Asking the Jewish Question: The Import of Jewish History to Corporate Law

Authors

Dalia T. Mitchell, The George Washington University

First Page

1293

Abstract

This paper brings Jewish American history to bear upon the analysis of three major milestones in the development of corporate law’s fiduciary duties jurisprudence: Meinhard v. Salmon (N.Y. 1928), Bayer v. Beran (N.Y. 1944), and Revlon, Inc. v. MacAndrews & Forbes Holdings, Inc. (Del. 1986). Bringing to the fore the background of the Jewish litigants and the Jewish lawyers who represented them, I use Meinhard, Bayer, and Revlon to explore changing cultural attitudes toward Jewish Americans’ participation in corporate America (as investors, managers, or their legal representatives). I argue that these cases demonstrate how our ideas about the appropriate purpose of corporations and the duties of those who manage them, at least in part, were shaped by the judiciary’s commitment to combating the corporate elite’s exclusionary practices. Viewed through the lenses of Jewish history, Meinhard, a case addressing the duties of a manager toward his co-adventurer, tells the story of first-generation Jewish Americans using business and investment to assimilate into New York society. Then-Chief Judge Benjamin Cardozo, who wrote the majority opinion, offers a scathing rebuttal of the manager’s willingness to forsake his compatriot for the sake of profit. Bayer, explicating the standard of review applicable in cases involving the directors’ duty of loyalty, becomes a narrative about how the midcentury New York courts attempted to support first- and second-generation Jewish American entrepreneurs seeking to become members of the managerial class. I argue that Justice Bernard Shientag, who wrote the opinion, sought to balance boosting entrepreneurial freedom with assurances to individual shareholders, who were typically invested for steady income and who had little control over the affairs of their companies, that their investments would yield profit. Finally, Revlon, a case that symbolizes the end of managerialism and the triumph of the shareholder wealth maximization norm, becomes a narrative about second- and third-generation Jewish Americans (in this case Ronald Perelman, Michael Milken, and Joseph Flom) who turned to the stock market to claim a place for themselves among the corporate elite. The wave of hostile takeovers seeking to unseat the corporate establishment that these newcomers helped bring about drove the Delaware Supreme Court to overhaul directors’ fiduciary duties jurisprudence. Taken together, these cases demonstrate the role litigation has played in facilitating the integration of Jewish entrepreneurs into the ranks of the corporate elite.

Recommended Citation

Dalia T. Mitchell, Asking the Jewish Question: The Import of Jewish History to Corporate Law, 27 Lewis & Clark L. Rev. 1293 (2024).
Available at: https://lawcommons.lclark.edu/lclr/vol27/iss4/10