Interesting to see Judge Jed Rackoff ruling against Terra Firma in its EMI case this week on the question of the maximum level of damages that Terra Firma could win if the Court finds in its favour.

He held that the maximum pay-out could be US$2 billion rather than the US$8 billion of punitive damages claimed by Terra Firma.
Is that encouraging for Citigroup? Maybe. But this dispute is more about each side’s reputation than the money. Moreover, a clearer indication of the Judge’s view may be his aside that he regards this as a “catfight between two rich companies”. That suggests that he may not have vast wells of sympathy for either party.

All of which should point to a settlement being the right answer, rather than the continued enormous expense of litigation. The only problem there is that, as pointed out in my blog of October 22nd, each party needs to feel that its reputation has been saved by virtue of any settlement. As so often in negotiation, face-saving options for the participants are the most critical part of the deal….