A recent law review article by a former Delaware corporate litigator, turned law professor, provides timely insights about recent developments in Delaware corporate law regarding the private enforcement of directors’ fiduciary duties. The article is based on a lecture that Professor Randall Thomas delivered a few months ago in Delaware (that is part of a series named after my saintly father, may he rest in peace). With the permission of The Chancery Daily, we offer the TCD’s following overview:
Friday, October 20, 2017, marked the 33rd year of The Delaware Journal of Corporate Law and the Delaware Law School’s Annual Francis G. Pileggi Distinguished Lecture in Law, where Vanderbilt Law School’s Professor Randall S. Thomas posed the question: Is Delaware Retreating? His discussion considered refinement and more or less sudden abrogation in subsequent case law of legal rules announced in four groundbreaking Delaware corporate law decisions: William B. Weinberger v. UOP, Inc., No. 58, 1981, opinion (Del. Feb. 1, 1983); Unocal Corp. v. Mesa Petroleum Co., et al., No. 152, 1985, opinion (Del. June 10, 1985); Revlon, Inc., et al. v. MacAndrews & Forbes Holdings, Inc., Nos. 353, 354, 1985, opinion (Del. Mar. 13, 1986); Blasius Industries, Inc., et al. v. Atlas Corp., et al., C.A. No. *9720-CA, opinion (Del. Ch. July 25, 1988). Today’s edition of The Chancery Daily includes mention of the paper upon which the lecture was based — Delaware’s Retreat: Exploring Developing Fissures and Tectonic Shifts in Delaware Corporate Law (Cox; Thomas) — which in TCD’s view presents a thoughtful, balanced, and cautious view of, in particular, developing aspects of Delaware law, exemplified by the [below] excerpt from the paper’s conclusion.
In our view, there are reasons to be concerned that private enforcement of director fiduciary duties has spiraled out of control, but at the same time, it is important to remember that the new cutbacks by the Delaware courts and legislature will weaken shareholder monitoring of corporate management and potentially increase the incidence of director misconduct.