American Business Law Journal最新文献

Corporate law does not support the corporate operating systems of Silicon Valley startups. Startups are exit-driven, short-term ventures. Their shareholders care from day 1 about the exit strategy that the startup will finally pursue (i.e., how and when it will be acquired or go public). Startup shareholders often have differing views in this respect, and to allow them to collaborate efficiently nonetheless, startups have developed unique governance structures. These structures rely substantially on giving prominent shareholders the power to force their desired exit strategy on other shareholders and startups' managements. At the same time, however, startups are practically required to organize their businesses as corporations, which strictly undermines these governance structures. Corporate law compels shareholders to entrust almost all exit-related powers and discretion to the board of directors. The board, in turn, is obliged to serve the interests of the shareholders as a whole, disregarding particular shareholders' needs. This tension burdens startups by making their carefully crafted governance structures unreliable and difficult to enforce. Currently proposed solutions, whether based on sophisticated contracting or using non-corporate business entities, prove inadequate for resolving this fundamental clash. Instead, this paper calls for policymakers to introduce the “venture corporation,” a new business entity designed to answer startups' unique governance needs.

In the last decade, we learned of massive scandals at some of the world's largest companies. In each of those cases, compliance officers were charged with ensuring that the company adhered to legal and regulatory requirements and their own internal codes of conduct, and yet, these companies were not protected from their own bad actors. Compliance functions have grown in importance, while, at the same time, it has become increasingly difficult to hire and retain qualified personnel for compliance roles. We posit that a key issue facing compliance personnel—one that could be improved with legislative attention—is the failure of the law to protect compliance officers from retaliation when they blow the whistle by reporting unlawful or unacceptable conduct to superiors inside the organization. In essence, when compliance officers do their jobs and alert the company to possible violations of law or take issue with the company's handling of a potential legal violation, these officers are vulnerable to retaliation and can be terminated, demoted, and the like without legal consequence. The very employees that organizations hire to protect them are themselves unprotected. In this article, we consider compliance officers in three areas: Equal Employment Opportunity (EEO), securities fraud and financial regulation, and anti-money laundering. In two out of the three areas, we find compliance officers uniquely exposed to lawful retaliation, while the third area provides a far more protective environment and offers a path forward for the other two. In both the EEO sector and the securities fraud sector, we highlight the common law doctrines and statutory interpretations that have created this situation for compliance officers. In contrast, the Anti-Money Laundering Act of 2020 (AMLA) provides exceptional protection for whistleblower compliance officers in this sector, and as a result, we propose using the AMLA as model legislation for proposed changes in the other two domains. The plight of compliance officer whistleblowers is complicated by courts that have intentionally and unintentionally narrowed protections without contemplating the broader implications of their actions. We propose that Congress respond to these narrowing doctrines so that compliance officers can effectively do their jobs and protect their organizations from legal liability and scandals, with the assurance of protection against retaliation as they perform this essential function.

Children mistakenly eating tetrahydrocannabinol-laced gummies thinking they are Halloween candy. Adults overdosing on seemly innocent and fun-looking “edibles.” These all-too-common occurrences are a serious problem in the growing market for cannabis-related products. A significant part of the risk stems from the broad acceptance and expectation of parody marketing in the field, which has contributed to these dangerous misunderstandings. Importantly, recent changes to trademark law have limited the commercial use of parodies as marks, strengthening the hand of brand owners to police harmful impersonation while preserving legitimate speech. As a result of the more restrictive environment, trademark law and consumer safety rules are increasingly congruent and a greater array of stakeholders with significant financial resources now possess the power and incentive to reduce the danger. This article uses the above cannabis marketing conflict as a framing tool for exploring the limits of trademark parody in an important yet under-examined context: when safety concerns clash and arguably supersede speech. The existing literature has typically considered parody in innocuous and often noncommercial applications. Such limited review underappreciates instances when trademark confusion or dilution through parody lead to serious health consequences, particularly for vulnerable audiences such as children. Additionally, to the extent that the literature does address cannabis and trademarks, it has generally focused on cannabis branding issues as opposed to infringing the rights of others. This article bridges the gaps. Moreover, it integrates a consideration of the impact of recent Supreme Court cases, Jack Daniel's Properties, Inc. v. VIP Products LLC and Vidal v. Elster, that reflect a tighter circumscription on speech protections for unauthorized use. It concludes with the observation that not all parodies are equal in terms of balancing speech and safety. And with evolving trademark law, there is increasingly an incentive for various stakeholders to collaborate to enhance consumer safety.

It is common knowledge that climate change concerns have prompted countries around the world to plan for a reduction in their fossil fuel dependencies. Yet while much attention has been placed on new low-carbon sources of energy such as wind, solar, and nuclear, comparatively little focus has centered on the commodity inputs, critical metals, needed to create this clean energy. In this article, we argue that at the heart of the energy transition is a commodities transition, representing an unprecedented international reliance on critical metals, which have traditionally been capricious commodities traded in global markets. Indeed, nations around the world have begun to stockpile these geographically concentrated, geopolitically potent materials which are poised to take center stage. This critical commodities transition accompanying the energy transition is underappreciated in the legal scholarship despite its widespread implications for many areas, including financial regulation. We use the story of the London Metal Exchange's March 2022 nickel debacle to turn a spotlight on this development and to highlight several areas of existing regulatory frameworks in derivatives markets that are ripe for reexamination given this commodities evolution. In doing so, this article sets the stage for a research agenda that will examine how regulators and financial innovators can build strong metal markets to enable secure metals supply chains and to provide the basis for a sustainable energy transition.

The recurrent series of crises demonstrates that supply chains are frequently susceptible to disruption. It is imperative they adapt to evolving economic, ecological, social, and geopolitical circumstances. Economists and management scholars have introduced contract governance models that facilitate adaptation and collaboration; however, these models have been largely ignored in the legal field. This article addresses a significant gap in the existing literature on commercial contracts, which is currently fragmented between legal, economic, and organizational perspectives. The article proposes a functional, proactive contracting framework focused on joint value creation. The framework integrates insights from transaction cost economics, relational contract theory, relational view, functional contracting, proactive contracting, and legal design. It provides an instrument for contracting parties to co-create contracts that enhance performance, reduce transaction costs, devise contingency plans, and utilize contracts as user-centric tools to support relational governance practices and sustainability. A case study on Finnish Alliance Model Contract Clauses demonstrates the benefits of this approach in fostering more collaborative and resilient commercial contracts.

The growing prevalence and magnitude of climate-related natural disasters are perpetuating a climate debt trap in which recovery costs compound over time, progressively eroding the capacity of governments to obtain financing to respond to them. How can countries participating in global financial markets respond? This article focuses on natural disaster clauses in sovereign debt contracts, which enable a national government to temporarily suspend payments to its creditors when a natural disaster strikes the country. Natural disaster clauses are analyzed and critiqued as an example of contract innovation amidst ongoing debates about legal reform of the global financial system in response to climate change.

The national pension debt and COVID crises have collided. Post-pandemic economic decline has escalated existing financial strains on state and local pension plans, impacting workers and the public welfare. With unfunded obligations exceeding one trillion dollars, many of these plans are in jeopardy. But the movement to reform government pension contracts has yet to adopt an anchoring idea, leaving judicial decisions in disarray and policymakers without guidance about how to shore up troubled retirement systems. The crux of the problem is the many meanings of contract under state and US Contract Clauses that prevent pension reform. This Essay endorses a promising path forward—contract minimalism. “Contract minimalism” concentrates on the duration of government pension contracts. It posits that public and private employment law should be treated the same. Like its private law counterpart, public sector employment at-will ought to consist of a daily contract interval. A contract-a-day concept entitles employers to change the plan prospectively, with employees receiving a proportionate share of benefits for work performed. Just as several agreements safeguard salaries for labor, they should also mirror the protection afforded to deferred benefits like pensions. Contract minimalism additionally puts public and private sector employers on the same legal footing as to the authority to change pension plan terms. Thus, it aligns public pension benefits with overlapping fields of law, placing them on a firm conceptual foundation. The minimalist approach also has the advantage over approaches that are insufficiently attentive to scarce government resources or employee old-age security. By protecting pension benefits early and incrementally, it advances a middle path with fairer, more coherent results. In the present post-pandemic era of hard choices, minimalism provides an equilibrium between the over- and under-protection of pension benefits.

The Community Reinvestment Act (CRA) was passed in 1977 as a response to redlining, the systemic discrimination against loan applicants who resided in predominantly Black neighborhoods. In enacting the CRA, Congress found that banks have a “continuing and affirmative obligation” to help meet the credit needs of the communities in which they are chartered. To that end, the CRA requires bank regulators to rate the record of each bank in fulfilling these obligations. While much has changed since 1977, some things have not. Financial services are now provided by a much broader set of entities including financial technology (fintech) firms, yet the CRA's mandates still just apply to banks. In addition, while the demographic compositions of neighborhoods have changed since 1977, Black applicants are still 2.5 times more likely than White applicants to be rejected for a home loan. On October 24, 2023, the banking agencies jointly issued final rules to “strengthen and modernize” the agencies' CRA regulations. While the updated rules do inject more objectivity in order to address persistent concerns about CRA ratings inflation, we contend that further amendments are needed to account for what has changed and what has not changed since its original enactment. In this article, we argue that the CRA continues to be a worthwhile endeavor, as it addresses gaps left by fair lending laws. To further its impact and address its many shortcomings though, we contend the CRA should be amended to also apply to nonbanks that provide financial services, to counter discrimination more directly, and to calculate CRA ratings more objectively.

Innovation is usually framed in terms of expanding the knowledge frontier or the commercialization of new ideas. However, it is much more than that. Innovation is also about providing greater well-being for society and the various stakeholders that support a firm's efforts to innovate. This article examines the paradoxical status of innovation and its related legal domain of intellectual property rights, which largely exists beyond the purview of corporate social responsibility (CSR) theory, practice, and discourse. To address this conceptual deficiency, this article interlinks intellectual property, innovation, and CSR to offer three contributions. First, this article provides a working definition of the various stakeholders that must be identified to define CSR goals related to innovation. A critical aspect of CSR is the identification of relevant stakeholders. Second, this article discusses how established CSR approaches will accommodate these innovation stakeholders. Third, this article introduces and positions the managerial strategy of open innovation as a feasible and desirable approach that ethically recognizes, engages, and balances the interests of innovation stakeholders with the interests held by the firm and society. The normative argument made is that the firm's fiduciary leaders have an ethical obligation to pursue open innovation practices as a default norm to achieve the best CSR results for the firm and its various innovation stakeholders.

The literature on stakeholder theory has largely ignored the difficult and central issue of how judges and firms should resolve disputes among stakeholders. When the issue is addressed, focus has largely been on the potential for management to use stakeholder theory as cover for rent-seeking or on disputes between classes of stakeholders. Sharply underappreciated is the potential for disparate interests within a stakeholder class. That potential is particularly acute due to a (largely education-driven) stark and growing class divide in the United States. There is a substantial difference between the interests of a highly educated professional and managerial elite and a pink-collar and blue-collar working class who mostly do not hold 4-year degrees. Despite their smaller numbers, the professional and managerial elite will frequently win out in intra-stakeholder disputes with working-class stakeholders due to their greater status, power, and influence. Because this class divide is cultural, social, and political, as well as economic, these disputes will go beyond financial pie-splitting to culture war issues. This threatens to be destabilizing for both the republic and individual firms and undermines both the practical and ethical arguments for the stakeholder theory.