Politics

There's An Actual Attack Ad Based On The Delaware Court of Chancery

The ad is made by an angry Republican but, dude, it's about the Court of Chancery

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As an informed voter, I can’t imagine being swayed by a political attack ad. Like, I know there are people who are swayed by them, I just can’t imagine being such a person. Like, who says: “This person has a decades long career I can read and learn about, but did you see the way she LAUGHED? She seems like a B who hates black people.” The attack ad breaks into some deep part of our reptilian brain and is meant to override thought and learning with pure emotion.

That’s why an “attack” ad based on a candidate’s support for the Delaware Court of Chancery is inherently a bad idea. NOBODY has a deep emotional connection with the Chancery Court, and I’m including that 11-19 people who actually know what it is. That’s also why this the weirdest attack ad I’ve ever seen. It’s the “who’s gonna do it, YOU Lt. Weinberg?” of random explosions of deep anger. You’ve got to see it:

What. The. Hell? I mean, don’t get me wrong, the Delaware Chancery Court IS “too white and too male.” But that’s not what is really going on here.

Okay, let me explain the Chancery Court and why we’re seeing an ad about it.

The Chancery Court is the court of origin of equity disputes in Delaware. Put plainly, corporate litigation in Delaware ends up in Chancery Court. The key feature here is that the Chancery Court is not a jury court. Nor is it an appellate court. It’s a trial court where one judge (or “chancellor”) gets to make the final ruling. In Delaware, those judges are experts in corporate law.

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The Chancery Court is a big reason so many corporations are incorporated in Delaware. When there’s a corporate governance issue, or a shareholder dispute, often times these companies have to be sued where they’re incorporated. In Delaware, that means you end up being sued in the Court of Chancery, and that’s one easy way to avoid a pesky jury who might not take kindly to your corporate shenanigans.

But wait, there’s more. The Court of Chancery religiously applies the “business judgement rule.” That’s a common-law rule that says that as long as the corporate overlords were acting in “good faith” and being “reasonably prudent,” then courts should restrain themselves from imposing liability, even if their actions turned out to be disastrous. It is not the kind of rule you want to hear about when you want to sue the CEO of your company.

Over half of the companies listed on the New York Stock Exchange or NASDAQ are incorporated in Delaware. The entire state exists as a kind of corporate loophole for companies to avoid jury trials over their internal decision making. Yes, the Court of Chancery serves the laudable function of having business law “experts” make business law decisions. But they’re also irreparably “pro-business,” in a way retards the ability of the law to demand corporate accountability.

The Court consists of five Chancellors, chosen by the Governor of Delaware to serve 12 year terms. Two additional “masters” are chosen by the head Chancellor. The court is overwhelming white and male. The first African-American to sit on the court was nominated in… 2015! Tamika Montgomery-Reeves is still there, but that took a while, didn’t it? When she joined the court in 2015, she was the first woman nominated to the court since 1994.

Of course Joe Biden supports the Court of Chancery. He was the Senator from Delaware! This is, like Delaware’s thing. I’m sure it’s not hard to dig up footage of the Senator from Delaware saying Delaware’s corporate expertise is a good thing. And, while we’re here, I’m sure it’s not hard to dig up footage of Elizabeth Warren saying that there should be more transparency in corporate regulations. I don’t even know if they actually disagree about the Court of Chancery: one probably thinks it’s generally good and one probably thinks it could generally be improved.

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Of course, none of that explains, AT ALL, why there’s a freaking attack ad based on the Delaware Court of Chancery. No, for that we have to look at the ad’s buyer. Nobody’s campaign decided this would be a good idea. Instead this is part of the anti-Biden ad buy made by Shirley Shawe. She’s buying half a million dollars of ads against Biden in the early states because (wait for it) she blames the Court of Chancery for a business dispute that cost her son a lot of money:

Shawe’s interest in the Chancery Court stems from the legal problems of her son’s translation software company, TransPerfect, which was embroiled in very costly years-long litigation in the chancery system. According to Salisbury ABC local station WMDT-TV, Shawe owned a 1% stake in the company during the dispute. Delaware Business Now last year quoted a source claiming the price tag of the legal squabble totaled a quarter of a billion dollars.

This seems like a good time to mention that Shawe is a Republican.

Elizabeth Warren has said that the ad should be taken down and Biden says it mischaracterizes his position.

Like just about every attack ad, there’s not actual “there” there. There’s always more to the story than the people paying for the attack ad would like to convey. Here, The Court of Chancery is an really weird thing that should absolutely be reformed. It’s also got almost nothing to do with Joe Biden, Elizabeth Warren, or the 2020 Presidential campaign.

The more you know, the less angry Republicans can fool you.

Elie Mystal is the Executive Editor of Above the Law and a contributor at The Nation. He can be reached @ElieNYC on Twitter, or at elie@abovethelaw.com. He will resist.

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