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— Media Maneuvers —
Leo E. Strine Jr. offers a rare peek into the judicial mind in his article "The Story of Blasius Industries v. Atlas Corp.," which appears in the recently published book "Corporate Law Stories," a collection of 11 essays on famous judicial opinions in the field. The Delaware vice chancellor uses Blasius to illustrate the subtle choices judges face in writing opinions and the occasionally tense relationship between the Court of Chancery, on which Strine serves, and the state's Supreme Court.
Strine argues that former Delaware Chancellor William Allen crafted the 1988 decision in a way that would protect at least some of his jurisprudence from the incursions of the Supreme Court, which was inclined to grant target-company boards and managements significant leeway in defending against hostile bids. Blasius involved a target company's effort to add directors to its board in order to prevent a hostile bidder from taking control in a consent solicitation. Allen held that Delaware courts would scrutinize actions taken by a board that impair shareholders' right to elect directors. But, Strine writes, "[c]ertain words that never appear in Blasius itself -- 'poison pill' and 'just say no' -- were very much on the mind of the decision's author." When Allen wrote Blasius, the Delaware courts had not yet squarely faced the issue of whether a board could use a poison pill to flatly reject an unsolicited offer, but the Supreme Court seemed inclined to allow a board to do so. By focusing on the shareholder franchise in Blasius, Allen created a "firewall" to prevent the Delaware Supreme Court from completely cutting off the possibility of a hostile takeover by preserving the integrity of the shareholder franchise. Strine admits how a trial court judge may shape the facts of a case for his own ends. Allen could have followed the Delaware Supreme Court by writing a decision "replete with vivid characterizations of the key actors" in which the judge identifies good actors (generally, but not always, managers) and bad actors (generally, but not always, raiders) and rules accordingly. Allen didn't do that. He chose to depersonalize the situation and emphasize the importance of the shareholder franchise. And, Strine writes, Allen omitted a key fact from his opinion in Blasius: The target's directors had acted to "restore the board to the sort of electoral security that the corporate constitution actually contemplated." Allen, writes Strine, deliberately ignored "the implications of that hard fact." But sidestepping the issue allowed Allen to preserve at least part of his "predictable and principled" jurisprudence against a Delaware Supreme Court that lurched from case to case depending on what it thought of the personalities involved. More importantly, Strine writes, Blasius "helped maintain the credibility of Delaware corporate law at a critical time in its history." The International Bar Association is hosting its eighth annual M&A conference in New York on June 23 and 24. Despite the IBA's focus on cross-border issues, it will offer the last chance to hear Delaware Vice Chancellor Stephen Lamb speak as a member of the bench. Lamb, who's stepping down from Chancery on July 28, will appear on a panel with Delaware Chief Justice Myron Steele, former Delaware Chancellor William Allen and Latham & Watkins LLP partner Charles Nathan. Rogert Altman, the founder of Evercore Partners Inc., will deliver the keynote address after lunch on the first day of the confab. Douglas Braunstein, the head of investment banking at J.P. Morgan Securities Inc., will offer an overview of the M&A market, and David Sorkin, the general counsel at Kohlberg Kravis Roberts & Co., will appear on a panel that will discuss private equity. Other sessions will focus on shareholder activism, acquisitions of troubled companies, cross-border deals and antitrust. David Marcus is a senior writer at Corporate Control Alert. |
What do judges think about when they write opinions? How do they balance not only the facts of the case before them and the governing precedent, but their desire to respond to broader trends and, in the case of lower court judges, to protect their own jurisprudence from a higher court that may be hostile to it? Lawyers and scholars who follow an area of the law intensely may suggest answers to such questions, but judges themselves usually remain silent.
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