In Re Rural Metro Corporation Stockholder Litigation, C.A. No. 6350-VCL (Del. Ch. Mar. 7, 2014) [an enhanced version of this opinion is available to lexis.com subscribers].
This noteworthy opinion deserves more fulsome commentary but for present purposes we highlight that this 90-page post-trial decision by the Court of Chancery found RBC Capital Markets LLC liable for aiding and abetting the breach of fiduciary duties of directors by advising simultaneously Rural/Metro Corp. on the value of the company in connection with a sale to Warburg Pincus LLC, while other bankers at RBC were pitching their services to Warburg in an effort to gain fees by helping Warburg finance the same deal.
Liz Hoffman’s Wall Street Journal article today has an excellent overview of the facts and law. The full opinion is must reading for investment bankers and others involved in M & A. One of many notable aspects of this decision, which is the latest of several Delaware opinions finding fault with investment bankers for similar behavior, is that even if directors may be exculpated from liability under DGCL Section 102(b)(7), that protection does not extend to others, such as investment bankers, who may be found to have “aided and abetted” the breach of fiduciary duty. More extensive commentary on the opinion will follow.
Read more Delaware business litigation case summaries and commentary on Delaware Corporate and Commercial Litigation Blog, a blog hosted by Francis G.X. Pileggi, of Eckert Seamans.
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