Friday, April 26, 2002

The ultimate yardstick of how the Hewlett v. Hewlett Packard case will be decided won't come down to some arcane interpretation of a law. That's not how a court of equity works. And Delaware's Chancery Court is a court of equity. The measurements made by Chancellor Chandler are ones marked by fairness. What are the facts of the case? What potential harm exists to all of the people involved in making a decision one way or another? Were the shareholders mislead? Was the investment bank coerced into voting a particular way? Were economic forecasts misleading? Were they so misleading, intentionally or unintentionally, that a vote was made without a reasonable understanding of the possible risks involved in a merger? Did the people making those forecasts act in good faith? Can a remedy be drafted that will overcome potential problems with the vote, such as another vote? Would another vote likely produce the same results? Would the cost in time and money to hold another vote be damaging to parties involved, including all of the shareholders?

You can pull out legal doctrines and precedents from previous Delaware and Chancery Court cases all you want, and polish them up nice and shiny and point to them and make whatever prognostications that you may. But when it comes down to the top judge in the Chancery Court making a decision in this case, what matters is fairness. The legal doctrines and the precedents are ways of getting there, but the result is something that will be based upon simpler rules of equity. These words from former Chancellor William T. Quillen apply here:
Unlike its extinct English ancestor, the High Court of Chancery of Great Britain, Delaware's Court of Chancery has never become so bound by procedural technicalities and restrictive legal doctrines that it has failed the fundamental purpose of an equity court--to provide relief suited to the circumstances when no adequate remedy is available at law.

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