Law Firms
Stoneridge Ruling Protects Clifford Chance in Shareholder Action
Posted May 1, 2008, 09:16 am CST
By Debra Cassens Weiss
A federal judge in Philadelphia has ruled that Clifford Chance cannot be sued in a shareholders suit for advice the law firm gave to a health care finance company.
The suit had claimed Clifford Chance helped executives at DVI Inc. hide financial problems. But U.S. District Judge Legrome Davis said the law firm was protected because its work did not result in public statements that affected the market for DVI stock, the New York Law Journal reports.
Davis cited the U.S. Supreme Court’s January ruling in Stoneridge Investment Partners v. Scientific-Atlantic Inc., which held that third parties are not liable for participating in corporate wrongdoing if they did not directly mislead investors.
The lawyer for Clifford Chance, William Schwartz of Cooley Godward Kronish, told the New York Law Journal that the decision will satisfy law firms that "hoped there would be meaning in the Supreme Court's decision."