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Volume XIII, Number 32

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If The Court Of Chancery Is Predictable, Why Does Anyone Bother To Go To Court?

In a recent posting on the Business Law Prof [sic] Blog, William S. Boyd School of Law Professor Benjamin Edwards wrote about a recent order issued by Nevada state District Court Judge Timothy C. Williams.  The case involved a dispute over who was the properly selected Chief Executive Officer of Vinco Ventures, Inc.  Judge Williams recognized two individuals as Co-CEOs of the company.  However, he found that given the possibility of disagreement and emergencies, it was in the best interest of Vinco Ventures to have an interim, neutral, and independent third co-CEO. 

Professor Edwards' surprise at this outcome is directed at the manner in which Judge Williams selected the third Co-CEO, a Mr. Ross Miller.  According to a transcript of the hearing,  Mr. Miller "just happened to wander in the courtroom today, because he was a witness in the case next door".   As it turns out, Mr. Miller is a corporate lawyer, a former Nevada Secretary of State and the son of a former Governor of Nevada.  This might cause just how much wandering actually occurred.

Professor Edwards ends his post with the following comment:

One of the purported benefits of the Delaware Chancery Court is its predictable application of law and rich body of case law addressing questions. 

Nevada offers an alternative.  It's possible for a court here to appoint a lawyer who happens to wander into a courtroom as the co-CEO of a public company.

 One often hears the claim that the Delaware Court of Chancery is predictable.  However, if the Court were 100% predictable, no one would bother to go to trial because the outcome would never be in doubt.  Parties continue to litigate precisely because the outcome is in doubt and they differ in their assessments of the outcome.   What Professor Edwards describes as a "rich body of case law", I would characterize as voluminous and highly nuanced.  As such, the Delaware Court of Chancery may be far less predictable than is generally assumed.

© 2010-2023 Allen Matkins Leck Gamble Mallory & Natsis LLP National Law Review, Volume XII, Number 283
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About this Author

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