A Theory of Substantive Standards of Review: The Case of Corporate Law

58 Pages Posted: 28 Aug 2023

See all articles by Tomer Stein

Tomer Stein

University of Tennessee College of Law

Date Written: August 27, 2023

Abstract

In Students for Fair Admissions, Inc. v. President and Fellows of Harvard College, the Supreme Court limited deference to universities. In West Virginia v. EPA, the Court reduced its deference to administrative agencies. In Coster v. UIP Cos., Inc., the Delaware Supreme Court limited deference to boards of directors, proclaimed a new standard of review, and then retracted the new standard of review (maybe). Common to these constitutional, administrative, and corporate law cases is unpredictability, uncertainty, and inconsistency in the use and application of substantive standards of review. This doctrinal chaos is explicitly acknowledged by the very judges that formulate these standards—and these acknowledgments are evenly spread across the political map: Justice Sotomayor described constitutional standards of review as “perplexing;” Delaware’s Chancellor McCormick proclaimed that “the struggle is real” in response to a development in corporate standards of review; and Justice Scalia attested that constitutional law’s tiers of scrutiny are “no more scientific than their names suggests.”

This Article develops a comprehensive theory that fixes our law of substantive standards of review. Specifically, it shows that the courts have created a haphazard conflation of standards of review, types of scrutiny, and kinds of deference. This conflation has resulted in doctrines that erroneously categorize standards of review on the basis of degree rather than kind. To fix this disarray, the theory offered by this Article looks under the hood of the substantive standards of review and provides a full conceptual and normative guide for the administration of claim-of-fact, scienter, and action scrutiny, and the corresponding epistemic, moral, and institutional deference. This Article further models the afore as either independent or auxiliary standards of review and introduces the widespread but unacknowledged use of scrutiny modifiers.

In transitioning from theory to legal and policy implications, the Article confines its discussion to corporate law. The justification for this methodological move is twofold. First, it provides an exhaustive account of all corporate standards of review, which, in turn, establishes the profound importance and utility of this Article’s theory. Second, it sets the framework for constitutional and administrative law scholars and practitioners to fully develop the doctrinal changes needed in those areas.

Keywords: standards of review, corporate law, constitutional law, administrative law

Suggested Citation

Stein, Tomer, A Theory of Substantive Standards of Review: The Case of Corporate Law (August 27, 2023). University of Tennessee Legal Studies Research Paper, Available at SSRN: https://ssrn.com/abstract=4553450 or http://dx.doi.org/10.2139/ssrn.4553450

Tomer Stein (Contact Author)

University of Tennessee College of Law ( email )

1505 West Cumberland Avenue
Knoxville, TN 37996
United States

HOME PAGE: http://https://law.utk.edu/directory/tomer-s-stein/

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