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Do Judges Need To Put Wax In Their Ears To Avoid Delaware's Siren Song?

"But I with my sharp sword cut into small bits a great round cake of wax, and kneaded it with my strong hands, and soon the wax grew warm, forced by the strong pressure and the rays of the lord Helios Hyperion.  Then I anointed with this the ears of all my comrades in turn; and they bound me in the ship hand and foot, upright in the step of the mast, and made the ropes fast at the ends to the mast itself; and themselves sitting down smote the grey sea with their oars."

Homer, Odyssey, Book XII (A.T. Murray, Trans.)

A recently published article in the Nevada Law Journal is a cri de coeur for state and federal judges to reject Delaware precedent and apply Nevada's corporate law as written.  Chodorow & Lawrence, "The Pull of Delaware: How Judges Have Undermined Nevada's Efforts To Develop Its Own Corporate Law", 20 Nev. L.J. 401 (Spring 2020).  The authors argue that courts' predilection for applying Delaware precedent "undermines democracy, weakens the rule of law, and upsets the federal system where states may forge their own paths".  In a strikingly militant conclusion the authors argue:

"If the Nevada courts continue to ignore Nevada law, state lawmakers can and should take steps to educate judges about Nevada corporate law and make clear that Nevada courts should not follow Delaware law, at least when it comes to the fiduciary duties of directors and shareholder primacy."

Maybe a little wax will get the job done.

© 2010-2020 Allen Matkins Leck Gamble Mallory & Natsis LLP National Law Review, Volume X, Number 140
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About this Author

Keith Paul Bishop, Corporate Transactions Lawyer, finance securities attorney, Allen Matkins Law Firm
Partner

Keith Bishop works with privately held and publicly traded companies on federal and state corporate and securities transactions, compliance, and governance matters. He is highly-regarded for his in-depth knowledge of the distinctive corporate and regulatory requirements faced by corporations in the state of California.

While many law firms have a great deal of expertise in federal or Delaware corporate law, Keith’s specific focus on California corporate and securities law is uncommon. A former California state regulator of securities and financial institutions, Keith has decades of...

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