Has Chancery Court Outlived its Appeal?
The "chancellor's foot"
The "chancellor's foot" is a term coined by English legal scholar John Selden for the argument that equity is an unjustified and unfortunate interference in the regular course of the rule of law. As the old "chancellor's foot" legal saying argues, what if we changed the measure of a foot from being a static 12 inches to be whatever the chancellor's foot size was that year. How silly a world that would be?
Well, welcome to Delaware 2016, as described by Alana Semuels of The Atlantic, former National Correspondent of The Los Angeles Times.
Something wrong with Delaware Judiciary!
There is something terribly wrong with the Judiciary in the State of Delaware. When you have a rookie judge in his first big case who is obviously biased, who refuses to consider relevant evidence or allow it to be submitted into the record, who has an undisclosed connection and personal friendship with the Plaintiff’s attorney, who appears in New Orleans as a co-panelist at a forum with that same attorney during the decision stage of the case, who orders the sale of a successful $500 million dollar company that employs 4,000 people, who appoints a custodian that institutes a policy of retaliation towards employees who express dissatisfaction with the court decision -- violating their First and Fourth Amendment rights under threat of being fired, who imposes an unprecedented sanction for alleged discovery violation of $7.1 million dollars on the defendant (based on the testimony of zero witnesses), who awards $1.4 million dollars in attorney’s fees to his same, attorney buddy without making him show his itemized bills (like every other attorney had to), and finally who approves the bilking of this company to the tune of well over $8.5 million dollars in Custodian-mandated legal and consulting fees for the benefit of his former law firm, his former legal partner, and their consultants, there is indeed something happening here that should concern every Delaware citizen.
Again, I’m talking about the TransPerfect Global case which has been adjudicated by Chancellor Andre Bouchard. How does Delaware pay for public education, Medicaid, law enforcement, prisons and other big-ticket items? Delaware is known as the legal home for the majority of Fortune 500 companies. Delaware has a corporate cash-cow whereby more than one-quarter of all the corporations in America are incorporated in the State of Delaware. Over one-third of Delaware’s income comes from the franchise taxes paid into its coffers by these corporations. The largest of those corporations pay $180,000 annually to incorporate here, helping keep our other taxes relatively low.
When there are disputes within Delaware Corporations, the Delaware Court of Chancery (a supposedly "equity" court) rules on these disagreements. The unprecedented decisions made by Andre Bouchard have people in the national business and legal communities shaking their heads. Andre Bouchard’s decisions are, in my opinion, so off the wall, so biased, and so outrageous that he is literally scaring away corporations. The same corporations that have contributed $1 billion dollars into our State coffers to help keep our taxes low.
While the average Delaware citizen has to worry about his taxes going up, Bouchard is driving a Bentley to work at the court house. Chancellor Bouchard has the power to get away with his outrageous rulings, and the wronged defendant, who could lose his company, and be forced to pay absurd and unreasonable sanctions if his appeal before the Delaware Supreme Court fails, can only seek recourse through the United States Supreme Court, which is currently overwhelmed with cases. The significant question is why would any enterprising entrepreneur want to incorporate in Delaware if he or she is at risk for this kind of terrifying result in the event of litigation? The State of Nevada has interesting corporate advantages, is actively soliciting business, and most likely, salivating at the prospective of Bouchard's improprieties and inexperience ruining this successful company.
That being said, the Delaware Legislature, in its new general assembly coming up in January, should consider a law change, preempted by a “Concurrent Resolution” to implement a study on how to prevent the forced sale of a profitable Delaware Corporation for arbitrary and capricious reasons by a Chancery Court judge, rather than for legitimate, economic, and viable reasons that should be clearly spelled out under the law which are not.
If this does not happen, Delaware could lose millions of dollars in yearly revenue when people go elsewhere to incorporate; as Bouchard will have single-highhandedly destroyed not only the lives of 4,000 innocent workers, but Delaware's business friendly image, that his predecessors spent decades creating, cultivating and defending. The time has come for Bouchard and his Bentley to drive off into the sunset.
More from Jeff Mordock
In the wake of Chancellor Andre Bouchard’s controversial decisions in the TransPerfect case, which have gleaned national attention and have legal experts and corporate executives alike shaking their heads in amazement, the employees of this extremely profitable company are attempting to change the ability of Delaware’s equity judges to be able to arbitrarily and capriciously force the sale of a company incorporated in Delaware without exhausting every reasonable remedy over a 3- year period.
As I have stated in previous articles, it is my belief from my research that Bouchard’s actions were biased and without just cause. Indeed, I believe the forced sale of TransPerfect is the most insidious and un-American ruling in Delaware history, which warrants serious review. Chancellor Bouchard appears to have single-handedly put Delaware’s incorporation income at risk by his unprecedented actions.
The proposal to the Bar Association by the TransPerfect employees makes sense and if the Delaware Bar approves it, no doubt this will facilitate the path for the Delaware Legislature to change the law accordingly. I urge the legal community to get behind this proposal to serve future fairness and justice in Delaware’s Chancery Court.
As always your comments are welcome
As always your comments are welcome.
JUDSON Bennett-Coastal Network