# Cold Call Cast Sheet
## Business Entities and Operation — Devlin, Fall 2026

Devlin doesn't just ask what the case held. He assigns you a party and makes you argue from inside it. This document exists so that when he says *"You're the subagent — what do you owe Demian?"* you already know who you are, what you want, and which fact saves you.

**How to use it.** Before class, read the cast table for each assigned case. Know three things for your role: **what you did**, **what you want the court to say**, and **the one fact that hurts you.** That is enough to survive any follow-up.

The tables give you the first two. For the third, read the **Pivot** and **Trap** lines from your assigned side — the fact that decides the case is almost always somebody's bad fact, and Devlin's favorite move is to flip you to the other party and make you argue it back. If you can state your own worst fact before he does, you've won the exchange.

**The four questions he asks after you answer**, in roughly this order:
1. *How would you classify this person?* — agent, employee, independent contractor, subagent, partner, creditor, insider.
2. *What should your client have done differently?* — nearly always: put it in writing, disclose, or give notice.
3. *What additional facts would change your answer?* — he wants the fact that flips the result, not a recitation.
4. *Was the case correctly decided?* — he asks this after every case. Have a position and a reason.

---

## The role scripts

Generic openings by role. If you are handed a part cold and haven't read closely, these get you through the first thirty seconds — then the facts take over. **These are starting positions, not rules.** Every one of them can be defeated by a fact, a statute, an agreement, or a different jurisdiction, which is the entire point of the course.

| If you're cast as | Your default opening position |
|---|---|
| **Principal** | I never authorized this. Nothing I said or did told anyone that this person could do what they did. If I owe anything, it's only what I actually agreed to. |
| **Agent** | I did what I reasonably understood my principal wanted. I acted for them, not for myself, and I disclosed who I was acting for. |
| **Subagent** | The agent appointed me to perform functions *he* owed the principal. Under § 3.15 I'm an agent in **both** relationships — to the appointing agent and to the principal — and the appointing agent remains responsible to the principal for my conduct. |
| **Coagent** | I answer to the principal directly, in parallel with the other agent. Neither of us is responsible for the other. |
| **Third party** | I dealt in good faith with someone the principal put in front of me. I shouldn't have to police the principal's internal limits I never saw. |
| **Employee** | I was doing the job I was assigned, on the employer's business, under the employer's control. |
| **Alleged independent contractor** | I control my own manner and means. I set my hours, bear my own risk, and take my own profit. *(Devlin's vocabulary — but the label proves nothing on its own; § 1.02 and the conduct decide it.)* |
| **Employer** | Either this person is not my employee, or the act was outside the scope of employment. Preferably both. |
| **Franchisor** | I license a brand and enforce quality standards. Standards are not operational control, and a sign is not a promise. |
| **Franchisee** | I own and run my own business. The disclaimer in the agreement says so. |
| **Partner** | We are co-owners. I have an equal right to manage and a full fiduciary duty to my partners in everything connected to the firm. |
| **Alleged partner (defending)** | I took a share of profits as compensation, interest, or security — not as a co-owner. I had no capital at risk, no losses, and no management rights. |
| **General partner** | I run the business, my liability is unlimited, and the partnership agreement authorizes what I did. |
| **Limited partner** | I'm a limited investor, and the statute shields me from partnership obligations unless my conduct crosses the statutory control boundary. G.L. c. 109, § 19 lets me consult and advise the general partner, vote on major transactions, act as surety, and exercise my limited-partner rights without becoming a general partner. |
| **LLC manager** | Start with the operating agreement — that's the primary source of my duties. Then ask what the statute imposes that the agreement *can't* displace. |
| **Majority shareholder** | I have a legitimate business purpose, and there was no less harmful way to accomplish it. |
| **Minority shareholder** | I invested expecting employment, participation, and a return. There is no market for my shares, so I can't just sell and leave. |
| **Director** | I informed myself, I had no personal interest, and I acted in good faith. The merits of my decision are not the court's business. |
| **Derivative plaintiff** | The claim belongs to the corporation and I sue in its right. I made the demand this jurisdiction requires — or, where futility is recognized, here are the particularized facts excusing it. *(Massachusetts, c. 156D § 7.42, requires written demand and a 90-day wait absent irreparable injury; Delaware excuses demand under* Aronson*.)* |
| **Insider / tipper** | I owe a duty to my corporation and its shareholders. I disclosed nothing, and I received nothing. |
| **Tippee** | I didn't know the information came from a breach, and my source got no personal benefit. |
| **Attorney (lien)** | I performed the services, I still hold the file or created the fund, and I haven't been paid. |

**Two sentences that work in almost any role:**
> *"My position is that the classification is X, and the fact that gets me there is ___."*
> *"If ___ were different, I'd concede — but on these facts it isn't."*

---

# WEEK 1 — CLASSIFYING AGENTS

### Demian, Ltd. v. Frank
**Setup:** Leather jackets imported from Korea arrive defective after an inspection certificate was issued.

| Actor | Role | Your position |
|---|---|---|
| **Demian, Ltd.** | Principal — U.S. importer | I hired Frank to arrange this. Frank promised the goods would be inspected. Whoever did the inspecting, Frank answers to me. |
| **Charles A. Frank Assoc.** | Agent — sourcing service paid by commission | I located suppliers. Sun was a separate contractor who dealt with Demian directly, and Demian sent its letters of credit to Korea, not to me. |
| **K.C. Sun (Da Chong Hong)** | Alleged subagent — took 50% of Frank's commission | Frank appointed me to perform what Frank owed Demian. If I'm a subagent I owe agency duties in both directions — to Frank and to Demian — and Frank still answers to Demian for my conduct. |
| **Koreanna Moulson** | Manufacturer | Not an agent of anyone. I made what was ordered. |

**Chain:** Demian → Frank → Sun → Koreanna
**Pivot:** Was Sun employed to perform *Frank's* duties to Demian (subagent), or did Sun become a separate agent answerable to Demian?
**Trap:** Devlin's delegation list — delegation is permitted only if **authorized, ministerial, customary, or necessary.** Know all four.
**Sleeper answer:** If Frank personally promised inspection, he's liable for his own breach and subagency never matters.

### Tormo v. Yormark
**Setup:** A New York lawyer sends his clients' personal injury case to a New Jersey lawyer, who embezzles the settlement.

| Actor | Role | Your position |
|---|---|---|
| **Karen Wendel Tormo & Henry Wendel** | Principals — clients | Devlin undertook to handle this for us. He put our case in a criminal's hands. |
| **Edward Devlin** | Agent — the NY attorney (yes, the name) | I worked pro bono, I never took a fee, and I referred the matter out as lawyers routinely do. |
| **Milton Yormark** | Subagent or coagent — the NJ attorney | I converted the funds. There is no defense; the question is who else pays. |
| **Fidelity Union Trust / Keene Nat'l Bank** | Depositary and collecting banks | We're the deep pockets who filed the third-party complaint against Devlin. |

**Pivot:** Not "did Yormark steal" — that's conceded. It's whether **Devlin was negligent in selecting** a lawyer under criminal indictment.
**Trap:** Pro bono is not a defense; undertaking to provide the services creates the relationship.
**Devlin's provocation:** *Would you trust a person convicted of tax fraud to babysit your kids?* Have an answer about how much diligence a referral requires.

### Bucholtz v. Sirotkin Travel
**Setup:** A package tour falls apart; the customer sues the retail travel agent, not the wholesaler.

| Actor | Role | Your position |
|---|---|---|
| **Helen Bucholtz** | Principal — the customer | I hired *you*. I never agreed to a wholesaler and didn't know one existed until after the booking. |
| **Sirotkin Travel** | Agent of the customer | Using wholesalers is universal in this industry. I selected a reputable one with reasonable diligence. |
| **The wholesaler** | Delegate | I defaulted. I'm not in this courtroom. |

**Pivot:** Did the customer **consent**, expressly or impliedly, to the delegation? Without consent, the agent answers for the wholesaler's default.
**Trap:** The court refused to impute industry knowledge to the public. Don't argue "everybody knows."
**Devlin's hypo:** Your dry cleaner sends your shirt out. Should liability for the stain depend on that?

### Rowen & Blair Electric v. Flushing Operating Corp.
**Setup:** A tenant orders building improvements beyond its $45,000 authority; the contractor seeks a mechanic's lien on the landlord's building.

| Actor | Role | Your position |
|---|---|---|
| **Flushing Operating Corp.** | Undisclosed principal — the owner | I authorized $45,000 and not a dollar more. The contractor never knew I existed, so nothing I did could have misled him. |
| **Dutch Treat Bakers** | Agent — tenant with limited authority | I ordered the work. I exceeded what I was authorized to spend. |
| **Rowen & Blair Electric** | Third party — the contractor | I did the work and improved the building. I dealt with the party in possession. |

**Pivot:** P is **undisclosed** — apparent authority is structurally unavailable. The analysis runs on actual authority, § 6.03, and § 6.05's cap at the authorized amount.
**Trap:** Devlin frames this as "general vs. special agent" and "reasonable expectations." Answer in his vocabulary, then note the modern home.
**Bonus:** He asks about Massachusetts mechanic's liens (c. 254) and the attorney's lien statute (c. 221). Skim both.

### Cowan v. Eastern Racing Association
**Setup:** A patron at Suffolk Downs is beaten by police officers working the track.

| Actor | Role | Your position |
|---|---|---|
| **Cowan** | Third party — business invitee | I was assaulted by men the track put there to keep order. |
| **Eastern Racing Ass'n** | Alleged employer — owns Suffolk Downs | Those were City of Boston police officers acting in the public interest, not my employees. And that day I ran the meet as agent for the National War Fund. |
| **The two Boston police officers** | Alleged employees / special officers | We were maintaining order. Whose payroll we're on is the whole case. |

**Pivot:** Are the officers **employees** of the track for respondeat superior? Public office plus private pay is the classic hard case.
**Trap:** Devlin wants a *list of factors* distinguishing an agent generally from an employee, and then: *is any one of them dispositive?* Have five ready — control over manner and means, method of payment, who supplies tools, right to discharge, whether the work is part of the regular business.
**Vocabulary:** He uses **SOTO / FOTO** — scope of the ordinary vs. frolic of the... His shorthand for scope of employment. Use it back at him.

### Miguel v. Linden Motor Car Co.
**Setup:** A garage employee returning a customer's car detours home for breakfast and crashes.

| Actor | Role | Your position |
|---|---|---|
| **Miguel** | Third party — other driver | Rebello was on the employer's errand in the employer's customer's car. |
| **Linden Motor Car Co.** | Employer | He'd gone home to eat. That's his own business, not mine — and he wasn't due at work until eight. |
| **Rebello** | Employee — pickup and delivery | I was told to bring the car back. I ate first. |
| **The customer's daughter** | Owner's agent | I dropped him off and told him to drive the car back to the garage. |

**Pivot:** Slight deviation or genuine frolic? And Devlin's follow-up: *what if the negligence occurs after the frolic ends but before he's back on the right route?*
**Trap:** He tells you to draw the chart. Actually draw it — garage, customer, daughter, employee, route home, route to garage.

### Wright v. Kelleher
**Setup:** A bakery route distributor kills a pedestrian while delivering; the plaintiff sues the brand owners.

| Actor | Role | Your position |
|---|---|---|
| **Carlotta Wright** | Plaintiff — administratrix | The distributorship is employment dressed as a contract. |
| **David Kelleher** | Distributor — former Entenmann's employee | I bought distribution rights, but I do the same work I did as a W-2 employee. |
| **George Weston Bakeries / Arnold Foods** | Alleged employers | He's an independent contractor. He bought the route, he can hire anyone to drive it. |
| **Steve Mutascio** | District sales manager | I interviewed him, asked coworkers about his work ethic, and required a valid license. |

**Pivot:** The label says independent contractor; the conduct (interviewing, licensing requirements, control) says otherwise. Summary judgment **denied** — so the holding is that a factfinder could go either way.
**Devlin's angle:** He asks about Social Security funding. He's pointing at the incentive: reclassifying employees as contractors shifts payroll tax.

### M.G.L. c. 151A, § 2 · Ruggiero v. American United Life
**Setup:** A statutory classification test displaces the common-law one.

| Actor | Role | Your position |
|---|---|---|
| **Ruggiero** | Service provider | The contract calls me an independent contractor, but c. 149 § 148B presumes I'm an employee. |
| **American United Life** | Putative employer | He controlled his own time, place, manner, and means — his own agreement says so. |

**Pivot:** The **ABC test** — the employer must prove **all three** prongs. Failing any one makes the worker an employee.
**Trap:** *Is X an employee?* has different answers for respondeat superior, unemployment benefits, and wage law. Say which question you're answering.

### Fortenbacher v. Commonwealth · Dudley v. Mass. State Police
**Setup:** A car goes through a bridge railing into the Acushnet River; separately, a trooper releases a police dog in a commuter lot.

| Actor | Role | Your position |
|---|---|---|
| **Michelle Fortenbacher** | Plaintiff — mother/administratrix | MHD failed to maintain and make safe the bridge. |
| **The Commonwealth / MHD** | Public employer | Railing design is a discretionary policy and planning judgment. § 10(b) immunity. |
| **Melissa Hartnett** | Driver (also died) | Not a defendant — she was the other party to the collision. |
| **The trooper (*Dudley*)** | Public employee | Releasing the dog was tactical implementation, not policy — **no** immunity. |

**Pivot:** Policy/planning (immune) vs. operational implementation (not immune).
**Trap:** Employee + scope + negligence still ≠ liability once a statute immunizes.
**Devlin's prep:** He wants you to have looked at the bridge on a map and to know what sovereign immunity was.

---

# WEEK 2 — AUTHORITY AND ATTRIBUTION

### Wing v. Lederer
**Setup:** A part-time yardman hires a tree surgeon to work on the homeowner's property.

| Actor | Role | Your position |
|---|---|---|
| **Philip Lederer** | Principal — homeowner | I never met this man. Novera was a part-time caretaker, not my purchasing agent. |
| **Mrs. Lederer** | The principal's other manifestation | I asked Novera whether one maple needed care. One tree. |
| **Peter Sonza-Novera** | Alleged agent — part-time yardman | I was told to look at a tree. I told the plaintiff to talk to the lady of the house. |
| **Jacob Wing** | Third party — licensed tree surgeon | I sprayed, pruned, and root-fed. Somebody has to pay me the $500. |

**Pivot:** Run the whole tree: express actual → scope of actual (implied) → apparent → ratification. All four fail.
**Trap:** Ratification fails because the trees were already cut before Lederer learned. **Retained benefit is not ratification without informed choice.**
**His question:** *What should Wing have done?* Answer: confirmed with the homeowner and gotten the price in writing.

### Elliott v. Great National Life Insurance
**Setup:** A Senior VP of Marketing makes a one-year oral employment deal the company disowns.

| Actor | Role | Your position |
|---|---|---|
| **B.N. Elliott** | Third party — the hire | I dealt with the Senior Vice-President of Marketing. Who else would I have asked? |
| **Donald Spear** | Agent — Senior VP of Marketing | Hiring marketing people is what my title means. |
| **Great National Life** | Principal | Spear had no authority to make a fixed-term contract, and we never told Elliott he did. |

**Pivot:** How is apparent authority *proved* when the principal is a company? Through position, prior dealings, delegated channels, and acquiescence.
**Trap:** Devlin asks what the company **should have done** — publish authority limits, require written approval, don't let a VP negotiate alone.
**Pair it:** *Wing* = no manifestation. *Elliott* = enough manifestation.

### Gizzi v. Texaco
**Setup:** A used VW van sold at a branded Texaco station has defective brakes; the customer is injured.

| Actor | Role | Your position |
|---|---|---|
| **Augustine Gizzi** | Third party — steady patron | *"You can trust your car to the man who wears the star."* I did exactly that. |
| **Russell Hinman** | Station operator — lessee | I sold and serviced the van. The station is mine to run. |
| **Texaco** | Principal — brand owner | I sell gasoline and lease equipment. I never held Hinman out as authorized to sell used vehicles. |

**Pivot:** Two steps kept apart — **what did Texaco communicate** (advertising, star, uniforms, signage), and **what authority would a reasonable customer infer from it**?
**Trap:** Directed verdict was wrong because apparent authority is a **fact** question. Devlin will ask if you know what a directed verdict is. Know it.
**His assignment:** Argue *both* sides, then say what extra facts you'd need to win.

### Drummond v. Hilton Hotel Corp.
**Setup:** A guest falls at a "Hilton Inn" that Hilton neither owns nor operates.

| Actor | Role | Your position |
|---|---|---|
| **James & Verna Drummond** | Third parties — hotel guests | The name on the building was Hilton. That's why we stayed there. |
| **Hilton Hotel Corp.** | Franchisor | The agreement expressly disclaims agency. We license a name and set standards. |
| **Creative (the operator)** | Franchisee — record owner | I own and run the hotel. |

**Two theories, never merged:** (A) actual agency through control — inspection rights and operating standards; (B) apparent agency — pervasive Hilton branding to the public.
**Pivot:** The disclaimer binds Hilton and Creative. It says nothing to the guest.
**Devlin's twist:** *What if the plaintiffs were unpaid linen suppliers instead of guests?* Suppliers deal with the entity and can check; guests can't. That's why the answer changes.
**Also prep:** the difference between a division and a subsidiary, and the four exceptions letting a principal be liable for an independent contractor — dangerous disrepair, nuisance, inherently dangerous activity, nondelegable duty.

### Hoddeson v. Koos Bros.
**Setup:** A woman pays cash to a well-dressed man on the sales floor who turns out to work for nobody.

| Actor | Role | Your position |
|---|---|---|
| **Joan Hoddeson** | Third party — customer | He knew the stock, the prices, the availability. He was standing in your showroom taking money. |
| **Koos Bros.** | Alleged principal — furniture store | We have no record of the sale, no such employee, and we made no manifestation of anyone's authority. |
| **The impostor** | Purported agent | I acted like a salesman. That's the whole problem. |

**Pivot:** Apparent authority **fails** — every manifestation came from the impostor, not the store. What survives is estoppel and the store's own negligence in letting an impostor operate on its floor.
**Trap:** Devlin flatly asks *who is lying* — the plaintiff or the store — and expects you to justify it.
**His hypo:** the tomato on the grocery store floor. What must you prove beyond the fall? Notice — actual or constructive — and that's the same idea as the store's duty here.

### Cullen v. BMW of North America
**Setup:** A buyer pays a financially failing dealer for a car he never receives.

| Actor | Role | Your position |
|---|---|---|
| **Thomas Cullen** | Third party — buyer | BMW knew this dealer was in trouble and let it keep the sign up. |
| **Bavarian (the dealer)** | Franchisee | Insolvent and gone. |
| **BMW of North America** | Franchisor / distributor | Actual and apparent authority both fail. And I owe no duty to police my dealers' finances. |

**Pivot:** Once attribution theories fail, the only route left is **BMW's own negligence** — a § 7.05 claim, not respondeat superior. The court rejects the duty.
**Devlin's hypo:** If a FedEx truck runs you over, can you sue every company whose packages were aboard? No — and articulating *why not* is the answer he wants.

### Barrow v. Dartmouth House Nursing Home
**Setup:** A son signs an optional arbitration agreement during his mother's nursing home admission.

| Actor | Role | Your position |
|---|---|---|
| **Scott Barrow** | Agent — son, later executor | I had authority to get my mother admitted. Nobody authorized me to give up her right to sue. |
| **The mother** | Principal — resident | I wasn't present, I authorized nothing specific, and I was never told he signed it. |
| **Dartmouth House** | Third party — nursing home | He signed as her representative during admission. |

**Pivot:** Authority is **act-specific**. Agency for admission is not agency to waive a jury trial — especially when arbitration wasn't required for admission.
**Trap:** Estoppel also fails; there's no detrimental reliance where the agreement was optional.
**One-liner:** *"An agency relationship is not a blank check."*

---

# WEEK 3 — EQUAL DIGNITIES AND RATIFICATION

### Commission on Ecumenical Mission v. Roger Gray, Ltd.
**Setup:** A managing agent signs a store lease extension by informal letter; the landlord's successor says the writing wasn't good enough.

| Actor | Role | Your position |
|---|---|---|
| **The Commission (landlord's successor)** | Principal in interest | The statute requires written authority. A bare "managing agent" designation doesn't authorize executing a lease extension. |
| **Vartan Jinishian (dec'd)** | Original principal — president and sole stockholder of Madison Avenue Realty | I designated him. Whether that designation was specific enough is now for the court. |
| **The managing agent** | Agent | I had negotiated and signed extensions for years. Everyone treated me as authorized. |
| **Roger Gray, Ltd.** | Third party — tenant | I have a signed extension from the man who ran the building. |

**Pivot:** Two different questions — did he *have* actual authority, and is there *legally sufficient written evidence* of it?
**Trap:** Devlin asks whether apparent authority or implied agency powers would rescue the tenant. They don't, because the statute demands a writing signed by the principal.
**His curveball:** *Why don't corporate officers need a writing from the corporation?* Because their authority comes from the corporate structure itself — bylaws, board votes, the office.
**Take a side:** majority or dissent, and say why.

### Flynn v. Dugas
**Setup:** An executive strikes "Personally and Individually" from a guaranty and signs as chairman — then gets held personally liable anyway.

| Actor | Role | Your position |
|---|---|---|
| **Adolph Dugas** | Agent — chairman/COO of Automated Products of America | I crossed out the personal language, wrote in the corporation, and signed in my corporate capacity. That is the definition of intent. |
| **Edward Flynn (Flynn's Truck Stop)** | Third party — fuel supplier | A corporate guaranty of a corporation's own debt is worthless. It only makes sense as a personal one. |
| **Peter Ferraro** | Flynn's general manager | I'm the only live witness to the signing. |

**Pivot:** Not whether the agent can bind the principal — whether the agent **also** bound himself. That's Chapter 6, § 6.01.
**Trap:** The entire trial transcript is 22 pages. Devlin will ask what evidence there actually was.
**Practice point:** identify the principal in the signature block and sign "by ___, its ___." Say that when he asks what Dugas should have done.

### Bridge Enterprises v. Futurity Thread
**Setup:** A sales manager negotiates and signs a memorandum for a lease of a floor of his employer's building.

| Actor | Role | Your position |
|---|---|---|
| **Futurity Thread** | Principal — building owner | Rae sells thread. He has no authority to convey an interest in real estate. |
| **Benjamin G. Rae, III** | Agent — sales manager | I met, negotiated, and signed in my official capacity. |
| **Bridge Enterprises** | Third party — existing tenant at will | Your man drafted and signed it with our treasurer. Specific performance. |
| **George Coupounas** | Bridge's treasurer | I signed for my company, in my official capacity. |

**Pivot:** Does authority to **negotiate** carry authority to **execute and bind**? Same question as *Barrow*, different subject matter.
**Devlin's only question:** *Does the court apply the correct doctrine?* He's inviting you to say this is a scope-of-authority case wearing an equal-dignities costume. Say it.

### 3A's Towing v. P&A Well Service
**Setup:** A Chevron representative cancels a well-plugging contract; Chevron later stands behind the cancellation.

| Actor | Role | Your position |
|---|---|---|
| **Chevron U.S.A.** | Principal | Whatever my man did, I didn't authorize it. |
| **The Chevron representative** | Agent | I repudiated the contract without giving P&A a real chance to perform. |
| **P&A Well Service** | Contractor / third party | I was hired to plug and abandon the well and was cut off. |
| **3A's Towing** | Subcontractor | I'm downstream of all of this and want to be paid. |

**Pivot:** Ratification by **knowing acquiescence and failure to repudiate** — Chevron ratified its agent's *repudiation*. That's the twist worth naming out loud.
**Trap:** Devlin asks directly how this differs from *Wing*. Answer: informed organizational knowledge plus time to object, versus a homeowner facing an irreversible fait accompli.

### Linkage Corp. v. Trustees of Boston University
**Setup:** A university officer renews a training-program agreement the university later says was never renewed.

| Actor | Role | Your position |
|---|---|---|
| **Linkage Corp.** | Third party | Meng ran this relationship for BU for years. BU treated him as authorized and then took the benefit. |
| **Meng** | Agent — the BU officer | I negotiated and renewed. That was my role. |
| **Trustees of BU** | Principal | Meng lacked authority to bind the university, and the agreement was lawfully terminated. |

**Pivot:** Two theories on the same facts at **two different times** — apparent authority (what BU manifested *before* execution) and ratification (what authorized officials did *after* they knew).
**Devlin's aside:** *"Ever work for a megalomaniac?"* He's inviting the human story. Have a sentence about why an institution lets one person run unchecked.

### Colony of Wellfleet v. Harris
**Setup:** A seller learns the material facts about a sale and does nothing for too long.

| Actor | Role | Your position |
|---|---|---|
| **Eleanor Harris** | Principal — seller | I never authorized these terms. |
| **Her agent** | Agent | I made the deal. |
| **Colony of Wellfleet** | Third party — buyer | She had the facts and her lawyer, and she sat on it. That's affirmance. |

**Pivot:** § 4.06 knowledge — she and counsel had access to the material facts and failed to repudiate within a reasonable time.
**Trap:** Deliberate ignorance doesn't help a principal who consciously affirms despite known gaps.

---

# WEEK 4 — TERMINATION AND EMPLOYMENT AT WILL

> **Before the cases:** Devlin assigns §§ 3.06–3.11 but the cases are employment law. If he asks a Restatement question here, it will be **§ 3.11** — terminating actual authority does *not* terminate apparent authority. Fired Friday, orders $50,000 Monday, vendor never notified: the principal is bound. The fix is notice.

### Thomas v. Ballou-Latimer Drug Co.
| Actor | Role | Your position |
|---|---|---|
| **George Thomas (by his executrix)** | Employee — general manager | The salary was monthly, the bonus was a percentage of annual net profit. That's a year-to-year hiring. |
| **Ballou-Latimer Trust** | Employer | The agreement states no term. American rule: indefinite means at will. |

**Pivot:** Which facts are strong enough to overcome the at-will presumption?
**Devlin's challenge:** he thinks some of the court's facts are "borderline irrelevant." Pick one and defend or attack it.

### Shenn v. Fair-Tex Mills
| Actor | Role | Your position |
|---|---|---|
| **Al Shenn** | Employee — salesman | I kept working on the same terms after the written term expired. That renewed it annually. |
| **Fair-Tex Mills** | Employer | The contract had a definite ending date. Holding over doesn't manufacture a new one-year contract. |

**Pivot:** Counterpoint to *Thomas*. The difference is the presence of a stated ending.
**Devlin's warning:** courts pick the facts that produce the result they want. Be ready to say that out loud.

### Pine River State Bank v. Mettille
| Actor | Role | Your position |
|---|---|---|
| **Richard Mettille** | Employee — loan officer, hired orally | The handbook's disciplinary procedures became part of my contract, and the bank ignored them. |
| **Pine River State Bank** | Employer | There was no consideration for any modification. He was at will from the first day. |

**Pivot:** Can a handbook issued *after* hiring modify an at-will relationship? (Yes — continued employment supplies the consideration.)
**Trap:** Devlin's question — *what if Mettille had been caught embezzling?* He's testing whether handbook procedures produce absurd results.

### Monge v. Beebe Rubber Co.
| Actor | Role | Your position |
|---|---|---|
| **Olga Monge** | Employee — machine operator | I refused to go out with my foreman and he made my working life impossible. |
| **The foreman** | Supervisor | The harassment came from me. |
| **The personnel manager** | Employer's agent | I knew and did nothing. |
| **Beebe Rubber** | Employer | She was at will. We needed no reason. |

**Pivot:** Bad faith, malice, or retaliation makes even an at-will discharge actionable.
**Trap:** Devlin asks about the personnel manager's knowledge — that's how the foreman's conduct becomes the company's. And he asks whether she'd have done better in **tort**; the verdict was only $2,500.

### Maddaloni v. Western Mass. Bus Lines
| Actor | Role | Your position |
|---|---|---|
| **Joseph Maddaloni** | Employee — salesman | I earned $61,000 in commissions on past services. You fired me to keep them. |
| **Western Mass. Bus Lines** | Employer | At will means at will. |

**Pivot:** *Monge* was sex; this is **greed**. Massachusetts won't let an employer use at-will termination to capture compensation already earned.
**Trap:** The remedy is commissions for past services, not future employment. Devlin's follow-up: *what disincentive does that actually create?*

### Siles v. Travenol Laboratories
| Actor | Role | Your position |
|---|---|---|
| **Richard Siles** | Employee — respiratory therapy specialist | There was no good reason to fire me. A $250,000 jury agreed. |
| **Travenol** | Employer | No good reason is not the same as bad faith. JNOV granted, affirmed. |

**Pivot:** **Bad decision ≠ bad faith.** You need a legally improper purpose.
**Devlin's question:** *Who bears the burden, and how much does that matter?* The employee does, and it decides the case.

### Brockmeyer v. Dun & Bradstreet
| Actor | Role | Your position |
|---|---|---|
| **Charles Brockmeyer** | Employee | Wisconsin should follow Massachusetts and imply good faith. |
| **Dun & Bradstreet** | Employer | Wisconsin recognizes only a narrow public-policy exception. |

**Pivot:** Wisconsin's rebuttal — contract law applies, but the implied covenant of good faith does not.
**Devlin's three questions:** Is the difference real or verbal? Does it create forum-planning opportunities for a national sales force? And — *you're in Massachusetts and about to be fired: what do you do first?*

---

# WEEK 5 — NOTICE AND KNOWLEDGE

### Farr v. Newman
| Actor | Role | Your position |
|---|---|---|
| **Franz Farr** | Third party — earlier buyer at $3,000 | I told Hardy's lawyer about my agreement directly. That's notice to Hardy. |
| **Elbert Hardy** | Principal — later buyer at $4,000 | My attorney never told me. I paid more, in good faith. |
| **Hardy's attorney** | Agent — authorized to handle the purchase | I decided Farr's agreement was unenforceable, so I said nothing to my client. |
| **The Newmans** | Sellers | We sold twice. |

**Pivot:** Notice to an agent **authorized to receive it** is legally notice to the principal. It is not a presumption that the lawyer passed it along.
**Devlin's question:** *Did the attorney do anything wrong, and how should he have handled it?* Answer: tell the client, and let the client decide.

### R & D Muller v. Fontaine's Auction Gallery
| Actor | Role | Your position |
|---|---|---|
| **R & D Muller** | Moving party | Counsel's prior representation was substantially related. Disqualify. |
| **Fontaine's Auction Gallery** | Client of the challenged firm | I chose my lawyer. |
| **The law firm** | Agent holding another's confidences | I owe a duty of confidentiality that outlives the representation. |

**Pivot:** Why is a disqualification case in a *notice* chapter? Because imputation assumes information may travel — and a lawyer's confidentiality duty stops it (§ 5.03(b)).
**One-liner:** *"Agent knows = principal knows" collapses when the agent is forbidden to tell.*

### Southern Farm Bureau v. Allen
| Actor | Role | Your position |
|---|---|---|
| **Southern Farm Bureau** | Principal — insurer | I rejected Joe's application and returned the premium. My agent then conspired with the family. |
| **The Wattenbarger Agency** | Agent — local insurance agency | I had authority to take applications; whatever I knew, the company knows. |
| **Joe Jezisek** | Third party — minor with a bad record | I needed coverage for the bank's mortgage. |
| **George Jezisek** | Named insured — the brother | The policy is in my name for a car my brother drives. |

**Pivot:** § 5.04. Knowledge is **not** imputed where the agent acts adversely — and a third party who colludes with the agent isn't in good faith and can't use the protective rule.
**Devlin's question:** *What is the crucial difference from Farr?* In *Farr* the agent was serving his client badly; here the agent joined the other side.

### Sutton Mutual v. Notre Dame Arena
| Actor | Role | Your position |
|---|---|---|
| **Sutton Mutual** | Insurer | Notice of the accident came late. Coverage is off. |
| **Notre Dame Arena** | Insured — rented the rink to a hockey team | We rent the building. We don't run the games. |
| **Dr. Danais** | Arena president — attending as a spectator | I heard the announcement while watching a game I didn't pay to attend. |
| **Florence Ploude** | Injured spectator | I was struck by a puck. |
| **The Berlin Maroons** | Renter | We hired the ticket sellers and the police. |

**Pivot:** Not *whether* the president knew — **in what capacity** he learned it. Which hat was he wearing?
**Trap:** Devlin flags that Danais didn't pay to get in. That's the fact pushing toward "there in his corporate capacity."

### Black Elk Energy / Nordlicht
| Actor | Role | Your position |
|---|---|---|
| **Nordlicht** | Agent — the fund principal committing the fraud | I was working to benefit these investors, not against them. |
| **Black Elk / the entities** | Principals | His knowledge shouldn't be ours; he was adverse. |
| **The defendant investors** | Beneficiaries of the scheme | Adverse interest is narrow, and he wasn't adverse to *us*. |

**Pivot:** The adverse-interest exception requires **total abandonment** of the principal's interests — acting solely for self or another. A conflict is not enough.
**One-liner:** *"He's a bad actor" doesn't answer "adverse to whom, and for whose benefit?"*

### Lawrence Savings Bank v. Levenson
| Actor | Role | Your position |
|---|---|---|
| **Lawrence Savings Bank** | Principal | My officer's misconduct shouldn't be charged to me by the people who dealt with him. |
| **The VP / loan officer** | Agent | I retained counsel, made the loans, attended the closings — exactly my authorized functions. |
| **Levenson and the borrowers** | Third parties | The officer's knowledge is the bank's knowledge, and it defeats the bank's claim. |

**Pivot:** Does institutional imputation survive when the agent is entangled in the very transaction? Third in the *Southern Farm* → *Black Elk* → *Levenson* progression.

### In re Color Tile
| Actor | Role | Your position |
|---|---|---|
| **The bondholder / principal** | Principal at the top | I gave notice into the system. |
| **State Street Bank** | Agent — indenture trustee | I received it in my defined role. |
| **DTC / Cede & Co.** | Subagent — the depository layer | Was transmitting this complaint up the chain within *my* scope? |

**Pivot:** Imputation can travel through subagents — but only through links where receiving or transmitting was within scope.
**Trap:** Never say "someone in the organization knew." Draw the chain; test every link.

### Georgia-Pacific v. Great Plains Bag
| Actor | Role | Your position |
|---|---|---|
| **Georgia-Pacific** | Principal — the corporation | Salespeople sell. They are not my agents for receiving legal notice of a competing trademark use. |
| **The G-P salespeople** | Agents — acting in their official capacity | We saw the mark in the field. We were on the job. |
| **Great Plains Bag** | Third party — registrant | Your own people knew for years. |

**Pivot:** Contrast with *Sutton*. There the question was capacity; here it's **whether this class of agent is authorized to receive this kind of notice at all**.
**Devlin's question:** is the distinction between salespeople, bookkeepers, and loading dock workers convincing? Take a side.

---

# WEEK 6 — LOYALTY, COMPETITION, AND COVENANTS

### Arthur Murray Dance Studios v. Witter
| Actor | Role | Your position |
|---|---|---|
| **Clifford Witter** | Former employee — dance instructor | I waltzed out and went to a competitor. Once the job ended, so did the duty. |
| **Arthur Murray (Cleveland)** | Former employer | He signed a covenant not to work for a competitor. |
| **Fred Astaire Studios** | New employer / competitor | We hired a dance teacher. |

**Pivot:** Once the agency ends, § 8.04 permits competition — so the employer needs a **contract**, and the fight is enforceability.
**Trap:** Devlin asks why the employer **lost** even though the restraint looked reasonable in scope, duration, and geography. Read the remedy discussion.

### DeVoe v. Cheatham
| Actor | Role | Your position |
|---|---|---|
| **Richard DeVoe** | Former employee — vinyl roof installer | I came in with no experience and learned a trade. There's no secret here. |
| **Pop's Vinyl Tops / Cheatham** | Former employer | Two-year nondisclosure, five-year noncompete, fifty-mile radius, $200 a week. |

**Pivot:** Two questions in order — is there a **protectable business interest**, and is the restraint no broader than necessary? Fail the first and the second never matters.
**Devlin's question:** *If the employer can't justify a covenant, what do you advise instead?* Trade secret protection, nonsolicitation, garden leave, deferred compensation.

### 1st American Systems v. Rezatto
| Actor | Role | Your position |
|---|---|---|
| **Brian Rezatto** | Former employee — seven years at the agency | The covenant is void as a restraint on trade. I'm free to compete, even next door. |
| **1st American Systems / Insurance Counselors of Aberdeen** | Former employer | Fine — but the customer information you took wasn't yours. |

**Pivot:** **Competing vs. competing unfairly.** The noncompete falls; the trade secret claim survives independently.
**One-liner:** *"Free to compete" is not "free to take the files."*

### National Recruiters v. Cashman
| Actor | Role | Your position |
|---|---|---|
| **Daniel Cashman + 3 former employees** | Employees who signed *after* starting | No new consideration. Preexisting duty. And I want my vested profit-sharing. |
| **National Recruiters** | Employer | Continued employment plus training and access is consideration enough. |
| **Career Resources / Micah Garber** | Competitor accused of tortious interference | We hired people who were free to move. |

**Pivot:** Formation, not loyalty. Courts test the **sufficiency of consideration after** the employee signs.
**Devlin's jab:** *Does Minnesota have its head in the sand?* Be ready to defend or attack the majority rule.

### Maryland Metals v. Metzner
| Actor | Role | Your position |
|---|---|---|
| **Sidney Metzner + the other manager** | Employees preparing to compete | We planned, incorporated, and arranged financing. Preparation is lawful. |
| **Maryland Metals** | Employer | You are high-level managerial employees. I'm entitled to your undivided loyalty while you're on my payroll. |

**Pivot:** Where does preparation cross into disloyal competition? The opinion states both policies openly — use them both.
**Bonus doctrine:** corporate/business opportunity and **abandonment** — if the employer is offered the opportunity and passes, the employee may take it. Devlin compares it to adverse possession: use it or lose it.

### BBF, Inc. v. Germanium Power Devices
| Actor | Role | Your position |
|---|---|---|
| **Francis Driscoll** | General manager of the Silicon division | I resigned and then pursued the germanium business. |
| **John Q. Adams, Jr.** | Marketing manager | Same. |
| **Oliver Ward** | Outside attorney, no BBF connection | I was the outsider who joined them. |
| **BBF / Silicon division** | Employer | Solitron's germanium operation was offered to *my* people, in confidence, while they worked for me. |
| **Solitron** | The opportunity's source | I told BBF I wanted to sell my germanium operation, before it was public. |

**Pivot:** Liability is the easy part. Devlin's real question is **damages** — can BBF recover the salaries paid during the period of disloyalty? What else, and how would you prove it?
**Pair it:** *Maryland Metals* = lawful preparation. *BBF* = the line crossed.

### NuVasive v. Day
| Actor | Role | Your position |
|---|---|---|
| **Patrick Day** | Former employee | Massachusetts law should govern where I live and work. |
| **NuVasive** | Former employer | The agreement selects Delaware law and contains nonsolicitation and noncompetition terms. |
| **The competitor** | New employer | I hired someone I believed was free to work for me. I'm not bound by my competitor's employment agreement unless that restriction is valid and enforceable. |

**Pivot:** Not fiduciary duty during employment. It's **which jurisdiction's law decides what survives after** it.

### DraftKings v. Hermalyn
| Actor | Role | Your position |
|---|---|---|
| **Michael Hermalyn** | Former executive | California generally bans noncompetes, and that's where the new job is. |
| **DraftKings** | Former employer | Massachusetts choice-of-law clause, one-year noncompete, valid under c. 149 § 24L. |
| **Fanatics** | New employer / competitor | We hired him to work in California, where this restraint is unenforceable as a matter of public policy. |

**Pivot:** How far the law moved — *Maryland Metals* asks what the common-law duty permits **before** departure; this asks what a contract may prohibit **after**, under a statute and a conflicts analysis.
**Know the statute:** c. 149 § 24L — garden leave or other consideration, one-year cap, notice requirements, categories of workers who can't be bound.

---

# WEEK 7 — LIENS AND THIRD-PARTY RIGHTS

> **Role vocabulary for this week:** lienholder in possession (retaining/general lien) vs. lienholder claiming a fund (charging lien); secured party vs. possessory lienholder; agent vs. undisclosed principal for the election problem.

### Matter of Heinsheimer (Meyer v. Schulte) — Cardozo
| Actor | Role | Your position |
|---|---|---|
| **The petitioner attorney** | General counsel paid $5,000/year salary | I'm owed $3,096.92 in arrears. I held the papers, and I won a $4,176.64 judgment against Schulte. |
| **U.S. Restaurant & Realty Co.** | Client — principal | We terminated the general retainer and hired new counsel. |
| **The assignee for creditors** | Substituted plaintiff | The client is insolvent; the fund is ours to distribute. |

**Pivot:** No lien of any kind attaches to a claim for **unpaid salary** — a general lien needs possession, a charging lien needs a fund the services produced. The judgment he actually won is a different story.
**Devlin's hypo:** the client signs a will, promises to pay tomorrow, never returns. You hold the will — general or charging lien? (General; possession is the whole basis.) *And what if the client dies?*

### Upgrade Corp. v. Michigan Carton
| Actor | Role | Your position |
|---|---|---|
| **Harry Shriman** | Withdrawing attorney | Common-law retaining lien on the files until I'm paid. And I want an evidentiary hearing on what I'm owed. |
| **Upgrade Corp.** | Client | We have a live trade-secret case and you're holding our file hostage. |
| **Remaining counsel** | Successor attorney | Order him to turn the files over. |

**Pivot:** Equity converts the retaining lien into a **statutory lien on the eventual recovery**. The lien is real but defeasible.
**Devlin's analogy:** eminent domain — the state takes your house though you did nothing wrong. *"Do you know anyone who lives near the Sagamore Bridge?"*

### Gormley, P.C. v. Wilkins
| Actor | Role | Your position |
|---|---|---|
| **George Gormley, P.C.** | Attorney claiming a c. 221 § 50 lien | My efforts got the property marketed at a higher price and created this escrow. |
| **The husband** | Client | I owe my lawyer his fee — but the escrow was never money ordered in my favor. |
| **The wife** | Opposing party — the escrow's ultimate beneficiary | The escrow secures taxes and encumbrances, then reverts to me. |

**Pivot:** § 50 reaches a judgment, decree, or order **in the client's favor**. An escrow held for a special purpose is a trusteeship, not an order in his favor.
**Trap:** "But for my work there'd be no fund" is not the test. Devlin will push you there.

### Ropes & Gray LLP v. Jalbert
| Actor | Role | Your position |
|---|---|---|
| **Ropes & Gray** | Attorney — patent prosecution work | § 50 covers patents and applications, and the lien follows the sale proceeds. |
| **Engage, Inc.** | Client — bankrupt | Every dollar of lien reduces what my estate can pay everyone else. |
| **Craig Jalbert** | Liquidating supervisor | The estate's assets belong to creditors generally. |

**Pivot:** Certified questions, both answered **yes**. § 50 isn't limited to litigation judgments.
**Pair it:** *Gormley* reads "in the client's favor" strictly; *Ropes & Gray* reads the property covered broadly.

### Gangloff Industries v. Generic Financing & Leasing
| Actor | Role | Your position |
|---|---|---|
| **Gangloff Industries** | Towing/repair company in possession | I towed and stored the truck. Possessory lien, and I still hold it. |
| **Robert Bougher** | The "lessee" — the debtor | I signed something called a lease. |
| **Generic Financing** | Lessor / secured party | I own the truck. Or if not, I have a perfected security interest. |

**Pivot:** Two steps — (1) the "lease" is in substance a **security interest** (economics, not the caption); (2) under UCC § 9-333 a possessory lien **beats** a security interest unless the lien statute says otherwise.
**Echo:** this is Week 8's labels-don't-control lesson arriving a week early.

### Commerce Acceptance of Oklahoma City v. Press
| Actor | Role | Your position |
|---|---|---|
| **Jerry Press** | Garageman in possession | Towing, repairs, and storage — at the owner's request — and I still have the car. |
| **Commerce Acceptance** | Prior recorded chattel mortgagee | I perfected first. |
| **The owner** | Debtor | I asked him to store it. |

**Pivot:** Possession plus services beats the earlier paper interest. Note the wrinkle: the storage component held up because the **owner requested** it.

### Williams v. Investors Syndicate
| Actor | Role | Your position |
|---|---|---|
| **Williams** | Third party — delivered loam, unpaid | Bradford was a straw. Investors is the real owner and should pay. |
| **Bradford Estates, Inc.** | Agent — the "straw" | I held title. I'm a judgment debtor with no assets. |
| **Investors Syndicate** | Undisclosed principal | He already took judgment against the agent. He elected. |

**Pivot:** Filing against the agent isn't a conclusive election — **taking judgment** is.
**⚠ Flag it:** Restatement (Third) § 6.09 **rejects** election — judgment against one discharges neither; only satisfaction discharges. Say both, then say which governs. That answer wins the room.
**Devlin's framing:** "a trap for the unwary, and a windfall to either the agent or the principal."

---

# WEEK 8 — IS THERE A PARTNERSHIP?

> **Role vocabulary:** partner vs. creditor · partner vs. employee · co-owner vs. profit-sharer · franchisor/oil company vs. station operator.

### Kaufman-Brown Potato Co. v. Long
| Actor | Role | Your position |
|---|---|---|
| **Kaufman & Brown** | Claiming to be **creditors** of the operation | We financed a potato crop and want to be paid in the bankruptcy. |
| **Horton & Althouse** | The operators | We wrote the contracts and ran the farming. |
| **The trustee / other creditors** | Adverse | If they're partners, they drop behind us under UPA § 40 — and they're liable for the debts under § 15. |

**Pivot:** Did they act as **co-owners of a business for profit**? Advances beyond the contract, on-site recommendations, and access to the books say yes.
**Method Devlin wants:** take each fact and ask — consistent with creditor, partner, or both?
**Consequence:** partner status doesn't just cost them priority; § 15 exposes them to the firm's debts.

### Martin v. Peyton
| Actor | Role | Your position |
|---|---|---|
| **Knauth, Nachod & Kühne (KNK)** | The brokerage firm — the actual debtor | We were failing and needed securities to stay afloat. |
| **Peyton, Perkins & Freeman** | Lenders defending against partner status | We took a profits share, option rights, veto powers, and resignations in escrow — **as security for a loan**. |
| **Martin** | Creditor of the firm | The controls make them partners, so they're liable for the firm's debts. |

**Pivot:** Control taken **as security** is not co-ownership. *"Mere words will not blind us to realities"* — but the realities here show lenders.
**⚠ Naming warning:** Devlin's discussion points call the borrower "Peyton" and the lender "KNK," which is the reverse of the opinion. Listen for how he sets it up and use his labels in class rather than correcting him mid-call.
**His moral:** the more security and control a lender takes, the closer it comes to becoming a partner.

### Frank v. R.A. Pickens & Son Co.
| Actor | Role | Your position |
|---|---|---|
| **Louis Sterling Frank** | Junior partner in a 22-partner farming partnership | I want an accounting and liquidation. Book value doesn't reflect what my interest is worth. |
| **R.A. Pickens** | Managing partner since 1937 | The partnership has run this way for decades, and the agreement says book value. |
| **R.A. Pickens & Son (the other partnership)** | 31% partner — largest interest | The agreement's book-value terms bind all twenty-two of us equally, including the biggest holder. |

**Pivot:** Partners need not be equal. Unequal profit shares, no voting power, and a book-value buyout do not defeat partnership status.
**Devlin's setup:** he'll tell the story of taking you in as a 10% junior partner where his decision is final. Know why that's still a partnership — and what **book value** leaves out (goodwill, appreciation).

### Fenwick v. Unemployment Compensation Commission
| Actor | Role | Your position |
|---|---|---|
| **Arline Chesire** | Cashier/receptionist labeled a "partner" | I got 20% of profits — but I kept my $15/week salary, contributed no capital, bore no losses, and had no say. |
| **John Fenwick** | Owner, United Beauty Shoppe | We signed a partnership agreement. She agreed to it. |
| **The Commission** | Regulator | If she's an employee, she's the eighth — and he's a covered employer. |

**Pivot:** The factor list — intention, profit sharing, **loss sharing**, capital contribution, control, conduct toward third parties, rights on dissolution.
**Devlin's flag:** the court calls her a "girl." He wants you to notice that the opinion's vocabulary discloses its conclusion.

### Vohland v. Sweet
| Actor | Role | Your position |
|---|---|---|
| **Norman Sweet** | 20% of **net** profits, called a "commission" | I shared in the enterprise after every expense. That's co-ownership, whatever we called it. |
| **Paul Vohland** | Nursery owner | It was a commission arrangement with a longtime employee. |

**Pivot:** Substance over label — the intent that matters is the intent to **do the things that constitute a partnership**, even where the parties expressly disclaim it.
**Pair it:** *Fenwick* and *Vohland* both feature 20%. The difference is sharing the **net** and the risk.

### Humble Oil & Refining v. Martin
| Actor | Role | Your position |
|---|---|---|
| **The Martin family** | Injured pedestrians | An unattended car rolled off the station lot and hit us. |
| **Mrs. A.C. Love** | Car owner | I left it at the station for servicing. |
| **The station operator** | Alleged agent/employee | Humble paid most of my operating costs, set my hours, and took my reports. |
| **Humble Oil** | Principal | Independent dealer. |

**Pivot:** Control over the **details** of day-to-day operation → agency → liability.

### Hoover v. Sun Oil
| Actor | Role | Your position |
|---|---|---|
| **Gerald Hoover** | Customer injured by a fire at the pump | Sun's name is on everything. |
| **James Barone** | Station operator | I keep my own profits, set my own hours, and hire and pay my own people. |
| **John Smilyk** | Barone's employee | I was fueling the car. |
| **Sun Oil** | Lessor/supplier | I advise on results. I don't direct the details. |

**Pivot:** Same test, opposite result. **Influence over results ≠ control over means.**
**Say it in class:** these two cases are *Cowan* and *Wright* wearing a franchise costume.

### Amory v. Checroune
| Actor | Role | Your position |
|---|---|---|
| **David Amory** | Architect — creditor | The proposal went to Checroune, Atlan, and "South Shore Realty Investors." I looked to the people. |
| **Alain Checroune** | Defendant claiming agent status | I acted solely as an agent for a disclosed principal, South Shore Realty, LLC. |
| **Paul Atlan** | Co-venturer — signed the acceptance | I signed as a representative of the entity we had just formed, not for myself. |
| **South Shore Realty, LLC** | The disclosed principal — formed days earlier | I bought the building and I'm the party to the architect's contract. |

**Pivot:** The defense is agency; the winning theory is **partnership by estoppel** (§ 16).
**Devlin's question:** *What would you have advised Checroune to do?* Disclose the entity fully in the writing, sign in a representative capacity, and never let a trade name float free of the LLC — then he asks whether that advice works in real life.

### Tropeano v. Dorman
| Actor | Role | Your position |
|---|---|---|
| **Philip Tropeano and the plaintiff partners** | Partners seeking dissolution | The thirty-year term ran out. This is a partnership at will and I can dissolve it today. |
| **Charlene Dorman and the defendants** | Partners resisting | The business continued for decades; the arrangement wasn't meant to evaporate. |
| **Captain Parker Arms Partnership / T&N Realty Trust** | The entity and the title-holding nominee trust | — |

**Pivot:** A term partnership that keeps operating past its term becomes a partnership **at will** — dissolvable by anyone, at any time, for any reason.
**Drafting moral:** a term you never renewed is a term that expired.

---

# WEEK 9 — DUTIES, MANAGEMENT, DISSOLUTION

### Meinhard v. Salmon
| Actor | Role | Your position |
|---|---|---|
| **Walter Salmon** | Managing coadventurer — held the lease in his name | The new project was bigger, longer, and offered to me alone. Our venture was about the Bristol. |
| **Morton Meinhard** | Passive coadventurer — put up half the money | The opportunity came to you *because* you managed our venture. You owed me the chance to bid. |
| **Gerry (the lessor)** | Third party who brought the new project | I dealt with the man who ran the building. |

**Pivot:** The opportunity was an "extension and enlargement" of the venture and came to Salmon **as manager**.
**Devlin's variations — have answers ready:** (a) Salmon's brother pitches an alligator ranch in Florida — outside the venture, no duty; (b) Salmon hears of nearby NYC real estate **on the subway** — harder, and the answer turns on capacity and enlargement.
**What should he have done?** Disclose and offer — or bargain for the right in advance, in writing.

### Meehan v. Shaughnessy
| Actor | Role | Your position |
|---|---|---|
| **Meehan, Boyle & Cohen (MBC)** | Departing partners | We prepared to leave, which the law allows, and we're owed our partnership amounts. |
| **Shaughnessy and the remaining Parker Coulter partners** | The firm | You denied your plans when we asked, used firm resources, and mailed clients before we could respond. |
| **The clients** | Third parties | We choose our own lawyers. |

**Pivot:** Preparation is lawful; **unfairly acquiring consent** is not. Burden shifts to MBC to prove the clients would have followed anyway.
**Devlin's set piece:** compare Cardozo's *"thought of self was to be renounced"* with *Meehan*'s *"consider their co-partners' welfare, and not merely their own."* **Pick one and defend it** — this is his favorite exam essay.
**What should they have done?** Give notice first, then solicit; send a joint letter offering a real choice; never deny plans when asked directly.

### Gibbs v. Breed, Abbott & Morgan
| Actor | Role | Your position |
|---|---|---|
| **Gibbs & Sheehan** | Departing trusts-and-estates partners | Partners may invite qualified people to move with them. |
| **Breed Abbott & Morgan** | The firm | You sent our confidential compensation and personnel evaluations to a competitor while still our partners. |
| **Chadbourne & Parke** | The receiving firm | We got a memo we found useful. |

**Pivot:** Client solicitation is *Meehan*; **employee data and confidential information** is this case. § 8.05, not § 8.04.

### National Biscuit Co. v. Stroud
| Actor | Role | Your position |
|---|---|---|
| **C.N. Stroud** | Partner who gave notice | I told Nabisco I wouldn't be responsible for more bread. |
| **Earl Freeman** | Partner who ordered anyway | Buying bread is the ordinary business of a grocery. |
| **National Biscuit** | Third party — supplier | We delivered $171.04 worth at a general partner's request. |

**Pivot:** Equal management rights (§ 18(e), (h)) — **a majority of one out of two is no majority.** One partner can't unilaterally strip a co-partner's ordinary-course authority.
**Devlin's question:** *Where does this leave Stroud?* One real option — **dissolve**, and give notice to creditors (the § 3.11 problem returns).

### Roach v. Mead
| Actor | Role | Your position |
|---|---|---|
| **William Roach** | Client who lent his lawyer money | I relied on Mead as my lawyer about this loan. |
| **Kenneth Mead** | Partner who borrowed and didn't repay | I borrowed personally. That's not law practice. |
| **David Berentson** | Innocent partner being charged | It was outside the scope of our partnership's business. |

**Pivot:** Recharacterize the conduct as the **failure to give legal advice** — no independent counsel, no security, a usurious rate — and it lands squarely inside the firm's business.

### Prentiss v. Sheffel
| Actor | Role | Your position |
|---|---|---|
| **Chris Prentiss** | Excluded minority partner (15%) | They froze me out and then bought the assets at the sale. |
| **Sheffel & Iger** | Majority partners | The partnership was at will, dissolution was proper, and our bidding **raised** the price he received. |
| **W. Miller Bennett** | Receiver | I supervised the sale. |

**Pivot:** Exclusion doesn't bar the majority from bidding absent fraud or a depressed price.
**Devlin's question:** *What is a 15% voting interest actually worth?* Whatever the agreement gives it — here, not much.

### Monin v. Monin
| Actor | Role | Your position |
|---|---|---|
| **Charles Monin** | Winning bidder at the partnership auction ($86,000) | I bought the milk routes. My brother took them anyway. |
| **Sonny (Joseph) Monin** | Selling brother | The contract required DI's approval, the producers chose me, and the deal was void without approval. |
| **Dairymen Inc.** | The customer whose approval was required | Our producers voted for Sonny. |

**Pivot:** The fiduciary duty runs **through winding up**. He competed for the very asset being sold.
**What should he have done?** Not competed for it — or bargained for that right in the sales agreement.

### Johnson v. Kennedy
| Actor | Role | Your position |
|---|---|---|
| **Johnson & Walker** | Partners left behind | The dissolution was wrongful and we want going-concern value. |
| **Donald C. Kennedy** | Dissolving partner | Oral agreement, no fixed term. § 31(1)(b): any partner may dissolve at will. |

**Pivot:** *"However unseemly in manner and method,"* dissolving a partnership at will is **not a legal wrong.** And with no continuing firm, there's no basis for a $25,000 going-concern valuation.
**Devlin's question:** Kennedy is unsavory — **is unsavory a breach?** Generally no. Nastiness is not a cause of action.

### Dreifuerst v. Dreifuerst
| Actor | Role | Your position |
|---|---|---|
| **Claude Dreifuerst** | The partner demanding a sale | I didn't wrongfully dissolve, so I can force liquidation by actual sale. |
| **Cletus & Roy Dreifuerst** | The brothers who served the dissolution notice | Let the court value the mills and pay him cash. |

**Pivot:** Absent an agreement, an in-kind distribution **cannot** be forced on a non-wrongful partner. A sale is the best evidence of value.
**Pair it:** with *Prentiss* — the partners who want the business may bid, but they must actually bid.

### 8182 Maryland Associates v. Sheehan
| Actor | Role | Your position |
|---|---|---|
| **8182 Maryland Associates** | Landlord on a long-term lease | Somebody owes me the rest of this lease. |
| **Sheehan (estate)** | Partner when the lease was signed | I signed. My estate is exposed. |
| **Noelker, Burdette, Lageson, Klar** | Partners admitted **after** the lease, gone **before** the breach | § 17: liability for pre-admission obligations is satisfied only out of partnership property — not personally. |
| **Popkin & Stern** | The firm — repeatedly dissolved and reconstituted | The firm signed the lease. Look to the firm and its assignees. |

**Pivot:** Every admission or withdrawal dissolves the old partnership and creates a new one. Old debts stay the **personal** obligations of the old partners.
**Draw:** a timeline of admissions, withdrawals, and the date of breach. That timeline *is* the answer.

---

# WEEK 10 — LP, LLP, AND LLC

> **Role vocabulary:** general partner (unlimited liability, runs it) · limited partner (limited liability, no management) · LLC member vs. manager · successor entity vs. predecessor.

### Bassan v. Investment Exchange Corp.
| Actor | Role | Your position |
|---|---|---|
| **Morton Bassan and the limited partners** | Passive investors | He sold his own land to our partnership at a profit and told us afterward. |
| **Investment Exchange Corp.** | Sole general partner | The articles let the limited partners consent to that profit, and they knew and said nothing. |
| **Auburn West Associates** | The limited partnership | — |

**Pivot:** Consent must be given **the way and at the time the agreement requires** — here, only *after* the sale. Silence and acquiescence are not consent.
**Devlin's question:** *Is this closer to Meinhard or Meehan?* Argue it either way, but pick.

### Puleo v. Topel
| Actor | Role | Your position |
|---|---|---|
| **Philip Puleo and the other creditors** | Third parties | He kept doing business after the LLC was dissolved. Under corporate law he'd be personally liable. |
| **Michael Topel** | Manager of Thinktank, LLC | The legislature removed that provision from the LLC Act. Read the statute. |
| **Thinktank, LLC** | Involuntarily dissolved for a missed annual report | — |

**Pivot:** The court **admits** the result is inequitable and holds it's bound by the text.
**One-liner:** *Never reason from corporate law to LLC law by analogy. The gaps are the point.*

### Harbison v. Strickland
| Actor | Role | Your position |
|---|---|---|
| **Suzy Strickland Harbison** | 83% equity owner | You sold the LLC's real property without considering my interests or getting consent. |
| **Bonnie Sue Strickland** | Manager and 17% owner | As manager I make business decisions. |
| **Strickland Family LLC** | The entity — an estate-planning vehicle | — |

**Pivot:** The **operating agreement** is the source of duty — best interests of the LLC and its owners, and no action with a material adverse effect on a group of equity owners without consent.
**Trap:** the trial court thought she could dispose of property as she saw fit. Reversed.

### Knapp v. Neptune Towers Associates
| Actor | Role | Your position |
|---|---|---|
| **Russell Knapp and the Class A limited partners** | Passive investors | The general partners sold the property out from under us. |
| **The general partners** | Managers of the LP | We ran the partnership and did nothing the Partnership Agreement doesn't authorize. |
| **William Bailey** | Attorney for the partnership | I wasn't your lawyer. I owed you no duty. |

**Pivot:** Conduct authorized by the agreement is generally not a breach — and **entity counsel represents the entity**, not its investors.
**Mirror image of** *Bassan*.

### Milliken & Co. v. Duro Textiles
| Actor | Role | Your position |
|---|---|---|
| **Milliken & Co.** | Unsecured trade creditor of Old Duro ($8.75M) | New Duro is the same business with the debts stripped off. |
| **Old Duro (Duro Industries)** | Predecessor | My assets went out in a lawful foreclosure sale. My debts stayed with me. |
| **New Duro (Duro Textiles, LLC)** | Successor entity | We bought assets. We didn't assume this debt. |
| **Patriarch Partners / the Ark lenders** | Acquirers | We ran a lawful foreclosure and purchase. |

**Pivot:** **De facto merger / mere continuation** — continuity of ownership, management, personnel, location, operations; predecessor's dissolution; assumption of the liabilities needed to keep running.
**Second holding:** the c. 93A claim fails for want of a commercial relationship with the acquiring entities.

### Fronk v. Fowler
| Actor | Role | Your position |
|---|---|---|
| **Fronk, Walter & Saltiel** | Limited partners | You bought the neighboring parcels without us and charged us related-party fees. |
| **Wolff, Fowler & Millman** | General partners (The Cambridge Company) | The limited partnership agreement expressly permits both, and the fees were at market rates. |

**Pivot:** *Meinhard* is a **default** rule. A sufficiently specific agreement can authorize what would otherwise be usurpation.
**Burden note:** once self-dealing is shown, the fiduciary must prove fairness (*Starr v. Fordham*) — and here the judge found they met it either way.

### Pierce v. Morrison Mahoney, LLP
| Actor | Role | Your position |
|---|---|---|
| **Pierce, Fahey, Davis and the withdrawing partners** | Departed partners | The forfeiture provision penalizes leaving and restricts client choice. |
| **Morrison Mahoney, LLP** | The firm | We amended the agreement so it applies to **all** voluntary withdrawals, competing or not. |

**Pivot:** *Pettingell* struck a provision that punished only competitors. A **neutral** provision doesn't violate Rule 5.6.
**Practice lesson:** the fix for a disfavored restriction is often to make it evenhanded.

### Rapoza v. Talamo
| Actor | Role | Your position |
|---|---|---|
| **Dr. Peter Rapoza** | Partner / member — petitioner | We're deadlocked. Dissolve it. |
| **Dr. Jonathan Talamo** | The only other partner / member | Deadlock cuts both ways. If we dissolve, it's on terms that value what each of us built. |
| **Cornea Consultants LLP; LESB; LECB** | The three entities, **no written operating agreements** | — |

**Pivot:** G.L. c. 156C § 44 — dissolution when it is **not reasonably practicable** to carry on. *Nabisco* deadlock in modern entity clothing.

---

# WEEK 11 — THE BUSINESS JUDGMENT RULE

### A.P. Smith Mfg. Co. v. Barlow
| Actor | Role | Your position |
|---|---|---|
| **A.P. Smith Mfg. Co.** | Corporation making a gift to Princeton | Corporate philanthropy serves our long-term interests, and the statute permits it. |
| **Barlow and the objecting shareholders** | Owners | That's our money going to the board's favorite charity. |
| **Princeton University** | Donee | — |

**Pivot:** *Intra vires* or *ultra vires*? Held intra vires.
**Devlin's needle:** *Isn't it bothersome when other people decide which charity your money supports? Could your bank do this with your checking account?* Have a position.

### Bayer v. Beran
| Actor | Role | Your position |
|---|---|---|
| **Bayer and the shareholder plaintiffs** | Derivative plaintiffs | The radio campaign existed to showcase the president's wife. |
| **Beran and the Celanese directors** | Defendants | Advertising is a business judgment. The program served the company. |
| **Dr. Camille Dreyfus** | President whose wife was featured | The program served the company, she was paid a reasonable fee, and I didn't push it through the board. |
| **Jean Tennyson** | The wife — a professional singer | I was paid a reasonable fee. |
| **Henri Dreyfus** | VP/director on a $30,000/year contract | Separate transaction, separate analysis. |

**Pivot:** The BJR protects **judgment**, not self-interest. A director's relative in the transaction triggers stricter scrutiny — but on these facts, no liability.
**Say it:** *"Directors may make mistakes. They may not be on both sides."*

### Shlensky v. Wrigley
| Actor | Role | Your position |
|---|---|---|
| **William Shlensky** | Minority shareholder | The Cubs lose money because you won't install lights. |
| **Philip K. Wrigley** | Director / controlling shareholder | Night baseball would degrade the neighborhood — and that affects the property's long-term value. |
| **Chicago National League Ball Club** | Nominal defendant corporation | — |

**Pivot:** Absent **fraud, illegality, or conflict of interest**, courts won't second-guess. Dismissed at the pleading stage.
**Devlin's question:** *Is the BJR a sliding scale — and should it be?* Read it against *Bayer* and answer yes, with the reason.

### Menard, Inc. v. Dage-MTI, Inc.
| Actor | Role | Your position |
|---|---|---|
| **Menard, Inc.** | Buyer of 30 acres for $1,450,000 | The president represented he had authority and signed. |
| **Arthur Sterling** | President of Dage-MTI | I've run this company for years with little board involvement. |
| **The Dage board** | Principal — six directors, four out of state | We reserved final approval, and we disapproved. |

**Pivot:** "Inherent authority" of a corporate president; internal limits don't bind a buyer without **notice**.
**⚠ Flag it:** the Restatement (Third) abandoned inherent agency power. Route it through §§ 2.03/3.03 apparent authority and § 2.05 estoppel.
**Read the dissent:** the buyer knew it had to go to the board, it went, the board said no — and the deal binds anyway. Devlin will want that argued.

### Burg v. Horn
| Actor | Role | Your position |
|---|---|---|
| **Lillian Burg** | One-third shareholder, derivative plaintiff | You were the men who found buildings for our corporation. You bought nine for yourselves. |
| **Max & George Horn** | Majority shareholders and managing officers | She invested knowing we already owned and kept buying similar properties. There was never an agreement to offer everything to Darand. |
| **Darand Realty Corp.** | The corporation | — |

**Pivot:** The **line-of-business test is not mechanical.** Expectations at formation shape the duty in a close corporation.
**Read the dissent:** straight *Meinhard* — the men whose job was finding properties had to offer them first, especially where corporate funds were used.

### Boylan v. Boston Sand & Gravel
| Actor | Role | Your position |
|---|---|---|
| **Dorothy Boylan & Paul Ryan** | Plaintiffs (estate side) | The board leased a 42-acre parcel to a company owned by two of its own officers for $2,000/month with an option to buy. |
| **Dean M. Boylan, Jr. & Jeanne-Marie Boylan** | Officers/directors who own Ankat | The board unanimously authorized it. |
| **Boston Sand & Gravel / Manchester Sand** | Corporation and subsidiary | The land was mined out. The lease was reasonable. |
| **The disinterested directors (2006)** | Ratifiers | We approved it after the fact. |

**Pivot:** Summary judgment **denied**; the court orders a hearing on whether the ratification satisfies the Massachusetts **Houle** three-tier test.
**Note:** when a disinterested board refers a demand to a disinterested committee, both get BJR protection — but the process is still tested.

---

# WEEK 12 — PIERCING THE CORPORATE VEIL

> **Role vocabulary:** shareholder vs. corporation · parent vs. subsidiary · sibling corporations under common control · tort claimant (couldn't investigate) vs. contract creditor (could).

### Zempel v. Liberty
| Actor | Role | Your position |
|---|---|---|
| **Darwin Zempel** | Nonmember plaintiff | I sued the bar, its shareholder, and another individual. |
| **Lenora Liberty** | Sole shareholder, tribal member | Tribal court has jurisdiction over claims against me. |
| **Tiny's Tavern of Charlo, Inc.** | Montana corporation on the reservation | We operate here, on tribal land. Claims arising here belong in tribal court. |

**Pivot:** Before you pierce, make sure you're in a **court that can hear the case against the entity you sued**. Dismissal of the corporation and shareholder reversed.

### Walkovszky v. Carlton
| Actor | Role | Your position |
|---|---|---|
| **John Walkovszky** | Injured pedestrian | Ten corporations, two cabs each, minimum insurance — the structure exists to defeat recovery. |
| **William Carlton** | Shareholder of all ten cab corporations | Complying with the statutory minimum isn't fraud. Sue the corporation that owned the cab. |
| **Seon Cab Corp.** | The owner of the cab | I own the cab and carry the insurance the statute requires. Recover from me — that's what I'm for. |
| **Marchese** | The driver | I drove negligently. I'm personally liable, and I have nothing. |

**Pivot:** The complaint alleges the corporations ran as **one enterprise** — which reaches the *sibling corporations*, not Carlton personally. To get Carlton you must allege he ran the business **in his individual capacity**.
**Do the thing he asks:** draw the chart with arrows. Sideways liability vs. upward liability is visible only on paper.
**Read Keating's dissent** for the other side.

### Howie v. Ikechukwuka
| Actor | Role | Your position |
|---|---|---|
| **Jennifer Howie** | Massport taxi dispatcher, foot crushed | Every cab is painted alike, the phone answers "Boston Cab," and the cards say Boston Cab. |
| **Stephen Ikechukwuka** | Driver under an alleged "lease" | I lease the cab and run my own shifts. I'm nobody's employee. |
| **Elsie's Cab, Inc.** | The one-cab corporation | I own one cab. My assets are my assets, and the association is not me. |
| **Boston Cab / the association** | The integrated brand and dispatch operation | Each cab is separately incorporated and self-insured. |

**Pivot:** Branding plus integrated operations supply what *Walkovszky*'s complaint lacked. Forty years later, same industry, better facts.

### Sea-Land Services v. The Pepper Source
| Actor | Role | Your position |
|---|---|---|
| **Sea-Land Services** | Unpaid ocean carrier | A default judgment against an empty dissolved shell is worth nothing. |
| **Gerald Marchese** | Owner of five corporations | Corporate form is corporate form. |
| **The Pepper Source, Caribe Crown, Jamar, Salescaster, Marchese Fegan** | The other corporations to be **reverse-pierced** | We never dealt with Sea-Land. Our creditors shouldn't fund another company's freight bill. |

**Pivot:** *Van Dorn* two-part test. Unity is easy here — no formalities, no records, no meetings, no capital, personal expenses (mortgage, alimony, boat, car) paid from corporate accounts. The hard half is **"fraud or injustice"**: an unpaid judgment alone isn't enough; the court looks for unjust enrichment.
**Devlin's tip:** the four subparts of unity — records/formalities, commingling, undercapitalization, treating assets as one's own. And he'll ask what happened on remand (993 F.2d 1309).

### Kinney Shoe v. Polan
| Actor | Role | Your position |
|---|---|---|
| **Kinney Shoe** | Sublessor | No capital, no records, no formalities — a shell holding a sublease. |
| **Lincoln Polan** | Sole shareholder of Industrial Realty | You could have required my personal signature, a surety, or a credit check. You went in blind. |
| **Industrial Realty** | The lessee corporation | I'm the tenant on the sublease. Kinney contracted with me. |

**Pivot:** Two prongs plus an optional third — could the creditor have protected itself? The court **declines** to apply it and pierces.
**Devlin's critique — be ready to argue it:** Kinney "is rewarded for his ignorance." Then his reconciliation: in **tort** cases the victim can't investigate, so **capitalization** should dominate and formalities matter less.

### Baatz v. Arrow Bar
| Actor | Role | Your position |
|---|---|---|
| **Kenny & Peggy Baatz** | Injured motorcyclists | The bar over-served a driver who is uninsured and judgment-proof. |
| **The Neuroths (Edmond, LaVella, Jacquette)** | Shareholders who personally guaranteed a $50,000 loan | We observed the formalities and held the business out as a corporation. |
| **Arrow Bar, Inc.** | The corporation | The corporation served the drinks and the corporation answers for it. |
| **Roland McBride** | The drunk driver | Uninsured and judgment-proof. |

**Pivot:** Formalities observed → no piercing, despite thin capitalization and a personal guaranty.
**Line to keep:** *incorporating to limit liability is the purpose of incorporating — not evidence of abuse.* The dissent quotes the president saying they incorporated "as a shield." Know both readings.

### My Bread Baking Co. v. Cumberland Farms
| Actor | Role | Your position |
|---|---|---|
| **My Bread Baking (Joseph Duchaine)** | Supplier — owner of the delivery racks | Store managers refused to return my racks. Title never left me. |
| **Byron Haseotes** | Officer/stockholder of C.F. Inc., each codefendant, and fifteen more corporations | I gave the instruction. |
| **Cumberland Farms, Inc.** | Held liable though it **owned no stock** in the codefendants | I own no shares in the store corporations and never had possession of the racks. |

**Pivot:** The Massachusetts standard — (a) common control **plus** fraudulent or injurious consequence, **or** (b) **confused intermingling** with substantial disregard of separate entities.
**Devlin's questions:** would the result differ if a codefendant's truck had run someone over? And would this theory reach **Haseotes personally**?

### Gardemal v. Westin Hotel Co.
| Actor | Role | Your position |
|---|---|---|
| **Lisa Gardemal** | Widow of a drowned guest | Shared trademark, shared manuals, shared reservation system. |
| **Westin Hotel Co.** | U.S. parent | That describes an ordinary parent-subsidiary relationship. |
| **Westin Mexico / Westin Regina** | Subsidiary and resort | I'm a separate Mexican corporation. A Texas court has no personal jurisdiction over me. |

**Pivot:** The outer limit. No blending of identities, no harm caused by separateness → no alter ego, no single business enterprise.

### Philip Alan, Inc. v. Sarcia
| Actor | Role | Your position |
|---|---|---|
| **Philip Alan, Inc. / Christine Perkins** | Salon owner and president | The renovation went wrong and we want the contractor and everyone near him. |
| **Michael Sarcia** | Signed for "MSarcia Construction Services, LLC" — **which did not yet exist** | I signed for a company. |
| **Nosal Builders** | Alleged related entity | No corporate connection was ever shown. |
| **Eliot Square / LDL Studio** | Property owner and architect | — |

**Two lessons:** (1) veil piercing needs **evidence**, not suspicion; (2) **promoter liability** — contracting for a nonexistent principal makes you the party (§ 6.04).
**Say it:** *Form the entity before you sign.*

### Scott v. NG U.S. 1, Inc.
| Actor | Role | Your position |
|---|---|---|
| **Wayne Scott, trustee** | Developer who found coal tar | Someone must pay for the cleanup. |
| **Salem Gas Light Co.** | The company that ran the gas works — 1850–1890 | I made the gas and I sold the land in 1890 — decades before NEES bought a share of my stock. |
| **NEES / NEPA** | Parent that bought Salem Gas stock **decades later** (1926–27) | I acquired it thirty-six years after the property was sold. |
| **Boston Gas** | Codefendant | — |

**Pivot:** The **twelve-factor** Massachusetts list — and the governing sentence: *"control, even pervasive control, without more, is not a sufficient basis"* to ignore corporate form. There must be improper purpose and a connection to the injury.

### Nissen Corp. v. Miller
| Actor | Role | Your position |
|---|---|---|
| **Frederick Brandt** | Injured on a treadmill five years after purchase | Somebody made this machine. |
| **American Tredex** | Manufacturer — continued for five years as "AT Corporation" | I designed and built the treadmill, and I stayed in existence to be sued for five years. |
| **Nissen Corp.** | Asset purchaser | The contract **expressly excluded** liability for previously sold products. |
| **Atlantic Fitness Products / Warren Miller** | Seller of the treadmill | — |

**Pivot:** Successor liability, **not** piercing. Maryland keeps the four traditional exceptions and **rejects** continuity-of-enterprise and product-line theories.
**Pair it:** with *Milliken* — did the buyer buy the **business** or just the **assets**?

### Attorney General v. M.C.K., Inc.
| Actor | Role | Your position |
|---|---|---|
| **The Attorney General** | Enforcing the Patient Protector Receivership Act | The owner disclaimed financial responsibility and residents were endangered. |
| **M.C.K., Inc.** | Owner of the nursing home | I disclaimed financial responsibility. The receiver's authority comes from the statute, not from me. |
| **The receiver** | Court-appointed | May I sell the facility, or must it close? |
| **Union Square residents** | The people at risk in an involuntary transfer | Closing the facility means transfer trauma — a real increase in illness and death. Sell it instead. |

**Pivot:** The source of the phrase later courts use — piercing is for the **"rare situation."**

---

# WEEK 13 — CLOSELY HELD CORPORATIONS

> **Role vocabulary:** majority/controlling shareholder · minority shareholder · shareholder-employee · the ad hoc controller (a veto holder).

### Donahue v. Rodd Electrotype
| Actor | Role | Your position |
|---|---|---|
| **Euphemia Donahue** | Minority shareholder, widow of a longtime employee | The corporation bought Harry's shares for $36,000 and offered me nothing. |
| **Harry C. Rodd** | Former controlling shareholder who sold to the corporation | I was retiring and arranging succession for my sons. |
| **Charles & Frederick Rodd; Harold Magnuson** | Directors | We approved a legitimate retirement buyout. |

**Pivot:** **Memorize the three elements** of a close corporation — few shareholders, no ready market, substantial majority participation in management. Then the **equal opportunity rule**: a corporate purchase from a controlling shareholder must be offered ratably to everyone on identical terms.
**Devlin's questions:** how did Harry come to control with only 200 of 1,000 shares? Would the result be the same in a public corporation? What could the Rodds have done instead?

### Wilkes v. Springside Nursing Home
| Actor | Role | Your position |
|---|---|---|
| **Stanley Wilkes** | Equal shareholder, cut off in 1967 | Salary and office were my whole return. There were no dividends. |
| **Quinn, Riche & Connor** | The other three | We had our reasons and we had the votes. |
| **Springside Nursing Home, Inc.** | The corporation | — |

**Pivot:** The balancing test — controlling group shows a **legitimate business purpose**; minority shows a **less harmful alternative**; the court weighs them.
**Devlin's hypo:** a 5% shareholder-employee at will whose stock is redeemable on termination — can you fire him for any reason? That's essentially *Merola*.

### Merola v. Exergen Corp.
| Actor | Role | Your position |
|---|---|---|
| **Steven Merola** | VP and minority shareholder, terminated | There was no legitimate business purpose for firing me. |
| **Francesco Pompei** | President and majority shareholder | And no gain to me either — he was paid $17 a share, the same price others got. |

**Pivot:** No legitimate purpose **and yet no breach**, because the majority captured nothing. Not every discharge of an at-will shareholder-employee is a freeze-out.
**The test to state:** did the majority **take value** from the minority?

### Sugarman v. Sugarman
| Actor | Role | Your position |
|---|---|---|
| **Jon Sugarman et al.** | Minority — grandchildren of Samuel | Excessive salary to himself, no participation for us, then a low-ball offer for our shares. |
| **Leonard Sugarman** | Majority — son of Myer | I run the company and I'm paid for running it. |
| **Statler Industries** | The corporation | — |

**Pivot:** The classic freeze-out pattern: **drain via compensation, then buy cheap.**
**Devlin's follow-up:** how should Leonard set his salary going forward? Market comparables, disinterested approval, documentation. And the honest one — **aren't the plaintiffs still frozen out?** Damages don't create a market.

### Keating v. Keating
| Actor | Role | Your position |
|---|---|---|
| **Paul Keating, Jr.** | Son, 49% shareholder, left and competed | I was fired and frozen out of my 49%. |
| **Paul Keating, Sr.** | Father, controlling the family food distribution business | He quit, and then he competed against us. |
| **The daughter** | Aligned with the father | I work in this business too, and my brother left to compete against us. |

**Pivot:** Four weeks of trial, 24 witnesses, "very close legal calls" — quit or fired, frozen out or not, buy-sell agreement or none, breach by one or both.
**Devlin's real question:** *what would you, as corporate counsel, have done to prevent this?* A written stock restriction and buy-sell agreement with a valuation formula and triggering events. Say it in one sentence.

### Smith v. Atlantic Properties
| Actor | Role | Your position |
|---|---|---|
| **Dr. Louis Wolfson** | 25% holder wielding the **80% veto** | I blocked dividends because the buildings needed repairs and improvements. |
| **Paul Smith, Abraham Zimble, William Burke** | The other three quarters | His veto triggered IRS penalty taxes for unreasonable accumulation. |
| **Atlantic Properties, Inc.** | The corporation with the 80% provision | — |

**Pivot:** A veto turns a **minority** holder into a controller for the decisions it reaches — and the *Donahue*/*Wilkes* duties attach to him.
**Devlin's needle:** *are the other three any less blameworthy?* "Tyranny of the majority or tyranny of the minority, it's still tyranny."
**What should Wolfson have done?** Documented a legitimate business purpose contemporaneously and offered a less harmful alternative — *Wilkes*, run from the minority side.

---

# WEEK 14 — MERGERS, TAKEOVERS, DERIVATIVE SUITS

### Coggins v. New England Patriots Football Club
| Actor | Role | Your position |
|---|---|---|
| **David Coggins** | Nonvoting shareholder, cashed out | The merger existed to make the team pay Sullivan's personal acquisition debt. |
| **William H. Sullivan, Jr.** | Controlling shareholder | Reorganization was necessary and the price was fair. |
| **The old and new corporations** | Merger vehicles | The merger was approved in form. Whether it had a corporate purpose is the only question. |

**Pivot:** A freeze-out merger requires a legitimate **business purpose of the corporation**, not of the controlling shareholder.
**Devlin's questions:** how could Sullivan have succeeded, and what should he have done **in advance**? Also note the business-purpose test hasn't traveled well — Delaware abandoned it.

### Cheff v. Mathes
| Actor | Role | Your position |
|---|---|---|
| **P.T. Cheff** | CEO and director, $77,400 salary, 6,000 shares | The raider's plans threatened our sales organization and corporate policy. |
| **Katharine Cheff** | Director since 1922, family holder through Hazelbank | I'm the founder's daughter. My family's shares aren't a conflict — they're why I care what happens to this company. |
| **Anne Mathes & Harry Lewis** | Derivative plaintiffs | You spent corporate funds buying out a threat to your own jobs. |
| **Holland Furnace Co.** | The corporation | — |

**Pivot:** Where directors are charged with entrenchment, they bear the burden of showing **reasonable grounds** — good faith plus reasonable investigation. Ancestor of *Unocal*.
**Vocabulary:** know what **greenmail** is and whose perspective makes it good or bad.

### Cohen v. Beneficial Industrial Loan Corp.
| Actor | Role | Your position |
|---|---|---|
| **Cohen (as executors)** | Derivative plaintiff | Eighteen years of self-enrichment by management. |
| **Beneficial Industrial Loan Corp.** | The corporation, in diversity | The forum state's security-for-expenses statute applies. |

**Pivot:** A state statute creating liability for defense expenses applies in federal diversity actions. It exists to deter **strike suits** — the abuse Devlin describes (buy one share, allege wrongdoing, get paid to go away).

### Heineman v. Datapoint Corp.
| Actor | Role | Your position |
|---|---|---|
| **Stanley Heineman** | Shareholder | Four self-dealing transactions; demand would have been futile. |
| **The eight Datapoint directors** | Board | Plead particularized facts or go home. |

**Pivot:** *Aronson* — particularized facts creating **reasonable doubt** that directors were disinterested and independent, or that the transaction was a valid exercise of business judgment. Dismissal reversed with leave to amend.
**Devlin's needle:** *What do you think a board says when a demand is made? Isn't that the end of the suit?* That's exactly why futility is fought so hard.

### Alford v. Shaw
| Actor | Role | Your position |
|---|---|---|
| **Frank Alford and the minority shareholders** | Derivative plaintiffs | A committee appointed by the board being sued isn't independent. |
| **Robert Shaw and the AAA directors** | Defendants | The committee investigated and recommended termination. |
| **Marion Follin & Frank Parker** | Elected to the board **and then** named the special litigation committee | We are disinterested. |

**Pivot:** On rehearing the court **reverses itself**: the SLC's decision is not binding; the court conducts its **own** review.
**Devlin's question:** how independent is such a committee, and does it depend who's on it?

### Food & Allied Service Trades Dept., AFL-CIO v. Wal-Mart
| Actor | Role | Your position |
|---|---|---|
| **FAST (AFL-CIO)** | Shareholder — owns 23 shares | § 220 demand for the stockholder list to solicit proxies. |
| **Wal-Mart** | Corporation | Your real purpose is a labor campaign, not shareholder value. |

**Pivot:** Proxy solicitation is a classic **proper purpose**, and pressing the corporation to comply with law is consistent with management's own conception of corporate interest.
**Practical note:** § 220 is how a plaintiff gets the particularized facts that *Heineman* and *Brehm* demand.

### In re Paxson Communications Corp. Shareholders Litigation
| Actor | Role | Your position |
|---|---|---|
| **The Class A shareholders** | Plaintiffs | The board summarily rejected an all-cash $20/share offer from Fox. |
| **Lowell W. Paxson** | Controlling stockholder | I chose a partner who could grow the company. Shareholders don't get to pick the buyer. |
| **The Pax board** | Defendants | The claim belongs to the corporation, not to you individually. |
| **NBC** | The party that got the deal instead | $415 million in preferred, warrants, and purchase rights. |

**Pivot:** Failure to evaluate an acquisition offer is **derivative** — the harm is common to all shareholders. The dilution theory dies on the plaintiffs' own concession that Class A and B were economically identical.
**Ask yourself:** who was harmed, and who would collect?

### Cuker v. Mikalauskas
| Actor | Role | Your position |
|---|---|---|
| **Albert Cuker and the minority shareholders** | Derivative plaintiffs | The board can't kill our suit against itself. |
| **Mikalauskas and the PECO directors** | Defendants | The business judgment rule permits termination — under a defined procedure. |
| **PECO Energy** | Regulated utility corporation | — |

**Pivot:** Pennsylvania **adopts the ALI Principles §§ 7.02–7.10** as the framework — the third way between Delaware and *Alford*.

### Brehm v. Eisner
| Actor | Role | Your position |
|---|---|---|
| **William Brehm and the shareholders** | Derivative plaintiffs | A $140 million severance after fourteen months is waste. |
| **Michael Eisner and the Old Board** | Directors | We relied in good faith on a compensation expert. § 141(e). |
| **Michael Ovitz** | The president who left | I signed the contract the board approved and left on its terms. The severance was the bargain. |
| **Graef Crystal** | The board's compensation expert | I was their expert *ex ante*, not their agent *ex post* to make admissions. |

**Pivot:** **Process, not outcome.** Gross negligence as to the process; waste means no person of ordinary business judgment could think the consideration adequate. Complaint dismissed **with leave to replead**.
**Note the posture:** review of a Rule 23.1 dismissal is *de novo*. This is a holding about a **pleading**, not about whether the directors behaved well.

---

# WEEK 15 — SECURITIES LAW; INSIDER TRADING

> **Role vocabulary:** insider (classical) · temporary insider · misappropriator (duty to the **source**) · tipper · tippee · relief defendant · the trading counterparty.

### Goodwin v. Agassiz
| Actor | Role | Your position |
|---|---|---|
| **Goodwin** | Selling shareholder | You bought my shares knowing a geologist's theory about copper under our land. |
| **Agassiz** | President and director | We bought impersonally on the Boston exchange. My duty runs to the corporation, not to you. |
| **MacNaughton** | Director and general manager | The theory was speculative and unpublished. |
| **Cliff Mining Co.** | The corporation | — |

**Pivot:** The pre-1934 baseline — no duty to an anonymous seller on an exchange absent "special facts."
**Devlin's framing:** *"Back in the old days... it was much more of a rough and tumble, caveat emptor type of world."* **Note to whom the duty runs** — that's his stated question.

### SEC v. Texas Gulf Sulphur
| Actor | Role | Your position |
|---|---|---|
| **The SEC** | Enforcer | Disclose or abstain. |
| **Fogarty, Mollison, Murray, Huntington, O'Neill, Clayton, Crawford** | Insiders who bought stock and calls | The drill core was one hole. Nothing was confirmed. |
| **Darke** | The tipper | I told friends. |
| **Coates** | Bought right after the announcement | The news was out. |
| **Texas Gulf Sulphur** | Corporation that issued a discouraging press release | We were trying to prevent rumors. |

**Pivot:** **Materiality** = probability × magnitude. And information is not public until effectively **disseminated and absorbed** — Coates's timing is the teaching example.
**Devlin's policy pitch:** the retiree in Kansas with $50,000. Capital markets need the belief the game isn't rigged. *"Can you spell G-r-e-a-t D-e-p-r-e-s-s-i-o-n?"*

### Carpenter v. United States
| Actor | Role | Your position |
|---|---|---|
| **R. Foster Winans** | WSJ reporter, "Heard on the Street" | The column contained no corporate inside information — its value was its market impact. |
| **Kenneth Felis** | The broker who traded | I traded on a newspaper column's publication schedule — not on any corporate inside information. |
| **David Carpenter** | Winans's roommate — convicted of aiding and abetting | I passed messages. |
| **The Wall Street Journal** | The **source** whose property was taken | Our publication schedule and contents are confidential business information. |

**Pivot:** Confidential business information is **property** for mail and wire fraud. On the securities counts the Court split **4–4**, leaving misappropriation unresolved until *O'Hagan*.
**Devlin's aside:** *"Can you really trust your fellow conspirators?"* — the co-conspirator testimony is how these cases get proved.

### United States v. Chestman
| Actor | Role | Your position |
|---|---|---|
| **Robert Chestman** | Stockbroker | I owe a fiduciary duty to nobody in the Waldbaum family. |
| **Keith Loeb** | Husband of a Waldbaum granddaughter — the tipper to Chestman | I learned it from my wife. |
| **Susan Loeb / Shirley Witkin** | The family chain | We were told to keep it quiet. |
| **Ira Waldbaum** | President and controlling shareholder | I told my children and my sister about the A&P sale. |

**Pivot:** Marriage and kinship **alone** don't create a fiduciary-like relationship, so 10b-5 fails — but **Rule 14e-3(a)** needs no breach of duty in the tender offer setting, and that conviction stands.
**Devlin's exact question:** *So which rule did he violate?* Answer: **14e-3.**
**Aftermath:** this gap produced **Rule 10b5-2**.

### United States v. O'Hagan
| Actor | Role | Your position |
|---|---|---|
| **James O'Hagan** | Partner at Dorsey & Whitney; never worked on the deal | I owed no duty to Pillsbury or its shareholders. I traded against nobody I represented. |
| **Grand Met** | Client of the firm — **the source** | We shared our tender offer plans in confidence. |
| **Pillsbury** | The target | O'Hagan never represented me and owed me nothing. That's precisely why the classical theory doesn't reach him. |

**Pivot:** The **misappropriation** theory — the fraud is on the **source** of the information, and the deception is complete when the trade occurs, because disclosure to the source would defeat the scheme. Rule 14e-3(a) upheld as a prophylactic.
**One-liner:** classical reaches insiders who owe a duty to the people they trade *with*; misappropriation reaches outsiders who owe a duty to the people they took it *from*.

### SEC v. McGee
| Actor | Role | Your position |
|---|---|---|
| **Timothy McGee** | Traded on what he learned from a fellow **Alcoholics Anonymous** member he had sponsored | There was no commercial or family relationship here. |
| **The AA acquaintance** | The source — an executive at the target | I confided in my sponsor over years. |
| **Michael Zirinsky** | Tippee who traded and tipped further | I didn't know where the information came from or that anyone breached a duty to get it. |
| **Robert Zirinsky** | Father — dismissed for want of **scienter** | I didn't know what I was told or where it came from. |
| **Kellie, Jillynn, Geraldine, Mary Zirinsky** | **Relief defendants** — held the profits | We just have the money. |

**Pivot:** **Rule 10b5-2** — a history and pattern of sharing confidences creates the duty. The relationship need not be commercial or familial.
**Second point:** relief defendants can be reached for disgorgement without primary liability.

### SEC v. Spivak
| Actor | Role | Your position |
|---|---|---|
| **Shirmila Doddi** | Bank analyst — the **tipper** | I never traded and I got nothing. |
| **Vlad Spivak** | Day trader and **romantic partner** — the tippee | Under *Newman*, absent a pecuniary benefit to Doddi there's no breach and no derivative liability for me. |
| **Spivak's late mother's account** | The second trading account | $222,357 in profits across the accounts. |

**Pivot:** Under *Dirks* and First Circuit law, a **gift** of confidential information to a friend, relative, or romantic partner **is** the personal benefit. *Newman* doesn't control — and *Salman* settled it.
**The chain to recite:** tipper breached → tipper got a personal benefit → tippee knew or should have known. Break one link and tippee liability fails.

---

# LAST-MINUTE CHECKLIST

Read this on the way into class.

1. **Say the classification first.** "My position is that Sun is a subagent." Then the fact that gets you there. Devlin is grading the structure, not the eloquence.
2. **Name whose manifestation you're relying on.** Principal to agent (actual), principal to third party (apparent), agent's own behavior (fails — that's *Hoddeson*).
3. **If the case turns on employment, split the two questions.** Is this person an employee? Was this act within the scope? Never merge them.
4. **If the case turns on a document, say what the document does and doesn't do.** A no-agency clause binds the parties to it. It says nothing to a stranger.
5. **If you're stuck, ask which way the duty runs.** To the corporation, to the shareholders, to the source of the information, to the partner, to the principal. Most of his hard follow-ups are duty-direction questions.
6. **Have the "what should they have done" answer ready.** Almost always: put it in writing, disclose and get informed consent, or give notice. It works for nearly every case in the course.
7. **Answer "was it correctly decided" with a reason, not a verdict.** "Correctly decided on the classification, but the remedy doesn't match the wrong" is a better answer than yes or no.
8. **When you genuinely don't know:** *"I'd want to know ___ before answering, because if ___ then the classification changes."* That is a real answer, and it's the move he's actually teaching.