DE House of Rep. Newsletter Issue 616 – March 7, 2025
Date Posted: Wednesday, March 12th, 2025Bill Raises New Questions about Gun Control and Invasion of Privacy
A bill being considered by the House Judiciary Committee on Wednesday morning adds fresh fuel to the already heated debates over gun control, governmental intrusion, and the erosion of individual rights.
Sponsored by State Reps. Krista Griffith (D-Fairfax) and Mara Gorman (D-Newark), House Bill 45 would require the distribution and use of a new credit card “merchant category code” (MCC) that specifically identifies businesses selling firearms and ammunition. Credit card networks would be mandated to comply by July 1, 2025.
Proponents of the measure are framing it as a public safety precaution. They claim that unusually large purchases at such businesses could serve as an early warning system, alerting authorities to the need for investigation.
“We must use every tool at our disposal to fight the gun violence epidemic in our communities,” said New York State Senator Zellnor Y. Myrie (D-Central Brooklyn), who sponsored a similar bill in the Empire State last year. “For too long, those who facilitate and profit from gun violence have escaped scrutiny. This bill would give law enforcement another tool to pinpoint suspicious purchasing patterns and prevent a tragedy before it occurs.”
Last fall, New York became the third state to enact the firearm business merchant code, joining California and Colorado.
The proposal’s impetus can be traced to a 2018 opinion piece by New York Times columnist Andrew Ross Sorkin, entitled “How Banks Could Control Gun Sales if Washington Won’t.” In it, Mr. Sorkin suggested that the finance industry—credit card companies, credit card processors, and banks—“could have more leverage over the gun industry than any lawmaker.”
In 2022, Amalgamated Bank, which describes itself as “the financial institution for progressive people and organizations” and has a record of opposition to firearms businesses, lobbied the International Organization for Standardization to create a specific merchant category code to categorize gun and ammunition retailers.
Opposition to the implementation of the new code delayed its immediate implementation.
At least 16 states, including West Virginia, Florida, Texas, North Dakota, Mississippi, and Idaho, have enacted legislation prohibiting the use of the code in their jurisdictions.
Opponents say the stated rationale for the bill does not hold up to scrutiny.
Writing for the National Shooting Sports Foundation (NSSF), Larry Keane noted in a 2022 article that creating a unique merchant code for gun retailers was the first step in a greater agenda: “It was never about gathering data to aid law enforcement. It is, and always has been, a concerted effort to pressure credit card companies to deny lawful purchases of firearms and put every single gun purchaser on a watchlist. Since the federal government is forbidden by law from creating and maintaining a searchable database of gun owners, this task is being outsourced to private industry…[This initiative] is setting the conditions that will allow credit card companies to track, categorize, and report ‘suspicious’ purchases to law enforcement. This is the definition of an Orwellian society.”
Jeff Hague, president of the Delaware State Sportsmen’s Association, said House Bill 45 will predictably lead to law-abiding citizens being targeted for investigation based solely on their purchasing patterns.
The language of Delaware’s proposed law has raised some unanswered questions. One issue is the tightly defined nature of the bill that specifically targets the operators of small gun shops while ignoring larger firearms retailers selling a broader range of merchandise. Under the legislation, “firearms merchant” is defined as a “federal firearms licensee for which the highest sales value is, or is expected to be, from the combined sale…of firearms, firearm accessories, or ammunition.”
Secondly, the bill does not provide any information on how the data resulting from implementing the merchant code would be used.
If enacted this session, the law would take effect October 1. Violators would face a civil fine of $10,000 for each infraction.
The House Judiciary Committee will consider the bill at 10:30 Wednesday morning in the House Majority Hearing Room of Legislative Hall in Dover. To watch the proceedings live and potentially participate, use this link for more information: https://legis.
Proposed Corporate Law Changes Will Protect Investors, Restore Clarity
William Chandler III and Lawrence Hamermesh
The best umpires in baseball are those you don’t notice. The same could be said of the game of business. In that arena, the state of Delaware has acted as the nation’s umpire for 125 years, providing a playing field of corporate laws so clearly marked, consistent and fair that businesses can focus on performing for the benefit of their shareholders, their customers and our country. These very features have allowed Delaware to go unnoticed, while they led eight out of 10 newly public companies and more than two-thirds of the Fortune 500 to choose to incorporate here.
But suddenly, Delaware is attracting attention. This week, lawmakers proposed changes to our General Corporation Law, placing the business world’s focus squarely on the umpires. In response, as predictably as fans aggrieved by a call, some commentators have questioned the motivation behind the bill. They intimate that it wrongly serves the interests of specific political agendas, companies or individuals. Most often they point fingers toward Elon Musk, whose pay package was famously invalidated in a Delaware court.
We can say this, as individuals who responded to the call from Delaware’s governor and legislative leadership for assistance drafting the proposed amendments that represent an attempt to reestablish long-accepted rules once familiar to the Delaware courts and are nothing less than a sincere effort by public officials to protect the interests of their constituents.
Two aspects of the legislative process have drawn particular attention: the participation of private citizens in drafting the bill, and the speed with which it was introduced. These are reasons for praise, not suspicion. Delaware Gov. Matt Meyer and bipartisan lawmakers sought our help crafting legislation to restore confidence in Delaware as a trusted venue for incorporation. They turned primarily to us and Leo Strine, Jr. — a former chief justice of the Delaware Supreme Court — for our understanding of the nuances of Delaware law. They certainly did not seek us out for the cohesiveness of our political views (we include one Republican, two Democrats, and a former president of the ACLU in Delaware), nor our loyalty to Musk. Although we have different political perspectives on many things, we have a long, shared commitment to the integrity of Delaware corporate law.
The swiftness with which the state Senate introduced the bill is also laudable. Meyer, to his credit, responded within weeks of being in office to the growing crisis. Multiple companies, including Meta, had begun to consider alternatives to Delaware as their state of incorporation. We understand other companies are also considering whether to vote on the question at their upcoming annual meetings, with proxy season beginning next month for many public companies. The time to address concerns about Delaware’s continued value as a venue for incorporation is before play starts, not after the game has begun.
The proposed amendments answer those concerns, and their substance confirms that they were not drafted to serve any one company or individual. They respond to a trend in Delaware court decisions that has evolved rapidly in recent years, where changes to judge-made law have made it easier for shareholders to challenge company actions in court, often by expanding critical concepts beyond earlier boundaries. Take, for instance, the conflicts of interest among board members that trigger powerful shareholder derivative lawsuits. Previously, courts found such conflicts only when board members had a financial stake in a disputed transaction or material entanglements with someone who did; now they perceive conflicts over mere social ties between individuals, using a standard so loose that it becomes relevant whether one director was a guest at another’s family wedding or in pictures on social media.
Similarly, courts had long given heightened scrutiny to transactions between companies and their “controlling shareholders.” But that term has expanded from its natural meaning — someone who owns half or nearly half of a company’s stock — to include “superstar CEOs” who supposedly control investors through sheer force of personality.
These decisions have created an unknowable strike zone when companies try to anticipate lawsuits. Worse, in using nebulous standards, they have made it impossible for corporations to know if they are complying with Delaware law. When an advantageous deal comes before them, corporations do not know if they should swing or not.
Close observers have watched and worried over this trend for years. In fact, two important articles, one of which goes back to the turn of the century and was co-authored by the late Chancellor William Allen, Strine and then-Vice Chancellor Jack Jacobs, and another co-authored by Strine, Jacobs and Hamermesh, identified the principles underlying the current legislation as reflecting Delaware’s traditional approach to corporate law. The articles, which both predate Musk’s loss on his compensation package, addressed ways in which those traditions were under stress. The current bill reflects a good faith attempt to ensure that Delaware corporate law, as was understood and applied for many years, can be relied upon. It is designed to reaffirm what it was until recent years and to address departures from that tradition that have caused legitimate concern among companies in all industries and regions.
The amendments offer clearer, brighter-line definitions of key terms like “disinterested director” and “controlling shareholder.” They also establish procedures that offer safe harbors for companies to use in transacting with controlling shareholders or where members of the board have conflicts, so they can do the right thing and be confident that, if they do, they won’t be sued. Another provision places reasonable limits on a shareholder’s right to examine a company’s “books and records,” which has inflated over time to cover emails, text messages and other material that goes beyond that term’s normal and intended meaning.
These details may not excite anyone not steeped in corporate law. Yet non-specialists who only see the rules being changed deserve an explanation, so that the quick answer — it’s all Musk — can be seen for what it is. Assisting the Legislature and the governor with statutory drafting has been an inspiring exercise in sound government — one joined by lawmakers and citizens with varied economic and political interests, united only in our desire to serve Delaware by ensuring that investor and manager interests are fairly balanced. That exercise will serve its purpose if, after enactment, long-standing principles of Delaware law that maintain high levels of protection for shareholders, in a way that also gives corporations needed clarity, are restored.
As a result, the playing surface in Delaware’s business arena will be more definitively lined and fairly balanced than it has been in years. With the proposed amendments, Delaware as umpire has yelled “play ball!” After that, it can again recede from view, a comforting and reliable backdrop to the competition that is rightly at the heart of the game.
Lawmakers Return to Work
Following a lengthy five-week recess for budget hearings, lawmakers will return to work at the state capitol building on Tuesday.
The General Assembly will meet for the next three weeks.
For information on committee meetings, House and Senate agendas, watching live streams of floor debates, and tracking the progress of bills, visit the state legislative website by using this link: https://legis.delaware.gov/
Bill Seeks to Establish the Office of Suicide Prevention
State Rep. Eric Morrison (D-Glasgow) is sponsoring legislation (House Bill 54) to create a new state Office of Suicide Prevention.
According to the Centers for Disease Control, in 2022, over 49,000 people died by suicide in the U.S., with 130 of those fatalities occurring in Delaware.
Delaware is reportedly the only state in the nation without such an agency. Among other duties, the office would be charged with creating a state Suicide Prevention Plan.
Thus far, the bill does not include a fiscal note indicating the cost of establishing and operating the office.
Rep. Morrison is also sponsoring the Ron Silverio/Heather Block End of Life Options Act that seeks to legalize physician-assisted suicide.
The former measure is pending consideration in the House Health & Human Development Committee. The latter bill is on the House Ready List and is eligible for inclusion on the House Agenda.
