Volume 19
Volume 19.1
Multi-Unit Franchising: Alternative Approaches to Protect Vulnerable Franchises
Robert W. Emerson & Jason R. Parnell
Multi-unit franchising is growing rapidly in the United States. This increase in multi-unit franchising over more traditional single-unit franchising models calls for new regulations to protect franchisees choosing to embark upon a multi-unit franchise arrangement. The United States, however, has not recognized the special circumstances of multi-unit franchisees face when opening multiple franchises. As a result, U.S. regulations fail to provide enough protection for prospective multi-unit franchisees, whether sophisticated or unsophisticated.
This Article focuses on the advantages of switching to a multi-unit franchising model and the benefits of a multi-unit business from the perspectives of both franchisors and franchisees. Next, this Article analyzes the lack of protection the United States provides to multi-unit analyzes the lack of protection the United States provides to multi-unit franchisees. This lack of protection is based on the mistaken belief that analyzes the lack of protection the United States provides to multi-unit franchisees. This lack of protection is based on the mistaken belief that most multi-unit franchisees are sophisticated and on an equal playing field with franchisors. Finally, this Article discusses solutions to the problems associated with multi-unit franchising by examining how upgraded disclosures, enhanced regulation of development schedules, and extensive guidance from other nations’ laws would better protect multi-unit franchisees and, in general, improve franchising overall.
Disney v. Democracy?: A Public Choice and Good Governance Analysis of Florida’s Reedy Creek Improvement Act of 1967 and Its Resulting Regime
Donald J. Kochan
The Reedy Creek Improvement Act of 1967 [hereinafter “1967 Act”], by all accounts is an extraordinary piece of legislation, designed principally to serve the private interests of a private corporation and its operation of Walt Disney World. This Article concludes that the 1967 Act, the political environment surrounding its creation and the maintenance of authorities under the Act, and governance pursuant to the Act have all accomplished a dangerous relaxation of normal limits on governmental power and structures of democratic accountability. In its analysis, this Article brings scholarly insights to bear upon the inquiry from constitutional law, statutory interpretation, democratic governance and institutional analysis from law and political science, land use planning, local government law, urban planning, administrative law and regulatory policy, and the interdisciplinary work animating positive political theory (explaining how politics actually works rather than how we wished it worked).
In particular, the insights from public choice theory are applied to the 1967 Act, the Reedy Creek Improvement District (RCID), and Disney for the first time in any substantial way as a matter of academic inquiry. As part of its work, the Article identifies the types of “masks” that Disney has used to obscure the private nature of the legislative deals it has profited from by attempting to clothe the 1967 Act and RCID authority in public interest-sounding frames. This Article also explores the scholarly literature explaining why agencies with single-industry-enhancing purposes or a single- or primary-entity constituency, like the RCID, tend to be captured by entities they govern.
Ordinary institutional design and limits, democratic accountability mechanisms, and constitutionally-grounded processes of good governance serve important purposes. They exist to ensure that government powers remain limited, democratic principles remain protected, citizens remain empowered, and powerful interest groups like Disney are thwarted from capturing the strong arm of the state to advance their private purposes. Indeed, the preservation of these principles of limited government and the rule of law requires erecting and respecting hurdles to government intervention to: (1) ensure that government interference in private affairs is restricted to actions that serve the public interest and are truly necessary as to justify such public intervention; and (2) maximize the space for private ordering and market competition free of special privileges, so that economic freedom, competition, innovation, and growth may flourish. Consequently, governance is intentionally difficult and time consuming, allowing for broad public participation and scrutiny that leads to optimal decisionmaking, including balancing competing interests and recognizing that the neutrality principle grounding good governance prohibits picking favorites. Legislation that sets a framework risking the relaxation of these norms should be re-evaluated.
Investigating Indebtedness: Rational Changes or Boilerplate Happenstance?
Rishabh Sharma
The terms of sovereign bond contracts—and consequently, the approximately $64 trillion sovereign debt market—hinge on the concept of Indebtedness. Indebtedness, and how it is defined, impacts the interpretation of key provisions in sovereign bond contracts. As such, it can serve as either a shield or sword for either party. But there is just one problem: no one knows what Indebtedness looks like in practice. Yet the term is too crucial of a crucible to be left nebulous and neglected. Additionally, it is imperative to determine if the vast definitional changes are products of rational calculus or boilerplate happenstance. In this paper, I analyze how the term has appeared in practice for ten countries, across seventy-five sales documents, and spanning five decades to determine a) how different countries have defined the term and b) how the definition has evolved over time. While 84 percent of the sales documents I examined define Indebtedness, 16 percent oddly use the term without defining it or make no reference to Indebtedness. Further, most of the documents that do refer to or define Indebtedness use other terms instead of their variant of Indebtedness in the pari passu, negative pledge, and cross-default clauses. Additionally, 57 percent of documents that do define Indebtedness use a broad definition rather than tailoring the term narrowly to exclude obligations. Despite these seeming confusions and apparent inconsistencies, I conclude the changes reflect intentional and rational maneuvers.
Volume 19.2
Nevadaware Divergence in Corporate Law
Wendy Gerwick Couture
The differences between Nevada and Delaware corporate law—which I call “Nevadaware divergence”—are the subject of media attention, scholarly critique, and current litigation. Nevada corporate law has a reputation as being a no-liability zone where officers and directors are free to defraud stockholders without consequences. My goal in this article is to inform a more fulsome understanding of Nevada corporate law, both substantively and theoretically, as compared to Delaware corporate law. Starting with the premise that Nevada corporate law is more nuanced than common wisdom suggests, I highlight Nevadaware divergence—not only about substantive corporate law—but also about each state’s balance of the competing policies underlying corporate law. I explore the ebb and flow of the relationship between Nevada and Delaware corporate law, from the days of copycat-ism to the current era of Nevadaware divergence, and I deeply analyze three areas in which Nevada and Delaware corporate law diverge: exculpation, appraisal, and freeze-out mergers. Based on my analysis, I assert several new perspectives about Nevadaware divergence on substantive corporate law, including the controversial argument that breaches of the duty to act in good faith are not exculpated in Nevada. Drawing from Nevada and Delaware’s different choices about the appropriate balance of the competing policies underlying corporate law, I also offer a broader perspective on the policies underpinning Nevada corporate law. In short, across the board, Nevada—to a greater degree than Delaware—prioritizes the policy goals of minimizing the negative impacts of potential monetary liability on officers and directors (such as disincentivizing qualified individuals from serving or making risky decisions) over the competing policy goals of deterring breaches of fiduciary duty, compensating stockholders and corporations for fiduciaries’ breaches, and incentivizing minority-stockholder protections.
The SEC’s (Ill-Fated) Stock Repurchase Transparency Reform: A Missed Opportunity for Investor Protection
Lynn Bai
In May 2023, the SEC adopted new transparency measures designed to improve oversight of corporate stock buybacks. However, the new regulation faced immediate and successful challenges in court, prompting the agency to suspend its implementation in November 2023 for further cost-benefit analysis. Critics contended that the new regulation would offer minimal additional benefit to investors given the current regulatory framework. Despite this legal setback, advocates for the re-proposal of the regulation persist. This article shows that the new regulation would open new avenues of legal recourse for investors, fortify their claims that might otherwise be dismissed, and unlock corporate records for inspection that were previously inaccessible. The new regulation would enhance investor protection and market integrity.
The Curious Case of Reverse Morris Trusts
Mira Ganor
This Article analyzes the Reverse Morris Trust (RMT) transaction and shows that RMTs present a unique case of corporate governance. In an RMT the shareholders are positioned on both sides of the transaction while management is not, thus creating a misalignment of interests, which can be detrimental to the shareholders and potentially lead to inefficient transactions. This Article shows that the common use of a split-off as part of the RMT transaction can benefit informed shareholders at the expense of unsophisticated shareholders. To address these concerns, this Article puts forward a proposed amendment to the tender offer rules—a default contingent tender rule.
Public-Private Coordination for Climate Solutions: Integrated Resource Planning as a Tool for Decarbonization
Bryce Campanelli
The electricity sector accounts for twenty-five percent of United States greenhouse gas emissions but has been slow to decarbonize generation assets. As companies across economic sectors look to reduce their carbon footprints and take part in the energy transition, many questions have arisen related to the proper role of government involvement. This note attempts to illuminate the way public-private partnership can spur planning, and eventual energy transition deployment, by analyzing an understudied, and frequently underappreciated, planning document deployed across the states in the electricity sector: Integrated Resource Plans (IRPs). These utility-driven, government-reviewed planning documents have been in place for decades and feature coordination between utilities and regulators to develop plans ensuring the electricity system is developing in a manner that is reliable, keeps costs low, and, increasingly, ensures that generation is decarbonized. This note aims to illuminate the current IRP landscape by examining the legal features underpinning its current implementation and categorizing the features of state IRPs that can successfully act as tools in the effort to both decarbonize the electricity sector and stand as examples for the public-private partnership that will likely be necessary to usher in a fully decarbonized society and ensure ESG is not just a marketing stunt, but something that companies are held responsible for deploying.
Volume 19.3
Boundary-Setting and Choice-Making with No “Adult” in the Room: Professional Identity Formation Opportunities for 1Ls in the Transactional Context
Marni Goldstein Caputo and Kathleen Luz
Law schools are now required by the American Bar Association’s Standard 303(b)(3) to provide students with opportunities for professional identity formation throughout their legal education. It is critical that those opportunities be well-balanced and tied to the realities of practice. Yet until recently, we, as 1L lawyering skills professors at Boston University School of Law, only provided those opportunities in the litigation context. Further, our 1L lawyering skills curriculum was, since its inception, almost entirely steeped in litigation. This litigation focus matches neither the career trajectory nor the upper-level experiential opportunities of the majority of our students. In fact, transactional opportunities for second and third year law students have exploded in recent years, with meaningful clinic and externship programs abounding. Further, more of our law students will engage in transactional practice than in any other area. Thus, there was a mismatch that needed to be rectified.
During the 2023-24 academic year, we made a change to our curriculum to address this mismatch. We, along with all other professors in our department, added a six-week, comprehensive transactional simulation into the spring semester of our 1L lawyering skills curriculum. In so doing, we created an opening to add professional development formation opportunities, in the transactional context, to our curriculum. Due to the unique and complex role of transactional attorneys, most notably in-house counsel, it is critical for students entering practice in this area to have these learning opportunities.
As discussed in our prior scholarly work, we do not teach professional identity through long, amorphous discussions on the topic. Rather, we focus on teaching what we have coined as inward-facing and outward-facing character-based skills. Inward-facing character-based skills, which refer to the inner life and identity of a lawyer, include choice-making, boundary-setting, mindfulness, and more. Outward-facing character-based skills, which refer to the way in which lawyers interact with, and are perceived by, other stakeholders in the legal world, include active listening, empathy, and more. By introducing our students to these skills through assignments and exercises, allowing them to practice them within the context of assignments, and providing opportunities for reflection, we force students to “back into” professional identity formation in the transactional context in a structured, non-amorphous manner.
In Part I of this article, we discuss the definitions of professional identity and transactional lawyering to lay a foundation for the remainder of the piece. In Part II, we discuss the unique and complicated nature of transactional lawyering generally, and of the in-house counsel role specifically, and the consequential need for transactional lawyers to possess strong professional identities. We further elaborate on the specific inward- and outward-facing character-based skills needed in transactional practice. Finally, in Part III, we discuss specific examples of transactional attorneys who have faced professional identity crises, the fallout from those crises, and how we already use, or plan to use, those examples in the exercises we created to teach character-based skills in a way that spurs professional identity formation in the transactional context. Through this article, we hope to inspire our colleagues within the lawyering skills universe to expand professional identity formation instruction to the transactional context to best serve students as they march toward practice.
A Knight in Shining Nascency: Under-the-Radar Platforms as a Solution to Access to Justice for Incarcerated Litigants
Ashley Krenelka Chase
Access to justice in the criminal legal system and antitrust laws are inextricably intertwined, though not obviously so. But when major corporations behave in a way that creates a moat between incarcerated people and the laws they need to experience access to justice, the relationship of the two cannot be ignored. The “Curse of Bigness” in the legal information industry – the idea that corporations can get too big to collapse and then fail to benefit the market in a meaningful way – widens that moat and demonstrates that the companies that provide legal research services to prisons present both a social and industrial menace. This menace is damaging to all who seek legal information but is particularly and uniquely problematic when looking through the lens of access to justice for incarcerated litigants, individuals whose access to legal information is directly tied to their constitutional rights, and whose access is controlled by a massive monopsony in the industry: the prisons, themselves.
This Article discusses the history of antitrust law and the legal principles needed to understand how antitrust interplays with access to justice for incarcerated litigants. It reviews the history of prison libraries and the ways in which reforms have been moved through the courts and then retracted, most recently watering down access to the courts and access to justice for incarcerated people. In describing prison monopsonies, legal publishing monopolies over legal information, and the legal publishing duopoly that controls access to information, it explains how giving prisons and the legal publishing duopoly power over the provision of legal information, they are, essentially, handing incarcerated people’s constitutional right of access to the courts via access to information over to a knight in shining armor – a knight who is actually a dragon in disguise. Finally, this Article suggests ways prisons can embrace new platforms – the knights in shining nascency – for legal information and change the ways they buy and provide legal services to those who need them most, and truly effectuate access to justice for incarcerated people.
The Fine Print of Activist Settlements
Emily Campbell
The freedom of contractual private ordering has long been hailed as a cornerstone of corporate law. In recent years, corporate planners have capitalized on this freedom of contract to negotiate settlements with activists, granting not only board seats, but also broad-reaching governance and control rights, to hedge funds who threaten proxy contests. In response, stockholders have turned to Delaware courts for relief, alleging these settlements are classic examples of self-dealing—taking decision-making away from all stockholders to entrench existing board members and, by and large, maintain the status quo. At the same time, a larger conflict has bubbled up in Delaware over the scope and validity of these contractual governance rights more broadly. Specifically, this Spring, a decision in the Moelis litigation invalidated the structure and content of most stockholder governance agreements, including many activist settlements. This was met with a swift response from corporate planners and the Delaware legislature, who proposed and passed amendments to the Delaware General Corporate Law, undoing much of the Moelis decision. As a result, a central question emerges in the debate over private ordering and contractual governance rights: how can existing fiduciary duties cabin their most harmful effects? This paper makes sense of this question in the context of activist settlements. Specifically, it details how Delaware courts can apply fiduciary principles when evaluating challenges to activist settlements in order to maintain Delaware’s commitment to a broadly enabling regime that promotes stockholder value and long-term corporate welfare.