May 21, 2013

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Deals without Bankers: Salomon and Benjamin Moore

posted by Robert Mundheim

Warren Buffett has a reputation for not relying heavily on investment bankers in doing transactions.

A. Salomon, Inc.  The first time I personally experienced this aspect of Buffet’s approach occurred in connection with the sale of Salomon, Inc. to Travelers. Salomon was a major investment bank which had a near death experience in 1991. Berkshire was a very substantial shareholder of Salomon and Buffett played a significant role in its rebuilding.

Although Delaware decisions in the wake of Smith v. van Gorkum suggested the advisability of the board of directors of a company being sold getting a fairness opinion from an outside investment banker, Salomon did not get such a fairness opinion to validate the price its shareholders received in the sale of the company. It did put Salomon Brothers investment bankers to work getting the same type of information and analysis which would normally be given to a board of directors in connection with a business combination for which Salomon Brothers had been retained to give a fairness opinion.

Salomon considered the advisability of securing a fairness opinion, but as the proxy states “ . . . a fairness opinion would have provided little, if any, incremental value to the deliberations of the Salomon Board given the insurance and securities industry expertise of the officers and directors of Salomon and its subsidiaries who were evaluating the Merger from a financial point of view.”

B. Benjamin Moore. My next experience with Warren Buffett and his willingness to do transactions without involving an outside investment banker occurred when I was an outside director of Benjamin Moore. Benjamin Moore was essentially a family- controlled corporation which had acquired enough other shareholders to be traded in the over-the-counter market. The company decided that it was time either to go public or be sold. It retained an investment banker to advise it. After studying the company, the investment banker determined that the company should be able to command a price of $X. It then tried to find buyers at that price, but proved unable to do so. Read the rest of this post »

  May 21, 2013 at 9:00 am   Posted in: Symposium (The Essays of Warren Buffett: Lessons for Corporate America)   Print This Post   Comments (0)

The Skeptical Principal

posted by Deborah DeMott

As the Essays note, Berkshire is unusual in several ways. These include the diverse range of businesses that it controls or in which it holds a significant ownership interest, its large proportion of non-controlling equity held long-term by individual shareholders, and its no-dividend pattern. These characteristics—plus the enduring management success of its controlling shareholders—may well be linked to the skeptical voice evident in the Essays.         

Consider first how the Essays recount the process through which Berkshire acquired Scott Fetzer. A “major investment banking house” had undertaken to sell it but failed despite offering Scott Fetzer “widely.” Learning of this failure Mr. Buffett wrote Scott Fetzer’s CEO (whom he had never met), expressing interest, and “within a week we had a deal.” But “[u]nfortunately, Scott Fetzer’s letter of engagement with the investment bank provided it a $2.5 million fee upon sale, even it had nothing to do with finding the buyer.” (Essays at 217).

To be sure, this account may slight the investment bank’s contribution because its unsuccessful marketing effort preceded Mr. Buffett’s awareness of Scott Fetzer as an acquisition target. Nonetheless the incident exemplifies the Essays’ skepticism of the value of external intermediaries and deal-facilitators, at least most of the time. Instead, identifying acquisition targets and determining the terms on which a deal might be possible can be handled internally and more simply. Read the rest of this post »

  May 21, 2013 at 9:00 am   Posted in: Symposium (The Essays of Warren Buffett: Lessons for Corporate America)   Print This Post   Comments (0)

May 20, 2013

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Mr. Buffett Joins a Board

posted by Donald Graham

In September 1974, I joined the board of The Washington Post Company.  Two other directors were elected at roughly the same time:  George J. Gillespie III, a partner at Cravath, Swaine and Moore; and Warren E. Buffett, ceo of Berkshire Hathaway.   Adding Warren to the board was one of the best decisions (in a life full of great ones) for Katharine Graham, the ceo of The Washington Post Company, and my mother.  (George’s contributions are a story for another day).

I’m pretty certain that Kay was, at the time, the only woman ceo in the Fortune 1,000.  Her autobiography, Personal History, won the Pulitzer Prize for biography in 1998 and was a number one bestseller.  Her book emphasized how utterly uncertain she was at all times, how unsure of her own judgment, how modest.  If conceit normally enters the bloodstream when one takes on the title ceo, Kay was an exception.

There were two people she worked with who gave my mother the belief that she could do the job:  Ben Bradlee, the executive editor of the Post, and Warren Buffett (later Meg Greenfield, the Post’s editorial page editor, would be added to the group).

Kay Graham, who had never heard of Mr. Buffett before he bought stock in her company, quickly figured out after meeting Buffett and Charlie Munger, Berkshire vice chairman, that they were the two smartest business people she’d ever met. Many advisers told her not to put Warren on the board; she ignored their advice and in effect made him her lead director.

Warren was an active, smart director from the first meeting.  He had more time then than now; he advised her on basic corporate matters; on management choices; and on acquisitions (the story of his input on acquisitions for The Washington Post Company is told in wonderful detail in Personal History).

The story I want to tell in this blog post has to do with Mr. Buffett’s first two interventions in our company’s business life.  Warren extensively advised Kay Graham (in writing, in both cases) to change major corporate policies.  Neither involved reversing policies she herself had been involved in.  Read the rest of this post »

  May 20, 2013 at 4:00 pm   Posted in: Symposium (The Essays of Warren Buffett: Lessons for Corporate America)   Print This Post   Comments (3)

The Many Audiences of Buffett’s Letters

posted by Simon Lorne

In part I of this post, I talked at a basic level about the factors that seem to me to have enabled the financial success of Warren Buffett and Berkshire Hathaway, and the value of his annual letters to stockholders, and their amalgamation in Larry Cunningham’s The Essays of Warren Buffett, now in its third edition.  In examining Buffettonian business principles through those letters, however,  it is good to remember that among his many talents has always been an uncanny ability to recognize how his comments will be perceived by different audiences, combined with an acute sensitivity to those audiences (in this regard, he has sometimes been regarded as differing somewhat from his partner, Charlie Munger).

The audience for the letters of Warren Buffett (as he is well aware) is not limited to the stockholders of Berkshire Hathaway.  The audience also includes other investors and market participants, the managers and other employees of Berkshire and its many subsidiaries, the owners of businesses who might one day want to sell to Berkshire, the regulators and other government officials who can affect the business, its competitors, the news media and others.  Inevitably, then, some part of the content of the letters is intended for those non-stockholder audiences.

To take a simple example, the letters have at times referred to a given operation’s return on book value, in the process of praising the operation’s management for above-market returns.  (Always naming the managers involved: “Praise by name, criticize by category.”  A maxim breached only, to my recollection, by a reference to Ivan Boesky.)  It is fairly apparent that Warren Buffett would not seriously suggest that an appropriate measure of an entity’s worth is book value.  There are simply too many ways and too many circumstances in which book value will understate, and often substantially understate, actual worth.  (Where is the value of the moat to be found on a balance sheet, except in the case of goodwill for a recently-acquired enterprise?   Warren himself notes this—see page 224 in the Essays, for example—whenever he talks about the more rational, if less precise, intrinsic value of an enterprise.)   And by virtue of the necessity of recognizing impairment charges book value should be far more likely to understate than to overstate intrinsic value.  In consequence, an organization’s return, as measured by return on book value, will often overstate the performance of its managers, but in the  pattern of Berkshire Hathaway, to overstate the contribution of managers does little or no harm to stockholders, and may provide a little more job satisfaction, a little more incentive, etc., to the managers involved.

I do not mean to suggest that Warren Buffett would mislead his partner-stockholders—far from it.  That he would avoid like the plague.  In the first place, it’s simply not in his nature.  In the second place (as if a second place were needed) he would immediately realize that misrepresentations would likely be discovered and the reputation he has worked so assiduously to maintain and enhance would be undermined.  But he would, and does, introduce relatively harmless error from time to time when doing so is in one way or another to the longer term benefit of Berkshire Hathaway.  I rather think he expects his stockholders to be able to recognize such excursions and treat them accordingly.  It’s worth recognizing, though, that if in the course of reading the letters, or the Essays, there comes a point when one finds oneself scratching one’s head and saying “that can’t be right,” there is at least a possibility that it isn’t quite right, and was written for a different audience.  Of course, it’s also possible that it is right, and that one just didn’t understand.  It is quite unlikely to be the case that Warren didn’t understand.

It’s an interesting question whether the change in Berkshire’s stockholder body over the last several years has changed the nature of the annual letters (I would guess not—they have always been written to be understood by everyman).  If there have been such changes, that is the kind of nuance that is necessarily lost in the deconstruct-and-reconstruct process of putting together the Essays.  Read the rest of this post »

  May 20, 2013 at 2:00 pm   Posted in: Symposium (The Essays of Warren Buffett: Lessons for Corporate America)   Print This Post   Comments (0)

A Devotee on Three Elements of Buffett’s Success

posted by Simon Lorne

When I was a very young lawyer, Chuck Rickershauser (the law firm’s name was then Munger, Tolles, Hills & Rickershauser, now Munger, Tolles & Olson—and yes, the Munger is Charlie) explained Warren Buffett to me.  “They say,” he said, “that when Mozart looked at the score for a symphony, he could actually hear the music, and hear each of the different instruments working together.  That’s the way Warren is with a financial statement.  He can look at it and visualize the widgets coming off the assembly line, the sales force generating leads, inventories building up and being depleted and all the other activities involved in running the business—including the financial consequences of it all.”

It seems to me that Warren Buffett’s remarkable accomplishments, and this is true of many people who have achieved truly extraordinary success, are the result of a coalescing of at least three factors.  The first is being born into circumstances that are conducive to that success.  This is what Buffett has often referred to as winning the Ovarian lottery.  If Mozart had been born in a remote village in China, instead of Salzburg, we might never have heard of him.

Alternatively, if Warren Buffett had been born in Salzburg instead of Omaha, his success might have been in a field other than investing.   (Having heard his efforts on a Ukulele, with all due respect, I’m not convinced he would have been a musical success, even in Salzburg, but I’m quite confident he would have been successful.)  Quite a large number of people “win” the Ovarian lottery, but it is a necessary element of success—and even more, unfortunately, don’t win it.  (Before we rush to the assumption that winning that lottery for financial success requires being born in the United States, it’s good to remember that the current leader in the “world’s richest” race was born and has always lived in Mexico.)

The second factor is natural aptitude, and the third is the application of dedicated, focused effort over a long period of time.  (Of course, these two factors also have elements of the genetic lottery at work, but that’s not what the “Ovarian lottery” references are about.)  To achieve financial success at a Buffettonian level probably requires a 10 on a scale of 1 to 10 for each of these factors, but considerable success might well be achieved with scores of 6 on one and 7 on the other.  One with 5% of the wealth of Warren Buffett is still very, very rich.

I would speculate that of the two last factors—aptitude and dedication—the latter is the more important.   Very few people seem to have the willingness, or perhaps capacity, to focus in on the goal, with laser-like intensity, over a sustained period of time, to the exclusion of much of anything else.  In her Buffett biography The Snowball, Alice Schroeder notes that aspect of his success, and compares it with a similar dedication on the part of Bill Gates.  It can also be easily discerned in Walter Isaacson’s biography, Steve Jobs.

It’s not so much that they forced themselves hermit-like to work on the one thing, whether it be investing or software or design, as it is that they enjoy immersing themselves in it completely.  It’s in their DNA.  Given a favorable environment and the necessary quantum of natural ability (the more the better) it seems likely that it is dedication and single-minded pursuit, over a lengthy period of time, that makes the difference.

The coalescence of those factors in the person who is Warren Buffett, in any event, has led to the phenomenal investment success story that is Berkshire Hathaway, and it is a worthy object of study.  Larry Cunningham’s assembly and reordering of the contents of the annual letters to Berkshire’s stockholders to create The Essays of Warren Buffett provides us with a very useful picture of the world of business as Buffett sees it.  Read the rest of this post »

  May 20, 2013 at 11:00 am   Posted in: Symposium (The Essays of Warren Buffett: Lessons for Corporate America)   Print This Post   Comments (0)

An Insider’s View of The Essays of Warren Buffett

posted by Carol Loomis

Warren Buffett’s words in his annual letters to Berkshire Hathaway shareholders are brilliant, and years ago Larry Cunningham took them to a still-higher level by reorganizing what Buffett said into single-subject chapters.  Cunningham’s The Essays of Warren Buffett (whose third edition we are now celebrating) therefore emerged as a book no student of Buffett can do without.  It begins, moreover, with an excellent introduction written by Larry.

After that beginning, the book moves into what Buffett said in his letters—and here I will lay a small claim to being the person participating in this symposium who is most familiar with those words. That’s because I have been the editor of Warren’s annual letter to shareholders for 36 years—since 1977, when he served on a SEC task force studying communications to shareholders and decided to renovate his own letter.

I had then been a friend of Warren’s for about ten years; he knew my work in Fortune; and he sent me a first draft of his letter, saying, “Any suggestions?” Somewhat intimidated—my husband and I were big admirers of Warren and also Berkshire shareholders—I have joked that I suggested changing a “the” to an “a.”  Since that time, I have been his pro bono, but attentive editor. The drill over the years has never changed. He writes, I edit (and sometimes, alas, lose arguments about how a sentence should go).

Fortune and I published our own book about Buffett just a few months ago:  Tap Dancing to Work, Warren Buffett on Practically Everything, 1966-2012.  It is at heart a real-time business biography, containing everything important Fortune published about Buffett in those years (the bulk of it arranged chronologically). Among these articles are speeches he gave and pieces we took from his annual reports (most of which, you will not be surprised to hear, also turn up in Essays).

In the book’s introduction, I praise Buffett for his “consistency of thought” over the years. Cunningham’s book provides constant reminders of how what Buffett thought became what he did—and in this online space, I will present a classic example.  There have been a few exceptions to the general rule, though, and I will supply an example on the inconsistency front as well.
Read the rest of this post »

  May 20, 2013 at 8:00 am   Posted in: Symposium (The Essays of Warren Buffett: Lessons for Corporate America)   Print This Post   Comments (0)

Introducing Symposium: The Essays of Warren Buffett

posted by Lawrence Cunningham

We at Concurring Opinions are delighted to welcome a dozen luminaries and thousands of readers to this week’s on-line symposium featuring The Essays of Warren Buffett: Lessons for Corporate.  

I began studying Warren Buffett’s letters to the shareholders of Berkshire Hathaway in 1992 when researching what became my first scholarly article, tracing the intellectual history of efficient market theory.  The letters went against the grain of prevailing academic work, so they served as a sort of contrary exhibit rather than supporting many standard assertions.  

The letters were smart, witty, arresting and expansive, addressing governance, mergers, investing, accounting, taxes and many other topics I would spend my career teaching and writing about. I could not put them down. Yet nor could I, acting alone, give them a place of respect in the academy that I thought they deserved but had not received.

So I decided to host a symposium featuring the letters, gathering a group of 20 scholars to dissect their content. Through Monroe Price, then Dean of Cardozo Law School, where I worked, I contacted Bob Denham, a close Berkshire adviser then and now, who passed along my proposal, which Warren embraced.

The centerpiece of the conference was a collection of Buffett’s letters, which I had rearranged thematically, and would later publish as The Essays. The arrangement both enabled a correspondence between the collection and the panel topics and papers, as well as the emergence of an unmistakable organizing principle: the fundamental idea that price and value are different things.

That meant that stock markets are not so efficient as to invariably produce a price that is a reliable proxy for value. This idea is so deep, and was so contrary to academic literature and classroom teaching, that it received an entire section of the collection and separate panel at the symposium. But it was even larger because pretty much all the other principles in The Essays—about governance, mergers, accounting and so on—followed from that tenet.

Since the conference edition (1997), we published a revised first edition (2001), a second edition (2008) and now a third edition (2013), in each case maintaining the themes that have animated the material from the beginning while adding discussion of contemporary issues that radiate from them.

We have often thought of hosting a reunion symposium on The Essays and this week, thanks to the generosity of a dozen luminaries, we do so.  Following is a run-down of the participants in this week’s symposium, half of whom participated in the original.  They are listed in roughly the order in which their contributions appear (with links to pieces as they have been posted).

[To see all posts in the symposium grouped together, click the following link, which also appears below every post in the symposium: "Symposium: The Essays of Warren Buffett: Lessons for Corporate America."]

Read the rest of this post »

  May 20, 2013 at 7:00 am   Posted in: Symposium (The Essays of Warren Buffett: Lessons for Corporate America)   Print This Post   Comments (0)

May 17, 2013

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Copyright’s Constitutional Chameleon

posted by admin

by John Duffy, Peter Strauss and Michael Herz

Earlier this year, more than 100,000 citizens petitioned the White House to overturn a copyright rule issued by the Librarian of Congress that made unlocking a cell phone a crime.  The White House responded by promising to seek legislation to overturn the Librarian’s rule.  That was the most the President would or could do because “[t]he law gives the Librarian the authority,” and the Administration would “respect that process,” even though the Librarian acted contrary to the Administration’s views.  See here. As the New York Times reported, “because the Library of Congress, and therefore the copyright office, are part of the legislative branch, the White House cannot simply overturn the current ruling.” See here.

There’s only one problem with all of this:  The Department of Justice has been vigorously arguing precisely the contrary constitutional position in the federal courts. Read the rest of this post »

  May 17, 2013 at 3:34 pm   Posted in: Constitutional Law, Intellectual Property   Print This Post   Comments (7)

May 15, 2013

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Kentucky: Boy, 5, Kills Sister, 2

posted by Sarah Waldeck

That’s not my headline.  It was in the New York Times earlier this month, in the section where the paper provides short blurbs about what is happening around the country.

My youngest daughter is in kindergarten.  Here is a list of some of the things that she either cannot do or is not allowed to do: cross a busy street by herself; pour milk from a full gallon jug; ride in a car without a booster seat; and tie her shoes (I know . . . she’s working on that one).  She is, however, a highly capable kid.  So it might be fairer to her if I listed some of what she can do:  get herself ready for school; ride her bike around the block; make her bed; use a variety of electronic devices that begin with an “i”.

But regardless of whether the list is of “cannots” or “cans,” it does not square with this statement from the county coroner in Kentucky:

 Mr. White said that the .22-caliber rifle had been kept in a corner and that the family had not realized a bullet was left inside it. “It’s a Crickett,” Mr. White said, referring to a company that makes guns, clothes and books for children.  “It’s a little rifle for a kid,” he said, adding, “The little boy’s used to shooting the little gun.”

I grew up in a small Wisconsin town.  At my high school, so many teachers and students were absent on the first day of deer season that school might as well have been cancelled.  Today some of my close relatives keep hunting rifles in their closets.  So while I absolutely do not want to suggest that I know anything about the family that suffered this terrible tragedy, I am familiar with the kind of culture in which a .22-caliber rifle is put in a corner.

Which is not to say that I wasn’t jarred by the phrase “a company that makes guns, clothes and books for children.”  Or that I expected, when I visited Crickett’s website, to see child-sized guns in bright blue and pink.   And watch out Joe Camel, because Crickett’s mascot is a jolly green frog sporting a rifle, boots, and a hunting cap.

Footbinding, smoking, drunk driving—these are all legend among law and norms scholars.  But with few exceptions, almost no one talks about trying to change gun culture through the sort of small, incremental changes that have made such a difference elsewhere.  Certainly it is daunting to even think about how to spark change.  And it’s also true that those whose ideas would make a difference would only receive posthumous gratification, because change might not actually be realized until my kindergartener has great-grandchildren.

But Boy, 5, Kills Sister, 2.

  May 15, 2013 at 10:29 am   Posted in: Culture, Second Amendment   Print This Post   Comments (17)

Franks on “How to Feel Like a Woman, or Why Punishment Is a Drag”

posted by Danielle Citron

Professor Mary Anne Franks and fantastic guest blogger makes an important contribution with her latest work “How to Feel Like a Woman, or Why Punishment Is A Drag” (forthcoming UCLA Law Review). Professor Franks focuses on the sexual abuse of men in prison to help us better understand sexual and domestic abuse more generally. As Franks writes:

If a man in prison claims he was made “to feel like a woman,” this is commonly understood to mean that was degraded, dehumanized, and sexualized. This association of femininity with punishment has significant implications for the way our society understands not only the sexual abuse of men in prison, but sexual abuse generally. These important implications are usually overlooked, however, because law and society typically regard prison feminization as a problem of gender transposition: that is, as a problem of men being treated like women. This Article argues that feminization is punitive for both men and women: it is as unnatural and as wrong for women to be degraded, dehumanized, and sexualized under coercive circumstances as it is for men to be. This Article suggests that examining the sexual abuse of men in prisons can help disrupt the persistent and uncritical linking of feminization and women. By reading the sexualized abuse of men in prison as a form of forced drag, this Article hopes to expose the artificiality and violence of compelled feminization. The proper approach to assessing forced feminization is to focus on its oppressive structure, not on the gender of its victims. When we do so, we can see what all victims along the spectrum of sexual and domestic abuse have in common, and to form our social and legal responses accordingly. The phenomenon of male sexual abuse in prison thus provides a potentially illuminating opportunity to think about the structure and consequences of sexual abuse in general. This is significant not least because social and legal responses to sexual abuse outside of the prison setting – where sexual abuse is overwhelmingly experienced by women and committed by men – are constrained by pernicious gender stereotypes and a massive failure of empathy. Understanding the phenomenon of male prison sexual abuse is thus essential not only for addressing a specific problem in carceral institutions, but forces law and society to consider sexual abuse in a productively counter-intuitive way.

Also, as my co-blogger Kaimi notes in our Asides, there is a write up of Prof. Franks in Ocean Drive that captures the force of her intelligence and personal strength.

  May 15, 2013 at 9:13 am   Posted in: Criminal Law, Feminism and Gender   Print This Post   Comments (2)

Friedman and Lakier on Limiting Commerce Power

posted by Danielle Citron

Professor Barry Friedman and NYU-graduate and Genevieve Lakier have made an important contribution to our understanding of Commerce Clause power in their piece “‘To Regulate,” Not “To Prohibit:’ Limiting the Commerce Clause.” In the piece, just posted on SSRN, the authors debunk the long-standing and critically unexamined assumption that congressional power to regulate commerce entails the power to shut commerce down:

Today it is taken for granted that Congress’s power “to regulate . . . Commerce among the several States” includes the power to shut interstate markets down. That is why, for example, Congress is understood to have the power to ban the possession and use of marijuana, even though twenty states have expressed contrary preferences, either for the medicinal or recreational use of the drug. This Article argues that as a matter of constitutional history and theory both, this familiar assumption about congressional power is wrong. First, the Article demonstrates that the original understanding, which prevailed for over one hundred years, did not grant Congress the power to ban markets. Congress could pass “helper” statutes to facilitate state choices, and it could even ban particular goods (such as diseased cattle) “in service” of the interstate market; but it could not simply prohibit all commerce in products of which it disapproved. Second, the Article demonstrates that although this understanding changed following the 1903 Supreme Court decision in Champion v. Ames, none of the reasons supporting the change justify Congress possessing the power today. Finally, this Article examines theoretical justifications for congressional power grounded in law and economics and constitutional theory to suggest that the power “to regulate” interstate commerce should not be understood to include the power to prohibit it. The argument has implications for national bans on articles and activities such as interstate gambling, drugs, raw milk products and assault weapons.

  May 15, 2013 at 8:53 am   Posted in: Constitutional Law   Print This Post   Comments (0)

May 14, 2013

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Minnesota Marriage and Political Strategy

posted by William McGeveran

I’m proud that my adopted home state of Minnesota became the 12th state to legalize same-sex marriage this afternoon. I’m also proud of my law school colleague Dale Carpenter, who was central to efforts to pass the measure. And I’m looking forward to some weddings.

There are lots of lessons about politics and gay rights to draw from today’s victory. But I want to emphasize a more general lesson about ballot measures.

Two years ago this month, the Minnesota Legislature, then controlled by a newly-installed Republican majority, voted to hold a statewide referendum on marriage. A proposed amendment to the state constitution on the November 2012 ballot would define marriage as between a man and a woman. Unlike many states, Minnesota does not allow citizen-initiated referenda. But a simple majority of the legislature can put proposed constitutional amendments to the voters without the governor’s assent.

Some insiders have claimed that the rationale for doing so was, at least in part, a raw political one. Advancing a measure important to social conservatives would drive up their turnout, helping preserve Republican legislative control. Surely that must have been at least part of it, along with a substantive desire to thwart same-sex marriage in Minnesota.

Whatever the reason, this turned out to be a political strategy failure of epic proportions. In retrospect, the scale of this miscalculation is stunning. Opponents of the amendment organized, raised over $10 million, and coalesced around a new strategy of personalizing marriage issues. The 31-year-old strategist brought on to manage the campaign against the amendment turned out to be a wunderkind. The amendment failed, 52.5% to 47.5%. A month beforehand, I would have predicted the reverse numbers. Not only that, but in a landslide that surprised everyone I know, voters also rejected a voter ID amendment, turned out a Republican U.S. House member, and flipped both chambers of the state legislature back to the Democrats by significant margins. The amendment drove turnout all right — just not the voters its proponents wanted. (The same appears to have happened in neighboring Wisconsin.)

And today was the final kicker. Two years ago, legislation actually allowing same-sex marriage was a pipe dream. Even at the beginning of 2013, it wasn’t clear if a bill would happen. Once again, I would have bet against it. But the sleeping grass-roots giant awakened by the amendment did not go back to bed. By all accounts, the organization that didn’t even exist two years ago pushed the measure through against considerable odds.

So, one other moral of this story: when it comes to referenda, be careful what you wish for.

  May 14, 2013 at 10:43 pm   Posted in: Election Law, LGBT, Politics   Print This Post   Comments (0)

Welcome to Wills Lab

posted by Kaimipono D. Wenger

I held another “Wills Lab” (voluntary out-of-class practice-focused exercises) a few weeks ago. This time around, I was Andy Nicole Smith, and I needed someone to write my will for me. I did my best to blunder into the exact issues that caused so much confusion with the real Anna Nicole Smith will. My students set me straight. Nicely done.

How did we get to this point? It’s a long story. Read the rest of this post »

  May 14, 2013 at 4:30 pm   Posted in: Law School (Teaching)   Print This Post   Comments (3)

Collegiality, Judging, and the D.C. Circuit

posted by Aaron Zelinsky

From filibustered nominees to recess appointments, the D.C. Circuit has been much in the news lately. But for all the blood sport involved in confirming a nominee to the D.C. Circuit, the judges there are surprisingly collegial (a quality that, when I clerked, trickled down to their employees as well).

So it was with some interest that I read Judge David Tatel’s recent speech at the portrait hanging of (now former) Chief Judge David Sentelle. (I’ve received permission to post it in full here). The speech underscores how, for all the political tumult surrounding the D.C. Circuit, the Circuit itself is almost a world apart.

Judge Tatel begins by noting an observer’s likely surprise that a Clinton appointee would speak at the portrait unveiling of Sentelle, Reagan’s choice to replace Justice Scalia. But over the past nineteen years, it turns out that Tatel and Sentelle have “disagreed less than 3% of the time,” an astounding statistic given the common (mis)conception of how the Courts of Appeals operate.

In other words, the vast majority of judges agree on the vast majority of issues the vast majority of the time.

Judge Tatel chalks this up to “restrained decision-making,” or (more familiarly) “judicial restraint.” He relates a few stories about Sentelle to underscore his point, including one about how the two judges tried to write a joint op-ed, but failed because “unconstrained by the rules that bring us together as judges” they were “unable to agree on how to portray certain historical aspects of the issue.”

In fairness, Judge Tatel doesn’t pretend life is always roses. He notes that he and Sentelle “have had our disagreements,” (emphasis in original), and that “despite our best efforts at neutrality, we cannot but see the world – and the law – through the lens of who we are and what we’ve been through.” But even in those circumstances, the D.C. Circuit lives by a “proudly nurtured tradition of collegiality.” Judge Tatel gives special thanks for the particularly good job Chief Judge Sentelle did of “navigating [these] sometimes sensitive waters with a firm but gentle oar.”

The speech is a short five pages and is definitely worth a read.  It underscores the noncontroversial nature of the vast amount of Courts of Appeals work, and how much pride the D.C. Circuit takes in its spirit of collegiality even when disagreement surfaces.

  May 14, 2013 at 2:46 pm   Posted in: Uncategorized   Print This Post   Comments (5)

May 13, 2013

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After Kiobel, extraterritoriality is not a question of subject matter jurisdiction under the Alien Tort Statute – and neither is corporate liability

posted by Marco Simons

(Marco Simons is Legal Director of EarthRights International.  He is a graduate of Yale Law School, where he received the Robert L. Bernstein Fellowship in International Human Rights.)

The Supreme Court issued its decision in Kiobel v. Royal Dutch Petroleum a few weeks ago, and it has raised more questions than it has answered. Commentators and scholars have puzzled over what the Court did and what it means – all we really know is that the Court did not expressly rule on whether corporations could be sued for human rights abuses under the Alien Tort Statute (ATS) (the original question certified), and only began to elaborate under what circumstances an ATS suit could be brought for injuries arising in a foreign country (the question certified for reargument).

As to the extraterritoriality question, the Court held that some sort of presumption against extraterritoriality applied to ATS claims. Unlike the usual application of such presumptions, however, the Court did not suggest that this meant that no claims arising in foreign countries could be heard. Instead, the Court’s five-justice majority said that claims needed to be assessed on the basis of the extent to which they “touch and concern” the United States, and that where the only connection to the U.S. is the “mere corporate presence” of a foreign multinational, that is insufficient to allow an ATS claim to proceed.

This raises an interesting question of how this presumption is being applied. As the Supreme Court ruled in Sosa v. Alvarez-Machain, the ATS is a purely jurisdictional statute – claims under the statute come from federal common law. Ordinarily, the presumption against extraterritoriality does not apply to jurisdictional provisions; it only applies to substantive provisions. So Kiobel did not decide that the ATS is not an extraterritorial statute – it decided that the presumption against extraterritoriality applies to claims brought under the ATS. Read the rest of this post »

  May 13, 2013 at 5:41 pm   Posted in: Uncategorized   Print This Post   Comments (9)

Software Patent Eligibility

posted by David Schwartz

This post reflects my initial impressions of an important Federal Circuit development in patent law, which is my primary area of scholarly focus. On Friday, the Federal Circuit, sitting en banc, ruled on a controversial and divisive patent law issue, whether software inventions are patent eligible subject matter. Unfortunately, I find the decision in this case, CLS Bank v. Alice Corp., quite unsatisfying.

The court, sitting with 10 judges, issued 7 separate opinions spanning 135 pages. The court only agreed upon a very brief – 55 words – per curiam opinion affirming the district court ruling that the asserted patents were invalid. The per curiam opinion explained that the “method” and “computer readable media” claims were deemed not patent eligible by the Federal Circuit, while the court was equally divided on the status of the “system” claims. (Basically, there are several different ways that a software invention can be claimed in a patent, including as a process/method of performing steps; as software embedded upon a computer readable medium (i.e., a DVD); and as a system (i.e., software running on a machine/computer).) None of the remaining substantive opinions garnered more than 5 votes – thus, none are binding precedent. Although a majority of the Federal Circuit judges found the method and media claims invalid, a majority could not agree upon the reasoning. Below I will briefly provide a few preliminary observations about the opinions.

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  May 13, 2013 at 3:26 pm  Tags: CLS Bank, Federal Circuit, patent, patent eligibility, patentable subject matter, software  Posted in: Courts, Intellectual Property, Uncategorized   Print This Post   Comments (0)

May 12, 2013

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Happy Mother’s Day . . .

posted by admin

From everyone here at Concurring Opinions!

  May 12, 2013 at 4:26 pm   Posted in: Uncategorized   Print This Post   Comments (0)

May 11, 2013

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Privacy and the Bloomberg Terminal

posted by William McGeveran

The privacy scandal of the week involves Bloomberg terminals, reporters, and Wall Street traders. It started making the rounds of the financial press in the last couple of days and today reached the New York Times, which led its story by declaring that a “shudder went through Wall Street” in response to the revelations. But as with many of the periodic Facebook privacy scandals, this one is only surprising if you haven’t been paying attention. And it distracts the press and the public from more serious matters.

The story, in a nutshell: a Bloomberg terminal like the one in the picture sits on every trading desk. It is the central platform for managing a constant stream of information about market activity, financial news, economic data, and much more. By making this very expensive equipment a necessity, Michael Bloomberg (now New York’s mayor, of course) built a multibillion-dollar empire and made himself fabulously wealthy.

From the beginning, company employees have been able to look up individual Bloomberg subscribers and scrutinize their most recent activity in the system. That may make some sense for sales and technical personnel (although even then it probably ought to have been more anonymized than it seems to have been). Unfortunately, that access also extended to journalists at the many news outlets that have been added to the Bloomberg corporate family over the years. And these reporters appear to have mined that data routinely for tidbits that might have helped with their stories.

Don’t get me wrong, this is not an example of good privacy practices. But it ain’t exactly the allegations of pervasive bribery, eavesdropping, and hacking by journalists in the employ of Rupert Murdoch. Quartz has a pretty good explanation of the data that was available. Primarily, it boils down to the last time a person logged in, the “functions” used (essentially, what general categories of information services were accessed, such as reports of corporate bond trades), and the transcript of any online customer service chats. Crucially, Quartz notes, “Employees can see how many times each function was used but not further details, like which company’s bonds were being researched.” In other words, a lot of it resembles information that many web sites, including news sites, can already glean about most of their customers, particularly those who are logged in. At most, Bloomberg journalists might have obtained some slight lead that would send them on the hunt for more solid information, much as a tip from a source might. In the incident that brought the practice to light, for example, a reporter surmised that a Goldman Sachs partner might have left the firm because he stopped using his Bloomberg terminal.

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  May 11, 2013 at 2:42 pm   Posted in: Current Events, Privacy, Technology   Print This Post   Comments (0)

Wachtell Lipton’s Errors on Shareholder-Paid Director Bonuses

posted by Lawrence Cunningham

Amid debate over shareholders offering contingent payments to directors, Wachtell Lipton recommends an option that may be tempting for incumbent boards: unilaterally adopting a bylaw banning the arrangements.  Boards should be wary of this advice.

True, Wachtell’s position concurs with my view that such payments are lawful, contrary to the position urged by my esteemed fellow corporate law Prof., Stephen Bainbridge.  But that’s where Wachtell and I part company, first because Wachtell’s proposal is myopically universal and second because it errs on a basic legal point about board and shareholder power.

In my view, not only are the arrangements lawful, but shareholder bodies ought to have the choice to embrace or reject them.  My guess is that they are desirable for some corporations in some settings and not so for others.  Therefore, the use or rejection of these ought to be determined, as with much else in corporate life and law, in context by business people participating in particular governance situations. Read the rest of this post »

  May 11, 2013 at 1:10 pm   Posted in: Corporate Law, Current Events   Print This Post   Comments (5)

Happy 10,000th Post!

posted by William McGeveran

I was just working on my next guest post when I noticed a little statistic in the dashboard: there have been 10,007 posts to Concurring Opinions. Which means this lil’ ol’ “blawg” passed a significant milestone about a week ago that deserves some celebration — and heartfelt  thanks to Dan Solove and the cadre of other permanent bloggers who keep it going.

By my count, post number 10,000 was a pointer to a new essay about the Kirtsaeng decision in the Stanford Law Review Online. That’s appropriate, because spreading the word about interesting and timely legal scholarship — especially stuff that appears in less traditional places like the journals’ online supplemnets — has been one of ConOp’s many services to the rest of us for years now.

  May 11, 2013 at 12:37 pm   Posted in: Administrative Announcements, Blogging, Law Rev (Stanford), Law School   Print This Post   Comments (2)

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