November 15, 2012
Judging a judge: Chancellor Strine's comments called weird, disgusting
By: Maureen Milford
Judges in Delaware’s prestigious business court have been criticized for many things over the decades, but they’ve never been called out as Chancellor Leo E. Strine Jr. has for a peculiar sense of humor.
And it’s no laughing matter to the state’s political and legal elite, who jealously guard Delaware’s lucrative and august brand as the nation’s Tiffany of corporate America.
The nation’s legal community has been whipped up in the past week over the courtroom ruminations of Strine, the colorful and combative chief judge of the Delaware Court of Chancery, during a business dispute between high-end clothing designer Tory Burch and her husband, T. Christopher Burch. In a recent proceeding, Strine likened the case to “a drunken WASP fest.” He then asked lawyers whether the Burches are white Anglo-Saxon Protestants.
Concerns about Strine’s odd commentary from the bench and beyond are nothing new. A Jewish news service questioned his “obsession” with “Jewish identity” and the state Supreme Court took the extraordinary step last week of rebuking him for straying off point in a recent opinion.
Strine, in an interview, called his remarks a lighthearted attempt at humor. But others see the judge’s comments as potentially more troublesome.
“It’s great to have a sense of humor, but when it becomes a distraction and takes the focus off the role of our courts, that’s counterproductive,” said Secretary of State Jeffrey Bullock, whose department includes the Division of Corporations.
“It brings the court into disrepute and the court is the state’s most valuable asset,” said Stephen Gillers, a professor of law at New York University School of Law. “It hurts the credibility of the court, which is the jewel.”
The stakes are high for Delaware. For nearly 100 years, the state’s corporate law business has brought in as much as one-third of annual revenues. Corporate franchise taxes and fees brought in $867 million to the general fund in fiscal year 2012 or 25 percent of the general fund budget. There are millions more in state revenue generated from abandoned property and taxes from jobs related to the state’s legal business.
But in recent years, Delaware has faced increased competition for its corporate business both nationally and internationally. There have been rumblings about federalizing some aspects of corporate law, Bullock said.
What’s more, a 2010 study shows the Delaware Courts lostmarket share to other jurisdictions in the lucrative business of certain types of corporate lawsuits from 1994 to 2010.
Some Delaware lawyers and political leaders worry the commotion over Strine’s more sensational comments and the Supreme Court’s rebuke could take some shine off the state’s carefully polished reputation as a corporate haven.
The Court of Chancery is considered the keystone in attracting companies to incorporate here or form other entities.
Approximately 64 percent of Fortune 500 companies and a majority of publicly traded companies on the New York Stock Exchange and NASDAQ are incorporated in Delaware.
This “doesn’t cast the court in the nicest light,” said Mark Roe, a law professor at Harvard Law School.
Reached in Boston, where he teaches at Harvard, Strine said he regrets if his musings in the Burch proceeding offended anyone.
“If, in the course of what I thought was a lighthearted discussion with counsel about the scheduling of a case involving arguably preppy clothing, my attempt at humor upset anyone, I regret that,” Strine said.
“As a kid who went to high school in Greenville, Delaware, one of the 10 preppiest places in America, according to the Preppy Handbook, it was a subject that my L.L. Bean, camp-moccasin- wearing-body couldn’t resist.”
Strine offered many observations during the scheduling conference earlier this month in the Burch clothier case.
He also remarked about the beard of a law partner at a top New York law firm, (Strine called it “a Hasidic rattail”); designer Ralph Lauren’s real name (Lifschitz); how the Chinese travel so they can gamble; and how Strine speaks “restaurant Chinese.”
At one point, Strine discussed whether some lawyers from Wilmington’s old-line law firms were qualified to answer questions “about who’s a WASP.”
“It’s disgusting,” said Susan Koniak, a law professor at Boston University School of Law.
“It’s inappropriate for a judge to conduct himself and speak like that. He’s a powerful judge and he should be disciplined.”
To some legal scholars, such behavior diminishes respect for the rulings of a court whose judges historically have been known to be models of predictability, consistency and judicial decorum.
William Clark Jr., a lawyer at Drinker, Biddle and Reath in Philadelphia, called it “not exactly the most judicial behavior.” There’s a good reason for the expression, “Sober as a judge,” Koniak and others say.
The controversy over the Burch case was compounded by a more esoteric dust-up with the Delaware Supreme Court over another Strine case involving a business dispute between Gatz Properties LLC and Auriga Capital Corp.
The high court took Strine to the woodshed recently for making legal “pronouncements” about the Delaware Limited Liability Company Act in his written decision that the justices felt strayed beyond the matter before him.
“We remind Delaware judges that the obligation to write judicial opinions on the issues presented is not a license to use those opinions as a platform from which to propagate their individual world views on issues not presented.”
Corporate law experts called it unprecedented. “I can’t remember anything quite like this,” said Lawrence Hamermesh, a professor of corporate and business law at Widener University School of Law.
Some say it appears the Supreme Court is attempting to put Strine in his place with the rebuke. Strine is considered so powerful that most of the nearly two dozen people interviewed declined to comment or spoke only on condition that their names not be used.
“The Supreme Court did a service,” Gillers said.
Strine’s behavior repeatedly has raised concerns since he ascended to chief judge in 2011 after Chancellor William B. Chandler III retired.
At a conference at Tulane University Corporate Law Institute in 2011, Strine got edgy when discussing the $5.9 billion hostile takeover between Air Products & Chemicals Inc. and Air Gas Inc. Strine commented that Wachtell, Lipton attorneys were “Airgasmic” following the decision, according to a Wall Street Journal law blog.
He suggested that Wachtell could advertise itself as the “leaders in multiple Airgasms,” the blog said.
A commentary published Monday by Jewish Telegraphic Agency, a news service focusing on issues of interest to the Jewish community, questioned “the obsession one of (Delaware’s) better-known judges, Leo Strine Jr., has with Jewish identity.”
The writer cites both the Burch transcript and a piece Strine wrote in 2011 for The Deal Magazine. In that article, Strine notes that the music of Mayer Hawthorne dispels the idea that “white Jewish kids can’t make it as soul artists.”
In a dispute earlier this year between landlords and the city of Newark, Strine told lawyers to “chill out,” saying “this is not an episode of any television show. This is a rental-property permit case.”
He commented about students being “knuckleheads” that drink and get in trouble. But also noted that they spend money at Newark businesses and then inexplicably went into a discussion about vegans.
“You can’t assume a university with, I don’t know, all Mother Teresas, all abstainers,” Strine said, adding: “Frankly, then, it would be like horrible food smells because vegans would try to have things taste like meat and that’s synthetically awful and, frankly, morally weird to me that you want something to taste like animal but you don’t actually eat the animal.
“So you would have all these vegan restaurants in that case, and it can be weird.”
Many in the legal community credit Strine for a brilliant legal mind and argue that he continues to be a huge asset to state.
“Leo is a very good judge, but he is still new to his role as Chancellor. If he sticks to that role, and doesn’t get sidetracked, I think he will be one of the very best,” Bullock said.
Few question his commitment to public service. He is known for a prodigious output of legal writing, from opinions to scholarly articles.
“The governor continues to believe Chancellor Strine is a very bright and capable jurist,” said Brian Selander, spokesman for Gov. Jack Markell.
“However, like the Supreme Court, he would prefer that the chancellor not stray so far from the issues at hand. Hopefully, that lesson was learned.
“While the governor believes these remarks at a scheduling conference were unfortunate, he also knows that Chancellor Strine has worked incredibly hard and has done important work for Delaware for more than 12 years on the bench.”
Edward Rock, a law professor at the University of Pennsylvania Law School, said while the Burch comments were “a silly thing to say and he probably regrets it,” the episodes won’t “derail” Strine’s career because of the quality of his legal opinions.
“The basis for the court’s reputation will not be won or lost on a few stray comments,” said Francis Pileggi, a Delaware corporate lawyer.
When asked if he regretted the Burch comments, Strine said he tries to learn.
“But precisely because being human, being authentic and being direct is such an important element, I’ve been able to help people resolve disputes, move cases in an efficient manner and handle so many expedited cases over the course of my career it seems to me to be important to not lose those qualities – the human quality of being direct with people,” Strine said.
“But there’s a risk to that and sometimes someone will take it the wrong way and I always regret if that happens.”