Justice Jack B. Jacobs of the Delaware Supreme Court depicted a complex patchwork of sometimes contrary legal mandates when he delivered the 15th annual Justice William J. Brennan Jr. Lecture on State Courts and Social Justice, titled “The Reach of State Corporate Law Beyond State Borders: Reflections Upon Federalism.”
Theoretically, Jacobs said, the United States federal system is made up of 50 states, each with its own distinct set of laws, and an overriding layer of federal law operates independently of individual state law. “But as with much in life,” he said, “the reality is more complex than the theory. And that’s particularly true in the case of corporate law, because in that arena one state’s corporate law will often acquire an extraterritorial reach that’s at odds with the theory.”
Jacobs traced the history of U.S. corporate law, which was virtually all local, he said, until the 20th century. The onset of the Great Depression prompted the federal government to enact federal laws dealing with corporations, which had grown increasingly multistate, leading to potential jurisdictional conflicts. While the state and federal layers of corporate law were supposed to operate independently, Jacobs said, with states establishing their own individual legal oversight, reality has not always reflected the model.
Watch the full recording of this event (1 hr, 17 min):