Court Of Chancery Clarifies Rules On Class Action For Fraud Claims
This decision clarifies when a class action may be brought arising out of a claim based on the duty of disclosure. Briefly, when there was no request for the stockholders to vote [such as when they just receive notice of a completed corporate action], then a plaintiff must prove "reliance, loss causation and damages." As those elements of the claim may vary for each individual plaintiff, a class action is inappropriate. Delaware does not recognize the "fraud on the market" theory in those instances.