Six months ago the Delaware Supreme Court upheld the right of an enterprise to include a loser-pays provision in its bylaws, specifying that losing shareholder-litigants would have to contribute reasonable legal fees to compensate what would otherwise be loss to other owners. Since then there’s been a concerted campaign to overturn the ruling, either in the Delaware legislature or if necessary elsewhere. But as I argue in a new Cato post, allowing scope for freedom of contract of this sort is one of the best and most promising ways to avert an ever-rising toll of litigation. Contractually specified alternatives to courtroom wrangling have played a vital role, and are under attack for that very reason, in curbing litigation areas like workplace and consumer arbitration, shrinkwrap and click-through disclaimers of liability, and risk disclaimers at ballparks and elsewhere. (& Stephen Bainbridge).
To the extent America has made progress in recent years in rolling back the extreme litigiousness of earlier years, one main reason has been the courts’ increased willingness to respect the libertarian and classical liberal principle of freedom of contract. Most legal disputes arise between parties with prior dealings, and if they have been left free in those dealings to specify who bears the risks when things go wrong, the result will often be to cut off the need for expensive and open-ended litigation afterward.
More on the Delaware bylaw controversy: D & O Diary (scroll), Andrew Trask on state of the merger class action, WSJ Law Blog first and second, Daniel Fisher, and ABA Journal in June, Alison Frankel/Reuters (forum selection bylaws).
His hometown newspaper, the Greenwich Time, profiles the Connecticut attorney general who’s now running for Senate against Republican nominee and televised wrestling impresario Linda McMahon. Jane Genova, previewing the race at Pajamas Media, quotes me on the competing forms of showmanship involved:
Walter Olson, senior fellow at the Cato Institute… puts it this way: “So now Blumenthal, known for years of legal posturing and grandstanding against business opponents, will face off against someone known for building the World Wrestling Entertainment empire. I’d say the two operations actually resemble each other in many ways, except the spectacles Blumenthal puts on have been more stagy and less dignified, and the opponents getting beaten up aren’t there of their own free will.”
Hans Bader of the Competitive Enterprise Institute informs me that Connecticut’s Richard Blumenthal has in a sense won his recount after all: a recalculation taking into account a bit of overlooked data has now moved him up from #3 to #2 on this year’s list, though he’s still essentially tied with Oklahoma’s Drew Edmondson. In first place: California’s Jerry Brown, while perennial favorites Patrick Lynch of Rhode Island and Darrell McGraw of West Virginia fill the #4 and #5 places, and a newcomer, William Sorrell of Vermont, makes an appearance at #6.
More: Bader in the Examiner on the selection process.
At only #3, Connecticut’s Richard Blumenthal demands a recount [Hans Bader, CEI, PDF]
An editorial in today’s Wall Street Journal (paywall) quotes me on the subject:
The AG has challenged the verdict, but the Kolb case [Gina Kolb, formerly Gina Malapanis] fits a pattern that the Cato Institute’s Walter Olson calls “bullying, legally ill-founded ventures into litigation.” From his leading role in the tobacco lawsuits of the 1990s to trying to repossess bonuses to AIG executives, Mr. Blumenthal has cultivated a reputation as the Eliot Spitzer of Connecticut.
For more on some of the cases that have brought Blumenthal his reputation as a bully and grandstander, start here, here, and here. And William Saletan at Slate is out with the piece I wish I’d written comparing Blumenthal’s repeated misstatements on his service record with the sorts of misrepresentations for which he’s gone after marketers and other businesses over the years.
For some light on how Blumenthal happened to obtain a photo opportunity in a VFW hall to denounce his critics, check out this post by Ronald Winter.
The “grandstanding” Connecticut attorney general, notes Mike Masnick at TechDirt, is now publicly decrying Craigslist for turning a profit from sex ads. Why is it turning a profit? Well, the ads used to be free, but Craigslist started charging fees after Blumenthal himself (with fellow AGs) demanded that it do so, the idea being that a credit card trail would scare off some illegal users and make it easier for police to crack down on others.
Blumenthal, a longstanding bete noire of this site, is now running for the U.S. Senate seat held by the departing Chris Dodd. More: New York Times on his Senate bid (rough start, “Martha Coakley in pants”).
At Point of Law I’ve got a post up about a significant embarrassment — $18 million worth — for veteran Connecticut Attorney General (and now Senate candidate) Richard Blumenthal.
I was a guest this morning on Ray Dunaway’s show on WTIC 1080 (Hartford) to discuss Democrat Richard Blumenthal’s bid to replace Chris Dodd in the U.S. Senate. I’ve been covering the Connecticut attorney general’s legal record for years here at Overlawyered as well as at my other site, Point of Law. For details on his bullying, legally ill-founded ventures into litigation against gun makers and dealers, check here, here, here, here, etc., while for the aromatic tobacco-fee angles, you can start here and here. For the time he sued his own state client, see this 2002 post (& welcome Instapundit, New York Post readers).