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In Scott v. Dandero, C.A. No. 9041-VCG (Del. Ch. Sept. 8, 2014), the Court of Chancery applied general principles of comity and judicial efficiency to deny a request to lift a stay of a case before it involving parties and issues that were common to separate pending litigation in Texas. This amorphous power of the court is a useful and practical tool to employ when  common parties are involved in multi-jurisdictional litigation involving related issues.

This is the 25th year that the Tulane Corporate Law Institute has presented a seminar in New Orleans that attracts corporate litigators and M & A lawyers from around the country to discuss the latest developments in corporate law. Members of Delaware’s Supreme Court and Court of Chancery by far represent the largest number of jurists from one state on the panel presentations. Delaware Supreme Court Chief Justice Myron Steele is providing the keynote address today entitled “Delaware and M&A: Looking Forward”. Vice Chancellor Donald Parsons is on a panel discussing recent corporate decisions from Delaware.  Other panels include Justice Ridgely and Justice Jacobs, as well as Chancellor Strine and Vice Chancellor Glasscock. I plan to update this post throughout the afternoon on March 21 and during the morning of March 22.

UPDATE: A few highlights of the keynote address by Chief Justice Steele:

– The duty of good faith should not stand alone as a concept but acknowledge that one cannot act loyally without at the same time acting in good faith.

– His Honor’s comments are, he emphasized, made on his own behalf and not on behalf of the court.

– It is a presumption in Delaware that the first-filed plaintiff receives some deference as to choice of forum; not to be confused with the doctrine of forum non conveniens. He also mentioned comity as a concept to address multi-jurisdiction litigation.

– Task Force of state and federal judges and practitioners around the country who are expected to prepare a handbook to guide judges and lawyers regarding multi-jurisdiction litigation.

– Equity v. Predictability; and Implied Covenant of Good Faith and Fair Dealing:  This implied covenant as a gap-filler should be used sparingly. Note that 75% of companies now chartered in Delaware are alternative entities. – Vice Chancellor Laster’s decision in ASB, 50 A.3d 434, 440 (highlighted on these pages here), is in the Chief Justice’s view, the best explanation of distinction between good faith as a common law duty and as part of the contractual implied duty of good faith and fair dealing.

– His Honor says more focus should be placed on the doctrine of stare decisis.  He notes that 90% of all appeals from Chancery are affirmed and that the common law system may not be perfect, but as Churchill said, it’s the best we have.

UPDATE II: Rick Alexander of the Morris Nichols firm in Wilmington discussed proposed new legislation predicted to pass the Delaware legislature by the summer. First is a “medium-form merger” amendment to the DGCL to provide a simpler way to address “top up options”. Also, a new “benefit corporation” statute is expected to become law in Delaware this summer. This allows a for-profit corporation to balance the interest of maximizing shareholder value with other considerations, but it must be a specified public beneficiary. Only shareholders can sue.  Business judgment rule protection is available for compliance with statute. There is also a reporting requirement, but no requirement for optional third-party standards to apply. Twelve states already have a version of this. Of course, this type of private ordering is already available in the alternative entity context. In order to convert an existing corporation, it requires a 90% shareholder approval.

Another new proposed change to the Delaware corporate statute is a new DGCL Section 204, designed to be a safe harbor for defective corporate acts such as over-issuance of shares. Also, a new Section 205 will give Chancery jurisdiction to address defective corporate acts. Vice Chancellor Parsons commented on cases that have addressed current limitations on its ability to fix defective corporate acts in light of potential barriers such as laches. There also was a discussion of In Re Complete Genomics, Inc. Shareholder Litig., C.A. No. 7888-VCL (Del. Ch. Nov. 9, 2012),(Transcript), that addressed ability of board to enter into an agreement without a “fiduciary out”.

Highlights of prior years at the Tulane seminars can be found on these pages here.

 

ASB Allegiance Real Estate Fund v. Scion Breckenridge Managing Member LLC, C.A. No. 5843-VCL (Del. Ch. July 9, 2012).  In this opinion the Court of Chancery awarded attorneys’ fees, based on a fee-shifting provision of the LLC agreement, of more than $3.2 million. The recent Chancery decision on the merits of this case, on which the award of fees is based, was highlighted on these pages here.

Issue Addressed

Whether the fee-shifting provisions of an LLC Agreement justified an award of fees to the prevailing party for litigation conducted simultaneously in four different courts.

Short Answer: Yes.

Brief Background

The background details of this case were highlighted in a May 2012 decision by the Court of Chancery linked above, which addressed the merits of a dispute involving the interpretation of several related LLC Agreements, and the decision of the Court to reform the related LLC Agreements based on a scrivener’s error.

One key issue in this case was whether the four separate litigations in four separate courts could be combined for purposes of awarding fees to the prevailing party.

In describing the procedural genesis of this case, the Court said that: “logic and efficiency cried out for a single forum, preferably with a decision-maker knowledgeable about Delaware law.  Scion eschewed the efficient course.”  Instead of agreeing to litigate all the issues in Delaware, the defendant filed three separate additional actions in three separate federal courts in Illinois, Wisconsin and Florida.  Motions to stay were filed, briefed and decided in each of the federal cases.  Motions to dismiss were filed, briefed and decided in all four cases.  Motions for summary judgment were filed, briefed and decided in all four cases.  Multiple courts heard motions on discovery in pretrial issues.  At least two emergency applications were made to the Court of Chancery for an expedited decision to help avoid a “multi-jurisdictional train wreck.”

The prevailing parties sought $3.2 million in fees and costs for the successful effort in the Court of Chancery, as well as in the three separate federal cases.  After the Court of Chancery decision in May of 2012, the parties dismissed the three federal cases by stipulation.  [By comparison, a separate decision from the Court of Chancery also within the last few days, awarded fees based on the bad faith exception to the American Rule, under different factual circumstances, as summarized here.]

Analysis

When parties by agreement have consented to a shifting of fees that requires a non-prevailing party to reimburse the prevailing party for reasonable fees and costs in connection with enforcement of an agreement, the focus of the Court is:  “principally on enforcing the parties’ agreement to make the prevailing party whole.”  Prior decisions of the Court of Chancery have generally upheld such a provision entitling the prevailing party to fees, and the Court has found that such a provision:  “will usually be applied in an all-or-nothing manner.”

Explanation of the Difference between “Good Faith” and “Fair Dealing” as Components of Fiduciary Duty, as Compared to the Implied Covenant of Good Faith and Fair Dealing  

In the course of explaining why it would award attorneys’ fees under the fee-shifting provision of the LLC Agreements, the Court was called upon to discuss the basis of a claim for a breach of the implied covenant of good faith and fair dealing–and to compare the “good faith component” of that covenant, and the “fair dealing component” of such a claim, with the fair dealing concept under the fiduciary duty law of Delaware, and the good faith aspect of the fiduciary duty law of Delaware, and how those concepts differ.  See Slip op. at 5-7.

The Court emphasized that fair dealing for purposes of the good faith and fair dealing covenant imposed on every contract in Delaware as an implied covenant is, unlike its fiduciary duty namesake under the entire fairness doctrine, a commitment to deal consistently with the terms of the agreement of the parties and the agreement’s purpose.

Likewise, the good faith component of the covenant of good faith and fair dealing does not envision loyalty to the other party to the contract, but rather:  “Faithfulness to the scope, purpose, and terms of the parties’ contract.  Both necessarily turn on the contract itself and what the parties would have agreed upon had the issue arisen when they were bargaining originally.”

In connection with its analysis, the Court also reviewed basic contract principles including Delaware’s recognition of “efficient breach” of contract and that the:  “traditional goal of the law of contract remedies has not been compulsion of the promissor to perform as promised but compensation of the promissee for the loss resulting from the breach.  ‘Willful’ breaches have not been distinguished from other breaches . . .”  See footnote 6.  Moreover, the Court emphasized that proving a breach of contract claim does not depend on the breaching party’s mental state.

The Court also emphasized that proof of fraud violates the implied covenant not because breach of the implied covenant requires fraud, but because “no fraud” is an implied contractual term.  That is, the law implies that the parties never would have agreed to fraud as a term of an agreement.

The Court also recited the four situations when an at-will employee can claim a violation of the implied covenant.  See footnote 8.

In discussing the way that the concept of fraud interfaces with a claim for breach of the implied covenant, the Court explained that proving fraud is simply one way of establishing a breach of the implied covenant of good faith and fair dealing, but not the only way.  This is so, because proving fraud represents a specific application of the general implied covenant test; that is:  “What would the parties have agreed to when bargaining initially?”  Specifically, they would have agreed that fraud would not be allowed.  The Court explained that the implied covenant of good faith and fair dealing is, in essence, a contract claim and not a tort claim.

The Court also cited to other decisions to support the view that even when separate actions and separate lawsuits were pending in different jurisdictions, if they were related to one essential dispute, then a fee award would be entirely proper that included those separate actions which were deemed to be one continuous piece of litigation, and the net result of all the actions resulted in the settlement of the differences of the parties.

Reasonableness of the Fee Award

The Court described the standards that would be used to determine the reasonableness of fee awards based in part on Rule 1.5(a) of the Delaware Lawyers’ Rules of Professional Conduct. As applied to the facts of this case, the Court reasoned that simply because the rates that one firm charges are higher does not make them unreasonable.  In addition, the fact that an attorney for one party spent more than twice as many hours for the same task does not make that number of hours unreasonable.  For example, the Court referred to the attorney for the prevailing party spending 67 hours to prepare for an expert deposition, and that at trial the prevailing attorney “destroyed” the credibility of the opposing party’s expert.  The losing party, by contrast, was unshaken on cross examination and that party’s attorney spent less than half the number of hours (31) preparing for the expert deposition.

Practical Perspective

One of the many lessons that can be learned from this opinion, is that Delaware courts do not often second guess the amount of fees charged by attorneys in situations where the fees are awarded based on a fee shifting provision in an agreement, such as this case, or when they were awarded pursuant to the bad faith exception to the American Rule.  See, e.g., Auriga case highlighted here, and the very recent Coughlin case, highlighted here.

We typically focus on summarizing corporate and commercial decisions of Delaware’s Supreme Court and Court of Chancery, but today we find noteworthy a bevy of new lawsuits just filed in the Delaware Court of Chancery.

These new suits challenge bylaws in several companies that require shareholder suits to be filed exclusively in the Delaware Court of Chancery.  If suits are filed elsewhere, the company threatens to sue those shareholders to recoup fees for breach of the bylaw provision. The challenge is based on the alleged violation of due process rights because there was no mutual consent by the shareholders. The suits were filed by the highly-regarded corporate litigator Michael Hanrahan of the Prickett Jones firm in Wilmington. Among the companies sued by shareholders challenging the exclusive forum bylaw provision, in separate lawsuits, are the following Delaware corporations:

Navistar International Corp., AutoNation, Inc. Chevron Corp., SPX Corp., Superior Energy Services, Inc., Franklin Resources, Inc., Curtiss-Wright Corp., Danaher Corp., and Solutia Inc.

Friend of this blog and well-recognized corporate law expert, Professor Stephen Bainbridge, provides timely comments on these new lawsuits. Thomson Reuter’s Alison Frankel wrote an excellent article about these cases that provides a very helpful overview and also has a link to the actual complaints. Broc Romanek on his site called The Corporate Counsel.net, provides helpful observations on this development.

The concept of a forum selection clause in a corporate charter was given momentum by the dicta and citations to Delaware decisions and law review articles, in Vice Chancellor Laster’s footnote 8 in his opinion in the case of In Re Revlon, Inc. Shareholders Litigation, Consol. C.A. No. 4578-VCL (Del. Ch. March 16, 2010), read opinion here.

Scholarship on the Topic

Corporate law scholars have written extensively about this topic and we have featured much of that scholarship on these pages. For example, Professor Joseph Grundfest of Stanford, one of the early promoters of the idea of adding a charter provision (as compared with a bylaw provision), with an exclusive forum selection clause for shareholder suits, presented a lecture in Delaware before the Bench and Bar on the issue, as discussed on these pages here . Prof. Steven Davidoff provided insights on the topic here. Ted Mirvis of Wachtell Lipton, who often litigates high-stakes matters in the Delaware Court of Chancery, has also been credited with this particular forum-selection concept, as indicated in his 2007 article available here.

Although Delaware Courts have not squarely decided the issue of a forum selection clause in a bylaw provision, that is not voted on by the shareholders, a California court struck down a provision in a case noted on these pages here. Professor Bainbridge comments on the topic here.  Prof. Brian J.M. Quinn wrote a law review article on the issue, available here.

Our post here  on this topic and related issues, includes commentary by the late, great scholar Prof. Larry Ribstein and others who have addressed the related problems with multi-jurisdictional litigation and the challenges that arise with an apparent increase in the number of non-Delaware courts deciding issues of Delaware corporate law. A ruling on these new cases by the Delaware Court of Chancery, which will likely be appealed to the Delaware Supreme Court, will be a welcome addition to provide a measure of certainty on this cutting edge topic.

Supplement: Corporate attorney Claudia Allen prepared a study of Delaware forum selection clauses in charters and bylaws that is available via a post by Professor Bainbridge here. Delaware litigator Edward Micheletti has written an article on the issues of multi-jurisdictional litigation that these bylaw amendments are attempting to address. Kevin La Croix on his blog called The D & O Diary compiles articles and statistics and related sources on the various issues related to an increase in M& A/Takeover litigation here  including multi-jurisdictional aspects of that litigation here.

The Wilmington News Journal has an article co-authored by Phil Milford that examines average awards of attorneys’ fees in cases challenging deals even when it is not apparent if the shareholders are receiving a quantifiable benefit from the lawsuit.

In Parcell v. Southwall Technologies, Inc., C.A. No. 7003-VCL (Del. Ch. Nov. 7, 2011)(transcript), the Delaware Court of Chancery refused to stay litigation challenging a transaction despite parallel litigation pending in California challenging the same transaction. Read transcript here.

Thanks are due to Delaware litigator Kurt Heyman for forwarding this transcript.

Brief Overview
Most readers know that transcript rulings are often cited in briefs in Delaware as persuasive authority. In this ruling, the vice chancellor acknowledged his respect for the erudition and competence of the California judiciary, as well as the recurring problem of multiple suits pending in multiple jurisdictions over the same challenged transaction. The Court of Chancery focused on the internal affairs doctrine that would apply Delaware law in this case and the wisdom of having the court whose state law applied being the forum where the case was adjudicated. Unresolved by this ruling was whether the jurists in California would also decide, for their own reasons, to allow the parallel cases before them to proceed simultaneously.

Also noteworthy is that the Delaware court would not order expedited proceedings but did state in this decision that it would entertain expedition if the parties agreed to submit a stipulated scheduling order with an expedited timetable. The Court’s reasoning, in part, was that: (i) there was no apparent basis to suggest that the majority shareholder’s interests were not aligned with other shareholders; and (ii) there was no need to enjoin the transaction because a quasi-appraisal remedy was available under the Berger v. Pubco case.

Other posts on these pages addressing the issue of simultaneous multi-jurisdiction litigation are available here.

Recently filed derivative suits now proceeding in both Delaware and Texas which challenge the $21 billion merger involving El Paso and Kinder Morgan again raise the issue of merger litigation involving Delaware companies being filed outside Delaware. Alison Frankel of Thomson Reuters writes here about whether the suits will proceed in Delaware or Texas or both. She refers to a lecture that Stanford Professor Joseph Grundfest gave in which he proposed a solution to multi-jurisdiction contests by means of provisions in charters that include forum selection clauses for shareholder litigation, as we described here and here. Additional commentary on this topic is available here.

Her article also addresses the question of how the court picks lead counsel from among competing plaintiffs in parallel derivative cases which are not governed by the federal statute applicable in securities class actions. Delaware courts have addressed these issues as noted in recent posts on this blog here and here.

Supplement: Professor Larry Ribstein, often cited in Delaware court decisions, graciously refers to this post here, and links to his scholarship on the issues raised in this post relating to choice of forum and corporate governance. The good professor also links to the burgeoning evidence that Delaware is losing cases involving Delaware law that are being filed in other jurisdictions.

In a recent letter ruling, the Delaware Court of Chancery provided a practical analysis to support its reasoning in connection with the selection of lead counsel in a class action challenging a merger. Southeastern Pennsylvania Transportation Authority v. Rubin, et al., C.A. No. 6323-N (revised April 29, 2011), decision available here. By contrast to the more formal and comprehensive recitation of factors recited in the seminal Hirt case as applied in other recent Chancery cases, such as the Del Monte case, summarized here,Court of Chancery Seal this ruling made the candid observation that an application of the Hirt factors were not determinative and did not exorably lead to a selection that distinguished the many counsel competing for the title of lead counsel.  The Harvard Law School Corporate Governance Blog has an insightful post here with proposals to address the related issue of multi-jurisdictional class action litigation.

The Harvard Law School Corporate Governance Blog provides a thoughtful post that discusses recent and older Delaware decisions regarding the standards that are used to select lead counsel in class actions, especially those challenging proposed mergers. In addition to addressing the multi-jurisdictional litigation issue, the post presents a useful review of recent unreported decisions from the Delaware Court of Chancery on this topic, and concludes with a proposal for a new approach that it suggests for the courts to use in selecting lead counsel in class actions.

Scully v. Nighthawk Radiology Holdings, Inc., C.A. No. 5890-VCL (Mar. 11, 2011)(Report of Special Counsel). This Report concluded that there was neither forum shopping nor collusive behavior in the settlement of a class action related to the $170 million merger of Nighthawk Radiology and Virtual Radiologic Corporation.

Issues Addressed (as quoted from the Special Counsel’s Report):

1. Is forum-shopping for purposes of securing an advantageous settlement a wrong under existing law, taking into account Prezant v. De Angelis, 636 A.2d 915 (Del. 1994), and other authorities? What is (or should be) the standard for determining when a settlement is collusive?

2. What role, if any, should the disfavored forum (here, the Court of Chancery) have when it receives notice of what appears to be a collusive
settlement?

3. My principal concern has been that, given the manner in which representative action settlements typically are presented, the court in the favored forum (here, the Arizona Superior Court) would not have reason to learn about (i) forum shopping efforts or (ii) prior adverse rulings or commentary by the court in the disfavored forum. Is this concern valid and, if so, how should it be addressed?

4. Lawyers are the repeat players in the multi-jurisdictional litigation process. What remedy, if any, should there be if counsel is found to have engaged in a collusive settlement? Should the pro hac vice status of forwarding counsel be revoked? Should the revocation go beyond the civil action relating to the collusive settlement? If Delaware counsel participates in a collusive settlement, what action should be taken?

5. How should the answers to the foregoing questions be applied to the facts
of this case? 

Procedural Setting

The Delaware Court of Chancery appointed a Special Counsel to address the above issues "from the point of view of Delaware and the public interest". If not sui generis,  the appointment of a Special Counsel in this context is unusual for corporate litigation in Delaware, and may be compared in the world of corporate law, in an academic sense, with the unfortunate tremors experienced in Japan a few days ago. The genesis of the Special Counsel’s decision was a status conference in December, held in the Court of Chancery in connection with the approval of a class action lawsuit in Arizona. The status conference was memorialized in a transcript ruling here. The class action involved in this matter related to the merger of Nighthawk Radiology and Virtual Radiologic Corp. The Court of Chancery raised issues sua sponte about a possible "reverse auction" and the exploitation of several cases pending in multiple forums (or fora). The Court of Chancery was concerned about whether a settlement reached in a related Arizona case was intended to avoid the scrutiny of the Delaware Court and if there was pressure for the Delaware counsel to join the Arizona settlement or "lose out on fees."

The Special Counsel’s Report (the "Report")

The Special Counsel appointed by the Court of Chancery in this matter was the highly-regarded veteran corporate litigator Gregory P. Williams of Richards Layton and Finger in Wilmington. The Report was filed with the Court two days ago in the form of a "Brief of Special Counsel" authored by the Special Counsel and Richards Layton associate Blake Rohrbacher. Their 42-page magnum opus is available here. Likely to be as widely read as a major decision from the court, it includes a reference to many transcript rulings from the Court of Chancery in recent cases. Transcript rulings are often cited in briefs to the Court of Chancery in corporate litigation. An index to the voluminous Compendium of transcript rulings referred to in the brief is available here, and the actual Compendium of transcript rulings (weighing in a 627-pages) is available here.

Short Overview of the Special Counsel’s Report

The AmLaw Daily blog has a short post that provides a brief synopsis of the Special Counsel’s brief, which we refer to as the Report, here.  According to The AmLaw Daily, the stakes involved in the outcome of the Report included at least one lawyer’s continuing ability to "litigate in the country’s most important business court" as well as "the rules and guidelines for plaintiffs’ and defense lawyers litigating a swell of merger-related class actions." This momentous Report could easily stimulate a long commentary the length of a typical law review article, but the goal here is much more modest. I will attempt merely to highlight a few of the key aspects of the Report and encourage readers to make time to read the entire document linked above. It is truly "must reading" for anyone interested in the latest developments in Delaware law on this topic.

The Special Counsel describes the three-part background of the Report, before he addresses the issues listed above, as follows: 

First the brief discusses forum-shopping in the context of multi-jurisdictional class actions, including the “reverse auction” phenomenon, in which plaintiffs’ counsel are said to underbid each other to settle with defendants and secure higher attorneys’ fees. Next, the brief discusses the effects of the “settlement class” procedure, in which the Court does not certify a class until the settlement is approved. Then, the brief addresses the Court’s review of settlements, particularly those involving issues of potential collusion.

Forum Shopping

Regarding the topic of forum-shopping in the context of multi-jurisdictional class actions, the Report quotes from a recent Chancery transcript ruling as follows:

"Plaintiffs gain some leverage by filing deal litigation in multiple courts. As this Court has recognized, plaintiffs’ lawyers may choose multiple forums to gain advantage in the contest for lead counsel status; they also do so to force defendants to engage with their individual suits.See, e.g., In re Compellent Techs., Inc. S’holder Litig., C.A. No. 6084-VCL, at 20 (Del. Ch. Jan. 13, 2011) (TRANSCRIPT) (“[W]hen everybody is filing in the same forum, you’re not guaranteed to get control of a case. But if you then go and file in another forum, you do have control of that case and then the defendants have to deal with you. You may get control of the entire action but, at a minimum, you get control of a piece of the litigation for purposes of the fee negotiations.”)."  Report at 2.

The Report also cites to the duty of an attorney to zealously represent her client as required by the Rules of Professional Conduct, as a consideration in determining the best forum in which to file suit. See also Delaware Principles of Professionalism at A(4).

Related to the discussion of forum-shopping in corporate litigation, is the increased attention given by scholars and practitioners to non-Delaware courts deciding issues of Delaware law–perhaps due to the aversion that some plaintiffs may have to the greater scrutiny they might find in Delaware. See, e.g., Professor Larry Ribstein’s discussion of this topic and the related issue of jurisdictional competition, available here. See also the discussion available here, of a related article by Professors John Armour, Bernard Black and Brian Cheffins. Also notable is the analysis by Professor Joseph Grundfest here and Professor Stephen Bainbridge’s discussion here of a somewhat related issue of "choice of forum provisions" in bylaws and corporate charters. See also the draft article by Professor Brian Quinn here about plaintiffs bringing Delaware-law based claims in non-Delaware courts.

The Special Counsel concludes that: "… forum-shopping for purposes of securing an advantageous settlement is not an independent wrong under existing Delaware law. That is, such forum-shopping should not be equated with a collusive settlement".

Collusion

After a review of the leading commentary by scholars as well as court decisions from around the country, the Special Counsel formulated the following definition:

a collusive settlement in the context of stockholder deal litigation appears to involve, at its core, an explicit or implicit agreement between counsel for plaintiffs and counsel for defendants to require less consideration for the settling class in exchange for (1) exclusive dealings with particular plaintiffs’ counsel and/or (2) more consideration for plaintiffs’ counsel.  Factors that should give rise to heightened scrutiny for collusiveness include the following: settlement consideration disproportionately weak in comparison to the strength of the claims asserted; settlement with a plaintiff’s firm that typically does not litigate aggressively when other, more formidable, firms are involved in the litigation; and an agreement to pay attorneys’ fees significantly higher than are typical given the settlement consideration.  Report at 26-27.

The Report explains with detailed reasoning why there was no collusion based on the facts of this case. Advice on best practices is also provided for those involved in multi-jurisdictional deal litigation that is pending in the Delaware Court of Chancery and is courts of another state:

… all counsel should be aware that this Court will play some role, either in reviewing a potential settlement or in dismissing a case following a settlement approved by another court.  Therefore, best practice for counsel negotiating a settlement of such litigation in a jurisdiction outside of Delaware—recognizing this Court’s focus on representative settlements—would be to substantively involve Delaware counsel in the negotiations. 

The Report also discussed the public policy aspects of the role that state courts play in multi-jurisdiction settlements within our system of federalism. See, e.g., footnote 12 (citing several transcript rulings within the last few months in which the Court of Chancery addresses the public policy issues.)

The Role of the Non-Settlement Forum

At the request of the Court, the Special Counsel made the following suggestions for the role of the non-settlement forum in multi-jurisdiction deal litigation:

1). The non-settlement forum should ensure that all courts involved in the multi-jurisdictional case are operating on the same information. The Special Counsel is also the Chair of the Court of Chancery Rules Committee and will follow-up to determine if the Court of Chancery is amenable to a new rule that would require disclosure to the settlement forum where the Court of Chancery is the non-settlement forum.

2). The non-settlement forum could maintain an open line of communication with the settlement forum.

3). The non-settlement forum could require the common parties to provide it with copies of the settlement documents filed in the settlement forum.

Remedies for Collusive Behavior and Basis for Revocation of Pro Hac Vice Admissions

Because the Special Counsel did not find the need for any remedies or revocations in this case, I will merely commend the last section of the Report for future reference on the following topics, the second one being of wide applicability beyond the world of class action settlements:

1).  What penalties, if any, can or should courts impose upon a finding of collusive behavior; and

2).  What is the standard for the Court revoking the grant of a motion for admission pro hac vice.

Supplement: Though not related to this particular matter, conceptually relevant to the general topic is an article in Forbes here that discusses from a business columnist’s point of view, some of the merger litigation issues generally addressed in this post.