Corporations Outline
Spring, 2010
Preface
This outline is keyed by page numbers to the ninth edition of Eisenberg's Corporations and Other Business
Organizations: Cases and Materials.
Table of Contents
Introduction: Features of the Corporate Form
The Evolution of Corporate Law
The Separate Legal Entity and The Corporate Form
Selecting a State of Incorporation
Pseudo-Foreign Companies
The Capital Structure and Introduction to Finance
Limited Liability Against Tort Claimants
Protection of Corporate Creditors
Piercing the Corporate Veil and Enterprise Theory
Inadequate Capitalization
Equitable Subordination, Fraudulent Transfers, Legal Capital and Dividends
Fiduciary Duties of Management
To Whom Do Fiduciary Duties Run?
A. The Duty of Care
The Basic Standard
The Business Judgment Rule
The Duty to Act in Good Faith
B. The Duty of Loyalty
Self Dealing
Corporate Opportunity
Executive Compensation
Controlling Shareholders
Fiduciary Duties in Comparative Perspective
The Voting System
Allocation of Legal Powers
The Proxy Rules
Theory & Politics
Mergers and Acquisitions
Transactions in Control
Mergers
The Legal and Business Structure: Part 1
The Legal and Business Structure: Part 2
Freeze-outs and the Appraisal Right
Tender Offers
Part 1
Part 2
Part 3
Part 4
Takeover Regimes in Comparative Perspective
Insider Trading
From the Common Law to SEA 10b-5
Fraud on the Market
Rule 10b-5 (Part 1)
Rule 10b-5 (Part 2)
Shareholder Lawsuits
Part 1
Part 2
Part 3
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Corporations Outline
Spring, 2010
Table of Authorities
Cases
Brecher v. Gregg, 89 Misc. 2d 457 (N.Y. 1975) ............................................................................. 9
Broz v. Cellular Information Systems, Inc., 673 A.2d 148 (Del. 1996) .......................................... 6
Charlestown Boot & Shoe Co. v. Dunsmore, 60 N.H. 85 (NH 1880) ............................................. 7
Cookies Food Products v. Lakes Warehouse, 430 N.W.2d 447 (Iowa, 1988) ................................. 6
Dodge v. Ford Motor Co., 204 Mich. 459 (1919) ........................................................................... 4
Essex Universal Corp. v. Yates, 305 F.2d 572 (2d Cir. 1962) ......................................................... 9
Farris v. Glen Alden Corp., 393 Pa. 427 (1958) ............................................................................. 9
Fletcher v. Atex, Inc., 68 F.3d 1451 (2d Cir. 1995) ......................................................................... 3
Francis v. United Jersey Bank, 87 N.J. 15 (Sup. Ct. NJ, 1981) ...................................................... 4
Friese v. Superior Court, 134 Cal. App. 4th 693 (2005) ................................................................ 3
Gantler v. Stephens, 965 A.2d 695 (Del. 2009) .............................................................................. 5
Hariton v. Arco Electronics, Inc., 41 Del. Ch. 74 (Del. 1963) ........................................................ 9
Hawaiian International Finances, Inc. v. Pablo, 53 Haw. 149 (Hawaii, 1971) ............................. 6
Hollinger, Inc. v. Hollinger International, Inc., 858 A.2d 342 (Del. Ch., 2004) ............................ 9
In re Caremark International Inc. Derivative Litigation, 698 A.2d 969 (Del. Chanc. 1996) ......... 5
In re the Walt Disney Company Derivative Litigation, 825 A.2d 275 (Del. Chanc. 2003) ............. 5
In re the Walt Disney Company Derivative Litigation, 906 A.2d 27 (Del. 2006) ........................... 5
Kahn v. Lynch Communication Systems, Inc. ................................................................................. 7
Kamin v. American Express Co., 86 Misc. 2d 809 (NY Trial Court, 1976) .................................... 4
Kinney Shoe Corp v. Polan, 939 F.2d 209 (4th Cir. 1991).............................................................. 3
Lewis v. S.L. & E., Inc., 629 F.2d 764 (2d Cir. 1980) ..................................................................... 6
Lyondell Chemical Co. v. Ryan ....................................................................................................... 5
Malpiede v. Townson, 780 A.2d 1075 (Del. 2001) .......................................................................... 5
Mills v. Electric Auto-Lite Co., 396 U.S. 375 (1970) ...................................................................... 8
Minton v. Cavaney, 56 Cal.2d 576 (Cal. Sup. Ct. 1961) ................................................................. 4
Northeast Harbor Golf Club, Inc. v. Harris, 661 A.2d 1146 (Maine, 1995) .................................. 6
Perlman v. Feldmann, 219 F.2d 173 (2d Cir. 1955)........................................................................ 9
Schnell v. Chris-Craft Industries, Inc., 285 A.2d 437 (Del. 1971) ................................................. 7
Sea-Land Services, Inc. v. Pepper Source, 993 F.2d 1309 (7th Cir. 1993) ..................................... 3
Sinclair Oil Corporation v. Levien, 280 A.2d 717 (Del. 1971) ...................................................... 7
Smith v. Van Gorkom, 488 A.2d 858 (Del. Sup. Ct., 1985) ............................................................. 4
Stone v. Ritter, 911 A.2d 362 (Del. 2006) ....................................................................................... 5
Terry v. Penn Central Corp., 668 F.2d 188 (3d Cir. 1981) ........................................................... 10
VantagePoint Venture Partners 1996 v. Examen, Inc., 871 A.2d 1108 (Del. 2005)........................ 3
Virginia Bankshares, Inc. v. Sandberg, 501 U.S. 1083 (1991)........................................................ 8
Walkovsky v. Carlton, 18 N.Y.2d 414 (NY, 1966) ........................................................................... 4
Weinberger v. UOP, Inc., 457 A.2d 701 (1983)............................................................................. 10
Zahn v. Transamerica Corporation, 162 F.2d 36 (3d Cir. 1947) .................................................... 6
Zetlin v. Hanson Holdings, Inc., 48 N.Y.2d 684 (N.Y. 1979) ......................................................... 8
Introduction: Features of the Corporate Form
The Evolution of Corporate Law
NY Statute, 1811; DGCL Table of Contents; Pistor et al., “Innovation in Corporate Law”, JCE 2003, 676-694
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The Separate Legal Entity and The Corporate Form
DGCL §§ 101-109, 242; Form of Certificate of Incorporation (p. 1387); Form of By-Laws (p.1389)
Selecting a State of Incorporation
VantagePoint Venture Partners 1996 v. Examen, Inc., 871 A.2d 1108 (Del. 2005), Supp. pp. 14-23:
Facts:
Analysis by Holland, J.:
European Court of Justice (ECJ):
Centros:
Pseudo-Foreign Companies
Friese v. Superior Court, 134 Cal. App. 4th 693 (2005), Supp. pp. 23-33:
Facts:
Analysis by Benke, Acting P.J.:
Inspire Art:
The Capital Structure and Introduction to Finance
Characteristics of a Corporation, pp. 106-107
Selecting a State of Incorporation, p. 107
Organizing a Corporation, pp. 107-114
Preincorporation Transactions by Promoters, pp. 114-117
The Classical Ultra Vires Doctrine, pp. 122-124;
W. Klein & J. Coffee, Business Organization and Finance 239-242, pp. 535-538:
Limited Liability Against Tort Claimants, pp. 234-239
Protection of Corporate Creditors
Piercing the Corporate Veil and Enterprise Theory
Fletcher v. Atex, Inc., 68 F.3d 1451 (2d Cir. 1995), pp. 221-227:
Facts:
Analysis by Cabranes, Cir. J.:
Berle, The Theory of Enterprise Liability, 47 Colum. L. Rev. 343 (1947), pp. 232-3:
Sea-Land Services, Inc. v. Pepper Source, 993 F.2d 1309 (7th Cir. 1993), pp. 243-246:
Facts:
Analysis by Timbers, Sen. Cir. J.:
Kinney Shoe Corp v. Polan, 939 F.2d 209 (4th Cir. 1991), pp. 34-36:
Facts:
Analysis:
Inadequate Capitalization
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Walkovsky v. Carlton, 18 N.Y.2d 414 (NY, 1966), pp. 227-232:
Facts:
Analysis by Fuld, J.:
Dissent by Keating, J.:
Minton v. Cavaney, 56 Cal.2d 576 (Cal. Sup. Ct. 1961), pp. 239-241:
Facts:
Analysis by Traynor, J.:
Arnold v. Browne, 1972, p. 241:
Slottow Fidelity Federal Bank v. American Casualty Co., 10 F.3d 1355 (9th Cir. 1993), p. 241:
Truckweld Equipment Co., Inc. v. Olson, 26 Wash.App. 638 (1980), p. 242:
Radaszewski v. Telecom Corp., 981 F.2d 305 (8th Cir. 1992), p. 242-3:
DGCL § 102(b)(6)
Equitable Subordination, Fraudulent Transfers, Legal Capital and Dividends
Equitable Subordination of Shareholder Claims, pp. 252-255:
Benjamin v. Diamond, 563 F.2d 692 (5th Cir. 1977), p. 255:
Transfers without an Equivalent Exchange, p. 256:
The Corporate Entity and the Interpretation of Statutes and Contracts, pp. 256-7:
pp. 1233-1262
UFTA § 4(a); Bankruptcy Code § 548; DGCL §§ 154, 160, 170, 172, 174
Fiduciary Duties of Management
To Whom Do Fiduciary Duties Run?
Dodge v. Ford Motor Co., 204 Mich. 459 (1919), pp. 134-146:
Facts:
Analysis:
ALI Principles of Corporate Governance §§ 2.01, 6.02
A. The Duty of Care
The Basic Standard
Francis v. United Jersey Bank, 87 N.J. 15 (Sup. Ct. NJ, 1981), pp. 515-526:
Facts:
Analysis by Pollock, J.:
Aronson v. Lewis, 473 A.2d 805 (Del. 1984), p. 527:
Quillen, Trans Union, Business Judgment, and Netural Principles, 10 Del.J. Corp. L. 465 (1985), p. 527-8:
In re Emerging Communications, Inc. Shareholders Litigation, 2004 WL 1305745 (2004), p. 528:
Causation, pp. 528-531:
Kamin v. American Express Co., 86 Misc. 2d 809 (NY Trial Court, 1976), pp. 531-535:
Facts: file this with BJR stuff, in the next heading.
Analysis by Greenfield, J.:
The Difference between Standards of Conduct and Standards of Review, p. 539-544:
Smith v. Van Gorkom, 488 A.2d 858 (Del. Sup. Ct., 1985), pp. 544-561
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Facts:
Analysis by Horsey, J.:
Dissent by McNeilly, J.:
Substance and Process in the Duty of Care, p. 562:
DGCL §§ 102(b)(7), 141(e), 145:
The Business Judgment Rule
In re Caremark International Inc. Derivative Litigation, 698 A.2d 969 (Del. Chanc. 1996), pp. 562-574:
Facts:
Analysis by Chancellor Allen:
Corporate Criminal Liability, the Sentencing Guidelines, and Compliance Programs, pp. 574-577:
ABA Section of Business Law, Committee on Corporate Laws, Corporate Director's Guidebook (2004), p. 577:
Eisenberg, The Board of Directors and Internal Control, 19 Cardozo L. Rev. 237 (1997), pp. 577-578:
Civil Liability of Directors and Officers to Third Persons, pp. 578-579:
Emerald Partners v. Berlin, 726 A.2d 1215 (Del. 1999), p. 580:
Malpiede v. Townson, 780 A.2d 1075 (Del. 2001), pp. 580-587:
Facts:
Analysis by Veasey, C.J.:
In re the Walt Disney Company Derivative Litigation, 825 A.2d 275 (Del. Chanc. 2003), pp. 587-596:
Facts:
Analysis by Chandler, J.:
Criminal Liability of Directors and Officers, pp. 599-603:
Directors' and Officers' Liability Insurance, pp. 603-605:
Gantler v. Stephens, 965 A.2d 695 (Del. 2009), Supp. pp. 77-89:
Facts:
Analysis by Jacobs, J.:
Sarbanes-Oxley Act §§ 301, 302, 304, 307, 404
The Duty to Act in Good Faith
In re the Walt Disney Company Derivative Litigation, 906 A.2d 27 (Del. 2006), Supp pp. 89-110:
Facts:
Analysis by Jacobs, J.:
Stone v. Ritter, 911 A.2d 362 (Del. 2006), Supp. pp. 110-121:
Facts:
Analysis by Holland, J.:
Lyondell Chemical Co. v. Ryan, 970 A.2d 235 (Del. 2009), Supp. pp. 121-129
Facts:
Analysis by Berger, J.:
B. The Duty of Loyalty
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Corporations Outline
Spring, 2010
Self Dealing
Marsh, Are Directors Trustees?, 22 Bus. Law. 35 (1966), pp. 606-609:
Lewis v. S.L. & E., Inc., 629 F.2d 764 (2d Cir. 1980), pp. 609-616:
Facts:
Analysis by Kearse, Cir. J.:
Remedies for Violation of the Duty of Loyalty, pp. 616-618:
Associates of Directors and Senior Executives, pp. 626-7:
Cookies Food Products v. Lakes Warehouse, 430 N.W.2d 447 (Iowa, 1988), pp. 628-641:
Facts:
Analysis by Neuman, J.:
Dissent by Schultz, J.:
DGCL §§ 122(17), 141(h), 144, 157
Corporate Opportunity
Hawaiian International Finances, Inc. v. Pablo, 53 Haw. 149 (Hawaii, 1971), pp. 654-657:
Facts:
Analysis by Kobayashi, J.:
Forkin v. Cole, 192 Ill. App. 3d (1989):
Northeast Harbor Golf Club, Inc. v. Harris, 661 A.2d 1146 (Maine, 1995), pp. 658-666:
Facts:
Analysis by Roberts, J.:
Further Proceedings in Harris, pp. 666-668:
Broz v. Cellular Information Systems, Inc., 673 A.2d 148 (Del. 1996), pp. 668-672:
Facts:
Analysis:
Corporate Opportunity Doctrine, pp. 673-677:
In re eBay, Inc. Shareholders Litigation, 2004 WL 253521 (Del. Ch. 2004), pp. 677-678:
DGCL §§ 122(17), 141(h), 144, 157
Executive Compensation
Supp. pp. 130-148; TARP Executive Compensation rules
Controlling Shareholders
Zahn v. Transamerica Corporation, 162 F.2d 36 (3d Cir. 1947), pp. 678-685:
Facts:
Analysis by Biggs, Cir. J.:
Further Proceedings in Zahn, pp. 685-686:
Duty of Disclosure by Controlling Shareholders under Delaware Law, pp. 686-688:
Target of Suits by Minority Shareholders, p. 688:
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Corporations Outline
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Sinclair Oil Corporation v. Levien, 280 A.2d 717 (Del. 1971), pp. 688-694
Facts:
Analysis by Wolcott, C.J.:
Kahn v. Lynch Communication Systems, Inc., 638 A.2d 1110 (Del. 1994), pp. 695-709:
Facts:
Analysis by Holland, J.:
Levco Alternative Fund v. The Reader's Digest Ass'n, Inc., 803 A.2d 428 (Del. 2002), pp. 709-711:
Fiduciary Duties in Comparative Perspective
Readings TBA
The Voting System
Allocation of Legal Powers
Shareholdership in Publicly Held Corporations, pp. 154-162:
Charlestown Boot & Shoe Co. v. Dunsmore, 60 N.H. 85 (NH 1880), pp. 162-164:
Facts:
Analysis by Smith, J.:
People ex Rel. Manice v. Powell, 201 N.Y. 194 (N.Y. 1911), p. 164:
Removal of Directors, p. 165:
Schnell v. Chris-Craft Industries, Inc., 285 A.2d 437 (Del. 1971), pp. 166-167:
Facts:
Analysis by Herrmann, J.:
A.A. Berle & G. Means, The Modern Corporation and Private Property 220 (rev. ed. 1967), p. 167:
Blasius Industries, Inc. v. Atlas Corp., 564 A.2d 651 (Del. Ch. 1988), pp. 167-175:
Facts:
Analysis by Allen, Ch.:
Condec Corp. v. Lunkenheimer Co., 43 Del. Ch. 353 (1967), pp. 175-176:
Business Judgment Rule, pp. 176-177:
Takeovers, pp. 177-178:
Weighted Voting in Publicly Held Corporations, pp. 178-180:
Structure of the Corporation, pp. 198-200:
Architecture of Corporate Law, pp. 200-201:
Choice of the State of Incorporation, pp. 201-206:
Directors' Informational Rights, pp. 206-207:
Formalities Required for Action by the Board, pp. 207-210:
Committees, pp. 210-211:
Authority of Corporate Officers, pp. 211-215:
Schoonejongen v. Curtiss Wright Corp., 143 F.3d 120 (3d Cir. 1998), pp. 215:
Formalities Required for Shareholder Action, pp. 215-217:
Cumulative Voting, pp. 217-220:
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Corporations Outline
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DGCL §§ 141, 109, 223, 242
The Proxy Rules
Terminology, p. 275:
Overview of the Proxy Rules, pp. 276-278:
Annual Report to Shareholders, pp. 278-279:
Randall S. Thomas & Catherine T. Dixon, Aranow & Einhorn's Proxy Contests for Corporate Control, 3d ed. 1998,
pp. 279-281:
Private Action under the Proxy Rules
J.I. Case Co. v. Borak, 377 U.S. 426 (1964), p. 281-282:
Wyandotte v. U.S., 389 U.S. 191 (1967), p. 282:
Cort v. Ash, 422 U.S. 66 (1975), p. 282:
Mills v. Electric Auto-Lite Co., 396 U.S. 375 (1970), pp. 282-288:
Facts:
Analysis by Harlan, J.:
Further Proceedings in Mills, p. 288:
TSC Industries v. Northway, Inc., 426 U.S. 438 (1976), pp. 288-290:
Virginia Bankshares, Inc. v. Sandberg, 501 U.S. 1083 (1991), pp. 290-300:
Facts:
Analysis by Souter, J.:
Concurrence in Part and Concurrence in Judgment by Scalia, J.:
Concurrence in Part and Dissent in Part by Stevens, J., with Marshall, J.:
Concurrence in Part and Dissent in Part by Kennedy, J., with Marshall, Blackmun, and Stevens, J.J.:
Wilson v. Great American Industries, Inc., 979 F.2d 924 (2d Cir. 1992), p. 300:
Causation, Reliance, and Standing in Private Actions, pp. 300-301:
Standard of Fault in Private Actions under the Proxy Rules, pp. 301-302:
State Law, p. 303:
Rosenfeld v. Fairchild Engine and Airplane Corp., 309 N.Y. 168 (N.Y. 1955), pp. 315-322:
Facts:
Analysis by Frossel, J.:
Dissent by Van Voorhis, J.:
J. Heard & H. Sherman, Conflicts of Interest in the Proxy Voting System 84-85 (1987), pp. 322-324:
Heineman v. Datapoint Corp., 611 A.2d 950 (Del. 1992), p. 324:
Theory & Politics
Readings TBA
Mergers and Acquisitions
Transactions in Control
Zetlin v. Hanson Holdings, Inc., 48 N.Y.2d 684 (N.Y. 1979), pp. 719-720:
Facts:
Analysis:
Andrews, The Stockholder's Right to Equal Opportunity in the Sale of Shares, 78 Harv. L. Rev. 505 (1965), pp. 720722:
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Corporations Outline
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Javaras, Equal Opportunity in the Sale of Controlling Shares: A Reply to Professor Andrews, 32 U. Chi. L. Rev. 420
(1965), pp. 722-724:
Gerdes v. Reynolds, 28 N.Y.S.2d 622 (N.Y. Trial Court, 1941), pp. 724-730:
Facts:
Analysis by Walter, J.:
Further Proceedings in Gerdes v. Reynolds, p. 730:
Perlman v. Feldmann, 219 F.2d 173 (2d Cir. 1955), pp. 731-735:
Facts:
Analysis by Clark, C.J.:
Theory of Corporate Action, pp. 735-736:
Brecher v. Gregg, 89 Misc. 2d 457 (N.Y. 1975), pp. 736-739:
Facts:
Analysis by Harvey, J.:
Essex Universal Corp. v. Yates, 305 F.2d 572 (2d Cir. 1962), pp. 739-747:
Facts:
Analysis by Lumbard, C.J.:
Concurrence by Friendly, J.:
A. Mergers
The Legal and Business Structure: Part 1
Hollinger, Inc. v. Hollinger International, Inc., 858 A.2d 342 (Del. Ch., 2004), pp. 1040-1048:
Facts:
Analysis by Strine, V.C.:
Sale of Substantially All Assets, p. 1048:
Statutory Mergers, pp. 1056-1057:
R. Ward, E. Welch & A. Turezyn, Folk on the Delaware General Corporation Law § 251.2.2.1, pp, 1057-1058:
Short-Form Mergers, pp. 1058-1059:
DGCL §§ 251(a)-(f), 253, 259-261, 271
The Legal and Business Structure: Part 2
The Stock Modes and the de Facto Merger Theory, pp. 1060-1062:
Hariton v. Arco Electronics, Inc., 41 Del. Ch. 74 (Del. 1963), pp. 1062Facts:
Analysis by Southerland, C.J.:
Heilbrunn v. Sun Chemical Corporation, pp. 1064-1065:
Farris v. Glen Alden Corp., 393 Pa. 427 (1958), pp. 1065-1071:
Facts:
Analysis by Cohen, J.:
Farris, pp. 1071-2:
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Rath v. Rath Packing Co., 257 Iowa 1277 (1975), pp. 1072-1074:
Survivor's Liability to the Transferor's Creditors in Stock-for-Assets Combinations, pp. 1074-1075:
Terry v. Penn Central Corp., 668 F.2d 188 (3d Cir. 1981), pp. 1075-1079:
Facts:
Analysis by Adams, C.J.:
Triangular Mergers and Share Exchanges, pp. 1079-1081:
DGCL §§ 251(a)-(f), 253, 259-261, 271
Freeze-outs and the Appraisal Right
Background on Appraisal Rights, pp. 1049-1050:
Leader v. Hycor, Inc., 395 Mass. 215 (1985), pp. 1050-1051:
In re Valuation of Common Stock of McCloon Oil Co., 565 A.2d 997 (Me. 1989), pp. 1051-1052:
MT Properties, Inc. v. CMC Real Estate Corp., 481 N.W.2d 383 (Minn. App. 1992), pp. 1052-1054:
Exclusivity of the Appraisal Remedy, pp. 1053-1055:
Freezout Techniques, pp. 1081-1082:
Weinberger v. UOP, Inc., 457 A.2d 701 (1983), pp. 1083-1097:
Facts:
Analysis by Moore, J.:
Kahn v. Lynch
check updated syllabus re pp. 1098 -1115
DGCL § 262
B. Tender Offers
Part 1
pp. 1116-1138;SEA Rules 13d-1, 13d-3, 13d-5, 13e-1, 13e-4, 14d1 to d-4, 14d-6 to 14d-10, 14e1 to e-3, 14e-5
Part 2
pp. 1138-1151; Supp. pp. 213-230
Part 3
pp. 1163-1176; 1176-1206
Part 4
pp. 1206-1224; DGCL § 203
Takeover Regimes in Comparative Perspective
Readings TBA
Insider Trading
From the Common Law to SEA 10b-5
pp. 748-760; 760-776; Securities Exchange Act § 10b; SEC Rule 10b(5)
Fraud on the Market
pp. 785-808; 857-860; Supp. pp. 106-115
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Corporations Outline
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Rule 10b-5 (Part 1)
pp. 760-779; 817-826
Rule 10b-5 (Part 2)
pp. 826-848; 860-895; SEC Rule 14e(3); SEA § 16
Shareholder Lawsuits
Part 1
pp. 912-918; 930-931; 933-935; 944-959
Part 2
pp. 967-975; 978-984; 993-998;1000-1002
Part 3
pp. 1003-1004; 1019-1033
The Public Distribution of Securities
pp. 1263-1275; 1285-1318
Liabilities under the Securities Act
pp. 1338-1340; Supp. pp. 251-297
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