Delaware Business Litigation Report

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

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.

In this decision, the Court considered these access issues and the mechanics of class member inspection of the discovery record and highlighted the benefit of retaining Delaware counsel in such an action. A Special Discovery Master recommended that class members be provided access to the record after submitting proof of beneficial ownership and agreeing to a more restrictive confidentiality agreement. Because the class included many unrepresented individual stockholders, the Court found that more stringent confidentiality provisions were warranted, as was in-person inspection of the discovery record, which the Court indicated could be provided via a terminal with access to a document review platform.

Once the unrepresented movants provided proof of ownership, the Court ordered that parties provide access to the record via a terminal within 100 miles of the stockholder’s address. The Court noted that, while stockholders must be allowed to take notes regarding the discovery record, other restrictions on access and review were permissible, such as supervised observation, removal of personal electronic devices, and restriction on printing materials.

Finally, the Court observed that if a stockholder retained individual Delaware counsel, then counsel would be allowed to access and inspect the documents electronically, subject to negotiation between parties. For unrepresented stockholders, however, the terminal was the only option available that sufficiently addressed confidentiality considerations.

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