July 18, 2014
RFRA's Strict Scrutiny: A Missed Opportunity and a Doomed Proposal
Posted by Brett McDonnell

So far we haven't said much about the strict scrutiny analysis that comes at the end of the Hobby Lobby opinion.  That makes sense given our comparative advantage as corporate law scholars.  However it does matter, both in general and for a few points we have discussed, such as Eric's call for paying attention to the interests of Hobby Lobby's employees and Jayne's skepticism as to whether a workable accommodation is truly available.

The majority assumed that assuring that women had access to contraception is a compelling interest, but argued that the mandate is not the least restrictive means to achieving that interest.  The Alito opinion considers two alternatives, ultimately resting more on allowing Hobby Lobby to use the already existing accommmodation for religious nonprofits, under which the insurers pay for the contraceptive coverage.  If this works, it means that the RFRA objection is met while the employees are still covered.  I say "if" because the Court may yet strike down that accommodation as itself invalid under RFRA.  That would be a nasty bait-and-switch, but given Justice Kennedy's concurrence, I remain hopeful that at least he will not do so.

The contrast between Alito and Kennedy illustrates at least a different tone in how they apply strict scrutiny.  In law school we learn this is strict in theory but fatal in fact, which seems to fit Justice Alito's tone.  However, sometimes the balancing is more nuanced and even-handed, as in Justice Kennedy's concurrence.  Much anxiety over the opinion stems from a sense that Justice Alito's tone will prevail in future cases.

That could be problematic because of an inherent tension in RFRA.  I am a big fan of the statute, but there is merit to some concern.  RFRA applies to statutes that do not discriminate against religions either on their face or by intent, but only in effect as applied in some circumstances.  Given our rich array of statutes and religious beliefs, that can happen quite a lot.  If everytime it does we are going to re-write the law unless the government can satisfy a very toughly-applied strict scrutiny standard, we may be doing a lot of re-writing.

This concern isn't new.  It is the core of Justice Scalia's refusal to follow a strict scrutiny standard in Employment Division v. Smith, the case that RFRA overturned.  In essence, Scalia chose to follow rational basis scrutiny in such circumstances.  But if strict scrutiny risks being too tough, rational basis scrutiny is too weak, providing in effect no religious liberty protection unless statutes explicitly regulate religion.  Is a compromise possible?

That leads me to the missed opportunity and my doomed proposal.

The missed opportunity.  There is of course an intermediate scrutiny standard of review available in constitutional law jurisprudence.  That standard would allow a more even-handed weighing of the competing interests, not favoring plaintiffs as heavily as strict scrutiny or the government as heavily as rational basis.  Moreover, precedent was readily available.  In free speech cases (a clause separated from free exercise by a semi-colon), in time, place and manner cases the Court basically applies intermediate scrutiny.  These cases occur where a statute does not regulate speech explicitly or by intent, but still has the effect of restricting speech--precisely analogous to the situation in Smith and RFRA.

So why did no one in Smith take the intermediate scrutiny route?  Or, why didn't Congress do so in RFRA?  Beats me.  That is actually two missed opportunities.

The doomed proposal.  It is still technically possible to re-visit the point.  Congress could always amend RFRA.  But the statute is now helplessly caught up in the culture wars, in stark contrast to the near unanimity of its passage.  It is very hard to envision this weakening of RFRA passing as long as Republicans retain blocking power in the House, Senate, or Presidency.

Which leads to a more complicated version of the doomed proposal.  What about a grand bargain?  Republicans agree to amend the federal RFRA, and in return Democrats agree to pass the intermediate scrutiny version in a large number of states that currently have no RFRA.  To my mind, it's not even a compromise--the result is better at both the federal and state levels.  That's not the way the parties see it, but still each side gets a lot out of this.  Alas, they both lose something too.  Given the state of current politics, I can't see such a bargain working.  The spirit of compromise is weak, and both sides are having too much fun rallying their bases with Hobby Lobby.


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July 07, 2014
Welcome Guest Blogger Max Minzner
Posted by Erik Gerding

We are pleased to welcome Max Minzner for a  guest blogging stint at the Conglomerate.  Max is a Professor and the Associate Dean for Faculty Development at the University of New Mexico School of Law.  In addition to teaching at UNM and Cardozo, Max has a wealth of experience in the public sector.  He served as an Assistant U.S. Attorney in the Eastern District of New York and as Special Counsel to the Director of the Office of Enforcement at the Federal Energy Regulatory Commission.  Among his articles is the fantastic new piece (co-authored with Margaret Lemos), For-profit Public Enforcement which appeared this January in the Harvard Law Review.

Welcome Max!



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June 23, 2014
Welcome Guest Blogger Elizabeth Pollman
Posted by Gordon Smith

We are excited to welcome Elizabeth Pollman as a guest blogger for the next two weeks. Elizabeth is an Associate Professor of Law at Loyola Law School in Los Angeles, where she teaches business law courses and write about the entity status and constitutional rights of corporations, as well as on law and entrepreneurship. If you are interested in the trading of private company stock, you must read her excellent article on Information Issues on Wall Street 2.0, published last year in the Penn Law Review. Welcome, Elizabeth!

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June 15, 2014
Welcome Guest Blogger Ted Sichelman
Posted by Gordon Smith

According to his web bio, Ted Sichelman of the University of San Diego School of Law "writes in the areas of intellectual property, law and entrepreneurship, empirical legal studies, law and economics, and computational legal studies, and tax law." Of course, you don't have to believe the bio ... you can also read his work for yourself. It's good stuff. I especially like the work at the intersection of law and entrepreneurship, like "Why Do Start-ups Patent?" and "Commercializing Patents." Ted will be guest blogging with us over the next two weeks, and we are very eager to see what is currently occupying his thoughts. Welcome, Ted!

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June 02, 2014
Welcome Guest Blogger Christopher Bruner
Posted by Gordon Smith

Christopher Bruner is Professor of Law and Ethan Allen Faculty Fellow at Washington and Lee University School of Law. Christopher writes about corporate governance, and we recently linked to his excellent book, Corporate Governance in the Common-Law World. I am currently immersed in some of his papers on fiduciary law, and I am eager to read his upcoming posts. Welcome, Christopher!

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May 20, 2014
Welcome Guest Blogger Michael Burstein
Posted by Gordon Smith

Mike Burstein of Cardozo School of Law will be joining us as a guest blogger for the next two weeks. Mike writes about IP law, and I particularly enjoyed his article "Exchanging Information Without Intellectual Property," published last year in the Texas Law Review, which questions the need for intellectual property for the promotion of information markets. Also, check out his newer piece, "Rethinking Standing in Patent Challenges", forthcoming in The George Washington Law Review, which argues, "When ... market participants are deterred from engaging in innovative activity ... they have standing to bring what amounts to a quiet title action" before making costly investments. We are grateful to welcome Mike to the Glom.

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April 23, 2014
Welcome Guest Blogger Robert Miller
Posted by Gordon Smith

After a delay caused by the well-publicized attack on TypepadRobert Miller is poised to begin guest blogging. Robert is Professor of Law and F. Arnold Daum Fellow in Corporate Law at the University of Iowa College of Law, where he teaches Mergers and Acquisitions, Law and Economics, Corporate Finance, Business Associations, Antitrust, and Contracts. He is an experienced and insightful transactional lawyer, and we are grateful to have him for the next couple of weeks at the Glom. Welcome, Robert!

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October 18, 2013
Larry E. Ribstein Memorial Fund & the Larry E. Ribstein Academic Fellowship Program
Posted by Christine Hurt

We have today concluded our Ribstein Memorial Symposium here at the University of Illinois College of Law.  I can't think of a better way to honor the scholarly and personal legacy of Larry Ribstein, other than a week-long conference.  I am grateful to our organizers, presenters and participants. 

At the conference, Dean Bruce Smith announced that in conjunction with the Larry E. Ribstein Memorial Fund, our VAP program, before known as the Illinois Academic Fellowship Program, will from yesterday forward be known as the Larry E. Ribstein Academic Fellowship Program.  Again, having this successful program bear his name is a perfect tribute.  Larry worked very hard with each of our VAPs and on behalf of them.  The fund "will support initiatives designed to advance the intellectual life of the College of Law, including a named faculty position, research support, and workshops for junior faculty members, as well as innovations designed to more effectively bridge the worlds of legal theory and legal practice, particularly in the area of business law."  If you would like to learn more about the fund, and perhaps contribute to it as a way to honor Larry, you can find more information here.

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October 08, 2013
You Are Cordially Invited to the Larry Ribstein Memorial Symposium, Oct. 17-18, 2013 at the University of Illinois College of Law
Posted by Christine Hurt

You know how you get all those emails "inviting" you to a conference that takes place across the country tomorrow?  Or yesterday?  You weren't really invited.  You were "noticed."  This is not that kind of invitation.

As most readers know, my dear colleague, friend, and "friend of the Glom" Larry Ribstein passed away in December 2011.  The University of Illinois College of Law has spent the better part of the last year designing an academic symposium composed of papers building on his huge and varied scholarly legacy.  These papers will be published in our law review.  We hope that many, many of his friends, colleagues, blog readers and fans will come to Champaign to continue exploring the ideas and themes he dedicated his career pursuing.

The information on the symposium is here.  If you are coming, feel free to email me (achurt@illinois.edu) or Carolyn Turner (carolynt@illinois.edu) to get registered and get a password for the papers.  I would love to see you, and we will treat you like an invited guest, not an interloper with a mass email "invite."  Champaign is a couple/few hours away from notable urban centers with many law schools.  If you decide to drive down and spend the night, know that the fanciest hotels in town are pretty cheap!

Here is the lineup:

October 17, 2013:
8:00-9:00 a.m. Breakfast at the College of Law
9:00-11:15 a.m. 1st Session: Legal Practice (Moderator: Bruce Smith)
Daniel Katz The MIT School of Law? A Perspective on Legal Education in the 21st Century
Bruce Kobyashi Law's Information Revolution as Procedural Reform: Predictive Search as a Solution to the In Terrorem Effect of Externalized Discovery Costs
Richard Painter and Donna Nagy Plugging Leaks and Lowering Levees in the Federal Government:  Practical Solutions for Securities Trading Based on Political Intelligence
Scott Baker
(with Anup Malani)
Trial Court Budgets, The Enforcer's Dilemma, and The Rule of Law.
11:15-11:30 a.m. Break
11:30 a.m.-12:30 p.m. 2nd Session: Jurisdictional Competition (Moderator: Verity Winship)
William Carney Jurisdictional Competition
Erin O'Hara O'Connor(with Susan Franck) Jurisdictional Competition and Bilateral Investment Treaties
12:30-1:30 p.m. Lunch at the College of Law
1:30-3:00 p.m. 3rd Session: Corporate Law I (Moderator: Christine Hurt)
Katherine Litvak Defensive Management: Does the Sarbanes-Oxley Act Discourage Corporate Risk-Taking?
Bernard Black Unbundling and Measuring Tunneling
Harwell Wells
(with Brian Cheffins and Steve Bank)
Law and History by Numbers: Use but with Care
3:00-3:15 p.m. Break
3:15-4:45 p.m. 4th Session: Corporate Law II (Moderator: Jamelle Sharpe)
Kelli Alces Ribstein's Fiduciary Duties
Gordon Smith Fiduciary Confusion
Jeffrey Lipshaw Trust vs. 'Law in a Box': Do Organizational Forms Make a Difference?
6 p.m. Reception and Dinner
October 18, 2013:
7:45-8:45 a.m. Breakfast at the College of Law
8:45-10:15 a.m. 5th Session: Corporate Law III (Arden Rowell)
Deborah DeMott "The Contours and Composition of Agency Doctrine"
John Armour
(with Brian Cheffins)
The Origins of the Market for Corporate Control
Eric Talley Corporate Form and Social Entrepreneurship: A Status Report from California (and Beyond)

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August 05, 2013
Job Announcement: Indiana-Kelley
Posted by David Zaring


Department of Business Law and Ethics 

The Kelley School of Business at Indiana University seeks applications for open-rank, tenure-track positions in the Department of Business Law and Ethics, effective August 2014. The candidates selected will join a well-established department of 15 full-time faculty members who teach a variety of courses on legal topics and business ethics at both the undergraduate and graduate levels.

To be qualified, a candidate must have a J.D. degree and an excellent academic record and must demonstrate the potential for outstanding teaching and research in law and/or ethics. The ideal candidate will also have training in applied ethics or experience teaching business ethics.

Interested candidates should review the application requirements and submit their application at http://indiana.peopleadmin.com/postings/348. Candidates should direct any questions to Jane Mallor, Chair, Department of Business Law and Ethics, Kelley School of Business, 1309 E 10th Street, Bloomington, IN 47405 or mallor@indiana.edu

Application materials received by October 15, 2013, will be given full consideration.

Indiana University is an Affirmative Action, Equal Opportunity employer committed to excellence through diversity.  The University actively encourages applications of women, minorities, and persons with disabilities.

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May 07, 2013
Hiring Announcement: Wake Forest Seeks Civ. Pro. VAP Apps
Posted by David Zaring

From our friends at Wake Forest comes this announcement: 

Wake Forest University School of Law welcomes applications for a Visiting Assistant Professor (VAP) to teach Civil Procedure in the 2013-2014 academic year, and perhaps beyond.  Additional information is here.

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August 21, 2012
Transactional Skills Position at Suffolk University Law School
Posted by Usha Rodrigues
SUFFOLK UNIVERSITY LAW SCHOOL invites applications for an appointment as Professor in the Practice of Law to instruct in and direct its Transactional Skills Program starting in the 2013-14 academic year.  We seek a candidate who has the interpersonal skills, vision and ambition necessary to establish an innovative transactional lawyering skills program, and who will function as the program’s architect, principal faculty resource, and, as necessary, supervisor in mentoring adjunct faculty members.  We welcome applications from persons with a demonstrated background in transactional practice or pedagogy and a commitment to teaching, and particularly encourage applications from women, persons of color, sexual orientation minorities, and others whose backgrounds will contribute to the diversity of the faculty.  The faculty position will either be tenure-track or be covered by a long-term renewable contract.  Interested candidates should contact Professors Jeffrey Lipshaw or Joseph Franco, Co-Chairs, Business Law and Transactional Skills Committee, at jlipshaw@suffolk.edu or jfranco@suffolk.edu, with a copy to jlafauci@suffolk.edu, or mail their materials to the Co-Chairs of the Business Law and Transactional Skills Committee, c/o Ms. Janine LaFauci, at Suffolk University Law School, 120 Tremont St., Boston, Massachusetts 02108-4977.  Suffolk University is an equal opportunity employer.

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August 17, 2012
CSR: Masters Forum on Corporate Social Responsibility: the Complete Posts
Posted by Erik Gerding

Thank you to our Masters for two days of provocative and insightful posts on what the Chick-fil-A controversy means for the current state of corporate social responsibility.

The complete set of posts in the forum can be viewed here

For those of you looking for weekend reading, here is a (tiny) sample of very recent writings by scholars with a history of provocative writing on the field of CSR:

Claire and Brett’s new volume also includes contributions on “Corporate Constituencies” by Stephen Bainbridge, Margaret Blair, Chuck Whitehead, and our current Master Matt Bodie, as well as our own Gordon Smith.

There is a lot more good stuff in the Handbook – including chapters by Lisa Fairfax and our current Master Steven Davidoff. Congratulations to Claire, Brett, and their contributors!

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August 16, 2012
CSR: The Chick-fil-A Controversy and a Masters Forum on Corporate Social Responsibility
Posted by Erik Gerding

We have decided to convene a late summer forum of the Conglomerate Masters -- our roster of distinguished corporate and financial law professors -- to discuss the current state of corporate social responsibility.  In particular, we wanted to address the controversy over Chick-fil-A's corporate stance against same sex marriage and to use this Economist blog post as a jumping off-point. 

The Economist blogger contends that Chick-fil-A's culture is in fact a prime example of a firm embracing corporate social responsibility (or "CSR") - albeit not with the politics that one traditionally associates with that movement.  The blogger concludes that the Chick-fil-A example demonstrates that matters of social policy should best be left to democratic institutions.  He or she writes:

Matters of moral truth aside, what's the difference between buying a little social justice with your coffee and buying a little Christian traditionalism with your chicken? There is no difference. Which speaks to my proposition that CSR, when married to norms of ethical consumption, will inevitably incite bouts of culture-war strife. CSR with honest moral content, as opposed to anodyne public-relations campaigns about "values", is a recipe for the politicisation of production and sales. But if we also promote politicised consumption, we're asking consumers to punish companies whose ideas about social responsibility clash with our own. Or, to put it another way, CSR that takes moral disagreement and diversity seriously—that really isn't a way of using corporations as instruments for the enactment of progressive social change that voters can't be convinced to support—asks companies with controversial ideas about social responsibility to screw over their owners and creditors and employees for...what? 

It is a provocative argument.  Although one wonders if the author would have made this same series of arguments in the 1960s: would the author have encouraged civil rights protesters to abandon lunch-counter sit-ins and lobby state legislators instead?

Still, the Chick-fil-A example raises some disquieting questions for CSR, which our Masters may address.  These include:

Is corporate law the most effective or legitimate tool for social change?  If we are worried about environmental degradation, is the solution to broaden the stakeholders to whom a corporation must answer?  Or shouldn't we look instead to environmental law?

Is CSR viewpoint neutral?  When covering CSR in a Corporations course, I ask students whether social activists who are lobbying a corporation to change what they see as immoral employment practices, should be able to put their views to a shareholder vote?  Then I ask whether the answer would or should change based on whether the activists are looking to end racial or gender discrimination or whether they are lobbying a company to stop offering benefits to partners in same sex couples.

At the same time, the current state of legal affairs raises some disquieting questions for opponents of CSR too.  The conclusion in the Economist blog -- leave social policy to democratic institutions and public law -- has a long lineage.  It harkens back to Milton Friedman's arguments that corporations and the states do and should exist in separate spheres; if citizens want to change corporate policy, the argument goes, they should act through the political process and push through public regulation.

But, the separate spheres argument looks more and more outdated, as corporations influence and permeate the sphere of government.  Do arguments to leave regulating the public dimension of corporate behavior out of corporate law and governance -- and leave it to traditional legislative and regulatory bodies -- appear naive in a post-Citizens United (and post-public choice)world?

Also, do these same questions for proponents and critics of CSR apply in equal measure to the growing field of social entrepreneurship?  Can entrepreneurs do well while doing good?  Should we expect them too?  Is social entrepreneurship a workable, stable, and viewpoint neutral concept?  If so, what does it entail?  Does/should CSR apply equally to small businesses and startups as to global corporations?

We look forward to hearing from our Masters...

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April 16, 2012
Peer Review Is The Enforcement Mechanism In International Financial Regulation
Posted by David Zaring

Now that the standards of financial supervision are designed internationally, the signature problem of international rules is something that financial regulators need to deal with.  The problem: how do you enforce laws in an anarchic world with no courts, cops, or central authority?

In IFR, the solution has been to turn to peer review to do the trick.  Since the financial crisis, the FSB and Basel Committee have conducted peer reviews of member countries and particular issue areas.  For example, yesterday, Basel announced the results of its peer review of the powers of its members to engage in stress testing of banks (whereby you run models hypothesizing catastrophic conditions on bank balance sheets), something that Basel feels is necessary for effective supervision.  The report is kind of interesting in its not-very-interestingness.  Although the report indicates that half the members are in the early stages of developing adequate stress-testing protocols, no laggard country is identified, and much of the writing looks not so much like peer evaluation, as it is the sharing of best practices - a subject you can read my wisdom on here.

Still, peer review is a pretty good idea, given the lack of more forceful alternatives for requiring implementation of international rules.  My guess is that the institutionalization of it in IFR will spread more broadly to other international institutions. 

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