Delaware Chancery Court Dismisses Plaintiffs' Counsel In Merger Class Action, Challenging Credibility Of All Counsel In Connection With Proposed Settlement

In In re Revlon, Inc. Stockholder Litigation, Consol. C.A. No. 4578-VCL, 2010 WL 985732 (Del. Ch. Mar. 16, 2010), the Delaware Chancery Court dismissed a group of law firms that had been appointed to act as co-lead and liaison plaintiffs’ counsel for a putative class of stockholders in an action challenging a corporate merger, and appointed new co-lead counsel with instructions to investigate the conduct of former counsel and the fairness of a proposed settlement negotiated by former counsel. This scathing decision from Vice Chancellor Laster highlights the critical importance for all attorneys of maintaining credibility and “reputational capital” with the Court when, among other things, seeking approval of a settlement of a class or derivative action.

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