Submitted by EveTahmincioglu on Fri, 10/25/2019 - 09:03

Justice Seitz, Jr. nominated to replace DE Supreme Court Chief Justice Strine. Will the court take shareholder or stakeholder approach?

By Eve Tahmincioglu

Justice Collins J. Seitz, Jr. was nominated Thursday by Delaware Governor John Carney to serve as the next Chief Justice of the Delaware Supreme Court, replacing outspoken Chief Justice Leo Strine, who retires on Oct. 31.

Seitz – who has served as an Associate Justice on the Supreme Court since 2015 – was a founding partner of Seitz Ross Aronstam & Moritz LLP. His practice included corporate, commercial, intellectual property and trust litigation, as well as government law and litigation.

The position of Delaware Supreme Court chief justice is seen as critical when it comes to how corporate governance laws are shaped in the United States. The state is the corporate home to two-thirds of Fortune 500 companies and corporate laws that emerge from the high court are often considered the de facto law of the land.

It’s unclear how Seitz will shape the court, but corporate governance experts predict he will take his own path.

Charles Elson, director of the John L. Weinberg Center for Corporate Governance at the University of Delaware, says Seitz is “totally different” from Strine. Seitz, he says, “is very careful, judicious in style and temperament.”

His appointment, Elson adds, “will serve to calm the waters following Leo; bring us back to a place where we probably should be.”

Strine has been at the heart of a debate in this country over whether directors should focus only on the interests of the shareholders and not all stakeholders, including employees, the environment and community.

A vocal advocate for bolstering equity throughout corporate America, Strine has been calling on corporate leaders to engage in more gainsharing with employees and communities.

“There is going to be a level of inequality where people are just not going to take it. Frankly, they’re not going to trust business elites and for a good reason,” he told Directors & Boards earlier this year.

He continues: “Do you have to make a profit to be a for-profit company over the long run? You do. But there’s a responsible amount of gain sharing that’s supposed to go on with the workers whose capital is contributed every day. And that this really matters to businesses and it matters to our society. That’s, to my mind, where boards of directors and managers have really fallen short in this country over the last 25 years."

(Here is an extensive print and video interview with Strine.)

That stakeholder focus, recently trumpeted by the Business Roundtable with the release of its “purpose” statement, is gaining in importance under the environmental, social and governance issues umbrella.

Elson is of the camp that shareholders, not all stakeholders, should be the main focus in the boardroom.

Of Seitz, Elson maintains, “I would imagine, he would hold the traditional shareholder view.”

In a statement, Carney said: “Justice Seitz is one of Delaware’s finest legal minds, and I’m pleased to send his nomination to the Delaware Senate. Delaware courts have a longstanding reputation across our country as objective, stable, and nonpartisan. Justice Seitz has the judgment, sense of fairness, and experience necessary to maintain and build on that reputation as our next chief justice.”

And in a statement, Seitz said: “I am honored that Governor Carney chose to nominate me from a field of exceptionally well-qualified candidates.  If the Senate sees fit to confirm my nomination, I look forward to serving the citizens of Delaware as their Chief Justice.”

Carney also said he intended to nominate Vice Chancellor Tamika Montgomery-Reeves to serve as associate justice on the Supreme Court, replacing Justice Seitz. She would be the first African American to serve on the Delaware Supreme Court.

The Delaware Senate is expected to consider both nominations during a special session on November 7.