This is the page for Caroline Bradley’s Spring 2014 Business Associations class at the University of Miami. The class will meet on Mondays, Tuesdays and Thursdays from 11:00 am to 12:20 pm in F209.
The assigned casebook is William A Klein, J Mark Ramseyer & Stephen M Bainbridge, Business Associations, 8th. Edition (2012). This edition of the book adds a small number of cases to those covered in the previous edition. If you can find a copy of the 7th edition and are prepared to deal with differences in pagination and the need to read some of the cases online the 7th edition would work. I am not assigning a statutes book because of the expense. However you will need to read statutes for this class. We will focus primarily on Florida and Delaware statutes in this class. I will provide links to statutes on the blog as well as details of class assignments, questions for discussion and links to additional material.
Material which appears on this page is regularly moved to the 2014 archive page.
WEEK 9: Mar. 10-14: Spring Break. I hope you enjoy the break. I will post assignments for the week after spring break at the end of next week – probably late on Friday. But if you really need to read ahead then please read the material in the casebook on LLCs, together with the material I assigned for this week but that we did not get to: the Florida LLC statute (especially ss 605.0105, 605.0402, 605.0403, 605.0404, 605.0405, 605.0406, 605.0407, 605.04074, 605.04091, 605.04092, 605.04093) and Touch of Italy Salumeria & Pasticceria, llc, v. Louis Bascio and Frank Bascio, Trading as Frank and Louie’s Italian Store (Del. Ch. 2014).
WEEK 8: March 3-7: For Monday please prepare to casebook page 250 (finishing derivative litigation- assigned for last Tuesday but we didn’t get there!), and for Tuesday to page 267 (role and purposes of corporations).
With respect to derivative litigation, on February 17, Chindex Corporation (“an American healthcare company providing services in China through the operations of United Family Healthcare, a network of private primary care hospitals and affiliated ambulatory clinics”) announced that it was to be acquired by “a buyer consortium (the “Buyer Consortium”) of an affiliate of TPG (together with its affiliates, “TPG”), an affiliate of Shanghai Fosun Pharmaceutical (Group) Co., Ltd. (“Fosun”), and Ms. Roberta Lipson, the CEO of the Company” at a price of $19.50 per share in cash. Law firms have already announced they are investigating: the Shuman Law Firm in Boulder, Colorado, the Law Offices of Vincent Wong in New York, Rigrodsky & Long (Delaware and New York), Robbins Arroyo LLP (California) and Johnson & Weaver, LLP (California and New York).
For Thursday’s class please read the Florida LLC statute (especially ss 605.0105, 605.0402, 605.0403, 605.0404, 605.0405, 605.0406, 605.0407, 605.04074, 605.04091, 605.04092, 605.04093) and Touch of Italy Salumeria & Pasticceria, llc, v. Louis Bascio and Frank Bascio, Trading as Frank and Louie’s Italian Store (Del. Ch. 2014).
Note Mar. 3: When we discussed veil piercing I suggested that there would be facts in veil piercing cases that would look like fraudulent transfers. Here is a case where the courts found liability for fraudulent transfers and that the veil piercing claim was therefore moot: Centerpoint Energy Services, Inc. v Cameel Halim, (7th Cir. 2014). The plaintiff creditor gas company sued the Halims (a married couple) and their wholly-owned llc, WR Property Management, LLC. Centrepoint provided gas to Wilmette Real Estate & Management Co., LLC, wholly owned by the Halims. After Centerpoint sued for payment of the gas bill all of Wilmette’s assets were transferred to WR Property Management (and Wilmette, which had collected money for gas from lessees of the buildings where the gas was supplied, paid the money to the Halims rather than to Centerpoint). Judge Posner writes that “CES, unable to collect the judgment, sued the Halims and WR in federal court, alleging fraudulent conveyance of Wilmette’s assets to the Halims and WR in violation of the Fraudulent Transfer Act; successor liability (of WR as successor to Wilmette); and alter ego liability —the Halims were the alter ego of Wilmette and liable therefore for its debts regardless of any fraudulent transfers.The district judge granted summary judgment for CES on the fraudulent-conveyance and successor-liability claims and having done so dismissed the alter ego charge as moot.” Posner writes “There is no more need for us than there was for the district judge to address CES’s third claim for relief—that the Halims are the alter ego of Wilmette and WR. But we don’t want to leave the impression that it is a negligible claim; it is a strong claim. The Halims commingled Wilmette’s assets with their personal assets, failing … to comply with the formalities that would have provided documentary evidence of an allocation of assets between them and Wilmette. And now they are doing the same with WR’s assets. They began in April 2011 to drain WR’s assets into yet another company of their creation, CH Ventures, LLC, and the process is, it appears, now complete, leaving WR the same kind of empty shell as Wilmette.”
Note Mar. 4 on demand: I am providing the following passage from Rales v Blasband (Del. Supr. 1993) (this case is cited in a footnote in Grimes v Donald) because I think it should help with thinking about situations like the embezzlement hypothetical:
Not all derivative suits fall into the paradigm addressed by Aronson and its progeny. The essential predicate for the Aronson test is the fact that a decision of the board of directors is being challenged in the derivative suit… where there is no conscious decision by directors to act or refrain from acting, the business judgment rule has no application …. Consistent with the context and rationale of the Aronson decision, a court should not apply the Aronson test for demand futility where the board that would be considering the demand did not make a business decision which is being challenged in the derivative suit. This situation would arise in three principal scenarios: (1) where a business decision was made by the board of a company, but a majority of the directors making the decision have been replaced; (2) where the subject of the derivative suit is not a business decision of the board; and (3) where, as here, the decision being challenged was made by the board of a different corporation.
Instead, it is appropriate in these situations to examine whether the board that would be addressing the demand can impartially consider its merits without being influenced by improper considerations. Thus, a court must determine whether or not the particularized factual allegations of a derivative stockholder complaint create a reasonable doubt that, as of the time the complaint is filed, the board of directors could have properly exercised its independent and disinterested business judgment in responding to a demand. If the derivative plaintiff satisfies this burden, then demand will be excused as futile.
Note: I moved the comments that appeared on this page to the archive.