Through the Antitrust Looking Glass: A New Vision of Delaware’s Takeover Defense Jurisprudence

Beginning in 1985, Delaware’s jurisprudence governing the legality of takeover defenses, i.e., poison pills, has centered around a subtly complex concept—proportionality—as introduced in the seminal case of Unocal Corp. v. Mesa Petroleum Co. Unfortunately, Unocal proportionality review, initially billed as a comparison of the threat posed by a hostile bidder and the board’s defensive response, never evolved into a true balancing of these two elements. The failure of Unocal proportionality review to develop into anything more than a fact-specific inquiry with little precedential value could easily be viewed as one of Delaware corporate law’s greatest disappointments.

In the face of widespread criticism from academic commentators and their frequent calls for doctrinal overhaul in the name of predictability and bright-line rules, this Note argues, however, that the ad hoc quality of Unocal proportionality review, along with other inconsistencies in Delaware corporate law, is entirely appropriate in the context of takeover defense jurisprudence. It reaches this conclusion by likening Delaware’s takeover defense doctrine to federal antitrust’s Rule of Reason, which polices illegal restraints on trade under the Sherman Act.

Using this comparison, this Note presents a novel paradigm for understanding Delaware’s review of defensive measures, positing that the regime’s so-called flaws are actually key components of an effective, antitrust-like mechanism for evaluating directors’ implementation of takeover defenses. In doing so, it will demonstrate not only that Delaware courts’ treatment of Unocal as an ad hoc, effects-based test is a workable and appropriate methodology, but also that Delaware courts are uniquely equipped to employ such a method and can do so without the typical difficulties often attending a case-specific form of review. As a result, this Note offers a unique perspective on the undervalued strength of Delaware’s takeover defense jurisprudence, challenging critics’ repeated calls for reform and providing practitioners with valuable insight into the true underlying goals of the law with which they seek to comply.

Clean Air Act Preemption of State Common Law: Greenhouse Gas Nuisance Claims After AEP v. Connecticut

In American Electric Power Co. v. Connecticut (AEP), the Supreme Court held that the Clean Air Act displaces federal common law tort claims related to greenhouse gas emissions. This decision effectively signaled the end of a series of public nuisance lawsuits invoking the federal common law as a means of redressing the effects of global warming. While nuisance claims based on state common law could serve as a replacement, their viability depends on an important threshold question: whether, or to what extent, such claims are preempted by the Clean Air Act. This is an issue the Supreme Court raised, but declined to reach, in AEP, and it remains one of the most important questions for the future of greenhouse gas litigation. 

This Note addresses that issue by arguing that the Clean Air Act preempts only one variety of state-law nuisance claims: those brought pursuant to the law of a state other than that where the relevant emissions source is located. Claims brought pursuant to the law of the source state, by contrast, should be able to proceed. As this Note demonstrates, this result is compelled by the structure, text, and purpose of the Clean Air Act, as well as by the Supreme Court’s 1987 decision in International Paper Co. v. Ouellette. At the same time, policy considerations generally counsel against using litigation as a means of regulating greenhouse gas emissions. For this reason, Congress should provide for preemption of all greenhouse-gas-related nuisance claims, regardless of which state’s law applies.

Persuasion Treaties

All treaties formalize promises made by national parties. Yet there is a fundamental difference between two kinds of treaty promise. This difference divides all treaties into two categories: treaties that govern the behavior of state parties and their agents fall in one category; treaties in the second category—those I call “persuasion” treaties—commit state parties to changing the behavior of non-state actors as well. The difference is important because the compliance problems for the two sets of treaties sharply diverge. Persuasion treaties merit our systematic attention because they are both theoretically and practically significant. In areas such as international environmental affairs, we simply cannot address critical global problems without them.

I use the term “persuasion” to communicate the observation that the success—and sometimes the very existence—of treaties in this class depends upon whether state parties can successfully enlist private sector support. The theory builds on recent scholarship that identifies the depth of regulatory interdependence between private and public sector actors. Business entities may choose either to cooperate with or to impede domestic regulatory regimes, and their decisions are not fully susceptible to legal control. The business choice is significant on the international stage: without a successful domestic regulatory regime, a state will not be able to keep corresponding international commitments. Moreover, many states do not commit to treaties they cannot implement or enforce. Thus, persuasion treaty regimes must attract the support of relevant business entities, either ex ante (to secure international agreement) or ex post (to achieve results).