Issue 2

Shareholder Derivative Litigation and the Preclusion Problem

Shareholder derivative litigation differs from other types of representative lawsuits because a lead plaintiff does not purport to stand in for an entire class of similarly situated parties. Rather, the plaintiff seeks to wrest governance control from the corporate entity itself in order to prosecute a lawsuit on the firm’s behalf. This is an extreme act: Why should one shareholder get to take the reins of an entire firm? Accordingly, corporate law only permits these lawsuits to go forward in rare circumstances, typically when there are strong signs that something is rotten in the boardroom.

Many claims are filed each year, however, and a single alleged bad act will often attract multiple lawsuits. This raises a very tricky question for derivative litigation: When can we be confident that a given shareholder adequately prosecutes a claim—such that the matter should be closed? When a case is dismissed in one court, the failure to collaterally estop a sister case (relating to the same misdeed) in another jurisdiction raises the possibility of never-ending litigation. But routine dismissal of follow-up filings could create a situation where firms are inoculated from legitimate derivative claims by ill-informed plaintiffs who rush to the courthouse with weak complaints. Relatedly, early filing pressures, amplified under a strict collateral estoppel regime, may encourage jurisdiction shopping and shoddy claims that undermine the governance goals of derivative litigation.

This Article offers a three-part strategy for navigating the preclusion problem in derivative litigation. First, more claims should be channeled into a single jurisdiction through the robust adoption (and judicial validation) of forum selection provisions for derivative litigation in corporate charters or bylaws. This will minimize the race to the courthouse(s) and alleviate conflicting judicial treatment of derivative claims. Second, following recent Delaware precedent, collateral estoppel should not be triggered until a mindful shareholder-plaintiff brings the case; prior attempts should be classified as inadequate representation. This will prevent a corporation from taking advantage of “patsy” litigation that obstructs legitimate claims. Finally, courts should be encouraged to implement legal fee shifting whenever a plaintiff undertakes derivative litigation without reasonable cause or for an improper purpose. In particular, the failure to incorporate information from a books and records investigation into a complaint should raise concerns that the lawsuit was brought without reasonable cause. Similarly, filing a follow-on lawsuit, after an initial claim has been dismissed, should only meet the reasonable cause test if the subsequent plaintiff introduces substantial incremental evidence related to the alleged misdeed. Taken together, these reforms should minimize duplicative litigation and mitigate specious claims—while still preserving the promise of shareholder lawsuits as a meaningful safeguard against dysfunctional corporate governance.

Rethinking the Road to Gault: Limiting Social Control in the Juvenile Court, 1957-1972

Although almost all existing scholarship considers the Supreme Court’s 1967 decision in In re Gault, which provided certain procedural rights to juveniles, to be the start of juvenile justice reform, that view ignores substantive discussion and legislative change preceding the Court’s ruling. This paper relies heavily on previously untapped archival sources to examine the beliefs and accomplishments of lawyers, judges, probation officers, and professors who led and resisted change in the administration of juvenile justice before and after Gault. These sources show that reformers advocated for a reduction in the court’s jurisdictional scope, a restriction on institutional dispositions, and an increase in procedural formalities (including an increase of the burden of proof, the rights to counsel, notice, and confrontation of witnesses, and the right to remain silent) concurrently and consistently throughout the period from 1957 to 1972. These reforms should be understood together, as means to limit the scope of courts’ authority over children whose non-criminal behavior deviated from middle-class social norms. This limitation of social control is consistent with contemporary limitations in adult criminal law, which sought to restrict judges’ discretion and increase rehabilitative services for adult offenders. Through both revision of substantive law and procedural formalization, reformers sought to transform the juvenile court into an institution that treated young law violators with dignity and allowed non-law violators to live their lives free from the social controls of others. In an age of incarceration, this paper demands a reconsideration of the juvenile court’s purpose.

Restoring the Original Meaning of the Speech or Debate Clause

A proper analysis of the original meaning of the Speech or Debate Clause identifies two, and only two, protections it affords a federal legislator: an immunity from punishment for legislative acts, and a privilege from testifying about those acts. Yet, the U.S. Supreme Court has interpreted the clause as prohibiting even the mention of legislative acts during a bribery prosecution. This evidentiary privilege lacks basis in text and prior precedent; what produced it was a deeply flawed understanding of the clause’s implications as a matter of constitutional structure. These flaws did not stop the D.C. Circuit from applying this unsound structural reasoning and thereby broadening the testimonial privilege well beyond its proper boundaries. These erroneous decisions needlessly frustrate the enforcement of anti-bribery laws which are necessary to punish and deter abuse of the public trust. Seeking to unsettle the foundations of nearly fifty years of precedent, this Note argues that the Court should remove the evidentiary privilege from the Speech or Debate Clause and return the testimonial privilege to its proper narrow scope. The Ninth Circuit’s recent disagreement with the D.C. Circuit’s interpretation of the clause gives the Supreme Court a prime opportunity to restore its original meaning this term.

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