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"Delaware's Senate just chose billionaire insiders—like Elon Musk and Mark Zuckerberg—over pension funds, retirement savers, and other investors by passing S.B. 21."
The push to pass Senate Bill 21 in Delaware, the "corporate capital of the world," is garnering criticism from some anti-monopoly, economic, and legal experts this week.
"Delaware's Senate just chose billionaire insiders—like Elon Musk and Mark Zuckerberg—over pension funds, retirement savers, and other investors by passing S.B. 21," Laurel Kilgour, research manager at the American Economic Liberties Project (AELP), said in a Monday statement about state senators' overwhelming support for the "corporate insider power grab" last week.
Delaware lawmakers are swiftly working to overhaul state law after a judge ruled against Musk's $56 billion 2018 compensation package for Tesla. The CEO—who is the world's richest person and now a key leader in President Donald Trump's administration—then moved the incorporation for his other companies elsewhere, and urged other businesses to follow suit. Some are doing so and others are reportedly considering it, including Zuckerberg's Meta, the parent company of Facebook and Instagram.
As Business Insiderreported last month, citing Delaware's Division of Corporations, nearly 2.2 million entities are registered in the tiny state, including two-thirds of all Fortune 500 companies.
"This bill only serves to make it easier for corporate boards to rubber-stamp excessive executive pay and self-serving deals that drain returns from pensioners and retirement accounts," warned Kilgour. "Coming on the heels of another panicked giveaway to the corporate defense bar just last year, this is a reckless move that will undermine investor confidence and further erode Delaware's credibility as a fair corporate forum. The Delaware House must step in and stop this dangerous bill before it's too late."
Specifically, as AELP laid out, "S.B. 21 jeopardizes the ability of investors to protect themselves from harmful board decisions that slash returns to investors' hard-earned retirement savings, such as awarding exorbitant executive pay packages that far exceed any rational benchmark, or overpaying to acquire companies in which controlling shareholders have financial stakes."
"The bill makes it easier for corporate boards to insulate directors and controlling shareholders from litigation over conflicts of interest and self-dealing by corporate insiders, narrows who qualifies as a controlling shareholder, imposes a new presumption that board members are independent no matter who they are appointed by, and makes it more difficult for shareholders to discover conflicts by restricting their access to internal corporate records," the nonprofit detailed.
Joseph R. Mason, a Ph.D. economist and fellow at the University of Pennsylvania's Wharton School of Business, also sounded the alarm on S.B. 21 with a Monday opinion piece in the Delaware Business Times.
"I recently conducted an economic impact study on the likely effects of Senate Bill 21 (S.B. 21) on the Delaware economy. Based on my findings, a reasonable estimate of the annual economic activity lost due to S.B. 21's passage is $117 million-$235 million in decreased economic activity and 450-900 lost jobs, statewide," he wrote. "My analysis very likely understates the impact to Delaware, as it only estimates lost economic activity generated by law firms located in the state."
Mason's op-ed followed a Delaware Onlinepiece from attorney Greg Varallo, who is head of Bernstein Litowitz Berger & Grossmann's Delaware office and represented Richard Tornetta, the Tesla shareholder behind the Musk case in the state.
"On March 5, this paper published an op-ed by William Chandler and Lawrence Hamermesh," Varallo pointed out last week, referring to a former chancellor on the Delaware Court of Chancery who is now a partner at Wilson Sonsini Goodrich & Rosati, and a professor emeritus at the Widener University Delaware School of Law.
"In the piece, my old friends extolled the virtues of S.B. 21, going so far as to argue that the bill restored balance to the corporate law playing field. Nonsense. S.B. 21 is a license to steal for corporate controllers like Elon Musk," argued the lawyer, who spent decades leading a defense-side firm.
According to Varallo: "The idea that S.B. 21 will restore 'balance' between the interests of regular investors and billionaires who control companies is demonstrably false S.B. 21 creates 'safe harbors' for controllers to steal from their controlled public companies and from the stockholders who invested in those companies without having to answer for doing so. The bill overturns decades of thoughtfully crafted common law and puts Delaware in direct competition with Nevada for the state which gives controllers the clearest and easiest to follow road map to commit grand larceny."
"This isn't someone else's problem. If your retirement includes index funds, as most do, you are a stockholder in controlled companies because no index fund operates without owning controlled companies," he added. "As a citizen who believes that the independence of our judiciary is at the very core of our form of government, I can't sit still while the proponents of this legislation continue to attack the public servants who serve on the Court of Chancery, the nation's leading business court."
Meanwhile, as the Delaware Business Timesnoted Monday, S.B. 21 is backed by "two of the most powerful Delaware business organizations, the Delaware State Chamber of Commerce and the Delaware Business Roundtable," and groups that testified in support of it include ChristianaCare, the Central Delaware Chamber of Commerce, and the Home Builders Association of Delaware.
Despite expert warnings, Delaware lawmakers are continuing their efforts to send S.B. 21 to the desk of Democratic Gov. Matt Meyer, who last week called on them to pass the legislation "as quickly as possible." According to the Delaware General Assembly website, the state House introduced an amendment to the bill on Tuesday.
"The Supreme Court's decision brings the people of Delaware and Hoboken one step closer to putting these polluters on trial and making them pay for their climate deception."
On the heels of similar decisions last month, the U.S. Supreme Court on Monday delivered "another win for climate accountability," rejecting fossil fuel corporations' attempt to quash lawsuits filed by the city of Hoboken, New Jersey, and the state of Delaware.
Both filed in September 2020, the suits from Hoboken and Delaware—like those filed by dozens of other municipalities and states—take aim at companies including BP, Chevron, ConocoPhillips, ExxonMobil, and Shell for fueling the climate emergency. The fossil fuel industry has repeatedly tried to evade accountability by shifting such cases from state to federal court.
"We appreciate and agree with the court's order denying the fossil fuel companies' petition, which aligns with dozens of decisions in federal courts here in Delaware and across the country," said Democratic Delaware Attorney General Kathy Jennings in response to Monday's decision.
The Supreme Court's decision means that both of these cases will now move forward in state court.
Jennings on Monday cited an opinion piece she wrote for Delaware Online with Shawn Garvin, secretary of the Delaware Department of Natural Resources and Environmental Control, back when they launched the legal effort in 2020:
As we stated at the time of filing this case almost three years ago: "It didn't have to be this way. The fossil fuel industry knew for decades that their products would lead to climate change with potentially 'severe' and even 'catastrophic' consequences—their words, not ours. But they didn't clean up their practices or warn anyone to minimize the peril they were creating. Instead, they spent decades deliberately and systematically deceiving the nation about what they knew would happen if they carried on with business as usual."
Building on revelations from the past decade that have bolstered climate liability lawsuits, peer-reviewed research published in January shows that ExxonMobil accurately predicted global heating decades ago, while documents released in early April make clear that Shell knew about the impact of fossil fuels even earlier than previously thought.
"Imagine how far along we might be in the transition to a low-carbon economy today if not for their deception," Jennings said. "That's why we filed our lawsuit, and today's order moves Delawareans one step closer to the justice and economic relief that we deserve."
For Hoboken and Delaware, the high court denied fossil fuel companies' challenge to decision last year from a panel at the U.S. Court of Appeals for the 3rd Circuit, which wrote in part that "our federal system trusts state courts to hear most cases—even big, important ones that raise federal defenses. Plaintiffs choose which claims to file, in which court, and under which law. Defendants may prefer federal court, but they may not remove their cases to federal court unless federal laws let them. Here, they do not."
Center for Climate Integrity president Richard Wiles noted Monday that "Big Oil companies keep fighting to avoid trials in state courts, where they will be forced to defend their record of climate lies and destruction in front of juries, but federal courts at every level keep rejecting their efforts."
"The Supreme Court's decision brings the people of Delaware and Hoboken one step closer to putting these polluters on trial and making them pay for their climate deception," Wiles added. "Fossil fuel companies must be held accountable for the damages they knowingly caused."
After the high court's April decisions—which involved cases brought by the state of Rhode Island as well as municipalities across California, Colorado, Hawaii, and Maryland—Jamie Henn of Fossil Free Media said, "This should open the floodgates for more lawsuits that could make polluters pay!"
There were no noted dissensions on Monday. However, like last month, Justice Samuel Alito, who owns stock in some fossil fuel companies, did not participate in the decision about these two cases—but Justice Amy Coney Barrett, whose father spent nearly three decades as an attorney for Shell, did.
Lawyers representing Venezuelan migrants who were recently flown to Martha's Vineyard, Massachusetts on orders from Florida Gov. Ron DeSantis filed a class action lawsuit Tuesday alleging the Republican and his state's transportation secretary perpetrated a "fraudulent and discriminatory scheme" against them.
"Defendants manipulated them, stripped them of their dignity, deprived them of their liberty, bodily autonomy, due process, and equal protection under law."
The suit, which was filed Tuesday afternoon in the United States District Court in Boston, said the legal asylum-seekers who boarded two flights from Texas to the wealthy island resort were told they would be sent to Boston or Washington, D.C.
The filing further claims that in an effort to mislead the migrants, Florida officials "manufactured" an "official-looking brochure" listing fake benefits. Migrants were also offered incentives such as $10 McDonald's gift cards if they boarded the flights.
"These immigrants, who are pursuing the proper channels for lawful immigration status in the United States, experienced cruelty akin to what they fled in their home country," the lawsuit argues.
"Defendants manipulated them, stripped them of their dignity, deprived them of their liberty, bodily autonomy, due process, and equal protection under law, and impermissibly interfered with the federal government's exclusive control over immigration in furtherance of an unlawful goal and a personal political agenda," the document adds.
\u201cTODAY, @LCRBOSTON filed a lawsuit, with @ALIANZAAMERICAS as a plaintiff, that seeks to hold @GovRonDeSantis & the State of Florida accountable for deliberately tricking a group of nearly 50 people to board a plane from San Antonio, TX, to Martha\u2019s Vineyard https://t.co/OuS26pn5g9\u201d— ALIANZA AMERICAS (@ALIANZA AMERICAS) 1663715152
The plaintiffs are asking the court to find Florida's actions violated their 4th and 14th Amendment rights, as well as the Civil Rights Act of 1964, as state officials "intentionally targeted only individuals who are non-white and born outside the United States."
Oscar A. Chacon, executive director of case plaintiff Alianza Americas, said in a statement that "for the governor of Florida to cynically use recently arrived immigrants who have applied for asylum in the U.S. to advance a hate-driven agenda intended to create confusion and rejection throughout the country is not only morally despicable but utterly contrary to the best traditions of humanitarian protection embraced by most Americans."
"That is why we have taken the step to legally challenge what we view not only as a morally reprehensible action but what we believe is also illegal," he continued.
"We want to do everything we can to prevent more abuses against newly arrived immigrants," added Chacon, "especially asylum-seekers who deserve support, protection, and to be recognized for the incredible contributions they make to the U.S., as well as their loved ones in their home countries."
\u201c"We thought that they were going to take us to a shelter and continue with our lives." \n\nThe man I've been speaking with sent me the following photos of the brochure. \n\nThey match up with @JuddLegum reporting that he obtained from @LCRBOSTON.\u201d— Emmanuelle Saliba (@Emmanuelle Saliba) 1663678720
On Tuesday, Common Dreams reported that Javier Salazar, the sheriff of Bexar County, Texas--the planes to Massachusetts departed from San Antonio--had launched a criminal investigation into the flights.
Last week, seven U.S. lawmakers representing Massachusetts urged the U.S. Treasury Department to investigate DeSantis' apparent abuse of federal Covid-19 relief funds to pay for the flights.
Massachusetts state Rep. Dylan Fernandes, a Democrat who represents Martha's Vineyard, this week called for a federal human trafficking probe of DeSantis.
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DeSantis said last Friday that the recent flights "are just the beginning of efforts" and that he may work with Texas Gov. Greg Abbott to arrange future removals. DeSantis insisted last week that the migrants' relocations were "all voluntary."
Two other Republican governors--Abbott and Arizona's Doug Ducey--have sent migrants to Chicago, New York, Washington, D.C., and Sacramento. In total, more than 13,000 people have been transported to the sanctuary cities since April.
Asked during a Tuesday press conference about reports that DeSantis may send migrants to Delaware, his home state, U.S. President Joe Biden said that "he should come visit."
"We have a beautiful shoreline," the president added.