9 Hastings Business Law Journal, Issue 3

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Articles

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SIX YEARS ON AND STILL COUNTING: SIFTING THROUGH THE MORTGAGE MESS
Robert Hockett, 9 Hastings Bus. L.J. 373 (2013)

U.S. primary and secondary real estate and mortgage markets remain one of the principal drags upon economic recovery. Upwards of 12 million new mortgages face foreclosure in the coming six years. The reason for this self-perpetuating slump is exceedingly complex, thanks to the large number of causal factors in play. After identifying the principal interests at stake and the constituencies that hold these interests, this article identifies the impediments that prevent economic recovery and proposes a solution to remove them. The conclusion reached is that municipalities exercising their eminent domain powers in partnership with investors are best situated to move the nation out of the ongoing mortgage mess.

 
John A. Pearce II

John A. Pearce II

Ilya A. Lipin

Ilya A. Lipin

THE UNCERTAIN VIABILITY OF A SINGLE MEMBER LIMITED LIABILITY COMPANY AS A CHOICE OF ENTITY
John A. Pearce II and Ilya A. Lipin, 9 Hastings Bus. L.J. 423 (2013)

Single Member Limited Liability Companies ("SMLLC") play an increasing role in a wide array of transactionsincluding corporate reorganizations, like-kind exchanges, and asset protection. However, recent legal developments showcase pitfalls and uncertainty associated with utilizing SMLLCs as an operating business entity. Specifically, courts have held that creditors of a SMLLC can go beyond traditional remedies of obtaining a charging order or piercing the corporate veil to satisfy an existing judgment. For owners to take full advantage of the SMLLC form, they need to heed the cautions implicit in recent legal developments and enact operating agreements and bylaws that help preserve control and management rights if the SMLLC is faced with a severe financial reversal. This article investigates the corporate structure of SMLLCs and offers innovative solutions to enhance protection of an owner's assets and safeguards in the event of bankruptcy.

 
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BURNING MAN: A CASE STUDY OF ALTRIUSM THRIVING IN A FOR-PROFIT ORGANIZATIONAL FORM AND THE RATIONALES FOR LLC-TO-NONPROFIT CONVERSION
Yuan Ji, 9 Hastings Bus. L.J. 449 (2013)

Burning Man is a temporary city of over 50,000 citizens that exists for one week every year in Nevada's Black Rock Desert. It is best known in popular culture for its celebration of interactive art, gift economy, and ritualistic burning of a large wooden structure in the shape of a man. The case study of Burning Man illustrates that an altruistic, not profit driven, organization can thrive in a for-profit legal form without abandoning its mission. Nevertheless, this article discusses the theories on nonprofit formation and suggests rationales for Burning Man's conversion to a nonprofit structure. This article also makes specific recommendations for better organizational accountability and transparency in Burning Man's current and future operations.

 
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DEFENDING PATAGONIA: MERGERS AND ACQUISITIONS WITH BENEFIT CORPORATIONS
J. Haskell Murray, 9 Hastings Bus. L.J. 485 (2013)

Will the benefit corporation statutes enable companies like Patagonia to preserve their mission in the face of hostile takeover threats? To what extent should the benefit corporation statutes protect against such threat? This article explores these questions and investigates how, if at all, the tests resulting from Unocal and Revlon should be applied to benefit corporations. This author concludes that 1) a modified version of the Unocal test could be used to evaluate takeover defenses erected by benefit corporations; and 2) Revlon should remain relevant for benefit corporations that are incorporated in states following Delaware law, but that there should be statutory amendments requiring a partial-asset lock and an annual charitable giving floor to ensure public benefit in the event of the break-up or sale of a benefit corporation.


Student Notes

AVIC INTERNATIONAL A SUCCESS: HOW REGULATORY CHANGES TO CFIUS HAS LIMITED POLITICAL INTEREFERENCE AND EMPOWERED CHINESE INVESTORS TO OBTAIN A SUCCESSFUL REVIEW
Amrietha Nellan, 9 Hastings Bus. L.J. 517 (2013)

Chinese businesses are wary of merging or acquiring United States companies due to a perceived hostile environment. The Committee on Foreign Investment in the United States ("CFIUS") may deny the transaction or make recommendations to the President to divest a completed deal if a risk is found. After a string of highly public failed CFIUS reviews against Chinese acquirers, the process seemed insurmountable for Chinese investors. The recent success of a Chinese aviation firm, AVIC International, in acquiring a U.S. based aviation company indicates that the United States is not an impenetrable market for Chinese investors. In particular, AVIC International's use of the informal pre-notice review and mitigation agreement with CFIUS minimized political interference during the formal review and helped ensure a favorable outcome. This note suggests that Chinese investors should follow AVIC International's strategy rather than shy away from acquiring U.S. companies.

 

GATEKEEPING POST-UNILOC: EXPERT TESTIMONY IN MULTI-COMPONENT PATENT LITIGATION
Erika Mayo, 9 Hastings Bus. L.J. 539 (2013)

In recent years, the Federal Circuit has made an effort to rein in excessive or unfounded patent damages awards. In Uniloc v. Microsoft, the Federal Circuit granted a motion for retrial on the issue of damages, rejecting the validity of plaintiff's damages expert testimony. This note advocates a broad reading of Uniloc and encourages trial courts to take a greater role in providing juries with sound methodology for assessing damages. Specifically, this article encourages the use of court-appointed damages experts to restore predictability in the U.S. patent system.