As Predicted: The SEC and the Further Denial of Shareholder Access (Oral Argument Before the Delaware Supreme Court)(Part 8)

We had the benefit of listening to the oral argument in CA v. AFSCME.  The oral argument is publicly available and can be found on the Delaware Supreme Court web site. 

It was a bad idea for the SEC to certify this to the Supreme Court, as we have already noted. We have also noted that the Supreme Court lacked jurisdiction to hear the case, violating its own rule in accepting the certified question. But the oral argument further demonstrated how difficult the resolution of this type of issue can be without the traditional fact finding process. We will illustrate this in the next several posts.

As an initial observation, we note that the quality of the oral argument was extremely high and engaging. Despite the short time frame and the intervening 4th of July weekend, both sides (Michael Barry, of Grant & Eisenhoper, for AFSCME, and Robert Giuffra of Sullivan & Cromwell for CA) were very prepared and had anticipated many of the difficult questions that would arise. It was also a hot bench, with the Justices clearly having read the materials (one of them pointed out a perceived inconsistency with the argument before the Court and page 41 of the CA brief) and having thought about the issues. They peppered both sides with questions within minutes after each began.

While we will explore some of what went on, the oral argument also hurt CA. A number of points came out (through the give and take process of discussion) that weakened the CA position. Nonetheless, we remain convinced that CA will win this case, as the race to the bottom dictates. 

The primary materials, including the briefs, are posted on the DU Corporate Governance web site.