Delaware
Delaware Supreme Court upholds reforms to curb ‘DExit’ concerns
This story was produced by Spotlight Delaware as part of a partnership with Delaware Online/The News Journal. For more about Spotlight Delaware, visit www.spotlightdelaware.org.
A Delaware law passed last year in the wake of escalating assaults on the state’s corporate brand shielded powerful company leaders from facing certain lawsuits brought by smaller investors.
What it didn’t do was violate the Delaware Constitution, the state Supreme Court ruled on Friday, Feb. 27.
More than three months after hearing arguments, the justices ruled that the corporate law reform – known as Senate Bill 21 – did not strip Delaware’s prominent Court of Chancery of its constitutional authority to decide when a business deal is fair.
“The General Assembly’s enactment of SB 21 falls within the ‘broad and ample sweep’ of its legislative power,” the justices stated.
The ruling ends a bruising fight in Delaware over when the state’s business court should allow small-time investors to interrogate insider deals struck within companies by founders or other business leaders.
The ruling also averts what could have been an embarrassment for the state’s legal and political establishment had the high court overturned the law.
More than a year ago, Tesla CEO Elon Musk — the world’s richest person — was calling on business leaders to move their companies’ legal homes out of Delaware. Musk had launched the campaign, which became known as “DExit,” after a Delaware Chancery Court judge ruled that he could not accept a multibillion-dollar pay package from Tesla.
Just as the campaign appeared to be gaining a foothold, Gov. Matt Meyer, legislative leaders, and Delaware attorneys who represent corporations threw their collective heft behind SB 21.
They argued then that the legislation amounted to a “course correction” that would bring the state’s business courts back into alignment with rulings from a decade ago. Many also said the bill was needed to pacify executives who were considering following Musk’s calls to move their companies’ legal homes out of Delaware.
In response, a cadre of critics — which included national law professors, pension fund attorneys, and a handful of progressives within the Delaware legislature — derided SB 21 as a “billionaires bill.”
Some also argued that the legislation was the latest in a string of recent changes to Delaware corporate law that have shifted the state away from protecting shareholder rights and toward giving greater deference to powerful executives.
Meyer and others SB 21 supporters rejected those characterizations last year. And on Friday, he celebrated the Supreme Court’s ruling.
In a statement, he said the decision affirms that “Delaware is the gold standard locale for global companies to do business.” He also stated that the number of companies that maintain their legal home in Delaware had increased throughout 2025 despite the DExit campaign.
“In short, SB 21 is working, and I’m glad it will continue to be the law,” Meyer said.
The legal arguments for SB 21
When arguing against SB 21 in front of the Supreme Court last fall, one attorney asserted that the new law removed the Chancery Court’s time-honored and constitutional duty to say what is fair – or equitable – in a business dispute.
The attorney, Gregory Varallo, argued that by removing a shareholders’ ability to sue their company, the law reduced what he described as the immutable power of the Court of Chancery to oversee a “complete system of equity.”
During his arguments, Varallo also offered the justices an unusual acknowledgement, stating that he knew that his stance was unpopular — and that he understood “well the pressures on this court.”
The comments were a likely reference to the consensus of big business groups and the state’s political establishment that believed SB 21 was necessary for Delaware to remain the world’s preeminent corporate domicile.
Following Varallo, Washington, D.C.-based attorney Jonathan C. Bond defended SB 21, in part, by characterizing his opponents arguments as unprecedented. If adopted, he said they would imperil several existing Delaware laws that go back decades.
He also argued that changing the rules of corporate law – as SB 21 did – “is the same as wiping out jurisdiction merely because it makes some plaintiff’s claims harder.”
Also arguing in favor of SB 21 during the hearing was William Savitt, an attorney with the Wachtell, Lipton, Rosen & Katz – among the most prominent corporate law firms in the country.
Last spring, Meyer hired Savitt’s firm to represent the state in the legal defense of SB 21 for a budget rate of $100,000. By comparison, Wachtell Lipton charged Twitter $90 million in 2022 to ferry that company through its arduous, four-month-long acquisition by Elon Musk.
Wachtell’s client list also includes Mark Zuckerberg and other Meta executives and board members, who last summer settled a seven-year-long, multibillion-dollar shareholder lawsuit in the Delaware Chancery Court.
During his arguments on SB 21, Savitt said equity as determined by judges must follow the statutes created by the legislature, and “not displace the law.”
“No natural reading of the words (of the Delaware Constitution) support plaintiff’s position,” he said.
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Tatnall’s Gavin Leffler wins 3,200 at indoor state meet
With a 28-second last lap, Tatnall’s Gavin Leffler won the boys 3,200 at the Delaware indoor track and field state meet in 9:28.10.
Since the start of 2025, Delaware boys track and field athletes have set 11 state records between the indoor and outdoor seasons.
After a winter season in which 17 performances reached the top five on the state all-time list, Delaware appears poised for another strong spring.
Our list of track and field athletes to watch (presented alphabetically) features athletes from 24 schools who compete in sprints, distance races, throws and jumps. They are the athletes we expect to be among the state’s leaders at the DIAA Championships at Dover High on May 15-16 although many new names could emerge by then.
After defending its indoor track and field state title, Middletown is in search of its second straight Division I championship. Saint Mark’s enters the season as the Division II winner in three of the past four seasons.
2026 Delaware boys track and field athletes to watch
Elijah Annan, sr., Dover
Jason Baker, sr., Cape Henlopen
Derick Belle, sr., Odessa
Suhayl Benson, jr., Howard
Shaun Bosman, sr., Christiana
Elijah Burke, sr., Saint Mark’s
Khalid Burton, sr., Laurel
Isaiah Charles, jr., Caravel
Chukwuma Chukwuocha, jr., Wilmington Friends
Timothy Claessens, jr., Newark Charter
Rodney Coker, so., Odessa
Jaheim Cole, sr., Dover
Josh Cox, sr., Archmere
Calvin Davis, fr., A.I. du Pont
James Dempsey, jr., Salesianum
Will DiPaolo, sr., Cape Henlopen
Logan Elmore, jr., Middletown
Dahani Everett, sr., Caesar Rodney
Jayden Feaster, sr., Middletown
Gabe Harris, sr., Caesar Rodney
Phoenix Henriquez, sr., Smyrna
Christian Jenerette, sr., Odessa
Brandon Jervey, jr., Middletown
Mekhi Jimperson, sr., Caesar Rodney
Benjamin Johnson, jr., Dickinson
Michka Johnson, sr., Hodgson
Trey Johnson, sr., Cape Henlopen
Amir Jones-Branch, sr., Middletown
Alec Jurgaitis, sr., Saint Mark’s
Gavin Leffler, sr., Tatnall
Elijah MacFarlane, sr., Caesar Rodney
Max Martire, sr., Tatnall
Dylan McCarthy, sr., Tatnall
Chase Mellen, so., Salesianum
Zamir Miller, sr., Middletown
Ryan Moody, sr., Sussex Academy
Wayne Roberts, jr., Appoquinimink
Elijah Tackett, sr., Dover
Kai Thornton, sr., Sussex Central
Marc Patterson, sr., Dover
Charles Prosser, so., Salesianum
Riley Robinson, fr., Middletown
Roan Samuels, sr., Salesianum
Douglas Simpson, jr., Cape Henlopen
Jessie Standard, jr., Middletown
Riley Stazzone, sr., Cape Henlopen
Jamar Taylor, jr., Salesianum
Jordan Welch, sr., Sussex Tech
Brandon Williams, sr., Charter of Wilmington
Xzavier Yarborough, jr., Dover
Brandon Holveck reports on high school sports for The News Journal. Contact him at bholveck@delawareonline.com.
What is a data center? Here’s what you should know
Data centers have been popping up all over Arizona. The massive sites have drawn economic praise and resident criticism. Here’s what you need to know.
Project Washington’s prospects in Delaware appear murkier after a board stood on the state environmental agency’s decision to prohibit the data center proposal.
The public hearings with the Coastal Zone Industrial Control Board kicked off in Dover on March 24 at the Delaware Department of Natural Resources and Environmental Control’s Auditorium near Legislative Hall. It finished on March 26 after days of testimony from witnesses supporting and opposing the DNREC decision on the data center, which would be the largest in the state.
Project Washington was prohibited by DNREC in February because the agency said it violated the Coastal Zone Act, which was signed in 1971. Project Washington’s developer, Starwood Digital Ventures, filed an appeal of that decision soon after.
A little more than 30 people attended the meeting on March 24. It was modeled more like a court hearing than a public government meeting. The next two days included testimony from witnesses from both Starwood Digital Ventures’ and DNREC’s attorneys.
The Coastal Zone board consists of nine members, five of which are appointed by the governor and approved by the state Senate. Four other members are the state director of the Division of Small Business and Tourism and the chairs of the planning commissions of each county.
It’s the first time this assembly of the board has been called to action. Board members said they are making decisions on a fact and law basis, and are trying to cut out the noise this project has caused on social media and in other public meetings.
Witnesses and experts explained a ton of technical definitions for generators and got into the nitty-gritty of emissions and infrastructure. It was up to the board to take those facts in stride and make their decision.
“What we have to do is come back to the purpose of the appeal,” said Willie Scott, a member of the board during a break between sessions on March 24.
They voted unanimously to uphold the DNREC decision to prohibit the project based on the Coastal Zone Act.
Courtroom-like arguments for and against the data center
The hearing on March 24 began with opening arguments. Attorneys for Starwood Digital Ventures, Project Washington’s developer, argued that Project Washington’s purpose and infrastructure fall outside of the Coastal Zone Act’s regulations, and that DNREC’s definitions of smokestacks and tank farms are flawed.
“It fails every element of the statutory definition, as interpreted by the Delaware Supreme Court and the Delaware Superior Court,” said Jeff Moyer, an attorney representing Starwood. “Its limited diesel infrastructure is not a tank farm within any reasonable meaning of that term, and each of the core three functions of Project Washington – data storage, electrical infrastructure and backup power – are all expressly not regulated.”
DNREC’s attorneys argued the data center campuses fall under heavy industry in a modern context, and it is the kind of project the act is intended to kill. They also argued it has a potential to pollute when backup generators are working if the power fails.
“The law requires that it be prohibited, not recharacterized, not broken into pieces and minimized, but prohibited,” said Michael Hoffman, attorney representing DNREC. “Over the course of the next few days, we will show that Starwood’s proposed hyperscale data center is one such project.”
Closing arguments on March 26 reiterated arguments from both sides, and the board voted to stand with DNREC.
How Project Washington and DNREC got here
The Coastal Zone Act prevents heavy industrial projects from developing along the Delaware River and Bay, Chesapeake and Delaware Canal, Atlantic Ocean, Indian River Bay and other Sussex County bays. The 14 projects that have been grandfathered include the Delaware City Refinery and the Port of Wilmington.
Project Washington’s proposed site falls within the defined coastal zone, which extends west to Dupont Highway in that specific spot. In February, DNREC said the massive data center is prohibited, stifling the project while it worked through state and county permits.
It would be 11 two-story data center buildings surrounded by electrical fields on two large land parcels north of Delaware City accessible by Hamburg Road, Governor Lea Road and River Road.
DNREC’s beef with the project is in the backup generators and their accompanying diesel tanks. The data center is proposed to run 24 hours a day, seven days a week, 365 days a year. If power goes out, it needs to use the backup generators to keep running. DNREC’s decision says the project includes some 516 double-walled diesel fuel belly tanks, each capable of storing some 5,020 gallons of fuel. That’s about five acres of tank farm.
There would be 516 backup generators with 516 smokestacks, which DNREC said in its original decision is the exact type of infrastructure the Coastal Zone Act targets by prohibiting “heavy industrial” projects.
Starwood Digital Ventures, appealed the decision, mentioning countervailing factors including avoiding wetlands, no direct surface water discharges and projected economic benefits.
Their appeal said the original DNREC decision “solely focuses on alleged environmental risk and worst-case emissions, and does not fairly weigh or explain these countervailing factors in light of regulating criteria.”
Jim Lamb, who is handling media communication for the project, said the backup generators would only run 37 to 45 minutes per month just to test if they are operational. Project Washington will also use a closed-loop cooling system, limiting its water intake.
The appeal required a hearing, which is the first time the board made a decision since 2021.
The developer of the project did not immediately respond to Delaware Online/The News Journal’s request for comment. New Castle County officials did not immediately respond to either.
Shane Brennan covers Wilmington and other Delaware issues. Reach out with ideas, tips or feedback at slbrennan@delawareonline.com.
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