J. Travis Laster.

A Delaware Court of Chancery judge on Monday said that two recent decisions from the state Supreme Court represented an “unprecedented shift” in the way the state handles appraisal cases and that it would be up to the high court to sift through the errors in a ruling decision that has rankled petitioners and raised questions about the future of appraisal in the First State.

The remarks from Vice Chancellor J. Travis Laster came in a 58-page decision denying reargument in one of the most notable cases to follow a pair of Supreme Court decisions, which indicated a strong preference for deal price as the indicator of fair value and signaled tighter scrutiny of appraisal actions.

In February, Laster applied the high court's reasoning in the cases—known as Dell and DFC—to find that the $3 billion deal price in Hewlett-Packard Co.'s 2015 acquisition of Silicon Valley wireless networking company Aruba Networks Inc. far exceeded the company's fair value. The decision was the first to find share price, and not deal price, as the best marker of fair value.

The Aruba case has since exposed a divide in Delaware's legal community and generated criticism among attorneys for appraisal-seekers, who argue that the result could effectively strip dissident investors of a statutory remedy available under state law.

Attorneys for the companies counter that the rulings were needed to stem the rising tide of appraisal arbitrage, where firms would buy up large amounts of companies' stock on news that a sale was imminent in order to exercise appraisal rights under the Delaware General Corporation Law. They point to a steep decline in such cases as evidence that the Supreme Court has struck the proper balance in Dell and DFC.

Stuart M. Grant, who represents the Aruba petitioners, has blasted Laster's decision as “ridiculous” and “absurd,” even suggesting in his motion for reargument that the judge did not believe in the legal theory he applied in the case.

In an extensively footnoted opinion, however, Laster responded that Dell and DFC had “changed things,” saying that the February ruling was his best effort to grapple with Supreme Court precedent “altering the decisional landscape and authorizing greater reliance on market value.” In his ruling, Laster admitted that he may have made some mistakes, but denied accusations that he had used the case to set up a showdown with the high court.

Any errors, he said, would need to be addressed on an appeal to the state's five justices.

“I reasoned through the issues as best I could and reached what I believe is the correct determination of fair value for purposes of this case. At this point, the proper institutional remedy for correcting any errors lies with the senior tribunal on appeal,” Laster said.

Grant, the managing director of plaintiffs firm Grant & Eisenhofer, did not return a call on Monday seeking comment on the decision.

The appraisal petitioners had challenged multiple findings in Laster's post-trial opinion and argued that the judge misapprehended Delaware law in reaching his conclusion. Grant said he shared Laster's supposed frustration with the Supreme Court, but said Laster should not have taken his anger out on Aruba's dissenting shareholders, even accusing the judge of violating his oath under the Delaware Constitution.

“While we do recognize the frustration shared by this court and many commentators with the Supreme Court failing to respect this court's discretion, making its own findings of fact (many of which are wrong), and sitting as if it were the trial court without the benefit of trial, the litigants before you are real with real dollars at stake. In this battle of legal titans, let's minimize the collateral damage,” Grant wrote.

On Monday, Laster said that multiple readings of Dell and DFC led him to believe that Dell and DFC endorsed market price as an indicator of fair value for a widely traded company without a controlling shareholder, and allowed the Chancery Court to place a heavier reliance on a company's unaffected market price.

“I am lot a legal titan. I am a state court trial judge,” Laster wrote.

“While I think it is fair game for a trial judge to suggest potential changes in the law, I do not believe that a trial judge has the flexibility to disregard the Delaware Supreme Court's holdings, nor do I think that a trial judge should look for clever ways to evade their implications. When a new precedent arrives, I view my job as requiring that I update my understanding of Delaware law to incorporate the new precedent.”

Michael P. Kelly, who represented Aruba in the case called the decision a “bulletproof” ruling and a scholarly response to “ad hominem attacks” from opposing counsel.

“It makes the appeal easy because he cited every case on point,” said Kelly, chairman of McCarter & English.

“It's a shame that he had to spend so much time defending himself.”

The case is captioned Verition Partners Master Fund v. Aruba Networks.