The Illinois Business Law Journal

Salute Your Shorts

I. A Short Introduction

With the recent collapse of numerous financial institutions, the practice of short-selling (“shorting”) has come under fire. Some authors have gone so far to claim that the actions of short-sellers (“shorters”) are among the core reasons for the current credit crisis.[1] In response to this outcry, the United States has imposed temporary bans on the shorting of certain stocks, particularly the stocks of firms in the banking and finance sector, citing the need to protect investors and markets.[2] Furthermore, New York Attorney General Andrew Cuomo has launched an investigation into shorters for allegedly spreading false rumors in the financial market.[3] These enforcement responses prompt the question; do shorters have a legitimate role to play in a fair and open market?

The First Step to Success: Securing Funding For Your Small Business

I. INTRODUCTION

Anyone who has considered starting a new business can attest to the excitement that comes along with being one's own boss, setting one's own hours, and turning a personal dream into reality. However, once the initial thrill wears off, the daunting task of ensuring enough preliminary funding and finding continued financing for the business can quickly turn this dream into a nightmare. This article will discuss the ways in which a small business can obtain initial funding and continued financing. First, it will stress the importance of creating a substantial business plan to which potential investors and sources of funding can look to learn about the business. Second, it will discuss debt options for funding and financing a business. Third, it will discuss equity options for funding and financing a business. Finally, it will conclude summarizing the options for funding for a start-up business and continued financing of a new business.

Political "Celebrity" Ads and the Right of Publicity

I. Introduction

With the 2008 presidential campaign expected to break spending records, it is no surprise that both major political parties are flooding swing-state airwaves with television advertisements.  While recent elections have produced the much-discussed "swift boat" and "3 a.m." commercials, the McCain campaign took a unique approach with the summer release of the so-called Barack Obama "celebrity" ad.[1] In response to the enthusiasm generated by large U.S. and European crowds at Obama's public appearances, the McCain campaign featured images of Britney Spears and Paris Hilton in an ad that characterized Obama as "the biggest celebrity in the world."[2]  Such unauthorized use of celebrity images in political advertisements has been the subject of recent debate, as any potential legal actions implicate the tension between the right of publicity and the First Amendment.

The Government Response to the Wall Street Crisis

I. Introduction

In the past few weeks, the media has been bombarded with news about the events on Wall Street.  The failure of such large entities as Washington Mutual, Bear Stearns, and IndyMac has left many people bewildered and afraid.[1]  Naturally unsettled by deepening concerns over the financial markets, many people are worried about both their financial assets and the future of the economy.  While these events are unexpected, the government seems fully preparing to take charge and protect the financial market.  In addition to the consumer protections now in place, the government has also planned a $700 billion dollar bail-out plan to bolster the financial market.[2]  This article looks at the guarantees government agencies provide to consumers, some of the effects this crisis is having, and finally at the intervention measures that government is currently planning.

The Journal Completes its 2007-2008 Publication Year, Begins Summer Hiatus

The Business Law Journal of the University of Illinois  has concluded its regular publication cycle for the Spring 2008 semester. The Journal will resume its full publication schedule in the Fall when classes begin.

Please join us in Congratulating the Editorial Board for the 2008-2009 publication year!

• Editor in Chief: Karen Lee
  
• Managing Editor: Joseph Krcmar
  
• Executive Editors: Yoo Jin Jung, Patrick Schuette, and Scott Wilson

We thank you for visiting the Journal and encourage you to explore our archives. Please feel free to post your comments or send us questions at buslaw@law.uiuc.edu.

We continue to accept articles submissions from students, professors, and practitioners. If you are a student at the University of Illinois College of Law and are interested in joining the Business Law Journal for the upcoming publication year, please contact us at buslaw@law.uiuc.edu.

The Business Law Journal of the University of Illinois  has concluded its regular publication cycle for the Spring 2008 semester. The Journal will resume its full publication schedule in the Fall when classes begin.

Please join us in Congratulating the Editorial Board for the 2008-2009 publication year!

• Editor in Chief: Karen Lee
  
• Managing Editor: Joseph Krcmar
  
• Executive Editors: Yoo Jin Jung, Patrick Schuette, and Scott Wilson

We thank you for visiting the Journal and encourage you to explore our archives. Please feel free to post your comments or send us questions at buslaw@law.uiuc.edu.

We continue to accept articles submissions from students, professors, and practitioners. If you are a student at the University of Illinois College of Law and are interested in joining the Business Law Journal for the upcoming publication year, please contact us at buslaw@law.uiuc.edu.

Please join us in Congratulating the Editorial Board for the 2008-2009 publication year!

• Editor in Chief: Karen Lee
  
• Managing Editor: Joseph Krcmar
  
• Executive Editors: Yoo Jin Jung, Patrick Schuette, and Scott Wilson

We thank you for visiting the Journal and encourage you to explore our archives. Please feel free to post your comments or send us questions at buslaw@law.uiuc.edu.

We continue to accept articles submissions from students, professors, and practitioners. If you are a student at the University of Illinois College of Law and are interested in joining the Business Law Journal for the upcoming publication year, please contact us at buslaw@law.uiuc.edu.

The Sophisticated User Doctrine: Fair or Fowl

Introduction

Keith Wilson is a well trained ventilation and air conditioning (HVAC) technician. [1] Trained both on and off the job, Mr. Wilson had the highest certification available from the Environmental Protection Agency ("EPA"), a training that required passing a five-part examination. [2] His qualifications allowed him to purchase, braze, weld and replace parts on large commercial air conditioning systems. [3] These air conditioning systems use R-22, a hydrochloroflourocarbon refrigerant that can decompose into phosphane gas when exposed to heat, as is often the case when a technician brazes or welds an air conditioning system. [4] Exposure to phosphane gas and R-22 can cause numerous health problems which are detailed in Material Safety Data Sheets (MSDS's). [5] The California code requires employers to use the MSDS's to train their employees about the chemicals and dangers they can be exposed to on the job. [6] Mr. Wilson received a MSDS every time he purchased R-22 and he even read it on occasion. [7].

After years of being exposed to R-22, Mr. Wilson developed pulmonary fibrosis and sued the chemical manufacturers, suppliers and air conditioning unit manufacturers including the defendant, American Standard, Inc. [8] His contention was that the companies failed to adequately warn him of the dangers of being exposed to R-22. [9] The defendant moved for summary judgment claiming that it had no duty to warn to Mr. Wilson of the dangers of R-22 and as a professional HVAC technician, he should have known of the dangers of the chemical. [10] On appeal, the California Supreme Court agreed with the defendant reasoning that Mr. Wilson was a sophisticated user, one who knew or should have known of the dangers of being exposed to R-22, and as such, the manufacturer/distributor should and will be held blameless for exposing him to the chemical. [11]

Blockbuster's $1 Billion Bid on Circuit City

I. Introduction

     On April 14, 2008 Blockbuster Inc. announced publicly its offer to purchase electronic retailer Circuit City Inc. Blockbuster has been in talks with Circuit City for months regarding an acquisition. [1] On February 17, 2008 Blockbuster sent a letter to Circuit City Chairman Philip Schoonover offering over $1 billion for the transaction. [2] This is equivalent to $6 to $8 a share in cash for the company. [3]Blockbuster also stated that they were willing to pursue alternative deal structures to enable Circuit City shareholders to receive stock. [4] Circuit City is hesitant about the deal and has yet to reveal to Blockbuster its long-term corporate plans and performance data. [5] This paper will evaluate the benefits and negatives of the acquisition as well as discuss whether this merger should occur.

Home Is Where the Most Economically Beneficial Laws Are: Finding the Best Location to Incorporate Your Business

I.  Introduction

There are very few requirements for a business to be incorporated in a given state.  The business must usually have a registered agent in that state, but rarely are there requirements to construct an office or actually engage in commercial transactions. [1]  From the outset, it seems as though finding the best location to incorporate a business would be quite simple.  This prediction, however, could not be farther from the truth.  Finding the right place to "set up camp" is a long and crucial process; but if done properly, the initial research can lead to the creation of a business that uses state law to its advantage rather than demise.

Probing Spygate: Will the NFL Indemnify Key Witness?

I.    INTRODUCTION

    From the moment of its initial disclosure, the National Football League's (NFL's) so-called Spygate incident had the potential to be one of the more notorious sports scandals in recent memory.  During the first game of the 2007 season, a videographer on the New England Patriots sideline was caught taping the hand signals of New York Jets offensive coaches, a violation of Article 9 of the NFL Constitution and Bylaws.[1]  The intrigue was apparent: the league's modern-day dynasty had been caught red-handed, begging the question of whether the Patriots had broken league rules at any other times during its championship era.  The NFL's first-year commissioner, Roger Goodell, addressed the issue quickly, fining the team and head coach Bill Belichick a combined $750,000 and taking away a first-round draft pick.[2]  Despite its rapid action, the NFL's handling of the situation added to the mystery.  After announcing the penalty, the league destroyed the tapes it confiscated from the Patriots.[3]  Further fueling the controversy, U.S. Senator Arlen Specter publicly rebuked the Patriots, accusing the team of "stonewalling" his own investigation into the matter.[4]

    The questions followed the then-undefeated Patriots to Super Bowl XLII, when the Boston Herald reported that Matt Walsh, a former Patriots employee, allegedly taped the St. Louis Rams walk-through practice the day before New England's surprise upset of the Rams in Super Bowl XXXVI.[5]  Since that report, the NFL has expressed a desire to speak with Walsh regarding his knowledge of any potential wrongdoing by the team.[6]  Walsh, for his part, has suggested he has damaging information, but his legal representation is demanding full indemnity before revealing his knowledge or role in any malfeasance.[7]  The negotiations over the scope of an indemnity agreement have lasted for months, keeping the league in the dark as to what Walsh really knows.[8]

Cyberbullying: A Modern Problem

    A girl kills herself because she finds out the boy she liked on MySpace.com (“Myspace”) was actually a couple of girls, allegedly assisted by their parents, making fun of her. [1]  Another teenager is lured to a girl’s home and beaten repeatedly in retaliation for comments made on MySpace.com, while the beating is filmed for posting on MySpace. [2].  These events and others have highlighted the lack of adequate criminal laws about online harassment and online bullying – sometimes called cyberstalking or cyberbullying.
This article will examine the recent cases of cyberbullying, address examples of current laws that deal with cyberbullying and cyberstalking, and, finally, explain what needs to be changed about current laws to address the developing criminal area of cyberbullying.

Is Your Ad Deceptive?

I. Introduction   

Small business owners often take out an advertisement in a local paper or, more in line with the times, advertise on a website.  The advertisement, however, can sometimes create liability for the business owner if the ad is found to be deceptive. [1]  This article will discuss the different sources of the law regarding deceptive advertising and then generally describe what makes an advertisement deceptive.  It will then explore the trends and adaptation of the law regarding web logs and advertising.  In conclusion, this article will present considerations that a small business owner should take into account when deciding to post an advertisement.

BALCO’d: How Will the Tammy Thomas Conviction Affect Barry Bonds and Future Steroids Cases?

I. Introduction

Barry Bonds’ publicity may arise from his feats on the baseball diamond as Major League Baseball’s (“MLB”) all-time home run king, or it may arise from allegations that he took anabolic steroids to gain an edge on the playing field.[i] His negative publicity has recently subsided, primarily because he is not currently signed to a contract by an MLB franchise, and the steroids controversy lost momentum. However, Bonds’ name may re-enter the public consciousness with the recent conviction of Tammy Thomas for perjury and obstruction of justice.[ii] Thomas denied use of steroids, like many athletes before her, that have been in the position of being accused of the same.[iii] However, she was convicted under evidence that clearly indicated that she had used anabolic steroids.[iv] The result of this case may have a significant effect on any future litigation involving Bonds, and further-reaching implications on future steroids criminal cases.

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Primary Dealers Credit Facility: Changes for Market Liquidity

I. Introduction

On March 17, 2008, Bear Stearns, one of the oldest and largest global investment firms on Wall Street unexpectedly collapsed and was sold to J.P. Morgan Chase & Co at a fire-sale price of $2 a share in stock, approximately $236 million.[1]  With the rumors about Bear Stearns' losses in the mortgage industry circulating in the market, investors pulled their money out, the firm was short on cash, and the deepening losses left Bear Stearns with no other choice but to sell to their white knight, J.P. Morgan Chase & Co.[2]  With the help of the Federal Reserve, the acquisition price was later revised to approximately $10 per share, totaling $1 billion; however, even the revised deal was still much lower than the company's value of $20 billion in January 2007.[3]

In response to the ongoing credit crisis and the sudden crash of Bear Stearns, the Federal Reserve ("Fed") took several measures to help ease the market.  Wanting to ensure that other investment banks can avoid a crash like Bear Stearns, on March 16, 2008, the Fed Board of Governors announced a new loan program and established the "Primary Dealer Credit Facility"  ("PDCF").[4] This new program is designed to help struggling investment banks avoid a liquidity crisis.[5] 

Seagate Files Patent Infringement Lawsuit Against Competitor

I.     Introduction
        In response to increasing market pressure on their core business, Seagate Technologies is asserting a handful of its patents against manufacturers of flash memory-based solid state drives (SSDs) products.  Seagate Technology is currently the world’s largest manufacturer of hard-disk drives (HDDs), but lags behind several competitors in the SSD market.  [1]  On Monday, April 14th, Seagate Technology filed a patent infringement lawsuit against STEC.  The lawsuit, filed in the US District Court for the Northern District of California, alleges infringement of four Seagate patents.   [2]  Industry commentators believe that Seagate’s lawsuit is a result of increasing market pressure on their core business, which competes directly with that of STEC.  By filing an infringement lawsuit now, Seagate opens several options for itself in the face of a potential collapse in sales for its major products.   

Enron and Citigroup Settle: MegaClaims Litigation Comes to an End

I. Introduction

In late March Enron Creditors Recovery Corp. ("Enron") settled its latest and final MegaClaim against Citigroup, the largest bank in the U.S. [1] Citigroup agreed to pay $1.66 billion to Enron over its alleged responsibility in Enron's downfall. [2] In addition, Citigroup is releasing $4.25 billion in claims against the Enron estate, including a $4 billion claim reserve established by the U.S. Bankruptcy Court for the Southern District of New York. [3] Citigroup denied any wrongdoing in its dealings with Enron, but stated that it settled solely to avoid the expense and uncertainty of litigation. [4] Trial was set to start in April. Initially, Enron had sought $3 billion from Citigroup, alleging that number represented the amount fraudulently transferred by Enron to Citigroup. [5] Enron contended that Citigroup, in particular, played a central role in its collapse. [6]