Corporate Governance

In re Lear Corporation: Its Tough Being a Plaintiff's Lawyer in Delaware (Part 3)

By J. Robert Brown

VC Strine is at it again.  In In re Lear Corporation, plaintiffs were before the Chancery Court in their fourth amended complaint.  The Vice Chancellor couldn't help but criticize the efforts.  With respect to the plaintiffs' theory that the board violated its fiduciary obligations by approving a termination fee for a merger agreement that they allegedly viewed as unlikely to pass, VC doesn't like it.  He describes the claims as "inflammatory and conclusory charges of wrongdoing."  

But the most egregious slap concerned the complaint.  He didn't like that either and had this to say about the efforts of plaintiffs' counsel: 

• The amended complaint in this case is an unwieldy document comprised of 208 paragraphs.  As the case evolved, the complaint simply grew, with the plaintiffs adding on to their original complaint without any attempt at editing.
  

The statement was unnecessary even if true.  Does the opinion become any more insightful because of the gratuitous challenge to the plaintiffs' editing skills?  But more importantly the comment is wrong.  First, if you want to stop reading and see for yourself, the redacted version of the fourth amended complaint is here.  It is certainly long, going on for 92 pages.  The complaint, however, is well written and well edited.  The document travels through the problems associated with the attempted merger, relying on a clear and chronological description of the events as they transpired. 

Moreover, as usual, VC Strine takes none of the responsibility for the length.  As we have pointed out time and time again, Delaware imposed excessive pleading standards, often dismissing cases on this basis without allowing plaintiffs even to have discovery.  The trend toward longer complaints has be placed in large part at the feet of the judges in the Delaware courts.   

Full post as published by The Race to the Bottom on October 07, 2008 (boomark / email).