This year’s Distinguished Lecturer is Professor Edward Rock of the University of Pennsylvania Law School, a nationally recognized corporate law expert. A summary of his background and a sampling of his scholarship are provided in the announcement here. The origin of the  Annual F. G. Pileggi Distinguished Lecture in Law,  sponsored by The Delaware Journal of Corporate Law, the lead law review of Widener University School of Law, is described here. This annual lecture series was named after my father, F. G. Pileggi, and not the author of this blog post. (I have an extra middle initial.) Last year’s Lecture, and links to lecturers from prior years, are highlighted on this blog here.

The topic and the abstract of this year’s presentation, held today, October 9, 2009, in Wilmington, Delaware, is as follows:

TOPIC:
When the Government is the Controlling Shareholder: Implications for Delaware
 

ABSTRACT:
As a result of the bailouts that began in the fall of 2008, the Emergency Economic Stabilization Act of 2008, and Troubled Assets Relief Program, and its various subprograms, the United States Government now owns a large portfolio of equity positions in Delaware corporations, including controlling positions in AIG, Citigroup, GM, and GMAC. Corporate law provides a complex and comprehensive set of standards of conduct governing the behavior of controlling shareholders. When the Treasury is the controlling shareholder, doctrines of “sovereign immunity” replace many of these existing “private law” structures of accountability with federal “public law” norms. In this lecture, I examine Delaware’s place in this new legal landscape.

UPDATEThe Wilmington News Journal published an article about the Annual Lecture here. Also, The Philadelphia Inquirer’‘s Joe DiStefano wrote a piece about the good professor’s Lecture here.
 

The 24th Annual F.G. Pileggi Distinguished Lecture in Law, sponsored by The Delaware Journal of Corporate Law, the lead law review of Delaware’s Widener University School of Law, was presented today by Professor Eric Talley, a visiting professor this year at Harvard Law School.  Here is a short description of this year’s event with a link to a video of the presentation. 

The prior 23 Annual Distinguished Pileggi Lecturers have been listed here. My posts about last year’s Distinguished Pileggi Lecturer (and reference to the two prior years) is available here. Some background on how the Annual Lecture began is described here. 

UPDATE: The Delaware Law Weekly has a story about it here. The Delaware Corporate Litigation Reporter, published by Thompson-West, also has an article about it that they graciously allowed me to reprint on this blog here.

A  partial abstract of this year’s Distinguished Lecture in Law by Professor Eric Talley,  held at the Hotel duPont in Wilmington, Delaware, on October 10, 2008,  is as follows:

How Complexity Simplifies Corporate Law, Governance, and Incentives

ABSTRACT:

Complexity makes corporate law and governance both challenging and interesting. Indeed, the modern corporate enterprise must mediate and regulate a vast number of conflicting interests, claims, constituencies and authority relationships. Within the shadowy interstices of these conflicts, coordination and incentive problems tend to propagate and thrive. In many ways, the key challenge of corporate law is that of constructing balance amid the chaos of these competing forces.
 

This post was prepared by Frank Reynolds, who has been following Delaware corporate law, and writing about it for various legal publications, for over 30 years.

The law school professor widely regarded as the “dean” of Delaware corporate law told a gathering of the state’s bench and bar in Wilmington Nov. 8 that he was just fortunate to be in the right place at the dawn of the age of hostile takeover litigation.

At the 35th Annual Francis G. Pileggi Distinguished Lecture in Law at the Hotel duPont, Widener University Delaware Law School Professor Emeritus Lawrence A. Hamermesh presented his unique perspective on more than 40 years of legal trends in an interview with fellow Widener professor Paul L. Regan. The law school provided an excellent overview of the event on their website.

Hamermesh said in 1976, he was fresh out of Yale Law School and working for the law firm Morris Nichols Arsht & Tunnel in Wilmington when he was assigned to a minority shareholder’s appraisal suit over the value of the stock of Kirby Lumber Corp.

He said that low-profile case involved issues that were common to later high-stakes hostile acquisition litigation that dominated the docket of the Delaware Chancery Court for decades. Bell v. Kirby Lumber Corp. 413 A 2d 137 (Del. 1980).

Morris Nichols frequently defended companies and their officers and directors, who usually took the position that the company’s worth should be based on its revenue — in Kirby’s case, about $120 a-share — but the plaintiff said its assets were worth $770 a-share.

Kirby’s legacy

Hamermesh said as merger and acquisition battles heated up through the 1980’s, hostile bidders seeking control of a bare majority of a target company’s stock so they could profitably sell off its pieces were focused on asset value.

“The court struck a compromise and averaged Kirby’s stock value between those two value extremes but that was just the beginning” of a long, see-saw battle between corporate officers and directors on one side and hostile bidders and activist investors on the other, he said.

Often, he faced his interviewer, Prof. Regan, in those battles during Regan’s stint at firm Skadden Arps, before Hamermesh traded the courtroom for the Widener classroom in 1994, where the two have steered the corporate law department.

They said they have witnessed the evolving struggle between corporate operating value and break-up asset value proponents put takeover litigation and the Delaware business courts in the national spotlight.

Often, the threat of a takeover that would bust up a company and its business made strange bedfellows out of traditional adversaries, such as management and labor who would be forced to put aside their differences to present a united front against a hostile bidder, Hamermesh noted.

Spotlight shifts to Delaware

After the U.S. Supreme Court decided in Green v. Santa Fe that merger challenges were the province of  state law and not classic federal securities laws because they focused on fiduciary duty, not securities deceit and fraud, the Delaware state courts rose to prominence, the professors agreed. Santa Fe Industries, Inc. v. Green, 430 U.S. 462 (1977)

They discussed the key Delaware decisions in the 1980’s that tried to balance the right of the directors to manage their companies, against the right of investors, as the owners, to decide the company’s ultimate fate.

Unocal and Revlon’s effect

The Delaware Supreme Court’s Unocal decision for the first time imposed an “enhanced duty” on directors to show that their takeover defense was a reasonable response to a threat to the corporation by a hostile bidder, they said. Unocal v. Mesa Petroleum Co., 493 A.2d 946 (Del. 1985)

One year later, the high court’s Revlon ruling said in a sale-of-control battle the directors effectively become the auctioneers of the company and must take a hostile bidder’s higher offer, because the board’s defenses could be the product of conflicted interests. Revlon, Inc. v. MacAndrews & Forbes Holdings, Inc., 506 A.2d 173 (Del. 1986)

“The Supreme Court said the board has to take the highest offer in a sale situation if its the end of the line for the business, but what if it will live on in some other form?” Hamermesh asked.  In those cases, the board could consider other constituencies, including the interests of constituencies such as employees, creditors and suppliers. Compare generally, Bandera Master Funds LP v. Boardwalk Pipeline Partners, LP, C.A. No. 2018-0372-JTL, Slip op. at 30-31 and n.8 (Del. Ch. Oct. 7, 2019)(recent Chancery decision noting considerations that can be taken into account consistent with fiduciary’s obligation to act in best interests of stockholders.)

The takeover battles evolved into a struggle between long-term revenue proponents and the hedge funds, private equity companies and other activist investors who pushed for changes that would generate quick, short-term profits, he said.

Investing with grandchildren in mind

Today, the issue is still “shareholder primacy”, versus other interests – such as the environment — because “companies can benefit by dumping on the world, but what about my grandchildren — what kind of world will they inherit?” because of investor decisions, he asked.

The professor said like many investors, his stock holdings are through “investment intermediaries” whose short-or-long-term influence on the companies in their portfolio can be hard to gauge.

The iconic Delaware court rulings mainly address the fiduciary duties of corporate officers and directors, “but what duty do investment companies owe to shareholders?” he asked.  The focus has been on the agency costs directors and officers incur in running the company, “but what are the investment intermediaries’ agency costs?”

Responding to Regan’s “where is shareholder litigation going?” question, Hamermesh applauded the Chancery Court’s 2016 Trulia decision that effectively stopped what he called “merger tax” lawsuits in which plaintiff law firms reaped attorney fees for quick settlements that provided no benefit beyond unimportant added deal information.   In re Trulia, Inc. S’holder Litig., 129 A.3d 884, 894 (Del. Ch. 2016).

In hindsight, he said, whatever his contribution has been to his field, his choice of corporate over criminal law meant that, “I was basically representing people fighting about money, and no one was going to die.”

The 22nd  Annual Francis G. Pileggi Distinguished Lecture in Law will be held on October 20 at 8:00a.m. at the Hotel duPont in Wilmington, Delaware. This year’s lecturer is Prof. Hillary Sale, a nationally prominent corporate law expert. The lecture is approved for one-hour of free CLE for both Delaware and Pennsylvania attorneys. Prof. Sale’s presentation: "Caremark: A Tale of Two Fiduciaries" comes on the 10th anniversary of the Court of Chancery decision by retired Chancellor William T. Allen titled In re Caremark International Inc. Derivative Litigation. The famous decision dramatically focused attention on directors’ roles in implementing corporate compliance programs. More details are available here (including a number to rsvp, though seating is limited) .

This post was prepared by Frank Reynolds, who has been following Delaware corporate law, and writing about it for various legal publications, for over 30 years.

Corporate lawyers have a unique opportunity to influence American companies to benefit by practicing the ethical standards their mission statements and codes of conduct espouse, a Villanova Law School professor told a gathering of Delaware’s bench and bar recently.

After a two-year pandemic pause, jurists and attorneys returned to the Hotel DuPont in Wilmington for the 36th Annual Francis G. Pileggi Distinguished Lecture in Law to hear Business Ethics: What Everyone Needs to Know,’ presented by J.S. Nelson, an Associate Professor at the Harvard Business School and an Associate Professor at Villanova Law School.

Nelson began by popping what she identified as numerous myths about ethics

Compared to the statutes and rules that corporate lawyers deal with, ethics is rather esoteric

Ethics–essentially, man’s instinct to do the right thing–is not a theoretical subject, but is rather the foundation for the formulation, interpretation, application and enforcement of laws, Nelson said.  “Ethics is nothing like what you think it is.”

Ethics are just a matter of subscribing to a set of principles

It’s more complicated than that because humans have a dual nature regarding ethics, she pointed out.  On one hand, they proudly endorse certain values and behaviors and believe they are ethical, but on the other, they are very susceptible to pressure from certain institutions and situations to compromise or suspend even fervently held values and principles—often with famously disastrous results.

The people who said they were “just following orders” during the Holocaust were unique

Nelson told the group that extensive behavioral studies have repeatedly produced the exact opposite conclusion: regardless of ethnic, cultural or religious background more than two thirds of test subjects will yield to consistent unified pressure to join with an institution or group’s program –when the program directly contradicts the subject’s core ethical principles.

She said this dynamic applies in the corporate world when employees confront a corporate culture that tolerates or even promotes lax quality control, poor safety or working conditions, gender inequality or sexual harassment or questionable financial practices.  They will often do what they must to get along in the world in which they find themselves.

Ethical management does not produce a better bottom line.

Actually, in the long run, a management that provides good working conditions with equal pay, benefits and opportunities and prioritizes quality and safety over short-term operating cost savings will attract and retain more engaged, efficient staff, enjoy greater profits, and “won’t have to worry about where the next scandal will be coming from,” Nelson predicted.

But to have that positive proactive effect, the institution must present a consistent unified position against even small ethical wrongs, because it’s all too easy for a company’s effect on ethics to reverse and snowball in the negative direction, she said.

The Boeing example

For example, Nelson said, the Boeing Company had a stellar safety record until its management and board decided to create a higher passenger capacity version of its workhorse 737 jetliner without a complete redesign.  Instead, they opted to essentially hang bigger engines on its wings to lift the greater weight and when that caused a tippy fore/aft balance problem, they devised a computer program to help pilots compensate, but the program had deadly flaws that allegedly caused two crashes with the loss of all aboard, she explained.

That triggered an FAA investigation that grounded the entire 737 MAX fleet for 20 months and a successful shareholder suit in the Delaware Chancery Court that claimed Boeing’s directors were liable for lax safety that caused large financial losses. In Re the Boeing Company Derivative Litigation, No. 2019-0907-MTZ opinion issued, (Del. Ch. Sept. 9, 2021).

As this blog has reported, ethical failure allegations played a key role in Vice Chancellor Morgan Zurn’s Sept 9, 2021 landmark ruling which found plaintiffs’ derivative director oversight claims met the tough pleading standards of the Delaware Supreme Court’s Marchand ruling with well-supported allegations that a majority of the directors are likely liable for Boeing’s billions of dollars in losses and penalties. Marchand v. Barnhill, 212 A.3d 805 (Del. 2019).

Importantly, Vice Chancellor Zurn’s ruling repeatedly pointed to the Marchand standards in finding that Boeing’s directors:

  1.  Got no regular safety information on the 737 MAX or any of its planes due to their “complete failure” to establish a committee or regular board reports on safety issues,
  2.  After the first crash, did not immediately investigate what caused the 737 MAX to repeatedly push its nose down in a series of disastrous dives at low speeds and instead virtually ignored the problem even though safety was a “mission critical” area,
  3. Intentionally misled federal regulators about the scope and seriousness of a computer pilot training program meant to help them use software that would allegedly minimize nose-down dives,
  4. Allegedly lied to the public and regulators about how comprehensive, how much in good faith and how quickly implemented their post-crash safety program was.
  5. Never pressed the CEO for more information or questioned his conclusions when he repeatedly told the board the 737 MAX was safe and blamed the crashes on pilot and maintenance errors.

But Nelson pointed out that rulings on alleged low points in corporate behavior often prompt positive changes in ethical standards, “and sometimes today’s ethics become tomorrow’s laws.”

The current issue of the Delaware Journal of Corporate Law features an article by Professors James D. Cox and Randall S. Thomas entitled: Delaware’s Retreat: Exploring Developing Fissures and Tectonic Shifts in Delaware Corporate Law, 42 Del. J. Corp. L. 323 (2018). The authors carefully review recent Delaware court decisions that have reduced the role of judicial review in contests for corporate control in deference to decisions of independent directors and appropriate shareholder approval. Those involved in Delaware corporate litigation need to add this to their “must reading” list. The article was presented in connection with the 33rd Annual F.G. Pileggi Distinguished Lecture in Law at the Widener University Delaware Law School.

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.

Cox & Thomas 12/01/2017

Prior Annual Pileggi Lectures in the series have also been highlighted on these pages.

Widener University School of Law announced that Guhan Subramanian, the Joseph Flom Professor of Law & Business at Harvard Law School, delivered the 2013 Annual Francis G. Pileggi Distinguished Lecture in Law. This is the 29th year of this Lecture Series.

The title of this year’s lecture was, “Delaware’s Choice,” and was presented on Friday, Nov. 22 in the du Barry room of the Hotel du Pont at 11th and Market Streets in Wilmington. The Institute of Delaware Corporate and Business Law provided a synopsis of this year’s lecture. Professor Subramanian provided an overview of his presentation on the Harvard Law School Corporate Governance Forum with links to related commentary.

Frank Reynolds of Thomson Reuters also penned a helpful overview of the Lecture.

Highlights of the lectures from prior years were provided on these pages here, here and here.

Subramanian, who also serves as the Douglas Weaver Professor of Business Law at Harvard Business School, discussed Delaware’s antitakeover statute, DGCL Section 203, its constitutionality and the merits of amending it to strengthen it against a possible legal challenge.

Subramanian is the first person in the history of Harvard University to hold tenured appointments to both the law school and the business school. His research explores topics in corporate governance and negotiations, and he has published articles in the Stanford Law Review, the Yale Law Journal, the Harvard Business Review and the Harvard Law Review. His work has been featured in the Wall Street Journal, the New York Times and The American Lawyer. His book “Dealmaking: The New Strategy of Negotiauctions” has been translated into five other languages. Prior to joining the Harvard faculty he spent three years at McKinsey & Company.

The annual Pileggi lecture is presented by Widener Law and the Delaware Journal of Corporate Law. The series has attracted many renowned speakers in the area of corporate law since the first Pileggi lecture in 1986. As in the past, this year’s program has been approved in Delaware for one continuing legal education credit and in Pennsylvania for one substantive continuing legal education credit.

The event each year is made possible by the generosity of Francis G. Pileggi, a founding attorney of Pileggi & Pileggi and father of Widener Law alumnus Francis G.X. Pileggi, who conceived of the idea while he was on the law review in order to create a corporate law forum for practitioners, judges and academics.

The Delaware Journal of Corporate Law recently announced their hosting of the 27th Annual Francis G. Pileggi Distinguished Lecture in Law with the above topic by Professor Jill E. Fisch. This lecture series, held in Wilmington, Delaware, is presented to the Delaware Bench and Bar and focuses on developing issues in the area of corporate law. The lecturer is always a leading voice in the field of corporation law, and the lecture provides the Delaware Bar, particularly the members of the bench on both the Court of Chancery and the Supreme Court, an opportunity to challenge academia with practical concerns. The notice is available here. Registration information is available here. The post on the law school’s website about the lecture is available here.

Highlights of last year’s lecture by Professor Joseph Grundfest on forum selection clauses for intra-corporate disputes, was highlighted here. 


The 27th Annual Francis G. Pileggi Distinguished Lecture in Law
Friday, September 23, 2011
Registration Form

Jill E. Fisch Jill E. Fisch
Perry Golkin Professor of Law
Co-Director, Institute for Law and Economics
University of Pennsylvania Law School

“Leave it to Delaware: Why Congress Should Stay out of Corporate Governance”
8:00 a.m. Hotel duPont, Wilmington, Delaware
11:00 a.m. Widener University School of Law

Professor Jill E. Fisch is a nationally known scholar, whose work focuses on the intersection of business and law, including the role of regulation and litigation in addressing limitations in the disciplinary power of the capital markets. Her 1997 paper, Retroactivity and Legal Change: An Equilibrium Approach (Harvard Law Review),
introduced a new framework for retroactivity analysis that could apply to both adjudication and legislation. Her 2003 paper (with Stephen Choi), How to Fix Wall Street: A Voucher Financing Proposal for Securities Intermediaries (Yale Law Journal), proposed a voucher financing mechanism to increase accountability for securities intermediaries such as research analysts, proxy advisors and credit rating agencies.