Opposing attorneys in Delaware’s Court of Chancery typically refer to each other as “my friend at the other table” during oral arguments.
So J. Travis Laster, who spent years litigating in that mild-mannered world, caused a stir when, in one of his first orders after joining the court as a judge, he kicked several attorneys off a case.
That was in 2010, when he removed three law firms as lead counsel from a shareholder lawsuit because, he said, they hadn’t adequately pursued the case for corporate misdeeds before proposing a settlement. More than a dozen years later, Laster—now in the middle of his second 12-year term as a vice chancellor—remains focused on getting all the details right, no matter whose feathers are ruffled.
When a company rescheduled a settlement hearing at the last minute in April, Laster ordered its attorneys to come to the courthouse anyway and hold up signs for any shareholder who missed the calendar change.
Laster, 53, brings that exacting style to billion-dollar M&A lawsuits and other high-profile corporate fights at the Chancery Court. The judge and his six colleagues, who hear cases without juries, hand down decisions that can reshape the law around the blockbuster fiduciary breach cases that dominate the court’s docket.
The shareholder lawsuits, often brought by pension funds, generally center on allegations of wrongdoing by corporate leaders. Over the past several years, perhaps the most important category has involved so-called Caremark claims, named after the court’s 1996 ruling in In re Caremark International Inc. Derivative Litigation.
Laster has issued groundbreaking decisions in the last year in shareholder litigation involving claims that C-suite executives and boards of directors ignored mission-critical risks. His rulings against top brass at
“Everything we write goes out to corporate America, effectively,” Laster said. “And, you know, the line between a decision being accurate and a decision being idiotic is, unfortunately, a quite narrow one.”
In the McDonald’s case, Laster extended oversight duties from board members to company executives. His AmerisourceBergen and Walmart rulings laid out a novel way of calculating the statute of limitations in shareholder lawsuits accusing officers or directors of ignoring red flags over time.
The judge is now presiding over investor litigation blaming the leadership of Fox News, including
Laster, a vegan who studies Buddhism, drills to the heart of a case, according to Charles Elson, founding director of the John L. Weinberg Center for Corporate Governance at the University of Delaware.
“He gets to the right result and uses the law correctly,” Elson said. “He’s tough. He expects a lot from others, but he’s very fair.”
Laster acknowledges the criticism he hears from court watchers who say he goes out of his way to rewrite the law, but it doesn’t trouble him.
“Totally legitimate questions,” Laster said. “Reasonable minds can disagree.”
‘Good Cases’
Two former law clerks who spoke on condition of anonymity to describe their time working in Laster’s Wilmington, Del., chambers said it was more intellectually grueling than anything they’ve since done in legal practice. The judge, they said, had a blunt but constructive way of shredding their writing.
After his clerks finish working for him, Laster likes to hand out a token of his appreciation: a gag T-shirt, often in a loud color.
The souvenirs sometimes feature the faces of legal scholars notable only in Delaware. One, in hot pink, said, “I did it sua sponte,” a Latin legal term for a court acting on its own initiative—something for which Laster gets his fair share of criticism.
The dorky jokes reflect the judge’s reputation as a monkish scholar of Delaware law who expects that attorneys come to his courtroom highly prepared—even if only to see him make quick work of their arguments.
In court this year, Laster has asked, “What are we doing here?” Or, when a case resembled one that was recently dismissed, “What makes yours different?” He rejected one complaint from the bench as “word salad” and “sloppy.”
Writing about the lawyers he removed from the 2010 case, Laster said, “They literally did nothing,” noting “the absence of any activity on the docket” showing any kind of evidence-taking or legal research.
Laster can come down hard on plaintiffs’ attorneys who file fiduciary breach claims without first demanding corporate records—through a separate lawsuit if necessary, according to Gregory Del Gaizo, a partner at Robbins LLP.
That emphasis, which Laster shares with several of his more reserved colleagues, has probably improved the quality of shareholder cases being brought, Del Gaizo said.
“He cares about good cases being in Delaware,” Del Gaizo said.
Transformational Rulings
Laster said his judicial philosophy is rooted in his clerkship with Jane Richards Roth, a judge on the US Court of Appeals for the Third Circuit. Her work for the US State Department in Iran in the late 1950s overlapped with his parents’ time teaching at the Tehran American School.
After his clerkship, Laster joined the Delaware law firm founded by Roth’s grandfather, Richards, Layton & Finger PA. He eventually co-founded his own firm and was appointed to the Chancery Court in 2009.
When Laster started as a corporate lawyer in the 1990s, Delaware law was being shaped by hostile takeovers pitting aggressive buyout firms against corporate boards. These days, the court sees fewer of those heavyweight battles. Instead, it’s consumed by shareholder lawsuits, like Caremark cases, that target corporate leaders.
Laster’s recent first-of-their-kind rulings each represented a significant mile marker in the transformation of Caremark cases from long-shot lawsuits that were barely worth bringing into a staple of Delaware’s corporate accountability regime.
For years, judges ruling on Caremark claims—which they almost always threw out—would repeat the axiom that they were “the most difficult theory in corporation law upon which a plaintiff might hope to win a judgment.” Laster isn’t solely responsible for their emergence as a more viable option for shareholders, but his rulings in the past few months have pushed the law firmly toward plaintiffs.
After each decision, criticism of the judge has echoed a recurring theme: that he went out of his way to issue potentially transformative rulings on disputes that could have been handled more straightforwardly.
His novel opinion expanding officer liability, for example, kept the McDonald’s case alive for only about a month before he tossed it on mundane procedural grounds, finding that the pension funds leading the lawsuit had to demand an internal board investigation first.
In the AmerisourceBergen case, the gap between Laster’s statute of limitations ruling and his decision to dismiss the case on the same routine grounds was even smaller: only a week. Even though those cases were ultimately thrown out, the initial rulings set new legal rules that widen the path forward for investors bringing Caremark claims.
The Walmart litigation is ongoing after Laster said—again in a separate ruling—that it’s plausible the company’s board “consciously condoned illegality.” Walmart didn’t respond to a request for comment on the decision.
Laster said he doesn’t subscribe to the idea of “minimalist judging.” The issues raised by those cases kept coming up, he said, and needed to be addressed.
“Once something clusters like that,” Laster said, he begins to realize an area of law could use more clarity. “If next year, in the course of two months I see defendants in, you know, three or four different cases making the exact same argument, it’s going to flag that in my mind,” he said.
Laster learned early to look past the dense formalities of corporate litigation, spot what a case really concerns, and make sure the law keeps up with the times, Roth said.
“You’ve got to make your law current to the needs,” she said. “That’s good judging.”
‘Classic Travis’
Laster’s analysis in Caremark cases simplifies the prevailing legal standards for the investors bringing those lawsuits, according to Carliss Chatman, a professor of corporate law at the Washington and Lee University School of Law.
“The cases tend to be more solid because we’ve got clearer rules,” Chatman said. Though critics worry Laster’s decisions will invite frivolous or borderline cases, the floodgates haven’t opened, she said. “It just benefits everyone to have clarity.”
Some attorneys who have appeared before Laster said his rulings in the McDonald’s, Walmart, and AmerisourceBergen lawsuits—and others—show him imposing his idea of fairness in cases that called for more modest decisions.
The complaints against the boards of Walmart and AmerisourceBergen concerned their oversight of drug prescription practices that allegedly helped fuel the nationwide opioid epidemic. The suit by McDonald’s investors accused its senior leaders of ignoring red flags about pervasive sexual harassment in the workplace.
In the McDonald’s case, Laster “clearly wanted to make pronouncements about the law, clear up doctrinal issues, perhaps send a warning shot,” said Larry Hamermesh, an emeritus professor at the Widener University Delaware Law School.
“Some lawyers I’ve spoken to find such arguably superfluous rulings helpful in revealing the court’s thinking and reinforcing advice to clients,” Hamermesh said. “Others don’t think that’s necessarily what a judge’s job is.”
Elson said Laster struck the right balance.
“He got what happened there, the failure in culture, and he got the right result, and he moved the law a bit down the field,” he said. “Classic Travis.”
Shifting Landscape
Perhaps Laster’s biggest frustration is the court’s ballooning workload. Chancery Court judges just don’t have time to write full opinions in every case when they’re facing litigation tidal waves like a “SPAC apocalypse” earlier this year, Laster said from the bench in March, referring to publicly traded shell entities known as special purpose acquisition companies.
The caseload threatens to undermine Delaware’s high level of judicial decision-making, Laster said. He mentions the problem publicly, he said, to enlist the help of attorneys, who are officers of the court as well as advocates for their clients. He hopes what they hear is, “Please don’t make stupid arguments that I have to deal with. Triage these motions, triage these theories.”
“Part of what I’m trying to do is remind them of that—that they’re not just supposed to be throwing something at the wall because it might help their client,” Laster said. “They’re supposed to be thinking, ‘How do we get to a just result?’”
He points to quieter cases as the best examples of the fundamental fairness that the country’s best-known court of equity is supposed to embody.
One is a 2021 decision by Vice Chancellor Morgan T. Zurn in a dispute involving a request for ivermectin, an ineffective Covid-19 treatment. While courts nationwide were struggling with similar cases, Zurn fast-tracked proceedings and produced a detailed ruling that said a hospital had no duty to offer the treatment because it didn’t meet the standard of care.
Laster also cites his own 2016 opinion in favor of a part-time cleaner at a luxury hotel a couple of blocks away from the Wilmington courthouse. After she challenged a payday loan company over an extremely high-interest debt she couldn’t repay, Laster found the loan agreement unenforceable.
“We’re not just here for these billion-dollar mergers and fights between millionaires and billionaires,” Laster said. “What we’re here for is to address cases of inequity.”
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