BADM 4101 Business Law and Ethics Outline
Before beginning work on your paper, you should read (or re-read) the “Papers” section of
the syllabus, including the documents linked in that section. Most of the information that you
need can be found there.
An outline of your paper is due by the end of the day on February 7. More precisely, what’s
due is some sort of preliminary plan for your paper. That plan can take different forms—an
outline, an abstract, an argument map, etc. Some of these alternatives will be described in a
separate document, to be distributed by January 31. You should begin planning your BADM 4101 Business Law and Ethics Outline now by doing the following:
• Choose a prompt.
• Decide on a thesis.
• Think of possible arguments.
Your thesis is the claim that your paper aims to establish, or the position that your paper aims to
defend. You should be able to state your thesis in a single sentence. An argument is a line of
reasoning that leads to the conclusion that your thesis is true.
You are not expected to do research beyond the readings that have been assigned or are
linked in the prompts below. If you choose to do outside research, you must be careful in your
selection of sources. Much of the information that you will find online is incomplete, misleading,
or inaccurate. I can answer questions that you have, including questions about where to find
reliable information about a given topic.
Excellent advice on writing a paper can be found here . The advice comes from a philosophy
professor at NYU, Jim Pryor. While our course isn’t in the philosophy department, Pryor’s
advice is applicable more generally to papers that present an argument in defense of some thesis.
(1) Walmart recently announced a $100 million commitment to create and fund its Center for
Racial Equity . Doug McMillon is Walmart’s CEO and a member of its board of directors.
McMillon is also a member of the board of directors of the Business Roundtable and a signatory
of the 2019 Statement on the Purpose of the Corporation . Suppose that a group of Walmart
shareholders sue McMillon and the rest of the board, alleging that the directors are violating their
fiduciary duties. In addition to the $100 million price tag of the Center for Racial Equity, the
shareholders offer the Business Roundtable’s 2019 statement, along with McMillon’s remarks on
the new center, as evidence that Walmart’s directors are not acting in the best interests of the
corporation and its shareholders. The shareholders ask that the court forbid further funding of the
center. (Or perhaps they ask that the court order the center’s existing funds be returned to
Walmart, or that the directors repay Walmart out of their own pockets—for our purposes, the
requested remedy doesn’t matter). Based on the readings in this unit, would a court side with the
shareholders in this case?
(2) Patagonia was incorporated in California as a benefit corporation. But suppose that Patagonia
had been incorporated in Delaware, and not as a benefit corporation. Would the practices
described in Patagonia’s 2018 benefit corporation report violate the standard of conduct that
applies to directors of Delaware corporations? Would they violate the applicable standard of
review? (See here for the distinction between the standard of conduct and standards of review.)
(3) Consider the following passage from Lynn Stout:
Courts regularly allow corporate directors to make business decisions that harm
shareholders in order to benefit other corporate constituencies. […] A classic example of
this judicial eagerness to protect directors from the claim that they failed to maximize
shareholder wealth can be found in the oft-cited case of Shlensky v. Wrigley (1968). In
Shlensky , minority investors sued the directors of the corporation that owned the Chicago
Cubs for refusing to install lights that would allow night baseball games to be played at
Wrigley Field. The minority claimed that offering night games would make the Cubs
more profitable. The corporation’s directors refused to hold night games, not because
they disagreed with this economic assessment, but because they believed night games
would harm the quality of life of residents in the neighborhoods surrounding Wrigley
Field. The court upheld the directors’ decision, reasoning— as the directors themselves
had not —that a decline in the quality of life in the local neighborhoods might in the long
run hurt property values around Wrigley Field, harming shareholders’ economic interests.
Shlensky illustrates how judges routinely refuse to impose any legal obligation on
corporate directors to maximize shareholder wealth. 1
Stout rejects the claim that “American law imposes on corporate directors the legal obligation to
maximize profits for shareholders.” 2
Is Stout correct that Shlensky suggests there is no such
obligation? (You may want to read these excerpts from the court’s opinion in Shlensky , but I
don’t recommend reading Stout’s paper.)
(4) You can come up with your own prompt, or write a paper that does not respond to any of the
prompts above, but you must get approval from me first.
BADM 4101 Business Law and Ethics Outline