Notes on the Facebook fairness hearing
At the conclusion of a hearing held yesterday morning, the Department of Corporations approved the acquisition of Instagram, Inc. by Facebook, Inc. Technically, the Department approved the issuance of a permit to offer and sell the securities. The hearing was was held pursuant to Corporations Code Section 25142. See A Program Guide To The Facebook Fairness Hearing. Below are some observations concerning the proposed transaction and the hearing.
Ninth Circuit upholds determination of "responsible connection" to subsidiaries
A case decided earlier this week by the Ninth Circuit Court of Appeals caught my eye because it involved the application of "Chevron deference" in a corporate setting. The law involved was the Perishable Agricultural Commodities Act, 7 U.S.C. ยง 499a et seq. ("PACA"). This 1930's era legislation was intended, at least in part, to ensure that farmers get paid for their produce. Under PACA, penalties may be imposed on a person who was "responsibly connected" to a person whose license under the act has been revoked or suspended or who has been found to have committed any flagrant or repeated violation. In Perfectly Fresh Farms, Inc. v. U.S. Dept. of Agriculture, 2012 U.S. App. 18209 (Aug. 28, 2012), one of the issues on appeal was an administrative judicial officer's determination that two individuals were "responsibly connected" to the corporations in which they served as officers, directors and stockholders. The Ninth Circuit determined that the judicial officer's interpretations of PACA were entitled to deference under Chevron, U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984), a case that we covered yesterday in my Administrative Law class at the University of California, Irvine School of Law.