Capital Discrimination

The law of business associations does not recognize gender. The rights and responsibilities imposed by states on business owners, directors, and officers do not vary based on whether the actors are male or female, and there is no explicit recognition of the influence of gender in the doctrine. Sex and gender nonetheless may pervade business disputes. One co-owner may harass another co-owner; women equity holders may be forced out of the company; men may refuse to pay dividends to women shareholders. In some contexts, courts do account for these dynamics, such as when married co-owners file for divorce. But business law itself has no vocabulary to engage the influence of sex and gender, or to correct for unfairness traceable to discrimination. Instead, these types of disputes are resolved using the generic language of fiduciary duty and business judgment, with the issue of discrimination left, at best, as subtext. The failure of business law doctrine to confront how gender influences decisionmaking has broad implications for everything from the allocation of capital throughout the financing ecosystem to the lessons that young lawyers are taught regarding how to counsel their clients. This Article will explore how courts address – or fail to address – the problem of discrimination against women as owners and investors. Ultimately, the Article proposes new mechanisms, both via statute and through a reconceptualization of fiduciary duty, that would allow courts to recognize, and account for, gender-based oppression in business.