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Altering Rules: The New Frontier for Corporate Governance
No full textVol. 42:291Corporate law has taken a contractarian turn. Shareholders are increasingly
contracting around its foundational rules—statutory rights, the fiduciary
duty of loyalty, even the central role of the board—and Delaware courts
are increasingly enforcing these contracts. In the one case where they did not,
the legislature swiftly overruled the decision and adopted a new statutory
provision permitting boards to completely cede their powers to a shareholder
by contract. These developments have sparked a polarized debate, with some
calling for a return to mandatory rules, while others push for total contractual
freedom.
We argue, however, that the best approach lies neither in rigid mandatory
rules nor unchecked contractual freedom—but in recognizing the potential
of corporate law’s altering rules. Altering rules define how parties can
opt out of the default rules of governance. Our theory identifies corporate
altering rules’ essential features, namely, whose consent is required to change
a default (process) and who is bound by that decision (scope). We show that
the central role of altering rules in corporate law is not simply to make
changing a default more or less difficult, as is widely supposed, but rather to
combine process and scope in ways that define distinct bargaining environments,
shaping how insiders negotiate over governance. Corporate law can
fine-tune these features in ways that both encourage contractual innovation
and manage intra-corporate risks. In response to recent cases and legislation,
we propose new altering mechanisms that will broaden decision-making to
include non-signatory shareholders, protecting them from harmful externalities.
Altering rules, as they exist now, represent only a fraction of their potential.
Rethinking their design opens the door to a vast, largely unexplored
landscape of possibilities that could guide corporate governance in its new
era of contractual innovation
Contractual Control in Dual-Class Corporations
No full textVol. 42:332Founders and other corporate insiders go to great lengths to control
the companies they take public, and the mechanisms they use to maintain
control have been a central theme of corporate law. Dual-class structures,
which give insider shareholders voting rights that exceed their economic
rights, are a common way for insiders to maintain post-IPO control. Scholars
and policymakers have endlessly debated the costs and benefits of these
structures, which have surged in popularity over the past 20 years. As one
prominent scholar put it, dual-class structures are “[t]he most important
issue in corporate governance today.
Lost-Premium Damages in M&A: Delaware’s New Legal Landscape
No full textVol. 42:33In the event of a buyer’s willful breach of a merger agreement, lost-premium
provisions allow a target corporation to claim damages that include
the lost premium or economic entitlements that its stockholders would have
received had the deal closed. In the recent Crispo v. Musk decision the Delaware
Chancery Court held these provisions to be unenforceable under the
anti-penalty doctrine. In this Article we challenge the analysis in Crispo by
arguing that lost-premium provisions are doctrinally defensible, economically
sensible, and supported by policy considerations. Lost-premium provisions
became enforceable in Delaware from August 1, 2024, following
amendments to the Delaware General Corporation Law. But the issue may
crop up again in other jurisdictions. This Article explains why courts in other
states both can and should uphold lost-premium provisions
Defining the Field of Judicial Administration
No full textVol. 36:2How do we define an academic field?
You may be charmed to know that the word “field” was inherited from Germanic, and its original form—“feld”—meant “open country.” We may think of fields of study, then, as plots of land that we come to cultivate.
Or we may think of fields in more celestial terms. Academic fields do, after all, bear a certain resemblance to stars. They are born, they expand, they contract, they die out, and eventually some of their matter is taken up by new fields. If the “Programme of Instruction” of our friends in Cambridge is any guide, a century ago law students were expected to take courses in, among other subjects, equity. (Today, equity might be the white dwarf of legal fields—a stellar remnant, if you will.)
Yet as much as this second metaphor may illuminate, it is missing a critical element of the first: the hand that we, as scholars, have in shaping these fields. To wit, remedies exists as a coherent body of study today because of past choices made by judges and academics—among them, such luminaries as Charles E. Clark and Charles Alan Wright. As the great Doug Laycock wrote in How Remedies Became a Field: A History, “It was not inevitable that there would come to be courses, casebooks, treatises, and all-day workshops on the law of remedies.” It was because these figures thought there should be a field dedicated to the following question—What should a Court do to correct an actual or threatened violation of law?—that material moved from other fields to establish a coherent plane of inquiry for students and academics today.
Federal courts exists as we know it because of the particular choices of Henry Hart and Herbert Wechsler, some seventy years ago. It was their insights—their connections under the themes of federalism, separation-of-powers, and what courts are good for (and not good for)—that established the field that many of us play on today. And the Legal Process School exists along with it because of the tilling of Hart and Wechsler and the rich questions posed by the same Hart and Albert Sacks—namely, who ought to make a given legal decision and how ought that decision be made?
My rather bold claim today is that it is time for us to chart a new field of study within law: the field of judicial administration
Corruption and the Supreme Court
No full textVol. 36:2Corruption is everywhere at the Supreme Court. The justices routinely rule on what is—and, more frequently, what is not—corrupt. Simultaneously, their off-the-bench behavior has subjected them to a barrage of criticism that they themselves are corrupt, accusations to which they have responded in halting and inconsistent ways. To what does all this amount?
My goal in this Article is to examine the justices’ rhetoric around the idea of corruption and the consequences of their rhetorical choices. How do they talk about the concept of corruption? What stories do they tell about corrupt actors? How does corruption interact with their discussions of the role moralities of various types of political actors? What sorts of actors do they portray as most likely to be corrupted, and what forms might that corruption take?
This inquiry into the justices’ rhetoric of corruption yields a rather clear result: consistently, across doctrinal issues and issues of Court administration, the justices have discussed corruption in a manner that simultaneously reinforces a narrative of their own trustworthiness and undermines the trustworthiness of other institutions and actors
Abortion's New Criminalization-A History-and-Tradition Right to Health-Care Access after Dobbs
No full textSince Dobbs v. Jackson Women's Health Organization reversed Roe v. Wade as contrary to the nation's history and traditions, efforts to ban abortion appear as calls for a return to tradition. But criminalization after Dobbs is not a return to the past; it is a new regime, in certain respects less restrictive, and in others far more so. Today, states criminalize access to urgently needed health care for pregnant patients in ways they never have before. Are there constitutional limits on abortion bans that restrict access to health- or life-preserving care? In Dobbs, the Court granted certiorari "to resolve the question whether 'all pre-viability prohibitions on elective abortions are unconstitutional.'" This Article shows that Dobbs's account of why states can criminalize "elective abortions" in turn suggests the unconstitutionality of bans that break with pastpractice in criminalizing terminations that are part of urgently needed health care under federal and state law. We show that the nation has long had a tradition of exempting critical forms of health care from criminalization, that this tradition extended to abortion law, and that it was expressed in the many state laws cited in Dobbs's appendices, as well as in the text and case law of the Comstock Act. We show that this tradition extended across jurisdictions and over time. We demonstrate that under Dobbs and Washington v. Glucksberg, such a tradition can guide interpretation of the Constitution's liberty guarantees, even if access was not historically termed a right. We show that courts in states with abortion bans often view history-and-tradition analysis of this kind as faithful to Dobbs and have begun to employ it under their own state constitutions. Finally, we defend our reading of Dobbs and substantive-due-process law against an originalist reading of Dobbs, advanced by Professor Stephen Sachs, asserting that the Fourteenth Amendment only protects rights historically recognized as such at the time of the Fourteenth Amendment's ratification. We argue that Sachs's originalist reading of the Fourteenth Amendment conflicts with important aspects of Glucksberg and Dobbs and, in the process, imposes constitutionally offensive status inequalities on the Constitution's liberty guarantees. Addressing these questions, we suggest, contributes to the broader debate about how history and tradition can guide constitutional inquiry. By no means are history and tradition the sole ground on which Americans can assert the rights in question, yet they are a critical ground--a reminder that criminalizing urgently needed health care is not what Americans traditionally do, even to pregnant women
The Proper Role of Equality in Constitutional Adjudication: The Cathedral's Missing Buttress
No full textThe most difficult and divisive issue in American constitutional law is how to deal with fundamental rights that are not specifically protected in the Constitution. At times, courts have afforded such rights near-absolute protection against infringement. At other times, courts have declined to provide such rights any constitutional protection. Both approaches are misguided. Instead, as argued by Justices Antonin Scalia and Robert H. Jackson, and Professor John Hart Ely, laws infringing these rights should be invalidated if they burden only some in society while leaving the rights of the enacting majority unimpeded. This Feature begins by describing the two sorts of protections the Constitution affords to enumerated fundamental rights. Some rights are given full "libertarian" protection, with any infringement subject to close scrutiny. But others, such as the right to property, receive only "egalitarian" protection. Private property may be taken for public use so long as all of society is burdened by the requirement that compensation be provided. This Feature argues that the Constitution should be read to extend similar egalitarian protections to any number of unenumerated fundamental rights. Encumbrances on these rights run afoul of the Constitution's egalitarian guarantees if the burdens they impose are unequal. Protection of such rights is not available under the current reading of the Equal Protection Clause because violations of these rights are often not the result of discriminatory intent but rather the enacting majority's desire to achieve results it deems good without bearing their costs. This Feature seeks to return the Constitution's egalitarian guarantees to the purpose contemplated by the Framers. It argues that a law violates these egalitarian protections if a law infringes unequally and substantially the fundamental rights of individuals not positively affiliated with the majority. It outlines factors in evaluating proper judicial remedies for impermissibly unequal laws. And it provides the doctrinal constitutional bases for such judicial action
Overruling Chevron Without a Coherent Theory of Statutory Interpretation and the Court-Congress Relationship
No full textThe article explores the significance of the U.S. Supreme Court decision in the administrative law-related case Loper Bright Enterprises v. Raimondo to the Court's continued lack of a coherent theory of the U.S. Congress and statutory interpretation. Topics include the author's view on the Court's overruling of the decision in Chevron U.S.A. Inc. v. Natural Resources Defense Council Inc. and arguments on the Court's denouncement of the Chevron case as a judicial invention and a fiction
Roman Law and the Narratives of European Legal History
No full textVol. 35:3Sometimes one sees things clearer from afar. Some years ago, James Q. Whitman published a remarkable article, evocatively titled" Long live the hatred of Roman law!" In it, he traced the long history of animosity towards Roman law in European culture, from the Middle Ages to the Nazis, discussing the various reasons why Roman law has been attacked by opponents ranging from theologians, lawyers and political leaders as being against the Christian faith, as being foreign, capitalistic, against morality and public good. He argues pointedly that the" hatred of Roman law was, in fact, a constant of western history until 1945." 1 What has been most remarkable is the extent in which similar claims, that Roman law promotes greed, unrestrained capitalism or other vices, have circulated throughout its history. In these often nationalistic narratives about law and what should constitute law, Roman law was presented as an alien and immoral monster, which sought to destroy all that is good and proper. According to these stories, Roman law promoted property absolutism that was considered offensive to theologians, political absolutism that was offensive to everyone except the princes, who adored the example of" princeps legibus solutus", and law that was materialistic and individualistic and thus offensive to the common people and their customs, as mainly characterized by nineteenth century Romantic authors in Germany and their Nazi followers. The latest would even codify their hatred of Roman law in point 19 of the Nazi party program (1920), which would call for the eradication of materialistic Roman law
Parents in Fact
No full textThe Restatement of Children and the Law, protects a child's relationship with a "de facto parent"--a person who has "established a bonded and dependent relationship with the child that is parental in nature." De facto parent doctrines are part of a broader category of functional parent doctrines that extend parental rights to an individual who has developed a parent-child relationship and acted as a parent to the child. Application of the de facto parent doctrine depends on a conclusion that the person formed a parental relationship, and yet debate remains over whether the person is a parent or merely a third-party nonparent. This Essay examines the Restatement's full-throated embrace of a de facto parent doctrine--an immensely important development--in the context of family law's evolving treatment of functional parents. In the past, family law generally cast functional parents as nonparents. For example, a 1995 state court decision, on which the Restatement relies, treated a de facto parent as a third party entitled merely to visitation with the child she had raised. More recently, family law has grown to see functional parents as parents. Common law doctrines have regarded de facto parents as entitled to the rights and responsibilities of parenthood, and a growing number of states have adopted statutory provisions that treat functional parents as legal parents. The Restatement's approach to de facto parents reflects these developments. Even as the Restatement begins by locating de facto parents in a framework designed around conflicts between legal parents and third parties, it distinguishes de facto parents in ways that render them, both conceptually and legally, like parents. Indeed, the Restatement pushes well beyond the American Law Institute's earlier endorsement of a de facto parent doctrine--the 2002 Principles of the Law of Family Dissolution, which recognized de facto parents but consigned them to an inferior legal status. After situating the Restatement's approach to de facto parents within broader family law developments, this Essay explores how the evolving status of functional parents--from nonparent to parent--matters to constitutional understandings of the parent-child relationship. To account for the fundamental right of parents to direct their children's upbringing, including by excluding third parties, the Restatement requires a de facto parent to show that "a parent consented to and fostered the formation of the parent-child relationship between the individual and the child." This consent-based approach to de facto parenthood proceeds from an assumption that a functional parent is a third party who, based not only on their conduct but also on the conduct of an existing legal parent, can transcend that third-party status. Yet, seeing de facto parents as parents prompts skepticism of this constitutionally grounded consent requirement. Such skepticism is reflected in law, as courts have resisted a restrictive application of the requirement, and newly enacted statutory doctrines have explicitly softened the requirement. Further, the fact that other functional parent doctrines, including those that yield legal parentage, do not expressly require parental consent suggests that consent is not a constitutional requirement. More broadly, the focus on consent obscures the constitutional interests of the functional parent, who, like other parents, may have a constitutional claim to parental recognition