What Is Law? California Has Some Answers, But I Prefer Cicero’s

Lawyers deal with the law every day, but seldom pause to ask the existential question – What is law?   Conveniently, the California legislature has provided some definitions.  Section 22 of the Civil Code defines “law” in decidedly magisterial terms:

“Law is a solemn expression of the will of the supreme power of the State.”

How is that the supreme power express its will?  The answer can be found in Section 22.1 of the Civil Code which declaims that the “will of the supreme power is expressed” by the Constitution and statutes.   Notably absent is any mention of the judicial precedents.

Section 160 Evidence Code provides a broader and seemingly open-ended definition:

“‘Law’ includes constitutional, statutory, and decisional law.”

Section 113816 takes the approach that law is law only if it is applicable, but omits the constitution and judicial precedent:

“‘Law’ means applicable local, state, and federal statutes, regulations, and ordinances.”

The great Roman lawyer, Marcus Tullius Cicero, answers the question by quoting the learned men of his time as defining law as “Lex est ratio summa, insita in natura, quae iubet ea quae facienda sunt, prohibetque contraria (Law is the highest reason, ingrafted in nature, which commands what must be done and prohibits the contrary)”.   De Legibus 1:18.   Cicero also observed that ignorance of the law leads to more litigation than knowledge of the law (“Potius ignoratio iuris litigiosa est quam scienta“).  Id.

© 2010-2021 Allen Matkins Leck Gamble Mallory & Natsis LLP


For more articles on the nature of the law, visit the NLR Litigation / Trial Practice section.

Why All Publicly Held Corporations Do Not File Corporate Disclosure Statements

California’s female and underrepresented communities quota requirements apply to “publicly-held corporations”.  California’s Corporate Disclosure Statement requirement applies to “publicly-traded corporations”.  California’s Secretary of State’s website describes publicly held corporations as a “subset of publicly traded corporations”.  This is not strictly accurate.  See Some Differences Between “Publicly Held” and “Publicly Traded” Corporations.

Moreover, not ever foreign corporation meeting the definition of a “publicly held corporation” is required to file a Corporate Disclosure Statement pursuant to California Corporations Code Section 2117.1.  Why?  A foreign publicly held corporation is required to file a Corporate Disclosure Statement only if it has registered to transact intrastate business pursuant to Section 2117.  Some publicly-held corporations do not transact intrastate business in California.  They may, for example, simply be holding companies.  Under Section 191(b) a foreign corporation is not be considered to be transacting intrastate business merely because its subsidiary transacts intrastate business or merely because of its status as, among other things, a shareholder of a domestic corporation or a foreign corporation transacting intrastate business.

A Day To Be Wary?

Today is, of course, the Ides of March.  The word “ides” is derived from the Latin word for the 15th of the month in March, May, July and October and the 13th in the other months.  The Latin word is derived from the still older Etruscan word meaning to divide.  The 15th is roughly the dividing day of the month.  The assassination of Julius Caesar in 44 BCE made the date famous.

According to the Greek historian Plutarch, a seer warned Julius Caesar of this day while Caesar was on his way to the Senate:

ὥς τις αὐτῷ μάντις ἡμέρᾳ Μαρτίου μηνὸς, ἣν Εἰδοὺς Ῥωμαῖοι καλοῦσι, προείποι μέγαν φυλάττεσθαι κίνδυνον ἐλθούσης δὲ τῆς ἡμέρας προϊὼν

(“A seer was telling Caesar on this day of the month of March, which is called the Ides by the Romans (Εἰδοὺς in Greek), a great danger was coming . . . “)

Fifteen centuries after Plutarch wrote these lines, William Shakespeare incorporated the seer’s warning into his play, Julius Caesar:

Soothsayer. Beware the ides of March.

Caesar. What man is that?

Brutus. A soothsayer bids you beware the ides of March.

In Thornton Wilder’s historical novel, The Ides of March, Caesar exclaims: “I govern innumerable men but must acknowledge that I am governed by birds and thunderclaps”.  The story, of course, ends with Caesar’s assassination and a different kind of “March madness”.

© 2010-2020 Allen Matkins Leck Gamble Mallory & Natsis LLP


For more articles on California corporate law, visit the NLR Corporate & Business Organizations section.

Why Is The WSJ Attacking A Dead Bill?

Last Friday, The Wall Street Journal published an alarming Op-Ed piece concerning a California Bill, AB 2088, that would impose a wealth tax on any person who spends more than 60 days inside the state’s borders in a single year.   The idea of a transient wealth tax is a very bad idea, but why is the WSJ spilling ink on the bill now?

AB 2088 started its brief life in February of this year as a bill to amend, of all things, the Education Code.  In March, it became a bill that would amend the Elections Code.  It was not until August 13, that the bill was gutted and amended to impose a wealth tax on sojourners to the Golden State.  The bill, however, never made it out of the house of origin.  When the session ended, the bill died.  The current legislative biennium began earlier this month and it is possible that the authors will resurrect the wealth tax idea in a new bill.  The bill introduction deadline is not until February 19, 2021 and we may have to wait until then to see if a reincarnated bill is introduced.  Even if after that deadline, it is possible that the legislature will gut and amend another bill to implement the tax.

The WSJ’s attack on a dead bill reminds me of a story about Charles V, the Holy Roman Emperor.  After defeating the Lutheran princes in the First Smalkaldic War, he entered the university town of Wittenberg where Martin Luther was buried.   Encouraged to desecrate Luther’s remains, Charles reportedly proclaimed “Let [Luther’s bones] rest until Judgment Day . . . I don’t make war on the dead . . .”.


© 2010-2020 Allen Matkins Leck Gamble Mallory & Natsis LLP
For more, visit the NLR Corporate & Business Organizations section.

Are Diversity Riders Legal?

Some venture capital firms have recently begun including so-called “diversity riders” in their term sheets.  In general, these require that the issuer and the lead investor make commercially reasonable efforts to include a member of an underrepresented community as an investor in the financing.  However well-intentioned the proponents of these clauses may be, the question arises whether they run afoul of state laws forbidding discrimination in private sector.

California’s Unruh Civil Rights Act, for example, provides:

” All persons within the jurisdiction of this state are free and equal, and no matter what their sex, race, color, religion, ancestry, national origin, disability, medical condition, genetic information, marital status, sexual orientation, citizenship, primary language, or immigration status are entitled to the full and equal accommodations, advantages, facilities, privileges, or services in all business establishments of every kind whatsoever.”

Cal. Civ. Code § 51(b).   The question, of course, is whether an obligation to include particular persons based on sex, race, color etc. runs afoul of “full and equal” advantages.  Notably, the protection of the Act extends to “all persons” and is not confined to a limited class of protected persons.  The use of the word “all” and the phrase “every kind whatsoever” makes it clear that the phrase “business establishments” is to be interpreted in the broadest sense reasonably possible.

It is quite obvious that if an issuer or lead investor discriminates in favor of one class of persons, it is not treating all persons in a “full and equal” manner.  Further, discrimination in favor of one class of persons (however defined) necessarily involves discrimination against all persons who do not belong to that class.


© 2010-2020 Allen Matkins Leck Gamble Mallory & Natsis LLP
For more articles on California Corporate Law, visit the National Law Review Corporate & Business Organizations section.