By Nate Raymond
In the three years since Travis Laster joined the Delaware Court
of Chancery, the vice chancellor has given a lot of thought to the proliferation of multiforum litigation, where near-identical
lawsuits over the same merger are filed in multiple states and
courts by different plaintiffs' lawyers.
But Delaware judges aren't alone in being frustrated by the
growing number of multijurisdictional corporate squabbles. Two
judges from New York's state courts on Tuesday expressed their
own concerns about the growing interstate conflicts in corporate
litigation and questioned whether anyone could fix the mess.
"It really depends upon Congress, and I'm afraid Congress
isn't moving too quickly on this," said Associate Justice Helen
Freedman, a New York state judge in the Appellate Division,
Freedman and Laster were speaking at a seminar in New York
on "bet the company" litigation hosted by the Practicing Law
Institute. Another New York judge, Supreme Court Justice Eileen
Bransten, and retired U.S. district judge Richard Holwell also
took part in the hour-long discussion on the headaches of
coordinating lawsuits in different jurisdictions.
The realities of multiforum litigation are well documented,
particularly in corporate litigation. While Delaware still gets
a steady amount of M&A litigation, Laster noted other courts are
also getting those suits. "The number of total litigations has
increased dramatically, and the number of multiple litigations
have increased dramatically," he said.
While some of the litigation is hitting the federal courts,
Laster said more often than not the other judges handling
related suits are in state courts. That didn't surprise Holwell,
who suggested plaintiffs might prefer state courts over his
former home, U.S. District Court in Manhattan, due to two U.S.
Supreme Court decisions that raised pleading standards, Bell
Atlantic Corp v. Twombly and Ashroft v. Iqbal. "It's certainly a
reason for a defendant to have an inclination toward the federal
courts," Holwell said.
The problem with multistate litigation is coordination.
Unlike in the federal courts, where similar cases can be grouped
together before one judge in a multidistrict litigation
proceeding, a state court in Delaware has few mechanisms to
coordinate related litigation in state courts in, say, Ohio or
New Jersey. Freedman ticked off a series of proposals
encouraging multiforum coordination over the years that had
"been singularly unsuccessful."
Bransten, who was one of three judges in New York, Delaware
and Texas to weigh in on the litigation over the proposed merger
between Hexion Specialty Chamical and Huntsman Corp in 2008,
said there was a risk to having related cases going on in
different courts at the same time. "The one thing all of us want
to strive for is uniformity," Bransten said. "Not in our
decisions, but in not having the same thing litigated twice with
Without an MDL-type mechanism for the state courts, the
solution appears to be a phone call from one judge to another, a
fix the judges in New York and Delaware say they frequently
employ. "Often we just come to a resolution on a simple phone
call," Bransten said. Laster said he regularly calls judges in
other courts after the defense files a so-called "one-forum
motion" in both courts seeking to get the judges to coordinate.
But the calls aren't always easy. Laster said the "success
in working it out is directly proportionate to me wanting the
case." If he indicates the case involves complex issues of
Delaware law, usually the other judge becomes interested in the
case, he said.
On the flip side, saying his case load is heavy and he
doesn't want the suit usually results in the other judge not
wanting it either, Laster said. "We're all people. We all have
limited capacity for work and have plenty to do. At the same
time, none of us wants to be a slacker."
What would simplify his job, Laster said, would be if the
defendants took a position on what court should take the primary
role in the M&A lawsuits. Laster said he understood it was a
delicate motion to make, given the possibility of offending
But Laster said the lack of a position by the defendants has
created a vacuum for the plaintiffs' lawyers, who are ready and
willing to fight to keep their case going in the court they
filed it in. "For the plaintiffs, it's not a forum dispute, it's
a control dispute," Laster said. After all, he said, no control
equals no case, which equals no attorneys fees.
(Reporting by Nate Raymond)
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