Hewlett-Packard Judge Is Known for Balance in Corporate Cases
By Phil Milford
Wilmington, Delaware, April 5 (Bloomberg) -- The fate of Hewlett-Packard Co.'s $18.7 billion buyout of rival Compaq Computer Corp. lies in the hands of a judge who's known for his even-handed approach to disputes between shareholders and corporate officers.
Chancellor William B. Chandler III is the senior judge on the Delaware Chancery Court, which decides lawsuits involving thousands of Delaware-incorporated companies, including half of the Fortune 500. On Sunday in Wilmington, he'll hear Hewlett- Packard's request to dismiss a lawsuit challenging the Compaq acquisition.
``He's highly respected. I think he strikes a very good balance between management prerogative and shareholder prerogative,'' said Charles Elson, a law professor at Stetson College in St. Petersburg, Florida, and director of the Center for Corporate Governance at the University of Delaware.
Chandler has experience with high-profile disputes over corporate transactions, having decided cases involving WorldCom Inc. and Hilton Hotels Corp. A major focus of his 210-year-old court, which traces its history to England's High Court of Chancery, is deciding the fairness of acquisitions in which stockholders seek more money for their shares.
`Respected' Court
``It's the best and most respected business court in the country,'' said Elson.
Chandler and the court's four vice chancellors also rule on derivative complaints, where shareholders sue directors on behalf of the company, alleging mismanagement. There are also more routine cases such as trusts and neighborhood property line disputes.
In one recent highly publicized case, a chancery judge decided last year that Tyson Foods Inc. must complete a $4.7 billion buyout of beef processor IBP Inc. after Tyson backed out of the deal.
Elson describes Chandler as ``thoughtful, polite and intelligent'' and says ``I believe he'll do a very fair job.''
``He's an excellent judge, very hard-working,'' said corporate lawyer Stephen Radin of Weil, Gotshal & Manges in New York, who shares Elson's views of Chandler's abilities.
``I think he strikes an appropriate balance'' between the interests of management and shareholders, said Radin, who appears often in Chancery Court.
Rural Roots
Chandler, a husband and father of two who turns 51 this year, has tried to stay close to his roots in rural Sussex County, where chickens outnumber people by a wide margin. In 1997, he told an interviewer that he declined a federal judgeship because he didn't want to move his family to Wilmington, the state's largest city.
Chandler still lives in Dagsboro, Delaware, the tiny town where he grew up.
He hears many of his cases in the Sussex County Courthouse, often using a videophone to communicate with out-of-town litigants appearing in a Wilmington courtroom.
Chandler, a Republican, earned a bachelor's degree from the University of Delaware as a philosophy and political science major and holds law degrees from the University of South Carolina and Yale University.
Admitted to the bar in 1976, he served as a law clerk for a federal judge in Wilmington and worked as a law professor at the University of Alabama from 1979 to 1981 teaching about the legislative process, commercial law and legal remedies. He then returned to Delaware to become legal counsel for then-Governor Pierre S. DuPont IV.
Chandler worked for the law firm of Morris, Nichols, Arsht & Tunnell in Georgetown, Delaware, from 1983 to 1985. He was appointed associate judge of Superior Court for Sussex County, became a vice chancellor of Chancery Court in 1989 and took the post of chancellor for a 12-year-term in 1997.
Sunday Hearing
On Sunday, Chandler is to hear Hewlett-Packard's arguments to dismiss the suit by Walter Hewlett, who leads a family group with 18 percent of the shares that opposes the Compaq purchase. Hewlett, a son of co-founder William Hewlett, claims the Palo Alto, California-based company bought votes from Deutsche Bank to win the proxy fight over the buyout.
While shareholders' votes haven't been officially tallied, Chief Executive Officer Carly Fiorina said March 19 that a ``slim'' majority approved the purchase of Houston-based Compaq.
Hewlett-Packard, which reported $45.2 billion in fiscal 2001 sales, is the world's second-largest computer maker after International Business Machines Corp.
Other Cases
In other contested corporate cases, Chandler has been known to issue two-pronged decisions.
In an opinion in late 2000, Chandler refused to block a $4 billion buyout of Intermedia Communications Inc. by phone-service provider WorldCom -- yet warned that the combined companies could face more than $2 billion in shareholder claims.
WorldCom bought Intermedia last July and settled the shareholder cases for more than $400 million.
In October 2000, Chandler ruled that Hilton Hotels' ``poison pill'' anti-takeover defense was valid and threw out a shareholder's lawsuit.
While an official tally in the Hewlett-Packard proxy contest is expected in the next few weeks, the legal fight over the Compaq purchase may take months to resolve.
``I think the parties are lucky to have someone of his caliber reviewing the case,'' Elson said. |
