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Westlake Legal Group > Corporations

Labor Dept. Rule to Curb Lawsuits by Franchise Workers

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Workers could have more difficulty suing large companies for wrongdoing by contractors or franchisees under a rule announced on Sunday by the Labor Department.

Under the rule, which will take effect in March, employees of a fast-food franchise like a McDonald’s restaurant, for example, may struggle to win a legal claim against the parent company if a franchisee violates minimum-wage and overtime laws.

“This final rule furthers President Trump’s successful, governmentwide effort to address regulations that hinder the American economy and to promote economic growth,” Secretary of Labor Eugene Scalia said in a statement.

The rule, which the department proposed last April, fleshes out its position on a concept known as joint employment. It effectively replaces a more labor-friendly Obama-era approach that the Trump administration withdrew in 2017, one of several departures from the previous administration in the area of employment and labor law.

After the rule takes effect, it could limit the ability of millions of workers to recover wages they are owed.

The contractors and franchisees that directly employ workers often have limited resources to pay legal penalties and settlements, making the large upstream companies with whom these employers have a relationship a more practical target.

“This resolution provides much-needed clarity for the 733,000 franchise establishments across America,” said Robert Cresanti, the president and chief executive of the International Franchise Association, an industry group.

Advocates for worker have criticized the rule, arguing that it provides a road map of sorts for employers seeking to avoid liability for harmful practices.


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After Boeing Halts Max Production, Suppliers Wait for Fallout

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Boeing made a decision on Monday that the company had long resisted: to temporarily stop producing its most popular passenger jet, the 737 Max, which has been grounded for nine months in the wake of two crashes that killed 346 people.

The impact of that decision is stretching far beyond Boeing’s headquarters in Chicago and its giant production facility in Renton, Wash., rippling through the worldwide aerospace supply chain from California to Kansas, Britain to France. For Boeing’s vast network of suppliers, the announcement made real what they had dreaded — a suspension of unknown length that could force some of them to scale back production and even lay off workers.

“The uncertainty around the airplane is a challenging thing at the moment,” said Phil Anderson, who runs a small aerospace supplier that has facilities in Wichita, Kan. and depends on the Max for 50 percent of its annual revenue. “All the options are on the table.”

Boeing purchases the parts that go into the Max from 600 companies, including major corporations like General Electric, which supplies engines for the airplanes, and lesser-known manufacturers that specialize in components like lighting systems and seats.

Those manufacturers, many of which depend on Boeing for much of their business, span the world. Safran, a French company that manufactures engines for the Max in partnership with G.E., plans to cut production in response to the suspension, making enough material for 15 planes a month, down from 42.

“We are in a crisis mode,” Philippe Petitcolin, the company’s chief executive, told the French newspaper L’usine nouvelle. “Any day we do nothing now costs us money.”

Boeing is also the largest customer of the aerospace unit of Senior Plc, a British company whose California-based subsidiary makes tubing for the Max. Spirit AeroSystems, an $8 billion company based in Kansas that manufactures the plane’s fuselage, relies on Boeing for 80 percent of its revenue. And the grounding of the Max has strained G.E.’s finances, reducing its cash flow by $400 million per quarter, company officials said in August.

The full reach of Boeing’s production process extends beyond those direct suppliers. A company that produces seating or fuselage for its planes might purchase material from several other companies, resulting in a network of as many as 8,000 suppliers, according to industry experts, though not all of them provide material for the Max. While Boeing is not planning to lay off any of the 12,000 workers building the Max in Renton, employees at some suppliers will likely face salary cuts, furloughs or layoffs.

It remains unclear how exactly the Max suspension will affect each company in that network. Boeing announced that the suspension would begin in January but did not say how long it would last. And the company plans to continue buying parts from some major suppliers, though probably at a reduced rate. A Boeing spokesman said the company was reviewing how much support it would provide to individual contractors on a case-by-case basis.

“People don’t know what staff to keep on — how many do I need to hire, do I need to think about firing people, how do I think about retention,” said Carter Copeland, an aerospace expert at Melius Research. “It’s a series of equations that each individual company is trying to manage.”

For the most part, aerospace experts say, major suppliers that manufacture materials for other companies in addition to Boeing should be equipped to weather the suspension, while smaller operations with fewer customers will struggle. But a halt to production that lasts longer than a month could put even those larger companies in peril.

“If it goes two or three, this is going to hurt like hell,” said Paul Weisbrich, an investment banker at D.A. Davidson & Co. who specializes in the aerospace industry. “There will be layoffs, there will be people put on the street.”

Boeing has already announced more than $8 billion in charges related to the Max crisis, a figure that is expected to rise significantly. And in many ways, halting production of the plane makes financial sense for the company as it awaits clearance from regulators to get it back in the air.

The current production rate costs Boeing about $2 billion a month, according to a J.P. Morgan report. The halt will bring those costs down, the report said, though the company will likely continue to burn around $1 billion per month.

This is not the first time that the uncertain status of the Max has disrupted Boeing’s suppliers.

The company said in April that it would slow production of the Max from 52 airplanes a month to 42. In response, the chief executive of Spirit AeroSystems, Tom Gentile, told investors the company would freeze some hiring, reduce overtime and decrease its use of contractors. And in June, Spirit moved about 6,000 employees in Kansas and Oklahoma to a four-day workweek, resulting in a 20 percent pay cut that lasted until the end of August.

“Everybody weathered the storm pretty successfully, but it’s still a loss that won’t be recouped,” said B.J. Moore, a regional director for the Society of Professional Engineering Employees in Aerospace, a union that represents workers at Spirit.

Mr. Moore said Spirit had not told employees how it would respond to Boeing’s decision to suspend production of the Max. A spokeswoman said the company was “working closely with our customer to determine what that means for Spirit.”

Just as aerospace parts flow from one supplier to the next, so too do the crucial decisions about how to manage a break in production. Mr. Anderson’s company, HM Dunn AeroSystems, supplies metal structures that go into the fuselage that Spirit sells to Boeing. A team of around 50 workers produce parts designed for the Max, and Mr. Anderson said he was waiting to hear from Spirit before he decided how to deploy that work force in the coming weeks.

“When they determine their course of action, they’ll bring in their supply chain, and we’ll talk about how we manage it together,” Mr. Anderson said. “We’ll contemplate furloughs, we’ll consider shortened workweeks.”

Many Boeing suppliers have been preparing for this moment for months. Mr. Anderson said he started mapping out possible adjustments to the production process as early as April. At the Paris Air Show in June, the president of G.E.’s aviation division, David Joyce, said the company “modeled four, five scenarios literally a week,” according to The Wall Street Journal.

Still, while the stakes are high for Boeing and its suppliers, the broader economic impact of the suspension is likely to be limited.

“It might shave a tenth or two of G.D.P. growth because of the lost production,” said Mark Zandi, chief economist at Moody’s Analytics. “But in the grand scheme of things it’s not going to change the trajectory of the economy.”

Some Boeing suppliers said that the suspension of Max production would not have a major effect on their bottom lines. A spokesman for Honeywell, which provides weather radars and cockpit advisory systems to Boeing, said the company did not expect “a significant financial impact” from the grounding of the Max.

Senior Plc, the British manufacturer, did not respond to a request for comment. A G.E. spokeswoman said the company was working to mitigate the impact of the suspension while “protecting the company’s ability to accelerate production as needed in the future.”

With the exact terms of the suspension still unclear, many factory workers and suppliers are simply waiting to learn more. “Right now, everyone’s in that mode of getting through the holiday and seeing what’s on line in 2020,” said Mr. Moore, the union official. “Until you find out, nobody knows.”

Natalie Kitroeff, David Gelles and Mélissa Godin contributed reporting.

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Study Examines Why Black Americans Remain Scarce in Executive Suites

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It is no secret that the corporate world has a diversity problem. A company where everyone brings fresh and exciting ideas to the table and has an equal opportunity to succeed is the dream for many executives, and a lack of diversity in the top ranks consistently places high on the list of roadblocks keeping that dream from being realized.

When it comes to African-Americans in the corporate world, the situation looks especially grim. Only four companies in the Fortune 500 — Merck & Co., TIAA, Tapestry and Lowe’s — now have a black chief executive, down from seven less than a decade ago.

Experts are scratching their heads about why corporate efforts to bring more women into the executive ranks have made progress in recent years, while increased racial diversity has remained stubbornly out of reach. But a new report makes clear that current methods are either accomplishing too little or are not working at all.

The report, “Being Black in Corporate America,” comes from the Center for Talent Innovation, a nonprofit group that is focused on workplace diversity and is sponsored by large companies including Morgan Stanley, Pfizer and Disney. The center surveyed 3,736 full-time professionals of all races, and found that today’s diversity and inclusion efforts are failing African-American professionals.

If corporate America wants to create a more equitable and inclusive workplace, the report concludes, it needs not a band-aid but an intervention. Here are highlights of what the authors say is at stake.

The study found that only 8 percent of people employed in white-collar professions are black, and the proportion falls sharply at higher rungs of the corporate ladder, especially when jumping from middle management to the executive level.

Doubts about the effectiveness of current diversity and inclusion programs are driving more black professionals to give up on the corporate ladder and pursue autonomy and their own businesses instead.

“Despite being ambitious, having strong professional networks and being career driven, black professionals face slow career advancement, which makes them more likely to leave,” the report notes.

The study found generational differences in those attitudes. Baby Boomers and Gen Xers tended to be more comfortable with the status quo than millennials.

According to the survey, black millennials are more likely than the black professionals who came before them to feel they have a responsibility to represent their race, and they are more likely to feel they should bring their authentic selves to the office.

They are also more likely to be dreaming about leaving their current job if the one they have does not offer fair and ample opportunities for growth, creating the risk of a costly brain drain.

Black professionals do not want to be lumped under the umbrella of “people of color.” Not only does it flatten their experience within the wider pool of underrepresented groups, the study says, it assumes that all black people in the workplace experience it the same way.

The black immigrant population in the United States has increased fivefold since 1980, and black immigrants often have different perspectives than American-born black people on what it means to be black in America. According to the report, white people tend to prefer and give better opportunities to Afro-Caribbeans over African-Americans, and African-Americans are more likely than immigrants from Africa to say that colleagues have underestimated their intelligence.

Full-time professionals of Afro-Caribbean descent are more likely than those with African or African-American roots to have access to senior corporate leaders, the study found. “Heritage shapes black professionals’ experience of the workplace in profound ways,” the report says, contributing to hierarchies that are rarely discussed.

A Pew Research Center survey this year found that half of white Americans agreed with the statement, “There is too much attention paid to race and racial issues in our country these days.” The new study cites that finding repeatedly to reinforce one of its major points: that while most black professionals are keenly aware of inequities that slow their advancement, many of their white peers are largely ignorant of them.

Black professionals surveyed for the new study were more likely than white professionals to say that the primary beneficiaries of diversity and inclusion efforts have been white women. And “very few respondents — including white employees — think that white women are using their power to advocate for other underrepresented groups,” the report notes.

The study argues that the measures that have achieved some success in addressing gender discrimination in the workplace may not work on racial discrimination, in part because white employees tend not to understand the challenges faced by black co-workers as well as they do those faced by women.

“Focusing on women first echoes Angela Davis’s account of the history of the feminist movement, in which white women consistently deprioritized issues of race,” the report notes, referring to the longtime political activist, academic and author.

Race is still a “third rail” — an unwelcome and dangerous subject — in many corporate settings, the study says. Employee resource groups may offer a safe space for black professionals and other underrepresented groups to talk about workplace issues, the authors say, but too often that is where the conversations end.

Black employees go back to their desks feeling that the burden remains on them to make white co-workers comfortable with their presence and aware of their unique experiences, the authors say, and black employees are still asked to “offer solutions to solve their own problems.”

The study recommends that companies conduct audits of how black employees are faring and feeling, and then take steps to address “mismatches in perception of racial equality” between employees of different races. That, the authors argue, will lay the necessary groundwork for the company’s diversity and inclusion programs to be more successful.

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Biden Proposes Smaller Tax Increases Than Rivals Do

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WASHINGTON — The Democratic presidential candidate Joseph R. Biden Jr. would raise taxes on high earners and corporations by at least $3.4 trillion over the course of a decade if elected, his campaign said Wednesday, releasing a set of plans that are far less aggressive than his more liberal rivals’.

Mr. Biden would raise a much smaller amount of tax revenue from the wealthiest Americans and businesses than his rivals Senators Bernie Sanders of Vermont and Elizabeth Warren of Massachusetts, who have each proposed wealth taxes on the assets of billionaires and some multimillionaires, along with corporate tax increases.

The gulf in tax proposals mirrors the candidates’ divide on plans for new government spending. Ms. Warren and Mr. Sanders want to spend trillions of dollars more per year on new federal programs, including Medicare for All and student debt relief, than Mr. Biden has suggested.

Ms. Warren has proposed about $30 trillion in new tax revenues to pay for her spending plans. Mr. Sanders has said his health care plan alone will cost $30 trillion. Mayor Pete Buttigieg of the South Bend, Ind., who has emerged as one of Mr. Biden’s main rivals in wooing moderate Democrats, has proposed nearly $7 trillion in new taxes, according to his campaign.

It remains possible that Mr. Biden could propose additional spending plans and other new taxes to help pay for them. But his tax increases are already more than double the amount that the last Democratic presidential nominee, Hillary Clinton, proposed in the 2016 campaign.

While less aggressive than his rivals’, Mr. Biden’s proposals reflect a growing focus among Democrats to reduce economic inequality through higher tax and spending programs.

Mr. Biden would use the tax revenues to fund new spending on higher education, infrastructure, health care and carbon emissions reduction.

The list of proposals he released Wednesday shields more Americans from tax increases than Ms. Warren’s or Mr. Sanders’s would, and it tweaks — rather than scraps entirely — President Trump’s tax cuts for corporations.

Mr. Biden has cast his plans as both progressive and achievable, a contrast the campaign sought to underscore with the details it released. They include revenue projections that are more conservative than some of his opponents’.

For example, Mr. Biden projects raising less than $2 trillion over a decade from all of his corporate tax increases combined. Ms. Warren forecasts she can raise more than $2 trillion solely by cracking down on companies that underpay their American tax liability.

Mr. Biden “is committed to being transparent with the American people about the smart and effective ways he’d pay for the bold changes he’s proposing,” said his policy director, Stef Feldman. “He believes that being forthright with voters about how plans would be financed is critical to building the public support necessary to beat Donald Trump, help more Democrats win up and down the ballot, and then pass legislation through Congress.”

Some high-earners — those who make around $450,000 a year — would pay lower tax rates under Mr. Biden’s plan than they did during the Obama administration, when Mr. Biden was vice president. That is a deliberate choice by Mr. Biden: He proposes returning the top income tax bracket to 39.6 percent, after Mr. Trump’s 2017 tax law cut it to 37 percent.

But Mr. Biden would only subject individuals’ income above $510,000 to that top rate. Before the Trump tax cuts, the top rate started at just under $420,000 for individuals.

Mr. Biden would also repeal a limitation that the Trump tax law placed on the deduction of state and local taxes from federal taxes. The law capped the so-called SALT deduction at $10,000 for individuals or households, a change that raised taxes on some higher-earning taxpayers in high-tax and predominantly Democratic states like California, New York and New Jersey.

Corporations would also be subject to a lower rate under Mr. Biden’s plan than they were before the passage of Mr. Trump’s tax cuts. The 2017 cuts reduced the corporate rate to 21 percent from a high of 35 percent. Mr. Biden would raise it to 28 percent — the same rate Mr. Obama proposed in a tax overhaul plan he was unable to push through as president.

Mr. Biden would unambiguously raise taxes on millionaires, and not just by lifting the top rate. He would raise the tax rate on capital gains — the proceeds from the sale of a stock, vacation home or other investment asset — to 39.6 percent from 23.8 percent, for taxpayers earning more than $1 million a year. He would also limit those taxpayers’ itemized deductions and eliminate an inflation adjustment at death that reduces capital gains liabilities for wealthy heirs.

Mr. Biden would raise additional tax revenues from multinational corporations whose effective tax rates are below the 21 percent corporate rate by enacting measures aimed at discouraging companies from shifting profits overseas. The proposals target companies like Amazon and Apple that report little or no federal tax liability.

They include a type of alternative minimum tax of 15 percent on companies’ total revenues worldwide, with credit given for taxes paid in foreign countries. A similar, but not identical, proposal from Ms. Warren would tax companies on the difference between their foreign taxes paid and her proposed American corporate rate of 35 percent.

Another of Mr. Biden’s plans would double the rate of a new minimum tax of sorts, which was established by Mr. Trump’s tax law and which applies to certain income from multinationals.

Thomas Kaplan contributed reporting from Ames, Iowa.

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Elizabeth Warren’s Days Defending Big Corporations

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Elizabeth Warren had never taken on the federal government before.

But in 1995, she found herself up against the Clinton administration, representing the Cleveland-based conglomerate LTV Steel.

Even though LTV had sold off its coal mines during the 1980s, a new law required it to contribute to a health fund for retired miners.

LTV believed that it should not have to pay. Those claims, the company said, should have been handled as part of its bankruptcy reorganization.

Ms. Warren’s job was to convince the Supreme Court to hear LTV’s case.

The court declined, but for Ms. Warren, the issue would fester. Over a decade later, when she ran for the Senate from Massachusetts in 2012, the Republican incumbent, Senator Scott Brown of Massachusetts, tried to use her work for LTV against her, unleashing an ad calling her a “hired gun” who sided “against working people.” Notwithstanding the attack, Mr. Brown lost his seat to Ms. Warren.

The LTV case was part of a considerable body of legal work that Ms. Warren, one of the nation’s leading bankruptcy experts, took on while working as a law professor — moonlighting that earned her hundreds of thousands of dollars over roughly two decades beginning in the late 1980s, mostly while she was on the faculty at Harvard. Much of it involved representing big corporate clients.

Ms. Warren has ascended toward the head of the Democratic presidential pack on the strength of her populist appeal and progressive plans, which include breaking up big technology companies, free public college and a wealth tax on the richest Americans. Her political opponents, in turn, have sought to find a soft spot on issues of authenticity — chiefly Ms. Warren’s handling of her claim to Native American ancestry.

Against that backdrop, some of Ms. Warren’s critics have seized upon her bankruptcy work for LTV and other big corporations to question the depth of her progressive bona fides. How, they wonder, could someone whose reputation is built on consumer advocacy have represented a company seeking to avoid paying for retired miners’ health care?

Ms. Warren’s campaign did not make her available to discuss her outside legal work, though it did provide email responses to some questions. But over the years, Ms. Warren has twice released accounts of her practice — a partial list of cases during the 2012 Senate race and a fuller list of more than 50 cases posted to her presidential campaign website in May.

Among her corporate clients were Travelers insurance and the aircraft maker Fairchild, as well as one of America’s wealthiest families, the Hunts of Texas. She advocated for a railroad company that wanted to avoid paying for a Superfund cleanup, and advised Dow Chemical as its subsidiary Dow Corning dealt with thousands of complaints from women who said they had been harmed by its silicone breast implants.

But she also worked on a number of cases involving consumer bankruptcy and victims’ rights in asbestos litigation, served as an expert in a lawsuit against the cigarette maker Philip Morris and represented the lawyer whose battles with polluters inspired the film “A Civil Action.”

In very brief and simplified summaries, the lists cast much of her work — even for corporate clients — in terms that align with her pro-consumer narrative. Those descriptions have themselves become a focus of some contention.

But a review by The New York Times, together with interviews with several of Ms. Warren’s former compatriots in the rarefied world of self-described bankruptcy nerds, reveals a complex picture in which many cases defy simple black or white categorization. It also offers a look at a relatively unexamined aspect of her thinking.

Her work, the scholars say, should be understood primarily as an effort to preserve the right to file for bankruptcy and the integrity of the bankruptcy system.

“As far as I can tell, the kind of positions she took were positions that were completely consistent with someone who was dedicated to the value of the bankruptcy process,” said Douglas G. Baird, a University of Chicago Law School bankruptcy expert who differs philosophically from Ms. Warren on some issues in the field and says he is not a political supporter.

Indeed, in her most recent list of cases, Ms. Warren wrote that bankruptcy “inevitably pits sympathetic interests against each other — current victims against future victims, employees against retirees and small suppliers against customers who didn’t get what they were promised.” The challenge, she concluded, is “balancing all of these interests in the fairest way possible.”

Mr. Baird also suggested that in some cases, Ms. Warren was simply advocating for clients, not necessarily with an eye toward the future popularity of her positions. Lawyers, he said, are not ideologues, but are to some extent “plumbers or mechanics trying to be zealous advocates for their clients.”

Ms. Warren has acknowledged that for much of her long and varied career she was not politically engaged and had no plan to run for public office. Until 1996, she was registered as a Republican.

In taking on outside clients, Ms. Warren augmented her salary at Harvard, where she was among the most highly paid faculty members. In 1998, the Harvard Crimson reported that she was paid $192,550 in salary plus $133,450 in “other compensation.”

It is not possible to tell how much Ms. Warren made from her legal consultancy, and she declined to reveal the amount, but it was clearly more than $500,000 and probably much more. Most of the work fell outside the period when she was required to submit financial disclosure reports.

Travelers paid her more than $200,000 over several years for advice on dealing with asbestos claims against its insured, Johns Manville.

In 2010, Ms. Warren was paid $90,000 to write two expert opinions on behalf of merchants who were suing credit card companies and banks, alleging antitrust violations in processing fees. Because she was heading up the congressional panel monitoring the bank bailout at the time, Senator Richard Shelby, Republican of Alabama, raised questions about whether the work presented a conflict of interest. Some conflict-of-interest provisions had been waived, however, because members of the panel were experts who served part-time.

For her work with Caplin & Drysdale, a firm representing plaintiffs in a number of asbestos-related cases, Ms. Warren billed $675 an hour, in line with what partners in top New York firms charged at the time.

While some law professors look askance at outside work, regarding it as impure, most schools permit it, and Harvard has encouraged it, according to Randall L. Kennedy, a law professor there and former colleague of Ms. Warren.

“The idea that you would be in government, you would be consulted, you would be a big shot in the legal profession, I think that was viewed as one of the distinctive parts of the Harvard Law School ethos,” said Mr. Kennedy, who noted that some of his best-known colleagues maintained very active practices. “That’s how we roll.”

It is an unglamorous area of law, and it rarely makes news. That’s why the bankruptcy nerds who post to a blog called Credit Slips were shocked in 2012 when a decade-old bankruptcy case became a hot political topic.

“LTV has amazingly become an issue in the U.S. Senate race in Massachusetts,” wrote John A. E. Pottow, a former Harvard student of Ms. Warren who teaches bankruptcy at the University of Michigan Law School. “A bankruptcy case!”

Ms. Warren’s record in the LTV case is a textbook example of how complex legal matters can be seen in vastly different ways. Viewed through a layman’s eyes, Ms. Warren appeared to be fighting against working people. Some bankruptcy experts, however, viewed her motivations as more far-reaching — aimed at preserving a system that ultimately offers working people some measure of protection.

The origins of the 1995 case dated back to the Truman administration. To settle a coal miners strike, the federal government forged an agreement that miners would have health care coverage when they retired, provided by their last employer. Over the years, as demand for coal declined, companies closed their mines and stopped paying these benefits.

To remedy the problem, in 1992, Congress passed the Coal Industry Retiree Health Benefit Act, to provide benefits for more than 100,000 retired miners. Each company that had operated coal mines, even those no longer in the business, would be required to pay into a fund for their retirees.

LTV objected to paying into the fund. The company had filed for bankruptcy in 1986, resolving claims from thousands of employees. The Coal Act, LTV now argued, retroactively imposed new liabilities based on events that had taken place years earlier and that therefore should have been resolved during bankruptcy.

The Second Circuit Court of Appeals disagreed, ruling that LTV’s liabilities were not technically “claims” under the bankruptcy code because they had been created by a new act of Congress.

Ms. Warren’s campaign has said she engaged in outside legal work primarily when there was a larger issue at stake, which is what Mr. Baird believed she had in mind when she agreed to represent LTV in its Supreme Court petition.

“Can Congress make that law apply retroactively even to firms that have had their day of reckoning in bankruptcy?” Mr. Baird said. “If you believe in the bankruptcy system, you can argue that you shouldn’t do this retroactive second-guessing.”

In her petition asking the Supreme Court to review the decision, Ms. Warren wrote that bankruptcy “contemplates that all legal obligations of the debtor, no matter how remote or contingent, will be dealt with by the bankruptcy case.”

“The Second Circuit,” she added, “threatens to erode that concept, with serious implications for future bankruptcies.”

This year, nearly 15 years after the Supreme Court declined to review the case, Ms. Warren’s campaign described her work this way:

“In this case, Elizabeth represented a company that was asking the Supreme Court to reverse a lower court’s ruling that limited the ability of future employees, retirees and victims to receive any compensation at all from bankrupt companies.”

In bankruptcy, there is a day of reckoning, the point at which a debtor’s accounts are squared.

As with LTV, several of Ms. Warren’s more prominent cases involved questions of what happens when claims arise after that day. Such claims are regarded as potentially eroding the system and undermining the chance for a “fresh start” for companies and individuals that file bankruptcy.

Ms. Warren at one point praised how the system gave a second chance to several well-known companies, including one of Donald J. Trump’s businesses.

“General Motors, Trump Enterprises, Hershey Foods and dozens of other well-known companies all survived early bankruptcies, she wrote in 2009. “Second chances opened the way for Francis Ford Coppola, Willie Nelson and Mark Twain to leave their marks on world cinema, music and literature.”

Any development that undermines that principle is “going to create a mess in the bankruptcy system,” said Adam J. Levitin, a professor at Georgetown University Law Center who studied under Ms. Warren. He added, “If all these new liabilities start appearing, the bankruptcy system doesn’t work.”

In one case that turned on these issues, Ms. Warren found herself on the same side as Kenneth Starr, who at the time was also the independent counsel leading a long-running investigation of the Clinton White House.

The case involved a company called CMC Heartland Partners and a Superfund site near Tacoma, Wash., named one of the 10 most hazardous in the country.

CMC Heartland was the successor company to the Chicago, Milwaukee, St. Paul & Pacific Railroad Company — known colloquially as the Milwaukee Road — which had filed for bankruptcy in 1977.

Union Pacific Railroad subsequently acquired the company’s old Tacoma rail yards, where it discovered an environmental disaster of oil and other industrial waste. When CMC refused to pay for the cleanup — arguing that the claims were barred by its predecessor company’s bankruptcy — Union Pacific sued.

In 1996, after a federal appeals court ruled against CMC, Ms. Warren filed a brief asking the solicitor general to support a Supreme Court review.

The implications of allowing the lower court ruling to stand, Ms. Warren argued, would be profound “for those who are trying to put the assets of those businesses back into productive use, for those who face uncompensated injuries and for those who have other claims against the business.”

The Supreme Court declined to hear the case.

Another such case, in 1995, involved Fairchild, the aircraft manufacturer. Two years before, a well-known NASCAR driver named Alan Kulwicki and three associates had been killed when their Fairchild Merlin crashed near Blountville, Tenn.

In a lawsuit, survivors of the four dead men sought compensation from Fairchild, arguing that their death was related to a defect in the aircraft and that, even though the manufacturer had filed for bankruptcy and been taken over by a newly established company, the new company should be liable.

Ms. Warren represented the new company, arguing that it had bought Fairchild’s assets free and clear of claims and should not be responsible for ongoing liabilities of planes made by the old bankrupt company.

Her campaign has said she was trying to save the new company and its 1,000 jobs. One of the opposing lawyers, James A. Hoffman of San Antonio, put it differently. “Her position in our matter was that these people are simply out of luck,” he said.

Ms. Warren lost, but the case was later settled, and the National Transportation Safety Board ultimately ruled that the crash had not been caused by an aircraft defect.

In quite a few cases, Ms. Warren came down clearly on the side of the consumer.

Yet some of the case descriptions released by her campaign, seemingly written to portray Ms. Warren’s work for corporate clients in the most consumer- or victim-friendly light, have prompted criticism from lawyers on opposing sides.

In its responses to The New York Times, the campaign said the summaries were written in an effort to make “complicated cases accessible while maintaining accuracy.”

Among the cases whose summaries have provoked criticism was the long-running bankruptcy of Cajun Electric Power Cooperative, a large nonprofit utility based in Baton Rouge, La., that provided power to 12 member cooperatives.

When Cajun Electric filed for bankruptcy in 1994, a bidding war ensued for control of Cajun’s assets, notably Big Cajun, a coal-fired power plant worth an estimated $1 billion. One of the bidders was SWEPCO, a utility company based in Shreveport, La.

As the case went on, SWEPCO ran afoul of the court. Unknown to the other bidders, it had quietly paid $1 million in legal bills for seven of the Cajun Electric-member cooperatives supporting its bid. A federal judge ruled the payments improper, disqualifying SWEPCO’s bid.

That was when SWEPCO, desperate to remain in the bidding for Big Cajun, called Ms. Warren, who carried the day. The Fifth Circuit Court of Appeals in New Orleans overturned the judge’s ruling, breathing new life into SWEPCO’s play.

But while she won the battle, SWEPCO ultimately did not capture the big prize. Louisiana Generating, known as LaGen, took over Big Cajun in 2000.

Matt J. Farley, a New Orleans lawyer who represented LaGen, recently said he regarded Ms. Warren as a bankruptcy “heavy hitter” who had done a good job for her client.

Mr. Farley, who describes himself as a political independent, said he saw a contradiction in 2012 when he first read her Senate campaign’s description of her work in the Cajun Electric case: “Elizabeth represented a company that offered a plan to help save a bankrupt rural power cooperative.” It is the same description given by her presidential campaign.

Ms. Warren’s client, SWEPCO, had offered lower electric rates in its proposal than the other bidders. But Mr. Farley believes that the summary is misleading.

“I can’t imagine that Warren really believes that she was helping to save a rural power cooperative,” Mr. Farley wrote in 2012 on a blog called Legal Insurrection. He added, “This was nothing more or less than high-stakes corporate litigation.”

The campaign’s synopsis of Ms. Warren’s work on the Dow Corning breast-implant case has also raised some eyebrows.

“Thanks in part to Elizabeth’s efforts, Dow Corning created a $2.35 billion fund to compensate women claiming injury,” the description said.

The exact nature of Ms. Warren’s work for Dow is not clear. Ms. Warren’s campaign said she advised Dow Chemical, the parent company, as it worked with most of the plaintiffs to defend the victims’ trust fund. Some of the plaintiffs had objected to the trust.

But Sybil Goldrich, a breast-implant victim and trustee for claimants in the 1995 bankruptcy case, has said Ms. Warren was “on the wrong side” of the litigation as the company worked to contain corporate damage related to the claims.

Other summaries released by the campaign omitted key details.

Describing Ms. Warren’s work in a 1989 Internal Revenue Service case, the summary says she worked to “help the tax court.” The summary does not specify that she was retained by one of Texas’s wealthiest families, the Hunts, in a tax dispute about how much various members owed to the I.R.S. after they tried to corner the silver market.

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Epstein Estate’s First Legal Bill in Fight Against Accusers: $90,000

Westlake Legal Group 14epsteinbiz-facebookJumbo Epstein Estate’s First Legal Bill in Fight Against Accusers: $90,000 Wills and Estates Tax Credits, Deductions and Exemptions Sex Crimes Epstein, Jeffrey E (1953- ) Corporations

The federal criminal case against Jeffrey Epstein ended with his death two months ago, but the legal battles by his estate are poised to go on for months to come.

Last week, lawyers for Mr. Epstein’s estate asked a judge in the Virgin Islands to allow the payment of $90,000 in fees to a New York law firm that is defending it against a half-dozen lawsuits filed by some of the financier’s alleged victims. The week before, it sent lawyers from another firm to court against the State of New Mexico over public grazing rights for livestock at Zorro Ranch, the nearly 10,000-acre property Mr. Epstein owned outside Santa Fe.

Legal maneuvering is not unusual when wealthy estates are involved — Mr. Epstein’s assets were estimated at more than $577 million — but the complicated court actions may have only just begun. Lawyers for some accusers have named dozens of companies Mr. Epstein was associated with as defendants.

The firm representing the estate against Mr. Epstein’s accusers, Troutman Sanders, billed for one conversation on Aug. 10, after Mr. Epstein was found dead in a Manhattan jail cell while he awaited trial on sex-trafficking charges. The month’s worth of legal fees also includes work for a continuing “federal regulatory matter” that began before Mr. Epstein’s death, although the filing did not offer details.

Mr. Epstein’s other enterprises are still up and running, too. Employees continue to go to work at the offices of Southern Trust, his main company in the Virgin Islands, which operates out of a marina and office complex on St. Thomas. And boats he owned are still shuttling people to the two private islands he owned nearby.

Mr. Epstein’s will, filed in the Virgin Islands and signed two days before he killed himself, put his estate into a trust, which would most likely cloak the eventual disbursements in secrecy. The mix of real estate and companies in the estate reflects the closely held nature of the operations Mr. Epstein ran over the past two decades.

The New York Times previously reported that Southern Trust made at least $200 million in net profits from 2013 to 2017, a financial rebound that began five years after Mr. Epstein’s conviction in Florida for soliciting sex from an underage girl. Unaudited financial statements, obtained from the island territory’s Division of Corporations and Trademarks, revealed that Southern Trust had begun making money after Mr. Epstein’s former money management firm, Financial Trust, posted years of losses beginning with the financial crisis.

Alan D. Jagolinzer, director of the Cambridge Center for Financial Reporting & Accountability at the University of Cambridge in England, said the statements raised “way too many questions.”

Mr. Jagolinzer said it was hard to understand how Financial Trust reported losses at a time when the stock market was rallying strongly after the 2008 financial crisis. He also did not understand why Southern Trust would seek a $30.5 million loan from an undisclosed source in 2017, when the firm appears to have been flush with cash.

Parts of those filings were signed, at times, by two close associates of Mr. Epstein: Darren K. Indyke, a lawyer, and Richard D. Kahn, an accountant. Both are executors of Mr. Epstein’s will, and they authorized Troutman Sanders to continue litigating on behalf of the estate.

Bennet Moskowitz, the lead lawyer at Troutman Sanders, did not respond to a request for comment.

A court filing in New Mexico contains a copy of a check signed by Mr. Kahn to pay for the renewal of the grazing leases for the Zorro Ranch. The check, dated Sept. 6, was drawn from an account with TD Bank.

The New Mexico State Land Office refused to accept the check, in part prompting the court action. A statement from the land office said the leases never should have been awarded and chided Mr. Epstein’s estate for wasting state resources on a court fight.

Clifford Atkinson, a lawyer representing the Zorro Ranch, declined to comment.

William LaPiana, an associate dean at New York Law School and a trust and estates expert, said it was not surprising that the executors of the estate were protecting its assets. “They have an obligation to carry out the expressed wishes in the will and owe a duty to the beneficiaries,” he said.

Mr. Epstein’s only known living relative is a brother.

The federal authorities have said they were continuing their investigation of Mr. Epstein’s alleged sex-trafficking activities. It is not clear to what extent Southern Trust and Financial Trust, both of which received lucrative tax incentives from the Virgin Island authorities, factor into that investigation.

Southern Trust, which purports to operate a DNA database business, remains eligible for that tax break. Representatives for the government agency that approved the tax incentives did not comment on whether they would be revoked in light of Mr. Epstein’s death and the active investigation.

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China Scores Businesses, and Low Grades Could Be a Trade-War Weapon

BEIJING — China is funneling vast amounts of public and private data into huge databases aimed at tightening its control over its nearly 1.4 billion people.

But the business world has become its biggest target.

Beijing is increasingly amassing information now divided among various government agencies and industry associations — including court decisions, payroll data, environmental records, copyright violations, even how many employees are members of the Communist Party — and using it to grade businesses and the people who run them, according to state media, government documents and experts.

Companies that get low grades can be banned from borrowing money or doing other essential tasks. Their owners or executives could have their bank accounts frozen or be forbidden from traveling.

It isn’t just aimed at Chinese businesses. In letters sent to the companies, officials have threatened to give United Airlines, American Airlines and Delta Air Lines black marks on their records if they don’t bend to Beijing’s wishes. FedEx could face a similar punishment.

China calls it the social credit system. By next year, Chinese leaders had hoped to start an ambitious nationwide program focused on punishing or rewarding individuals. It was aimed at replicating the credit scoring system common in the United States and other places, as well as taming behavior in a country where laws are inconsistently enforced.

Civil libertarians warned that it would create a digital Big Brother that would intrude into everyday Chinese life. But the system has yet to materialize for individuals on a mass scale.

For many businesses, however, social credit has become a fact of life. In September, China’s central economic planning agency announced that it had completed a first evaluation of 33 million businesses, giving them ratings from 1 for excellent to 4 for poor. China hopes it will someday become a nationwide regulatory tool, harnessing the country’s growing skills in big data and automation, to help the Communist Party keep the business world in line.

“It’s supposed to affect the decision making of businesses to conform to what the party wants,” said Samantha Hoffman, a fellow at the Australian Strategic Policy Institute, a think tank.

Loren Fei, the 30-year-old-daughter of a silk factory owner, has been added to a blacklist of businesses and their owners. Because her father couldn’t pay his bills, she said, her bank accounts have been frozen and she lost her job and her ability to travel.

“My family really wants to pay back the money, and the system is making it impossible,” Ms. Fei said.

The authorities are testing the system as a tool to bend foreign companies to the Communist Party’s political views.

United, Delta and American received letters last year from Chinese aviation officials saying their social credit score could be hit unless their websites labeled Macau, Hong Kong and Taiwan as part of China. Lower scores would lead to investigations, the possibility of frozen bank accounts, limitations on local employees’ movement and other punishments, according to a letter sent to United and seen by The New York Times.

Representatives of United, Delta and American Airlines confirmed changing their websites but declined to comment specifically on the matter.

Social credit is one aspect of the Communist Party’s efforts under Xi Jinping, its top leader, to strengthen its hold over the country. The authorities are installing separate facial-recognition technology and other monitoring systems to quell dissent as well as stop crime. They have taken a tougher line on media and worked to give the party a greater role in offices and classrooms.

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The Chinese government has threatened to place FedEx on a list of foreign companies and people it considers unreliable.CreditReuters

Applied to businesses, the social credit system could bring real benefits to China. Despite Beijing’s authoritarian grip on power, it has long struggled to get businesses to follow the law. Competing, inefficient government ministries hinder enforcement. Local governments shelter powerful businesses. The result has been widespread pollution, rampant violations of labor laws and other problems.

For instance, Ms. Fei said that for years her family’s silk factory had been given dispensation to break environmental rules by local government authorities eager for economic growth. It was finally shut down for environmental reasons.

But companies have little recourse if the data is inaccurate or punishments disproportionately disruptive, experts say.

“The unified rewards and punishment system significantly increases the potential for one violation to snowball across your operations until you have this avalanche of penalties that make it impossible to operate until you solve that one thing,” said Kendra Schaefer, head of digital research at Trivium China, a consulting firm that recently published a report on social credit.

Foreign companies have expressed concern about how they could be affected by their business partners. The German chemical company BASF, for example, is responsible for ensuring that its Chinese partners stay environmentally compliant.

“They put pressure on us in the supply chain to sort out the environmental challenges,” said Jörg Wuttke, the president of the European Union Chamber of Commerce in China, who is also the chief representative of BASF in China. “That’s a definite shift that puts a lot of pressure on us.”

Foreign businesses also worry that social credit could become a weapon in the trade war between China and the United States. In a report last month, the European Union Chamber of Commerce cited the example of FedEx, the American package carrier, which has been caught in the middle of the trade fight. The Chinese government has threatened to place FedEx on a list of foreign companies and people it considers unreliable, alleging that it broke the law by withholding the shipment of Huawei products. The language used was similar to social credit.

Chinese officials have not released the list or said what it would do, but they have said they will treat all companies equally.

China began to detail its ambitions for the social credit system six years ago, saying it could be a reality by 2020. While some critics saw it as a form of total social control, it was primarily envisioned as a tool for a country where people often break the law in big and little ways without consequences. The Chinese authorities typically exert social control through the police, who are setting up separate, more draconian systems that include biometric data, like face scans and DNA records.

In any case, social credit has proved difficult to use on individuals. China’s central bank canceled plans to include data from the popular electronic payment systems run by Alibaba and Tencent, two Chinese internet giants. Pilot programs have been started in only a few places.

Even there, the programs have had little impact. During a visit to Rongcheng, a social credit pilot city in eastern China, officials said that a good score would get you a speedier check-in at the hospital and easier access to loans. But hospital workers and teachers said social credit had not affected how they do their jobs. Many residents said they were unaware it existed.

“I might have heard about it somewhere but I think it’s none of my business and not relevant to our lives in the village,” said Liang Xiaoli, a store owner. Besides, she added, “I don’t really care. I mean, why should I?”

Residents were rewarded based on factors like whether they helped to keep the city clean. Officials with clipboards collected data and handed out self-assessment forms. They posted photos of citizens with top scores on bulletin boards. In many cases the standouts were related to local Communist Party leaders. Liang Huaying, a Rongcheng official, said they got points because they most often showed up at official events.

The system has proved more adaptable to ensuring good conduct for business.

The social credit system brings together various blacklists long run by different ministries and local governments, allowing the authorities to broadly and consistently punish wrongdoers. But while China is assembling a nationwide social credit system, it still has dozens of city-level systems that use different scoring methods.

Ms. Fei, the daughter of the silk factory owner, found out she was in the system during a work trip in late 2017, when she could not buy a train ticket home. Then her bank accounts were frozen. She was eventually fired from her job as a financial analyst.

Ms. Fei had signed for a loan on her father’s behalf. Ms. Fei’s mother, who is retired, is also on the blacklist because she is a shareholder. Her monthly pension payments have been frozen. The family is in debt for hundreds of thousands of dollars. Ms. Fei, who now sells goods on the internet, said she makes one-tenth of what she did before.

She found a community of people online with situations like hers. One man told her he used to be a civil servant until he was forced to quit his job after being blacklisted.

Ms. Fei said this was unfair. “No one wants to be a dishonest person,” she said.

Alexandra Stevenson reported from Beijing and Paul Mozur from Rongcheng. Lin Qiqing in Shanghai, Carolyn Zhang in Rongcheng and Cao Li in Hong Kong contributed research.

China to Debtors: Pay Up or Be Shamed

Oct. 11, 2017

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Tech Giants Feel the Squeeze as Xi Jinping Tightens His Grip

May 2, 2018

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China Strikes Defiant Stance on Trade Against Trump

June 2, 2019

Westlake Legal Group merlin_155802537_a8a89bff-72f9-4d10-b69d-720ec4a43e61-threeByTwoSmallAt2X China Scores Businesses, and Low Grades Could Be a Trade-War Weapon Social Credit System Politics and Government Fines (Penalties) Economic Conditions and Trends Data-Mining and Database Marketing Corporations Civil Rights and Liberties China Blacklisting

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The World’s First Ambassador to the Tech Industry

COPENHAGEN — Casper Klynge, a career diplomat from Denmark, has worked in some of the world’s most turbulent places. He once spent 18 months embroiled in reconstruction efforts in Afghanistan. For two years, he led a crisis management mission in Kosovo.

Yet Mr. Klynge, 46, says his toughest foreign posting may be the one he has now: as the world’s first foreign ambassador to the technology industry.

In 2017, Denmark became the first nation to formally create a diplomatic post to represent its interests before companies such as Facebook and Google. After Denmark determined that tech behemoths now have as much power as many governments — if not more — Mr. Klynge was sent to Silicon Valley.

“What has the biggest impact on daily society? A country in southern Europe, or in Southeast Asia, or Latin America, or would it be the big technology platforms?” Mr. Klynge said in an interview last month at a cafe in central Copenhagen during an annual meeting of Denmark’s diplomatic corps. “Our values, our institutions, democracy, human rights, in my view, are being challenged right now because of the emergence of new technologies.”

He added, “These companies have moved from being companies with commercial interests to actually becoming de facto foreign policy actors.”

But after two years in the job, Mr. Klynge is under no illusions of where Denmark’s concerns figure in the minds of Silicon Valley executives. Denmark’s population of 5.8 million is smaller than that of the San Francisco Bay Area. Fewer than 0.3 percent of Facebook’s 2.4 billion global users live in the Scandinavian country.

Silicon Valley companies and their leaders have given Mr. Klynge a mixed reception. He has never met with Mark Zuckerberg of Facebook or Sundar Pichai of Google or Timothy D. Cook of Apple. Danish officials said it was like dealing with an opaque new world superpower.

“We’ve been too naïve for too long about the tech revolution,” said Jeppe Kofod, Denmark’s minister for foreign affairs.

So Mr. Klynge’s position is part of an effort “to make sure that democratic governments set the boundaries for the tech industry and not the other way around,” Mr. Kofod said.

Denmark is emblematic of the many small countries that are grappling with technology’s effects on their societies and are frustrated by an inability to meet with, let alone influence, the companies causing that disruption.

Danish officials have been particularly concerned by how technological change is causing challenges that have afflicted other Western democracies: the spread of false and politically divisive content on social media, questions about privacy and data-hungry services, cybersecurity and the low taxes the companies pay outside the United States.

Andrew Cooper, a political-science professor at the University of Waterloo who studies diplomacy, said smaller countries had long needed novel ways to get attention from nations with more power.

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Ibrahim Didi, the Maldives minister of fisheries and agriculture, right, at an underwater cabinet meeting to highlight the threat of global warming. CreditMohammed Seeneen/Associated Press

The Maldives, for instance, has hosted underwater cabinet meetings to raise awareness about climate change, while Sweden created an embassy in the virtual-world video game Second Life. What’s surprising, Mr. Cooper said, is the extent to which Denmark is applying the strategy to private companies.

“Denmark has to play a different game,” he said.

But the obstacles Mr. Klynge has faced in Silicon Valley have been humbling. He said it had taken nine months to sit down with a senior executive at one of the biggest tech companies, which he declined to name. He arrived expecting a frank conversation on issues agreed on beforehand, including taxes, cybersecurity and internet misinformation — only to be offered a headquarters tour, he said.

When the executive arrived later, he began a brief rant against European regulations of the tech industry, before saying he did not have time for the meeting, Mr. Klynge said. Then the executive left.

As Mr. Klynge was exiting the building, the executive called his mobile phone to ask him to wait. Mr. Klynge thought there had been a change of heart.

Not so.

“When I got back to the conference room he gave me a goody bag with a T-shirt and cap of the particular company,” he said. He said Danish officials “laughed about this incident a lot afterward, but it says a lot about the mind-set of some of the companies in Silicon Valley.”

Some tech companies said they were beginning to better understand Mr. Klynge’s job.

Brad Smith, president of Microsoft, said he spoke regularly with Mr. Klynge, whose appointment he said gave Denmark “outsized influence.”

“If I want to compare notes on technology issues, he’s one of the best-informed people possible,” Mr. Smith said.

Peter Münster, a spokesman for Facebook, said, “It did take a few meetings before we understood the scope and intentions embedded in Klynge’s role.” Now, he added, “we have a good and constructive dialogue with the Danish tech ambassador, who speaks frankly, expressing both criticism and positive feedback.”

Google and Apple declined to comment, while Amazon did not respond to requests for comment.

Mr. Klynge said Denmark should not be overlooked. As a European Union member, it can influence regulations on privacy, competition, content moderation, taxes and misinformation. (He said he often had to clarify to tech executives that he worked separately from one of Denmark’s better-known officials, Margrethe Vestager, the European Union’s top antitrust enforcer, who has levied billions of dollars in fines against the tech industry.)

Mr. Klynge said Denmark should not be overlooked. As a member of the European Union, the country can influence regulations. CreditLaerke Posselt for The New York Times

Denmark has faced some criticism for putting corporations on the same level as sovereign governments, but other countries are also dedicating diplomatic resources to the tech industry. France created an ambassador for digital affairs, and Australia, Britain and Germany, among others, have added tech-centric postings, often to help facilitate trade and investment. But Denmark said it was still the only country with a dedicated tech ambassador posted overseas.

Priya Guha, Britain’s former consul general in San Francisco, said that even as societal challenges grew as a result of giant tech platforms, economic ties were a top priority for diplomats sent to be liaisons with the industry.

“Diplomacy has shifted. We aren’t in the 1900s anymore; we’re not in a world where it’s all about bilateral relationship with other countries,” said Ms. Guha, now a partner at Merian Ventures, a venture capital firm. “Countries need to adapt their view of diplomacy to counter that. The companies will have significant influence on the world, and you can either step back and watch that happen or you can work with that.”

About 55 people in Denmark applied for Mr. Klynge’s job when it was created. He now has a team of about 11, with seven in California, three in Denmark and one in China. His office is in Palo Alto, Calif., not far from the headquarters of many tech companies.

Mr. Klynge maintains some Danish traditions, like cycling to work every morning. But other aspects of living in California remain a shock.

“Despite probably being one of the places with the highest density of millionaires, every single day I meet homeless people on the streets,” he said. He added that there was no way he could afford to live in Silicon Valley, where fixer-uppers regularly cost more than $1 million, if housing was not provided by the Danish government.

Mr. Klynge said he had approached the tech companies as if they were countries, building relationships and networks. In lieu of often frustrating attempts to meet with senior officials, he spends time with lower-ranking workers, former employees, people from smaller competing companies, civil society groups and government officials.

His team sends intelligence cables to government leaders on what is going on within the companies, as well as reports on issues like cybersecurity, the growing use of health data and autonomous vehicles. Danish officials can then use those to inform policymaking.

Mr. Klynge said he traveled to other tech hubs about half the year, visiting China, India and countries in Europe. He said he was surprised that Chinese companies were more open to discussing political issues than those in the United States.

He counts some successes. Last year, when a Danish citizen was killed by an Islamic terrorist while traveling in Morocco, Mr. Klynge quickly spoke with representatives from Facebook and Google to get them to remove the video of the grisly attack.

“Diplomacy is by nature a long-term business where you don’t necessarily see goals being fulfilled from one day to the next,” he said.

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How Shareholder Democracy Failed the People

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Democracy is a messy thing. Shareholder democracy may be even messier.

For nearly a half-century, corporate America has prioritized, almost maniacally, profits for its shareholders. That single-minded devotion overran nearly every other constituent, pushing aside the interests of customers, employees and communities.

That philosophy was rooted in an idea that has an air of nobility about it. Shareholder democracy was the name given to investors asserting themselves in corporate governance. The idea was that investors would wrest control of companies from entrenched managers, letting the actual owners set their corporate priorities. But what we really got was something else: an era of shareholder primacy.

That may have a chance — a chance — of changing now that 181 chief executives have lent their signatures to a new “Statement on the Purpose of a Corporation” that was published by the Business Roundtable on Monday. The statement from the leaders of companies including JPMorgan Chase, Apple, Amazon and Walmart affirms that the nation’s largest companies have a “fundamental commitment” to all their stakeholders: putting employees, suppliers and communities on a pedestal that once belonged only to shareholders.

The companies’ statement is a significant shift and a welcome one. For years, businesses have resisted calls — including from this column — to rethink their responsibility to society. In response, corporations typically dismissed hot-button topics like income inequality, climate change, gun violence and more as political issues unrelated to them.

Some will doubt the sincerity of these business leaders’ words, and it remains an open question whether their companies will be held accountable — and by whom. But what we may be at the start of is less a new era and more a return to the past.

For nearly 50 years — following the publication of a seminal academic treatise in 1932 called “The Modern Corporation and Private Property” by Adolf A. Berle Jr. and Gardiner C. Means — corporations, for the most part, were run for all stakeholders. It was a time defined by organized labor, corporate pension programs, gold-watch retirements and charitable gifts from companies that invested heavily in their communities and the kind of research that promised future growth.

It is a period often referred to — sometimes derisively — as “managerialism.”

But by the 1970s, managerialism became synonymous in investment circles with immovable executives who were running bloated businesses more for their own benefit than for their shareholders.

It also coincided with the ascent of Milton Friedman, the University of Chicago economist who preached a gospel of profits-as-purpose and mocked anyone who thought that businesses should do anything else.

“What does it mean to say that ‘business’ has responsibilities?” Mr. Friedman wrote in this newspaper in 1970. “Businessmen who talk this way are unwitting puppets of the intellectual forces that have been undermining the basis of a free society these past decades.”

That began the rise of shareholder democracy, an idea that the public and news media embraced. Shareholders and, in turn, a new class of investors known as corporate raiders convinced executives to slash any and all fat from their budgets or risk being taken over or voted out. Layoffs increased, research and development budgets were cut, and pension programs were traded for 401(k)s. There was a rush of mergers driven by “cost savings” that grabbed headlines while profits soared and dividends increased.

And here we are. Americans mistrust companies to such an extent that the very idea of capitalism is now being debated on the political stage. Populism has been embraced on both ends of the political spectrum, whether in the trade protectionism of President Trump or the social-net supremacy of Senator Bernie Sanders.

It is against that backdrop that the Business Roundtable released its statement on Monday. The group should be commended for coming around — and no one wants to criticize progress — but it is undeniably late.

Make no mistake, it wasn’t shareholder democracy that created this new enlightened moment. Public outrage pushed this forward. So did anger in Washington and regulatory scrutiny that is finally coming to bear.

Shareholders — with some exceptions — did not come around until they had no choice but to realize that these forces could have an impact on their investments.

And in an echo of managerialism, there are some corporate executives who deserve credit for this change.

Larry Fink, the chairman of BlackRock, deserves to be doing laps for putting these ideas into his annual letters years ago, when some of those who signed Monday’s statement laughed at the idea.

Credit should go, too, to Howard Schultz, the former chief executive of Starbucks, whose company embraced its employees as stakeholders from the beginning. And companies like Patagonia and Ben and Jerry’s, which are so-called B Corporations, committed to community principles early.

The investor Paul Tudor Jones II has been talking about this for years. So has Judith F. Samuelson, an executive director at the Aspen Institute who has pressed corporate leaders to embrace a view of service to society, and told me about a dinner where she and others leaned on Jamie Dimon, the JPMorgan chief executive and chairman of the Business Roundtable, to change the group’s mission statement.

And there was Prof. Klaus Schwab, who founded the World Economic Forum, drafting the Davos Manifesto of 1973: “The purpose of professional management is to serve clients, shareholders, workers and employees, as well as societies, and to harmonize the different interests of the stakeholders.”

If you suspect that the Business Roundtable’s statement changes little, there may be reason for skepticism. Some big companies didn’t sign on, including the Blackstone Group, General Electric and Alcoa.

And the Council of Institutional Investors — which represents many of the same companies as Business Roundtable and many of the nation’s largest pension funds — distributed a response that forcefully disavowed the ideas set forth in the roundtable’s statement.

“Accountability to everyone means accountability to no one,” the council said. “It is government, not companies, that should shoulder the responsibility of defining and addressing societal objectives with limited or no connection to long-term shareholder value.”

For whatever progress may have been made Monday, it is hardly clear the debate is over. In fact, the fight for corporate identity is just beginning.

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U.S. and China Resume Trade Talks Amid Dim Prospects for Deal

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WASHINGTON — Trade talks between the United States and China resumed on Monday with prospects dimming for a transformative deal, as both sides appeared more focused on preventing tensions from escalating before the 2020 presidential election than on making concessions.

Negotiators from both countries are continuing to press for an agreement, but months of meetings have so failed to yield consensus on the most difficult issues and there is little to suggest that a compromise is within reach. Instead, the United States and China appear to be trying to find a path to keep the talks moving forward and to avoid a breakdown that could rattle stock markets and hurt President Trump’s chances of re-election.

Mr. Trump and his advisers are playing down the likelihood of reaching an agreement in the short term, and the president suggested on Friday that China was trying to drag out the negotiations in the hope that someone else might occupy the Oval Office come January 2021.

“Meeting after meeting,” Mr. Trump told reporters at the White House. “I think that China will probably say: ‘Let’s wait. It’s 14, 15 months till the election. Let’s see if one of these people that give the United States away, let’s see if one of them could possibly get elected.’”

“I don’t know if they’re going to make a deal,” he added, referring to the Chinese government. “Maybe they will, maybe they won’t. I don’t care, because we’re taking in tens of billions of dollars’ worth of tariffs.”

Mr. Trump’s advisers have echoed his stance. Larry Kudlow, the director of the White House National Economic Council, tried to lower expectations that any big announcements would come out of the talks in Shanghai this week between Robert Lighthizer, the United States trade representative, and Steven Mnuchin, the Treasury secretary, and their Chinese counterparts.

“I wouldn’t expect any grand deal,” Mr. Kudlow said on CNBC on Friday. “I think, talking to our negotiators, they are going to kind of reset the stage and, hopefully, go back to where the talks left off last May.”

Negotiators appeared to be on the cusp of making a deal earlier this year. But talks faltered suddenly in May, as Beijing made significant changes to a draft outlining the potential terms of an agreement, and the Americans accused China of reneging on commitments.

Since then, the path toward reaching a trade agreement has been unclear. Talks are highly secretive, but there still appear to be significant differences over how China would enshrine new protections for American intellectual property, how many American products China would agree to buy and how many of Mr. Trump’s tariffs on $250 billion in Chinese goods would remain in place.

The two sides also appear to differ over how explicit the agreement should be. Chinese negotiators previously objected to demands that certain provisions be enshrined in Chinese law, and have pushed for a more vaguely worded text.

Michael Pillsbury, a China expert at the Hudson Institute, said that leaving more uncertainty in the agreement could foster more trade fights between the world’s two largest economies, particularly given a complex enforcement mechanism the two sides previously agreed to establish to ensure both countries lived up the agreement.

“If there are loopholes and gray areas subject to interpretation, then the extensive appeal process the Trump administration has designed will be a recipe for a decade of acrimony,” he said.

Negotiators for the United States insist that China must wind the clock back to where it was before the talks stalled in order for things to progress. Yet the objections to the agreement appear to have come directly from China’s president, Xi Jinping.

“The real question in the next week is, ‘Will they go back to where we were before they changed their mind?’” Wilbur Ross, the commerce secretary, said in an interview on Fox Business Network on Friday. “That’s what’s the important thing, because we were very close to a transaction before.”

In June, Mr. Trump and Mr. Xi agreed on the sidelines of the Group of 20 gathering in Osaka, Japan, to try to get negotiations back on track. Mr. Trump emerged from the meeting saying that China had agreed to buy some American farm goods. In return, he said, the United States would hold off on imposing additional tariffs and approve the sale of some nonsensitive goods to Huawei, the Chinese telecommunications giant that the United States government has blocked from buying American technology over national security concerns.

Even that truce has not unfolded as Mr. Trump planned. China has been preparing to make agricultural purchases, and on Sunday the state-run Xinhua News Agency reported that millions of tons of American soybeans had been shipped to China. But elsewhere, Chinese officials have continued to insist that they are not making purchases as a condition of the talks.

“In order to better meet the needs of the domestic market, some Chinese enterprises are willing to purchase some agricultural produce from the United States,” a spokesman from the Chinese Commerce Ministry said in a briefing on Thursday. He added that there was “no direct relationship” between the resumption of trade talks and the purchases.

The Trump administration has continued to follow through on the agreements the president made in Osaka. Mr. Trump has temporarily backed off his threat to impose tariffs on an additional $300 billion of Chinese imports. And his administration is considering granting waivers that would allow American companies like Google and Micron Technology to sell Huawei nonsensitive goods like handset components that are widely available on the international market.

But it remains unclear exactly what type of American products Huawei would be allowed to buy, and if the limitations would cripple its business.

“China is looking to go back to the status quo before the trade war started, and to rewind the clock” to before Huawei was blacklisted from purchasing American goods, said Andy Mok, a trade specialist at the Center for China and Globalization in Beijing. “The biggest threat right now is what happens on Huawei.”

Some Trump administration officials believe the president would benefit politically by holding out for a tougher deal. Democrats would be quick to criticize any agreement with China, and politicians of both parties have warned about the national security threat of permitting further sales to Huawei.

But while Mr. Trump insists that the American economy is still insulated from the trade war, economic data suggests that the tensions with China, America’s largest trading partner, are taking a toll.

Data released on Friday showed that the American economy slowed in the second quarter of the year, with gross domestic product expanding at an annual rate of just 2.1 percent as net exports and business investment slumped. The Federal Reserve has frequently cited the trade war as a problem for the economy, and it is expected to cut interest rates on Wednesday to help keep the economic expansion going.

Big American companies whose performance has faltered are also citing tariffs and trade tensions on both sides of the Pacific as a reason. Caterpillar cited cooling activity in China, a major market, when it reported falling sales growth for the second quarter, while Hasbro, Nintendo and other companies have discussed plans to move part of their supply chains out of China to countries like Vietnam.

The trade war is also dragging on the Chinese economy. The shift of multinational companies out of China, a trend that was already underway as a result of rising Chinese wages, could have a corrosive effect on growth.

But a sense has emerged in China that the country can afford to wait for a better trade deal from the Trump administration, or from another president. The Chinese economy is decelerating, but the process has been gradual. Further increases in the country’s already huge amount of infrastructure spending have cushioned the shock.

China’s exports to the United States have dipped, but they have not plunged during the trade war, falling 8.5 percent in the first half of this year compared with the same period last year. But exports to the rest of the world have been up slightly.

“At this point, I don’t think people worry so much about the trade war anymore,” said Weijian Shan, a prominent Chinese economist and financier in Hong Kong. “Most of them don’t see a real negative effect on their businesses. The panic has subsided.”

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