Many judges are constitutional or criminal authorities. Ralph K. Winter was distinguished by his rare expertise in business and finance.
Judge Winter, who died December 8th at the age of 85, shaped corporate governance and securities law when he served on the Manhattan-based US Court of Appeals for the Second Circuit from 1982 until his death. He defied what he viewed as unnecessary legal restrictions on the business and formulated a memorable case for maintaining state control over laws affecting the relationship between shareholders and management.
“If a private transaction does not impose a substantial cost on society or a third party, the parties should be allowed to organize their affairs in a way that pleases them and not a distant official,” he wrote in an article against the federal minimum standards for that Charter company.
Mr. Winter, a law professor at Yale before he became a judge, was also known for his wit. Mr. Winter appeared before the Senate Judiciary Committee after being appointed a judge on the Court of Appeals by President Ronald Reagan in 1981. The chairman, Senator Strom Thurmond, asked if the candidate was a dean at Yale.
“No, I’m just a professor,” said Mr. Winter.
“Oh,” replied Sen. Thurmond, “you are only a professor.”
“Maybe I should say I’m not just a dean,” said Mr. Winter. “I am a professor.”
Mr. Winter died in a nursing home in Guilford, Connecticut. He had been treated for esophageal cancer about two months before his death and tested positive for Covid-19, said his son Andrew Winter.
Born an only child on July 30, 1935, Ralph Karl Winter grew up in Waterbury, Connecticut, where his father worked in the real estate business. He attended the private Taft School in nearby Watertown, which he later described as “a bit snobbish”.
After a Taft principal told him he wasn’t a Yale guy and shouldn’t apply there, he only applied to Yale – and got admitted. His major was political science, but later he wished he had chosen history. He earned a bachelor’s degree in 1957 and a law degree in 1960, also from Yale. There he met Kathryn “Kate” Higgins, who worked in the law library. They married in 1961.
Mr. Winter was serving as a clerk for Thurgood Marshall, the future Supreme Court Justice, when he was appointed to the Second Circuit Court of Appeals in 1961. Judge Marshall later told the New York Times that he was unsure about one jurisdiction case and asked Mr. Winter to review. After investigating the matter, Mr. Winter returned and said, “Hey Judge, guess what you don’t have!”
The two men joined forces. A speaker chosen by the family for Justice Marshall’s funeral in 1993, Judge Winter said his former boss was “the irresistible force for justice, the immovable object against injustice, and a warm, kind person.”
Mr. Winter joined Yale Law School in 1962 and remained a full-time professor until he joined the Court of Appeals in 1982. Being a conservative at Yale could be difficult, especially during the student riots of the late 1960s and early 1970s. “I’ve been labeled a fascist because I believe in a small government,” he said in an oral story from 2017 at Yale Law School, “which shows either a misunderstanding of mine or a misunderstanding of fascism.”
In the 1970s, he defied the conventional wisdom of corporate governance law. At the time, consumer advocate Ralph Nader called for large companies to be chartered by the federal government. William L. Cary, a past chairman of the Securities and Exchange Commission, advocated federal minimum standards.
Delaware had paid the lion’s share of the legal costs associated with issuing corporate deeds. Mr Cary wrote an article in 1974 saying the state was “racing for the soil” over legal standards. States, he said, have passed legislation that empowers managers and “diluted shareholders’ rights vis-à-vis management to a thin slurry.”
In a 1977 article to Messrs. Cary and Nader, Mr. Winter insisted that government regulation was generally preferable to federal regulation. Competition between states has reduced regulation, but in a way that has benefited shareholders by lowering compliance costs and making companies more profitable.
“Only by ignoring the cost side of the cost-benefit judgment can one assume that ‘negligence’ always hurts shareholders and thus supports the conclusion that competition between states for charter has worked to their disadvantage,” wrote he.
Mr Winter’s view prevailed and the States retained their role in chartering. “He destroyed Cary’s reasoning,” said Roberta Romano, who heads a corporate law center at Yale Law School.
Some of his appeals court judgments are taught in law schools. In one case, he gave rationale for the business judgment rule that directors act in the best interests of the company unless plaintiffs can show otherwise. The courts are not well equipped to evaluate business judgments, and if they try to do so, they could prevent prudent risk-taking, which is in the interests of shareholders. The rule helps protect directors from liability in trivial matters, making it easier for companies to recruit high-quality board members, Ms. Romano said.
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In another case, he argued that standard clauses in contracts for bond or debt issuance should be interpreted uniformly in order to provide more security to borrowers and creditors.
Mr. Winter’s wife, Kate, died in 2012. He is survived by his son and granddaughter.
Friends remembered his roaring laughter. José A. Cabranes, a colleague on the Second Circuit Court of Appeals, recalled that Mr. Winter was amused when an acquaintance referred to him as “a leisurely truck driver with a 300 IQ.”
During his tenure on the Court of Appeal, Mr. Winter continued to teach part-time at Yale covering topics such as securities regulation, antitrust, evidence, and sports law. Part of the fun of being with students, he once said, “is being the devil’s advocate and saying outrageous things and being driven back by them.”
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