ClassNotesCorporationsDanielsen

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Wednesday, August 6, 2003 (Class 30) ==


Review ===

* State law claims
** Breach of fiduciary duty: duty of loyalty, duty of care
*** Duty of care: consulting agreement with outgoing board members and chairman; increased compensation for incoming board; stock options granted to new members. Failed to talk to consultants, do study, to see industry standards. Presumption of business judgment rule and good faith.
*** Duty of loyalty: New board members; would need to find some sort of conflict of interest.
*** What was benefit to company of granting options that could be exercised immediately?
*** Why did Willy, Jr. get 10x what his father got? Why does he father continue to get paid what he was paid when he was working? What is consideration for consulting agreements? Looks like self dealing.
*** Doesn't consideration for Willy, Sr. look like compensation for past services, in which case it would be corporate waste?
*** By granting immediately exercisable option, might look more like a transfer.
*** May be a business purpose for consulting agreements.
*** Procedural and substantive fairness.
** If plaintiffs can show self-dealing, defendants can rebut by demonstrating procedural fairness.
** "Common enterprise" idea -- board members agree to approve each other's compensation
** Could be approved by disinterested shareholders; board members own %47, Wentworth Charitable Foundation owns 5%. Question: was board member who heads up Wentworth Charitable Foundation able to influence vote of Foundation?
** If board shows procedural fairness, then plaintiff needs to demonstarte substantive unfairness
** Might be duty of disclosure under state law issue
* Federal claims
** Proxy statement problems
*** Did board disclose sufficient information for a reasonable shareholder to piece together the fairness of the deal?
*** Should board have disclosed comparative historical data?
*** "Substantial likelihood that shareholder would have considered it important in voting."
*** If board makes statement, it is weighed heavily; can't make statements they know to be false when they make them.
*** "Compensation until consulting agreement is fair and reasonable." "Great value; significant access" etc.. Is this sufficient to show that board knew it to be false at time?
*** Need to demonstrate materiality.
*** Causation: was this something shareholders were entitled to vote on? No, not compensation; was their vote necessary for approval?
*** Loss of state right?
*** Injury: who was hurt by misrepresentations? After misrepresentation, stock value increased. Does stock value have to decrease again before injury can be proved? Or were people who bought stock at higher price injured?
*** Press release as part of proxy solicitation--might be understood to be solicitation. Unlikely to prevail.
*** Maybe 10b5 claim with respect to press release--misrepresentation in connection with purchase or sale of securities... who was harmed?
* Procedural hurdles
** Demand requirement: do we have obligation to make demand on board with respect to breach of fiduciary duty claims?
*** Need to make demand unless it would be futile; look to Aronson test.
** Don't need to make demand requirement with respect to duty of loyalty claims.
** Problem: board that made decisions is different from sitting board now. Rails v. Blasband: if there has been a change of board, then look to see whether you could plead sufficient facts to demonstrate that the board was unlikely to be disinterested.
** Is Willy, Jr. disinterested or dominated by Willy, Sr.?
** Did new board members get any personal financial benefit from deal? (doesn't appear to be).
** If not, then new board members could make determination as to whether or not to bring suit, demand futility would fail.
* Use old Rule 8.31 for conflict of interest, not subchapter F from supplement.




Corporations

Professor Dan Danielsen

Tuesday, May 27, 2003 (Class 1)

Logistical Details

Purposes of Corporation

William T. Allen, Our Schizophrenic Conception of the Business Corporation

[14 Cardozo L.Rev. 261] 1992

History of corporate law

Regulatory Goals


Wednesday, May 28, 2003 (Class 2)

Hypothetical firm: "Omega"


Friday, May 30, 2003 (Class 3)

Logistics

Theory of Firm

Basic Concepts and Terms

Duty of Care

Duty of Loyalty

Chesapeake Marine Hypothetical


Tuesday, June 3, 2003 (Class 4)

Chesapeake Marine Services Part I Cont'd

Equitable Limitations of Legal Possibilities

Schnell v. Chris-Craft Industries, Inc.

[285 A.2d 437] 1971 Delaware Superior Court (cb47)

Bove v. Community Hotel Corporation. of Newport, R.I.

[<<105 R.I. 36249 A.2d 89] 1969 Rhode Island Supreme Court (cb49)

Chesapeake Marine Services Part II


Wednesday, June 4, 2003 (Class 5)

Chesapeake Marine Services Part II Continued

Choice of Organizational Form

Precision Tools Problem


Friday, June 6, 2003 (Class 6)

Continuation of Precision Tools: Which form to use?

Introduction to Financial Accounting


Tuesday, June 10, 2003 (Class 7)

Relationship of Balance Sheet to Income Statement

Precision Tools Problem


Wednesday, June 11, 2003 (Class 8)

Valuation of Company

Capital Structure

Debt vs. Equity


Friday, June 13, 2003 (Class 9)

Precision Tools Part V

Legal Capital


Tuesday, June 17, 2003 (Class 10)

Legal Capital, Par Value, and Dividends

Precisions Tools Problem Part VII


Wednesday, June 18, 2003 (Class 11)

Securities Regulation

Precision Tools Problem Part VIII


Friday, June 20, 2003 (Class 12)

Limits on Limited Liability

Walkovskzy v. Carlton

[223 N.E.2d 6] 1966 New York Superior Court (cb311)

Radaszewski v. Telecom Corp.

[981 F.3d 305] 1992 8th Circuit Court of Appeals (cb317)

Precision Tools Problem Part IX


Tuesday, June 24, 2003 (Class 13)

Fletcher v. Atex, Inc.

[68 F.3d 1451] 1995 2d Circuit Court of Appeals (cb339)

In re Silicone Gel Breast Implants Products Liability Litigation

[887 F.Supp. 1447] 1995 North District Alabama (cb333)

Precision Tools Part IX


Wednesday, June 25, 2003 (Class 14)

Lee v. Jenkins Brothers

[268 F.2d 357] 2d Circuit Court of Appeals (cb355)

First Interstate Bank of Texas v. First National Bak of Jefferson

[928 F.2d 153] 1991 5th Circuit Court of Appeals (cb359)

Problem: Agency Relations -- Part I

  1. Express actual authority.
  2. Implied actual authority. Apparent authority as well.
  3. No actual authority. Factual inquiry for apparent authority, but usually foreman has no authority to enter into contract, so probably no apparent authority.
  4. Ratification authority, and possibly apparent authority.

Problem: Agency Relations -- Part II


Friday, June 27, 2003 (Class 15)

Board Formalities

Problem -- Widget Corporation

Fiduciary Duty


Tuesday, July 1, 2003 (Class 16)

Francis v. United Jersey Bank

[432 A.2d 814] 1981 New Jersey Supreme Court (cb661)

Graham v. Allis-Chalmers Manufacturing Co.

[188 A.2d 125] 1963 Delaware Chancery (cb667)

In re Caremark International Inc. Derivative Litigation

[698 A.2d 959] 1996 Delaware Chancery (cb672)

Fashion, Inc. Problem Part I

Fashion, Inc. Problem Part II


Wednesday, July 2, 2003 (Class 17)

Fashion, Inc. Problem -- Part III


Tuesday, July 8, 2003 (Class 18)

Duty of Loyalty

Common Law

Fairness

Shlensky v. South Parkway Building Corp.

[166 N.E.2d 793] 1960 Illinois Supreme Court (cb756)

Statutory Approach

Remillard Brick Co. v. Remillard-Dandini Co.

[241 P.2d 66] 1952 Califorina Court of Appeals (cb761)

Starcrest Corporation -- Part I


Wednesday, July 9, 2003 (Class 19)

Executive Compensation

Corporate Opportunity


Friday, July 11, 2003 (Class 20)

Starcrest Corporation Problem -- Part II

Rights of Shareholders


Tuesday, July 15, 2003 (Class 21)

Problem: LaFrance? Cosmetics -- Part I

Transaction Size

Gimbel v. Signal Companies, Inc.

[316 A.2d 599] 1974 Delaware Chancery (cb388)

Problem: LaFrance? Cosmetics -- Part II


Wednesday, July 16, 2003 (Class 22)

Problem: LaFrance? Cosmetics -- Part II Continued

Auer v. Dressel

[118 N.E.2d 590] 1954 New York Superior Court (cb395)

Campbell v. Loew's, Inc.

[134 A.2d 852] 1957 Delaware Chancery Court (cb398)

Blasius Industries, Inc. v. Atlas Corp.

[564 A.2d 651] 1988 Delaware Chancery Court (cb403)

Right of Inspection

State Ex Rel. Pillsbury v. Honeywell, Inc.

[191 N.W.2d 406] 1971 Minnesota Supreme Court (cb410)

LaFrance? Cosmetics Problem -- Part III


Friday, July 18, 2003 (Class 23)

LaFrance? Cosmetics Problem -- Part III Continued

Proxy

Procedure

Collective Action Problem


Tuesday, July 22, 2003 (Class 24)

Universal Netware, Inc. -- Part I


Wednesday, July 23, 2003 (Class 25)

Universal Netware, Inc. Part II

Duty of Disclosure

J.I. Case Co. v. Borak

[377 U.S. 426] 1964 United States Supreme Court (cb831)

TSC Industries, Inc. v. Northway, Inc.

[426 U.S. 438] 1976 United States Supreme Court (cb838)


Friday, July 25, 2003 (Class 26)

Mills v. Electric Auto-Lite Co.

[396 U.S. 375] 1970 United States Supreme Court (cb846)

Santa Fe Industries, Inc. v. Green

[430 U.S. 462] 1977 United States Supreme Court (cb855)

Virginia Bankshares, Inc. v. Sandberg

[501 U.S. 1083] 1991 United States Supreme Court (cb862)

Wilson v. Great American Industries, Inc.

[979 F.2d 924] 1992 2d Circuit Court of Appeals (cb878)


Tuesday, July 29, 2003 (Class 27)

National Metal Products Problem

Insider Trading


Wednesday, July 30, 2003 (Class 28)

Insider Trading

In re Cady, Roberts & Co.

[40 S.E.C. 907] 1961 Securities Exchange Commission (cb928)

Securities and Exchange Commission v. Texas Gulf Sulphur Co.

[401 F.2d 833] 1969 2d Circuit Court of Appeals (cb930)


Friday, August 1, 2003 (Class 29)

Insider Trading Conclusion

Derivative Actions

Bangor Punta Operations, Inc. v. Bangor & Aroostook Railroad Co.

[417 U.S. 703] 1974 United States Supreme Court (cb1028)


Wednesday, August 6, 2003 (Class 30)

Review



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