Delaware judge dumps frequent filer plaintiff attys
WILMINGTON, Del., March 17 |
WILMINGTON, Del., March 17 (Reuters) - The newest judge on Delaware's Chancery Court has taken the unusual step of replacing the lead counsel for a plaintiff in a merger-related class action lawsuit and ordered an investigation of previous counsel.
Vice Chancellor Travis Laster wrote in Tuesday's opinion that he found the plaintiffs original counsel failed to litigate their lawsuit, which was brought on behalf of shareholders against the board of Revlon Inc (REV.N).
"Their advocacy has been non-existent," Laster said. "When forced to defend their conduct and leadership role, original plaintiffs' counsel approached the concept of candor to the tribunal as if attempting to sell me a used car."
The lawsuit was consolidated from several complaints brought by law firms that Laster describes as "frequent filers" -- firms which often file cases on behalf of shareholders, sometimes within in minutes of a deal being announced.
Such lawsuits are often settled with the plaintiffs' attorneys fees paid as part of the agreement. In the past, judges have taken aim at these types of lawsuits by limiting fees by plaintiffs attorneys, but Laster took the unusual step of replacing the lawyers.
"It's a warning that if you bring cases like this you have the risk of being replaced," said Robert Thompson, a law professor at Vanderbilt University Law School.
Laster also ordered the new plaintiffs' counsel to investigate the amount of legal work done by the previous attorneys before they filed the case and before they agreed to a settlement.
Laster also directed the new counsel, drawn from the firms Smith Katzenstein & Furlow, Curtis V Trinko and Harwood Feffer, to determine the number of hours worked by the previous attorneys and how they determined that the settlement was fair.
The attorneys who were replaced were from Rosenthal, Monhait & Goddess and Rigrodsky & Long, both of Wilmington, Delaware and Wolf Popper of New York.
"It says he's a new judge and comes from the front line," Thompson said of Laster, who was a corporate law litigator in the Court of Chancery until late last year. "He's more bold than someone who's been on the bench for 20 years.
(Editing by Richard Chang)
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