The Berkeley Center for Law, Business and the Economy invites you to read our 2016-2017 Annual Bulletin for an overview of what we have accomplished in the past year, and to get a glimpse into the continued innovation that we are pursuing in 2017. Thank you for all of your support!

BCLBE is excited to announce the launch of a new progam called Startup@BerkeleyLaw! A joint initiative with the Berkeley Center for Law & Technology, Startup@BerkeleyLaw will give students—as well as entrepreneurs, investors, and attorneys—access to top experts, timely courses, and dynamic programming on emerging legal issues for startups. The program’s first endeavor is a partnership with the Nasdaq Entrepreneurial Center, a new nonprofit in San Francisco designed to educate, innovate, and connect current and aspiring entrepreneurs. Startup@BerkeleyLaw will offer courses there on several legal areas that affect startups. To read more about Startup@BerkeleyLaw and the partnership with Nasdaq, click here.

BCLBE is excited to introduce its new Executive Director, Adam Sterling, a Berkeley Law and Haas School of Business alum with an impressive track record of organizational leadership and startup law experience. Mr. Sterling will help position BCLBE as the premier hub for corporate and capital markets law on the Pacific Rim and lead a number of innovative new BCLBE initiatives. To read more about Mr. Sterling, click here.

The 2015-2016 Berkeley Center for Law, Business and the Economy Annual Bulletin is now available.  Learn more about BCLBE’s curriculum, programming, faculty and scholarship as Berkeley Law establishes itself as the leading center for the study and practice of business law on the Pacific Rim. 

In a trio of articles recently published in the New York Times, Professor Steven Davidoff Solomon examines placement agents, the DuPont-Trian case, and the effects of France’s new two-vote share system. In the first, Davidoff Solomon addressed the merits of placing agents as they continue to thrive amid controversy. In the next he explores how the details of the DuPont-Trian case will come to influence how shareholder activism matures as an industry. Most recently, Davidoff Solomon analyzes the ramifications of the French Parliament’s passage of a law creating a dual-class system for holding shares and how such a system would effect industry in the United States.

Corporate mergers bring about a 90 percent chance of shareholder lawsuits. Most cases settle for minor disclosuresand large attorneys’ fees. A new article co-authored by Steven Davidoff Solomon offers a novel way to assess the value of these disclosures, while lowering litigation costs to benefit shareholders.

With the US Supreme Court’s recent ruling that state licensing boards may be subject to antitrust laws, many professionals across the nation have started to wonder what effect this decision will have on competition. For Professor Aaron Edlin, this ruling marks the beginning of an era of increased competition and accountability among professionals and their licensing boards. In his article Letting Dentists Feel the Bite of Competition, recently published in the Wall Street Journal, Prof. Edlin argues that with professional licensing boards now under greater scrutiny from the Supreme Court, states and the Boards themselves will have to create fairer policies and practices so that they are exempt from antitrust lawsuit. His Penn Law review article was cited in the Supreme Court’s recent ruling in FTC v. NC Board of Dental Examiners.

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.

The Supreme Court cited a recent article by Professor Aaron Edlin
 in its Feb. 25 ruling that state licensing boards are not immune from federal antitrust laws. State boards regulate about 30 percent of U.S. workers. Edlin and co-author Rebecca Haw argue that boards often act like cartels. In North Carolina State Board of Dental Examiners v. Federal Trade Commission, the court agreed that such boards should be subject to antitrust when there is no independent state body supervising them.

The recap of Antitrust, Governance, M&A in 2015: Challenges and Conundrums for the West Coast is now available. We were so glad to see so many of you in Berkeley for this lively roundtable among senior personnel from law firms, in-house legal departments, and more. For the recap, click here. For photos of the event, click the photo. 


The January 2015 Update includes: a recent article by Prof. Steven Davidoff Solomon evaluated 2014’s most notable deals; a new seminar taught by Profs. Steven Davidoff Solomon and Stavros Gadinis began introducing students to the regulatory underpinnings of the international financial system; and BCLBE, together with law firm Cleary Gotlieb Steen & Hamilton LLP hosted the M&A and Antitrust Annual Conference where panelists discussed current issues and developments in these fields.

Reuters recently published an analysis of Prof. Robert Bartlett’s paper “Do Institutional Investors Value the 10b-5 Private Right of Action? Evidence from Investor Trading Behavior Following Morrison v. National Australia Bank Ltd.”, in which he asserts that there is an apparent gap between institutional investors’ adamant advocacy for shareholder class actions and their actual trading decisions.

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>

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 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
. 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 open the door 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

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. LitigationProf. 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.

In their article “Cartels by Another Name” (U Penn Law Review), Prof. Aaron Edlin and Rebecca Haw argue that state licensing boards established to protect consumer health and safety are frequently used to suppress competition. This can happen when the boards are placed in the hands of members of the profession who have an interest in using the boards as a mechanism to maximize the income of members of the profession. Edlin and Haw argue that this hurts consumers, and that the Supreme Court should settle a recent split in the Circuits by clarifying that “when competitors hold the reins to their own competition, they must answer to Senator Sherman.” 

WSJ article questions whether private equity firm KKR has withheld from its investors millions in consulting fees by improperly classifying its relationship with KKR Capstone. KKR is required to share 80% of consulting fees collected by “affiliates”, but claims Capstone is not an affiliate, even though KKR referred to Capstone as such in its SEC filings. KKR relies on an opinion by Linklaters LLP, but, says Prof. Robert Bartlett, Linklaters’ analysis was “very formalistic” and provides “a weak case it’s not an affiliate” since it didn’t address important functional-control tests or relevant SEC guidance about the consequences of Capstone’s accounting consolidation.

On Friday, May 2, Prof. Krishnamurthy presented a paper at the Consumer Financial Protection Bureau (CFPB) in Washington, D.C., entitled “Mortgage Regulation for Bubbles”, co-authored with Ryan Bubb of NYU Law School. The paper, as yet unpublished, argues that housing bubbles are the greatest risk the mortgage market poses to financial stability. The Dodd Frank Act’s approach to
mortgage regulation relies on regulatory incentives that are likely to be ineffective in a future bubble.  Krishnamurthy and Bubb suggest ways to improve on Dodd Frank’s approach by directly regulating the underwriting terms of mortgages.

This year, the Business Law
Certificate program recognized 38 recipients. Twelve J.D. and twenty-six
LL.M. students were awarded the certificate in recognition of their
completion of rigorous course of study in preparation for professional
practice as legal advisors to businesses, to business-oriented NGOs, and
to government entities. To view a photostream of the ceremony click here. To learn more about the Business Law courses and Certificate programs click here.

The U.S. Supreme Court recently revisited the scope of the Fifth Amendment’s Takings Clause–this time, in the land-use permitting context. In this Casenote, Christopher Hammond argues that the Court in Koontz v. St. Johns properly prioritized the right at issue over the means by which the government might infringe upon it and, in so doing, provided a broader jurisprudential view of property protections under the U.S. Constitution.

Professor Suzanne Scotchmer, of the UC Berkeley Economics Dept., School of Public Policy, and School of Law, was among the most influential economists of her generation. A Tribute by the Berkeley community captures a range of perspectives on her influence and carries forward her legacy. Read more>


At the end of a spirited debate between Jamie Yood ’14 and Joseph Santiesteban ’14, the latter won the prestigious McBaine Moot Court Competition. The competitors argued their cases before
a trio of prominent judges: UC
President Janet Napolitano, California Supreme Court Justice Goodwin Liu, and Northern District Court of California Chief Judge Claudia Wilken ’75. This fall, Santiesteban will begin work at Ropes & Gray, where he will focus on intellectual property and privacy. 

At a meeting with the California State Bar’s Task Force on Admissions Regulation Reform last month, Prof. Eric Talley emphasized the correlation of technical skills in business and finance, which are not routinely taught in law school, with a corporate lawyer’s ability to serve clients. According to a recent survey of transactional specialists conducted by Talley, document drafting, professional ethics, and fact development and analysis were among the most crucial skills needed for practice. Currently, the new training requirements proposed include: practice-based, experiential coursework or apprenticeships, the provision of legal services to pro bono or modest means clients, and additional MCLE (Minimum Continuing Legal Education) hours. A follow-up meeting is April 23 in Los Angeles. Survey>

Congratulations to winners of the inaugural Pircher, Nichols & Meeks 2014 Joint Venture Challenge!
The winning teams were composed of the following Haas and Berkeley Law students:
First Place: Ben Bradbury (MBA), Mary Loum (JD), Arkadiusz Malinowski (JD), and Kim McGinnis (MBA)
Second Place: Zane Keller (MBA), Steven McCarthy (JD), and Sam Wang (MBA)

And thanks to our Judges: Phil Nichols and Stevens Carey, partners at the sponsoring firm, and Josh Myerberg,
Executive Director, at Morgan Stanley’s San Francisco office. The JV
Challenge was organized by BCLBE, with support from Pircher, Nichols
& Meeks and Leo Pircher ’57. Read more>

Prof. Aaron Edlin has published the final edition of Activating Actavis. The article helps courts and counsel fill in the gaps in the Supreme Court’s recent decision in FTC v. Actavis which explored the relationship between antitrust and intellectual property law in the context of litigation settlements in which a brand name drug manufacturer (and patent rights holder) paid a would be generic competitor to stay out of the market. The paper describes the elements of a plaintiff’s affirmative case and justifications that may be offered by defendants. For private cases, it outlines an appropriate procedure for evaluating damages and suggests specific jury instructions. Read more>

An ABA task force recently made a proposal to establish minimum requirements within ABA-accredited law schools for “experiential” learning related to building practical skills and competencies. While an important invitation for law schools to re-imagine how they deliver legal education, the proposal raises the question of what constitutes “skills and competencies.” Within business law, this challenge is perhaps greatest for transactional attorneys. However, it is unclear how much, if any, input these practitioners/educators have had on the process of drafting guidelines, or whether there has been much systematic analysis of what topics constitute important “skills.” To address these gaps, Berkeley Law faculty, led by Eric Talley, devised an on-line survey instrument to help gauge what sorts of core competencies established professionals consider important. The preliminary results can be found here. We hope the results will help both practitioners and legal educators assess (and if necessary, work to amend) the current proposed ABA guidelines.

On February 24, BCLBE hosted a lunch presentation featuring Eugene Ludwig, founder and CEO of Promontory Financial Group. In his talk titled “Financial Regulation in the Post Reform Era: Putting Dodd-Frank in Context,” Ludwig shared his perspectives on the Dodd-Frank Act and other regulation efforts within the context of earlier cycles of crisis and reform.

He discussed what the changes mean for the evolution of the American regulatory model and the transformative potential of the financial services industry.   Video>       Read more>

Prof. Eric Talley comments on the proposed Comcast-Time Warner Cable merger, which has brought to light issues surrounding monopsonies: single, dominant buyers that create imbalances in price purchasing power. Because monopsonists exert considerable influence as dominant buyers, sellers are adversely affected and undermined. According to Talley, Comcast-Time Warner Cable’s defense of their deal will likely center around suppliers’ (like Netflix’s) extensive market power, and the cable companies’ ability to translate the merger into more bargaining power for its consumers.

With deep sorrow we share the news that our colleague, Prof. Suzanne Scotchmer, passed away on January 30.  She joined the Berkeley faculty in 1986 and, despite many offers from other universities, Suzanne remained a devoted and deeply distinguished member of the Berkeley faculty for almost her entire professional life.  Suzanne was a brilliant, internationally-renowned economist who made significant contributions to basic as well as applied theory in the areas of game theory, club theory, and patent law and incentives for R&D. She wrote more than 20 books, served as a consultant to the Department of Justice on antitrust, was a fellow of the Econometrics Society, and was highly sought after as a lecturer and speaker at universities across the globe. Read more>

Berkeley Business Law Journal has recently published a new Journal (Volume 10.2). This issue includes articles from practitioners and educators, including:
“Is Self-Regulation the Answer?” – Ian Peck, Kirkland & Ellis; “Charitable Insolvency and Corporate Governance” – Reid Weisbord, Rutgers School of Law; “The Law of Corporate Purpose” – David Yosifon, Santa Clara Law
Download the Journal here.

India’s public distribution system (PDS) distributes subsidized food to India’s poor. Reforms to the PDS in the state of Chhattisgarh have been lauded as a model for the National Food Security Act that other states can emulate. Prof. Prasad Krishnamurthy and two co-authors analyzed the impacts of these reforms on rice consumption in the state for the decade ending 2010. Their findings suggest that sustained reforms, when coupled with political and social will can improve access to food and other essentials through the PDS, but in the absence of such commitments, any PDS improvements may be insubstantial or unsustainable.

BCLBE received a cy près award to fund the launch of its Financial Literacy Education and Research Institute. The Institute will research, create, and implement consumer financial education programs that address the complex array of social, psychological, and economic factors that have historically limited efforts to improve consumer financial literacy. The diverse skills of the Berkeley Law faculty and the school’s close affiliation with the East Bay Community Law Center uniquely position the Institute for success. Read more>


In his new article in the Journal of Legal Studies, “Rules, Standards, and Complexity in the Cost Benefit Analysis of Capital Regulation“, Prof. Prasad Krishnamurthy examines the extent to which cost-benefit analysis can contribute to resolving issues in the regulation of bank capital requirements. He discusses the current regulatory framework and the rationale behind minimum capital requirements, and the perceived failure of those rules to adequately account for risks that resulted in the addition of risk-weighted requirements under the Dodd Frank Act. Krishnamurthy argues that a proper cost-benefit analysis would have exposed some of the possible consequences of risk-based requirements, and perhaps have led to the adoption of simpler rules that would maintain systemic stability. The full paper is available here.

In a recent article, Profs. Aaron Edlin and Rebecca Haw contend that occupational licensing boards, which now license as much as one-third of the US workforce, operate in a manner similar to cartels, excluding competition and raising prices for consumers. Because licensing boards are created by the states, they have been considered exempt from antitrust scrutiny under the state action doctrine. A recent decision by the Fourth Circuit, however, allowed a suit by the FTC against a state licensing board, providing an opportunity for the Supreme Court to clarify doctrine in this area. The authors recommend that the Court allow antitrust action against state licensing boards whenever the boards are composed of industry competitors. Read more>