Delaware’s Top Judge Emphasizes Independence Before Lawmakers

Delaware lawmakers should respect judicial independence as they consider making significant changes to corporate law, the state Supreme Court’s chief justice said Thursday at the state capitol in Dover.

Delaware’s judges “will respect the legislative judgments made by the General Assembly and the governor within constitutional bounds,” but lawmakers should remember the importance of an independent judiciary, Chief Justice Collins J. Seitz Jr. told the legislature’s joint finance committee.

Seitz said he couldn’t discuss pending litigation, and didn’t mention any of Delaware’s growing chorus of critics by name. But after losing multiple high-profile disputes in Chancery Court, and Tesla Inc.'s Elon Musk has rallied other CEOs to shift their incorporations outside Delaware—threatening its dominance in the Fortune 500, and the fees that contribute significantly to the state budget.

A bipartisan group of lawmakers this week introduced a bill that would change the way judges evaluate the independence of corporate directors from controlling shareholders in mergers, executive compensation plans, and other legal issues. It would redefine what makes a controlling shareholder and, in many cases, shift the balance of power away from minority shareholders or individual investors.

“We are keenly aware of the legitimate concerns being expressed when the Delaware franchise is under stress,” Seitz said.

Court Management

The Supreme Court and Chancery Court have long histories, and “the enduring success of these courts is due in no small part to the courage of the many judges who were not afraid to make unpopular decisions,” he said. He referred to orders his father issued in the 1950s, as a Chancery Court judge, to integrate Delaware public schools.

The courts face more complex cases with high-profile litigants than ever before, and “at great personal sacrifice,” he said. “Some of those who lose these days do not take it so well and have the tools to cause judges great pain,” with social media amplifying their dissatisfaction with the courts, resulting in threats against judges and their families, he said.

Citing instances of judges in other states being shot outside their homes, Seitz said Delaware’s judiciary is conducting an audit of its security protocols to ensure courthouse safety.

Last year, lawmakers approved funding that allowed the Chancery Court to hire two Magistrates in Chancery, who help manage its caseload of trusts and estates, property disputes, and books-and-records lawsuits. The court wants to hire two more magistrates, expanding their bench to seven positions, and it plans to add lawsuits concerning the advancement of legal fees for corporate executives to their dockets, Seitz said.

The court needs additional resources to manage not only its normally heavy caseload, but also the increasing number of “mega cases” brought to its docket, he said.

“Every day there are cases involving billions of dollars,” Seitz said. “They are time-consuming cases. They require hands-on care, and the resources are need to help us continue to handle these cases and do it with pride.”