August 19, 2010
Earlier this week, my co-blogger J. Scott Colesanti asked whether there was a "New Scrutiny of Settlements" coming from the bench. This made me think of an earlier post by J. Robert Brown Jr. over at the Race to the Bottom, wherein he noted there was some irony in a Delaware judge criticizing less-than-stellar board oversight when that is precisely what one should expect in light of Delaware's deferential approach to directorial oversight. Similarly, one might argue that there is some irony in judges criticizing the decision by government agencies to settle cases on less than onerous terms when that is precisely what one should expect when the judiciary repeatedly bends over backwards to protect business from "frivolous" litigation when cases go to trial. (I set out the various ways this is done in the securities law area here.) Obviously, the devil is in the details. But if this trend of criticizing settlements continues, it would be interesting to compare the judicial criticisms to the results of similar cases that are actually litigated.