M & A Law Prof Blog

Editor: Brian JM Quinn
Boston College Law School

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Friday, March 22, 2013

Take it outside boys

Sounds like the judicial fireworks are flying in Tulane (note to self: go next year).  At a panel discussion Chief Justice Myron Steele apparently continued his crusade to get the Chancery Court to shut up (via WSJ Deal Journal:

“Every time they open their mouth they make the law,” Steele said Thursday, discussing how he would love to get that idea into the heads of judges. Steele said it was inappropriate to force lawyers to read transcripts in order to determine the law.

Steele didn’t name names.

But we know.  It's funny.  The Supreme Court would like the Chancery Court to say less and only speak through its opinions and only on issues that are directly before the court.  All of this other stuff is just dicta.  It forces lawyers to read transcript hearings and search speeches for hints at what the law is.  As an aside - if the court were really worried about closing off access to knowledge of the state of the law, it would reconsider its Chancery Arbitration procedures.  Just saying.  

Anyway, those things that Steele thinks are bugs, are considered features by the Chancery Court.  In a paper (forthcoming in W&L Law Review) by Vice Chancellor Donald Parsons and his former clerk Jason Tyler, the authors point to dicta and judicial asides as an important component of the law making/dealmaking function of Delaware law:

To give just one small example of the organic nature of this process, in December 2011, Vice Chancellor Laster issued an opinion in In re Compellent Technologies. In dicta, he questioned the wording of a provision of a merger agreement requiring the target company’s board to give notice to the acquirer if any subsequent, superior offers arose. The Vice Chancellor did not question the general validity of this relatively common information rights provision, just the particular verbiage used to express it in the merger agreement at issue in that case.  Less than two months later, another case—In re Micromet—challenged a merger agreement containing a nearly identical provision, except for a revision in the language the court had questioned in Compellent. The court in Micromet found the revised provision unobjectionable. More important than the outcomes of those two cases, however, is what one reasonably can infer from their facts and sequence. Apparently, within a matter of weeks, transactional attorneys had read the Compellent opinion and advised their clients accordingly in connection with a later transaction that, when challenged, survived judicial scrutiny.

So, it's a bit of a judicial tug of war that will no doubt continue to play out.

-bjmq 

http://lawprofessors.typepad.com/mergers/2013/03/take-it-outside-boys.html

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