We are at the 24th Annual Tulane Corporate Law Institute in New Orleans. Of the several hundred corporate lawyers from around the country, perhaps close to half are from Delaware. The attendees include four of the five members of the Delaware Court of Chancery and three of the five members of the Delaware Supreme Court.
Indicative of the national interest in this gathering of lawyers and others who make their living by keeping up with the latest developments in corporate law, are the reports today about the seminar from The Wall Street Journal and The New York Times.
Delaware Supreme Court Chief Justice Myron Steele was on a panel entitled: “Public Company Directors: A View from Inside the Board Room”. The Chief Justice observed that as a general approach to the review of disinterested and independent directors:
Generally, when a Delaware court reviews the conduct of a director, if the director is disinterested and independent and satisfies other attributes that demonstrate that the director was acting objectively and reasonably, deference will often be given.
His Honor also expressed his skepticism about federal legislation that is often enacted quickly in response to a crisis and without careful consideration of the consequences, much like a Napoleonic Code, one-size-fits-all approach.
Highlights from another panel today come from Ted Mirvis of New York’s Wachtell Lipton firm, who is frequently involved in major corporate litigation cases decided by the Delaware courts. He addressed the issue of an increasing number of suits involving Delaware law being filed in courts outside of Delaware. A few bullet points from his presentation include the following:
- Background: over 90% of deals involving at least $100 million are challenged by an average of 6.1 lawsuits each. Now, M & A class actions in state court outnumber federal class actions.
- The Problem: About two-thirds of cases involving a challenge to a merger involving a Delaware company were filed outside a Delaware state court. The risk is that non-Delaware courts will be deciding issues of Delaware law.
- Why is there a problem: Some plaintiffs think they may suffer less scrutiny and receive more fees outside Delaware. There are more plaintiffs attorneys than ever. Many other states now have “business courts”.
- Solution: Forum selection clauses in charters or bylaws. Almost 200 public companies now have these provisions. Of this group of Delaware companies, 31% are based in California.
There is much more to report about this two-day long conference, but this is just a small sample. Two years ago we provided a fuller overview here.