Yesterday, the Delaware Supreme Court held that plaintiffs had pled demand excusal under Aronson v. Lewis due in part to a director’s “close friendship of over half a century with the interested party,” in combination with that director’s business relationship with the interested party.

Del. County Emples. Ret. Fund v. Sanchez involves a public company that is 16% owned by the Sanchez family.  The plaintiffs challenged a transaction in which the company paid $78 million to a privately-held entity owned by the Sanchezes, ostensibly to purchase certain properties and fund a joint venture.  The question, then, was whether plaintiffs could show that a majority of the Board was not independent, and because the Sanchezes themselves occupied 2 of the 5 seats, all eyes were on one additional Board member, Alan Jackson.

Alan Jackson, it turned out, had been close friends with the Senior Sanchez for “more than five decades,” and the Delaware Supreme Court deemed this fact worthy of of judicial notice.  Thus, in a heartwarming passage, the Court noted that though it had previously held in Beam v. Stewart, 845 A.2d 1040 (Del. 2004), that a “thin social-circle friendship” is not sufficient to excuse demand, “we did not…

I’ve been thinking a lot about the way technology can influence the path of the law – in terms of both judging and scholarship.

For example, the introduction of electronic legal databases like Westlaw has almost certainly changed how judges function.  They may be more reliant on clerks today than they used to be, because the sheer accessibility of so much relevant case information requires assistance to sift through.  I also wonder if precedent – rather than inductive or explicitly policy-based reasoning – has become more important (or is at least given greater emphasis) because of the ease with which earlier caselaw can be located.

Over at Prawfs, they’re discussing Judge Posner and the ethics of independent judicial factual research – something that technology has made far easier for judges to do.

Here at BizLawProf, we’ve talked about the relevance of law reviews in a world where SSRN can make articles immediately available (not to mention a world where law professors can, you know, umm, blog).

A number of law professors post articles to SSRN that aren’t articles so much as they are a form of advocacy – legal briefs, after a fashion, intended to sway a deliberations on…

I just completed the unit on partnerships in my Business class, and we covered Page v. Page, 55 Cal. 2d 192 (Cal. 1961), the case of the warring brothers who ran a linen supply partnership.  This is a semi-famous case – not as fundamental as Meinhard v. Salmon, but included in several business casebooks and discussed in many law review articles.

The opinion itself is maddeningly short on details of the relationship between the brothers, and how it is that this family dispute came to end up in a courtroom.

What we know from the California Supreme Court is this:

George Page was the sole owner of a corporation that supplies linen and machinery for the operation of industrial linen businesses.

George entered into an oral partnership agreement with his brother, H.B., in 1949.  That partnership was to operate a linen supply business serving Santa Maria.  Each brother contributed $43,000 of capital to the business that apparently went to purchase a few basic assets.  Day to day operations, however, depended on services and materials supplied by George’s corporation.  The partnership was unprofitable for its 10 years of existence, and ultimately came to owe George’s corporation $47,000 for the materials it supplied.

When the Vandenberg Air Force base was established in Santa Maria, the partnership finally began to turn a profit.  Only a few months later, however, George proclaimed that he wanted to dissolve the partnership, and sought declaratory judgment that the partnership was at-will, giving him free rights of withdrawal.  H.B. opposed, arguing that the partnership was intended to last until all obligations were paid, and that George was only trying to dissolve now so that he could take sole advantage of the opportunities afforded by the air force base.  Among other things, H.B. pointed out that a previous partnership between him and George explicitly provided it was to terminate only when obligations were paid off, and therefore this partnership should be interpreted similarly.

Ultimately, the court concluded that the partnership was at-will, but allowed that H.B. might be able to demonstrate a breach of fiduciary duty if George intended to appropriate for himself benefits properly allocated to the partnership.

The opinion offers no further insight into the George/H.B. arrangement, which leaves it to teacher’s manuals to speculate – and two in particular offer wildly divergent interpretations.

[More under the cut]

Further to Joan’s and Steve’s posts regarding the value that transactional lawyers can add to deals, Elisabeth de Fontenay at Duke has recently posted an article to SSRN, Law Firm Selection and the Value of Transactional Lawyering, which explores a new dimension along which lawyers can add value for clients: their unique, experience-based knowledge of deal terms.

de Fontenay’s argument is that for complex deals, it may not be readily apparent what the value or cost is for each term, and that lack of transparency impedes bargaining.  Experienced transactional lawyers have a unique knowledge base from which to draw upon, allowing parties to learn of new deal possibilities and value their alternatives.  de Fontenay points out, however, that this model is in tension with traditional notions of client confidentiality, because the lawyer’s value to the client is a function of the lawyer’s ability to pool knowledge drawn from other engagements.  The model also explains why elite law firms continue to be able to charge a premium for their services, and why they have combined into such large organizations: their size allows them to grow their knowledge base, and elite firms, by virtue of their experience, are able

Claire Moore Dickerson, a much-loved member of the Tulane faculty, passed away recently.  I did not have the privilege to know her personally (though I have been grateful to her for her notes while designing my Business Enterprises class), and I know how much she will be missed by my colleagues.

There will be a burial service tomorrow and a memorial service in Rye, New York on October 17.  Christine Hurt at The Conglomerate has more.

The Delaware Chancery Court recently issued its opinion in the Dole Food Stockholder litigation (.pdf), and it’s a doozy.

The précis, as has been reported extensively, is that according to the court, Dole’s Chair, CEO, and 40% controlling shareholder David Murdock conspired with C. Michael Carter, another Dole officer, to make Dole look less profitable than it actually was, so that Murdock could buy out the public stockholders at a bargain price.

The opinion is well worth reading if only for the entertainment value – the machinations involved, and the court’s commentary, make for a riveting tale – but I can’t help but read this and wonder, can we expect to see a follow on Section 10(b) complaint?  And what would that look like?

[tl;dr analysis under the cut]

Apparently, Paul Hastings is planning to bring lawyer cubicles to New York.  First and second year associates won’t get an office; instead, they’ll get a cubicle.  The firm pitches this as a move to enhance creativity; conveniently, it also saves expenses on office space.

Whenever I hear about moves like this – which include offices with glass walls, or offices shares by multiple people – I always wonder: But how will they sleep?

Leaving aside the sleep research demonstrating the cognitive benefits of naps, I know from personal experience that I cannot get through a full working day – let alone the kind of long day that lawyers often must work – without one or two 20-minute naps.  I’ve talked to other lawyers and I’ve heard the same thing; they loathe glass walls and other open-office plans not simply for the lack of privacy, but because they need space to sleep.

Google is famous for, among other things, counterbalancing shared offices and glass walls with sleeping pods – which likely benefits employee productivity (and also, presumably,  is part of a strategy to keep employees from ever leaving the complex).  I suppose Paul Hastings could try something similar, but I’m…