In a case of first impression, Vice Chancellor Laster issued an opinion in October 2014 holding that the Delaware Uniform Contribution Among Tortfeasors Act ("DUCATA") did not bar RBC Capital Markets LLC from collecting a settlement credit, even though other defendants in the Rural/Metro Corp. shareholder litigation settled with plaintiffs. The full name of the case is Rural Metro Corp. Stockholders Litig., C.A. No. 6350-VCL (Oct. 10, 2014).
Specifically, the Court found that under the DUCATA, a defendant that commits an intentional tort can seek contribution from a joint tortfeasor. Even though permitted by statute, courts retain discretion to deny contribution "if warranted by the facts of the case," including based on equitable considerations. In considering the equities the Court made clear that the relevant analysis was RBC's conduct vis-a-vis other joint tortfeasors and not vis-a-vis the class.
Notwithstanding the above, the Court found that RBC was barred from claiming a settlement credit to the extent it perpetrated a "fraud upon the board," which it characterized as a "failure of insiders to come clean" about their own or others' wrongdoing. As such, the Court found that the doctrine of unclean hands precluded RBC's entitlement to a full settlement credit, and ordered it to pay roughly $76 million, or $4.17 a share, to Rural/Metro's stockholders.
The Court also held as a matter of first impression that those defendants protected from monetary liability by the company's exculpatory provision under Section 102(b)(7) of the Delaware General Corporation Law were not "joint tortfeasors" under DUCATA, such that settlement credit would not be available as to the conduct of those defendants.
This case is significant in that it impacts the qualification of "joint tortfeasors" under DUCATA. Parties to litigation should be aware of the implications of this case when this Act is implicated among joint tortfeasors.
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