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Business Crimes Hotline

By ljnstaff | Law Journal Newsletters |
April 02, 2015

DELAWARE

Soulless Corporations Can't Be Witnesses, Judge Rules

The U.S. Supreme Court may treat corporations like people when it comes to making political donations, but there's at least one place where only a human being will do: a Delaware witness stand.

On Feb. 27, Vice Chancellor J. Travis Laster of Delaware Chancery Court ruled that an expert witness can't be a corporation and must instead be a “biological person.”

“As earlier generations framed it, a corporation has no soul,” Laster wrote in a footnote to the decision.

The decision is a reminder that even complex deal litigation can force a court to confront the most basic of questions. The opinion came in consolidated shareholder and appraisal litigation stemming from a 2013 take-private transaction involving Dole Food Co. Inc., which was sold for $1.2 billion to the company's founder and CEO, David Murdock.

For a key part of the dispute ' Dole's value at the time of the sale ' defense lawyers for Murdock, Dole and Deutsche Bank AG (which provided some financing for the take-private deal) had called on the investment bank Stifel, Nicolaus & Co. Inc. to serve as an expert witness.

The attempt to use Stifel as an expert didn't sit well with the plaintiffs' lawyers. They objected, arguing that an expert witness has to be a flesh-and-blood human being.

After taking a detailed look at Delaware's rules of evidence, Laster agreed. The judge ruled that a company like Stifel fails multiple requirements to serve as a witness.

“Because of its lack of a body and mind, a corporation only can act through human agents,” Laster wrote. “Lacking a voice, a corporation cannot testify. Lacking ears, it cannot hear. Lacking a mind, it cannot have personal knowledge or a memory to be refreshed. Lacking a conscience, it cannot take an oath or provide an affirmation. And because of its incorporeal nature, it cannot even meet Delaware's statutory requirement that a person taking an oath do so 'with the uplifted hand.'”

While he wouldn't allow the company to serve as an expert, Laster did cut the defendants a partial break. He ruled that their lawyers may substitute Seth Ferguson ' a Stifel managing director who has signed expert reports as an authorized agent of the investment bank ' to testify for the defense. ' Scott Flaherty , ALM

'

DELAWARE

Soulless Corporations Can't Be Witnesses, Judge Rules

The U.S. Supreme Court may treat corporations like people when it comes to making political donations, but there's at least one place where only a human being will do: a Delaware witness stand.

On Feb. 27, Vice Chancellor J. Travis Laster of Delaware Chancery Court ruled that an expert witness can't be a corporation and must instead be a “biological person.”

“As earlier generations framed it, a corporation has no soul,” Laster wrote in a footnote to the decision.

The decision is a reminder that even complex deal litigation can force a court to confront the most basic of questions. The opinion came in consolidated shareholder and appraisal litigation stemming from a 2013 take-private transaction involving Dole Food Co. Inc., which was sold for $1.2 billion to the company's founder and CEO, David Murdock.

For a key part of the dispute ' Dole's value at the time of the sale ' defense lawyers for Murdock, Dole and Deutsche Bank AG (which provided some financing for the take-private deal) had called on the investment bank Stifel, Nicolaus & Co. Inc. to serve as an expert witness.

The attempt to use Stifel as an expert didn't sit well with the plaintiffs' lawyers. They objected, arguing that an expert witness has to be a flesh-and-blood human being.

After taking a detailed look at Delaware's rules of evidence, Laster agreed. The judge ruled that a company like Stifel fails multiple requirements to serve as a witness.

“Because of its lack of a body and mind, a corporation only can act through human agents,” Laster wrote. “Lacking a voice, a corporation cannot testify. Lacking ears, it cannot hear. Lacking a mind, it cannot have personal knowledge or a memory to be refreshed. Lacking a conscience, it cannot take an oath or provide an affirmation. And because of its incorporeal nature, it cannot even meet Delaware's statutory requirement that a person taking an oath do so 'with the uplifted hand.'”

While he wouldn't allow the company to serve as an expert, Laster did cut the defendants a partial break. He ruled that their lawyers may substitute Seth Ferguson ' a Stifel managing director who has signed expert reports as an authorized agent of the investment bank ' to testify for the defense. ' Scott Flaherty , ALM

'

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