(Reuters) – There is no doubt that Fordham law professor Sean Griffith has contributed to Delaware Chancery Court’s deepening skepticism about disclosure-only settlements in M&A class actions. Griffith was co-author of the influential 2015 Texas Law Review paper, “Confronting the Peppercorn Settlement in Merger Litigation,” which Vice-Chancellor Travis Laster cited at the July 8 hearing that touched off a series of decisions questioning settlements that granted defendant corporations broad releases from claims in exchange only for beefed-up proxy disclosures.
(Reuters) – There was good news and bad news for investment banks in Monday’s hotly anticipated Rural/Metro opinion from the Delaware Supreme Court. The bad: The state justices affirmed a $76 million judgment against RBC Capital Markets, finding that the bank manipulated Rural/Metro’s 2011 sale process in an attempt to win a lucrative financing deal from the ambulance company’s private equity acquirer. The decision marks the first time the Delaware justices have held a financial adviser liable to shareholders for aiding and abetting a corporate board’s breach of duty – certainly a scary prospect for banks.
Chancellor Andre Bouchard of Delaware Chancery Court struck a double blow Monday for corporations that want to restrict shareholder litigation to a single jurisdiction. In a decision upholding the validity of a bylaw requiring shareholders of First Citizens Bancshares to sue board members only in North Carolina, Bouchard ruled that Delaware corporations can designate venues other than Delaware as the exclusive forum for shareholder claims – an issue of first impression in Chancery Court. But that wasn’t all. Bouchard also rejected shareholder arguments that First Citizens’ forum selection clause can’t be enforced because it was enacted on the same day that the North Carolina bank announced its $676 million acquisition of a related First Citizens entity in South Carolina.
On Wednesday, Delaware Governor Jack Markell nominated Chancellor Leo Strine of Chancery Court to become chief justice of the state’s Supreme Court. Assuming Strine’s nomination is approved, Chancery Court is going to be a much less colorful place. Strine is a legal mastermind – with an unpredictable and outspoken judicial demeanor. Occasionally, his off-tangent courtroom riffs have landed him in trouble. In 2012, for instance, Strine said he regretted comments he made during a hearing involving fashion entrepreneur Tory Burch in which he asked her attorney if Burch is Jewish and compared her dispute with her former husband to a “drunken WASP-fest.” Strine was also gently chided last year by his future colleagues on the Delaware Supreme Court for using judicial opinions to express his “world views.”