Rainess Holmes pleaded guilty to three counts of aggravated burglary and one count of second-degree murder in the 2021 death of Andrew “Drew” Rainer, a Rhodes College student. The Daily Memphian reports that Holmes was sentenced to 20 years in prison and received credit for the three and a half years he has already served. He will be required to serve 100% of the remaining sentence. Prosecutors said Holmes and several others broke into an off-campus home in October 2021 where Rainer, other students and a guest were staying. Rainer was shot in the chest during the break-in and pronounced dead at the scene. According to a statement from the Shelby County District Attorney’s Office, Holmes was one of four men who entered the home but was not the shooter.

For four consecutive weeks, the U.S. Immigration and Customs Enforcement (ICE) office in West Knoxville has been closed for routine check-ins, causing heightened anxiety among immigrants, Knox News reports. Many affected residents are in the process of seeking asylum and could face removal if they miss scheduled check-ins. The office serves individuals who are either authorized to be in the United States or are working with the government to remain. Those awaiting immigration court dates, undergoing the asylum process, or subject to removal orders but considered low priority are typically required to check in every few months. Prior to the closure, three individuals were arrested without warning during a Feb. 12 check-in, despite facing no criminal charges.

The Knoxville Bar Foundation is now accepting grant proposals for its 2025 funding cycle, with applications due by May 30. Established in 1992 to promote justice, legal education and support for the legal profession, the Foundation has awarded more than $580,000 to local law-related programs and projects. Individual grants are typically $5,000 or less and must be used for specific initiatives, excluding operating costs and endowments. Grants will be awarded in June, and interested organizations are encouraged to apply online here.

Dean John Sauer was confirmed as U.S. solicitor general and the Trump administration’s top lawyer for Supreme Court cases in a 52-45 Senate vote, Bloomberg reports. Sauer, a former federal prosecutor and Missouri solicitor general, successfully argued before the Supreme Court last year on behalf of former President Donald Trump in his bid for immunity from criminal prosecution related to the Jan. 6, 2021, U.S. Capitol riot. Additionally, the Senate confirmed attorney Harmeet Dhillon, Trump’s pick to lead the Justice Department’s Civil Rights Division, also in a 52-45 vote. Dhillon will oversee both criminal and civil matters, including hate crime prosecutions, voting rights litigation and investigations into law enforcement agencies for patterns of discrimination.

Nine international students at the University of Tennessee at Knoxville (UT) have had their immigration statuses changed, resulting in revoked student visas and the risk of deportation as of Friday, Knox News reports. The students are listed as “individual identified in criminal records check and/or has had their visa revoked.” UT discovered last week that the statuses had changed for three students and a former student working on campus. The terminations — entered directly into the federal Student and Exchange Visitor Information System (SEVIS) by U.S. Immigration and Customs Enforcement, bypassed the university’s traditional role in initiating such changes and left students without the opportunity to contest the revocations beforehand. International students across the country are now pursuing legal challenges to the SEVIS terminations, arguing the actions may violate constitutional due process protections and the Administrative Procedure Act, which requires federal agencies to provide notice and an opportunity to respond before taking adverse administrative action.

Facebook parent Meta Platforms faces trial in Washington, D.C., starting this week on claims it built an illegal social media monopoly by spending billions to acquire Instagram and WhatsApp, Reuters reports. The case, filed during President Donald Trump’s first term, alleges Meta bought the companies a decade ago to eliminate competition among social media platforms where users connect with friends and family. The Federal Trade Commission (FTC) is seeking to force Meta to restructure or sell parts of its business, including Instagram and WhatsApp. Meta has argued in court filings that its acquisitions of Instagram in 2012 and WhatsApp in 2014 have benefited users, and it plans to point to increased traffic on its platforms during TikTok’s brief U.S. shutdown in January as evidence of continued competition. Meta CEO Mark Zuckerberg is expected to take the stand during the trial, which could extend into July. If the FTC prevails, it would need to prove in a second trial that breaking up Meta’s business would restore market competition. The case is one of five in which the FTC and U.S. Department of Justice have accused major tech companies — including Amazon, Apple and Google — of maintaining illegal monopolies.

In its recent opinion in Youree v. Recovery House of East Tennessee LLC, the Tennessee Supreme Court addressed the doctrine of piercing the corporate veil.[1] The opinion did not establish new law in Tennessee, but rather clarified how long-standing principles should be applied when a plaintiff seeks to disregard the corporate form to impose liability on corporate entity owners.[2]

The court restated numerous well-established principles in the context of corporate separateness. In doing so, the court noted the sometimes reviled (by creditors) but nonetheless long-held principle that “it is perfectly acceptable ‘to incorporate for the express purpose of limiting the liability of the corporation’s owners.’” The court also noted that the liability protection afforded by the corporate form is not absolute. The equitable doctrine of piercing the corporate veil attempts to balance the benefits of limited liability against its costs.

Turning to an examination of the principle of corporate veil piercing in Tennessee, the court initially noted that, “There is a broad consensus that the doctrine of piercing the corporate veil is ‘among the most confusing in corporate law.’” The court stated:

The resolution of cases involving piercing the corporate veil has been susceptible to the use of rhetorical devices and picturesque terms that often serve as a shorthand for a conclusion without adequate discussion about how the conclusion was reached. Indeed, the doctrine long ago was described as “enveloped in the mists of metaphor” by then-Judge Cardozo. The passage of time since then-Judge Cardozo expressed that sentiment has not been particularly kind to the explication of the doctrine of piercing the corporate veil. Regrettably, the treatment of the doctrine in Tennessee has exhibited confusion over the years. (citations omitted)

In its stated effort “to be more precise in this opinion,” the court revisited its opinion from nearly 50 years ago in Continental Bankers Life Insurance Co. of the South v. Bank of Alamo, 578 S.W.2d 625 (Tenn. 1979), which set forth the three elements required to be proven in order to pierce the corporate veil in Tennessee:

(1) The parent corporation, at the time of the transaction complained of, exercises complete dominion over its subsidiary, not only of finances, but of policy and business practice in respect to the transaction under attack, so that the corporate entity, as to that transaction, had no separate mind, will, or existence of its own.

(2) Such control must have been used to commit fraud or wrong, to perpetuate the violation of a statutory or other positive legal duty, or a dishonest and unjust act in contravention of a third parties’ rights.

(3) The aforesaid control and breach of duty must proximately cause the injury or unjust loss complained of.

The court noted that the standard upon which the elements stated in Continental Bankers are based was established as early as 1931. The court also addressed the frequently cited 1984 Eastern District of Tennessee case of Federal Deposit Insurance Corp. v. Allen, 584 F. Supp. 386 (E.D. Tenn. 1984), noting that in “the ensuing years, as this case demonstrates, confusion has developed over the interplay between the Continental Bankers elements and the Allen factors.”

After acknowledging that the court’s “own opinions have not resolved the confusion,” the court stated, “[t]his appeal gives us an opportunity to resolve some of the confusion.” In resolving the confusion present in the underlying case, the court stated succinctly: “[T]he Continental Bankers elements provide the standard for piercing the corporate veil. [3] The “factors” enumerated in Allen are not a separate test. However, the 11 circumstances stated in Allen provide a non-exclusive list of circumstances which “may be used in determining whether the three required elements from Continental Bankers have been established. [N]ot every such circumstance need be present to establish the three elements, nor will any single circumstance be conclusive. Rather, establishing any of the elements likely will depend on a combination of circumstances.”

In concluding its analysis, the court cautioning that “checking items off a list is not a substitute for a purposive analysis of whether the Continental Bankers elements have been established.” In every instance, the circumstances must demonstrate all three elements of control, wrongdoing, and causation in order for the corporate form to be disregarded.

In bringing clarity to this issue, the Tennessee Supreme Court has effectively strengthened the axiomatic separateness between corporate entities and their owners, whether the owners are natural persons or other legal entities. Even when a corporate entity has no “separate mind, will or existence of its own” as to the transaction at issue, a party attempting to disregard the corporate form must prove that the improper control was used to commit a fraud or wrong which was the proximate cause of the injury or unjust loss complained of.

[1] While beyond the focus of this article, a significant portion of the opinion analyzed the issue whether the trial court properly entered a default judgment and, relatedly, properly denied a later motion to vacate that judgment. The Tennessee Supreme Court held that a trial court should not grant a default judgment simply because a party has not timely responded. While this should not be taken as an open invitation to unreasonably delay in responding to a lawsuit, the court stated that “our trial courts have an independent obligation, in exercising their discretion to enter a default judgment, to ensure that the admitted factual allegations are legally sufficient to establish a valid claim against the defaulting party."

[2] In case there was ever a question whether corporate veil piercing principles applied equally to corporations as limited liability companies in Tennessee, that issue has been conclusively addressed with this opinion.

[3] There was some discussion about whether the Allen test applied when attempting to pierce the corporate veil between a parent corporation and its subsidiary.  Continental Bankers applies in any context when piercing the corporate veil is at issue, whether that is a parent-subsidiary or a corporation-shareholder relationship.

Justin Joy is a shareholder in the Memphis office of the law firm Lewis Thomason and leads the firm’s cybersecurity practice group. He provides counsel to clients in a variety of industries in the area of information privacy and cybersecurity including incident investigation and breach response management, regulatory compliance, privacy and security policy review and drafting, and cyber risk management. He is a Certified Information Privacy Professional/US (CIPP/US) and a Certified Information Privacy Technologist (CIPT) through the International Association of Privacy Professionals. He speaks frequently to various groups and organizations on the topic of information privacy and cybersecurity. Joy also regularly represents businesses and individuals in a variety of litigation matters including professional liability claims, insurance coverage disputes, business torts and commercial disputes. He also frequently advises business clients regarding a range of governance, operational and strategic matters. He is a 2001 graduate of Wake Forest University and holds a law and MBA degree from the University of Memphis.

The Tennessee Court of Appeals recently decided a case involving a forum selection clause in a contract. The case of Lakeway Real Estate2 LLC v. ERA Franchise Systems LLC involves a dispute over a noncompete provision in a franchise agreement. The franchisee, Lakeway Real Estate2 LLC, sought declaratory relief from the chancery court, arguing that the noncompete provision in the franchise agreement was unenforceable. The franchisor, ERA Franchise Systems LLC (ERA), moved to dismiss the complaint because the forum selection clause in the agreement designated specific courts in New Jersey as the proper venue. The court quoted the clause at issue, stating:

Venue and Jurisdiction. You submit to the non-exclusive personal jurisdiction of the state and federal courts of New Jersey for any litigation arising out of or related to this Agreement or to any aspect of the business relationship between the parties. Such litigation will have venue in state courts in Morris County, New Jersey, or in the United States District Court for the District of New Jersey.

The trial court granted the franchisor’s motion to dismiss, finding the clause as mandating exclusive jurisdiction in New Jersey. The franchisee appealed, arguing that the clause was permissive, not exclusive, and allowed for jurisdiction in New Jersey but did not require it.

The Tennessee Court of Appeals reversed the trial court’s decision, agreeing with the franchisee. The appellate court found that the clause provided for non-exclusive personal jurisdiction in New Jersey. Under the agreement, the specified New Jersey courts were an option; however, they were not the only venues where litigation could be filed. The court emphasized that the clause should be read as a whole, and using the term “non-exclusive” indicated that New Jersey was a permissive, not mandatory, forum.  Specifically, the Tennessee Court of Appeals determined that:

[T]he inclusion of “non-exclusive” in the first sentence of the [forum selection clause] is evidence of the parties' intent at the time of drafting to make New Jersey a permissive, but not mandatory, jurisdiction for disputes arising out of the Agreement. The first sentence means that the parties have consented to the state and federal courts of New Jersey having jurisdiction over them. This is not to say, however, that they are consenting to personal jurisdiction only in New Jersey.

In addition to reciting well-established contract interpretation principles, the court’s opinion provides a helpful reminder to Tennessee practitioners when the parties to a contract desire to have disputes related to the contract litigated in a specific place. [1] While the two ideas are sometimes practically synonymous, the distinct concepts of jurisdiction and venue are analyzed separately in a forum selection clause. Accordingly, if the intention of the parties is to resolve disputes in a specific locale, the contract should provide both for an agreement on the jurisdiction (i.e., consent to suit in a specific state) and an agreement that the case will be brought in a particular county within the jurisdiction and/or in a specified federal district court within the selected state. Otherwise, such as in this case, there may be a mandatory/permissive mismatch where the venue is specified, but the jurisdiction is not exclusive.

[1] The court interpreted the contract under New Jersey substantive law, but for purposes of this article, Tennessee law is similar.

Justin Joy is a shareholder in the Memphis office of the law firm Lewis Thomason and leads the firm’s cybersecurity practice group. He provides counsel to clients in a variety of industries in the area of information privacy and cybersecurity including incident investigation and breach response management, regulatory compliance, privacy and security policy review and drafting, and cyber risk management. He is a Certified Information Privacy Professional/US (CIPP/US) and a Certified Information Privacy Technologist (CIPT) through the International Association of Privacy Professionals. He speaks frequently to various groups and organizations on the topic of information privacy and cybersecurity. Joy also regularly represents businesses and individuals in a variety of litigation matters including professional liability claims, insurance coverage disputes, business torts and commercial disputes. He also frequently advises business clients regarding a range of governance, operational and strategic matters. He is a 2001 graduate of Wake Forest University and holds a law and MBA degree from the University of Memphis.

Practitioners advising clients on Regulation D offerings should be aware of recent guidance from the SEC's Division of Corporation Finance ("Corp Fin") that provides a potentially less burdensome method for verifying accredited investor status under Rule 506(c). In a March 12, 2025, no-action letter issued to Latham & Watkins LLP, Corp Fin indicated that relying on a high minimum investment amount, combined with specific investor representations, can constitute the "reasonable steps" required for verification.

While Rule 506(c) permits general solicitation for private offerings, it mandates that issuers take "reasonable steps to verify" that all purchasers are indeed accredited investors. This verification requirement often involves collecting sensitive financial documents, leading to increased costs, delays, and investor reluctance compared to Rule 506(b) offerings (which prohibit general solicitation but allow for investor self-certification). Consequently, many issuers, especially earlier-stage companies, have historically preferred Rule 506(b).

The Latham & Watkins no-action letter outlines a verification pathway based on the following elements:

1. High Minimum Investment: A substantial investment amount can itself be a key indicator of accredited status. The guidance references the requesting firm's proposed thresholds as potentially reasonable: $200,000 for natural persons and $1,000,000 for entities (with variations for entities accredited via their owners).
2. Specific Investor Representations: The investor must provide written representations confirming (a) they meet the relevant Rule 501(a) accredited investor definition(s), and (b) the investment is not being financed by a third party solely to meet the minimum threshold.
3. No Contradictory Knowledge: The issuer cannot have actual knowledge suggesting the investor is not accredited or that the representations are false.
4. Method Flexibility: Nothing in the no-action letter appears to rule out Issuers using this high-minimum approach for some investors while employing traditional verification methods (e.g., reviewing tax returns or bank statements) for others within the same offering.

This guidance introduces valuable flexibility for Rule 506(c) offerings:

• Enhanced Attractiveness of Rule 506(c): For offerings targeting investors likely to meet the high minimums, this method can significantly streamline the verification process, making Rule 506(c) a more viable option, particularly for larger rounds seeking broad solicitation.
• Client Assessment: Evaluating whether this approach fits a client's fundraising strategy requires analyzing their target investors' typical investment size and profile. Very early-stage rounds with smaller check sizes may still find Rule 506(b) or traditional Rule 506(c) verification more suitable.
• Offering Structure: Counsel can advise clients on potentially combining offering types (e.g., starting with Rule 506(b) and later transitioning to Rule 506(c) using this verification method, mindful of integration rules) or using mixed verification methods within a single Rule 506(c) offering.
• Fundraising Impact: The guidance may also simplify capital raising for private funds utilizing Rule 506(c) by easing the verification for high-commitment limited partners.

The recent Corp Fin no-action letter provides welcome clarification and offers a practical alternative for satisfying the Rule 506(c) verification requirement in appropriate circumstances. While it does not eliminate the need for careful analysis of each offering's specifics, it presents an additional tool for counsel advising issuers and funds navigating Regulation D.

Trey Woodall is a corporate and securities attorney at Riggs Davie PLC in Nashville. He counsels clients on corporate and securities transactions, including mergers and acquisitions, entity formation, capital raising transactions and private fund formation. Woodall also mentors law students at the Belmont University College of Law; volunteers with the American Inn of Court program; and serves on the advisory board for the Tomorrow Fund of the Community Foundation of Middle Tennessee.

Alexander Davie is a member of Riggs Davie PLC in Nashville and serves in the firm's corporate and securities practice. He represents investment advisers, private equity funds, venture capital funds, hedge funds, real estate partnership syndicators, securities brokers and other entities with regard to private offerings of securities and complex federal and state securities regulatory matters. He also works extensively with technology companies, including startups and emerging growth companies, as well as businesses in other industries, providing legal counsel on company formation, mergers and acquisitions, technology transactions, equity compensation and venture capital financings.

The 2025 Business Law Forum will take place April 24 in Nashville, offering a full day of education and networking for Tennessee's business law community. The event will feature two sessions: "TN Business Law 101" in the morning, which will be aimed at early career professionals and seasoned practitioners looking for a refresher, and "Advanced Topics" in the afternoon for those dealing with more complex legal issues. A networking happy hour will round out a day of connection and education.

The morning program will focus on the basics of business law, beginning with a presentation on Tennessee-specific laws such as usury and indebtedness tax, which often arise in debt financing transactions and M&A transactions. Other morning sessions include entity formation, including choice of jurisdiction and entity, and a multi-firm panel discussion of drafting lessons and recommendations.

In the afternoon, the forum shifts focus to more complex and nuanced issues facing Tennessee business lawyers. Kicking off the Advanced Topics mini-program will be Delaware corporate governance litigator Brad Sorrels, who will be sharing recent updates to Delaware law. The second afternoon session will focus on tax and economic allocation provisions in LLC and partnership agreements. The last session of the day will further narrow the focus on entity formation, in particular the ethics challenges and conflicts of interest that attorneys face when forming new entities.

Schedule At-A-Glance: (all times central)

9 – 10 a.m.  A Beginner’s Guide to Debt Tax and Usury in Tennessee: Katie Smalley, Leslie Ford
10 – 10:15 a.m.  Break
10:15 – 11:15 a.m.  Entity Selection and Formation in Tennessee: Van East, Nathan Harris
11:15 – 11:30 a.m.  Break
11:30 a.m. – 12:30 p.m.  Practical Tips for Contract Drafting: Laura McKinney (moderator), Courtney Keehan, Tyler Huseman, Dillon Reid
12:30 – 1:15 p.m.  Lunch (provided)
1:15 – 2:15 p.m.  Delaware Corporate Law: The Times They Are A Changing (Or Are They?): Brad Sorrels, Joan Heminway
2:15 – 2:30 p.m.  Break
2:30 – 3:30 p.m.  Drafting Tax & Economic Provisions of Operating Agreements: Alex Davie
3:30 – 3:45 p.m.  Break
3:45 – 4:45 p.m.  Ethics Issues in Entity Formation in Tennessee: Paula Schaefer

In an effort to provide flexibility for attendees with specific learning interests, the TBA is offering three options for forum attendance:

• Full-day registration is available here.
• If you prefer to only attend the morning portion, which focuses on beginner topics, register to attend the 3-hour morning portion here.
• If you prefer to only attend the afternoon portion, which focuses on advanced business law topics, register to attend the 3-hour afternoon portion here.