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More Than a Brand
In fact, because more than two-thirds of Fortune 500 companies are incorporated in Delaware, the Court of Chancery has dealt with cases involving numerous household names, such as Deutsche Bank, Tiffany, Merck & Co. and McDonald’s.
In the latter case, heard by Laster himself, at issue was whether McDonald’s chief HR officer has a responsibility to monitor for and address sexual harass- ment inside the company. “His argument was that he had no such duty and I held that yes, you do have such a duty,” Laster said.
While the headline-grabbing Dominion v. Fox case was settled origi- nally in the Superior Court of Delaware, the dispute has now found its way to the
Court of Chancery. “Stockholders are now suing the directors in our court, saying the directors should have to pay the settlement,” Laster said.
It is a case that falls within another major jurisdiction for the Court of Chancery, which is breach of fiduciary duty, where “the board of directors will have done something and stockholders believe the decision was self-interested or done recklessly,” he said.
Those headline-grabbing cases have helped make the Court of Chancery a recognizable brand, but there is more to the court’s appeal.
“We have got a real commitment to resolving disputes quickly and giving them the attention and resources they need,” Laster said. “For better or worse, a lot of courts are not that responsive. They have busy dockets that include lots
of criminal cases or traffic tickets. Our dockets are busy too, but they are highly specialized.”
As a result, parties asking the Court of Chancery for a resolution know that they will not have to spend as much time explaining the issues at hand — the Chancellor and Vice Chancellors have seen it all before.
“We are also viewed as a forum
of integrity,” Laster said. “If a party in California and a party in New York want to have a contract between them, the solution is often Delaware. Everybody speaks the language of their state’s law and Delaware law, just like people around the world speak English in addition to their native language. For both domestic and international companies, Chancery is viewed as a forum where neither side is going to get a hometown advantage.” «
“We have got a real commitment to resolving disputes quickly and giving them
the attention and resources they need.”
– J. Travis Laster, Vice Chancellor
intellectual property. (In fact, the 2017 Supreme Court decision in TC Heartland LLC v. Kraft Foods Group Brands LLC, which held that patent infringement cases need to be filed in the state of incorporation, ensured that Delaware lawyers and judges now deal with more intellectual property cases than ever before. More than two-thirds of Fortune 500 companies are incorporated in Delaware.)
For both bankruptcy and intellectual property proceedings, companies cannot afford to take risks because “if you lose, your company goes away,” Zahralddin said. So, Delaware’s track record in these matters is a boon for businesses.
Delaware Counsel’s Unique Advantages
Another advantage of note: Delaware has a small bar whose members tend to know each other, interacting not just in a professional capacity but “at the school play, at the foot- ball game, at the grocery store,” Zahralddin said. “You cannot get into some of the gamesmanship that you find in the legal community in other places, which oftentimes just makes the
lawyers wealthier and not the clients.”
Some companies may be inclined to work with out-of-
state counsel in Delaware matters, for example because they already have an established relationship with a firm outside
of Delaware. However, a recent Chancery court decision established a precedent that if a lawyer not licensed in Delaware provides a legal opinion based on Delaware law in a commercial transaction and something goes wrong later, “the client and law firm are going to be liable for the consequences,” Zahralddin said. “So it is good to have a Delaware lawyer on call for those types of situations.”
When it comes to international business, Delaware enjoys advantages in expertise too. “People come here from all over the world to access the legal system,” Zahralddin said. “Every business lawyer, whether you are a trust lawyer or a Chancery Court lawyer, really needs to understand some basics about the overlay of cross-border litigation and cross-border transactions. That is another benefit to some of the really good Delaware lawyers — they understand that international piece too.” «
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