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Supreme Court Could Upend Delaware Courts, Corporate Law

Dec. 6, 2019, 7:12 PM

The U.S. Supreme Court agreed to review a ruling upending Delaware’s requirement for a politically balanced judiciary and threatening to shake up corporate law over which the state is dominant.

The tiny state is where 60% of Fortune 500 companies and more than 50% of those listed on the New York Stock Exchange are incorporated, according to a brief filed on behalf of Gov. John Carney (D).

Delaware’s importance over corporate matters is due “in no small part due to the reputation—and reality—of the Delaware courts as objective, stable, and nonpartisan,” the Carney told the justices.

But the Philadelphia-based U.S. Court of Appeals for the Third Circuit nevertheless struck decades-old state laws requiring a politically balanced judiciary.

Those requirements, which effectively preclude independents and other third party candidates from judicial service, can’t be squared with the First Amendment’s guarantee of free association, the Third Circuit said.

Generally party affiliation may not be considered for government employment. However, the Supreme Court has created an exception for “policymakers.”

The Sixth and Seventh Circuits have held that judges are “policymakers” for party affiliation can be considered.

The Third Circuit in this case, however, disagreed.

The case is Carney v. Adams, U.S., No. 19-309, granted, 12/6/19.

To contact the reporter on this story: Kimberly Strawbridge Robinson in Washington at krobinson@bloomberglaw.com

To contact the editors responsible for this story: Jessie Kokrda Kamens at jkamens@bloomberglaw.com; John Crawley at jcrawley@bloomberglaw.com

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