In a series of rulings that culminated in the January 2016 decision in the Trulia case, the Delaware courts evinced their hostility to the disclosure-only settlements that so often characterize the resolution of merger objection lawsuits. Since that time claimants have been filing the merger objection suits in courts outside Delaware. The question has been whether the other courts where the merger objection cases are now being filed would follow Delaware’s strict Trulia standard when reviewing disclosure-only settlements. In a ruling late last week, an intermediate appellate court in Florida expressly adopted Delaware’s Trulia standard. The Florida ruling does raise hopes that other courts might follow as well, which in turn could help stem the tide of proliferating merger objection litigation. The Florida District Court of Appeal, Second District’s July 13, 2018 decision in the Quality Distribution case can be found here.
Continue Reading Florida Court Adopts Delaware’s Strict Standard for Review of Disclosure-Only Settlements

As most readers are aware, litigation involving objection to mergers and acquisitions transactions has been proliferating in recent years, to the point that virtually every deal draws at least one lawsuit. While many of these actions are nuisance lawsuits, they are not without their costs. Indeed, according to one recent study, the costs to defend and settle these suits are growing.
Continue Reading The Growing Costs of Merger Objection Litigation

In prior posts (for example here), I noted that a series of Delaware court decisions culminating in the Court of Chancery’s January 2016 opinion in the Trulia case signaled the state’s courts’ hostility to disclosure-only settlements in merger objection lawsuit, which in turn has encouraged merger objectors to file their lawsuits in other jurisdictions. The Trulia line of cases is in fact only one of several recent judicial developments in Delaware that constrain shareholder claimants. So is stockholder litigation in trouble in Delaware? In a March 22, 2018 post on the Delaware Business Litigation Report (here), Edward McNally of the Morris James law firm take a look at this question, discussing where things stand while Delaware’s courts look to find the proper balance.
Continue Reading Is Shareholder Litigation in Delaware in Trouble?

In a series of rulings culminating in the January 2016 decision in Trulia (about which refer here), Delaware’s courts have evinced their hostility to the kind of disclosure-only settlement in which merger objection suits are frequently resolved. Since that time, plaintiffs’ lawyers increasingly have filed merger-objection lawsuits outside of Delaware, either in federal court or courts in other states. The question since then has been whether other jurisdictions’ courts would follow Delaware’s courts’ lead in rejecting disclosure-only settlements. Many courts have followed Delaware, but others have followed a different path. In particular, New York, in an intermediate appellate court decision in Gordon v. Verizon (about which refer here), set a lower standard than Delaware’s courts for accepting disclosure-only settlements.

However, the apparently more lenient New York standard did not stop New York Supreme Court Judge Shirley Werner Kornreich from rejecting a proposed disclosure-only settlement of a lawsuit challenging Martin Marietta’s 2014 acquisition of Texas Industries. In a scathing February 8, 2018 opinion (here), Judge Kornreich rejected the proposed settlement as “utterly useless to shareholders.” Her opinion shows that even under New York’s seemingly more lax standard, disclosure only settlements could face significant scrutiny and could be rejected where the additional disclosures do not provide benefits to shareholders.
Continue Reading New York Court Rejects “Utterly Useless” Disclosure-Only Merger Objection Suit Settlement

In the following guest post, Delaware partners Edward Micheletti, Paul Lockwood and associate Chad Davis of the Skadden Arps law firm take a look at the Delaware Supreme Court’s December 14, 2017 opinion in Dell, Inc. v. Magnetar Global Event Driven Master Fund Ltd. (here), which examined important appraisal action valuation issues. I would like to thank the authors for allowing me to publish their article. I welcome guest post submissions from responsible authors on topics of interest to this site’s readers. Please contact me directly if you would like to submit a guest post. Here is the authors’ guest post.
Continue Reading Guest Post: Dell Strongly Reinforces Importance of Merger Price

delawareAs documented on this site (for example, here and here) and elsewhere, deal litigation has been shifting from Delaware Chancery Court to courts in other states and to federal courts. This shift is largely the result of two Delaware court decisions, the Delaware Supreme Court’s 2015 decision in Corwin v. KKR Financial Holdings LLC  (here) and the Delaware Chancery Court’s January 2016 court decision in the In re Trulia Shareholder litigation (here). Though these court decisions are relatively recent, they are already having measurable impact on the amount of litigation in Delaware. Indeed, as detailed in a May 19, 2017 Law 360 article entitled “Delaware Plaintiffs’ Attorneys Fear Exodus of Chancery Deal Suits” (here, subscription required), the effect from these two cases has been sufficiently substantial that plaintiffs’ lawyers active in Delaware are now concerned that the future of deal litigation in Delaware is under threat.
Continue Reading Is Deal Litigation in Delaware Done?

new yorkIn a series of decision culminating in Chancellor Bouchard’s January 2016 ruling in the Trulia case (about which refer here), Delaware’s courts have shown their hostility to disclosure-only settlements in merger objection lawsuits. These Delaware developments led some observers to speculate that we might have seen the end of the litigation trend in which nearly every M&A transaction attracted at least one merger objection lawsuit.

However, a February 2017 New York court ruling in the Gordon v. Verizon Communications, Inc. (discussed here), in which an intermediate appellate court reversed the lower court’s rejection of a disclosure-only merger objection lawsuit settlement and remanded the case for an award of plaintiffs’ fees, raised the question of whether or not there might yet be life ahead for disclosure-only settlement in merger objection lawsuits.

In a provocative March 20, 2017 post on the CLS Blue Sky Blog (here), Columbia Law School Professor John Coffee takes a look at the New York court’s Verizon decision, concluding that the decision ensures that “the nuisance suit remains alive and well in New York and should bring the worst of the plaintiff’s bar streaming back to New York.”
Continue Reading Are New York Courts Keeping the World Safe for Nuisance Value Merger Objection Lawsuits?

gavel1In response to concerns that virtually every merger transaction was attracting at least one lawsuit, Delaware’s legislature and judiciary acted to try to cut down on the merger objection litigation in the state’s courts. In 2015, Delaware’s legislature adopted a provision expressly allowing corporations organized under the state’s law to adopt bylaw provisions designating Delaware’s courts as the exclusive forum for shareholder disputes. Delaware’s courts, in a series of decisions culminating in Chancellor Bouchard’s January 2016 decision in Trulia, made it clear that in most cases the courts will no longer support the kind of disclosure-only settlements by which these cases frequently were resolved.

But what has the impact of these changes been? That is the subject of a February 23, 2017 paper entitled “The Shifting Tides of Merger Litigation” (here) written by Matthew Cain of the SEC; U. Penn. Law Professor Jill Fisch; U.Cal. Berkeley Law Professor Steven Davidoff Solomon; and Vanderbilt Law Professor Randall Thomas. The authors conclude that there has been “a tidal wave of change in the merger objection litigation industry.”
Continue Reading A “Tidal Wave of Change” in Merger Objection Litigation

new yorkAfter the Delaware courts in a series of decisions culminating in the January 2016 ruling in the Trulia case showed their hostility to disclosure-only settlements of merger objection lawsuits, commentators asked whether this development might mean the end of the merger objection lawsuit curse. Since that Delaware court’s decision in the Trulia case, plaintiffs’ lawyers increasingly are filing merger objection lawsuits outside Delaware, primarily in federal court. This shift in turn raises the question of the extent to which the courts in other jurisdictions will follow the principles the Delaware court set out in the Trulia case. The jurisdictional shift also raises larger cases about the future direction of merger objection litigation. A recent decision from a New York intermediate appellate court provides important perspective on many of these questions.

A February 2, 2017 opinion from the New York Appellate Divisions, First Department, applying New York law, reversed a lower court’s rejection of the disclosure-only settlement of a suit that had been filed in connection with Verizon’s proposed acquisition of Vodafone subsidiaries holding ownership interests in Verizon Wireless. The decision expressly considered the Delaware courts’ concerns in Trulia and other cases about disclosure-only settlements, but nevertheless not only reversed the lower court’s rejection of the settlement, but remanded the case for the lower court to consider a fee award for the plaintiffs’ counsel. The New York court’s decision in the Verizon case presents a number of interesting and important suggestions the future direction of merger objection lawsuits.  The New York appellate court’s opinion can be found here.
Continue Reading Latest Twist in the Merger Objection Lawsuit Saga: New York Appellate Court Approves Disclosure-Only Settlement