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The Separation of Voting and Control: The Role of Contract in Corporate Governance
No full textThe default rules of corporate law make shareholders’ control rights a function of their voting power. Whether a director is elected or a merger is approved depends on how shareholders vote. Yet, in private corporations shareholders routinely alter their rights by contract. This phenomenon of shareholder agreements—contracts among the owners of a firm— has received far less attention than it deserves, mainly because detailed data about the actual contents of shareholder agreements has been lacking. Private companies disclose little, and shareholder agreements are thought to play a trivial or nonexistent role in public companies. I show that this is false—fifteen percent of corporations that went public in recent years did so subject to a shareholder agreement. With this dataset in hand, I show the dramatic extent to which these shareholders redefine their control rights by contract. Shareholders restrict the sale of shares and waive aspects of the duty of loyalty. Above all, however, shareholders use their agreements to bargain with each other over votes for directors, and to bargain with the corporation itself for other control rights, such as vetoes over major corporate actions. In essence, while statutory corporate law makes control rights a function of voting power, shareholder agreements make control rights a function of contract instead, separating voting and control
Disability in the Mirror of Zionist Ideology: A Comparative Perspective on the Israeli Disability Books
No full textThe interrelationship between the disability category, military service, Zionism, and political thought in the State of Israel has rarely been studied. This Article offers, for the first time, a comparative perspective on three Israeli disability books and an inquiry into the hierarchy between them in the context of Zionist ideology. The first book is the military profiles book, which examines the medical fitness of candidates for military service and, consequently, affects the roles selected for them. The second is the Ministry of Defense’s disability book that estimates disability because of and/or during military service. The third is the civil disability book, which estimates the disability of work or disabled people in general. Based on the theoretical intersection of critical disability studies, critical military studies, and science and technology studies, the article examines the mutual relations between political thought, social concepts, and the disability category. On the one hand, the article explores the effects of political thought and social concepts on the construction of the disability category. On the other hand, it inquires into the influence of the construction of the disability category on political thought and society. The potential and dangers of these mutual relations are appraised
Opportunism Zones
No full textIn 2017, Congress adopted the Opportunity Zone, a powerful place-based economic development tool, as part of a major tax reform. Place-based economic development tools and strategies provide incentives to re-attract jobs and capital to areas from which jobs and capital have fled. Investors in state-designated Opportunity Zone districts benefit from their mechanics: they are able to (1) defer capital gains on qualified investments; (2) step-up tax basis on invested funds; and (3) permanently avoid tax on investment appreciation. Proponents of the Opportunity Zone argued that these tax incentives will serve as an efficient way to direct investment dollars to poor areas. However, critics point out that such government interventions are stricken by corruption, abuse, and waste. This Article analyzes and critiques the Opportunity Zone. It argues that, when compared to other place-based economic development tools, the Opportunity Zone is an extremely troublesome approach. I hone my analysis on three key dimensions: use, transparency, and participation. Focusing on those dimensions, I argue that the Opportunity Zone may well harm the very areas and individuals that it is supposed to benefit. When considering its potential to increase wealth and income inequality in particular, there is ample reason to be skeptical of the benefits of the Opportunity Zone
The End Environmental Externalities Manifesto: A Rights-Based Foundation for Environmental Law
No full textBoth of us had the privilege of serving in government with Dick Stewart when he was the Assistant Attorney General for the Environment and Natural Resources Division of the U.S. Department of Justice, and we served at his client, the Environmental Protection Agency. Before that, we both knew and respected Dick’s work as an academic and environmental policy thought leader. We regard him as a mentor, an inspiration, and a model for our own careers. He is also a good friend.
In this Article, we attempt to extend Dick’s path-breaking work with Bruce Ackerman, who is also a mentor to both of us, on market based solutions to environmental problems.1 And like all of those who look at law through the prism of the incentives that it creates, we are further indebted to our teacher, Dean (now Judge) Guido Calabresi. We had the challenge—and opportunity—to try to implement some of their ideas about the role of economic incentives in regulation when we served at EPA in the late 1980s and early 1990s, most notably when we participated in the drafting and early implementation of the Acid Rain Trading Program under the 1990 amendments to the Clean Air Act. This Article reflects some of what we learned from that experience and what we regard as its implications for the future of environmental law.
Developing cost-effective ways to reduce obvious pollution, as Dick Stewart and other intellectual leaders of his generation did,
made great sense for the first fifty years of America’s modern efforts to protect the environment. Their approach delivered the low-
hanging fruit, and environmental conditions across America are much better today as a result. We believe, however, that the challenge for the next generation is to extend their work by addressing the remaining environmental externalities that are neither obvious nor easy to address. To do so, we need to reframe environmental law and policy on an intellectual foundation of environmental rights rather than economic efficiency
Lay People's Advocacy and Resistance in Talmudic Adjudication Narratives
No full textThis article analyzes depictions of Jewish lay people who advocate for their interests before rabbinic judges in adjudication narratives, a genre of brief case stories in the Babylonian Talmud (c. 200-550 CE). Adjudication narratives are distinguished by their portrayal of a specific judge’s hearing and ruling on the case, which grants the opportunity to portray dramatic interactions between litigants and judge. The extensive editing process of the Talmudic corpus, as well as the possibility that some of these narratives may have been composed as riffs on the same case, means it is difficult to ascertain how accurately they depict historical reality. However, narratives illustrating forum shopping, actions that change the facts of the case, interruption and finally, argumentation, each offer an opportunity to assess when and why tactics are effective for the petitioner. The stories suggest that tactics of lay advocacy are likely to be treated favorably by the Talmud’s authors when the petitioners’ actions support the authority of the judge and the traditions of rabbinic culture. Their inclusion in the Talmud also instructs future judges about the potential opportunities and challenges offered by lay people who advocate for their needs in court. Most important, perhaps, is that these adjudication narratives incorporate lay people’s concerns, and in some cases, their “backlash,” into Jewish legal reasoning, training, and tradition
Biology and Illegitimacy
No full textDENISE Hawkins and Darla Grese were in a committed, unmarried same-sex relationship when they decided to have a child together. Darla became pregnant with donor sperm and gave birth in 2007. For several years, Darla and Denise raised the child together in the home that they shared. But in 2014, Darla and Denise ended their relationship. At that point, the two women continued to share parenting responsibilities as part of an informal custody arrangement.
Two years into this arrangement, however, Darla refused to allow Denise to see their child. Cut off from the son she had been raising for almost a decade, Denise went to court and filed a petition for custody. Two psychologists, as well as a guardian ad litem, testified that ending the child's relationship with Denise would inflict psychological and emotional harm on him. In fact, the court found that the child had developed behavioral problems as a consequence of his separation from Denise.
Nonetheless, the Virginia Court of Appeals determined that Denise was not a legal parent and thus was not entitled to custody or visitation over Darla's objections. Because Denise was not a biological parent, was not married to the biological mother, and had not adopted the child, Virginia law did not recognize her as a legal parent. Moreover, the court asserted that Darla, as the child's biological mother, had constitutional authority to exclude non-parents. Accordingly, she was entitled, as a constitutional matter, to shut Denise out of their son's life. The court severed the child's relationship with one of his parents, even though it was clear that he would be harmed
Transactions Benefits
No full textAt least since Ronald Coase, law and economics has been deeply engaged with transactions costs. These frictions can prevent resources from being efficiently deployed in production and goods from reaching their highest-valuing users. The systematic study of how to reduce or minimize transactions costs has yielded explanations, for example, of the boundary between the firm and the market, the allocation of initial entitlements, and the choice between deploying property rule or liability rule remedies when
entitlements are breached.
However, the inevitable frictions that attend to human affairs can produce gains as well as losses, and law and economics has almost entirely neglected the study of these transactions benefits. At least three varieties of transactions benefits appear immediately once one starts to look for them. Publicity benefits arise when features of one transaction become known and are valuable to other circumstances and perhaps to the legal system at large. One reason to oppose settlement and arbitration, for example, is that even if these forms of dispute resolution involve lower transactions costs than adjudication, they also fail to generate adjudication's valuable transactions benefits. Legitimacy benefits arise when the frictions involved in legal arrangements transform the beliefs and desires of those who experience them in ways that sustain the authority that the arrangements have
over the parties within them. Accounts from social psychology of the authority of adjudication and, more broadly, the role that procedure plays in producing legitimacy emphasize this variety of transaction benefit. Finally, solidarity benefits arise when legal frictions constitute intrinsically valuable relationships among the parties who produce them. Adjudication's transformative powers and contractual collaboration illustrate this variety of transactions benefit.
The three species of transactions benefit pose both opportunities and challenges for law and economics. Publicity benefits and perhaps also legitimacy benefits are well captured by traditional economic models, which might treat them as positive externalities. Law and economics can therefore recognize publicity benefits without changing any of its deep substantive or methodological commitments; and recognizing these transactions benefits opens up new avenues for law and economics scholarship. Solidarity benefits pose a much deeper challenge for law and economics, as they move towards the view that value inheres not in states of affairs but rather in relations among persons. This view is difficult to compass from within the functionalist approach to law that law and economics embraces
Reading Regents and the Political Significance of Law
No full textWhen the Supreme Court handed down its decision in Department of Homeland Security v. Regents of the University of California, in June 2020, advocates celebrated. DACA—an acronym that no longer requires definition —lived to see another day.1 Newspaper headlines marked the decision as a decisive rebuff of the Trump administration’s efforts to end the Obama-era program that shielded so-called Dreamers from deportation while authorizing them to work in the United States. Initiated in 2012, the Deferred Action for Childhood Arrivals pro-gram had survived almost four years of a presidential administration overtly hostile to immigrants and immigration—a government bent on unraveling as much of the administrative and political legacy of its immediate predecessors as possible. The Supreme Court largely affirmed the Ninth Circuit’s holding that efforts by the Department of Homeland Security (DHS) to rescind DACA were arbitrary and capricious and therefore invalid, sending DHS back to the drawing board to accomplish its objectives.4 With the 2020 presidential elec-tion less than five months away and the very real possibility of regime change in the air, the decision seemed decisive. The Supreme Court had saved DACA, at least for the time being
Why Restrict Abortion? Expanding the Frame on June Medical.
No full textAs the Supreme Court prepares to roll back protections for the abortion right, this Article analyzes the logic of pro-life constitutionalism in June Medical Services L.L.C. v. Russo.
I expand the frame on June Medical to examine the logic of women protective health-justified restrictions on abortion.2 Do these laws protect women or the unborn—and how? By considering the history of the law at issue in June Medical and locating it in broader policy context, we can see how legislators who restricted abortion to protect women’s health equated women’s health with motherhood; they supported laws that push women into motherhood while declining to enact laws that provide for the health of pregnant women and the children they might bear. Expanding the frame on Louisiana’s pro-woman pro-life law shows us sex-role stereotyping in action, and demonstrates the intersectional injuries it can inflict.
From this vantage point, we can see that judges who refuse to scrutinize pro-life law making—on the grounds that it would involve judges in politics—help legitimate the claims about protecting women’s health that supposedly justify the abortion restrictions, while revising the meaning of theConstitution’s liberty and equality guarantees. Reading the doctrinal debate in June Medical in this context identifies open and hidden efforts to roll back protections for the abortion right—and suggests how the Supreme Court that President Donald Trump helped fashion values women, health, life, truth, and democracy
Fair Pay and Safe Workplaces in Government Contracting: Reassessing Labor Law Benefits in Light of Infrastructure Investments and Buy American
No full textVolume 39When purchasing infrastructure, goods or services, the U.S. government has “to promote economy, efficiency and effectiveness.” Executive Order No. 13,673, issued by President Obama, expanded the requirement to encompass social sustainability: to promote economy and efficiency in procurement, the government was required to “contract with responsible sources who comply with labor laws.” The Fair Pay and Safe Workplaces rule (the Rule), proposed in 2014, required contractors of federal agencies to provide fair wages and safe workplaces to their workers. Because industries feared that the Rule would lead to contractors being unfairly excluded from public contracts, opponents of the Rule called it the “blacklisting rule.” After having reviewed the final rule and its regulatory impact analysis, the Office of Management and Budget (OMB) approved the Rule in 2016. Shortly after his inauguration, President Trump revoked the Rule. Now, with Congress’ passage of the “once-in-a-generation” Infrastructure Investment and Jobs Act, and the proposed Buy American rule, the U.S. government will employ thousands of American workers to build highways, bridges, and public transit.10 Hence, improving the quality of workplaces in government purchasing is more relevant than ever and may very well necessitate the promulgation of a new version of the Rule. Therefore, taking a closer look at the Rule’s regulatory impact assessment and evaluation of labor law benefits is warranted and can provide a helpful model for understanding and improving cost-benefit analysis of government purchasing