Benefit Corporations: New Indiana Law Review Article Explains and Explores the Virtues of Benefit Corporations

Recently, my article entitled "When Making Money and Making a Sustainable and Societal Difference Collide: Will Benefit Corporations Succeed or Fail?" appeared in Volume 46:3 of the Indiana Law Review.  To my knowledge, this is one of the first articles to examine the "benefit corporation" a new form of organization that is a recent legislative creation, existing in a handful of states.  I believe that benefit corporations hold a great deal of promise for socially-minded entrepreneurs.  I'm placing a link to the article on my SSRN page, and encourage you to download and review this article.  Below is a brief abstract of the article: 

• A quiet, but important, corporate revolution is afoot in the United States. Many of us, laypersons and corporate scholars alike, have not even noticed. A new type of corporate entity has been created-the benefit corporation.

• This article explores benefit corporations as a tool entrepreneurs can use to make money, foster environmental sustainability, and create societal improvement. Part I briefly examines who has been advocating for the creation and passage of benefit corporation legislation in the United States. Part II analyzes the statutory requirements to form a benefit corporation. Specifically, Part II discusses the issues of purpose, accountability, transparency, rights of action, and enforcement of those rights in connection with the creation and operation of a benefit corporation. Part III highlights the states that have passed benefit corporation statutes and highlights those considering similar legislation. Part IV examines the pre-existing use of benefit entities, in unincorporated form, through exploration of the benefit certification process. Finally, Part V offers a future prognosis and debates whether benefit corporations will succeed or fail.

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2338140

Ninth Circuit Certifies Wal-Mart Gender Discrimination Class-Action Law Suit

In a divided 6 to 5 ruling, the Ninth Circuit Court of Appeals has certified a gender discrimination class-action lawsuit against Wal-Mart to proceed to trial. Wal-Mart is the world’s largest retailer. The gender discrimination lawsuit includes over 1 million women, and is the biggest employment discrimination case in U.S. history. Brad Seligman, a lawyer for the plaintiffs and executive director of the Impact Fund, a public-interest litigation organization that funds complex litigation, stated that “Wal-Mart tries to project an improved image as a good corporate citizen. No amount of P.R. is going to work until it addresses the claims of its female employees.”




The class-action lawsuit was originally filed against Wal-Mart in June 2001 by six female Wal-Mart employees who had worked in 13 Wal-Mart stores. The lawsuit alleged that Wal-Mart engaged in a pattern and practice of discriminating against women in promotions, pay, training and job assignments. Since the filing of the lawsuit, Wal-Mart has fiercely defended itself and its outside counsel, Theodore Boutrous, a partner Gibson Dunn & Crutcher LLP, has successfully managed to delay the case for nine long years including obtaining a stay of discovery during the pendency of several appeals. It is not surprising that Wal-Mart's general counsel, Jeff Gearhart, stated that "…Wal-Mart is considering options, including seeking review from the Supreme Court... We do not believe the claims alleged by the six individuals who brought this suit are representative of the experiences of our female associates." Appeals have delayed the lawsuit from moving to trial thus far, Wal-Mart has nothing to lose by appealing the decision to the Supreme Court, other than time.



Many experts believe the court’s class certification ruling provides a major incentive for the parties to reach a settlement before the case goes to trial, because juries are so unpredictable—sometimes awarding plaintiffs big sums and sometimes awarding the plaintiffs nothing. If the case does proceed to trial, approximately 1.4 million female plaintiffs could be awarded billions in actual damages and an even more substantial amount in punitive damages. The Ninth Circuit left the issue of punitive damages to the trial judge to decide whether the plaintiffs can seek punitive damages on class-wide basis or whether they must they pursue punitive damages individually. Seligman stated that he would be "happy to talk settlement." However, Boutrous believes that [Wal-Mart] is focused on a Supreme Court appeal rather than on a settlement. Boutrous stated that "[W]e feel the majority's ruling conflicts with not only Supreme Court precedent, but the law of several other circuits…talks of settlement were premature."




This is all very disturbing. There has been such little media coverage regarding the pending gender discrimination lawsuit that most people, myself included, had forgotten about it. I gather we all assumed that the case had been dismissed or quietly settled. And, Wal-Mart had done such an extraordinary public relations effort of profiling itself as an environmental sustainability superstar over the past six years that our collective focus was misdirected. Professor Jared Diamond’s op-ed piece in the New York Times last December applauded Wal-Mart’s sustainability programs include using renewable energy to power its stores and cleaner transportation to drive its trucking fleet. The new sustainability programs were going to save Wal-Mart’s millions in operating expenses which would have resulted in major savings, that Wal-Mart had announced that it would to pass on to its customers. We were all lovin’ Wal-Mart. However, it makes me wonder whether Wal-Mart’s environmental sustainability efforts were simply smoke and mirrors to create goodwill, and a positive public image to defray attention from Wal-Mart’s mistreatment of its women employees. Perhaps Wal-Mart is committed to environmental sustainability, I certainly hope so, but it all feels pre-calculated and rather icky in light of the gender discrimination lawsuit. As a periodic Wal-Mart customer, is it too much to ask that the world’s largest retailer should help save the environment, and treat its women employees decently? We should demand no less.