Networks of Fairness Review in Corporate Law

Abstract:     
The fairness doctrine in corporate law is rhetorically glorious. Courts speak of scrutinizing transactions tainted by self-dealing for entire fairness, intrinsic fairness, and even inherent fairness. In theory, the doctrine should be a boon to shareholder-plaintiffs, especially as contrasted with corporate law's usual tendency to defer to the business judgment of corporate insiders. But in cases where courts discuss the fairness doctrine, how often have plaintiffs actually won‘ Are their meaningful differences in the three articulations of the doctrine, or are the adjectives fancy verbiage‘ Are some fairness cases more important than others in promulgating doctrine‘ While anecdotes abound, precious little empirical research exists to address these questions.

This Article uses a new tool - network analysis - to perform an empirical study of fairness doctrine as developed by the Delaware Supreme Court and the Delaware Court of Chancery. It creates network maps to represent visually the topology of Delaware's fairness jurisprudence, using actual cases as nodes on graphs and interrelationships among cases as arcs connecting the nodes. These maps, along with metrics that describe the characteristics of the network, provide rich data through which to understand fairness jurisprudence more systematically.

Copyright 2008 San Diego Law Review. Article is reprinted with the permission of the San Diego Law Review.

Keywords: corporate law, network theory, fairness, judicial review

JEL Classifications: K22, K41, K00, G30, G34, C40

Accepted Paper Series