The Berkeley Center for Law, Business and the Economy (BCLBE) is the hub of Berkeley Law's research and teaching on the impact of law on business and the U.S. and global economies.
New in the January 2015 Update: A recent article by Prof. Steven Davidoff Solomon evaluates 2014's most notable deals; a new seminar taught by Profs. Steven Davidoff Solomon and Stavros Gadinis introduces students to the regulatory underpinnings of the international financial system; and BCLBE, together with law firm Cleary Gottlieb Steen & Hamilton LLP, host the M&A and Antitrust Annual Conference where panelists discuss current issues and developments in these fields.
International Financial Regulation Seminar
Disruptive Technology and Securities Regulation
Boalt Hall 170; 11:00-11:50am
Download paper here>
Political Contestability and Contract Rigidity: An Analysis of Procurement Contracts
Boalt Hall 134; 12:15-1:55pm
Download paper here>
The Corporation - An Alternative View Speaker Series
A conversation with Tariq Mundiya
Wilkie Farr & Gallagher LLP
Wednesday, February 18, 2015
Boalt Hall 170; 12:45-1:45pm
Want to know what it is like representing Dan Loeb in Third Point as they seek to replace the board of directors? Or how about representing Men's Warehouse as it seeks to storm the gates and takeover Jos A. Banks or Facebook in its IPO litigation? Come and see Tariq Mundiya, one of the nation's go-to litigators for shareholder activism and takeovers. He will be talking about the battle for Sotheby's.
A conversation with
Recent Post on The Network: Business at Berkeley Law
DreamWorks' Deal with Hasbro Falls Through
By John Runkel, J.D. Candidate 2016
The following media is now available:
Women in M&A Practice
A Conversation With Adrian Dollard, Qatalyst Partners
A full list of recordings can be found here>
First annual conference Antitrust, Governance, M&A in 2015: Challenges and Conundrums for the West Coast tackled legal challenges unique to lawyers handling West Coast mergers and acquisitions, antitrust and competition policy, governance and activism. Read more>
In Shareholder Wealth Maximization as Means to an End, Prof. Robert Bartlett examines the fiduciary duties of corporate directors when considering corporate action that pits the interests of common stockholders against those of its preferred stockholders – a situation that is common among venture-backed start-up companies. Using incomplete contracting theory, Prof. Bartlett shows why the conventional rule that directors must focus on maximizing common stockholder value must be viewed as simply a means to the ultimate goal of maximizing the value of the corporation itself. Further, he argues that close examination of corporate law reveals that neither economic theory nor corporate doctrine should prevent individual directors from favoring the interests of preferred stockholders when they have been elected to represent them. As such, he concludes recent decisions such as In re Trados and In re Nine Systems Corporation represent doctrinal innovations in need of judicial reconsideration.
In the column The Deal Professor, Prof. Steven Davidoff Solomon explains McDonald’s significantly lower stock valuation compared to its peer Shake Shack, noting that the fast food chain’s business is fundamentally different from its quick casual chain competitors. In another article, he examines how the current structure of whistle-blower compensation creates perverse incentives for corporate wrongdoers to profit from wrongdoing. Finally, Steven evaluates 2014’s most notable deals.
In the column China Real Time, China expert Stanley Lubman talks about how China’s anti-corruption campaign can succeed and its potential economic repercussions. He looks at the challenges party leaders face in light of the Hong Kong model, which saw the establishment of the Independent Commission Against Corruption (ICAC) – an agency with little to no interference from government authority. Stanley has specialized on China as a scholar and as a practicing lawyer for more than 40 years.
Prof. Richard Buxbaum reflected upon his involvement in the Free Speech Movement (FSM) at a recent panel event commemorating the 50th anniversary of the UC Berkeley Academic Senate’s vote supporting free speech on campus. Buxbaum served as 1 of 5 defense counsels in the criminal proceedings against 773 FSM participants arrested for staging a sit-in at Sproul Hall on Dec. 3, 1964.
On November 14-15, Berkeley Law faculty, including Prof. Ken Ayotte, hosted the Fourth Annual Law and Economics Theory Conference. Economic theory can help shed light on important legal and policy questions that involve strategic actions by parties with interrelated and sometimes competing objectives. For example, firms often require employees to sign covenants not to compete (CNCs), which limit a worker’s ability to move to a rival firm or start his/her own. These covenants are common in high tech industries, but they are increasingly found in more surprising places, like the employee contracts of the sandwich chain Jimmy John’s. Should the law place restrictions on the enforceability of these covenants? Read more>
While affirmative action may stigmatize students from disadvantaged groups, Prasad Krishnamurthy and Aaron Edlin say group-blind admissions is not the remedy. Erasing social inequality-based stereotypes, their paper argues, would perversely require a higher admission standard for marginalized students.
Berkeley Law’s growing collaborations with other campus departments have yielded a new benefit for students: the Interdisciplinary Graduate Certificate in Real Estate. The certificate honors real estate training that encompasses law, investment, and development. “It’s critical to develop and refine interdisciplinary skills, and to work with peers in different fields,” Ken Taymor says. Read more>
In his study, Corporate Inversions and the Unbundling of Regulatory Competition, Prof. Eric Talley examines the controversy surrounding US public companies executing “tax inversions” – acquisitions that move a corporation’s residency abroad while maintaining its listing in domestic securities markets. Properly structured, the inversion creates substantial corporate tax savings. Regulators and politicians have reacted with alarm to this perceived “inversionitis” pandemic. Prof. Talley argues, however, that inversions are simply not a viable strategy for many firms, and thus the ongoing wave may abate naturally.
In the column The Deal Professor, Prof. Steven Davidoff Solomon and co-author Peter J. Henning discuss some of the complications that may emerge from the apparently unsuccessful efforts of Valeant Pharmaceuticals and William A. Ackman’s hedge fund firm, Pershing Square Capital Management to acquire Botox maker, Allergan. Before Allergan accepted a competing offer, it sued Valeant and Pershing Square for violations of Rule 14e-3 (designed to stop insider trading in connection with hostile offers). While the court decided against Allergan, it left the door open for future litigation. The column discusses some of the issues analyzed by the court and proposes a strategy that a company that wants a hedge fund to serve as a co-bidder can observe to avoid insider trading claims under Rule 14e-3. Read more>
In Three Pathways to Global Standards: Private, Regulator, and Ministry Networks, Prof. Stavros Gadinis discusses how well informal international bodies, commonly called “transnational regulatory networks,” succeed in their goal to produce standards and convince governments to adopt Three Pathways to Global Standards—the standards as domestic laws. The paper focuses on three networks in three important areas of securities regulation – accounting, cross-border fraud, and money laundering – and draws on empirical evidence from 191 countries over 20 years. It concludes that each network’s standards have a distinct pattern of spread into domestic law and illustrates how networks tailor their operation and governance to the domestic lawmaking capacities of their participants.
Profs. Steven Davidoff Solomon and Stavros Gadinis will be teaching a seminar on International Finance Regulation in Spring 2015. This course has four goals: to introduce students to the regulatory underpinnings of the international financial system, educate students on the varieties of law-making available to international financial regulators when they have no formal law-making or enforcement power, provide a deeper understanding of this system by bringing students into contact with current research by leading academics and practitioners in this area, and provide students with an assessment of the changing nature of this regulatory apparatus in light of the financial crisis. In the course, students will fulfill these objectives by reading and studying key articles and other materials related to the international financial regulatory system. Students will ultimately engage with academics and practitioners to develop both their understanding of this topic and to develop their own ideas and proposals with respect to the evolving international financial regulatory system. For more details, click here>
Recently, a comment letter was submitted by UC Berkeley corporate law professors in response to a request for comment by the Health and Human Services Department on the definition of "eligible organization" under the Affordable Care Act in light of the Supreme Court's decision in Burwell v. Hobby Lobby. "Eligible organizations" will be permitted, under the Hobby Lobby decision, to assert the religious principles of their shareholders to exempt themselves from the Affordable Care Act's contraceptive mandate for employees. The comments recommend that the doctrine of veil piercing be used to identify which organizations should be eligible, and that shareholders should aver that they have unity in identity and interests with the corporation. Read more>
Prof. Eric Tally and co-authors Jennifer Muller and Diane Frankle report on the results of their survey of 17,500 lawyers at 25 firms nationwide that identifies causes and suggests remedies for the persistent wide gender gap in law firm M&A practices.
In his column The Deal Professor, Prof. Steven Davidoff Solomon argues that when large companies muzzle their lawyers, wrongdoing can get swept under the rug, illustrating the problem with Walmart’s unfolding bribery scandal and General Motors’ ignition switch scandal. He also examines the reasons behind Burger King’s acquisition of Tim Hortons doughnut chain in Canada and Burger King’s decision to move their headquarters. He argues that a lower tax rate is not the driving factor, but that relocating is the natural choice because Canada is the biggest market for the combined company. To read more of Davidoff Solomon’s articles click here.
Prof. Robert Bartlett discussed the US Supreme Court’s latest ruling affecting securities fraud class action lawsuits and the “fraud on the market” theory in his presentation: Life after Halliburton: What Would a “Price Impact” World Look Like? at the 2014 Business Law Scholars Conference, at Loyola Law School, Los Angeles, CA (June 2014).
Disputes over German bonds issued during the Weimar era took decades to resolve, with some cases still in flux. In Back to the Past: Old German Bonds and New U. S. Litigation, Prof. Richard Buxbaum follows the trail of these financial instruments and the legal tactics used to settle international claims.
In the Deal Professor column, Prof. Steven Davidoff Solomon argued that the unsolicited offer for Chiquita Brands International by the Cutrale Group and the Safra Group illustrates the problems that tax inversions can create. He also wrote about how a buying spree among technology companies such as Facebook and Google has revolutionized the venture capital business model. In a later post, he discussed how the Zillow-Trulia acquisition deal puts bulk of risk on Trulia if regulatory restrictions are imposed. He also wrote about how the scandal over the ouster of Dov Charney from American Apparel shows the consequences of confidentiality agreements. To read more of Davidoff Solomon’s articles click here.
Prof. David Gamage comments on the Bay Area district’s proposal to use tax dollars for a private club house.
On July 9, Ken Taymor presented "From Corruption to Good Governance: Lessons from the FCPA and the OECD" at the Goldman School's Ethics and Governance executive education program. The program serves senior-level Indian government administrative officers responsible for making policy in areas such as education, health, transportation and energy.
In “Actavis and Error Costs”, Prof. Aaron Edlin et al. defend the position they took in “Activating Actavis” that payments from a patent holder to fend off litigation from a competitor should be suspect whenever the payment exceeds the cost of litigation and the competitor agrees to stay out of the market. Such “reverse payments” can too easily be a subterfuge for allowing the competitors to split profits even when the patent is of dubious value or validity. This position has been criticized by some economists as too easily marking legitimate, pro-competitive agreements for antitrust litigation, and that SCOTUS never intended Actavis to be applied so broadly. Edlin et al. argue that their approach follows directly from Actavis, and that large reverse payments are generally not economically rational. In the unlikely case where competitors have legitimate pro-competitive reasons for large reverse payments, they would still be able to offer these reasons in defense.