The Future Direction of Delaware Law (Including a Brief Exegesis on Fee Shifting Bylaws)

Delaware sets the governance standards for most public companies. The ability to attract corporations could not be explained solely by the existence of a favorable statutory regime. Delaware was not invariably the first or the only state to implement management friendly provisions. Given the interpretive gaps in the statute and the critical importance of the common law in the governance process, courts played an outsized role in setting legal standards. The management friendly nature of the Delaware courts contributed significantly to the state’s attraction to public corporations. A current example of a management friendly trend in the case law had seen the recent decisions setting out the board’s authority to adopt bylaws under Section 109 of the Delaware General Corporation Law (DGCL), particularly those involving the shifting of fees in litigation against the corporation or its directors. The DGCL allows bylaws that address “the business of the corporation, the conduct of its affairs, and its rights or powers or the rights or powers of its stockholders, directors, officers or employees.” The broad parameters are, however, subject to limits. Bylaws cannot be inconsistent with the certificate of incorporation or “the law.” Law includes the common law. The Delaware courts have used the limitations imposed by “the law” to severely restrict the reach of shareholder inspired bylaws. The courts have not used the same principles to impose similar restraints on bylaws adopted by the board of directors. This can be seen with respect to bylaws that restrict or even eliminate the right of shareholders to bring actions against management and the corporation. In ATP Tour, Inc. v. Deutscher Tennis Bund the court approved a fee shifting bylaw that had littl relationship to the internal affairs of the corporation. The decision upheld the bylaw as facially valid.The decision ignored a number of obvious legal infirmities. Among other things, the decision did not adequately address the requirement in Section 109(b) that bylaws be consistent with “the law.” The decision obliquely acknowledged that the provisions would “by their nature, deter litigation” but otherwise made no effort to assess the impact of this deterrence on shareholders causes of action. The provision in fact had the practical effect of restricting, if not eliminating, litigation rights granted by the DGCL and the common law. Perhaps most significantly, however, the bylaws significantly limited common law rights of shareholders to bring actions against the corporation and the board. Given the high dismissal rates for these actions, fee shifting bylaws imposed a meaningful risk of liability on plaintiffs. Moreover, because judgments in derivative suits were paid to the corporation, shareholders serving as plaintiffs confronted the risk of liability without any offsetting direct benefit. By preventing suits in this area, the bylaw effectively insulated the behavior of boards from legal challenge. The ATP decision was poorly reasoned and overstepped acceptable boundaries. The management friendly decision threatened the preeminent role of Delaware in the development of corporate law. The decision raised the specter of federal intervention and the potential for meaningful competition from the states. Because the opinion examined the bylaw in the context of non-stock companies, the reasoning may remain applicable only to those entities and never make the leap to for-profit stock corporations. Nonetheless, the analysis reflects a management friendly approach that does not adequately take into account the impact of the provision on the rights of shareholders.

Staying in the Delaware Corporate Governance Lane: Fee Shifting Bylaws and a Legislative Reaffirmation of the Rules of the Road

The Delaware legislature has taken steps towards the adoption of amendments to the Delaware General Corporation Law (DGCL) that would prohibit fee shifting provisions in the articles and bylaws. The language in the legislative proposal, however, addresses fee shifting provisions only in the context of "internal corporate claims." Some have raised concerns that this language would allow for fee shifting provisions that applied to other types of actions, including at least some cases brought under the securities laws. This piece suggests that in fact the Delaware General Corporation Law already prohibits the adoption of bylaws and certificate provisions that apply to causes of action unrelated to internal corporate claims. As a result, there was no reason for the Delaware legislature to expressly bar fee shifting provisions in these types of actions.

Paintings of the petroleum industry in Lea County, New Mexico

"The pr1.mary purpose of this thea1a waa to learn about and t .o produce a aeries of pa1nt1n~.a that aymbolized. tbe oil induatry 1n Lea. Count,-, New ltexic.o. The secondary purpose waa to learn more about tho oil industry, which is the big business in Le.a Countj, :New Mexico"

Green Animal Shelter Design for the Stokes County Humane Society of North Carolina

The Stokes County Humane Society has the opportunity to implement sustainable design concepts and demonstrate long-term fiscal savings in the design of an animal shelter for Stokes County, North Carolina. The proposed renovated structure takes advantage of passive design strategies that convert a cold, steel structure into one with warmth, light, and functionality. Proposed design techniques include an interior courtyard, geothermal heating and cooling, solar panels, a green roof, rainwater harvesting, sustainable landscaping, and clever materials selection. A cost analysis identifies capital costs and long term operational costs for both traditional and sustainable construction techniques. The results are capital costs of a sustainable design that are comparable to a traditional build, with long-term operational cost savings and generated revenue.

Planning for the Future: Gray Water Supply as a Conservation Measure for a Key Water Provider in Douglas County, Colorado

Diminishing water in the Denver Basin aquifers requires Parker Water and Sanitation District plan for the future to ensure availability of supply. Water conservation is one approach to prolonging the life of the aquifers. Homeowner installed gray water systems will help conserve 25 percent of the water needed and reduce the need to pump ground water for irrigation. Non-potable water through gray water systems will reduce the demand on the supplier. Gray water use will prolong a potable supply to Parker for years ahead. For this plan to be effective, Colorado regulations must change to allow gray water use. This goal will be achieved as the mind-set about water conservation shifts and water suppliers and consumers demand modification to policies.

Development of a Cleanup Management Plan for the San Benito River in San Benito County, California

Trash and car/truck bodies in the San Benito River and along its banks continue to present a challenge as state mandated basin plans often fail to address these pollutants. To measure the extent of the problem, an assessment of trash and car/truck bodies was completed along four locations of the river. The survey results indicated a need for a Cleanup Management Plan that should include a streamlining process for the removal of car/truck bodies, as well as guidelines for river cleanups. Existing cleanup plans and internet resources were analyzed for creation of the Cleanup Management Plan for the San Benito River.

Surface and Groundwater Environmental Policy Compliance at the Adams County Regional Park and Fairgrounds

The Adams County Regional Park and Fairgrounds must comply with environmental policies related to surface water and groundwater protection. This paper assesses various methods which have proven to be effective in the reduction of nutrients and other contaminants found in surface and groundwater at comparable livestock-based venues. Data was gathered from other facilities in order to identify specific compliance alternatives and evaluate management options. Empirical research, coupled with GIS mapping technology yielded explicit water quality management recommendations for the Adams County Regional Park and Fairgrounds. The outcome of this research and mapping exercise include twelve management recommendations and two site-specific locations for structural BMPs designed to better control water pollution at the Adams County Regional Park and Fairgrounds.

The Exploration and Development of Alternative Management Strategies for Mining and Recreational Activities Atop Mount Antero and Mount White; Chaffee County, Colorado

The Mount Antero/White area is a popular prospecting area. Recent expansions in the recreation economy is drawing more visitors to the area. Consequently, visitors may be placing unsustainable pressures on the landscape. In order to help rectify this, the legal, ecological, geologic, aesthetic, recreational, historic, social, and economic character of the Antero/White area has been identified. Four feasible management alternatives have also been recognized. They are a) take no new management actions, b) prohibit motorized activities in the area, c) develop a mineralogical park, and d) a combination of options b and c. Option C has been defended, as it best balances the desires of area users with the underlying ecological and geological character of the area.