Cherokee Nation Requests that Jeep Discontinue Use of "Cherokee" Name

Chuck Hoskin, Jr., the principal chief of the Cherokee nation has asked carmaker Jeep to change the name of its Grand Cherokee vehicle stating that Jeep's use of the name without the tribe's permission is troubling and perpetuates international misinformation of the Cherokee people.  According to Hoskin "The use of Cherokee names and imagery for peddling products doesn't deepen the country's understanding of what it means to be Cherokee, and I think it diminishes it somewhat."  As might be expected for those that have followed American Indian cultural appropriation throughout the last several decades, the carmaker is resisting such a move claiming that the name "honors" the tribe.

Stellantis, the automobile conglomerate that owns Jeep, formed recently from the merger of Fiat Chrysler and Peugeot, defended its use of the Cherokee name claiming "our vehicle names have been carefully chosen and nurtured over the years to honor and celebrate Native American people for their nobility, prowess and pride."  This argument echoes the same arguments used for decades by Daniel Snyder, the owner of the Washington Football Team (formerly the Redskins) and the owners of the Cleveland Indians (who have also recently agreed to change the team name after phasing out the offensive Chief Wahoo logo a few years ago).  For Stellantis, the Grand Cherokee is one of Jeep's most popular models selling more than 200,000 units in 2020.

Suzan Shown Harjo, long an activist fighting against cultural misappropriation and offensive use of American Indian imagery, is not buying the "honor" argument.  "Of course it's not an honor" states Harjo, "That’s the assumption that was made by so many people about our land, water, gold, silver, copper — name a mineral. Now it’s about our imagery, our names and our cultural icons . . . When does this thievery stop?"  

The Cherokee Nation describes itself as a sovereign tribal government. "Upon settling in Indian Territory (present-day Oklahoma) after the Indian Removal Act, the Cherokee people established a new government in what is now the city of Tahlequah, Oklahoma. A constitution was adopted on September 6, 1839, 68 years prior to Oklahoma’s statehood.  Today, the Cherokee Nation is the largest tribe in the United States with more than 380,000 tribal citizens worldwide. More than 141,000 Cherokee Nation citizens reside within the tribe’s reservation boundaries in northeastern Oklahoma. . . . The Cherokee Nation is committed to protecting our inherent sovereignty, preserving and promoting Cherokee culture, language and values, and improving the quality of life for the next seven generations of Cherokee Nation citizens."

Whether Jeep drops the moniker will likely depend on whether the same kind of financial pressure is brought against Jeep and Stellantis similar to what was brought to bear on Daniel Snyder and the Washington Football Team and corporate entities like Aunt Jemima, Land-O-Lakes and Uncle Ben's.  Each of these entities have been persuaded to change/drop racist depictions and monikers because of the economic pressure of threatened boycotts and sponsorship withdrawals, particularly in light of the 2020 summer of protests following the police killings of George Floyd and Breonna Taylor.

hat tip: Savannah Johnston, Arkansas Little Rock Bowen School of Law, 3L

images courtesy of Wikimedia Commons

MAGA'S CRAVEN WAR ON DEMOCRACY & VIOLENT EMBRACE OF INSURRECTION

 

Eyewitness accounts regarding the events of January 6, 2021 give us the most reliable version of what happened that dark day. Particularly those eyewitnesses from the Republican Party who do not seek partisan advantage. For example:

"What happened here today was an insurrection incited by the President of the United States."

Republican Senator & former Presidential Nominee Mitt Romney, Jan. 6, 2021. 

"Today’s violent assault on our Capitol, an effort to subjugate American democracy by mob rule, was fomented by Mr. Trump. His use of the presidency to destroy trust in our election and to poison our respect for fellow citizens has been enabled by pseudo political leaders whose names will live in infamy as profiles in cowardice."

Former Trump Defense Secretary and Marine Corps General James Mattis, Jan. 6, 2021.

"The mob was fed lies. They were provoked by the president and other powerful people. And they tried to use fear and violence to stop a specific proceeding of the first branch of the federal government which they did not like."

GOP Senate Majority Leader Mitch McConnell, Jan. 19, 2021

"Today was a dark day in the history of the United States Capitol… We condemn the violence that took place here in the strongest possible terms… To those who wreaked havoc in our Capitol today, you did not win. Violence never wins. Freedom wins."

Trump Vice-President Mike Pence, January 6, 2021.

"These men and women in the uniform, they got overrun. One officer got killed…they got broken arms. You don’t understand what was transpiring at that moment and that time. . . . People brought ropes. . .[T]hey were well planned for it. They scaled walls. . . . They, they overtook the place.”

"Let me be clear: Last week’s violent attack on the Capitol was undemocratic, un-American and criminal…And make no mistake: Those who are responsible for Wednesday’s chaos will be brought to justice…The president bears responsibility for Wednesday’s attack on Congress by mob rioters."

GOP House Speaker Kevin McCarthy, Jan. 13, 2021 

"Today, the people's House was attacked, which is an attack on the Republic itself. There is no excuse for it. A women died. And people need to go to jail. And the President should never have spun up certain Americans to believe something that simply cannot be."

GOP Rep. Chip Roy, Jan. 6, 2021.

WOW!  The US Capitol became a combat zone on January 6.

The legal upshot of the above is Trump and his cultists levied war against the US in violation of 18 USC section 2381! They engaged in an insurrection in violation 18 USC section 2383!

These provisions carry severe criminal sanctions and section 2383 prohibits insurrectionists from ever holding federal office again. Trump also disqualified himself from federal office under the Fourteenth Amendment, section 3. As painful as it may be, the Biden Administration has little choice but to fully investigate these potential violations of law immediately. Donald Trump in particular must face swift justice. .

In his unending fantasy and lies of victory, President Donald Trump unleashed a violent coup on our democracy, our constitutional republic and ultimately our freedom in the lawless pursuit of autocracy, dictatorship, and dimwitted megalomania. 

This directly aided and abetted the ongoing efforts of Vladimir Putin to use Russian New Generation Warfare (RNGW) to weaken, undermine, subvert, and diminish the power of the USA to defend itself and its interests and allies across the world. As Lt. General H.R. McMaster explains RNGW aims to weaken the US and other democratic societies through the sustained use of misinformation. They seek to “disrupt, divide and weaken” American democracy. Yet, again the Trumpists continue to toss the nation and its people into bloody pitched battle with each other while doing the bidding of Putin.

Addendum:

"[T]here can be no soft-pedaling what happened and no absolution for those who planned, encouraged and aided the attempt to overthrow our democracy, Love of country demands nothing less. That’s true patriotism.” 

Karl Rove, writing in the Wall Street Journal, Former Republican Political Operative, January, 6, 2022.

"The importance of January 6th as an historic event cannot be overstated. I was honored and proud to join my daughter on the House floor to recognize this anniversary, to commend the heroic actions of law enforcement that day, and to reaffirm our dedication to the Constitution.  I am deeply disappointed at the failure of many members of my party to recognize the grave nature of the January 6 attacks and the ongoing threat to our nation.”

Former Republican Vice President Dick Cheney, January 6, 2022. 

January 6th, 2021 was a dark day for Congress and our country. The United States Capitol, the seat of the first branch of our federal government, was stormed by criminals who brutalized police officers and used force to try to stop Congress from doing its job. This disgraceful scene was antithetical to the rule of law. One year later, I am as grateful as ever for the brave men and women of the U.S. Capitol Police who served our institution bravely that day and every day since. I continue to support justice for those who broke the law.

GOP Senate Minority Leader Mitch McConnell, January 6, 2022. 

On the first anniversary of January 6, GOP Senator Ted Cruz and Trump-appointed FBI Director Christopher Wray called the violence "a violent terrorist attack on the Capitol" and "domestic terrorism," respectively.

President Biden Signs Executive Order To End the Use of Private For-Profit Prisons

Wikimedia Commons
Philadelphia County Prison

In an important move that returns federal government policy to the Obama era, today President Biden signed an executive order calling on the Department of Justice to ends its use of private prisons.  While this executive order does not end federal government reliance on for-profit immigration detention centers, it does require that no future contracts with private prison operators be entered into between the federal government and private prison corporations CoreCivic, GEO Group and others.  Use of the executive order to end private for-profit prison reliance has proven difficult politically as Obama ended their use before the 2016 election, but once Trump entered the White House, he rescinded the policy and made robust use of private prisons for federal prisoners as well as immigration detention.

This executive order, while lauded as a positive step in addressing mass incarceration and systemic racism, will not permanently end its practice.  Legislation outlawing private prisons would be a more permanent solution.  Or, a judicial pronouncement that private for-profit incarceration is unconstitutional would effectively end the use of private prisons as well.  An Arizona 501(c)(3), Abolish Private Prisons, has filed a lawsuit in Arizona federal district court on behalf of inmates housed in private prison facilities, arguing that for-profit incarceration is unconstitutional under the 13th, 14th and 8th amendments as well as a violation of the non-delegation doctrine.  The lawsuit Nielsen v. Shinn is currently pending in Arizona federal court.  

The complaint filed by plaintiffs, together with the Government motion to dismiss, the plaintiff's motion in opposition and the Government's reply can all be viewed here. 

Corporate Justice at the Micro Level

Several years ago, my friend, colleague and mentor, andre cummings, and I created and defined what we call "Corporate Justice."  "At its core, Corporate Justice refers to a responsibility, even a moral obligation, which businesses and corporations have to engage fairly, civilly and responsibly in the world and community that they do business and from which they derive profits. More than that, the concept of Corporate Justice also focuses on the roles that shareholders, policy makers, other stakeholders and the community at large have in fostering a more just and responsible business community."  Our conversation led to the creation of a course, a book, several presentations, and this blog.  In conceptualizing "Corporate Justice," our primary focus was on large corporations and their impact on the world around us.  That perspective influenced much of the work we have completed on the topic as well as the way that we conceptualized its impact.  However, after a recent community event I facilitated here in Miami, Florida, I was presented with a thought provoking question “what does corporate justice mean for small businesses?”  I had never considered this question and realized that I had made a substantial oversight in failing to do so.  Small business are the life line of many communities and they meet the immediate needs of the people in areas in which they operate.  Given that reality, I have begun to critically think about what Corporate Justice at the “micro” level means.  Specifically, do small businesses have the same obligations that we might expect from large corporations?  Over the next few days I plan to think more about this question and welcome your input and insight.  Next week, I will provide you with my initial response.  I look forward to reading about your insights on the issue.  

 

NASDAQ Promotes Diversity Through New Listing Requirements

On December 1st, 2020, Nasdaq filed a proposal with the Securities and Exchange Commission to adopt additional listing rules requiring enhanced board diversity and disclosure of firm diversity efforts.  The new listing rules require Nasdaq-listed companies to have on their board of directors, at least two diverse directors, including one who self-identifies as female and one who self-identifies as an underrepresented minority or LGBTQ+.  If the firm does not meet this listing requirement, it must explain why they do not have at least two diverse directors sitting on their board.  Additionally, the new listing rules require Nasdaq-listed companies to publicly disclose consistent, transparent diversity statistics regarding its board of directors.  Nasdaq defines underrepresented minorities to include Black or African America, Hispanic or Latinx, Asian, Native American or Alaska Native, Native Hawaiian or Pacific Islander, two or more races or ethnicities.  Smaller reporting companies and foreign companies have additional flexibility in satisfying these new listing requirements by seating at least two female directors.  These new listing rules require approval from the SEC.

NASDAQ's stated goal for requiring diversity among its listed companies board makeups is to provide the investing public with a "better understanding of the company's current board composition and enhance investor confidence that all listed companies are considering diversity in the context of selecting directors, either by including at least two diverse directors on their boards or explaining their rationale for not meeting that objective." To support this new listing requirement, Nasdaq pointed to over 24 studies that found a link between diverse board and more robust financial performance with better corporate governance.  Under this proposal, Nasdaq-listed companies are required to publicly disclose board-level diversity statistics within one year of the SEC's approval of the rule.

CNN reports that Nasdaq CEO Adena Friedman stated, "Nasdaq's purpose is to champion inclusive growth and prosperity to power stronger economies." Non compliance by Nasdaq-listed companies could lead to delisting.  

Nasdaq's move is part of a growing momentum to see that corporate board diversity is taken seriously across the United States.  California has for two years been requiring gender diversity on corporate boards and has recently begun requiring racial and ethnic diversity on California boards as well.  Goldman Sachs has recently announced that it will require any company that it assists in taking public must include at least one diverse board member. 

The Corporate Justice Blog has long advocated for board diversity as a priority for expanding human capital and realizing greater financial benefits for the firms and its shareholders. We argue that a commitment to diversifying the board, both in gender and racial diversity as well as worldview diversity enhances the performance of the corporations that so commit.  See here, here, here and here.

hat tip:  Deepali Lal, 3L, Arkansas at Little Rock William H. Bowen School of Law 

photo: courtesy of Wikimedia Commons

Systemic Racism in the Home Mortgage Context: We Don't Have Time to Notice

In 2020, pivotal events ushered in a season of antiracism rhetoric in the U.S. The brutal deaths of unarmed black Americans at the hands of police officers and white vigilantes, and the disproportionately harsh impact of COVID-19 in the black American community, launched the nation into a discussion about systemic racism. Unfortunately, it seems likely that the 2020 antiracism discourse was merely seasonal rather than enduring, and unlikely to result in meaningful change. 

Black American’s vulnerability in the face of systemic racism is not limited to death, sickness and injury as a result of COVID-19 or antiblack bias in police departments. Our vulnerability is precipitated by things like lack of access to nonpredatory financial services. This is just one of the contexts that compromise black Americans’ economic survival. Unacknowledged systemic racism destroys the wealth and wellbeing of black individuals, families and communities, sometimes causing working and middle-class black Americans to plummet into poverty. As 2020 comes to a close, an election that threatened democracy in the U.S. and the existential threats of an uncontrolled pandemic, eclipse a system of intentional antiblack racism on the part of the financial institutions that engaged in predatory mortgage lending in the years leading up to and beyond the 2008 recession. It is now well documented that lenders, brokers, and mortgage servicers engaged in conduct that was fraudulent and misleading. The mortgage market charged excessively high rates and fees, engaged in high-pressure sales tactics, imposed unnecessarily harsh prepayment penalties, and distorted loan structures to avoid the application of consumer protection statutes.  But, more than a decade later, many black Americans are still fighting to prevent financial institutions from taking away their homes. 

In a book I coauthored with Dr. Janis Sarra, a law professor at the University of British Columbia, Predatory Lending and the Destruction of the African American Dream (Cambridge University Press, 2020), we describe new iterations of predation that continue to target black consumers years after financial institutions settled litigation that alleged pervasive fraud on their part for steering black Americans into predatory subprime loans. But these renovated predatory practices are obscured by the nation’s focus on COVID-19 and a vitriolic election season. Meanwhile, more black Americans will lose their homes even after investing all or most of their wealth in attempts to keep them. This reality requires the calls for moratoriums on mortgage foreclosures to be answered in the affirmative.

The Political Economy of Inequality, Democracy & Oligarchy - Panel Presentation - November 13, 2020

The Law and Political Economy Project at Yale Law School is hosting the following panel:

The Political Economy of Inequality, Democracy & Oligarchy, on Friday, November 13, 2020 at 5:00 pm eastern time.

This panel discussion will focus upon the erosion of democratic institutions and the rise of oligarchy that has followed in the wake of unprecedented economic inequality. The panel will address elite efforts to entrench themselves politically as well as economically, including the consequences of such efforts in terms of human development. The panel will focus upon the specific context of election 2020 and the uncertainty it is creating. The subversion of democracy and the law governing our democracy naturally holds many costs, and each panelist will address such costs. Each panelist will also seek to articulate some mechanism for a path forward.  Register here

PANELISTS:

Emma Coleman Jordan, Georgetown Law Center

andré douglas pond cummings, Univ. of Arkansas at Little Rock William H. Bowen School of Law

Atiba Ellis, Marquette University Law School

Steven Ramirez, Loyola University of Chicago School of Law

Gerald Torres, Yale Law School

Do Black Lives Matter to Major Corporations?

The summer of Black Lives Matter protests responding to the police killings of George Floyd, Breonna Taylor and Rayshard Brooks, among others, has led to stunning commitments from major banks and corporations to commit to social justice and promoting practices to recruit, hire and retain underrepresented populations, including black Americans, Latinx and female colleagues.  American Express just announced its pledge to invest $1 Billion to advance racial and gender equity.  JP Morgan Chase in October announced a $30 Billion commitment to advance racial equity.  Similarly, Citi and Bank of America have each pledged $1 Billion to promote economic mobility among communities of color.  Goldman Sachs, famously referred to as a vampire squid during the mortgage crisis in 2008, has announced its "Launch With Goldman Sachs" program "to increase capital and facilitate connections for women, Black, Latinx and other diverse entrepreneurs and investors."  These commitments represent huge infusions of capital into causes that these major corporations have just recently found religion upon.  Numerous corporations have made recent pledges to financially support social justice and economic equality including Google, Disney, Facebook, Amazon,  Cisco, DoorDash, Etsy, Home Depot, Intel, TikTok, Lego, Nike, Proctor & Gamble, Fashion Nova, WeWork, and YouTube, among so many others.

Jamie Dimon, CEO of JP Morgan Chase stated in announcing its $30 billion-over-five-year commitment, that “[s]ystemic racism is a tragic part of America’s history. . . . We can do more and do better to break down systems that have propagated racism and widespread economic inequality, especially for Black and Latinx people. It’s long past time that society addresses racial inequities in a more tangible, meaningful way.”

For those long-time followers of the Corporate Justice Blog, these corporate pronouncements may seem ironic or perhaps will be received with trepidation or doubt.  Profit maximization has for years furiously driven corporate leadership to dizzying examples of fraud, corruption, and malfeasance as recorded on these blog pages for years.  Still, these Billion dollar commitments respond to a summer of true discontent and protest over inequality and the value of black lives, and if these corporations are to be taken seriously, these capital infusions could come as true gamechangers.  Will these corporations truly put their money where their commitments are?  And how do we hold these companies accountable to their commitments to advancing racial equality and economic mobility for those communities previously shut out?  

photo: Jamie Dimon, Wikimedia Commons

hat tip: Jessica Smith, 3L, Arkansas Little Rock Bowen School of Law

Typhoid Trump's COVID-19 Death Count Includes 700 Deaths from Rallies and 99,300 New Cases Yesterday

 

The Wall Street Journal reports today that the U.S. suffered 99,300 new COVID-19 cases yesterday. The WSJ notes that this marks a new record high. COVID marches on in the U.S. with its death toll at about 230,000. Fox News reports that number does not count total "excess deaths" suffered in the U.S. which would bring the death toll to 305,000 dead Americans.

Such numbers demand reflection and context. The COVID death toll now amounts to 100 times the number of deaths Osama Bin Laden inflicted on the U.S. on 9/11. The COVID death toll more than doubles the total U.S. deaths from the Viet Nam War, the Korean War and World War I combined. It exceeds U.S. combat deaths in World War II. All this death in only six months.

The U.S. death count per capita now exceeds 70 fatalities per 100,000 people. The U.S. death toll amounts to 6 times the deaths per capita in Germany from COVID, and 10 times the death rate in Greece. Singapore boasts at least as much diversity as the U.S. and its death toll is less than 1/100th of the U.S. per capita death rate. South Korea boasts the same 4-season climate as the U.S. and their death toll per 100,000 stands at less than 1. Taiwan with a total of 7 deaths has a per capita rate that stands at 1/2000th of the U.S. death rate. In the "US political failures have driven COVID-19 morbidity and mortality."

For example, the Trump Administration raised the White Flag on COVID-19 in recent days and pushed the pseudo-science of "Herd Immunity" as its excuse for abject failure to control the contagion. Thus, White House Chief of Staff Mark Meadows stated in a live interview with CNN that: "We are not going to control the pandemic." 

This finally explains the consistent recklessness of the Trump Administration in hosting super-spreader events, mocking the use of masks, and ignoring its own guidelines for the isolation of Administration personnel infected by COVID. In short, Trump now seeks herd immunity as cover for an out of control pandemic that now rips through our population sowing deaths beyond any war, conflict or terrorist attack.

In fact, a team of Stanford economists just posted a paper demonstrating that Trump rallies leave behind localized spikes in COVID cases and they attribute 700 American deaths to these super-spreader events. Here is the (edited) abstract:

We investigate the effects of large group meetings on the spread of COVID-19 by studying the impact of eighteen Trump campaign rallies. To capture the effects of subsequent contagion within the pertinent communities, our analysis encompasses up to ten post-rally weeks for each event. Our method is based on a collection of regression models, one for each event, that capture the relationships between post-event outcomes and pre-event characteristics, including demographics and the trajectory of COVID-19 cases, in similar counties. [W]e conclude that these eighteen rallies ultimately resulted in more than 30,000 incremental confirmed cases of COVID-19. Applying county-specific post-event death rates, we conclude that the rallies likely led to more than 700 deaths (not necessarily among attendees).

Typhoid Mary only infected 53 persons with Typhoid fever!

I urge all thoughtful Americans to read this study prior to casting a vote for Trump. The reckless disregard of U.S. citizens evinced by the Trump campaign in terms of exposing Americans to more death and disease renders Trump unfit to govern.

More fundamentally, the Typhoid Trump approach to COVID implies millions of deaths and long-term disabilities due to the 156 million cases we will need to reach herd immunity without a vaccine: "A strategy of going for herd immunity from natural infection would lead to a massive death toll—estimates suggests the result could be somewhere between 1 million to 2.5 million dead Americans. The U.S. health system would buckle under the weight of so many hospitalizations and ICU admissions." Only our most vicious enemies could want an American massacre of such a scale!

Very recent research shows the folly of seeking herd immunity before mass vaccination: the COVID anti-bodies fade over time.

Surging COVID cases will also crash the stock market and kill small businesses with all the job losses that follow which explains the massive support of Wall Street for Joe Biden. Herd immunity spells economic devastation.

We simply cannot afford the costs of Trump's herd immunity approach of doing nothing to control this pandemic.

Teaching "Corporate Governance" Differently in 2020

by Cheryl Wade, Harold F. McNiece Professor of Law, St. John's University School of Law

I decided to teach my Corporate Governance seminar slightly differently this semester in light of all that is happening in 2020. We have discussed the nuts and bolts of corporate governance – the roles of officers, directors and the process for nominating them; fiduciary duty; compliance; and shareholder democracy, among other things – but our discussion is taking place in the context of the corporation’s position and status in civil society. Some of my students will explore the role of public companies in addressing existential issues such as the global pandemic as a matter of social responsibility. We discussed the ability and appropriateness of public companies in addressing climate change. We considered the corporate governance failures at financial institutions that exploited consumers. Our approach this semester acknowledges the inextricable link between even the most mundane corporate governance issues on one hand and environmental and social matters on the other. 

Earlier this semester, I asked my students to think about the role of the corporate lawyer in helping companies avoid the public relations nightmares that sometimes ensue socially irresponsible behavior. Zach Sobel wrote, “imagine this, a corporate lawyer pushes their client to accept responsibility for whatever actions were alleged (assuming they actually did do what they are accused of). The public would be left with nothing to complain or hypothesize over, and the conversation moves from what the company did to how the company will respond.” Ricardo Gray agrees with Zach about the benefits of a corporation admitting wrongdoing “The corporate attorney serves the corporation so advice to have the corporation admit wrongdoing may seem backward, but after a corporation is caught red-handed remedial steps that do not leave those injured with a bad taste in their mouth, will only improve the likelihood of the corporation's success in the future.” Then Ricardo waxed poetic. “Specifically, once the corporation has caused harm to stakeholders, a corporate attorney becomes both a shield of the corporation, in that he or she will attempt to minimize liability and defend it from lawsuits and a sword, in that he or she will cut a path forward for the corporation to continue operations after the harm is caused.” 

I asked my students how firms can avoid litigation in the first place? Chris Gaine suggested that risks may be mitigated “by creating and implementing robust legal compliance systems.  In seeking to comply with the law, companies should look at relevant legal standards and aim to exceed them instead of just adhering to them.  Companies should also aim to comply with the “best practices” of a given industry, which manifest ideal ethical standards beyond what the law requires.” Greg Kramer also focuses on the potential of adequate corporate compliance. “One lesson from the spate of fraudulent, coercive, and otherwise illegal behavior of financial institutions leading up to the Great Recession (as well as more recent examples like Wells Fargo) is that these crises were not merely the result of a handful of bad actors at the top of an organization.  They involved systemic misbehavior of frontline employees across different parts of the organization.  But obviously, a board is incapable of monitoring every single operational activity of a company where the potential for misconduct exists.  Thus, boards must sift through this “noise” and focus their monitoring on key “signals” of systemic misconduct.” Federica Marini mentioned another crisis-avoidance structure that complements what Chris calls “robust” compliance. Federica writes that “while solving crises focuses on ending on-going emergencies and limiting damages to a client’s business, risk management is about finding solutions to avoid loss altogether prior to the occurrence of crises.”

Ryan Smith was concerned about another context with which public companies grappled in recent years – sexual harassment allegations. Ryan considers this problem in light of companies’ public disclosure about their investigation of harassment claims. “In the course of investigation, the firm should ask outside counsel to assess whether the company’s public statements require correction or updating based on what the investigation reveals.” Alexa Major also wrote about disclosure but did so in the context of COVID-19 and admonished firms to be careful about disclosing information about “the impact of the current pandemic on ‘business as usual’.”

All of my students submitted answers that reflect hopeful perspectives concerning the roles and obligations of public corporations. I have shared the ideas from just a few of them in this post.

Never Ever, Thought I Would See This . . . . Warren Buffett Gets Bamboozled?

Just out . . .  Berkshire Hathaway, Warren Buffet's investment firm, is suing international law firm Jones Day for fraud.  In 2017, a Berkshire Hathaway subsidiary Precision Castparts purchased Wilhelm Schulz, a German oil and gas pipemaker for $940 million dollars.  Only problem, Wilhelm Schulz fraudulently manufactured invoices, invented "phantom customers," and misrepresented their financial position during the acquisition (they were in fact at the time in discussion with insolvency representatives).  Precision Castparts, the Berkshire subsidiary, ended up losing some $755 million in the deal as the fraud and misrepresentation later became clear.  In fact, an arbitrator recently awarded Precision Castparts 643 million euros ($756 million) based on Wilhelm Schulz's true value at the time of acquisition of 157 million euros (approximately $200 million).  Because Wilhelm Schulz is in bankruptcy, it is very unlikely that Precision Castparts will recover much of any of the arbitration award.  Thus, the lawsuit against Jones Day, the lawyers that represented Wilhelm Schulz in the acquisition.

From Bloomberg:  "According to the suit, Jones Day conspired with Schulz to create a misleading picture of the German company’s value. Toward that end, the firm’s lawyers drafted documents including a securities purchase agreement and disclosure statements they knew were false, Precision claims."

This represents a rare misstep in Warren Buffet's empire, as he is recognized as one of the world's savviest investors.  If Berkshire and Precision were taken in a "fast shuffle," one has to assume that the fraud was deep indeed.

hat tip to Molly Curington, University of Arkansas at Little Rock Bowen Law School, 2L

photo: public domain

Why Are There Still So Few Black CEOs?

Stalled Progress

The number of CEOs of Fortune 500 companies who are minorities or women has inched up in the past 20 years, with Black CEOs making only tiny gains.

White

Asian

Black

Hispanic

Women

2000

2010

2020

Note: Data are through August 2020 and may include CEOs who left during the year.

Source: Richard Zweigenhaft, Guilford College

The Wall Street Journal recently asked the question "Why Are There Still So Few Black CEO?"  In 2020, carefully culled statistics show that less than 1% of all Fortune 500 CEOs are African American, naming just four out of 500 of the Fortune 500 that are led by black CEOs.  Further, the WSJ continues in reporting that all U.S. companies with more than 100 employees, African American senior leadership stands at only 3%, while the black population in the United States is roughly 13%.  Why is African American senior corporate leadership in the U.S. so inexplicably lowe?  The chart above details the achingly slow progress for CEO diversity in the past 20 years.  

Why is this so?  Some reasons provided in the article include:

Opportunity for leadership and promotion is not equally distributed;

"Black professionals face greater obstacles early in their career, are viewed more critically than their colleagues and frequently lack the relationships that are pivotal to advancement";

Unadulterated racism;

Companies often emphasize diversity recruitment but fall short on retention efforts and advancement; 

Many companies tended to see diversity as “nice to have, but not a must have,” although in recent months based in large part on the Black Lives Matter movement, more corporations seeking assistance with board recruitment have specifically mentioned diversity as a priority.

On the issue of unadulterated racism, "One 2019 study of racial bias in hiring in the sciences found Black applicants for postdoctoral positions were rated as being less competent, hireable or likable than their white, Latino or Asian peers.  A 2014 study in which people were asked to evaluate identical legal writing samples found that people consistently found more errors and judged the writing as being poor when they were told the author was Black.  A 2017 study examining callback rates for Black job applicants found discrimination levels haven't improved in the past 25 years."

One common refrain from white leaders for failing to diversify corporate leadership is that the talent pool is too shallow.  This age-old adage is belied by the facts.  From the article:  "When it comes to Black advancement, one popular argument among many white executives is that there is a “short supply” of talent. . . .  In reality, . . . the pool of highly educated, experienced Black professionals has never been greater.  In 2019, 26% of Black people age 25 and older in the U.S., or seven million people, had completed at least four years of college, up from 15% in 1999, according to federal data. Among white[s] . . ., that figure was 36%, or 63 million, up from 26% in 1999.  More than 13% of master’s degrees were given to Black graduates during the 2016-17 academic year, up from 9.4% in 2000-01."

The largest takeaway from firms that successfully diversify their corporate board is commitment.  Making a commitment to add diverse talent requires affirmative effort and the research indicates that diversity grows corporate profits.

hat tip to Will McGrath, 3L Arkansas Little Rock Bowen School of Law