In Scully v. Nighthawk, Special Counsel appointed (unusually) by the Court filed a brief on March 11 addressing the general issue of “reverse auctions” in multidistrict litigation (in which counsel for both sides in class actions in multiple fora have a possible incentive to proceed in the forum anticipated to approve the lowest-cost settlement). While likely not the last word on these issues (the Court has yet to rule), the brief sets a high bar to a holding that a settlement was “collusive”. But it states that the Delaware Court “should” ensure that all courts have equal access to information and can police this issue by, among other things, requiring that defendants disclose to the settlement court Delaware materials such as opinions or transcripts, or by contacting the settlement court itself.
The brief also proposes a new Chancery rule requiring such disclosures. Special Counsel, veteran Delaware corporate litigator Gregory P. Williams of Richards, Layton & Finger, is also Chair of the Court of Chancery Rules Committee; he intends to ask the Court whether the Committee should consider such a rule. The brief is available here (RLF associate Blake Rohrbacker assisted); the transcript of Vice Chancellor J. Travis Laster discussing the issue and appointing Special Counsel here.
Filed under: Class Actions, Collusive Settlements, Court of Chancery, Settlements
Delaware Corporate Law Update 