Current Issue


Published January 9, 2024



Edward Gao

In its March 22, 2022 ruling in Kalway v. Calabria Ranch HOA, LLC, the Arizona Supreme Court imposed a new rule for community associations seeking to amend their Declarations of Covenants, Conditions, and Restrictions (“CC&Rs”): an amendment is invalid unless the language of the original CC&Rs gave sufficient notice of the future amendment. While the new rule merely expands on existing common law, it creates new problems of defining what, precisely, constitutes sufficient notice. In doing so, the rule disrupts one of the core value propositions of the common interest community—risk mitigation by contractual reduction of uncertainty—and traps lower courts between their duty to give effect to contractual intent and their mandate to preserve and protect the Arizona Constitution. This Note examines the existing statutory and common law framework, as well as post-Kalway case law, to establish a four-factor test that will better define the contours of sufficient notice in a way that strikes a balance between preserving homeowners’ property rights and giving community associations flexibility to address modern issues that may not have been foreseeable when their original CC&Rs were recorded.

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Saul Levmore & Andrew Verstein

Cooperation sometimes breaks down, and former teammates will disagree about what happens next. For example, when can an employee quit to join a competitor? Courts often resolve disputes by looking at the parties actual or hypothetical bargain. Thus, a court may ask whether there was a non-competition agreement (and whether it was reasonable), or whether the employee is taking a “corporate opportunity” as she departs. These are all-or-nothing determinations by courts; either the bargain, or law, fully allows or fully prohibits the disputed conduct.

This is a suitable approach when fair and efficient bargains are possible. But, this article argues that fair and efficient bargains are often impossible, and explains a better way of resolving disputes in such cases. We consider impossible bargains in numerous areas of law (admiralty, family law, patent law, and more). When assessing disputes in these areas of law, courts often look beyond the bargain, and frequently shy away from all- or-nothing decisions. Instead, courts should review the parties’ collective success (or failure) and split up the gains (or losses) in a way that is intended to credit each person’s contribution and give the right incentives to both parties in multiple time periods – before, during and after their interactions. We argue that this approach deserves serious consideration in employment law, corporate law, and beyond.

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Kent A. Pederson, Esq.

Two interchangeable yet fundamentally unique doctrines have emerged in Delaware since the 1980s to deal with hostile takeovers and change-of-control transactions in Mergers and Acquisitions law. The first is the Unocal framework, designed to apply enhanced scrutiny to defensive measures taken by a board of directors when dealing with hostile takeovers. The second is the so-called Revlon duties, originally designed to compel boards to receive the best price for the sale of the corporation when the entity is put up for auction.

The problem with these two doctrines is that they both purport to solve the same problem while trying to apply to different hypothetical scenarios. Traditionally, when a board enacts a poison pill to avoid a hostile corporate raider, shareholders may be concerned that the board is not taking the pill for the good of the company, but is acting in self-interest in the fear that a new owner may fire the lot of them. Similarly, when a board engages in a series of transactions aimed at selling the company to a preferred bidder, there is a concern that in doing so, the directors had a conflict of interest.

In this way, Unocal and Revlon both confront the same judicial concern: can a court be certain that a board’s actions were in furtherance of their fiduciary duties to the corporation? The Delaware Supreme Court, in creating a separate line of cases, expanded the Revlon Zone towards a standard of reasonableness in piecemeal fashion and constrained its application in a world of complex transactions, most of which are not simply all-cash.

This paper proposes harmonizing this conflict by merging Revlon into the existent Unocal framework to create one uniform enhanced scrutiny framework. The standard of review should flow logically under Unocal – regardless of whether a firm enacts a poison pill to stop a bidder due to the fear of losing board seats, or hunts a buyer because of personal preferences and locks up the transaction to the detriment of a higher share price. Forcing a board to explain a complex transaction under the best price rule implies a trustee-style fiduciary duty to a world where layered financial instruments could sometimes yield a better long-term deal for the shareholders while – on paper – be something below the highest share offer. Delaware courts have attempted to cabin Revlon’s application for years. It is time to formally merge the language to apply a standard of reasonableness and proportionality onto boards that have entered the Revlon Zone.

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Christopher L. Puglisi

The Securities and Exchange Commission (“SEC”) has been more active than ever under new Chair Gary Gensler, issuing over twenty-six proposed rules in about nine months. This recent shift in increased rulemaking activity has been met with mixed responses. Some critics call his aggressive rulemaking an assault on U.S. capital markets, while other stakeholders generally support his fast-paced, yet ambitious rulemaking.

This paper focuses on one of the most controversial rules recently proposed by the SEC: The Enhancement and Standardization of Climate-Related Disclosures for Investors (hereinafter “Proposed Rule”)—a proposed set of rules designed to protect investors by requiring public companies to disclose their material climate-related risks. Stakeholders submitted over 16,000 comment letters urging the SEC to either keep the rule as is, strengthen the rule, or completely get rid of it. Within the Proposed Rule, this paper will focus on the highly debated disclosure requirement for Scope 3 emissions data, which includes emissions that occur in a company’s supply chain.

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Eyasu Yirdaw

For decades, noncompete agreements have attracted an overwhelming amount of scholarly criticism for unnecessarily restricting worker mobility, discouraging labor competition, and suppressing pay for low-wage workers. Though noncompetes were initially designed to protect an employer’s proprietary business information from unauthorized exploitation by former employees, low-wage workers generally lack access to this information. As a result, low-wage employees are often unjustly burdened by these agreements. Unsurprisingly, state courts and legislatures increasingly scrutinized noncompete agreements. More recently, President Biden signed an executive order calling for policies that promote market competition and limit practices known to stifle it. Subsequently, the Federal Trade Commission (FTC) proposed an administrative rule that would effectively ban noncompete agreements entirely. However, banning noncompetes outright may lead to unintended consequences for the American economy, including for some low-wage workers. This article discusses the importance of protecting proprietary information in the marketplace, highlights niche industries where low-wage workers are exposed to proprietary information, explains the ineffectiveness of noncompete alternatives in protecting this information, and addresses counterarguments against noncompete enforcement for low-wage workers. Lastly, in lieu of a nationwide noncompete ban, this article proposes maintaining the status quo—tailored state-by-state noncompete regulations designed to address each unique local economy. In the face of impending FTC regulation, it is in the best interest of both the employer and the employee to prevent a noncompete apocalypse.

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No commentary in Volume 5, Issue 1.