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NEWSMAKER-Judge rattles lawyers in U.S. shareholder battles
February 11, 2011 / 4:26 PM / 7 years ago

NEWSMAKER-Judge rattles lawyers in U.S. shareholder battles

* Judge fighting ‘darker’ side of shareholder lawsuits

* Unusual tactics stand out in powerful court

* Many welcome effort to improve quality of litigation

By Tom Hals

WILMINGTON, Del., Feb 11 (Reuters) - Lawyers involved in corporate litigation understandably might want to avoid the newest judge on one of the top U.S. business courts.

The judge, Vice Chancellor Travis Laster, has brought some unusual tactics to the bench at Delaware’s Chancery Court, whose five judges are key arbiters of U.S. corporate law. With a moralistic style some observers say may be borrowed from his Presbyterian minister grandfather, Laster is taking on what he sees as self-interested lawyers who are too cozy with counterparts on the other side of the aisle.

“He is creative and one of the least reserved in his decision-making style of any judge I’ve seen in the Delaware courts in a long time,” said J. Robert Brown, a professor at the University of Denver’s Sturn College of Law.

Delaware’s corporate law governs most big U.S. companies. Businessmen such as billionaire oilman T. Boone Pickens and eBay Inc (EBAY.O) founder Pierre Omidyar have come to the Chancery Court to settle disputes.

The court is the forum of an increasing number of lawsuits challenging corporate mergers on behalf of shareholders who say the deals treat them unfairly. <For details, see [ID:nN11251713]>

Laster was nominated to a 12-year term in 2009, at the age of 39, becoming only the 35th member of the bench since 1793, according to the court’s website. He joined after 13 years litigating both for plaintiffs and defendants, which honed his insights on how lawyers operate.

Attacking what he calls “the darker underside” of investor lawsuit settlements, Laster has sometimes used rare measures. For example, he essentially fired plaintiffs’ lawyers in a lawsuit against the board of Revlon Inc (REV.N), saying they “literally did nothing” for their clients and rushed to a deal that included their fees.

Observers noted his tendency to intervene without lawyers from either side asking for his involvement. He also has challenged the court’s congenial reputation with biting comments, calling repeat plaintiffs’ lawyers “frequent filers.”

Those who rush to the courthouse to file a lawsuit as soon as a deal is announced are “pilgrims” -- because, like those on the Mayflower, they are first to arrive and quick to “settle.”

The judge has said in court that he believes shareholders would be better off with lawyers who take the time to investigate corporate conduct before suing, and then to file fewer, better-drafted complaints.

Laster, who declined to be interviewed for this story, also takes defense attorneys to task.

“You might think that I am hostile to plaintiffs’ lawyers and to representative litigation,” he said at a January hearing involving a lawsuit against Botox maker Allergan Inc (AGN.N). “Far from it.”

Indeed, in December he took one of his most drastic steps, threatening to bar David Berger, a partner at corporate defense firm Wilson Sonsini Goodrich & Rosati, from practicing in the court.

Laster ordered an investigation of Berger for settling litigation against his client, the board of Nighthawk Radiology Holdings Inc, in Arizona state court.

Laster thought the deal had a whiff of collusion between the lawyers for the plaintiff and defendant, as it came soon after he indicated that plaintiffs in a parallel Delaware lawsuit had a good case.

Although Laster has known Berger for about 15 years and has dined with him, “everyone, even people I like on a personal level, has to follow the rules,” the judge said in court.

Berger declined to comment on the matter.

NEW PARADIGM

Laster often quotes advice passed on from his minister grandfather, whose robe he wore and battered Bible he held at his investiture ceremony.

Laster is not alone in pushing to improve the quality of litigation. Other judges have arrived at the court with similar vigor, such as Leo Strine who joined the court in 1998.

“He’s Strine on steroids,” said a Delaware lawyer who requested anonymity because he regularly appears before Laster.

Laster has plenty of supporters, although few practitioners wanted to comment on a sitting judge.

“(His actions) might lead to a new paradigm that will address this issue of lawyers’ incentives better than it has in the past,” said Robert Thompson, a law professor at Vanderbilt University in Nashville, Tennessee.

In a 2009 interview with Reuters shortly after becoming a judge, Laster emphasized his deep respect for the court’s reputation for civility.

“My job is to decide the cases that come before me and decide them as narrowly as possible,” he said. “What that means is, I‘m not here with some personal agenda to Lasterize the law.” (Editing by Martha Graybow and Lisa Von Ahn)

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