Corporate Law
Citizens Not United: The Lack of Stockholder Voluntariness in Corporate Political Speech
Comparative Corporate Criminal Liability: Exploring the Uniquely American Doctrine Through Comparative Criminal Procedure
118 Yale L.J. 126 (2008). In the United States, corporations—as entities—can be criminally tried and convicted for crimes committed by individual directors, managers, and even low-level employees. From a comparative perspective, such corporate liability marks the United States as relatively unique. Few other Western countries impose entity liability, and those that do impose such liability comparatively infrequently and under the threat of far less serious punishment. The question of why the United States—and the United States virtually alone—imposes corporate criminal liability has been the subject of limited scholarly attention. This Note seeks to fill that void through the prism of comparative law. Using Germany—a country that imposes no corporate criminal liability—as a foil, this Note argues that the American doctrine can best be explained not through criminal theory but rather through criminal procedure. American criminal procedure imposes unique difficulties on American investigators and prosecutors seeking to root out individual white-collar criminals. But it also imparts powers to those prosecutors that are unknown to their German counterparts. Among them is the power to threaten criminal indictment, one that allows prosecutors to force American corporations to cooperate, to waive the attorney-client privilege, and to cut ties to individual employees under investigation, thereby facilitating the prosecution of those individual defendants. Using differences in criminal procedure rather than criminal theory to explain the uniquely American doctrine, this Note concludes by suggesting how the criminal procedure approach can best be used to understand—and potentially to reform—an American system that critics increasingly decry as broken.
There Is No Affirmative Action for Minorities, Shareholder and Otherwise, in Corporate Law
Profits as Commercial Success
117 Yale L.J. 642 (2008). Courts often use the extent of a patented invention’s commercial success as crucial nontechnical proof of the patent’s validity. Relying on misguided economic reasoning, most courts use revenue as the primary yardstick for commercial success. This Note argues that courts instead should use profits as the proper measure of an invention’s commercial success. Current jurisprudence’s use of revenue reflects the flawed premise that firms maximize revenues rather than maximizing profits. As a result, courts will often find commercial success when the financial data suggest otherwise and vice versa. This Note finds the accounting and economic issues involved to be insubstantial, while requiring a threshold profit showing could materially further judicial economy.
Piercing China's Corporate Veil: Open Questions from the New Company Law
117 Yale L.J. 329 (2007).
Wealth Without Markets?
116 Yale L.J. 1472 (2007) The Wealth of Networks: How Social Production Transforms Markets and Freedom BY YOCHAI BENKLER NEW HAVEN: YALE UNIVERSITY PRESS, 2006. PP. 528. $40.00
Executives Do Not Need Waivers and Companies Should Not Offer Them: A Response to Mark Kressel
The Corporate Origins of Judicial Review
116 Yale L.J. 502 (2006) This Article argues that the origins of judicial review lie in corporate law. Diverging from standard historical accounts that locate the origins in theories of fundamental law or in the American structure of government, the Article argues that judicial review was the continuation of a longstanding English practice of constraining corporate ordinances by requiring that they be not repugnant to the laws of the nation. This practice of limiting legislation under the standard of repugnancy to the laws of England became applicable to American colonial law. The history of this repugnancy practice explains why the Framers of the Constitution presumed that judges would void legislation repugnant to the Constitution--what is now referred to as judicial review. This history helps to resolve certain debates over the origins of judicial review and also explains why the answer to other controversies over judicial review may not be easily found in the history of the Founding era. The assumption that legislation must not be repugnant to the Constitution produced judicial review, but it did not resolve issues such as departmentalism or judicial supremacy that arose with the continuation of this repugnancy practice after the Constitution.
Contractual Waiver of Corporate Attorney-Client Privilege
116 Yale L.J. 412 (2006) A corporate director, sued in her individual capacity in connection with corporate malfeasance, often seeks to raise the defense that she relied on the advice of the corporation's counsel that the proposed course of conduct was legal. A litigation impasse may arise, however, if the corporation, as sole holder of the attorney-client privilege, refuses to waive its privilege. The impasse leaves the plaintiff unable to evaluate the director's claims and leaves the defendant unable to mount her defense. As a solution to this impasse, this Note proposes that directors and their corporations should contract ex ante that the corporation will waive its privilege under these limited circumstances.
Quasipublic Executives
115 Yale L.J. 2254 (2006) In this Essay, we first observe the rise of what we call "quasipublic executives": both "nominally private executives," that is, private executives in charge of public functions such as corrections, education, and national defense; and "nominally public executives," that is, public executives who have assumed private characteristics such as insulation from electoral control mechanisms. We proceed to argue that control mechanisms for quasipublic executives should be drawn from both constitutional law and corporate law, broadly interpreted. Constitutional law and corporate law both face the problem of controlling executives but use radically different control mechanisms to do so. This difference, we argue, can be justified only by differences in the institutional settings of the executives governed by each body of law or in the functions with which they are charged. But because quasipublic executives, whether nominally public or nominally private, operate in private institutional settings and perform public functions, this justification for the use of different control mechanisms cannot apply to them. Further, we argue that the law's failure to draw control mechanisms from both fields is symptomatic of a larger doctrinal distortion. Under this distortion, the solutions that the law offers to social problems are often driven more by the doctrinal field to which those problems are assigned than by functional considerations.
For-Profit and Nonprofit Charter Schools: An Agency Costs Approach
115 Yale L.J. 1782 (2006) This Note applies agency costs theory to explain charter schools' use of for-profit and nonprofit forms, and to suggest ways to make charter school regulation more sensitive to the differences between these forms. Borrowing from Henry Hansmann's "contract failure" theory of nonprofits and recent data on the makeup of the charter school market, I argue that nonprofit forms dominate because they minimize the unusually high agency costs that characterize interactions between charter operators and the parents, regulators, and donors who influence them. For-profit schools survive only when the economies of scale they capture through superior capital-raising offset their higher agency costs. I also compare nonprofits' and for-profits' abilities to achieve some of charter school policy's more complex goals. These include resource attraction, localized governance, and output-based accountability. I conclude by arguing for changes in regulation to control for-profits more tightly and to reflect more accurately nonprofits' and for-profits' relative strengths.
Student Derivative Lawsuits
115 Yale L.J. 1471 (2006) In this Comment, I argue that states could help avert financial scandals like the one at American University by adopting rules less protective of university boards. Specifically, I propose that states subject all nonprofit university boards to the same fiduciary standards as corporate boards and empower enrolled students to oversee their university boards. Part I addresses the current law concerning university oversight. Part II briefly discusses the responsibilities of corporate directors, with an eye toward how the American University trustees' behavior would be analyzed in the corporate context. After concluding that the American University trustees might well be found to have violated their fiduciary duties under corporate standards, I describe my proposal regarding enforcement of corporate oversight standards on university boards in Part III.