Corporate

Arkansas Applies Delaware Corporate Law

A few days after highlighting an analysis of Delaware corporate law in an opinion by Judge Richard Posner of the 7th Circuit that discussed aspects of a director's fiduciary duties, here, (including the benefit of scholarly insights on the ruling by Professors Ribstein and Bainbridge), comes a decision from the Arkansas Court of Appeals that applies Delaware corporate law on the issue of pre-suit demand futility in the context of a derivative suit. In Berry v. Dillard, 2011 Ark. App. 242 (Mar. 30, 2011), read opinion here, the seminal Delaware cases on the issue of demand futility were recited in a manner that exhibited a firm grasp of the principles and nuances represented by those cases and their progeny.

Why, one might ask, do I burden the reader with what an Arkansas court says about Delaware law? The reason is that this is another indication of what some regard as an increasing trend of non-Delaware courts opining on Delaware law. A recent article by David Marcus of The Deal, available here, especially towards the end of the article discusses some of the conventional wisdom on the topic, in which he refers to several recent Delaware decisions that have been somewhat censorious in connection with lawyers who did not maintain the high standards that the Delaware courts expect of lawyers and their clients.

We have also refererred on these pages to law professors who have done empirical studies that support the existence of a tendency for some cases to be filed in non-Delaware courts even when Delaware law applies. See, e.g., here and here. See also a tangential post here, about a recent article by a Delaware Supreme Court justice that describes procedures that are available for non-Delaware state courts by which issues of Delaware law may be certified to the Delaware Supreme Court so that a definitive ruling on Delaware law can provide instruction to non-Delaware courts applying Delaware law.

Read more Delaware business litigation case summaries and commentary on Delaware Corporate and Commercial Litigation Blog, a blog hosted by Francis G.X. Pileggi, of Fox Rothschild LLP.

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  • Anonymous
    Anonymous
    This is quite interesting. I think it is very important to always know what is going on in other states legislature--it gets you prepared for what might happen in your local legislature. Thanks for this article Francis.