12 Hastings Business Law Journal, Issue 3

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Articles

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"INTENTIONAL ACTS CANNOT BE ACCIDENTS" - A CRITIQUE OF A LEGAL ERROR
James E. Scheuermann, 12 Hastings Bus. L. J. 301 (2016)

In this article, Mr. Scheuermann adds to the debate of the term “Accident” in the context of insurance agreements. To address the controversy of the term, Mr. Scheuermann critiques the principle rule of the Maxim: If an insured intended to do an act that caused (or allegedly caused) harm to the interests of a third party, then the intentional nature of that act means that it cannot be an “accident” within the insuring agreement of an occurrence, even if the insured did not expect or intend the injurious effects of which the third party complains. Mr. Scheueremann points out the inconsistencies across the country of this rule and suggests an alternative, arguing that the Maxim is based on a fundamental legal error. He suggests “Under an occurrence – or accident-based insuring agreement of a liability policy, if the act has an actual or alleged property (or properties) that allows us to describe it as an accident and the act-so-described has the right casual relation to the third party’s complained-of injuries that are within the insuring agreement, then that description is the coverage-relevant act description.” This will, allegedly, result in fairer outcomes in coverage disputes and more sound insurance coverage jurisprudence.

 
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WILL YOUR VEIL BE PIERCED - HOW STRONG IS YOU ENTITY'S LIABILITY SHIELD - PIERCING THE VEIL, ALTER EGO, EGO, AND OTHER BASES FOR HOLDING AN OWNER LIABLE FOR DEBTS OF AN ENTITY
Allen Sparkman 12 Hastings Bus. L. J. 349 (2016)

This article describes potential owner liability when the corporate veil is pieced.  Specifically, it describes piercing in the context of Limited Liability Companies.  It also addresses corporate cases to an extent because courts developed the veil-piercing and alter ego doctrines in corporate cases and much of the reasoning in corporate veil piercing and alter-ego cases will be applicable to limited liability companies as well.  Veil piercing claims also arise in what are known as reverse veil piercing cases.  This article discusses reverse veil-piercing cases as well.

 
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THE INCENTIVE PROBLEMS WITH THE ALL-OR-NOTHING CROWDFUNDING MODEL
Garry A. Gabison, 12 Hastings Bus. L. J. 489 (2016)   

This paper discusses how the all-or-nothing model can disincentivize crowd investors to perform due diligence over the fraud or failure risks of a crowdfunding campaign. Specifically, the major upside of this model is that a project cannot be funded without a critical mass investing. If enough individuals in this critical mass of crowd investors perform their due diligence to check whether projects will become successful, then the model functions correctly; instead, this paper argues that this model incentivizes the crowd to produce noisy information that cannot be relied upon. In the all-or-nothing model, sequential investments encourage rational investors to not perform their due diligence because they relied on the self-interest of prior investors to perform their own due diligence while non-fully rational investors may rely on the belief that prior investors have better information than they might gather. Allowing campaigns to be overfunded can exacerbate some of the all-or-nothing model characteristics. This paper concludes by discussing how the platforms, campaign creators, and crowd investors can be incentivized to better filter projects - in order to assure that crowdfunding fulfills its potential.

 
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THE VIRTUES OF SHAREHOLDER VALUE DRIVEN ACTIVISM: AVOIDING GOVERNANCE PITFALLS
Joel Slawotsky, 12 Hastings Bus. L. J. 521 (2016)

Slawotsky describes different shareholder models and review the differences between them.  Nothing that shareholder activism is on the rise, learning to deal with or planning for board coups or corporate breakups is essential to maintain strong corporate governance.  Slawostsky examines shareholder activism and determines that shareholder activism goes hand-in-hand with strong corporate governance, providing suggestions for how successful companies will do so.

 

Student Notes

SERIES LLCs: GETTING COMFORTABLE WITH UNCERTAINTY
Austin Jones, 12 Hastings Bus. L. J. 571 (2016)

Jones opines that series limited liabilities companies are underutilized.  Jones looks into the tax treatment and background of series LLCs and examines the pertinent case law.  By analyzing how current law could apply to series LLCs, this note describes how the legal landscape for series LLCs is changing.

 

THE U.N. GUIDING PRINCIPLES: BEYOND SOFT LAW
Noura Barakat, 12 Hastings Bus. L. J. 591 (2016)

This note describes the efforts of transnational corporation human rights to promote human rights while contrasting those efforts with human rights abuses that those same transnational corporations have been found guilty of.  Barakat examines the social duty of transnational corporations to promote human rights and investigates out transnational corporations implement policies of corporate social responsibility around the globe.  The note finds that transnational corporations have an ever increasing role to play in human rights issues and that each state must take the opportunity to press transnational corporations into being socially responsible.