Who should be trusted to govern the most powerful relationships in the economy: markets, managers, or courts? During this conversation, we are joined by two legal scholars, Zohar Goshen and Tomer Stein, whose newest article focuses on the role of specialized corporate courts. Their shared insight is that corporate relationships are inherently incomplete, and no contract can anticipate every future conflict. This is why states establish business courts: to enforce fiduciary duties and resolve disputes, while enabling efficient risk-taking. But something else is at work here: gatekeeping claims and claim dismissal. Join us as we unpack the unique role of specialized business courts, stepping in where shareholder governance ends. We also discuss the Business Judgment Rule, the Delaware Supreme Court’s decision in Tornetta v. Musk, and more!
Key Points From This Episode:
- An introduction to our guests and what sparked their shared focus on specialized corporate courts.
- Two reasons for any state to establish a corporate court.
- Why a corporate relationship can be thought of as an incomplete contract.
- How a specialized business court holds unique authority as a third-party participant.
- Why shareholders should handle mismanagement on their own, and courts should handle self-dealing cases.
- The Business Judgment Rule establishes whether shareholders or courts should intervene.
- Why different specialized courts are necessary.
- Safeguards to protect too much power being concentrated in the hands of managers.
- Whether or not federal preemption is likely or beneficial.
- Thoughts on Delaware Supreme Court decision in Tornetta v. Musk.
Links Mentioned in Today’s Episode:
Zohar Goshen
Zohar Goshen on LinkedIn
Zohar Goshen on X
Tomer Stein
Tomer Stein on LinkedIn
Tomer Stein on X
Leaving Delaware? The Essential Role of Specialized Corporate Courts
Fordham University School of Law Corporate Law Center
