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Summaries and analysis of recent Delaware court decisions concerning business-related litigation.

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Showing 77 posts in Class Actions.

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.

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.

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.

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 ›

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 ›

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.

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.

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.

Court Of Chancery Explains Equitable Tolling

Posted In Class Actions

In re Primedia Inc. Shareholders Litigation, C.A. 6511-VCL (December 20, 2013)

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.

Court Of Chancery Explains How To Calculate The Limitations Period When Class Is Not Certified

Posted In Class Actions

In Re Nine Systems Corporation Shareholders Litigation, C.A. 3940-VCN (July 31, 2013)

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.

Court Of Chancery Sets Guidelines For Trades By Class Representatives

Posted In Class Actions

In re NYSE Euronext Shareholders Litigation, C.A. 8136-CS (Transcript March 8, 2013)

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.

Court Of Chancery Explains Class Representative Qualifications

Posted In Class Actions

New Jersey Carpenters Pension Fund v. infoGROUP, Inc., C.A. 5334-VCN (February 13, 2013)

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.

Supreme Court Requires Opt Out Class Action

Posted In Class Actions

In re Celera Corporation Shareholder Litigation, No. 212, 2012 (December 27, 2012)

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.

Court Of Chancery Applies Hirt Test

Posted In Class Actions

Coyne v. Catalyst Heath Solutions Inc., C.A. 7448-VCN (May 25, 2012)

This decision applies the familiar Hirt factors to decide who should be lead class counsel.  Note the slight preference for who has the most support among the various plaintiffs' firms.