Legal Blog

Court of Chancery Expansion Proceeds Amidst Constitutional Challenge to Appointment Process | Part One

In late June, the Delaware legislature voted to expand the Court of Chancery from five judges to seven judges. This was in response to the Court’s increased caseload and the number of matters actually going to trial (all trials in the Court of Chancery are bench trials, where the judge is the fact finder). The caseload raised concerns that the court’s “cherished” reputation — which was being able to provide rapid and flexible scheduling as each case might require it — was at risk. Within a week of the vote, the judicial nomination process to fill those new vacancies was underway. In late September, two new nominees were announced by Governor Carney’s office — Morgan Zurn and Kathaleen McCormick. Both have now been confirmed at a special legislative session on October 3, 2018, and will shortly be sworn in.

The state Constitution requires only that judges be “citizens of the State and learned in the law.” (Del. Const. Art. IV, section 2). However, Delaware takes judicial appointments seriously, especially in the specialized Court of Chancery, which routinely handles multi-million and multi-billion dollar corporate disputes, and is respected across the country for its knowledge and expertise in interpreting and applying corporate law. As a result, nominees are generally practitioners who are already experienced in Court of Chancery litigation and corporate law, and that is the case with the two nominees. Ms. McCormick is a seasoned Chancery litigator and Ms. Zurn holds one of the two Master in Chancery position (loosely equivalent to Magistrate Judges).

Given the emphasis on specific substantive experience and skill, it is ironic that the Delaware Constitution also contains another prerequisite that is much more specific than being “learned in the law,” and has nothing to do with an individual nominee’s competence. Each of the primary state courts, including Chancery, must maintain parity between registered Democrats and registered Republicans, requiring exactly even numbers or no more than a majority of one if there is an odd number of judges. (Art. IV, section 3). If a “democratic” seat is open, no republicans may be considered no matter how impressive they are, and vice versa. With two new openings, it requires that one seat goes to a Democrat and the other to a Republican.

At the federal level, we have seen — and are currently seeing — how party politics can dramatically distort what should be a merit-based nomination requiring advice and consent of the legislature. Yet, Delaware has largely managed to avoid such pitfalls, partly due to its small size and “old school” political collegiality, and partly because the quality of the courts, like the quality of corporate law, is a key component to Delaware’s reputation as a center for corporate citizenship and law. That is not to say there isn’t lobbying, and jockeying among potential nominees, however, the lawyers who are in the running are all quality candidates. There is bipartisan interest to maintain the Court of Chancery’s strong reputation.

Nevertheless, the constitutional requirement for political parity is under attack. In fact, last December it was struck down as an unconstitutional violation of the First Amendment right of political association by Delaware’s senior US. Magistrate Judge Mary Pat Thynge. Adams v. Carney, 2017 U.S. Dist. LEXIS 200304 (D. Del. Dec. 6, 2017), reconsideration den., 2018 U.S. Dist. LEXIS 86169 (D. Del. May 23, 2018). The State appealed and oral argument in the Third Circuit took place on September 25.

So the two new appointments are proceeding under rather unique circumstances. In expanding the Court of Chancery, the legislature obviously found a compelling need to improve the administration of justice. Yet, at the time the vacancies were created, the existing mechanism for filling those vacancies had already been found to be unconstitutional. Thus, the State sought a stay of Magistrate Judge Thynge’s decision during the appeal process, which would allow the existing appointment process to continue for the time being. (The motion for stay preceded the legislature’s vote to expand the Court of Chancery by a few weeks). On June 25, Judge Thynge stayed her decision while the appeal to the Third Circuit was pending. 2018 U.S. Dist. LEXIS 105529 (D. Del. June 25, 2018). That stay is allowing the Chancery appointment process to proceed under the political parity requirement – which could perhaps be the last hurrah for the rule.


ABOUT FRANK NOYES | 267.338.1381

Mr. Noyes works with the Business Litigation group, as well as in the Business Law and Transactions group. His litigation practice focuses on representing companies in business litigation, disputes between owners, employment litigation, restrictive covenant and business tort litigation. He appears regularly in Delaware Chancery Court, and has represented clients in numerous state and federal courts in Delaware and Pennsylvania. On the transaction side, he represents companies in finance transactions, sales transactions, and general business matters, and represents employers in preparing employment agreements, handbooks, and separation agreements.






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