Delaware Chancery Court Chief Judge William B. Chandler III, who oversaw challenges to the Walt Disney Co. (DIS) and Hewlett-Packard Co. (HPQ) boards as head of one of the most important U.S. business litigation courts, is stepping down.
Chandler, 60, a former law professor, has led the influential five-member court since 1997 and most recently ruled on Air Products & Chemicals Inc. (APD)’s hostile $5 billion bid for Airgas Inc. (ARG)
“I’ve served for 25 years and it’s the right time for me to take on new opportunities and new challenges -- and it’s the right moment for someone else to lead and steer this court,” Chandler said in a phone interview today. Governor Jack Markell’s office said he is retiring effective June 17.
The Delaware Chancery Court, founded in 1792, has become a top forum for litigating business disputes because more than 60 percent of Fortune 500 companies are incorporated in the state, according to legal experts such as University of Pennsylvania law professor Jill Fisch. Companies incorporate in Delaware to take advantage of laws that give their directors wide latitude and to gain access to the chancery court, which provides fast- track trials that are heard strictly by sophisticated judges.
No replacement has yet been announced for Chandler, a resident of rural Sussex County in southern Delaware.
With Chandler’s departure, Judge Leo Strine becomes the favorite to take over as chief judge, said Charles Elson, director of the University of Delaware’s Weinberg Center for Corporate Governance. Strine, appointed in 1998, now is the court’s most senior judge, Elson said in an interview. He must be nominated by Markell, a Democrat, to fill Chandler’s post and be approved by state legislators.
Strine served as counsel to Tom Carper, a Democrat who served as Delaware’s governor from 1992 until 2001. Carper is now one of Delaware’s two senators.
Three Delaware lawyers already have expressed an interest in filling Chandler’s seat, according to two people familiar with the matter. The judgeship is based in Georgetown, Delaware, located about 30 miles from the state capital in Dover.
Sam Glasscock III, the current chancery court master based in Georgetown, has shown an interest in Chandler’s seat, the people familiar said. Glasscock said in an interview today it was “flattering” to hear people had suggested him as a candidate for Chandler’s seat and he’d “seriously consider” applying for the judgeship.
Superior Court Judge Mary M. Johnston, based in Wilmington, also has expressed an interest in succeeding Chandler as the Chancery Court judge in Georgetown, the people said. Johnston, who owns a home in Sussex County, applied for a 2009 vacancy on the court filled by J. Travis Laster. Johnston didn’t return a call seeking comment today.
Kevin Brady, a Wilmington-based litigator who handles chancery court cases, also has expressed an interest in the opening, the people said. Brady, who owns a home in the Sussex County vacation community of Lewes, declined to comment on whether he’ll apply for Chandler’s seat.
Before joining the court, Chandler taught for two years at the University of Alabama law school, was an associate with the Wilmington, Delaware, firm Morris, Nichols, Arsht & Tunnell, and was legal counsel to former Delaware Governor Pete du Pont.
Chandler was a Delaware Superior Court judge from 1985 to 1989, when he was appointed to the chancery court. He was named chief judge eight years later.
“It’s going to be nearly impossible to replace him,” Elson said. “He leaves behind a tremendous legacy. He was well- respected across the spectrum in the financial community.”
Chandler’s leadership has burnished the chancery court’s reputation and “made it the envy of court systems around the country and around the world,” said Francis Pileggi, a Wilmington-based lawyer who writes a blog about Delaware corporate and commercial litigation.
“His tenure has made it the standard by which other business courts are measured,” Pileggi said in an e-mailed statement.
Besides Chandler, Strine and Laster, the court’s other judges include Donald F. Parsons Jr. who, with Laster, sits in Wilmington, and John W. Noble, who is stationed in Dover, the state’s capital.
Closely Watched Cases
Chandler has handled cases closely watched by investors who frequently have millions riding on his decision. In the Hewlett- Packard case, ousted director Walter Hewlett claimed information about the Compaq deal was withheld from shareholders. In 2002, Chandler concluded that the company didn’t mislead investors, clearing the way for the $18.5 billion merger.
In the Disney case, shareholders contended the board violated its duties by approving severance for Michael Ovitz. Chandler ruled in 2006 that directors properly oversaw the firing and that Ovitz’s $140 million package wasn’t a waste of corporate assets.
Air Products sued in Delaware after Airgas used a so-called poison pill defense to block a hostile takeover. In February, Chandler ruled that the pill, designed to make the acquisition prohibitively expensive, was properly employed against Air Products’ “low-ball bid.”
“I’ve had a great run,” Chandler said. “I’m really excited about the possibilities in the private sector with corporate law and corporate governance issues.”
Chandler and his wife, Gayle, have two children, Will and Melody, both graduates of the University of Delaware. Chandler also studied there as an undergraduate and earned law degrees from the University of South Carolina and Yale Law School, according to his official biography.
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