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Showing 83 posts in Class Actions.

Chancery Rejects Declining-Percentage Method, Awards $266.7 Million in Attorneys’ Fees for $1 Billion Class Action Settlement


In re Dell Techs. Inc. Class V S'holders Litig., C.A. No. 2018-0816-JTL (Del. Ch. July 31, 2023, revised Aug. 22, 2023)
Stockholders filed class actions in the Court of Chancery challenging the terms of a redemption of a special class of common stock. After years of litigation and the filing of pre-trial briefs, nineteen days before trial, the parties reached a cash settlement of $1 billion. The plaintiff's counsel submitted a fee application for 28.5 percent of the common fund. Stockholders holding more than 25 percent of the class objected to the fee application and asked that the Court instead apply the declining-percentage method used for calculating fees in federal securities litigation. More ›

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Chancery Approves Revised Class Action Settlement After Denying Initial Proposal Due to Overly Broad Release

Posted In Breach of Fiduciary Duty, Chancery, Class Actions, Settlements


In re AMC Entm't Holdings, Inc. S'holder Litig., Consol. C.A. No. 2023-0215-MTZ (Del. Ch. July 21, 2023)
In re AMC Entm't Holdings, Inc. S'holder Litig., Consol. C.A. No. 2023-0215-MTZ (Del. Ch. Aug. 11, 2023)
The board of directors of a company in financial distress sought to raise capital by issuing more common stock. Existing common stockholders did not approve the proposed measure. The board then issued new preferred stock with sufficient voting power to ensure the passage of board proposals to issue new common shares. Stockholders filed a class action, alleging that the board violated the Delaware General Corporation Law in creating the preferred stock and breached its fiduciary duties by diluting the common stock's voting power. More ›

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Chancery Orders Discovery Record Be Made Available to Stockholders in the Settlement Class

Posted In Chancery, Class Actions, Discovery


In re AMC Entertainment Hldgs., Inc. S’holder Litig., 2023-0215-MTZ (Del. Ch. May 20, 2023)
Under Delaware law, class members are entitled to access to the discovery record to assess the terms of a proposed class action settlement. In addition to confidentiality concerns, the size of a class and the scope of a discovery record present logistical challenges regarding access, particularly if class members are not represented by counsel. More ›

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Chancery Declines to Modify Status Quo Order to Allow Partial Performance of Pending Settlement

Posted In Chancery, Class Actions, Equity, Settlements


In re AMC Entertainment Holdings, Inc. Stockholder Litigation, Consol. C.A. No. 2023-0215-MTZ (Del. Ch. Apr. 5, 2023)
In various contexts, upon request or stipulation, the Court of Chancery will impose status quo orders, which typically restrain corporate action pending the Court’s adjudication of disputed rights. A party seeking to modify or vacate such an order bears the burden of establishing good cause for the change. Here, following a settlement agreement between the parties, the plaintiffs sought to lift a status quo order to permit the defendant, AMC, to partially effectuate the settlement. The proposed action would alter the company’s capital structure. The litigation involved class claims, implicating Court of Chancery Rule 23, and the requirement that any class action or derivative settlement be approved by the Court following notice to the stockholders and the opportunity to object. The Court had not yet considered or approved the proposed settlement. In these circumstances, with little more than a desire for speed offered in support of the motion, the Court declined to lift the status quo order, citing the Court’s gatekeeping role in Rule 23 settlements.

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Chancery Upholds Class Claims Alleging Breaches of Fiduciary Duty in Alleged Controlling Stockholder’s Tender Offer

In re Coty Inc. Stockholder Litigation, C.A. No. 2019-0336-AGB (Del. Ch. Aug. 17, 2020)  

JAB Holding Company S.à.r.l. and its affiliates (together “JAB”) completed a partial tender offer (the “Tender Offer”) for shares of Coty Inc. (“Coty”) on April 25, 2019, increasing its ownership stake from 40% to 60% of the outstanding Coty shares. At the time of the Tender Offer, Coty had a nine-member board of directors – four directors affiliated with JAB (the “JAB Directors”) and five individual directors (the “Individual Directors”). Pierre Laubies, the CEO of Coty, was one of the Individual Directors. Although Laubies was the only Individual Director with a management position at Coty, he, like all of the Individual Directors, had professional ties to JAB and its officers, with Laubies having formerly served as CEO of a JAB affiliate.  More ›

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Citing Trulia and Walgreens Decisions, Federal District Court Orders Plaintiffs’ Counsel to Return Agreed-Upon Mootness Fee

Posted In Class Actions, M&A, Settlements

House v. Akorn, Inc., Consol. Nos. 17-C-5018, 17-C-5022, 17-C-5026 (N.D. Ill. Jun. 24, 2019).

Disclosure-only settlements of stockholder class actions have received increased scrutiny following the Delaware Court of Chancery’s Trulia decision in 2016 and the Seventh Circuit Court of Appeals’ Walgreens decision later that year.  Those decisions observed the problem of M&A strike suits, expressed disfavor of disclosure-only settlements in M&A class actions, and significantly raised the bar for getting the required court approval of such settlements.  One consequence has been many M&A suits migrating from the Delaware Court of Chancery to federal courts around the country.  Another has been defendants more frequently acting to voluntarily moot the claimed disclosure violations through supplemental disclosures.  In that instance, the parties then face the choice of either litigating the appropriate mootness fee award to plaintiffs’ counsel for the supplemental disclosures prompted by their claims or, alternatively, privately negotiating the mootness fee award and thus avoiding the judicial process, provided no other stockholders object to the negotiated award.  More ›

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Superior Court Sets Out Rules For Class Certification

Posted In Class Actions

Wilmington Pain & Rehabilitation Center P.A. v. USAA General Indemnity Insurance Co., No. N15C-06-218 JRJ CCLD (October 17, 2017)

This is an important decision became it sets out the most recent rules for determining when a class may be certified. Briefly, the class members claims must be capable of resolution on a class-based basis and not by looking at each class member’s circumstance. While easy to say, that is harder to actually do and this decision explains the reasoning that should be used.

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Court Of Chancery Stresses Importance Of Records Demand In Lead Counsel Battle

Posted In Class Actions

In re CytRx Corp. Stockholder Derivative Litigation II,  C.A 11800-VCMR (February 22, 2017)

When asked to choose the lead plaintiff and class counsel, the Court of Chancery applies the well-known Hirt factors.  As this decision demonstrates, the Court also will place some significant weight on which of the competing plaintiffs used a books and records inspection to bolster its complaint, rather than just relying on the financial press.

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Court Of Chancery Explains Class Distribution Procedures

Posted In Class Actions

In re Dole Food Company Inc. Stockholder Litigation, C.A. 8703-VCL (February 15, 2017)

Distributing the proceeds from a class action settlement is not as easy as you might think. Tracing ownership is complicated by the use of various intermediaries such as Cede & Co. This decision explains why that is so and provides a solution to the problem.

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Court Of Chancery Calculates Mootness Benefit In Post-Trulia Decision

Posted In Class Actions

Louisiana Municipal Police Employees’ Retirement System v. Black,  C.A. 9410-VCN (February 19, 2016)

This is an interesting decision for two reasons. First, the decision awards a mootness fee for disclosures and changes to deal protection measures in a merger gone bust. Thus, the opinion is useful precedent in the post-Trulia world, where mootness fee applications are one of the two optimal methods for adjudicating disclosure claims. More ›

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Court Of Chancery Explains Recent Fee Award Ranges

Posted In Class Actions

In Re Jefferies Group Inc. Shareholders Litigation, C.A. No. 8059-CB (June 5, 2015)

This is an important decision for several reasons. More ›

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Court of Chancery Addresses Application of Fee-Shifting Bylaw

The Rites of Spring are upon us: budding flowers, warmer temperatures, and a Delaware court issuing an important decision just before the annual Tulane Corporate Law Institute begins. This year the honor of issuing that decision fell to Chancellor Bouchard who issued his opinion in Strougo v. Hollander, C.A. No. 9770-CB (Del. Ch.) on March 16, 2015. The opinion addressed plaintiff’s motion for partial judgment on the pleadings that a fee-shifting bylaw adopted after the challenged transaction did not apply to him. The Court found that the fee-shifting bylaw did not apply to the plaintiff in this case, and in reaching this conclusion, made some interesting comments that will undoubtedly further the debate over the proposed legislation to eliminate fee-shifting bylaws and regulate forum selection bylaws. More ›

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Court Of Chancery Declines Mootness Fee

Posted In Class Actions
In re Zalicus Inc. Stockholders Litigation, C.A. 9602-CB (January 16, 2015) The Court of Chancery has again declined to dismiss a class action without notice to the class that the plaintiff's attorney is to be paid a so-called "mootness fee."  That is a too-clever attempt to avoid having the court actually look at how much is being paid to the lawyer who files an action attacking a transaction and then gives up the suit after some sort of additional disclosure is made that she argues makes the case "moot."  Instead, the Court wants notice to be given to the stockholders. Share

District Court Explains Class Certification Issues

Posted In Class Actions
Skeway v. China National Gas Inc., No. 10-728-RGA (June 18, 2014) This is a useful opinion dealing with when a securities action should be certified as a class action. Share

Court Of Chancery Explains When A Complaint Asserts A Class Claim

Posted In Class Actions

Allen v. El Paso Pipeline GP Company LLC, C.A. 7520-VCL (May 19, 2014)

This is an excellent explanation of when a clam is a "direct" claim that may be asserted by a class and not a derivative claim.  When the plaintiff's rights, such as the right to have a transaction approved in a certain way, are affected, then her claim is a direct one.  Numerous examples are given as well.

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