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Is Delaware Becoming a Tort Haven?

If you believe the WSJ, Delaware is turning into the next Madison County, becoming a wholly-owned subsidiary of Trial Lawyer’s Inc.:

A remarkable political fact of Mr. Biden career is that his top campaign contributor is SimmonsCooper, a law firm in Madison County, Illinois, of all places. Aficionados of tort law will understand. SimmonsCooper is a big asbestos player, and Madison County was until recently one of America’s meccas for jackpot justice. But the story gets better: Mr. Biden has been helping the tort bar turn his home state of Delaware into a statewide Madison County....

The trial bar’s strategy has been to overwhelm Delaware’s once-sensible legal system, taking advantage of rules that pressure companies to settle. In the 22 months following SimmonsCooper’s first asbestos filing in Delaware, the state was hit with 412 suits, primarily from SimmonsCooper and fellow asbestos giant Baron & Budd.

According to the Madison County Record—a legal journal that has doggedly followed this story—clerks in Wilmington were “working nights and weekends to keep up” with the filings. The trial lawyers drew sympathetic judges that have already overseen big verdicts against defendants, primarily Detroit auto makers. Plaintiffs have obtained certain procedures that raise the costs of defense, and restrict defendants’ ability to take discovery.

To keep the jackpots coming, the tort bar has focused on reshaping Delaware’s political and judicial landscape. SimmonsCooper knows all about this, having spent a fortune on judicial and county board elections in Madison County. The trial bar poured money into the 2004 re-election campaign of Democratic Governor Ruth Ann Minner, who happens to control judicial appointments in Delaware. Some 24 national asbestos and plaintiffs attorneys—including Dickie Scruggs, since convicted of bribery—contributed the legal maximum in the run-up to Ms. Minner’s victory. SimmonsCooper has also contributed nearly $35,000 to Jack Markell, the Democrat running to replace Ms. Minner this fall.

Also up for special attention was Beau Biden, son of Senator Biden. SimmonsCooper needed a local firm to file its Delaware suits, and it settled on Bifferato, Gentilotti and Biden, where Beau was a partner. This gave young Beau a share of the firm’s asbestos winnings. Beau Biden was also widely known to have political ambitions, and SimmonsCooper donated $35,000 to help Beau get elected state attorney general in 2006. Meanwhile, SimmonsCooper employees have funneled $200,000 in campaign donations to the senior Biden.

“Delaware is fast becoming asbestos lawsuit central,” says Steve Hantler, president of the American Justice Partnership Foundation, and a former Chrysler assistant general counsel. “A tsunami of lawsuits being filed by the SimmonsCooper firm, along with the flow of campaign dollars to Delaware politicians is quite the troubling coincidence.”

I don’t follow Delaware politics or Delaware’s non-corporate law, so I have no first hand knowledge. If true, however, it’ll be interesting to see if Delaware lets the effects bleed over into their corporate law. Given how much Delaware benefits from being the leading corporate jurisidiction, it’s hard to imagine that the Delaware bar would trade their birth right for a mess of abestos pottage, but the plaintiff’s counsel wing of any Bar makes tons of money from shaking down business that can be funneled into precisely this sort of political campaign.

So let’s watch closely: Will the Delaware courts continue eviscerating 102(b)(7) (not that there’s very much left after the repeated judicial guttings its suffered)? Will the expansion of cases covered by “Revlon duties” continue? Will the new good faith jurisprudence continue to be applied as expansively as it was in Ryan v. Lyondell? Will care cases continue to be transformed into good faith or loyalty cases, continuing the shrinking of the business judgment rule? Will more and more cases go to trial, as has seemed to be the case of late?

I haven’t counted heads. (I leave that sort of thing to the bean counters empiricists), but my gut feeling is that Delaware corporate law is less protective of directors and managers than it used to be. The balance seems to be shifting a bit from deference to authority and towards accountability. Delaware needs to remember the lessons of director primacy, which made it strong.