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Summaries and analysis of recent Delaware court decisions concerning business-related litigation.
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Showing 78 posts in Class Actions.
Citing Trulia and Walgreens Decisions, Federal District Court Orders Plaintiffs’ Counsel to Return Agreed-Upon Mootness Fee
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 ›
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.
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.
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.
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 ›
This is an important decision for several reasons. More ›
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 ›
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.
This decision explains when the doctrine of equitable tolling will save a complaint from being dismissed because it was filed too late. If the plaintiff would not have been able to discover the key facts supporting a claim by inspecting the company's books and records, equitable tolling of the applicable limitations period will apply until those facts come to light. That is particularly helpful in a Brophy claim alleging the use of insider information where the knowledge of the insider may not become apparent until that insider's records are disclosed.
This decision explains how to determine if too much time has passed to permit a complaint to go forward, under a variety of circumstances. It also discusses the various rules that may be applied when a class action is not certified but there is tolling while the class certification issue is pending.
This transcript sets 2 guidelines that a class representative should follow with respect to trading in the securities held by the class it represents. First, any trading should be first reviewed by class counsel to avoid problems with using insider information gained in the course of the litigation. Second, the class representative should retain at least 75% of the securities it held when the class was certified to be sure it continues to have the same economic interests that warranted its appointment to represent others.
This decision is a good review of the qualifications needed to serve as a class representative. Particularly noteworthy is its holding that merely voting in favor of the merger under attack is not an automatic disqualification. So too, the sale of the stock prior to the merger is not grounds for disqualifying a proposed class representative.
The Delaware Supreme Court has required opt out rights in a class action settlement. The objector that wanted to opt out was a major stockholder, the claims being settled were only damage claims and the class representative had acted in a way that called into question if it had adequately represented the class. Thus, this decision may be an abnormality and opt out rights will still continue to be rarely granted. But, we shall see.