Securities Regulation Daily Wrap Up, CORPORATE FINANCE—Delaware Chief Justice Seitz defends court’s ‘unpopular decisions,’ rate of case disposals, (Feb 24, 2025)

By Suzanne Cosgrove

In testimony before the state’s Joint Finance Committee, Seitz addressed legislators’ concerns about the Delaware Chancery Court franchise.

In introductory remarks to a budget presentation delivered last week to the Delaware General Assembly’s Joint Finance Committee, the state’s Supreme Court Chief Justice Collins J. Seitz Jr. defended the business court’s record, saying it was “unrivaled by any other judiciary in our country” in its speed in processing and deciding multibillion-dollar cases.

“I’m here to explain our budget requests, but before I begin, I want to acknowledge the serious concerns being expressed about what I’ll call the Delaware franchise and its impact on the State budget,” Seitz said, an apparent nod to competing specialist business courts in Nevada and Texas.

“We are keenly aware of the legitimate concerns being expressed when the Delaware franchise is under stress,” he said.

In its defense, he noted in Delaware’s fast case turnaround: 90 percent of its cases are disposed within 90 days, with the Court of Chancery achieving a 92.2 percent rate. Looking at the state’s budget, which he said allots about 2 percent to the judiciary, “We punch above our weight,” he said.

An independent judiciary. But Seitz also took pains to underscore the importance of judicial independence. “It is important that the people and companies and institutions who bring their disputes to the Delaware courts know that we have not prejudged their cases and are not influenced by anything other than what happens in the courtroom and on appeal,” he said.

He noted that parties who disagree with a trial court’s decisions can appeal to the Delaware Supreme Court. “We do our best to get it right, but it would be a rare day indeed when everyone agrees with our decisions.”

“Even with our unrivaled judiciary, the unfortunate but unavoidable fact of deciding legal disputes is that, in most cases, the judge or a jury is going to make one side unhappy,” Seitz said. “No one likes to lose. It’s no stroke of genius for me to say that some of those who end up on the losing side these days do not take it so well and have the tools to cause judges great pain.”

A contentious decision. While Seitz did not name any specific cases, it was an apparent reference to the Delaware Chancery Court’s rejection last December of Elon Musk’s bid to reinstate a record-setting pay package -- the largest executive compensation award in the history of public markets, according to the court filing – previously awarded to him by Tesla, Inc. and later denied to him by a court decision.

“Social media has been used to amplify dissatisfaction with the courts not just in Delaware but nationwide,” Seitz said. “Negative posts collect followers along the way who pile into the fight.”

Musk, the primary owner of the social media platform X, formerly known as Twitter, expressed his frustration with the Chancery Court on X after his CEO package was denied. Musk also shifted the company’s terms of service last fall, specifying any lawsuits against X must be filed in the more “conservative” U.S. District Court for the Northern District of Texas or state courts in Tarrant County, Texas.

The Delaware General Assembly is currently considering bipartisan legislation, Senate Bill 21, which proposes major changes to Delaware’s business statutes in an attempt to shore up its hold on corporate cases.

State courts’ legacy. As chief justice, Seitz oversees the operations of all six if the state’s court systems. “The Court of Chancery has been around for over 230 years,” he noted. “The Delaware Supreme Court for a long time too. The enduring success of these courts is due in no small part to the courage of the many judges who were not afraid to make unpopular decisions,” he said.

“I think of my father (the late Judge Collins Jacques Seitz) and his decisions in the early 1950s. It’s important now more than ever that the other branches of government support the third branch of government in its mission to provide equal justice to all.”

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