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The rules, known as "loser pays" or fee-shifting bylaws,
became a front-burner issue in May when the Delaware Supreme
Court said companies could adopt them to curtail investor
litigation.
The ruling upends the standard "American rule" of U.S.
litigation in which each party bears their own legal costs.
Fee-shifting bylaws might dramatically change investor
litigation. They raise the prospect that a shareholder with an
investment of a few thousand dollars could sue over executive
compensation or a merger price, lose and end up owing the
company millions of dollars to cover legal costs.
The issue caught Delaware lawmakers between the interests of the
state's legal industry, which often litigates investor lawsuits,
and big business groups that saw the bylaws as a way to cut
potentially meritless lawsuits.
Corporations flock to charter businesses in the state and fees
associated with incorporating those businesses make up as much
as 40 percent of Delaware's general budget revenue.
On Wednesday, the Delaware Senate adopted a resolution to
continue examining the issue, according to Senator Bryan
Townsend. He had sponsored the bill to bar fee-shifting which
had been pulled from the Senate's agenda earlier this month.
It's unclear if any corporations have adopted the bylaws since
the May 8 Delaware Supreme Court ruling in the case involving
ATP Tour Inc, which oversees men's professional tennis.
(Reporting by Tom Hals in Wilmington, Delaware; Editing by
Stephen Coates)
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