Site Meter

Author: Elizabeth Nowicki

1

Who Is Elizabeth Nowicki?

My name is Elizabeth Nowicki, and I am currently a visiting faculty member at Boston University School of Law. I teach law school for a living, I am a lawyer (admitted to practice in New York), I opine on matters related to law and business, and I write lawyerly articles and blog posts.

I am not on Twitter, I am not on Myspace, and I do not dabble in fiction or poetry or haiku or similar literary efforts.

I am telling you this because there is more than one Elizabeth Nowicki in the world, and I was recently confused with another Elizabeth Nowicki. Indeed, at least one of the other women named Elizabeth Nowicki has the exact same middle initial (“A.”), and another one is a faculty member elsewhere (education professor). Go figure.

To avoid a situation like Frank Pasquale’s, or, worse, like Tim Wood’s, I thought I would post this disclaimer: If you get a Twitter message from Elizabeth Nowicki, it is not from me. If you find an “Elizabeth Nowicki” Myspace page, it is not mine. If you read a poem or short story penned by Elizabeth Nowicki, I am not the author. Instead, you can find me on SSRN, Linkedin, and various other law-related sites. (Please feel free to add me to your Linkedin contacts.)

And, so, with that cleared up, I am done here at Concurring Opinions, as this is the final day of my stint. I am grateful to Dan Solove and his colleagues at Concurring Opinions for allowing me the honor of blogging here. This blog has a huge readership, and it is known for good blogging. Many thanks to the gracious readers for humoring me. Special thanks to A.J. Sutter.

As happened last time I blogged here, I did not blog about every topic I had intended to discuss, so I will return to my normal blog home, at truthonthemarket.com, and hopefully finish my blogging “to do” list there.

Again, many thanks to Dan Solove and the Concurring Opinions team.

Ahoy hoy,
Elizabeth Nowicki
P.S. I appreciate the fact that Ahoy hoy is normally used as a greeting.

11

Using a Teacher’s Manual

Textbooks and casebooks often have accompanying teacher’s manuals. These manuals range from limited, rambling copies of the textbook author’s classroom notes to detailed discussions of the book’s materials and related course structuring issues and classroom questions.

I have not really used a teacher’s manual over the years, in part because it was not an option when I started teaching years ago as I started teaching with a casebook that did not have a teacher’s manual. Later, when I began using books that did have teacher’s manuals, I did not always agree with the manual or the suggestions made therein, so I never really consulted the manuals.

That said, I will be working with a colleague on his teacher’s manual, so I am curious about what other professors find useful in a teacher’s manual. My impression is that a teacher’s manual should be geared toward:
(a) the new teacher who has never taught anything before,
(b) the teacher who is picking up a certain class to fill a curricular need, outside her/his area of primary expertise, or
(c) the teacher who needs help with the basics of a certain limited aspect of his course (such as tax in a mergers & acquisitions class).

Am I correct on the sort of faculty who tend to extensively use a teacher’s manual or are their teachers out there who do not fit the above parameters who find teaching manuals useful?

Perhaps it is best to ask professors who are reading this post: What would the ideal teacher’s manual include, and would an outstanding teacher’s manual sway you in favor of adopting a particular book for your class?

(Does this blog have a “poll” function, and should I know how to use it?)

5

Insider Trading: Dear “Guy Speaking Behind Me In the Loud Voice…”

When I discuss insider trading, either in my Corporations class or my Securities Regulation class, I usually talk about a hypothetical that involves a person who has traded on the basis of material, non-public information that he/she has received fortuitously (by overhearing the CEO of Microsoft talking on his cell phone in the grocery store, for example). If a person is lucky enough to stumble upon material, non-public information accidentally, and she has not received that information in breach of a duty or from someone who is breaching a duty in order to give her a benefit, the lucky person can trade securities on the basis of that material, non-public information without violating Section 10(b) of the Securities Exchange Act of 1934. We do not call that person a “tippee,” in violation of Section 10(b) and the insider trading regualtions. Rather, we call that person “lucky!”

I have always worried that my hypotheticals about the “lucky” person who overhears a phone conversation by the CEO on his cell phone in the grocery store (or in the ball park) might seem a bit far-fetched to the students, who can hardly believe that a CEO or a General Counsel or someone similar would speak carelessly on a cell phone in a public place. But my hypotheticals are actually always based in fact, based on my experience at the SEC, in practice, in consulting, or just by reading cases/newspapers.

Now I can add my own first-hand tippee experience to the mix: As I sit here in Laguardia airport, politely typing on my computer, there is a fellow standing about 25 feet behind me, pacing back and forth, discussing a joint venture and related matters that are clearly both material and non-public. He is talking loud enough for me to easily hear him and the juicy details he is discussing, and, were I so inclined (and less ethical (or perhaps more money-focused)), I would be taking notes, so that I could quickly go call my broker and buy (or sell) some stock. Instead, I am blogging.

Based on his side of the confidential conversation, I understand how important Robby (name concealed for obvious reasons) is to consummating the pending deal, and I understand the fact that he will want to feel out whether they really have cash flow issues before they ink the deal in December. I appreciate that the machinations of the Obama administration might impact the value of the deal, and I do appreciate the fact that they want to close the deal before the year end. Brazil is a hot market. I get that. Thanks for sharing.

Excuse me while I go call my broker….
(Tongue-in-cheek on that last point, by the way.)

8

Skanks in New York, the First Amendment and Anonymous Posting on the Internet

The recent “Skanks in New York” court case, which resulted in a New York state court ordering Google to provide identifying information about a blogger who posted offensive attacks on a model, has led to various privacy wonks, including our own Dan Solove, raising concerns about forcing Google to reveal the identity of an anonymous blogger. It appears that some people worry that there is a First Amendment issue raised when asking Google to reveal the identity of an anonymous blogger or some people worry that it is a violation of privacy for Google or internet service providers to reveal the identity of people who are anonymously blogging through there service.

This baffles me. Surely everyone who blogs using Google or who blogs through an internet service provider is or should be well aware that the provider of either the blog service or the internet service can figure out – and share – their identity. I cannot fathom the notion that anyone who anonymously blogs or uses the internet believes that their anonymity is guaranteed. Moreover, even if an anonymous poster does not realize that his/her identity is not guaranteed, how can there be a First Amendment issue or a privacy isuse if Google – a company, not a government entity, who has never promised to keep your identity a secret – reveals your identity?

If someone wants to say something with more anonymity than can be assured through the internet, write a letter and mail it in an unmarked envelope!

4

Does Time Magazine Approve of Cheating and Lying?

I was troubled to read Joel Stein’s column, captioned “Cheating Rocks,” in the August 17 issue of Time. (The online version of the article has the heading “Cheating: It’s All-American — And It’s Great!”)

The upshot of Stein’s column seems to be that cheating in various circumstances should be acknowledged as acceptable. Stein starts his “Cheating Rocks” column by discussing the (misplaced, in his view) public outrage against steroid use by athletes, and Stein seems to suggest that steroids and other “cheating” tactics in sports should not be scorned, since they enhance performance which makes sports more interesting. While I do not agree with that position, I imagine Stein might have been offering it partially tongue-in-cheek.

What was not tongue-in-cheek, however, was Stein’s later admission in the column that he assisted his father years ago with what is likely unlawful tax fraud of some ilk, and Stein indicates that he continues to think deceit and cheating is acceptable.. Specifically, Stein says in his column:
I have long been an advocate of cheating. It started when my dad fooled an IRS auditor by comparing different vintages of phone book, finding and out-of-business furrier and getting me to use my Apple IIe to create a fake receipt to prove a false fur-coat donation.

Stein admits to helping to deceive the IRS, and Stein offers no regrets about it. Stein then writes – seemingly with approval – about high school cheating. This all gives me pause.

To be clear, my concern is not about Stein himself or Stein’s ethics. I am sure Stein is a lovely person, and I personally have no stake in how he views cheating or dishonesty. Rather, I have concerns about the fact that no senior person at Time Magazine put the kibosh on Stein’s “Cheating Rocks” column. Does Time Magazine really want its writers to publicly admit to being comfortable with being dishonest? Surely that undermines reader confidence in the material being published.

I am not suggesting that Stein himself fabricates things in his writing. My impression is quite the opposite – Stein seems to be a well-respected and well-published writer who does stellar work. What I am suggesting instead is that I am perplexed by the fact that the higher-ups at Time did not raise an eyebrow at a column in which a Time writer appears to admit comfort with dishonesty and lying.

Maybe I am a bit sensitive about issues of dishonesty and cheating, given that I research and write on corporate and attorney ethics. Maybe I am jaded, having consulted on too many cases where comfort with fudging and a bit of cheating turned into full-blown options backdating.

Whatever the reason, the column did not sit well with me. Even if we all agree that the column was partially in jest, it still would have given me pause, were I a Time executive.

As a final note, I found it ironic that, two pages before the “Cheating Rocks” column, there was an article about Bernie Madoff (the article is actually about books written about Madoff). The article notes that “Madoff screwed his investors.” The word “screwed” is so overly judgmental, given that cheating seems not to be a big deal to folks at Time….

17

“Banning Laptops in the Classroom: Is It Worth The Hassles?”

In the December 2007 Journal of Legal Education, Kevin Yamamoto published his aptly-titled piece (“Banning Laptops in the Classroom: Is It Worth The Hassles?,” describing his experiment with banning laptops in his upper-level classes. I suggest that all faculty members who have ever wondered whether laptops do more harm than good for the classroom experience read this article. I found it eye-opening. Ultimately, after careful analysis, Professor Yamamoto concluded that banning laptops in his tax class was a positive and beneficial exercise that a majority of his students supported, such that he planned to continue banning laptops.

I have also contemplated banning laptops in the classroom, for two main reasons. First, my experience leads me to believe that students who are transcribing classroom discussions are less engaged than students who are listening to the discussion and jotting down notes by hand. As a practical matter, it is very difficult to type everything a professor says while simultaneously processing what the professor is saying. Second, I am concerned that students who are surfing the ‘net or using their computers for purposes unrelated to the class are distracting those around them. When I have been asked to evaluate the teaching of my junior colleagues, I sit in the back of the classroom, and I find students who are overtly surfing the ‘net to be horribly distracting, with the flashing pages and such.

In addition, it is not a bad idea for students to maintain some proficiency with taking notes by hand. The reality is that lawyers in practice tend not to use laptops when taking notes at meetings with clients or deal conferences or depositions. My own recent experience as an expert witness confirms this. If we are brainstorming or preparing for testimony or some such, we all work with yellow pads. When I meet with clients, I sit face to face with them and take notes on paper, as opposed to opening my laptop, putting it between us, and tapping away with minimal eye contact.

That said, I have not yet gone so far as to ban laptops in class because I am concerned that there might be legitimate overriding reasons for using computers of which I am not aware. (Professor Yamamoto’s article works through some of the objections to banning laptops, which makes his article particularly good, but I imagine there might be more than he presents.)

It is ironic that we have come so far in this age of technology, yet sometimes the technology itself has downsides that outweigh the upsides. Perhaps other faculty members who have successfully banned laptops in the classroom will post their comments on this thread.

9

Requiescat in pace, Professor Brooke Overby.

Tulane Law School Professor Brooke Overby passed away unexpectedly Wednesday night, August 5, 2009. It is a tragic loss.

Professor Overby was a nationally-recognized expert on commercial law, with a particular expertise in banking, and she was a leading voice on the recent mortgage meltdown. She was an outstanding scholar, she was a much loved and respected teacher, and she was a sage on issues of faculty governance. She was the consummate academic, and her love for her job was reflected in the quality of her work.

In addition, she was just a fabulous person. Indeed, while Brooke had a stellar professional resume, she also had an awesome personal resume. For example, Brooke was fearless traveler who regularly crossed the globe. She often sent me e-mails from locations I could not immediately place on the map. Average travelers go to Paris; Brooke went to Tunisia. Average travelers stay in hotels; Brooke camped in the middle of the wilds. And Brooke was not afraid to squeeze fun into narrow windows. She had no qualms about taking a five day trip of which three days were spent flying to her destination and back. Brooke embraced the “carpe diem” theory of world travel.

Brooke and I became good friends in part due to our bonding while serving together as Tulane Law School representatives to the University Faculty Senate. I never thought I would say “I am grateful for the time I had on University Faculty Senate,” but now I am saying exactly that.

Brooke was young, both in age and spirit, and I am stunned that she is gone. Her passing is a loss for the Law School, for the University, for the academic community, for her family, and for those of us who were lucky enough to consider her a friend. A colleague accurately characterized those of us who knew Brooke well as “bereft.” Bereft.

If you knew Brooke, personally or professionally, and you would like to post in the comments or via e-mail to me your reflections about her, I will pass them on to her family.

Requiescat in pace, Brooke.

2

Focusing on Important Matters: Professor Kim Krawiec, Judge Judy, and Jon & Kate Plus 8

For years, I harbored a secret: I watched Judge Judy on television. I would tape Judge Judy (4 p.m.-5 p.m., Monday through Friday), and I would watch the tapes while I cooked dinner. The t.v. show was an amusing diversion with just enough intellectual demand to engage my brain while still leaving free the vast majority of my firepower to grapple with whether I could substitute powdered garlic for fresh without sacrificing taste.

I no longer watch Judge Judy, but I have to say that I am not sure I would have gone public about even my former fondness for Judge Judy had Duke Law School Professor Kim Krawiec not first pulled the trigger and ‘fessed up here. (Professor Krawiec’s shocking admission is in the first comment listed on the web page.)

The reality is that I, a former clerk for two very well regarded federal judges, always felt a bit embarassed about watching a t.v. show where the judge would regularly yell at the litigants “Speaking. I am speaking” when litigants interrupted her. Yet the show was so funny that I could not help myself. Seriously, does everyone in the world except me purchase cars sight unseen with “As Is” purchase contracts without first having the cars checked out by a mechanic?

So now I am wondering – does Professor Steve Bainbridge watch Judge Judy? How ‘bout Blog Emperor Paul Caron? Professor Gates? Perhaps now is the time for cathartic admissions by everyone. The truth shall set us free! (For the record, Professor Kate Litvak does not watch Judge Judy. I know this for certain because I recall Kate telling me once that she does not watch television. You heard it here first.)

Since we are on the topic of shameful television, perhaps I should ask the more important question: Who among us is intending to watch Jon & Kate Plus 8 on television tonight when the new season resumes? (While I am unfortunately familiar with the show as I watched re-runs while packing for my visiting stint at Boston University, I can say for sure that I have no plans to watch the show ever again.)

For those of you who have been living under a rock, Jon & Kate Plus 8 is a hugely (inexplicably, in my view) popular reality t.v. show, chronicling the lives of two thirty-ish parents (Jon and Kate), their twins, and their adorable sextuplets. While the show was initially an innocent, family friendly program, the Jon & Kate show took a turn several months ago, as Jon and Kate battled rumors of drunken scandals, a sham marriage, college-aged paramours, outrageous filming schedules, etc.

For much of May and June, even the mainstream media was regularly covering breaking Jon & Kate news, and, in late June (I think), the sad truth that Jon and Kate were filing for divorce finally surfaced. While I would not normally pay attention to anyone’s divorce, the lead-up and public speculation surrounding this reality t.v. debacle was such that I have to admit reading the articles recently detailing how the situation resolved. (Kate filed for divorce; Jon is dating the daughter of Kate’s plastic surgeon.)

I rue the portion of my short term memory that I wasted on Jon & Kate Plus 8 while packing for Boston, but I cannot help ask: Kim Krawiec, do you have a view on Jon & Kate Plus 8? Do you have a view on the child labor issues raised when children film reality t.v. for many, many hours per week? If it seems that a reality show is tearing apart the marriage of the parents being filmed, should the television network halt production, even if they have a contract binding the parents to continue filming?

5

Erin Andrews, Naked Videos, and Agency/Tort issues

I read with horror the story about how some deranged pervert videotaped ESPN’s Erin Andrews through a peephole in her hotel room. The video, which included shots of a naked Andrews, was then widely released on the internet.

Tech experts like Grimmelman can correct me if I am wrong, but I am pretty sure you cannot un-ring the bell of releasing a video of a semi-nude Erin Andrews on the internet. Once a video like that is released, presumably other perverts will download it and save it locally, such that, even if the video is ultimately removed from the internet, it will likely still exist somewhere. Poor Ms. Andrews.

One of my first thoughts as an academic after reading about the situation was whether the hotel itself could face liability for allowing this to happen. If it was an employer who did the filming, does the hotel face liability? If a hotel employee “tipped” someone else about the fact that Andrews was in the hotel and gave Andrews’s hotel room number to someone else, who then booked the room adjoining that of Ms. Andrews’s in order to film her, would the hotel face liability? If the hotel does not have rules for employees regarding guest privacy, does that change that change the analysis?

0

The Market for Deals

Big deals – mergers, acquisitions, takeovers – are not being announced at a significant rate of late.  This has prompted some people to ask whether the deal market is dead or dying.  Others ask what the future holds for private equity.  Still others wonder whether we have seen the end of M&A as we knew it.

These questions are regularly raised in the media, and I am often asked whether I buy into the “gloom and doom” stories told by others.  I do not.

The reality is that a depressed economy and a tight capital market do not automatically bode ill for the long term deal market.  A depressed market can often present significant buying opportunities for hungry acquirors.  Buyers who are looking for targets to acquire can find bargains, with some targets teetering on the verge of bankruptcy, for example, and boards of the targets wanting to avoid dooming their shareholders to such a fate.  (As we know, shareholders of a company that goes bankrupt usually lose the totality of their investment.  Contrariwise, if an almost bankrupt company is acquired at a bargain price prior to bankruptcy, the target shareholders usually get at least something in the buyout.)

The caveat is that buyers tend to abhor an uncertain market.  If it is unclear whether we are close to the bottom of the market, or if the market is materially volatile, buyers tend to wait things out, to avoid overpaying or to avoid using stock in the acquisition in an unfavorable manner or to avoid taking on needlessly expensive debt to fund the acquisition.

Naysayers might then ask how deals can possibly get funded in this tight credit market.  Even assuming there are buyers who are gutsy enough to make bids for targets in this tumultuous economy, some question whether struggling banks will really fund deals in this “credit crisis.”

There are two responses to this funding issue:
First, some deals are not funded with borrowed cash.  In strategic deals, for example, where Widget Producing Company (“WPC”) acquires Widget Development Company (“WDC”), the deal is often funded with the stock of the acquiror.  WPC pays for its acquisition of WDC with WPC stock.  Instead of WPC writing a check to WDC to acquire WDC, WPC compiles a big pile of WPC stock to turn over to WDC and its shareholders.
Second, the fact that the credit market is tight and some banks are struggling does not mean that banks are not lending.  Quite the contrary – banks make money by lending.  When banks are struggling, banks will want to lend money for conservative, qualified deals in order to MAKE money from interest and fees.  That is not to say that the turbulent market and rough banking situation has not impacted the deal market – it has.  Banks are far less willing now to fund every possible deal than they were a few years ago.  Banks are more stringently judging the quality and risk-exposure of the deals that are presented for funding.  Five years ago, lenders asked fewer questions and asked for much less in terms of guarantees before lending money to finance acquisitions.  Now, however, bankers (and their lawyers) want to know more about the deals and are demanding more in terms of guarantees before agreeing to lend.

Indeed, the issue of guarantees is a thorny one in the private equity market.  Big private equity firms are usually founded by a few wealthy players or their affiliated entities, who then raise capital from other investors.  When these private equity firms make an acquisition of another company, the PE firm usually first creates a “shell” acquisition company to make the actual acquisition.  So if Nowicki Private Equity Firm (“NPEF”) wants to acquire Wal-Mart, NPEF would first create a shell company that is wholly owned by NPEF, and the shell company would then be the company to borrow money and itself acquire Wal-Mart.  By creating a shell company to actually acquire Wal-Mart, NPEF insulates itself to a degree from liability for borrowing money and engaging in the acquisition.  If the shell backs out of the acquisition or fails to honor the loan, recourse to NPEF would be limited (historically).  I say “historically” because this is one aspect of the deal market that has changed a bit in the recent credit crunch.  These days, if a private equity firm wants a bank or third party to fund the private equity firm’s shell to conduct an acquisition, lenders are asking for more demanding guarantees from the private equity firm itself.  Lenders are realizing that they need an entity with money/assets – as opposed to a shell – to be fully on the hook for the deal.

So, back to my point about lending:  Money is there, banks and others are lending, but they are being more conservative in evaluating the deals that they will fund, and they are being more demanding in terms of the guarantees that they require.  This means that fewer deals are getting funded, and this means, therefore, that fewer deals are getting done.

I do not see this as a negative, however, nor do I see this as presenting a gloom and doom scenario indicating that the deal markets are dead if not mortally wounded.  Rather, there were deals done in 2005 or 2006, for example, that never should have been done.  Lenders offered funding that they never should have offered, and they agreed to terms that were not particularly compelling.  A contraction in the deal market is perfectly appropriate, and the fact that a tight credit market is allowing (if not forcing) banks and other lenders to think harder about how they lend money and to whom is a very good thing, in my view.

While it is curious to have so few big deals announced each week in the WSJ or on Bloomberg, the reality is that this slow-down and the resultant reexamination of how deals are funded makes sense.  I imagine the past 15 months and the next 9 months will be significant in terms of molding the new parameters for the deal market.

To that end, I am co-teaching a Deals class at Boston University this spring, and it will be interesting to see how, if at all, the course changes in response to the changing deals market.  (The class involves a good number of guest teachers who are practitioners at various Boston firms, so the course will necessarily morph a bit in response to the current market for deals.)