In the case of Coyne v. Catalyst Health Solutions, Inc., C.A. No. 7448-VCN, the Court of Chancery was asked to determine a lead plaintiff, lead counsel and liaison counsel in connection with multiple actions brought by different plaintiffs to challenge the acquisition of Catalyst Health Solutions, Inc. by SXC Health Solutions Corp.
This case is significant in that it highlights the factors to be considered by the Court in selecting lead plaintiffs and lead counsel, which were originally set forth in Hirt v. U.S. Timberlands Service Company, LLC, 2002 WL 1558342, at *2 (Del. Ch. July 3, 2002). Those factors include:
- The quality of the pleading that appears best able to represent the interests of the shareholder class and derivative plaintiffs;
- The relative economic stakes of the competing litigants in the outcome of the lawsuit (to be accorded great weight);
- The willingness and ability of all the contestants to litigate vigorously on behalf of an entire class of shareholders;
- The absence of any conflict between larger, often institutional stockholders and smaller stockholders;
- The enthusiasm or vigor with which the various contestants have prosecuted the lawsuit;
- The competence of counsel and their access to the resources necessary to prosecute the claims at issue.
Accordingly, plaintiffs and their counsel should take account of the above-referenced factors when attempting to be named lead plaintiff or lead counsel in a class action dispute.