Delaware Loses Another Big Company Over Courts

The nation's largest shopping mall owner said it's leaving Delaware as its state of incorporation, citing concerns of increasingly woke behavior by courts.

Simon Property Group, an S&P 500 company valued at $60 billion, last week said it could no longer rely on Delaware courts, which now allow for "meritless litigation" and "judicial interpretation without a clear statutory bias," Law.com reported.

The move mirrors Elon Musk's decision last year to move multiple companies, including Tesla and SpaceX, out of Delaware.

Delaware was once the gold standard for its corporate legal system.

But major corporations have joined Musk in his warnings that the blue state is simply too woke for any company to domicile there.

Recent press reports indicate corporate giants like Meta, parent of Facebook, and Walmart are preparing to move their domicile from Delaware.

Online player Dropbox quit Delaware recently and Coinbase chief legal officer Paul Grewal warned on X that "Delaware is at serious risk of losing its standing as the leading state of incorporation for American companies."

Billionaire Bill Ackman, CEO of Pershing Square Capital Management, said in an X post in early February that he planned to move his management company out of Delaware to reincorporate in Nevada or Texas.

Several recent rulings have ignited concern about the courts.

Delaware Chancellor Judge Kathaleen McCormick in December ruled that Musk was not eligible for a 2018 compensation package then valued at $56 billion, a package that would be worth over $100 billion in value today.

Musk was not happy with McCormick's ruling and took to X, writing, "Shareholders should control company votes, not judges." The billionaire has urged other companies to leave Delaware for other states.

Some critics said Judge McCormick, a Democrat, was acting to confiscate Musk's legitimate compensation, approved by Tesla shareholders twice, for becoming a critic of the Biden administration and opening X to conservatives.

McCormick suggested Musk's package was too large, but then awarded the law firm which sued over the deal some $345 million for their legal filings. The law firm itself never suffered any damage as a result of Musk's compensation award.

Similarly, in 2023 Fox News settled a libel suit brought by Dominion Voting Systems for an unprecedented $787 million, the largest amount ever known for a defamation case.

Soon after the settlement, Fox News' then legal chief Viet Dinh, slammed the Delaware courts saying the judge in the case had failed to allow the network to offer a standard libel defense, including showing their balanced coverage of the 2020 election to a potential jury.

Delaware Gov. Matt Meyer told Business Insider the state faces a credibility problem but said he would try to lure back companies that leave.

"Any company thinking about leaving, we're actively reaching out, we're talking to them, we're understanding what the issues are and understanding what ways we can do better," Meyer told the outlet. "And for those entities that have already made the decision to leave, we're going to continue to work hard to earn their trust and hopefully to have them come back."