WILMINGTON, Del. (Reuters) - As chief justice of Delaware’s Supreme Court, Leo Strine has decided disputes affecting powerful U.S. companies and investors, but his departing thoughts were reserved for some unheralded participants in corporate America: workers.
In an interview ahead of his retirement announcement on Monday, Strine urged large investment funds to pressure U.S. corporations to stop funding political causes and advocate for labor.
“No one invests their money so that these corporations can spend it on politics. No one,” said Strine in an interview last week. “It’s unaccountable and it’s wrong.”
Because the state is home to most publicly traded companies, the Delaware courts are the most influential judiciary in the United States for business law, and Strine spent two decades there as a judge, including the last five as chief justice.
His influence has been far reaching. Strine, 55, did not disclose his post-retirement plans although he previously worked as a lawyer in private practice, taught at law schools and wrote scholarly legal articles. Wherever he lands, he is likely to continue to be an important voice in the law.
During a rare major media interview in his Wilmington, Delaware office, Strine called upon big managers of 401(k) retirement account money such as Fidelity and Vanguard, who are frequently the biggest investors in major U.S. companies, to focus more on workers’ welfare.
Vanguard and Fidelity declined to comment.
He said the big investment funds wrongly tolerate corporate political spending, which companies use to undermine federal worker protections and environmental laws.
Strine said it would be an “evolutionary step” for companies to have a director protecting the interests of the workforce and he supported of Massachusetts Senator Elizabeth Warren’s bill to expand corporate directors’ purview to include labor.
The chief justice brushed aside criticism that Delaware court rulings have made it tougher for investors to bring cases challenging board decisions.
Those rulings helped end a flood of shareholder class actions against merger deals. The suits produced fees for lawyers who brought the cases but rarely resulted in money for investors. Strine called the cases “an outrage against American stockholders and American workers.”
He criticized using mandatory arbitration as a way to further reduce shareholder litigation, an idea that has gained ground in academic circles.
Arbitration would deny companies and investors lengthy written opinions, a specialty of Delaware courts, that help improve corporate governance.
“To relegate those kinds of things to an arbitration proceeding, in my view is fundamentally inconsistent with the historical promise of our corporate law. It is not our brand,” he said.
Reporting by Tom Hals in Wilmington, Delaware; Editing by Cynthia Osterman
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