Delaware's Fiduciary Imagination: Going-Privates and Lord Eldon's Reprise

Abstract

What does it mean to be a fiduciary, and does it really matter whether the law labels a person a fiduciary or not? Until the late twentieth century Delaware corporate law could have given a singular, coherent answer to these questions; an answer that bore the deep imprint of fiduciary obligation fashioned in England in the early 19th century. Today, to its detriment, it is no longer able to provide clear answers to these questions. Through a close reading of Delaware’s early corporate fiduciary law and its contemporary going private case law, this article shows how late 20th century Delaware corporate law comingled, and then replaced, the traditional conception of what it means to be a fiduciary—which orbited the transfer and exercise of power (the power/undertaking conception)—with a conception which is power-blind and focused only on the influence and superiority that one person has over a more vulnerable other (the influence conception). The article tracks the accidental and unnoticed evolution of this conceptual shift and shows how it has altered the structure and source of Delaware fiduciary obligation, how it has significantly expanded the potential extent of fiduciary obligation, and how it has expanded the potential beneficiaries of such obligation. Delaware’s modern tool kit—including “the Duty of Loyalty”—as well as several modern fiduciary questions, uncertainties and anomalies are, the article argues, the product of this surreptitious 20th century appropriation of the conception of the “fiduciary”; without it, they would not exist.