How Rural/Metro Exposed the Systemic Problem of Disclosure Settlements

42 Pages Posted: 14 Nov 2015 Last revised: 1 Mar 2016

Date Written: February 28, 2016

Abstract

The outcome of the Rural/Metro litigation calls into question the major premise of disclosure settlements – that a global release of claims in exchange for supplemental disclosures is justified, supposedly because it safely can be assumed that the released damages claims challenging the transaction under Revlon and its progeny have been investigated and analyzed and have been found to be weak. In Section II of this article, I discuss the history of disclosure settlements and postulate that the Rural/Metro litigation prompted a decisive break with an era of routine approval of disclosure settlements. In Section III of this article, I discuss the contrast between the disclosure settlement phase and the post-disclosure settlement phase of Rural/Metro and how that contrast sheds light on policy issues raised by the routine approval of disclosure settlements. I argue that a generation of routine disclosure settlements has undermined in various respects the proper functioning of a system for the judicial enforcement of fiduciary duties.

Keywords: Rural/Metro, Disclosure Settlements

JEL Classification: K22, K41

Suggested Citation

Friedlander, Joel Edan, How Rural/Metro Exposed the Systemic Problem of Disclosure Settlements (February 28, 2016). Delaware Journal of Corporate Law (DJCL), Forthcoming; U of Penn, Inst for Law & Econ Research Paper No. 15-40. Available at SSRN: https://ssrn.com/abstract=2689877 or http://dx.doi.org/10.2139/ssrn.2689877

Joel Edan Friedlander (Contact Author)

Friedlander & Gorris, P.A. ( email )

1201 N. Market Street, Suite 2200
Wilmington, DE 19801
United States
302-573-3502 (Phone)

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