Sharon Steel Corp. v. The Chase Manhattan Bank, N.A. case brief

Sharon Steel Corp. v. The Chase Manhattan Bank, N.A.
2d Cir. 1983.

FACTS
-Convertible debs had clause whereby holders could not prevent sale of “all or substantially all” of assets, or merger if bonds redeemed in full early or equivalent bonds are issued.
-Co. sells off main asset (>50% profits and book value).
-Trustees demanded payment and sign contract stating trustees will not enjoin asset sales/liquidation if cash fund is set aside.
-Co. liquidates remaining assets and gives proceeds to S/H. Sharon (S) (who bought most assets) issues supplemental indentures which trustees refuse to sign. Trustees sue claiming default, S countersues.

Holding:
(1) Successor obligor clause did not permit UV to assign its debt.

• Policy Reason: Consistency. Clause is boilerplate and should have consistent interpretation to facilitate efficient capital markets. Consistency is best assured by allowing ct., not jury to determine meaning. 
• Evidence of Intent irrelevant. Consistency requires 4-corners approach. 
• Purpose of clause is to protect both the company and creditors, not just company. Z
• Balance of Considerations. Interpretation should balance harms and benefits such that no party greatly sacrifices for another’s minor gain.
• “Boilerplate successor obligor clauses do not permit assignment of the public debt to another party in the course of a liquidation unless “all or substantially all” of the assets of the company at the time the plan of liquidation is determined upon are transferred to a single purchaser.”

(2) UV had to pay redemption premium. It makes no sense to allow companies to avoid redemption by willfully creating default.

Notes: Meaning of “all or substantially all” is still unclear in most jurisdictions.

Metropolitan Life Insurance Co. v. RJR Nabisco case brief

Metropolitan Life Insurance Co. v. RJR Nabisco
(S.D.N.Y. 1989) (note approaches taken in implying covenant of good faith and granting equitable relief).


FACTS
-Ps, bondholders, allege breach of good faith and fair dealing by failing to maintain its good credit rating. -Indentures explicitly stated that they did not limit additional incurrence of debt. At best, a small number of the debentures included restrictive covenants which were bargained away by Ps.
-Additional docs show Metlife was aware of covenants restricting S/H payouts and knew risks, even, that it had been burned in past by LBOs where debentures didn’t include them.


Holding: (1) Covenant to restrict add’l debt cannot be implied because:
(a) Action did not cause D to be unable to perform express guarantee.
(b) Fruits of K (regular pmt. of interest) were not spoiled. Adhesion K tends to favor Ps.
(c) Other factors include: Fact that investors had included these provisions in other bonds, through negotiation, and didn’t here (sophistication) AND market probably priced in LBO risk.


(2) Relief cannot be granted on equitable basis because:
(a) No unjust enrichment since no contract violation.
(b) No frustration of purpose since no evidence that preventing additional debt was principal purpose of debenture.
(c) No FD to creditors.

Katz v. Oak Industries case brief

Katz v. Oak Industries (Allen, 1986)
(good faith narrowly construed, test for good faith, coercion)

FACTS
Oak (D), financially troubled, sells materials segment to Allied-Signal. Agreement components:
i. Stock Purch. Ag.: A purchases 10M O sh. for $15M plus shares.
ii. Common Stock Exchange Offer. 9 5/8% holders get .407 shares up to $38.7M
iii. Pmt. Certif. Exch. Off. $655 to 918 cash for debt conditioned on:
(1) Comm. St. Exch. Offer succeed.
(2) Minimum tenders for each of 6 classes of outstanding debt.
(3) Removal of rest. cov. preventing issuance of pmt. certs.

ANALYSIS
Plan constitutes a coercive measure to force tender of debt (since assets securing it would be gone) and thus violates implied duty of good faith.

Holding: Parties could not have wanted to give debtholders veto rt. over transaction.

RULES
Good faith: If the parties had thought to negotiate the term complained of, would the action in question have violated it?
Coercion: Nothing wrong with allowing co. to induce debtholders to take a certain action.

Notes: (1) Case of wealth transfer (S/H forced D/H to accept lower grade security even though if company had been allowed to fail, D/H would’ve gotten fully taken care of. S/H would’ve gotten close to nothing in bk, but got something through sales. LRA.
(2) It’s also about Allen using efficiency to determine good faith. This probably works were, but won’t always.

United States v. SCRAP case brief

United States v. SCRAP (1973)

Facts: Ps who used national parks and forests challenged the ICC order raising railway freight rates. They claim their pleadings alleged that they were "adversely affected"

Held: Ps had standing - order would raise the price of recycled materials thereby discouraging the use of such materials leading in turn to increased mining operations which would result in harm to parks and forests. Allegations were sufficient to withstand a motion to dismiss.

Analysis: Just because many persons share the same injury is not a reason to disqualify review.
-Ps here, unike those in Sierra, claimed the specific and illegal action that would directly harm their use of Wash. Metropolitan Area. If Ds think that allegations are untrue then they should have moved for summary judgment on the standing issue.

-Fn 5 rejects govt's request on limit standing to those who are significantly affected by agency action even if we could begin to define what such a test would mean Injury in fact reflects statutory requirement that a person be adversely affected and distinguishes those with a direct stake form those with a mere interest.

Note: although not expressly overruled it is doubtful that this case would be followed today see Lujan v. Federation- which limits it cases where D attacks standing through a motion to dismiss rather than a SJ.

Valuation Under Uncertainty - Corporate Finance

I. Valuation Under Uncertainty

A.   Risk and Diversification

1.    Various types of risk that have previous been assumed away - since investors are risk averse, have to compensate for bearing risk.

(a)   default - promise of payment made at time t is not kept

(b)   expected returned - based on bad guess

(c)   Inflation risk

(d)   Reinvestment risk - can “C” be reinvested at same rate ö mortgage may be repaid when r is low ö no penalty for early payment

(e)   Liquidity risk - won’t be able to sell to get fast cahs

(f)   Currency risk - exchange rate fluctuations

(g)   Political risk - foreign gov’t may expropriate investment.

2.    Five Key terms in Probability Theory:

(a)   Expected Return - expectation of a series of cash flows  

(1)   ER =  3 prob_i * return_i

(b)   Variance ö way to measure difference b/t two games

(1)   Var =  F² = E (return_i - ER)² / n

(2)   prob = 1/n - if each outcome is equally likely. 

(3)   More iterations, then variance goes now without any corresponding diminution in ER.

(c)   Std Deviation - SQRT of Variance ö way to make variance more intelligible. 

(1)   F = SQRT (F²)

(2)   More iterations, then variance goes now without any corresponding diminution in ER.

(d)   Covariance - relationship between two events

(1)   Expected Value of products of deviations

(2)   Cov (AB) = F_AB = E prob_i * (return_iA - ER_A) * (return_iB - ER_B).

(3)   Consider investing in Microsoft and GM.  Covariance tells you how much they vary, and how they vary

(e)   Correlation - tries to simplify covariance

(1)   always between -1 and +1.

(2)   D = Cov (A, B) /  (F_A * F_B)    

(3)   unitless measure.        

3.    Diversification  IMPORTANT - more interations, then variance goes down - same expected return be lower risk - works as long as additional stocks are not perfectly correlated to an existing stock in portfolio.

4.    End of the Day  NPV =

(a)   Numerator = Er_t = embodies all possible states of the world

(b)   Denominator = (1 + r) ^t = must also be adjusted for risk also!!!

(c)   Formula does not encompass all types of risk (e.g. liquidity, reinvestment risk)

NCR v AT&T Corp. case brief

NCR v AT&T Corp.

FACTS
AT&T failed entry into computer business, though wanted to buy company. NCR shareholders benefitted tremendously, but NCR managers hated the idea. Thus, deployed poison pill which staggered board elections. To get rid of Staggered Bd, needed 80 percent vote of all voting shares, not just shares that voted. Managers implemented an ESOP ö employees always vote in employee’s interest ö don’t want to be laid off. NCR needed business reason for ESOP.

(a) HELD: ESOP was purely to prevent takeover.
(b) DW says that decision of which way to finance (self or through bank) is irrelevant to issue of whether ESOP is a good idea.
(c) Stock price scenario. Goldman Sach said that stock 8 in short term, and then go into period of negative growth over long-term. DW stated that this was ridiculous.
(1) AT&T lawyers didn’t notice this. Should have hired own expert, make hay. Why refusal to offer a fairness opinion? Usually std practice.
(2) If you pay out faster than you earn, you are liquidating and the PV will drop. Thus, DIV must be > discount rate (r), which is only likely to happen in liquidated.
(3) Fluctuations in Stocks are based on new information being introduced. If we have all info, then curve must be smooth.

Leverage and Management in Corporate Finance - Management Control v. Debt

-The governance of the benefit of debt accrues in the context of the agency relationship between shareholders and managers rather than in the context of the conflicting interests of debt and equity.  Debt creates a benefit to shareholders (as a result of covenants and control factors) at the expense of management discretion.
-A low leverage capital structure will leave management with considerable discretion respecting the investment of excess earnings generated by the firm's operations.  As a result, the management can reinvest capital in suboptimal projects.  From an investor's point of view, this is bad.
-High leverage, on the other hand, will reduce the discretion of management.
-In order to keep current with debt payments and avoid bankruptcy, the managers of a firm must run an efficient operation.
-As a result, high leverage has the effect of being associated with good governance.
-Management is concerned with their loss of independence and control that which falls into the hands of the banks as debt rises (due to covenants).

How much debt is optimal? 
-Management's desire to be self sufficient as well as to be secure comes at a cost to the maximum return on the capital invested.
-Debt does more than merely perform a financial signaling function.

Managers have incentives to make their firms to grow beyond the optimum size.  Such growth increases the power of managers by increasing the resources that they have control of.  This growth is also associated with increases in manager's compensation.  This is because changes in compensation are positively correlated to the growth in sales.

-Conflicts of interest between shareholders and managers over payout policies of the firm are most severe when the organization creates substantial free cash flow.
-Debt can be an effective substitute for dividends.
-By issuing debt in exchange for stock, managers are bonding their promise to pay out future cash flows in a way which can not be accomplished by a simple dividend increase.
-Managers, by doing the above, give shareholder recipients of the debt the right to take the company to bankruptcy court if the managers do not maintain their promise to make the payments on interest and principal.
-Debt reduces the agency costs of free cash flow by reducing the cash flow available for spending at management's discretion.

Costs of increased leverage
-As leverage increases, the usual agency costs of debt also increases (which includes bankruptcy costs).
-Optimal debt equity ratio is the point at which firm value is maximized.  This is the point where the marginal costs of debt just offset the marginal benefits.

What is a leveraged buyout?
A leveraged buyout (LBO) is defined as an acquisition of a company (also known as the target) which is financed by borrowed funds.
-Targets assets are used to secure the loans.
-Parties bought out are the target company's common stockholders.
-Target can be either:  wholly owned subsidiary of a larger firm, a close corporation, or a publicly held corporation (if this is the case, the LBO is sometimes called a 'going private' transaction).
-Often the target's managers will have a substantial participation in the acquiring partnership and will stay on as managers after closing.  These transactions are known as management buyouts (MBOS) and make up a large subset of LBOs.

Sharon Steel Corp. v. The Chase Manhattan Bank, N.A. case brief

Sharon Steel Corp. v. The Chase Manhattan Bank, N.A.
691 F.2d 1039, cert. denied, 460 U.S. 1012, 103 S.Ct. 1253, 75 L.Ed.2d 482 (1983)

FACTS
Five indentures in contract, each included redemption premium prior to maturity and each contained a successor obligor clause allowing UV to assign debt to a corporate successor which purchased ‘all or substantially all’ of UV’s assets.
-UV was selling to Federal and selling the rest to Sharon Steel.  

RULES/TERMS
-Successor obligor clauses are boilerplate or contractual provisions which are standard in a certain genre of contracts.
-Are not the consequence of the relationship of particular borrowers and lenders to not depend on particularized intentions of the parties to an indenture.
Benefit: Efficiency of capital markets

ANALYSISA large degree of uniformity in the language of debenture indentures is essential to the effective functioning of the financial markets:  uniformity of the indentures that govern competing debenture issues is what makes it possible meaningfully to compare one debenture issue with another, focusing only on the business provisions of the issue (such as the interest rate, the maturity date, the redemption and sinking fund  provisions in the conversion rate) and the economic conditions of the issuer, without being misled by peculiarities in the underlying instruments.
-The creation of enduring uncertainties as to the meaning of boilerplate provisions would decrease the value of all debenture issues and greatly impair the working of capital markets.
Meaning of successor obligor clauses
-The debt securityholder can do nothing to protect himself against actions of the borrower which jeopardize its ability to pay the debt unless he establishes his rights through contractual provisions set forth in the indenture.
-A borrower which sells all its assets does not have an option to continue holding the debt.  It must either assign the debt or pay it off.
-One purpose of the clause was to insure that the principal operating assets of a borrower are available for satisfaction of the debt.
-The fact that piecemeal sales in the regular course of business are permitted thus does not demonstrate that successor obligor clauses apply to piecemeal liquidations, allowing the buyer last in time to assume the entire public debt. 


HOLDING
-An interpretation which satisfies a major interest of one of the parties while furthering only a marginal interest of the other should be rejected in favor of an interpretation which sacrifices marginal interests of both parties in order to protect their major concerns.
-Boilerplate successor obligor clauses do not permit assignment of the public debt to another party in the course of a liquidation unless “all of substantially all” of the assets of the company at the time the plan of liquidation is determined upon are transferred to a single purchaser.
-Court holds that here the successor obligor clauses are not applicable.  UV is in default on the indentures and the debentures are due and payable. 

Wertheim Schroder & Co. Incorporated v. Avon Products, Inc. case brief

Wertheim Schroder & Co. Incorporated v. Avon Products, Inc.
United States District Court, Southern District of New York, 1993.
1993 WL 126427 (S.D.N.Y.)

Subject: Dividends

FACTS
-After a period of expansion, Avon determined to retreat and develop a restructuring program.
-In an effort to conserve cash needed to retire debt, Avon’s annual cash dividend on common stock would be reduced from $2 to $1.  
-Avon’s financial advisor advised that a significant decrease in Avon’s stock price would follow (a result of the “signal” of the lower dividend).
-Avon would issue a new class of stock, PERCS, which would provide shareholders with option of continuing to receive $2/share dividend in exchange for limitation on capital appreciation.
-PERCs had an optional redemption provision which allowed Avon to redeem PERCS at any time during their term according to fixed price schedule.  
-In order to alleviate some of the concern that common stockholders would possibly receive some kind of benefit that PERCS holders would not, Avon incorporated an Accelerated Redemption Provision into PERCS (if Avon shall pay common stock dividend at a cumulative rate/year greater than 1.50/share or in event Avon is merged, etc., all PERCS holders would be entitled to one-one exchange for common stock plus payment of specified premium and accrued/unpaid dividends).  
-P, Wertheim Schroder, an investment banking firm, became a substantial investor in PERCS
-On February 7, 1991, Avon declared a first quarter common stock dividend of 0.35/share.  At same time, Avon declared a special dividend of $3.00/share to be paid on September 16, 1991 to common stockholders of record on September 4, 1991.
Avon also indicated that in the future it would continue to declare and pay a special dividend quarterly at $0.35.  
-On June 3, 1991, Avon exercised the Optional Redemption of all PERCS (not the better Accelerated Provision).
-P claims that either Avon’s special dividend or dividend increase should have triggered the Accelerated Provision and that Avon has failed to honor the terms of the provision.  P also claims violation of duty of good faith.
 
D argues: it is clear from language of provision that it is the payment of the dividend, not the declaration of the dividend, which is relevant for determination of the accelerated provision.
-Court says that what matters is not the payment of a dividend of $1.50 or more, but the payment of a smaller dividend (the .35 dividend) that, at an annual rate, would be $1.50 or more.  Once the payment has been made, it is the method of calculating the rate per annum which becomes the pivotal focus on the inquiry.
D argues: Payment of quarterly dividend must be treated separately from the declared, but unpaid, special dividend of $3.00, for purposes of calculating the “cumulative rate per annum”.  A declared special dividend is a separate consideration that does not become part of the cumulative calculation until it is paid.
P argues: there is no basis for allowing projected but undeclared and unpaid quarterly dividends to be included in the “cumulative rate per annum” while a simultaneous declared but unpaid dividend is not included.
-Court says that after the Feb. 7 declaration of the special dividend on the common stock, Avon had a legally binding obligation to pay the special dividend.
-Give that once Avon declared the special dividend on Feb. 7, it had a legal obligation to pay that dividend on the announced future date, an investor could reasonably conclude that, at the time Avon made its first quarterly dividend payment on March 1, 1991, that the payment was being made at a “cumulative rate” for 1991, which now included not only future quarterly dividends for 1991, but also the mandatory special dividend to be paid out on September 16.  
-One could interpret the annual dividend rate, as of March 1, to be $4.40 a share. 
P Argues: Purposeful manipulation of dividend by D to circumvent Accelerated Redemption provision = breach of covenant of good faith and fair dealing.
-Court states covenant of good faith and fair dealing is implied in all contracts and is violated when a party to a contract acts in a manner that, although not expressly forbidden by any contractual provision, would deprive the other of the right to receive the benefits under the agreement.
-Court says, that according to inferences in P’s favor, P has raised genuine issues of material fact.  

RULES
-When board of directors declare a dividend and makes a public announcement of that fact, it can not thereafter rescind the dividend.
-The relationship between a corporation and a stockholder w/ respect to the latter’s share of a dividend declared by the corporation is that of a debtor and creditor.  At any time after the date fixed for payment of each dividend, a holder of stock may maintain an action at law to recover the sum due.

Berwald v. Mission Development Company case brief

Berwald v. Mission Development Company
Supreme Court of Delaware, 1962
40 Del.Ch. 509, 185 A2d 480.

FACTS
P, owners of 248 shares, brought suit against D (Mission Development) to compel liquidation of Mission and the distribution of D’s assets.
-Mission = holding company for Tidewater.
-Tidewater discontinued payout of cash dividends in 1954, which effectuated a discontinuance of D’s income.
-Tidewater’s management deemed it unwise to issue a dividend (before was a 5% stock dividend), as it would decrease D’s proportionate ownership of Tidewater.  Adopted for policy of corporate expansion and modernization.

RULES
-Extreme relief of receivership to wind up a solvent growing business is rarely granted.  To obtain it there must be a showing of imminent danger of great loss resulting from fraud or mismanagement.  
-Same caution dictated in considering an application to compel a corporation to make a partial distribution.

P’s Argument:  Because of high income taxes, controlling stockholder is not interested in receiving dividends, he is interested in receiving more shares of Tidewater (conflicting interest between him and minority shareholders).

ISSUE
Should the court compel Mission to liquidate? 

HOLDING
No, P has failed to make a case.  Here Tidewater’s policy was adopted in furtherance of its own corporate interest.  Therefore, Mission’s stockholders have not been subjected to an actionable wrong and have no complaint.

APPLICATION
-Court looks at the fact that since 1960, Tidewater’s cash has been largely devoted to capital improvements and that, in the management’s opinion, funds were not available for dividends.
-The sole purpose of Mission is and has been to buy Tidewater stock.  Any investor in its shares could readily ascertain this fact.  Because of this he knows, or should know, that he is buying for growth and not for income.

Outlines for Copyright Law

These outlines are some I have found while searching the internet.  Where possible I will link the professor name and the school where the outline originated.

Schatzel’s Copyright Class - Santa Clara University School of Law

Magic Marketing, Inc. v. Mailing Services of Pittsburgh, Inc. case brief

Magic Marketing, Inc. v. Mailing Services of Pittsburgh, Inc.

634 F. Supp. 769 (1986)

FACTS:

An envelope was copied by a printing company. Suit for copyright infringement was brought because the design and symbols and overall "look" used on the envelope was copied.

PROCEDURE:
D moved for summary judgment on issue of copyrightability. Granted in part.

ISSUE:
Whether markings on the outside of an envelope are copyrightable.  In particular, "PRIORITY MESSAGE: CONTENTS REQUIRE IMMEDIATE ATTENTION" on a black stripe.  No pictures or designs are imprinted on the face of the envelopes except the solid black stripe.

MAIN RULE:
Instructions and wording that tells of contents of envelope is not copyrightable.

HOLDING:
(1) envelopes describing their contents with phrases such as "TELEGRAM," "GIFT CHECK," and "PRIORITY MESSAGE" and noting that contents of envelope required immediate attention were generic in nature and lacked minimal degree of creativity necessary for copyright protection, and (2) motion for summary judgment was premature as it related to forms and letters.

ANALYSIS
The words were not original with the person. It is just saying this is what is inside. There is no originality on the outside of the envelope.

RULES
-Copyright infringement action can not be maintained without a valid copyright.
"Originality," an essential element for copyright protection, is distinct from novelty; to be original, work must be product of independent creation, and, while test for originality is a low threshold, author must contribute more than a trivial variation of a previous work, i.e., the work must be recognizably his own. 17 U.S.C.A. § 102.
-Cliched language and expressions communicating an idea which may only be conveyed in a more or less stereotyped manner are not copyrightable.
-The following works are NOT subject to copyright:  words and short phrases such as names, titles, and slogans; familiar symbols or designs; mere variations of typographic ornamentation, lettering or coloring; mere listing of ingredients or contents.
-The test for originality is a low threshold, however, the author must contribute more than a trivial variation of a previous work.  The work must be recognizably his own.

Equity-Linked Investors, L.P. v Adams case brief

Equity-Linked Investors, L.P. v Adams
705 A.2d 1040. (Del.Ch. 1997)

FACTS
-Genta was a biotech start up firm that was not making any profits.
-Genta kept losing money, but was working on new technologies that looked promising.
-Unfortunately, Genta was near bankruptcy.
-As Genta searched for additional investors, the preferred stockholders were getting ready to cut their losses and liquidate the company.
-The preferred stockholders had a liquidation preference, meaning that if the company went under (or was delisted from the stock exchange), the assets would be sold off and used to pay back the preferred stockholders. The common stockholders would get nothing.
-Genta was able to secure some additional capital to stay in business. The preferred stockholders (led by Equity-Linked) sued the Board for making such a bad business decision.
-Preferred stockholders (P) argued that the more loans Genta took to stay in business, the less they would get if the company was liquidated. 
-P argued that Genta was violating their duty to the preferred stockholders by taking out more loans.
-Stockholders were pretty sure that Genta was going to go bankrupt eventually, so asked: "why not do it now instead of waiting until they were deeper in debt?"
-Genta argued: protecting the interests of the common stockholders by doing everything possible to stay in business.

PROCEDURAL HISTORY
Trial Court: Genta.
The Trial Court found that the imposition of additional economic risks on the preferred stockholders for the benefit of the common stockholders did not constitute a breach of duty.

ANALYSIS
-Court found that it is the duty of the directors, where discretionary judgment is exercised, to prefer the interests of the common stock to the interests created by the special rights of preferred stock, where there is a conflict.

RULES
-The Court noted that whether a company liquidates or not is a business judgment, and the courts should apply the Business Judgment Rule.
-Common stock owners are residual owners. They get what's left after all the debt is paid off.  Common stock owners are the ones taking the most risk, and are therefore the most sensitive to fluctuations in the company. Makes the most sense for directors to think of common stock owners first.

CONCLUSION
The court concludes that, "In the circumstances disclosed by the balance of credible evidence, the Genta board concluded in good faith that the corporation's interests were best served by a transaction that it thought would maximize potential long-run wealth creation and that in the circumstances, including potential insolvency of the company and presence of a $30 million liquidation preference, the board acted reasonably in pursuit of the highest achievable present value of Genta common stock, by proceeding as it did."

Held: For Genta.

Reina v. Landeskreditbank Baden-Wurttemberg case brief

Reina v. Landeskreditbank Baden-Wurttemberg (Germany)

FACTS:  German state had a system of interest free loans provided by a state bank to parents to cover childbirth expenses.  Only couples with at least one German spouse were eligible.
-Policy: to promote German population growth and reduce voluntary abortions.
-P had twins (Italian), sued to obtain loan.

ISSUE :  Was the interest free loan system in which only Germans were eligible void under TFEU 
45?

HOLDING:  The court has no powers in the field of demographic policy, and the member states are permitted, in principal, to pursue their achievement of the objectives in such a policy, even by means of social measures.   However, the childbirth loans here are not considered as falling outside the scope of the rules of Community law because they are rooted in the demographic policy.

Ministere Public v. Mutsch case brief

Ministere Public v. Mutsch (Luxembourg)

FACTS :  D, Luxembourg national whose native language is German resided/worked in German speaking community in Belgium.  
-Belgium law permits Belgium nationals in certain German language regions to demand that criminal proceedings against them be conducted in German.  
-D was convicted of a crime and did not get the benefit of the law.

ISSUE:  Was D, a worker, discriminated against?
 
HOLDING:  Yes, a worker who is a national of one member state and habitually resides in another member state is entitled to require that criminal proceedings against him take place in [German] if workers who are nationals of the host member state have that right in the same circumstances.
 
ANALYSIS:  Since D is a worker in the state, the court looks at it under TFEU 45.

Angonese v. Cassa Di Risparmio Di Bolzano case brief

Angonese v. Cassa Di Risparmio Di Bolzano (Horizontal Direct Effect)

FACTS :  In Bolzano, Northern Italian region where German is commonly spoken, bank required employees to be equally proficient in German and Italian.  
-P, Italian citizen, studied at University of Vienna, contested bank's refusal to consider application without having taken the required test, stating that his university studies (which did not include German, and for which he did not receive a diploma for) should be considered to prove German proficiency.

ISSUE :  Does the principal of non-discrimination in TFEU 45 have horizontal direct effect?
 
HOLDING:  Yes, it must be regarded to applying to private persons as well.
 
ANALYSIS:  Principal of non-discrimination in TFEU 45 is drafted in general terms, not specifically addressed to Member States.
-Prohibition on discrimination based on nationality applies BOTH to actions of public authorities as well as to rules of any other nature aimed at regulating in a collective manner gainful employment and the provision of services.
-Prohibition of discrimination applied equally to all agreements intended to regulate paid labour collectively, as well as to contracts between individuals.
 
ISSUE 2:  Is the bilingual examination certificate requirement discriminatory?
 
HOLDING 2: Yes, principal of nondiscrimination precludes any requirement that the linguistic knowledge in question must have been acquired within the national territory.

ANALYSIS:  The fact that it is impossible to submit proof of the required linguistic knowledge by any other means, in particular, by equivalent qualifications obtained in other member states, must be considered DISPROPORTIONATE in relation to the aim in view.

Groener v. Minister for Education case brief

Groener v. Minister for Education (Ireland)
Case C-379/87, [1989] ECR 3967.

FACTS:  Irish constitution declares Irish official language of Ireland.
-Ministry of education issued regulation requiring all lecturers in vocational educational institutions to have certificate of proficiency in Irish language.
-P, Dutch national, employed as part time art teacher in Ireland, she applied for permanent post, college wanted to grant, but she failed Irish language exam.

ISSUE: Can a State have employment condition relating to linguistic knowledge?

HOLDING:  Yes, but can not be disproportionate and must be fair.

ANALYSIS:  Obligation imposed applies without distinction to Irish and other nationals.
-Court considers first the nature of the post of lecturer in art justifies the requirement of knowledge of Irish language?  Court states that art is conducted almost exclusively in English language - knowledge of the Irish language is not required for the performance of the duties of the position.
-Court looks at the special linguistic situation in Ireland.  Ireland seeks to promote the use of Irish as a means of expressing national identity and culture.  Irish courses are compulsory for children.
-Court states that education is important, it is not unreasonable to require them to have some knowledge of the first national language.  However, that knowledge requirement must not be disproportionate in relation to the objective pursued.
-Linguistic knowledge can be pursued anywhere, and nationals of other member states should be able to retake test.

RULES: Treaty does not prohibit the adoption of a policy for the protection and promotion of a language of a Member State which is BOTH the first language AND the national language.
-HOWEVER, the implementation of the policy MUST NOT ENCROACH upon a fundamental freedom, such as the free movement of workers.
-Requirements deriving from measures intended to implement such a policy must not in any circumstances be disproportionate in relation to the aim pursued and the manner in which they are applied must not bring about discrimination against nationals of other Member States.

Wurttembergische Milchverwertungsudmilch v. Ugliola case brief

Wurttembergische Milchverwertungsudmilch v. Ugliola (Germany - Italy)

FACTS :  German law required employers to treat period which employee must spend in military service as though it were employment for purposes of seniority and pension benefits.
-Italian worked in Germany for several years before being required to perform compulsory Italian military service obligation.
-Employer refused to treat period of Italian service as it would German service.

ISSUE : Can one state's employer discriminate based on military service?

HOLDING :  No, TFEU 45 does not allow member states to make any exceptions to the equality of treatment and protection required by the Treaty for all workers within the Community by indirectly introducing discrimination in favor of their own nationals alone based on obligations for military service.

Hicklin v. Orbeck case brief

Hicklin v. Orbeck
437 U.S. 518, 98 S.Ct. 2482, 57 L.Ed.2d 397 (1978)

FACTS:  1972, Alaska concerned about high unemployment, adopted Act, which required all parties acting under Alaskan oil and gas leases or under AK permits for oil and gas pipelines to give hiring preference to AK residents.    Set up a system of state residence cards for AK residents (one year in AK).
-Non-resident job applicants challenged the act.

PROCEDURAL HISTORY:  AK supreme court sustained preference, but struck down year requirement as excessively long.

ISSUE:  Was the Act Unconstitutional?

HOLDING:  Yes, under the Privileges and Immunities Clause.

ANALYSIS:  Here AK did not show something to indicate that "non citizens constitute a peculiar source of evil at which the statute is aimed." 
-The discrimination of the act against nonresidents does not bear a substantial relationship to the peculiar evil they are said to present. 

Clean Car Auto Services v. Landeshauptmann Von Wien case brief

Clean Car Auto Services v. Landeshauptmann Von Wien (Austria)
Case C-350/96, [1998] ECR I-2521

FACTS :  Austrian Trade Code requires legal entities to have manager resident in Austria.
-P applied to be registered, application was rejected b/c manager was a resident of Berlin at the time, although he was seeking to live in Austria.
 
ISSUE:  Does residence requirement for company managers constitute indirect discrimination under TFEU 45?
 
HOLDING:  Requirement that nationals of other states must reside in state in order to be appointed a manager constitutes discrimination based on nationality under TFEU 45.
 
APPLICATION:  Here the law applies without regard to the nationality of the person to be appointed as manager.  Court says that national rules under with a distinction is drawn on basis of residence are liable to operate to the detriment of nationals of other member states.-Court says the residence requirement would be okay if based on objective criteria independent of nationality of employees, and proportionate to a legitimate aim pursued by national law.
 
D's ARGUMENT:  Residence requirement justified objectively by the needs to ensure that manager could act effectively.  (court disagrees). 

Lawrie-Blum v. Land Baden-Wurttemberg case brief

Lawrie-Blum v. Land Baden-Wurttemberg (Germany)
Case 66/85, [1986] ECR 2121

FACTS :  British national obtained teaching degree from German University, applied to Stuttgart teaching training program.
-Teacher training in Germany = 2 year program; prerequisite of being a high school teacher.
-P denied admission to program b/c German law made teachers public officials and required German nationality.

ISSUE:  Should a teacher-trainee be considered a worker?

HOLDING :  Yes, the fact that trainee teachers give lessons for only a few hours a week and are paid below the starting salary of a qualified teacher does not prevent them from being regarded as workers.

RULES :  Term "worker" has a community meaning, may not be interpreted differently by each state.
-Community concept of 'worker' interpreted broadly.
-Court looks at "rights and duties" of the persons concerned:
-The essential feature of an employment relationship is that for a certain period of time a person performs services for and under the direction of another person in return for which he receives remuneration.

ANALYSIS :  The court stated that the individual here gives service of some economic value to the school.
-Preparatory service not a bar to application of rule if the service is performed under the conditions of an activity as an employed person.

Barcelona Traction Case | Belgium v. Spain case brief

Barcelona Traction Case (Belgium v. Spain; ICJ 1970; p. 325)

• Case was very traditional and pushed the law backwards!
• Govt of things did things to BT causing it to go bankrupt. Canada tried to get Spain to agree and Spain refused. Canada wasn’t allowed to bring an action. Spain was being cynical knowing Belgium suit wldn’t succeed. (Some stockholders lived in Belgium).
• Holding: Belgium cannot represent citizens whose shareholder rights were affected by Spain.
• Ct relies on erga omnes. No genuine link btwn BT/Belgium so no standing.
• What about corporation as an individual?
• Like SW Africa Case—Canada can’t really take action unless Spain agrees to arbitration.
• N. 4, p. 337—where does BT go? If there had been a bilateral treaty btwn Belgium/Spain—it wld have had to be constructed in a way to recognize the rights of shareholders. N. 5, p. 337—“genuine link.”

The Nottebohm Case | Liechtenstein v. Guatemala case brief

The Nottebohm Case (Liechtenstein v. Guatemala; ICJ 1955; p. 315)

• Can Liechtenstein represent Nottebohm at the ICJ? No.
• Two concepts:
  • State protection—state of which person is a national can protect.
  • State responsibility—state where alien resides (see p. 322, n. 1). This has now expanded to include:
    • Territorial integrity. (Rainbow Warrior Case p. 323)
    • Harm to Environment.
    • Breaching Treaty Obligations.
    • Responsible for violating rights of its own citizens. Problem: (1) What are considered human rights? (2) How to enforce? Esp. when UN can’t intervene in domestic relations. Query: Is this really domestic?
• Attribution (n. 2, 323)—who in facts binds the state? For what acts is a state responsible? What if it is the act of a state/local agency—can whole nation/state be responsible? Esp w/ (a) federal system and (b) private parties. (Intl comm. has been working on this—but very controversial)
• Is Guatemala required to recognize Liechtenstein naturalization on intl level?
• Limitations on naturalization—can’t naturalize a member of foreign forces or someone who enjoys diplomatic immunity.
• Dualism: Liechtenstein can grant naturalization, but intl law does not require Guatemala to recognize this naturalization.
• Ct says that there must be a “genuine link” btwn a country and the person asking for protection for the ct to require Guatemala to recognize.
• This opinion is limited today b/c naturalization has become a matter of convenience. “Genuine Link” is dead.
• Ct goes into idea of when a state can bring an action—objective theory/positivist theory (only states can).
• N. 1, p. 322: Mavrommatis Palestine Concessions Case (PCIJ—1924) Est the doctrine that actions against individuals are actions against states. Denial of justice or exhaustion of remedies before it can go to the intl tribunal.
• There is a gap in the system—what recourse do Nottebohm type people have?
• N. 3, p. 318: Ct seems to focus on this extensive link w/ Guatemala (but implication that other states might be expected to recognize him.)
• Reparations: Wld they be given to Liechtenstein and Nottebohm? Stateless persons—do they have any rights? World has over 20 million refugees. Nansen---alien travel documents issued on behalf of UN for people in trouble. These don’t require protection by issuing states.

The Elsi Case | United States v. Italy case brief

The Elsi Case (United States v. Italy ICJ 1989; p. 303)

• Italy seizes the plant (belonging to the US) claiming debts, and labor disputes. Palermo mayor wanted to protect his citizens.
• US says Italy violated FCN (Friendship, Commerce, and Navigation) treaty (1948-now called the FCEstablishment treaty) by not letting the US organize, control, manage its corporation.
• Ct says no violation b/c it was really on its way to bankruptcy—hard to show appreciable damage.
• This was a chamber case (see below). US and Italy wanted Western Judges that wld be more familiar w/ the issues (bankruptcy, labor, etc.)
• Ct took this case even tho it really involved private parties—the countries went to ct on behalf of private parties. ( an espousal case).
• N. 1, p. 312—cynical attitude: The US had just decided not to go in the Nicaragua Case and had just withdrawn compulsory jurisdiction. So why bring this case? Muth: doesn’t really know why. It is a fairly minor case not really a lot of $--US didn’t take the Amerada Hess to the ct and it was more impt!
• Jurisdiction is governed by statute (must show exhaustion of local remedies and denial of justice.) (Nottebohm and Barcelona involve the same concept)
• Possibly US took case to help insure better intl climate for US investments.
• Dissent (US judge)—very rare that a judge votes against his own country.
• Other venues available for Raytheon:
  • Municipal court
  • Arbitration
  • Regional Court if one exists (esp w/ quasi-public issues like AM&S)
• One issue in reforming the court: Shld private parties be able to bring cases?
• N. 3, p. 313: Cld have a halfway system where a municipal ct refers for an advisory opinion if it thinks it is a more intl issue. It is very expensive, tho, to litigate at the ICJ (but this type of system wks well in Europe).
• N. 4, p. 313-There are many mechanism for dispute resolution (FOR MY JOURNAL ARTICLE!!)
• Issue for the future: Shld there be more universal tribunals or more specialized/regional ones? Guillame article says there too many of the latter and shld unify these cts (Muth Agrees, but it wld still be difficult, he says).

Western Sahara case brief

Western Sahara (ICJ, 1975; p. 288)

• It had been colonized by the Spanish for many yrs—since Papal Bull (1492). Spain resisted adjudication.
• Morocco claimed the north half and Mauritania claimed the S. Half. Mauritania was indep from Fr in the 60s, but Morocco claimed it was part of Morocco). This area had a huge deposit of phosphates. (Oil deposits)
• Resolution 1514 (1960)—a normative Gen Ass resolution—Declaration on the Granting of Independence to Colonies.
• Morocco eventually claimed the whole area and Spain wldn’t consent to a contentious proceeding. If this is really a contentious proceeding, can an advisory opinion work? Within the framewk, , Muth says this is ok. Ct sees its role as broader—to help the UN.
• Holding 1: At the time of colonization, the land was not terra nullius.
• Presence of organized tribes made it not terra nullius.
• Holding 2: There were some ties btwn the nomadic tribes and Morocco but not enough to say full political allegiance. (Like in E. Greenland case and Muth says ct is right). Ct says the same about the ties w/ Mauritania.
• Muth: Agrees there are legal issues in this case.
• What shld be the role of the ct in the 21^st century?
  • In North Sea Case—ct was very bold in its application of the law.
  • In others, it has been very passive (SW Africa, Lotus)
• Problem with a referendum is how do you ask the question—W. Sahara and Morocco cldn’t agree on this. So now UN won’t even push for a referendum.
• Efficacy of intl court: It’s opinion in this case has been ignored for 26 yrs!
• Muth: Ct needs to address the issue of political questions b/c if it doesn’t, this cld undermine the court if it is not managed well.