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By Dave Hoffman

An Important New Paper on Veil Piercing Procedure

Sam Halabi (Tulsa) has written an important and interesting new paper on veil piercing, titled Veil-Piercing’s Procedure.

“With the lines between shareholders and corporations blurring over constitutional rights like free exercise of religion and political speech, questions as to how and under what circumstances the law respects or disregards the separation between shareholders and their corporations have never been more urgent. In the corporate law literature, these inquiries have overwhelmingly focused on the doctrine of piercing the corporate veil, a judicial mechanism normally applied to hold shareholders responsible for the obligations of corporations. The last twenty years of veil-piercing scholarship has been largely devoted to empirical analyses of veil-piercing cases collected from Lexis and Westlaw searches. Since 1991, scholars have been trying to mine cases for ever more variables that might predict when and under what circumstances judges disregard the separation between shareholders and their corporations. This Article argues that these scholars have focused on the substance of veil-piercing law to the detriment of another factor: civil procedure. This Article is the first to survey civil procedure and evidentiary rules that affect existing veil-piercing studies including pleading standards, threshold presumptions, burdens of proof, jury access and waiver. The Article ultimately argues that phenomena scholars now ascribe to the “incoherence” of veil-piercing law are explicable in the context of veil-piercing’s procedural fluidity.” The paper breaks new ground on a very, very well trodden field.  (Full disclosure: Sam critiques my work with Christy Boyd on this topic, and we’re mostly guilty as charged.)  I continue to think that veil piercing is a vastly over-written topic, but this paper makes a real contribution and is worth reading. Check it out.

 

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Three Ideas to Improve Law Reviews (as Institutions)

This year, I’ve been tapped to be one of Temple Law Review’s faculty advisors.  I’m excited – the position will give me a platform to blather on to an even-more-captive audience on paramount importance  of avoiding use of et al.

Quite apart from that Cato-ian quest, the advising position has caused me to think a bit harder about some advice I’ve written on this blog to law review editors. While I once believed that law review editors could successfully strategize to maximize their W&L impact factors, I no longer think this is possible. I never was convinced it was a good idea on its merits.  Most law reviews–i.e., those outside of the top 20, variously defined–lack market power to reliably choose articles very likely to be cited. Therefore, strategies directed at W&L Impact, or citations otherwise measured, are unlikely to bear fruit. Neither the article-selection nor the article-citation markets are efficient: no one board can move the needle sufficiently to make it worthwhile. Worse, article selection strategies are going to make the people on boards feel terrible, because they are generally only tactical–reading only expedited submissions, looking at letterhead as a proxy for quality, applying short fuses on offers, focusing on random areas of law in an attempt to be counter-trend. But everyone is doing that now.  It’s like law review glossy publications seeking to bump USNWR reputation scores. The game is rigged. The only alternative is not to play.

So what should you do? I’ve already suggested how boards can escape the citation rat race by opening up the fire hose and closing their eyes.  Now I’ll go further – what can the board to do improve the law review as an institution, not merely as an article selection and publication machine.  Here are three concrete ideas:

1.  Improve the student experience:  Since it’s often terrible, there’s tons of low-hanging fruit. Start by surveying staff and ask them the three worse things about being on law review. Fix one of things things.  For many, that’s going to be the process of writing mini-law review articles (often called “comments,”sometimes called “notes.”)  Stop encouraging students to write this overfootnoted, circuit-split-obsessed, dreck and mandate, instead, short pieces that summarize recent developments.  For other students, it going to be interactions with managing editors. You should train people how to deliver criticism, and how to take it. Most incoming law review editors haven’t yet learned how to be a good boss. Many never will unless you intervene.

2. Create Institutional Memory:  I’ll let you in on a secret: most law schools are out of touch with their intellectual pasts – they have little record of the work of professors who’ve left the faculty, they don’t know their own history or past purposes, and they have an even vaguer idea of what alumni are up to, outside of those who contribute heavily to the school.  Law Reviews can, but rarely do, serve the purpose of being an institutional memory, for at least the intellectual work of the school.  Today, they can do so online, bringing the past to life and...

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Does Salaita Have a Contract Claim?

As I’ve argued in pedantic detail, Prof. Salaita’s hypothetical promissory estoppel claim against the University of Illinois is weak. In the Illinois Court of Claims, even if one can assert  estoppel against a state instrumentality, the claim should fail unless the undiscovered facts are radically different from those publicly known. But what about an ordinary contract claim? On its face, most observers have discounted the possibility because the offer letter explicitly stated there was no contract before board approval. Prof. Nancy Kim argues to the contrary, in a thoughtful post here. The nub of her argument is one of contract interpretation:

“I think both parties intended a contract and a “reasonable person” standing in the shoes of Salaita would have believed there was an offer.  The offer was clearly accepted.  What about the issue regarding final Board approval? Does that make his belief there was an offer – which he accepted -  unreasonable?  I don’t think so given the norms surrounding this which essentially act as gap fillers and the way the parties acted both before and after the offer was accepted . . . There was, however, an implied term in the contract that Salaita would not do anything or that no information would come out that would change the nature of the bargain for the university.”

I read this to be making an argument about conditions – that is, Prof. Kim thinks that we shouldn’t interpret the language “This recommendation or appointment is subject to approval by the Board of Trustees of the University of Illinois” as an express condition, given the anti-forfeiture preference that many courts practice.  Rather, Kim argues that we should see the term a promise which is subject to a brake – the implied duty of good faith and fair dealing: the Board of Trustees could only withhold approval for good cause. Whether the tweets in question constitute good cause then becomes the real issue.  She admits the problem “caused me some angst,” but ends up coming out against a finding of a condition.

I’m not unsympathetic to Prof. Kim’s position.  But to evaluate it, I would prefer to talk about Illinois decisional law, rather than contract doctrine in general terms.  Just for those few readers of this post who don’t already think about contract law all day long, well, I’ll tell you a secret: there is no contract law.  Notwithstanding the Restatement’s certitude, the states diverge sharply on many matters, including those as seemingly trivial as the preference against forfeiture, and as general as the liability of principals for agents’ actions. I’ve done some research into this.  I original wrote a post that catalogued the absence of evidence in Illinois for contract recovery under circumstances anything like these. But rather than subject myself to a tl;dr comment, I’ll just post the following challenges to Prof. Kim and others who care to take them on.

1. Doesn’t the “subject to approval” language from the letter make this a rather classic case of a non-offer under Restatement 26 and its adopting Illinois cases?

2. Why isn’t...

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Disclaimers & Promissory Estoppel

Imagine that, rather than because of his speech, but for no reason at all, University of Illinois Chancellor Wise decided not to present Prof. Salaita’s appointment to the Board of Trustees. Also assume that the facts are as they’ve been publicly described – there is no documented backchannel communication assuring that the appointment was a “rubber stamp,” and the Board had no knowledge of the offer’s existence before the summer. Finally, assume that the Illinois Chancellor has not failed to forward on a hiring proposal to the Trustees since, say, 2010.

These assumptions strip away the political and constitutional questions,* and leave us with a clean problem: does an express reservation of authority in an offer of employment make it unreasonable to rely on it, where the current institutional practice is for such authority to be confirmed later? Dorf thinks “no.” I, and Steven Lubet, think “yes.”

In my first post, I cited a number of cases in which promissory estoppel claims by prospective faculty members under circumstances like these were denied, including some that rested on the conclusion that the ultimate authority lay with the Board of Trustees.  This post continues that research.  I have found no cases directly on point in Illinois. Nor have I found a single case outside of Haviland v. Simmons where a plaintiff successfully asserted a PE claim under these circumstances.  In addition to the cases I cited in the original post, see also Drake v. Medical College of Ohio, 120 Ohio App.3d 493 (1997) (representation by college president that a faculty member would be hired and trustees would be a “rubber stamp” didn’t give rise to PE Claim);  Broderick v. Catholic University, 365 F. Supp. 147 (D.D.C. 1973) (representation of prospective wage equality in president’s letter not reasonably reliable in light of several factors, including reservation of power to Trustees).  Of the dozen or so cases I have found in this vein, Oja v. Blue Mountain Community College, 2004 WL 1119886 (D. Ore. 1994) comes closest to the Salaita facts:

 

“Defendants argue that McCarrell, the interim president, stated in the June 18, 2002 letter to plaintiff that McCarrell would recommend that the Board agree to employ plaintiff. I agree with defendants that a close reading of the letter and the contract show that McCarrell did not agree to employ plaintiff but rather stated that he would recommend that the Board employ plaintiff. This is indicated by contract’s blank signature line for the Chair of the Board. Plaintiff knew that Board approval was legally required, but argues that this as a mere formality. Plaintiff cites alleged statements by Shea to the effect that the job was secure, which Shea denies. Assuming Shea did make such statements, casual or unauthorized comments cannot create a binding employment agreement. See Butler v. Portland General Elec. Co., 748 F.Supp. 783, 792 (D.Or.1990), aff’d sub nom. Flynn v. Portland General Elec. Co.,958 F.2d 377 (9th Cir.1992) (table, text in Westlaw). The promissory estoppel claim fails because it was not reasonable for plaintiff to believe that he had a binding contract with Blue Mountain based on McCarrell’s statement that McCarrell would recommend...

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