Corporate Law

The Body, Incorporated

Listen to Professor Matambanadzo discuss The Body, Incorporated. Legal personhood has become a contested issue for individuals of all political persuasions. Some activists seek to expand the boundaries of legal personhood to include fetuses, human tissue, or even animals. Other activists, however, have sought to limit the community of legal persons by expelling one long-recognized group: corporations. Since the United States Supreme Court decided Citizens United v. Federal Election Commission in 2010, a variety of activists, artists, entertainers, and political commentators have claimed that corporate personhood should be severely limited or completely eliminated.This Article addresses the current controversy surrounding legal personhood by focusing on how legal personhood for corporations has been constructed by jurists and scholars in historical and contemporary contexts. This Article does so through an examination of the metaphorical use of the human body as an anchor for determining the status of corporations as legal persons. This analysis shows that even for corporations—disembodied, legally constructed entities lacking many of the rights and privileges of personhood—the human body serves as an important framework for shaping the legal community of persons and resolving theoretical disputes concerning those legal persons.

This Article also presents a novel theoretical justification of corporate personhood embedded in the legal tradition of the United States: the embodiment theory of the corporation. The embodiment theory of the corporation—deployed by courts, scholars, and lawyers—reveals how the embodied human being serves as the paradigmatic person of law. In the embodiment theory, human beings provide a model for determining how legal recognition functions for entities, collectives, and individuals—even those that are disembodied and legally constructed. For this reason, this Article argues that future efforts to determine the boundaries of legal personhood should incorporate human embodiment as a guiding framework for thinking about who “counts” in the community of persons.

Bailouts and the Potential for Distortion of Federal Criminal Law: Industrial Espionage and Beyond

This Article reveals previously neglected and disconcerting consequences that government participation in corporate ownership can have on American criminal law, and it illustrates these problems by establishing how the recent bailout could influence criminal enforcement. The Article shows how the model of cost allocation developed by Guido Calabresi and based on Ronald Coase's work can apply in the context of the criminal law and specifically economic crimes. The argument in this Article then demonstrates how the government's purchase of corporate shares through the implementation of the Troubled Asset Relief Program (TARP) causes inefficiencies and inequalities in the criminal law, including by shifting prosecutorial and other enforcement resources toward “preferred” companies and allowing for the imposition of higher statutory penalties against economic criminals that offend against those entities. As a consequence, some corporations may underinvest in private precautionary measures while others will be forced to overinvest and pass on the costs to their customers through artificially inflated prices. The potential end result is a misuse of government power to reward unsuccessful companies like General Motors at the expense of successful ones like Ford. Having established a general framework for using a cost allocation analysis to address economic crimes optimally and having shown that TARP leads to inefficient outcomes under that type of analysis, this Article concludes with recommendations to avoid these problems in the future.

Devil inside the Deal: An Examination of Louisiana Noncompete Agreements in Business Acquisitions

In a noncompete agreement, one party agrees with another to refrain from engaging in a particular line of business or from soliciting customers of another person. Buyers in business acquisitions seek these covenants because sellers, when not restricted by an enforceable noncompete agreement, can destroy the value of the business sold through their own competitive acts. Over the past twenty years, Louisiana courts have inappropriately applied the “strong public policy” requiring strict construction of noncompete agreements in the employment context to all noncompete agreements, including those executed ancillary to the sale of a business. The application of this policy is inappropriate, because sellers have equal bargaining power and often receive a substantial amount of consideration in the form of a purchase price. This is often not the case for an ordinary employee who executes a noncompete agreement as a condition of his or her employment. The Louisiana courts' hostility toward noncompete agreements in all circumstances places doubt in the minds of potential buyers and has a chilling effect on deals in this state. Therefore, legislative reform is once again needed in this area of the law. This Article chronicles the courts' misapplication of the strong public policy requiring strict construction of noncompetes in the employment context and argues that the neutral interpretive provisions of the Civil Code's articles on Conventional Obligations are more appropriate for noncompetes ancillary to business acquisitions.

Beyond Profit: Rethinking Corporate Social Responsibility and Greenwashing After the BP Oil Disaster

The explosion of the BP-leased Deepwater Horizon and subsequent oil spill stand as an indictment not just of our national energy priorities and environmental law enforcement; they equally represent a failure of Anglo-American corporate law and what passes for corporate social responsibility in business today. Using BP and the disaster as a compelling case study, this Article examines green marketing and corporate governance and identifies elements of each that encourage firms to engage only superficially in corporate social responsibility yet trumpet those efforts to eager consumers and investors. This Article then proposes reforms and protections designed to increase corporate social responsibility, root out greenwashing, and recognize liability for corporate social responsibility frauds on consumers and investors. One of these protections derives from the newly enacted Dodd-Frank Act, whose Bureau of Consumer Financial Protection could play a leading role in policing fraudulent claims of corporate social responsibility.