FALL 2000 ISSUE

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Delaware may be diminutive in size, but it is the giant in corporation law. In his 1997 article "The Unanimity Norm in Delaware Corporate Law" (83 Virginia Law Review 127) Professor David A. Skeel, Jr. addresses this quiet sovereignty.

"After reading and teaching about corporate law for years, it dawned on me that the Delaware Court is almost always unanimous, unlike the U.S. Supreme Court which disagrees all the time," Skeel explains. "You only see one opinion in Delaware Court cases for a huge amount of cases. As of 1997, something like 95-96 percent of the cases were unanimous. So what this article is about is why so many of the cases are unanimous and what that means for Delaware corporate law."

Skeel believes that Delaware's own internal court rules make it hard to issue dissenting opinions. The challenge is that there are five justices on the Delaware Supreme Court, but panels of only three justices hear a case. If the panel disagrees with a ruling, all five justices need to assemble to hear the case again. For convenience and ease of administration, it is in the Court's best interest for the panel to decide a case with unanimity.

Also, Skeel argues, deciding with unanimity is consistent with the role that Delaware perceives itself to have in corporate law. He references Professor Edward B. Rock's article, "Saints and Sinners: How Does Delaware Corporate Law Work?" (44 U.C.L.A. Law Review 1009, [1997]) in which Rock argues that Delaware views itself not just as deciding cases but as 'moral arbiters' who instruct directors of corporations in the way they ought to behave. Skeel states that he is "sympathetic to this argument," and asserts that unanimity reinforces the moral authority of Delaware decision-making. If the Justices were always disagreeing with each other, it would undermine the moral authority that Delaware claims to hold.

So, is the adjudication of corporate law in Delaware unbalanced? "It does seem to me that there is some room for Delaware to take advantage of the power it has" Skeel explains. "Many commentators suspect that Delaware helps out in-state interests, for example, the Delaware Bar. There is an argument that Delaware tends to encourage lots of litigation, and that Delaware tends to encourage having that litigation brought in Delaware, which is good for that state's lawyers.

"My view is that Delaware's success on the whole is a good thing rather than a bad thing. There's lots of room for slippage. It has so much power it can afford to re-direct some of its profits without being hurt in the overall competition because it has such an advantage over other states. But the fact remains that Delaware does a superb job of overseeing corporate law."