The most important corporate case

What was the " the most important corporate law decision of the 20th Century"? Steve Bainbridge nominates Smith v. Van Gorkom. He argues that it "presaged Unocal’s significant expansion of judicial review of corporate takeovers," "laid the foundation for the subsequent Caremark decision and the resulting expansion of judicial inquiry into whether the board of directors exercised proper oversight of its subordinates," "significantly increased director liability exposure," "drove dramatic changes in the D&O liability insurance market" and spurred "liability limiting charter provisions authorized by Delaware General Corporation Law § 102(b)(7)."

I agree with the premises but disagree with the conclusion. In the first place, I don't think that the answer to this question can be a state law decision. State corporate law is, as Bernie Black once said, "trivial." It is constantly evolving under the pressure of parties' contracts and state competition, as is indicated by some of the Steve's indications of VG's importance.

Second, this evolutionary process affects state jurisprudence.  For example, Van Gorkom was the doctrinal basis for Unocal, but only because that happened to be where the Delaware Supreme Court wanted to go – not because it was driven there by one of their prior decisions. The twists and turns in Delaware law show that the Delaware Supreme Court maintains its flexibility against the binding force of precedent.

So the "most important corporate law decision" has to be a federal securities law case. Surely no one can deny that this is "corporate law," even if the feds have chosen to shear off what it chooses to call "disclosure" from state law. The federal securities laws drive internal corporate behavior, and even state law decisions, as much as state law.

Moreover, the federal securities laws are "important" for the same reason that Bernie Black called state law "trivial." Add to this the fact that we have one Supreme Court that decides an important securities issue each blue moon, and then we have to live with that confusion until the next time the Court speaks.

So what's my candidate? That's easy, given the above: Basic v. Levinson. That case gave us the modern securities class action, and all of the substantive and procedural case law, as well as subsequent Congressional attempts to fix the class action and then to fix the fixes (the PSLRA and SLUSA). Moreover, what case has more impact on actual corporate behavior, particularly including the need to design disclosures to minimize the risk of risk of class actions?

Case closed. Next question?