Delaware’s judiciary is widely regarded as the most sophisticated corporate law judiciary in the United States. Its judges are not only experts in corporate law, but also keenly aware of the political forces that shape Delaware’s position as the jurisdiction of choice for publicly traded corporations. That institutional sophistication has historically allowed Delaware’s courts to navigate threats to the state’s corporate law franchise without inviting unnecessary confrontation. How, then, did Delaware’s judiciary provoke a political backlash that culminated in the hurried enactment of the 2025 amendments to Delaware’s corporate code, which displaced decades of judge made fiduciary duty doctrine and curtailed shareholder inspection rights?

To appreciate the puzzle, consider the judiciary’s handling of the litigation surrounding the federal government’s rescue of Bear Stearns during the 2008 financial crisis. The Federal Reserve orchestrated a merger between Bear Stearns and JP Morgan to prevent the investment bank’s collapse. The transaction involved aggressive deal protections designed to ensure shareholder approval, raising serious questions under Delaware corporate law. Yet when shareholders challenged the transaction, the Delaware Court of Chancery stayed the proceedings in favor of a parallel litigation in New York. Rather than strictly apply Delaware precedent and potentially thwart federal efforts to rescue Bear Stearns, the court effectively stepped aside.

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