In an opinion assessing damages in In re Rural/Metro Corp. S’holders Litig., C.A. No. 6350-VCL (Del. Ch. Oct. 10, 2014), the Court of Chancery held that a financial advisor, which had been held liable in an earlier opinion (discussed at http://www.rlf.com/Publications/5558) for aiding and abetting breaches of fiduciary duty by a board of directors in connection with approving a merger and related disclosures, would be required to pay 83% of the damages to the stockholder class. Relying on a discounted cash flow analysis, the Court determined that the fair value of Rural/Metro on a quasi-appraisal basis fell short of the merger price by $4.17 per share, and that the damages to the class of stockholders not affiliated with the defendants totaled approximately $91.3 million.
Rural/Metro, its directors and the company’s other financial advisor had settled before trial and obtained “joint tortfeasor” releases, under which the plaintiff class agreed that the damages recoverable against other tortfeasors would be reduced to the extent of the settling defendants’ respective pro rata shares, as permitted by the Delaware Uniform Contribution Among Tortfeasors Law, 10 Del. C. § 6301, et seq. The Court held that the unclean hands doctrine barred the non-settling financial advisor from claiming a settlement credit as to claims involving that financial advisor’s adjudicated “fraud upon the board,” but that it could claim a settlement credit as to other claims. The Court determined that the record at trial supported a finding that two of Rural/Metro’s directors were joint tortfeasors, but did not support such a finding as to the other directors or the settling financial advisor. Allocating responsibility for the various claims on which liability had been previously found, the Court entered judgment for approximately $75.8 million against the non-settling financial advisor.