Category: Agency Law

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New Book — Manheim & Watts, “The Limits of Presidential Power: A Citizen’s Guide to the Law”

A comprehensive and accurate description of the powers of the President of the United States. The book is intended primarily to benefit non-lawyers in understanding the sources and limits of the President’s powers, and their means of influencing his actions, but the work will be enlightening for lawyers as well.

Justice John Paul Stevens (ret.) 

Both a primer and a sophisticated analysis of the constantly evolving balance of power between the President, the Congress, and the Judiciary.

— U.S. Senator Slade Gorton

Two of my distinguished University of Washington Law School colleagues, Lisa Manheim and Kathryn Watts, have just released a unique and impressive book entitled The Limits of Presidential Power: A Citizen’s Guide to the Law ($7.99 paper) ($2.99 e-book, free with Kindle Unlimited subscriptions via Amazon.). Here is the abstract:

“This one-of-a-kind guide provides a crash course in the laws governing the President of the United States. In engaging and accessible prose, two law professors explain the principles that inform everything from President Washington’s disagreements with Congress to President Trump’s struggles with the courts, and more. Timely and to the point, this guide provides the essential information every informed civic participant needs to know about the laws that govern the president–and what those laws mean for those who want to make their voices heard.”

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I’ve read this book.  It is a quite accessible and highly reliable overview of the law of presidential power. Here is some of the advance buzz about the book:

This smart and indispensable guide begins where old-fashioned civics leaves off, and talks to troubled and puzzled Americans as adults. The authors demonstrate that the future of our democracy is where it’s always been: in our hands, if only we learn how to invoke the available limits on the power of the president. –Linda Greenhouse 

Prof. Lisa Manheim

Lisa Manheim and Kathryn Watts have written a wonderful book on presidential power, its scope, and its limits. The book is clearly written and easily accessible and is terrific in explaining the authority of the President and the checks on his power. The book is especially timely now, but it is about issues that have arisen since the beginning of the country and that will last as long as the Constitution. Erwin Chemerinsky 

The authors have provided a truly impressive chapter on climate change that is both sweeping and compelling, and have done so with crystal clarity and gripping narrative drive. As a result, the climate change chapter, like the rest of this book, offers every reader not only a ready understanding of a vital and complex issue and of the varying roles the government has played in shaping the issue, but also of the opportunity–for better or worse–that stakeholders and members of the public have to shape U.S. climate change policy going forward. If this is the only piece on climate change policy that a person reads, then he or she will be very well-informed and well-equipped to engage with the issue. — Joseph Goffman 

Prof. Kathryn Watts

A concise and crisp primer on the limitations of presidential power. The subject is timely and well worth pondering. This work should interest students concerned with law and the separation of powers and American politics, as well as the general public. — David M. O’Brien

In America, no one is above the law, not even the president. For anyone who has ever wondered ‘can he really do that?’ this clear and concise book on presidential power is a must read. Likewise, for everyone who cares about democracy and the rule of law, Watts and Manheim are your best guides to effective citizenship. — Kellye Testy

Accessible and interesting, this book is a must-read for anyone who wants to understand both the powers of the presidency and the limits on presidential power. Brianne Gorod 
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The 5 Things Every Privacy Lawyer Needs to Know about the FTC: An Interview with Chris Hoofnagle

The Federal Trade Commission (FTC) has become the leading federal agency to regulate privacy and data security. The scope of its power is vast – it covers the majority of commercial activity – and it has been enforcing these issues for decades. An FTC civil investigative demand (CID) will send shivers down the spine of even the largest of companies, as the FTC requires a 20-year period of assessments to settle the score.

To many, the FTC remains opaque and somewhat enigmatic. The reason, ironically, might not be because there is too little information about the FTC but because there is so much. The FTC has been around for 100 years!

In a landmark new book, Professor Chris Hoofnagle of Berkeley Law School synthesizes an enormous volume of information about the FTC and sheds tremendous light on the FTC’s privacy activities. His book is called Federal Trade Commission Privacy Law and Policy (Cambridge University Press, Feb. 2016).

This is a book that all privacy and cybersecurity lawyers should have on their shelves. The book is the most comprehensive scholarly discussion of the FTC’s activities in these areas, and it also delves deep in the FTC’s history and activities in other areas to provide much-needed context to understand how it functions and reasons in privacy and security cases.

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Prof. Bainbridge on Hess: Critics Still Not There Yet

Prof. Steve Bainbridge replied to my post about shareholders paying bonuses to director nominees elected in contested elections, highlighted by the pending proxy battle at Hess.  Steve clarifies his objection to Elliott Associates, the activist shareholder hedge fund, promising to pay its director nominees bonuses if Hess’s stock price outperforms a group of industry peers over the next 3 years:

When I described these transactions as involving a conflict of interest, what I had in mind was the general conflict of interest ban contained in Restatement (Second) of Agency sec 388:  “Unless otherwise agreed, an agent who makes a profit in connection with transactions conducted by him on behalf of the principal is under a duty to give such profit to the principal.”  Surely the hedge fund payments here qualify as, for example, the sort of gratuties picked up by comment b to sec 388:

“An agent can properly retain gratuities received on account of the principal’s business if, because of custom or otherwise, an agreement to this effect is found. Except in such a case, the receipt and retention of a gratuity by an agent from a party with interests adverse to those of the principal is evidence that the agent is committing a breach of duty to the principal by not acting in his interests.  Illustration 4.   A, the purchasing agent for the P railroad, purchases honestly and for a fair price fifty trucks from T, who is going out of business. In gratitude for A’s favorable action and without ulterior motive or agreement, T makes A a gift of a car. A holds the automobile as a constructive trustee for P, although A is not otherwise liable to P.”

How is the hedge fund’s gratitude for good service by the Hess director any different than T gift to A?  To be sure, directors are not agent of the corporation, but “The relationship between a corporation and its directors is similar to that of agency, and directors possess the same rights and are subject to the same duties as other agents.” . . . Thus, I believe, even if the hedge fund nominee/tippees are scrupulously honest in not sharing confidential information with the funds, put the interests of all shareholders ahead of those of just the hedge funds, and so on, there would still be a serious conflict of interest here.

I can offer 4 replies to Steve’s fine legal points, which I’ll first summarize and then elaborate:

1.  While Steve acknowledges that agency law doesn’t apply, he stresses similarities between agency and corporate law when justifying reference to the American Law Institute’s Restatement (Second) of Agency, but then omits the differences that warrant treating directors differently than agents.

2. Even accepting arguendo Steve’s proposal to rely on the Restatement (Second) of Agency,  he chose to present Illustration 4 as governing the Elliott-Hess arrangement, but the next one, Illustration 5 (excerpted below), is more on point and comes out the other way because the agent and principal are free to agree otherwise.

3.  Even if agency law applied, the Restatement (Second) of Agency, initially adopted in 1958, was superseded in 2006 by the Restatement (Third) of Agency, whose provisions support the Elliott-Hess arrangements.

4.  But agency law doesn’t apply.  The ALI’s applicable standard from corporate law is stated in its Principles of Corporate Governance, expressly referenced in the Restatement (Third) of Agency.  This standard puts the burden on those challenging such arrangements to prove defects such as unfairness or secretiveness, which opponents have not done.  Read More