Robbins Geller Obtains near $100 Million Judgment Against RBC Capital Markets, LLC on Behalf of Former Rural/Metro Corp. Shareholders
On Friday, October 10, 2014, Vice Chancellor Laster issued an opinion finding RBC Capital Markets, LLC (“RBC”) liable for nearly $100 million to the class of former Rural/Metro Corp. shareholders. The award is among the largest ever obtained against a bank over its role as a deal adviser, surpassing the $23.7 million Barclays PLC paid in 2011 to Del Monte Foods Co. shareholders and the $20 million advisory fee forfeited by Goldman Sachs Group Inc. for its role in the 2012 buyout of El Paso Corp.
Previously, Vice Chancellor Laster issued a post-trial opinion on March 7, 2014 finding RBC liable for aiding and abetting Rural/Metro Corporation’s board of directors’ fiduciary duty breaches in the buyout of Rural/Metro by Warburg Pincus LLC but did not fix an amount of damages suffered by the class.
In opposing damages, RBC had argued that it was only liable for 12.5% of the total damages suffered by the class. The Court rejected this contention, finding RBC liable for 83% of the total damages suffered by the class.
In assessing damages, the Court reiterated that “RBC provided false information to the Board in its financial presentation” and RBC’s conduct during the final approval of the Merger “involved a fraud on the Board.” Opinion at 48. In denying RBC’s request for contribution from the defendants who settled before trial, the Court explained that “[i]f RBC were permitted to seek contribution for these claims from the directors, then RBC would be taking advantage of the targets of its own misconduct.” Id. In short, “RBC forfeited its right to have a court consider contribution for [the Disclosure Claim or Sale Process Claim] by committing fraud against the very directors from whom RBC would seek contribution.” Id.at 49.
Robbins Geller and Friedlander & Gorris, P.A. are class counsel in this case.