/>iMuch has been written about Vice Chancellor J. Travis Laster's ruling in Palkon v. Maffeii, 2024 WL 678204 (Del. Ch. Feb. 20, 2024). That case involved a challenge to TripAdvisor's planned reincorporation from Delaware to Nevada. Although Vice Chancellor Laster declined to enjoin the move, he allowed the suit to go forward on the question of damages. See Vice Chancellor Laster Rules That It Is "Reasonably Conceivable" That Nevada Provides Greater Protection Against Fiduciary Liability Than Delaware and What Are The Damages? That ruling was appealed to the Delaware Supreme Court. Today in Dover, the Delaware Supreme Court will hear the appeal.
In June, the State of Nevada filed an amicus brief arguing that Vice Chancellor Laster got it wrong:
In finding that redomestication [sic] to Nevada offers a “non-ratable” benefit to directors, the trial court gave “credit” to inflammatory and inaccurate allegations instead of referring to Nevada’s statute.
More particularly, Nevada argues:
- Plaintiff’s “Race-to-the-Bottom” Allegations Should Not Be Uncritically Accepted By Delaware Courts;
- Neither Nevada Nor Delaware Are “Liability Free” Jurisdictions;
- Nevada’s Policy Decisions Do Not Provide “Non-Ratable” Benefits To Directors; and
- Each State Benefits From Respecting Other State’s Policy Choices.
Finally, Nevada argues that upholding Vice Chancellor Laster's decision will ill serve Delaware because:
- corporations may be reluctant to incorporate in the Delaware if they believe that reincorporation will be difficult;
- other states may similarly choose to raise barriers to reincorporation, including moves to Delaware; and
- the current situation risks prompting a federal response
Rather than trying to erect exit barriers, Delaware would be better served by addressing the reasons that corporations are deciding to leave. See Reasons To Quit Delaware Are Gettin' Bigger Each Day.
