Tuesday, June 10, 2014
Well, this is unusual. In reponse to ATP - the Delaware Supreme Court opinion that ruled that fee-shifting bylaws are facially valid in Delaware - there was a rare moment of unanimity when both the plaintiffs bar and the defense bar seemed to line up behind a quick fix to Section 102(b)(6) of the corporate law that would prohibit such bylaws. Now, according to the WSJ's Liz Hoffman, the US Chamber of Commerce is weighing in on the fix:
The Delaware legislature is set to vote as soon as this week on a bill to prevent companies from sticking stockholder plaintiffs with corporate legal bills in an effort to deter lawsuits, especially those that routinely follow merger deals.
But the U.S. Chamber Institute for Legal Reform, an arm of the U.S. Chamber of Commerce, is opposing the bill, which it says would deprive companies of a self-help tool that could reduce corporate litigation, which has risen sharply in recent years.
This fee shifting fix and the Chamber's response to it is highly usual. First, the proposed legislative fix it is being adopted very quickly on the heels of ATP. Usually, amendments to the DGCL take time and are worked out by committee over a good deal of time. Second, by the time such amendments get proposed, they have been so fully vetted that they are extremely non-controversial. Here, the Chamber is stepping in the lobby the legislature against adoption. I guess this week just got interesting.