A wonderful thing about being an academic is being able to travel to interesting places, like Gainseville. My wife and I enjoyed the city from the get go, stopping to dine at eclectic, fun places like Boca Fiesta. The outdoor patio at Boca Fiesta is worth visiting and their fusion cuisine tacos are out of this world. Next door, the Palomino Pool Hall offers an opportunity to spot local pool sharks and townies out for a night of leisure.

To top things off, my wife bought me a painting from a local sidewalk artist named Bill Peglar. I immediately fell in love with the painting since, to me, it perfectly represents Florida. The artist even said that he could “feel the humidity” in the painting.

Artist: Bill Peglar

Refusing to approve the settlement would either compel the defendant to admit wrongdoing, or force the SEC to drop the case, or litigate it. By failing to approve a settlement reached willingly by both parties as a matter of public interest, Judge Rakoff has departed from a customary practice. If the decision is sustained on appeal, it might create an important legal precedent that could curtail the harmful practices that are committed by some professionals in the financial industry.

Strategically, Citibank would likely refrain from appealing the case to avoid creating binding future precedent that would apply to itself and others in the financial industry. One might think that the SEC, as a public institution charged with protecting consumers, would be more inclined to appeal the matter to actually establish the precedent.

As the Wall Street Journal article suggests, however, the SEC often has settled cases with defendants in the financial industry as a practical compromise to avoid risks and expense. It is clear, based on Judge Rakoff’s ruling, that he believes practicality and expedience were not enough to warrant subverting the public interest.

The New York Times has a nice interactive feature that allows you to view the many patents Steve Job helped usher in during his tenure at Apple. It provides a glimpse into the unique role Jobs had within Apple as a pioneering innovator and strategist.

“A firm’s investors and other influential constituents use their contract rights against the firm to influence management and monitor management more carefully than the board can to protect their interests and investments in the firm.”

Delaware corporate law and other statutes, however, require that corporations be governed by a board with some independent members. Investors and entrepreneurs who want to opt out of this structure may opt for the limited liability company, or LLC. LLCs, unlike corporations, do not require a board as the ultimate overseers of business decisions. Under LLC law, the owners may delegate or assign responsibility among themselves, or to managers.

Professor Alces’ paper is accessible on the Social Science Research Network (SSRN), here.

Federal Civil Procedure Rule 23(a) requires  that any party seeking class action certification must demonstrate that:

“(1) the class is so numerous that joinder of all members is impracticable,“(2) there are questions of law or fact common to the class, “(3) the claims or defenses of the representative parties are typical of the claims or defenses of the class, and “(4) the representative parties will fairly and adequately protect the interests of the class”

In the Dukes case, the lower district (trial) and appellate courts found that the evidence marshaled by the plaintiffs were indeed sufficient to allow certifying the 1.5 million female Wal-Mart employees as a class under the rules.

The evidence used to persuade the lower courts included statistical data that suggested differences in pay between men and women, anecdotal testimony from witnesses who alleged gender-based discrimination, and the social framework analysis of the plaintiff’s expert sociology witness. The social framework analysis was discussed in greater depth in a prior post on this blog.

The U.S. Supreme Court, however, held that this evidence was insufficient to meet the commonality requirement of Federal Rule 23(a). Under the Court’s analysis of relevant precedent, the Court required evidence of a systematic practice, or corporate policy that would trigger a legal issue common to all  1.5 million women in the class. The only evidence that the Court found addressed this requirement was the social framework analysis offered by the plaintiff’s expert, Dr. William Bielby. The Supreme Court, however, found the use of a social framework analysis was insufficient to demonstrate typicality. The Court said:

“Relying on “social framework” analysis, Bielby testified that Wal-Mart has a “strong corporate culture,” that makes it “‘vulnerable’” to “gender bias.” He could not, however, “determine with any specificity how regularly stereotypes play a meaningful role in employment decisions at Wal-Mart.” …

“The only corporate policy that the plaintiffs’ evidence convincingly establishes is Wal-Mart’s “policy” of allowing discretion by local supervisors over employment matters. On its face, of course, that is just the opposite of a uniform employment practice that would provide the commonality needed for a class action; it is a policy against having uniform employment practices.”

The Court then discussed that the typicality requirement is a threshold issue that can impact the results of statistics that suggest gender based discrimination.

As a practical matter, it is unlikely that any plaintiffs will be able to certify a nationwide class against a major corporation in discrimination cases unless the plaintiffs can show with sufficient evidence that typicality of harm or injury arises from pervasive managerial behavior, such as an identifiable corporate policy, or from observable and uniform practice.

On the other hand, broad and unidentifiable factors, such as tacit managerially sanctioned social norms, are not likely to satisfy the typicality requirement. In the Dukes case, the Supreme Court disregarded the theory that something as real, yet broadly conceived, as corporate culture can be used to legally establish typicality.

As discussed in the Court opinion’s syllabus:

“Respondents’ only evidence of a general discrimination policy was a sociologist’s analysis asserting that Wal-Mart’s corporate culture made it vulnerable to gender bias. But because he could not estimate what percent of Wal-Mart employment decisions might be determined by stereotypical thinking, his testimony was worlds away from “significant proof” that Wal-Mart “operated under a general policy of discrimination.”

So, even if there is some indication of a corporate culture and statistical evidence pointing to a gender-based pay gap, the courts are likely to require  direct evidence of an actual company practice that fosters the discrimination.

Take a look at the Court’s opinion here.

Welcome to the informational site for the upcoming FL-GA Legal Studies Research Conference.

This inaugural conference will be hosted by The College of Business at Florida State University in October, 2011. After that, the conference  will rotate among the three other founding and participating institutions: The University of Georgia, The University of Florida and The Georgia Institute of Technology.

The event will bring together prolific and renowned legal studies in business scholars. These scholars routinely examine legal issues that confront managers who make decisions at the nexus of business and the law.

Please click on the Invitation to Register and the Conference Agenda to learn more about this exciting event.

The following list of presenters and attendees will be updated periodically, so please make sure to check back to learn more about the program.

Confirmed Presenters:

The Florida State University:

Chad Marzen, presenting: “OCIPs in the Future of the Insurance Industry: Legal and Regulatory Considerations”

Darren Prum, presenting “High Speed Rail in America:  An Evaluation of the Regulatory, Real Property, and Environmental Obstacles a Project will Encounter” (with Sarah L. Catz, University of California, Irvine)

University of Florida:

Robert W. Emerson, presenting: “Franchise Terminations: “Good Cause” Decoded”

Larry A. DiMatteo, presenting “An ‘All of the Above’ Theory of Legal Development”

The University of Georgia:

Alex Reed, presenting: “Subsidizing Hate: A Proposal to Reform the Internal Revenue Service’s Methodology Test”

Nathaniel Grow, presenting: “In Defense of Baseball’s Antitrust Exemption”

The Georgia Institute of Technology:

Seletha R. Butler, presenting: “All on Board! Strategies for Constructing Diverse Boards of Directors and Creating a Future Pipeline in a Borderless Global Marketplace”

Confirmed Attendants:

Stephen Bailey, The Florida State University

Seletha R. Butler, The Georgia Institute of Technology

Karie Davis-Nozemack, The Georgia Institute of Technology

Lucien J. Dhooge, The Georgia Institute of Technology

Larry A. DiMatteo, University of Florida

Robert W. Emerson, University of Florida

Nathaniel Grow, The University of Georgia

Chad Marzen, The Florida State University

Darren Prum, The Florida State University

Lee Reed, The University of Georgia

Alex Reed, The University of Georgia

David Orozco, The Florida State University

Bill Woodyard, The Florida State University

Today I attended a talk at the FSU Law School at which Professor Dino Falaschetti presented his paper: “A Difficulty in the Concept of Affirmative Action: Evidence from Females in Legislatures”. The paper empirically tests Suzanne Scotchmer’s theory, which posits that: “(1) winner-take-all games (e.g., promotions in hierarchies) favor inherently risk-taking males, but (2) successful females maintain greater skill on average and (3) see this skill-advantage depreciate with repeated play.”

The paper makes a contribution since the theory has rarely ever been empirically tested. A clever experiment was designed using elections in legislatures in both majoritarian (winner take all) vs. proportional election systems. The U.S. follows the majoritarian electoral system, where the candidate who garners the majority (> 50%) votes wins. Many, if not most, countries follow a proportional system whereby parties and their candidates obtain representation in proportion to the votes they obtain.

The article’s findings suggest a statistically significant result that demonstrates a negative correlation between elected female legislators and winner take all (majoritiarian) electoral systems across time and 130 countries . Ultimately, the author positions these findings as challenging the outcomes of affirmative action programs, since gender may ultimately lead to unintentional results due to the outcomes generated by risk preferences unique to gender type.  I think the paper may also raise some interesting questions related to institutional economics, given that similar outcomes were seen across a broad spectrum of societies and cultures

The link to the article on SSRN is here.