March 12, 2015
Aiding & Abetting Defendants: Motion for Amended Complaint Seeks to Add Company Counsel!
OMG! This motion to amend the complaint in Chen v Howard-Anderson (“aka Occam”), CA No. 5878-VCL (Del. Ch.) is sure to raise eyebrows as it indicates a willingness to bring aiding & abetting claims against company counsel and not just financial advisors and counterparties – something rarely seen before in the public company M&A context. The oppositions to the motion filed on March 4th were filed confidentially. Argument on the motion to add company counsel is being held on March 17th.
In light of the prisoner dilemma type incentives created by the Delaware Uniform Contribution Among Tort-feasors Law (DUCATL) – as interpreted by the Delaware Chancery Court in Rural/Metro – several commentators have suggested that defendants are increasingly likely to break ranks rather than present a united front in defense of aiding & abetting claims. This likely will contribute to a rise in company counsel appearing as defendants, if not initially included in the complaints filed or in cross-claims filed by co-defendants seeking to preserve and maximize rights of contribution or credit for settlements under DUCATL. This could get real messy.
Like Rural/Metro, the motion to amend the complaint adds new defendants to an action in which discovery is well advanced if not substantially complete, potentially requiring the new defendants – at least Jefferies (like RBC in Rural/Metro) – to go to trial based on a record, particularly discovery – that they may have had little if any role in creating. See paragraph 7 of the motion acknowledging that it is being filed four years after the hearing on a preliminary injunction in the matter.