A Backward- and Forward-Looking Assessment of the Supreme Court’s “Faithless Elector” Cases: Part One in a Two-Part Series

VIKRAM DAVID AMAR

In this first of a two-part series of columns about the U.S. Supreme Court’s recent decision in the “faithless elector” cases, Illinois law dean and professor Vikram David Amar expresses disappointment that the majority opinion—authored by Justice Elena Kagan—and concurring opinion—by Justice Clarence Thomas—are not as well reasoned or careful as they could be. Amar points out some of the ways in which the opinions fall short, noting some of the arguments that merited more discussion, or at least more thorough consideration.

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Murfey v. WHC Ventures, LLC

Docket: 294, 2019

Opinion Date: July 13, 2020

Judge: Karen L. Valihura

Areas of Law: Business Law, Corporate Compliance

Two limited partners demanded the books and records of certain limited partnerships. Most of the documents demanded were produced, but one category of documents remains in dispute: the Schedule K-1s (“K-1s”) attached to the partnerships’ tax returns. Although the limited partners were provided with their own K-1s, the limited partners sought the K-1s of the other limited partners for the purpose of valuing their ownership stake in the partnerships and in order to investigate mismanagement and wrongdoing. The partnerships countered that the K-1s were not necessary and essential to the valuation purpose and there was no credible basis to suspect wrongdoing. The Court of Chancery, based upon its history of interpreting 6 Del. C. section 17- 305 in the same manner as 8 Del. C. section 220, held that the K-1s were subject to the requirement that documents sought be “necessary and essential” to the stated purpose, and found they failed the "necessary and essential" test. The Delaware Supreme Court disagreed, finding that the limited partners were entitled to the K-1s under the terms of the partnership agreements. The Court thus reversed the Court of Chancery and remanded for further proceedings.