October 18, 2013

Chevron/FedEx Appeal Voluntarily Dismissed: Smart But Problematic Tactical Move

Here’s news from this blog by Prof. Larry Hamermesh:

I woke up this morning to news from the ever-faithful and thorough Chancery Daily that the plaintiffs in the FedEx/Chevron exclusive forum provision litigation have voluntarily dismissed their appeal of Chancellor Strine’s June 25, 2013 opinion generally validating forum selection bylaw provisions.

Plaintiffs’ counsel could hardly have made a more tactically intelligent move. As persuasive as Chancellor Strine’s opinion is – most people I talk to in Delaware believe that it was a shoe-in for affirmance – taking away the possibility of an endorsing opinion from the Delaware Supreme Court leaves at least a residual crack of daylight for plaintiffs to argue, in cases brought outside of Delaware, that exclusive forum bylaw provisions are generally unenforceable. That crack of daylight can only assist plaintiffs’ counsel who, for tactical reasons, would rather not litigate class or derivative claims in Delaware due to a sense that at least in some cases those claims would have settlement value that they wouldn’t have if brought in Delaware.

As you might guess, I view the dismissal of the appeal with considerable disappointment. I was hoping for and expecting a strong affirmance of the Chancellor’s ruling. Moreover, I expect that other plaintiffs’ counsel will learn a lesson from the FedEx/Chevron plaintiffs and make defendants invoke exclusive forum bylaws in jurisdictions outside of Delaware, where the courts may be less sympathetic to them.

FASB: Disclosure Framework Project FAQs

Recently, the FASB published this set of FAQs about its disclosure framework project. In FEI’s “Financial Reporting Blog,” there is an explanation of the status of this project (“bifurcated”) – as well as a status report on the IASB’s Disclosure Initiative.

SCOTUS Considers Scope of Preclusion of State Law Securities Fraud Class Actions Under Federal Law

Here’s news excerpted from this Simpson Thacher memo: Last week, on the first day of the new term, the Supreme Court heard oral arguments in Chadbourne & Parke LLP v. Samuel Troice in which the Court is expected to clarify the scope of preclusion under the Securities Litigation Uniform Standards Act (“SLUSA”) of state-law securities fraud class actions. SLUSA precludes state-law fraud class actions to the extent they are “in connection with” SLUSA-covered securities. The Court will likely resolve a circuit split and determine when an alleged misrepresentation is sufficiently related to the purchase or sale of a covered security to satisfy the “in connection with” requirement for SLUSA to preclude state-law class actions.

In this blog entitled “Is the “Fraud on the Market Theory” About to Get Dumped?,” Kevin LaCroix analyzes another SCOTUS case for this term…

– Broc Romanek