From March 13 to March 16, Widener University School of Law hosted its annual Ruby R. Vale Interschool Moot Court Competition. Students from twenty-one law schools from the across the country came to Widener to argue Mercer Christian Publishing Co. v. Praise Video, Inc. on appeal to the Delaware Supreme Court.
This case implicated the question of the extent to which Delaware’s recently enacted Public Benefit Corporation Statute affects the contours of Revlon and its progeny. The parties in the case were Praise Video, a closely-held public benefit corporation with a stated purpose to promote Christian values, and Mercer Christian Publishing Company, a wholly-owned subsidiary of a media conglomerate.
After Praise Video solicited bids, two potential merger partners emerged with offers. Mercer offered a superior per share price, but the competing bidder was more compatible with Praise Video’s public benefit purpose. Despite Mercer’s higher offer, Praise Video’s board opted for the competing bid to ensure that Praise Video would continue with its Christian purpose after the change of control. The board relied on the public benefit statute’s balancing test that allows a board to balance between shareholders’ pecuniary interests, constituents affected by the corporation, and the public benefit purpose when making decisions. Ordinarily, under Delaware’s well-settled jurisprudence in this context, the board’s decision would have unquestionably been a violation of the directors’ duty to the shareholders to maximize value. However, because of the new public benefit corporation statute, the question at issue was whether shareholder monetary value could be sacrificed to some extent in the interest of promoting the corporation’s public benefit purpose.
The Honorable Jack B. Jacobs and the Honorable Henry DuPont Ridgeley of the Delaware Supreme Court, Vice Chancellor John W. Noble and Vice Chancellor J. Travis Laster of the Delaware Court of Chancery, and Mr. Simon M. Lorne, Esquire, Vice Chairman and Chief Legal Officer of Millennium Management LLC, served as the distinguished Judges on the bench for the Final Argument. The advocates consisted of, for the Appellants, Jenna Grassbaugh, Ryan Harmanis, and Hunter West from Ohio State University’s Moritz School of Law, and Zachary Hutchinson and Daniel Woodard, for the Appellees, from Georgetown University Law Center. After well-argued presentations by both parties, the competitors from Ohio State University’s Moritz School of Law were crowned as this year’s winner. Competitors Mark Snyder and Alex Yarborough from Seton Hall School of Law were awarded the Donald E. Pease Award for the best brief. In addition, Mark Snyder received the award for Best Oral Advocate.
On the second day of the competition, Simon M. Lorne delivered to the audience in the Vale Moot Court Room the Vale Distinguished Scholar Lecture titled “Constituency Directors and the Objects of their Attention.” The lecture focused on the issues related to representative directors and their competing considerations for the shareholders who elected them and their fiduciary duties to the entire company. Mr. Lorne questioned whether the doctrinal emphasis on serving the interests of the corporation and its stockholder generally adequately acknowledges the reality that representative directors are expected to, and do, serve the interests of the stockholder who chooses them.