Page 29 - Delaware Lawyer - Winter 2022

device the size of a briefcase that had been given us by the proxy solicitor, which turned out to be an early ver- sion of the fax machine. Its purpose on that trip was to receive any last-minute proxies that might be delivered to the solicitor in New York so we could sub- mit them at the stockholder meeting in Florida. My recollection is that a single page transmitted over a telephone line took over five minutes to print out. Of course, as the years went on, the fax machine evolved to much higher speeds, but still never compared with the instantaneous ability we have today to edit a brief remotely on a computer screen hooked up to the internet. While the fax machine did permit me to take a vacation knowing I could edit the draft of a key brief that was faxed to me by an associate, I distinctly recall one very painful weekend when a lengthy draft brief I received required very substan- tial editing and, after a long day of edit- ing and rewriting, I had to spend hours feeding the revisions into our home fax machine one two-minute page at time. It was a far cry from today’s ability to make instantaneous revisions.
Before I mention one development in the law which also changed the quality of life of attorneys in the takeover arena, I must touch on one other transforma- tive device — the mobile phone. This new technology was both a blessing and a curse. On the plus side, and a bit like the fax ma- chine, in the later years of my practice it did permit contact with clients and colleagues from remote locations when otherwise I would have had to be at home or in the of- fice to take an important call. For example, I can recall any number of important calls I took while sailing on the Chesapeake or while my wife was driving us somewhere. Of course, the downside was that clients expected then and now to be able to reach you wherever and whenever, even if the call wasn’t an emergency — a clear nega- tive in the quality-of-life ledger.
Substantive Law Changes
I turn now to the change in sub- stantive law that in my view most im- pacted the quality of life of an M&A litigator. The first major takeover case I can recall arguing in the Court of Chancer y was the hostile takeover of Carrier Corporation by United Tech- nologies in 1978. I participated in many more expedited takeover cases between that case and the 1985 deci- sion by the Delaware Supreme Court in Moran v Household Finance Corp.1 sanctioning the use of the share- holder rights plan, a/k/a the poi- son pill. Not only was the Supreme Court’s sanctioning of the poison pill a substantive game changer, it also significantly improved the quality of life of corporate litigators engaged in M&A practice. While fact patterns varied, the timing of pre-poison pill M&A cases was often driven by the timing provisions of the federal Wil- liams Act. That Act requires a tender offer to remain open for 20 business days, or roughly 25 calendar days. Assuming a target corporation took a controversial defensive action as early as four days after commence- ment of an offer, and suit challeng- ing the action was filed the next day, only 20 calendar days (or perhaps less depending on the nature and timing of the defense) remained to conduct discover y and both brief and argue the matter before the Court of Chan- cery — and, in some cases, brief and argue the result before the Delaware Supreme Court, before shares could be purchased in the tender offer. Once the poison pill was sanctioned, this dynamic changed. Tender offers per force were conditioned upon a redemption of the pill, the permissi- bility of which represented the status quo. That meant that offerors were less likely to obtain highly expedited scheduling looking toward a prelimi-
nar y injunction hearing based on an argument that they were entitled to close their offer on the federal time- table. Moreover, under Moran and Unocal v. Mesa,2 boards faced with a demand to redeem the poison pill were expected to take the time neces- sary to decide in good faith whether to leave the pill in place, while the blocking feature of the pill remained. Finally, the fact-intensive nature of a board decision not to redeem a poi- son pill made it much more likely that a plaintiff challenging such a decision would opt for seeking an expedited trial on a somewhat more leisurely schedule rather than a preliminary injunction. In short, all of these fac- tors served to slow down much of the grueling M&A litigation practice that prevailed in the late 1970s through the mid-1980s.
Rather than present a review of cases or a discussion of the law, this over view has sought to convey some of the unique practical challenges faced by Delaware’s litigation bar in the dynamic formative years of our corporate M&A law, which produced such landmark cases as Unocal, Mo- ran and Revlon v. MacAndrews & Forbes Holdings.3
That said, other challenges faced the M&A litigator as I began to recede from practice, such as the explosion of email and other forms of electronic communication and how to deal with them in discovery, to say nothing of the more recent pandemic-related issues. I have every confidence that our excep- tional M&A bar will continue to meet such emerging challenges as time goes forward, while hopefully maintaining a reasonable quality-of-life balance.
NOTES
1. 2. 3.
500 A.2d 1346 (Del. 1985). 493 A.2d 946 (Del. 1985). 506 A.2d 173 (Del. 1986).
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