VantagePoint Venture Partners 1996 v. Examen, Inc.
871 A.2d 1108 (Del. 2005)

  • Examen was a Delaware corporation that did the majority of their business in California. They wanted to merge with another corporation called Reed Elsevier. This required shareholder approval. One of the shareholders, VantagePoint, opposed the merger.
    • There was a difference in how the votes would be counted under Delaware law versus California law. VantagePoint had enough shares to veto the merger under the California standard, but not under the Delaware standard.
  • Examen sued in order to determine whose law should apply.
    • Delaware followed the internal affairs doctrine, which says that the law of a State of incorporation should govern any disputes regarding that corporations’ internal affairs.
    • California (Cal. Corp. Code §2115) chooses to exercise power over corporations that are ‘psuedo-foreign’ because they conduct most of their activities or have a majority of their shareholders in the State, but are incorporated in another State.
  • The Trial Court found for Examen and said Delaware law should apply. VantagePoint appealed.
  • The Delaware Supreme Court affirmed.
    • The Delaware Supreme Court found that internal affairs doctrine applied because the issue about voting and mergers clearly involved the relationship between a corporation and its shareholders. Therefore, it was an ‘internal affair’.
    • The Court found that the internal affairs doctrine was designed to meet the constitutionality of the Commerce Clause. Therefore, it Delaware’s law was constitutional, and California’s was not.