SYLLABUS Corporations (Fall 2017) PROFESSOR: Steven McNamara COURSE: LAW 6063 OFFICE: Office # 363 CONTACT: 352-273-0998 mcnamara@law.ufl.edu CLASSROOM: Room 285C CLASS TIME: Tuesday: 4:00 PM to 5:15 PM Thursday: 4:00 PM to 5:15 PM OFFICE HOURS: Tuesday: 10:00 AM to 11:00 AM Wednesday: 2:00 PM to 3:00 PM FINAL EXAM: Wednesday, December 13, 8:30 AM COURSE DESCRIPTION This course is an introduction to corporate law. We will focus on core corporate law topics including the function of the board of directors, fiduciary duties, the rights of shareholders, and insider trading. We will also take some time to ask why corporations exist in our economic system, and the nature and extent of their obligations both to shareholders and other stakeholders. Many students find Corporations a challenging course, with legal concepts that require background knowledge in business, economics, finance, and accounting. These concepts will be discussed in class. Your attendance and preparation is essential therefore to your success in this course. You are expected to attend class regularly. TEXTBOOK Bauman, Stevenson & Rhee, Business Organizations: Law and Policy, West, 9 th ed. 2017.
COURSE WORKLOAD Corporations is a 3-credit course. ABA Standard 310 requires that students devote 120 minutes to out-of-class preparation for every classroom hour of in-class instruction. Corporations has 3 classroom hours of in-class instruction each week, requiring at least 6 hours of preparation outside of class. Accordingly, you will have about 60 pages of reading each week. Because the course includes statutory and regulatory excerpts that require careful reading, as well as discussion problems that require thoughtful advance preparation, you should spend at least one hour on every 10-15 pages of reading. UNIVERSITY POLICY ON ACCOMODATING STUDENTS WITH DISABILITIES Students requesting accommodation for disabilities must first register with the Dean of Students Office (http://www.dso.ufl.edu/drc/). The Dean of Students Office will provide documentation to the student who must then provide this documentation to Dean Inman in the College of Law Student Affairs Office when requesting accommodation. You must submit this documentation prior to submitting assignments or taking the quizzes or exams. Accommodations are not retroactive, therefore, students should contact the office as soon as possible in the term for which they are seeking accommodations. COURSE GRADING Your grade will be based on a final exam only. The final exam will be an in-class exam. Exam grades are done on a blind basis. All grades are final. There will be no regrading or revisions from me, except to correct any mathematical or clerical errors in computing the final score. The instructor will adhere to the College of Law s grade distribution policy in preparing final grades for this course. Letter Grade Point Equivalent A (Excellent) 4.0 A- 3.67 B+ 3.33 B 3.0 B- 2.67 C+ 2.33 C (Satisfactory) 2.0 C- 1.67 D+ 1.33
D (Poor) 1.0 D- 0.67 F (Failure) 0.0 FINAL EXAM FORMAT The final exam will be open casebook. There are no restrictions on what you can write into the book. You will also be allowed to bring in an outline or notes with the following restrictions: 10 pages on 8x11 sheets of paper, front and back permitted, handwritten or typed notes permitted, no margin or font restrictions. If a problem on the exam requires statutes, they will be provided in the exam. The final exam may have essay, short answer, and multiple choice questions. Short answer and multiple choice questions are fairly self-explanatory. Essay questions will be an issue-spotting, analysis, or problem-solving format typically seen in most law school exams. The issues and topics for exam questions will come from the course readings and class discussions. The exam will fairly reflect the work that is done in the course. This means that the best way to prepare for the exam is to do the class readings and to attend class. UNIVERSITY POLICY ON ACADEMIC MISCONDUCT Academic honesty and integrity are fundamental values of the University community. Students should be sure that they understand the UF Student Honor Code at http://www.dso.ufl.edu/students.php. STUDENT LEARNING OUTCOMES Corporations is an introductory course covering corporate law and governance issues. Students will be expected to: Identify situations in which corporate officers and directors fall short in living up to their fiduciary duties of care and loyalty to the corporation. Understand and apply the relevant statutory corporate law and case law to common legal issues arising in advising a corporation. Understand the differences between Delaware General Corporation Law and the Model Business Corporation Act, and when each statute (or state statute based on the Model Business Corporation Act) applies. Understand the basic principle of limited liability, and when it does not apply in the corporate context.
Understand the difference between double taxation and flow-through taxation, and which method of taxation applies to common business entities. Understand the difference between close corporations and public corporations, and the different legal issues that commonly arise in them. Understand the basic types of corporate securities that corporations issue. Gain insight into the wider social and political role that corporations play in the United States, and understand the important controversies surrounding this role historically and at present. Understand how the discipline of economics has been applied to the study of corporate law, and the major alternative approaches to corporate law. ACRONYM KEY The following are the acronyms for the various materials in the syllabus: Statute Guide MBCA Model Business Corporation Act DGCL Delaware General Corporation Law
ASSIGNMENTS Class # Date 1 Tues. Aug. 15 2 Thurs. Aug. 17 3 Tues. Aug. 22 4 Thurs. Aug. 24 5 Tues. Aug. 29 6 Thurs. Aug. 31 Topics, Issues, and Cases Introduction to Course CHAPTER 1 Business and Risk CHAPTER 2 Taxonomy of Business Organizations Why Do Firms Exist? Agency Gay Jenson Farms Co. v. Cargill Agency Authority in Corporations Summit Properties, Inc. v. New Technology Electrical Contractors, Inc. Agency Authority in Corporations Menard, Inc. v. Dage-MTI, Inc. Overview of Basic Legal Attributes of Firms Basic Terms and Concepts of Business Entities Fiduciary Duties Bayer v. Beran Equitable Limitations Schnell v. Chris-Craft Industries, Inc. Bove v. Community Hotel Corp. CHAPTER 3 Introduction to Veil Piercing Tort Creditors Walkovszky v. Carlton Radaszewski v. Telecom Corp. Contract Creditors Freeman v. Complex Computing Co., Inc. Kinney Shoe Corp. v. Polan Parent-Subsidiary Corporations Gardemal v. Westin Hotel Co. OTR Associates v. IBC Services, Inc. Fraudulent Conveyance and Equitable Subordination CHAPTER 5 Framing the Issues Dodge v. Ford Motor Co. ebay Domestic Holdings, Inc. v. Newmark Text pages and statutes 3-18 19-34 37-46 DGCL 141(a) MBCA 8.01(b), 8.41 46-79 81-101 MBCA 6.22 101-118 127-128 157-182 MBCA 3.01 DGCL 101(b)
7 Tues. Sept. 5 Corporate Charitable Contributions Theodora Holding Corp. v. Henderson Kahn v. Sullivan The Role of the Lawyer 182-210 8 Thurs. Sept. 7 9 Tues. Sept. 12 10 Thurs. Sept. 14 11 Tues. Sept. 19 12 Thurs. Sept. 21 13 Tues. Sept. 26 CHAPTER 6 Introduction Donahue v. Rodd Electrotype Co. Restrictions on Board Authority and Shareholder Voting Arrangements Smith v. Atlantic Properties, Inc. Contractual Transfer Provisions Dissension and Oppression Wilkes v. Springside Nursing Home, Inc. Nixon v. Blackwell In the Matter of Kemp & Beatley, Inc. CHAPTER 10 Corporate Securities Corporate Capital Structure Legal Capital Limitation on Distributions Klang v. Smith s Food & Drug Centers, Inc. Kamin v. American Express Co. Dodge v. Ford Motor Co. CHAPTER 12 Models of Corporate Governance Corporate Governance in a Federal System CTS Corp. v. Dynamics Corp. of America Louis K. Liggett Co. v. Lee CHAPTER 13 The Role of a Corporate Director Formalities of Board Action Governance in the Modern Board What Kind of Board? CHAPTER 14 Mechanics of Shareholders Meetings Election and Removal of Directors Inspection of Books and Records Dynamics of Shareholder Voting in Public Companies Federal Proxy Regulation Long Island Lighting Company v. Barbash 213-236 DGCL 342 DGCL 350, 351 MBCA 7.32, 7.25, 7.28 DGCL 214 236-262 DGCL 202 MBCA 6.27 MBCA 14.30, 14.34 399-431 DGCL 151 MBCA 6.01(b) DGCL 154, 160, 170 MBCA 6.40(c) 471-507 509-537 DGCL 141(a) MBCA 8.01(a) MBCA 8.22, 8.23, 8.24, 8.25, 8.30(b) 539-571 DGCL 211(d), 212, 213(a), 216, 228, 242 MBCA 7.04(a), 7.22, 7.25(c), 7.27
14 Thurs. Sept. 28 15 Tues. Oct. 3 16 Thurs. Oct. 5 17 Tues. Oct. 10 18 Thurs. Oct. 12 19 Tues. Oct. 17 Shareholder Proposals Auer v. Dressel Lovenheim v. Iroquois Brands, Ltd. Trinity Wall Street v. Wal-Mart Stores, Inc. Shareholder Nomination of Directors and Bylaw Amendments American Federation v. A.I.G., Inc. CA, Inc. v. AFSCME Employees Pension Plan The Role of Shareholders in Executive Compensation: Say-on-Pay CHAPTER 16 Direct and Derivative actions Tooley v. Donaldson, Lufkin & Jenrette, Inc. Role of Counsel Who Qualifies as a Plaintiff? In re Fuqua Industries Shareholder Litigation The Demand Requirement Aronson v. Lewis Rales v. Blasband Einhorn v. Culea Inspection of Books and Records Saito v. McKesson HBOC, Inc. Seinfeld v. Verizon Communications, Inc. Bylaw Provisions Dealing with Derivative Litigation Termination when Demand is Excused On the Independence of Directors Orman v. Cullman In re InfoUSA, Inc. Shareholders Litigation On the Independence of Directors The Disney Litigation The Oracle Story In re Ebay, Inc. Shareholders Litigation Settlement and Attorneys Fees CHAPTER 17 Standards of Care The Business Judgment Rule Shlensky v. Wrigley In re Walt Disney Derivative Litigation MBCA 16.01, 16.02, 16.03 DGCL 220 572-596 DGCL 112, 113 596-619 MBCA 2.06, 10.01, 10.03, 10.04, 10.20, 10.21, 10.22 663-698 MBCA 7.41 Through 7.46 698-727 DGCL 220 MBCA 16.01, 16.02, 16.03 727-745 747-768 MBCA 8.30, 8.31
20 Thurs. Oct. 19 21 Tues. Oct. 24 22 Thurs. Oct. 26 23 Tues. Oct. 31 24 Thurs. Nov. 2 25 Tues. Nov. 7 26 Thurs. Nov. 9 The Duty of Oversight Francis v. United Jersey Bank In re Caremark Int l Derivative Litigation In re Citigroup Inc. Derivative Litigation The Duty to Become Informed Smith v. Van Gorkom Avoidance of Liability CHAPTER 18 Director Self-Dealing and Conflict of Interest Remillard Brick Co. v. Remillard Dandini Co. Benihana of Tokyo, Inc. v. Benihana, Inc. Director Self-Dealing and Conflict of Interest Lewis v. Vogelstein Harbor Finance Partners v. Huizenga Gantler v. Stephens Evolution of good faith In re Walt Disney Co. Derivative Litigation Stone v. Ritter (Extended Session as Make-Up) CLASS CANCELLED The Duty of Good Faith Applied ATR-Kim Eng Financial Corp. v. Araneta McPadden v. Sidhu Corporate Opportunity Doctrine Farber v. Servan Land Company, Inc. Burg v. Horn (Extended Session as Make-Up) CHAPTER 22 What is Wrong with Insider Trading? Materiality State Corporate Law Goodwin v. Agassiz Diamond v. Oreamuno Rule 10b-5 Chiarella v. United States 769-798 799-842 MBCA 8.30(d), 8.31(a) DGCL 102(b)(7) MBCA 2.02(b)(4), 8.51, 8.52, 8.53, 8.56, 8.57 843-867 DGCL 144 MBCA 8.61, 8.62, 8.63 867-890 890-919 MBCA 8.70 1095-1119
27 Tues. Nov. 14 28 Thurs. Nov. 16 Dirks v. Securities and Exchange Commission Misappropriation United States v. O Hagan Applying the Principles Salman v. United States Remedies Disgorgement OVERFLOW/REVIEW SESSION 1119-1136