The Corporate Law Group

The Law of Unintended Consequences for Hershey

According to Wikipedia the law of unintended consequences, “dates to the Scottish Enlightenment and consequentialism, or judging by results. In the twentieth century, sociologist Robert K. Merton once again popularized the concept, sometimes referred to as the Law of Unforeseen Consequences. Merton (1936) spoke of the “unanticipated consequences” of “purposive social action,” emphasizing that his term “purposive action… [is exclusively] concerned with ‘conduct’ as distinct from ‘behavior’. In any case, the law was mightily fulfilled by Pennsylvania Attorney General D. Michael Fisher. The controlling interest in Hershey is owned by a charitable trust; likely set up by old Milton himself, and possibly benefiting the school he established. (By the way, Hershey’s story is a very interesting one for any student of growing businesses). It turns out that the trust was looking into selling its controlling interest and diversifying. That’s where AG Fisher comes in. Fisher was afraid that, following a sale, Hershey, PA would fold, ‘kisses’ street lights, amusement park, and all, and that jobs would be moved out of the state. He pressured the trust not to sell and it backed down. Now, law professors Jonathan Klick (Harvard), and Robert Sitkoff (Florida State), argue in a law review article in the Columbia Law Review that AG Fisher’s actions left Hershey in a “suboptimal ownership structure” and have destroyed $2.7 billion in shareholder value. Fisher, now a federal appeals court judge, defends his actions as “beneficial at the time.” Sounds to the Buzz like this judge doesn’t know his law… “of unintended consequences” at least. Also sounds to us like a good example of the arrogance of those who think they know best, but actually know very little.
Paul Marotta

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