California Corporate-Board Quota Law Unlikely to Survive a Constitutional Challenge

bainbridgeFeatured Expert Contributor, Corporate Governance/Securities Law

Stephen M. Bainbridge, William D. Warren Distinguished Professor of Law, UCLA School of Law.

The California state legislature recently passed SB 826, which will impose gender diversity quotas on all public corporations whose principal executive offices are located in California. If the corporation has six or more directors, it must have at least three female directors. If it has five board members, it will have to have at least two female members. If the board has four or fewer members, it will be required to have at least one female director. Governor Jerry Brown signed the bill into law.

SB 826 has been criticized on various grounds. Some commentators contend that the business case for gender quotas has not been made, so it is unclear whether the bill will benefit companies and their shareholders. Other commentators contend that state-mandated gender quotas are unconstitutional. Former SEC Commissioner Joseph Grundfest recently posted an article assessing the arguments on both sides of those debates, which I highly recommend for readers interested in pursuing those issues.1

Regardless of one’s views of the constitutional and business merits of diversity mandates, however, SB 826 is bad policy and of dubious constitutional validity for reasons wholly unrelated to gender issues. Continue reading “California Corporate-Board Quota Law Unlikely to Survive a Constitutional Challenge”

Updates: Supreme Court Refuses to Review Philly Cab Drivers’ Suit Against Uber

supreme courtOn April 24 in Ruling on Philly Taxis’ Suit vs. Uber, Third Circuit Reaffirms Antitrust Focus on Competition, not Competitors, one of our Featured Expert Contributors on antitrust, Baker Botts partner Anthony Swisher, wrote about a U.S. Court of Appeals for the Third Circuit decision that rejected a claim for attempted monopolization lodged against Uber. The taxi association sought a writ of certiorari from the U.S. Supreme Court, which yesterday announced in an orders list that it had denied the request.

A denial of certiorari has no precedential value; it simply means that the lower court decision stands. That said, the outcome may deter taxi organizations from other jurisdictions, as well as perhaps other businesses whose market share is threatened by “gig economy” entities, from filing similar antitrust suits. In addition, the Court let stand a decision that properly elevated protection of consumers over assisting competitors, a fundamental antitrust-law concept that is under attack by some politicians, legal activists, and antitrust academics. As the Third Circuit explained:

Appellants urge the application of antitrust laws for the express opposite purpose of antitrust laws: to compensate for their loss of profits due to increased competition from Uber. However, harm to Appellants’ business does not equal harm to competition.

New NY Commercial Division E-Discovery Rule Encourages Use of Technology-Assisted Review

 

Guest Commentary

By Elizabeth M. Sacksteder and Ross M. Gotler, Paul, Weiss, Rifkind, Wharton & Garrison LLP. Ms. Sacksteder is a Partner with the firm and a member of the Commercial Division Advisory Council. Mr. Gotler is E-Discovery Counsel with the firm. Some of this material first appeared in Law 360.

The most expensive stage of big-ticket litigation today is review of the huge volume of electronically-stored information (ESI) that such cases typically require, notwithstanding such common economies as the use of vendors to do first-level document review. Achieving greater efficiency in this resource-intensive stage of litigation—making review of ESI cheaper, faster, and more accurate—is a shared goal of litigants, their counsel, and the courts. Sophisticated litigants know that the use of technology-assisted review can yield substantial cost savings as well as streamline and accelerate document review and production.

Though the e-discovery industry is embracing technology, neither the Federal Rules of Civil Procedure nor state procedure codes address whether, in what circumstances, or how a party may use technology-assisted review to fulfill its disclosure obligations. Other than references in a few discovery pilot programs, a relatively sparse body of mostly federal case law, and secondary sources such as the commentaries of The Sedona Conference, there has been little express guidance to date for practitioners or courts concerning the appropriate use of technology-assisted review. Continue reading “New NY Commercial Division E-Discovery Rule Encourages Use of Technology-Assisted Review”

Soda Warning Case Tests How High Court’s NIFLA Decision Affects Commercial Speech Mandates

FirstAmendmentFor the past several decades, the U.S. Supreme Court and at least some federal appeals courts have been moving in opposite directions with respect to First Amendment protection for commercial speech. The Supreme Court’s trend since the mid-1970s has been to afford ever-increasing protection to truthful speech uttered by commercial speakers. In sharp contrast, some federal appeals courts have become increasingly deferential toward government efforts to control such speech. The Supreme Court’s June 2018 decision in NIFLA v. Becerra resoundingly affirmed the Court’s strict limits on the government’s authority over commercial speech, particularly in the context of compelled speech.

The first major test of whether appeals courts will heed that directive came before an en banc panel of the Ninth Circuit on September 25. The questions posed by the 11 judges on the panel suggest that the Ninth Circuit remains reluctant to embrace NIFLA’s message. Continue reading “Soda Warning Case Tests How High Court’s NIFLA Decision Affects Commercial Speech Mandates”

Big Business Will (Probably) Save Us

corporateHQIn the 1960s and 1970s, as South Korea and Hong Kong liberalized, India persisted in Jawaharlal Nehru’s vision of state planning and protectionism. No one deserves more blame than Nehru’s daughter, Indira Gandhi, the nation’s third prime minister.

One of Gandhi’s many sins was to limit capital investment. Most factories could not contain more than a few hundred-thousand dollars’ worth of equipment. At its height this control affected more than 800 products, including car parts, clothes, shoes, toys, and toothpaste. While China gained an economic foothold exporting cheap consumer goods, India could not even produce pencils efficiently.

By 2005 large firms employed more than half of China’s manufacturing workers, but only about ten percent of India’s. This is one reason why China’s GDP per capita was equal to India’s in the 1970s, but triple India’s by the 2000s.

In the abstract, at least, most Americans like small businesses and dislike big corporations. In Big is Beautiful: Debunking the Myth of Small Business, Robert D. Atkinson and Michael Lind argue for an attitude adjustment. Continue reading “Big Business Will (Probably) Save Us”

At Stake in “Apple v. Pepper”: Why the Supreme Court’s Direct-Purchaser Rule is a “Super-Precedent”

app storeOne of the more interesting cases the Supreme Court will hear in the new term is Apple, Inc. v. Pepper. We’ve blogged previously about the case here. Superficially, the Court will decide whether iPhone users who buy apps from Apple’s App Store may sue Apple for alleged antitrust violations, or whether only app developers may bring such claims. But more fundamentally, resolution of the case hinges on the continued viability of Illinois Brick Co. v. Illinois, which holds that only the direct purchaser of a good or service may sue an allegedly abusive monopolist for damages.

In February, two high-level officials in the Department of Justice’s Antitrust Division floated the possibility of asking the Supreme Court to abandon Illinois Brick’s direct-purchaser rule. But the Solicitor General, in the United States’ amicus brief, insists that the question is not properly joined in the case. If either the Respondents or their amici urge the Court to overturn Illinois Brick, they will face a high hurdle. Continue reading “At Stake in “Apple v. Pepper”: Why the Supreme Court’s Direct-Purchaser Rule is a “Super-Precedent””

WLF Supreme Court Preview Briefing Delves into Cases and Petitions Affecting Free Enterprise

Our October Term 2018 preview aired live at 12:30 on September 18. Thomas Goldstein of Goldstein & Russell, P.C. moderated a panel that featured Professor John Yoo of UC Berkeley School of Law; Shay Dvoretzky of Jones Day; and Beth Brinkmann of Covington & Burling LLP.

Washington Legal Foundation has filed amicus briefs in four cases currently on the Court’s October 2018 docket and in support of five certiorari petitions:

Merits cases

Cert. Petitions

Relevant WLF Publication

Air & Liquid Systems Corp. v. Devries: Asbestos Litigation’s “Bare Metals” Defense Goes Before the U.S. Supreme Court