General Assembly Post-Game Wrap-Up/Pre-Game Show: Weds., June 11, 2014

Filed in Delaware by on June 11, 2014

OK, let’s talk about Delaware’s position as the nation’s corporate leader.  Our lofty perch is not based on having ‘better’ lawyers, ‘better’ judges, or having the abiding respect of the corporate community. We’re in this position because we’ve passed laws that enable corporations  to engage in unsavory practices that otherwise would be considered criminal activity. We make it impossible for people to know who are behind straw corporations, or why these shells exist in the first place. We enable the worst kinds of criminal activity, including arms sales, drug-running, and, yes, human trafficking, by enabling corporations to create impossible-to-follow paper trails. The entire political establishment props this up by worshipping at the feet of the Court of Chancery and by placing those who are its most effective defenders in positions of power. It’s no accident that the preponderance of judgeships go to those from the corporate law community . It’s no accident that people like Ed Friel and Jeff Bullock, both from Carper Cyborgenics, have served as Secretaries of State. They’re all in on Delaware’s dirty secret: Our vast revenues generated by Delaware’s corporate hegemony are derived from Delaware’s willingness, no, eagerness, to enact laws that benefit even the worst actors at the expense of, well, people. In Delaware, corporations are not merely people, they have rights superior to people.  You can put suits on these people, and they can be heralded as Delaware’s best, but they are merely well-learned shills and shysters.

Hey, it’s no surprise that Delaware was the state to legalize usury. We were the most experienced when it came to legalizing criminal activity via corporate shell games.

So it was no surprise that HB 327 and HB 328 flew through the House yesterday, it’s what we do. Every year. In June. A package of bills emerges from the Corporate Section of the Delaware Bar every year. Proponents cite them as necessary to continue Delaware’s pre-eminent position in corporate law. But now you know just what kind of stuff is in these bills. Thanks to the ADA, League of Women Voters, and the Delaware Alliance for Community Advancement, for shining a light on Delaware’s dirty secret. Maybe, just maybe, this will start a debate that should have been taking place all along. If you’re late to this discussion, check out yesterday’s post/pre-game.

After a major amendment that was more like several amputations, Pete Schwartzkopf’s bill to substitute the judgment of the General Assembly for that of local elected officials on the issue of taxes passed. In its original form, the bill ‘… makes it clear that a municipality may only impose a tax within its jurisdiction if such tax is expressly authorized by an Act of the Delaware General Assembly’.  Following a substantive amendment, HB 333 now exempts various licensing fees from the ban, provides that the bill grandfathers in previous increases and does not revisit them, and, now here’s where it gets interesting, provides  ‘that (the bill) does not apply to any municipal corporation that obtained a home rule charter prior to June 1, 1966’. Got that? I can only take this to mean that we’ve now created a two-tier systemMunicipalities incorporated prior to 1966 have the collective wisdom to decide for themselves what’s best for their residents, those chartered AFTER 1966 do not.  Sez Speaker Pete. A truly awful bill. Maybe the Senate will deep-six this mess.

Here’s yesterday’s Session Activity Report.

The Senate is scheduled to run an agenda today. Mostly House bills.

Before I move on to committee meetings, allow me to point out that, on June 10, Colin Bonini introduced SB 250, creating a ‘Right to Work’ law in Delaware. Kids, when something like this is introduced on June 10, it’s not legislating, it’s politicking. Look for it on virtually every Rethug campaign brochure (as well as on Bob Venables’) this fall. They think their supporters are stupid. They’re correct.

Looks like we’re back in ‘Escheators Never Win’ territory. Two bills dealing with yet another one of Delaware’s dubious income sources will be considered in today’s Senate Banking Committee meeting. SB 228(Blevins) makes information harder to come by. Or at least codifies the keeping secrets nature of the escheat process. Of course, such secret-keeping is already happening. The bill ‘merely’ ‘codifies the longstanding practice of the Department of Finance and the Secretary of State to hold as confidential the financial information obtained during the course of examinations, settlements, or voluntary self-disclosure agreements that are conducted…’. Seems harmless enough, just not to this skeptic.

SB 215(Lavelle) ‘forbids the State Escheator from paying outside auditors by commission.’ You see what the Rethugs are doing here, kids? They’re trying to cost the state money. First, we’d have to pay more in fees than commissions. Since commissions are paid out merely as a percentage of what’s collected, it’s not costing the state anything to currently pay outside auditors. Oh, and the State would almost certainly collect less. Look, the entire escheat process is yet another of Delaware’s dirty secrets which enables us to keep our personal income tax base artificially low.  Sen. Lavelle: Tell ya what. I’ll support your bill if you support a genuinely progressive income tax structure. Sen. Lavelle? Monsignor?

The Senate Health & Social Services Committee considers SB 241(Marshall), which seeks to address the meltdown of the Office of Chief Medical Examiner by creating an entirely-new operating structure with a series of checks and balances. 45 legislators are sponsoring this bill.

Here’s a good bill. SB 233(Blevins), which:

streamlines the process of mandatory (juvenile) expungements by easing some of the cumbersome requirements currently in place. This change will save the Court time and resources and is in the interest of judicial economy. This change is also in the best interests of the child who may lack the resources, knowledge, and family support to file an expungement petition and obtain a criminal history on their own.

Second, the act modifies the discretionary expungement provisions to allow more children the ability to petition the Court for an expungement. These changes allow the Court to consider an expungement where the child has demonstrated rehabilitation despite multiple youthful indiscretions. These provisions will enable a greater number of deserving youth the ability to move beyond their past and recognizes that most youth mature out of offending behavior.

A perhaps more controversial bill will also be considered in the Senate Judiciary Committee today. SB 235(Ennis)  opens up some, but not all, Family Court proceedings to the public. The synopsis confuses me, as, if I’m reading this right, some so-called public proceedings can be held in private, and some private proceedings can be open to the public. Can a lawyer please translate the following?:

The Bill provides that paternity, divorce, property division and alimony hearings are presumed to be public proceedings and that the Court has discretion to hold the proceedings in private for criteria specifically outlined. The Bill also clarifies that adoption, custody, visitation, third party visitation, termination of parental rights, guardianship, permanent guardianship, and Child Protection Registry hearings are private, except that the Court may open the hearings to the public under a specific criteria.


Greg Lavelle is in favor of less government, except when he’s in favor of more government. To (half-) wit, SB 237.  I don’t oppose the bill, just appreciate the hypocrisy. In today’s Senate Public Safety meeting. As is SB 137(McDowell), which ‘prohibits the possession, sale and manufacture of a firearm undetectable by metal detectors’.  Who could possibly oppose such a bill? Betcha you’ll find out at the committee meeting.

OK, now this is just wrong. The Senate Sunset Committee is meeting today. You know, the committee that shines a light on the operations of state agencies. Wonder what bills they’re considering today…oops, in violation of Senate rules, the committee provides no notice of what they will consider.

For you completists, here’s today’s Senate Committee Meeting schedule. Along with today’s House Committee Meeting schedule.

Yet more tax credits for business start-ups are on the agenda of the House Business Lapdog CommitteeHB 330(Q. Johnson) ‘will allow expanded early stage investment of capital into targeted Delaware businesses, thereby assisting in the creation of jobs’. Basically $500K in state income tax credits. Presumably, as with virtually all other tax breaks like this, with no empirical evaluation as to whether this break makes the state money or costs the state money.

Yet another nominee for Worst Bill of the Year is in today’s House Education Committee meeting. I just love it when the representative from Delaware’s Wealthiest District sponsors something called the, wait for it, Parent Empowerment Education Savings Account Act. Sounds like something enabling indigent parents being able to afford college, but it’s not. Just another Rethuglican scam designed to divert money from public education to give a tax break to parents who choose to send their kids to private schools. They have no shame.

Speaking of which, should HB 293(D. Short) pass, food stamp recipients would be restricted to purchasing only those foods that the Delaware Department of Health & Social Services deems as sufficiently nutritious. You see, food stamp recipients are incapable of making these decisions on their own. Or so think a buncha Rethugs used to stuffing shrimp and fried chicken down their gold-plated gullets at weekly political fundraisers. In today’s House Health & Human Development Committee.

The House Sunset Committee, which does have a posted agenda, considers HB 381(Brady), which requires that appointed members of the Cash Management Policy Board file financial disclosure forms. Something Chip Flowers wants. Along with getting financial institutions to pay for his travel. Uh, Chip, can we talk? The issue isn’t whether people were upset with your travel, the issue is that the Treasurer, aka YOU, couldn’t account for your expenses. It’s unethical for you to force corporations who do business with you to keep you traveling in the manner to which you’ve become accustomed. This isn’t about saving the state money, it’s about an improper alliance between the Treasurer and the banks who receive contracts from his office. I remember former Insurance Commissioner Dave Levinson getting into trouble for something similar. Not sure why an ethically-challenged official like Flowers would do something that would make him look even less ethical, if that’s even possible. But, I digress.

Finally, I’ll be interested in the fate of HB 386 and HB 387, both sponsored by Rep. Kowalko. Why? Because Kowalko chairs the House Energy Committee. I’m sure that when he introduced these bills, he had at least a reasonable expectation that these bills would be assigned to his committee. But they weren’t. Instead, leadership assigned them to Lumpy Carson’s Transportation/Land Use/ and Infrastructure Committee. Why? Because the Speaker can assign a bill wherever he wants. So let’s see whether these bills get buried or not. If Pete wants ’em buried, they’ll stay buried. If not the best exercise of raw power, it’s an exercise of raw power.



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  1. Aint's Taking it Any More says:

    Disagree with you on the better lawyers, better judges. The level of civility amongst Delaware lawyers and judges is unparalleled in any other state that I am aware of. That civility promotes issue driven advocacy. Conversely, incivility promotes anger driven advocacy. Anger driven advocacy routinely produces bad law.

    It may not count for much here but the US Chamber of Commerce routinely ranks the Delaware judiciary as the best in the country. While their bend on quality is measured by favorable corporate treatment under Delaware law, the analysis is noteworthy because, aside from Delaware’s favorable law, they look at the impartiality, reasonableness, speed and quality of judicial decision making. Delaware’s judiciary has been ranked best for, I believe, as long as the COC has done the evaluations.

    As far as 328 and 328, they are largely mirror image legislation intended to address LLCs and limited partnerships (kissing cousins in the alternate entity world). For the most part they are technical changes.

    The more controversial piece of corporate legislation is Townsend’s fee shifting proposal in 236. The COC is screaming bloody murder about it. It vitiates a recent court decision allowing a company’s bylaw to requiring that the losing party in a shareholder lawsuit pay legal expenses. Absent Townsend’s legislation passing, expect to see a dramatic damper on shareholder challenges to fairness, sale price, fiduciary breaches, and accountability. Who gives a shit about this? Absent shareholder oversight, the right to challenge corporate management, and the ability to recover their fees for doing so, there will be little to throttle back management excesses. One way or another, we all pay for that.

  2. Civility. Everyone can AFFORD to be civil when they’re all making loads o’ bucks.

    Yes, the lawyerly parties by and large are civil. Doesn’t mean that they’re not creating a false impression as to why we’re the so-called corporate leader. Civility is merely a byproduct of a system that enriches the chosen insiders, not the cause of that system.

    Everyone knows their place in this corporate Kabuki theatre, so there’s need to be…unseemly.

  3. pandora says:

    Well, if the US Chamber of Commerce says so…

  4. Aint's Taking it Any More says:

    Don’t know of any other group, aside from the COC, that does a national rating of state judiciaries. Is there another?

  5. cassandra m says:

    food stamp recipients would be restricted to purchasing only those foods that the Delaware Department of Health & Social Services deems as sufficiently nutritious. You see, food stamp recipients are incapable of making these decisions on their own.

    Meanwhile, back on Capital Hill, Short’s brethren are trying to eliminate the new nutritional standards for school lunches:

    Alabama Republican Rep. Robert Aderholt, who chairs the subcommittee that decides how much money the school nutrition program gets each year, is not a fan of the Healthy Hunger-Free Kids Act, as it stands. “This is where the heavy hand of the government is coming down and trying to dictate to local school systems,” he said at a meeting of the House Appropriations Committee in May.

    They just don’t care about whether or not people are fed — they just care about feeding their own cynicism.

  6. radef16 says:

    “As is SB 137(McDowell), which ‘prohibits the possession, sale and manufacture of a firearm undetectable by metal detectors’. Who could possibly oppose such a bill? ”

    While the title is appealing, this is a poorly written, ill conceived and basically worthless bill. There already is a Federal law that bans undetectable firearms. This law is well written and unambiguous. Why even bother with a state law when the entire expense of prosecution & incarceration can be shifted over to the Feds? They’re better at getting convictions anyway.

    On the other hand, SB137 if passed, would be nearly unenforceable due to both language & technical ambiguities. Furthermore (probably to your liking), it would
    ban, in totality, many commonly available ammunition magazines simply because they are largely made of plastic. Magazines, both plastic & metal, are not a restricted, controlled or dangerous commodity. I would bet the the new Cabela’s store sells several hundred plastic ones per week. How this could prevent a crime is a total loss to anyone with a brain as they would be of no use without the gun and bullets to go with them.

    Regardless of the issue, I would hope that you put considerably more effort into analyzing bills before you comment on them.

  7. Aint's Taking it Any More says:


    Is it your point that the world of corporate hells would disappear if Delaware suddenly got a conscious? No more arms dealers, no more drug dealers, no more tax schemers, no more unsavory practices that otherwise would be considered criminal activity, no more shell corporations.

    Is that sometimes bad people do bad things and Delaware wipes their ass by allowing them incorporate here using as many C corps, S corps, LLC’s as their sniveling lawyers can duct tape together?

    Or is that corporations are inherently evil?

    Do tell – what’s your alternate?

  8. Neither, actually. I just want people who read this blog to understand the real Delaware, at least as I see it.

    We hear about Delaware’s role as the corporate capital of the United States, we hear about something called ‘escheat’. But the context behind these items is rarely explored, nor do the so-called Powers That Be want them explored. It’s basically ‘settled’ policy. “Nothing to see here.”

    Which is why I like to explore them.

    Bottom line: We pay a pretty low income tax, especially Delaware’s wealthiest, by developing these less-than-savory other revenue streams.

    I hope that people may, at some point, act intelligently and progressively, once they understand what’s hiding beneath the rocks.

    This screed wasn’t even planned. It was only when I read the statements from the ADA, the League of Women Voters, and other groups, that I wrote what I did.

    One reason I like to do the Pre-Game/Post-Game is because a new piece of legislation may lead me in a direction that wasn’t on my radar screen. That happened on Tuesday. I learn new stuff every day. When that stops, I’ll stop writing.

  9. Aint's Taking it Any More says:


    What did you mean by: But the context behind these items is rarely explored, nor do the so-called Powers That Be want them explored.

    Trying to understand

  10. Steve Newton says:

    The level of civility amongst Delaware lawyers and judges is unparalleled in any other state that I am aware of. That civility promotes issue driven advocacy.

    In Delaware that “civility” has produced an Attorney General’s office that issues secret policy rulings to other state agencies; sentencing recommendations of no prison time for confessed child rapists; among the longest pre-trial confinement periods for poor defendants; coerced plea bargains as a norm for poor defendants, usually before they see their own attorneys; and a new ruling on social media culpability that actually places the burden of proof on the accused

    If we were to leave the public sector we’d discover that “civility” exists primarily because Delaware attorneys (1) pay heavily into campaign coffers to keep from being subject to any reasonable oversight; (2) secret courts that, having been ruled unconstitutional, our judiciary is now touting its way to flout the law and re-establish them; (3) a complete corporate penetration (and, yes, the language is intentional) of public education; (4) virtual immunity from prosecution for major corporations for dumping PCBs and other pollutants into our waterways . . .

    issue driven advocacy? I’ll stop laughing if you can actually show where it has existed and been pushed by members of the Delaware bar.

  11. The context behind the quasi-religious worship of our great corporate legal structure is that the laws are designed to enable some real bad actors to avoid the disinfectant of sunshine. That’s why they incorporate here, and not elsewhere. Aided and abetted by many of Delaware’s most prominent citizens, who never mention that context.

  12. Steve Newton says:

    And, yes, the answer IS to start dismantling the corporate state, which is not only possible but has the potential of creating a new dynamic in both National and State politics by creating a new alliance that will invalidate the current “left vs right” standoff.


  13. Aint's Taking it Any More says:

    Once again you’re clueless but that doesn’t stop you from preaching your own special brand of quasi-intellectual shit. Done here.

  14. John Manifold says:

    Don’t want to get entangled in the ensuing pie fight, but aint’s initial point well explains the purpose of Sen. Townsend’s bill. It’s to prevent the trend described in this article:

    from infecting publicly-traded corporations based in Delaware.