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Summaries and analysis of recent Delaware court decisions concerning business-related litigation.
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Showing 75 posts in Class Actions.
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 decision has been widely reported as signaling the Court of Chancery’s intention to cut back on the wave of suits filed over almost every merger. More ›
This is an important decision for several reasons. 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.
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.
This is an important decision because it clarifies when a stockholder will be deemed to have acquiesced to a merger, thereby losing her right to continue to litigate. In short, voting for the merger or accepting a tender offer is acquiescence. Accepting the merger consideration when the merger is inevitable is not acquiescence.
This decision is also useful for its explanation of how the Court will calculate the fees to be awarded.