Performing Equity: Why Court of Chancery Transcript Rulings Are Law

Lawyers practicing in the Delaware Court of Chancery or advising Delaware corporations about Delaware corporate law read, inquire about, cite, and disseminate transcript rulings, which are also known as bench rulings. To the practitioner, they are an indispensable tool. They influence our behavior and those of our adversaries. They help predict future litigation outcomes. In that Holmesian sense, they constitute law: “The prophecies of what the courts will do in fact, and nothing more pretentious, are what I mean by the law.”

In the Delaware Court of Chancery, leadership applications, expedition motions, scheduling disputes, discovery motions, settlement hearings, and fee applications are regularly adjudicated orally or by entry of short minute orders. Merits rulings, such as motions to dismiss, preliminary injunction applications, advancement of legal fees, and summary judgment motions may also be adjudicated orally. A large corpus of unpublished rulings address all aspects of corporate law litigation.

Court of Chancery practitioners have long collected for future reference transcript rulings, letter opinions, orders, and other unpublished decisions. It was not until the 1990s that unpublished memorandum opinions and letter opinions became widely available on Lexis. Upon the publication a generation ago of a treatise on Delaware Court of Chancery practice, a book review attested to the treatise’s utility in light of practitioners’ prior need to collect unpublished rulings.

The treatise did not render transcript rulings obsolete. To the contrary, the ever-expanding body of transcript rulings generated by a busy court found new outlets. Lawyers in a given case might circulate a ruling by email through informal networks. Purchased transcripts appear on the docket and can be accessed electronically for a fee. Law firms gather transcripts to a greater or lesser degree. Some transcripts are summarized in client memos or attorney advertising on the internet. For a time, subscription services made transcript rulings available. The Chancery Daily summarizes and quotes transcript rulings for its subscribers. Transcript rulings also can be fodder for journalistic coverage, blogs, continuing legal education materials, or law review articles. By these less-than-universally-accessible means observers of Delaware corporate law litigation can read some of what judges say when ruling orally.

But are transcript rulings an illegitimate form of legal authority? Should litigants not cite them? Should Court of Chancery judges not pay attention to their colleagues’ transcribed words? These questions have arisen recently.

Several years ago, then-Chancellor Leo Strine chided lawyers for treating transcript rulings as “samizdat literature” and stated that “they should be taken as provisional” and that they have no “inhibiting effect” on future rulings.

In a series of written rulings in 2020, some members of the Court of Chancery stated that transcript rulings lack precedential value or stand on a lower footing compared to written decisions. In this essay, I question whether Court of Chancery transcript rulings stand on a lower footing than written opinions by members of the same court. No rule of court or legal rule prescribes categorically different treatment for oral rulings. The rule of law and prudence counsel in favor of considering how a member of the Court of Chancery ruled in a similar case, regardless of the manner in which that ruling is expressed.

Transcript rulings are not necessarily a lesser form of justice. They are thoughtful expressions of well-prepared expert judges. Transcript rulings may be fully scripted, partially scripted, or not scripted at all. A transcript ruling can convey its own form of rhetorical power. The immediacy of a decision and the relative intimacy of a courtroom, conference room, or conference call can lend passion that otherwise would be scrubbed from an edited draft. A transcript ruling can be used to perform justice in an individual case in a fact-specific way or to express concern about a general practice. Simultaneously, judges can speak more forcefully and with less intended precedential import by ruling orally.

In this essay, I discuss from three different perspectives why Court of Chancery transcript rulings should be considered law. In Part I, I discuss the circumstances, substance, and influence of three transcript rulings at issue in three recent decisions questioning the precedential value of transcript rulings. In Part II, I discuss a debate from two decades ago about whether unpublished federal appellate decisions should be cited by litigants or considered as precedent by courts. The perceived institutional imperatives for distinguishing between precedential and non-precedential opinions in that context have no applicability to Court of Chancery transcript rulings. In Part III, I discuss four occasions when then-Chancellor Leo Strine denied motions to dismiss in the Court of Chancery by means of transcript rulings.

The transcript rulings discussed in Part III point to a juridical problem. These rulings are virtuoso performances of equity. They explain why an exceptional case should go forward for reasons that are not obvious from published opinions. Years later, they continue to provide insight into legal doctrine. Yet, the same judge who issued these rulings pronounced that transcript rulings should not serve as a guide for the adjudication of similar fact patterns. If the same case that survived a motion to dismiss later settled, approval of the settlement and fee award would itself take the form of a transcript ruling. Institutionalizing a juridical rule that transcript rulings lack precedential value consigns such successful prosecutions of stockholder cases to legal nullities. The law is shaped instead by written decisions that mostly dispose of meritless actions.

The more general problem is that the rule of law depends on a system of precedent in which like cases are decided alike, unless the prior case is distinguished or rejected. The promulgation of transcript rulings that operate as individualized justice in a single case is antithetical to the leading role of the Court of Chancery as a specialized trial court for the judicial enforcement of fiduciary duties. Exceptional cases that call into question general rules or general practices need to be integrated into the body of Delaware corporate law.

The complete paper is available for download here.