  They also note that “the states with the most pro-lender law…

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Court Of Chancery Rejects Delaware Choice Of Law

The public policies of California and Delaware both espouse freedom.  Ironically, the freedoms that they espouse are antithetical to each other.  California embraces the freedom of people to pursue any lawful and employment of his or her choice.  Hence, Section 16600 of the California Business & Professions Code declares, with narrow exceptions, covenants not to…

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Judge Rules Choice Of Law Waives CSL Claim

I was quite surprised to read Judge Gregory M. Sleet’s ruling in OpenGate Capital Group LLC v. Thermo Fisher Scientific Inc., 2014 U.S. Dist. LEXIS 92256 (D. Del. July 8, 2014).  The lawsuit was brought by the purchaser of a business.  The purchase agreement included a choice of law clause specifying that the agreement would be “governed…

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Some Questions About Delaware’s New Law Allowing Parties To Extend The Statute Of Limitations

Delaware recently amended its law to allow parties to a written contract involving at least $100,000 to provide that any action based on that contract may be brought within a period specified in that contract provided that the action is brought prior to the expiration of 20 years from the accrual of the cause of action.  10…

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