Merger objection litigation

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delmapWhen Delaware Chancellor Andre Bouchard rejected the proposed disclosure-only settlement in the litigation arising out of Zillow’s acquisition of Trulia, there was some belief that his decision represented the death knell for these kinds of settlements in merger objection lawsuits. There is indeed some evidence that the number of merger objection lawsuits filed has declined. However, as discussed in an April 29, 2016 Washington Legal Foundation article by attorneys Anthony Rickey and Keola R. Whittaker (here), “Delaware’s sister courts continue to approved disclosure only settlements and award six-figure attorneys’ fees.” As discussed below, the net effect of Delaware’s hostility to disclosure only settlements may not necessarily be that fewer of these kinds of cases get filed, it may be that weaker cases are “driven to other jurisdictions.”
Continue Reading Will Disclosure-Only Settlements in Merger Objection Suits Live On Outside Delaware?

del1In a January 22, 2016 Delaware Court of Chancery decision that likely will prove to be significant because of the light it sheds on the future of disclosure-only settlements in merger objection lawsuits in Delaware, Chancellor Andre Bouchard rejected the proposed settlement in the litigation arising out of Zillow’s acquisition of Trulia, saying that because the “none of the supplemental disclosures were material or even helpful to Trulia’s stockholder,” the proposed settlement “does not afford them meaningful consideration to warrant providing a claim release.”

In reaching these conclusions, Bouchard reviewed the dynamics that have led to the “proliferation of disclosure settlements” and the problems these kinds of settlements present. Bouchard also offered his perspective on the ways that remedial disclosure assertions in deal litigation could optimally be litigated. At a minimum, Bouchard’s opinion represents a warning to the plaintiffs’ bar that to the extent they continue to pursue disclosure settlements, they can “expect that the Court will be increasingly vigilant in scrutinizing the ‘give’ and the ‘get’ of such settlements to ensure that they are genuinely fair and reasonable to the absent class members.” Chancellor Bouchard’s January 22, 2016 opinion in the Trulia case can be found here.
Continue Reading Delaware Chancellor Rejects Disclosure-Only Settlement, Signals What’s Next for Merger Objection Suits

gavelnewSince merger objection litigation became one of the most distinctive phenomena on the corporate and securities landscape, it has been both chronicled and measured in a series of annual papers by Matthew Cain, now an SEC economist, and Steven Davidoff Solomon, a law professor at the U.C. Berkeley. In their latest update, “Takeover Litigation in 2015” (here), published last week, the authors confirm that while merger objection litigation continued to be filed at significant levels last year, the litigation levels declined compared to recent years. Of particular note, starting in the Fall 2015, after Delaware Vice Chancellor Laster rejected the disclosure only settlement in the Aruba/H-P merger lawsuit, the filings of the merger objection lawsuits showed a decline that was “sharp and significant” and that the authors expect will continue in the new year.
Continue Reading Big Changes in the Merger Objection Litigation Marketplace

oregonsealAs readers of this blog will recall, Delaware’s courts have held that under Delaware law bylaws designating Delaware’s courts as the exclusive forum for corporate and shareholder disputes are facially valid. Last summer, Delaware’s legislature adopted a statutory provision adding the permissibility of forum selection bylaws to the Delaware Corporations Code. In response to these judicial and legislative developments, many Delaware corporations have adopted forum selection bylaws. But whether these new bylaw provisions will have their intended effects will depend in part on what the courts in other jurisdictions do. If an action in another jurisdiction is permitted to go forward notwithstanding the bylaw specifying Delaware’s courts as the designated forum, the bylaw’s purpose would be frustrated. A recent decision from the Oregon’s highest court suggests that this potentially frustrating outcome is less likely.
Continue Reading Oregon Supreme Court Holds Delaware Corporation’s Forum Selection Bylaw Valid and Enforceable

del1In my recent survey of the top stories in 2015 in the world of D&O, I noted that one of last year’s most important developments was the signal that several of the judges on the Delaware Court of Chancery sent in a series of rulings that they would not longer routinely approve the kind of “disclosure-only settlement” that frequently resolves merger objection lawsuits. According to Liz Hoffman’s  January 11, 2016 Wall Street Journal article focused on Delaware Vice Chancellor J. Travis Laster and entitled “The Judge Who Shoots Down Merger Lawsuits” (here), after Laster’s October 2015 decision rejecting the proposed settlement in the H-P/Aruba Networks merger objection lawsuit, there were dramatically fewer merger objection lawsuits filed in Delaware, and in fact some previously filed lawsuits are being withdrawn.
Continue Reading Delaware Courts’ Rejection of Disclosure-Only Settlements Results in Fewer Merger Objection Lawsuit Filings

del1As I have noted in recent posts, several members of the Delaware Court of Chancery have made it clear that they are increasingly skeptical of disclosure-only settlements in merger objection lawsuits. It now appears that the Chancery Court rulings are starting to have an impact at the supply end of the food chain; according to a recent analysis by The Chancery Daily, the number of new merger objection lawsuit filings in the Delaware Chancery Court has begun to drop in response the Chancery Court’s rulings. The publication reported what it observed to be during October and November 2015 a “pronounced decline in the number of class action complaints filed compared to prior months in the year 2015.” The Chancery Daily’s November 13, 2015 blog post discussing its analysis can be found here. Alison Frankel’s November 16, 2015 post on her On the Case blog discussing the recent filing trends can be found here.
Continue Reading Delaware Merger Objection Lawsuit Filings Decline in Response to Chancery Court’s Rejection of Disclosure-Only Settlements

nystateDelaware’s courts have recently made it clear that the days where they would routinely approve disclosure-only settlements in merger objection lawsuits may be over (as discussed here). It now appears that other states also are no longer willing to approve these kinds of settlements. In a blistering October 23, 2015 opinion (here), New York (New York County) Supreme Court Judge Charles E. Ramos refused to approve the disclosure-only settlement proposed in the Allied Healthcare merger objection lawsuit, saying that courts’ willingness to approve these kinds of settlements “reflects poorly on the profession and on those courts that, from time to time, have approved these settlements.”
Continue Reading New York Court Pans Merger Objection Lawsuit Disclosure-Only Settlement

del1Stating his belief that the merger objection litigation dynamic represents a “systemic” problem that has resulted in a “misshapen legal system,” Delaware Chancery Court Vice Chancellor Travis Laster rejected the proposed disclosure-only settlement of litigation that had been filed objecting to Hewlett-Packard’s $2.7 billion acquisition of Aruba Networks. In an October 9, 2015 settlement hearing in the case, Laster cited the “inadequacy of the representation” of plaintiffs’ counsel for the shareholder class as the basis for his rejection of the settlement, as well as for the outright dismissal of the case. Liz Hoffman’s October 10, 2015 Wall Street Journal article about Laster’s ruling can be found here.
Continue Reading Game Over?: Del. Chancery Court Rejects Disclosure-Only Settlement in H-P/Aruba Networks Merger Objection Lawsuit

courtofchancery
Delaware Court of Chancery

The fact that these days virtually every public company M&A transaction draws at least one merger objection lawsuit has provoked concern from many quarters. As I noted in a prior post, it recently became clear that among those concerned are the judges on the Delaware Court of Chancery. Based on developments last week, including in particular Vice Chancellor Sam Glasscock III’s September 17, 2015 opinion in the Riverbed Technology merger objection lawsuit (here), the days when merger objection suits in Delaware’s courts may be resolved through a disclosure-only settlement in which plaintiffs’ counsel gets their fees paid and the defendants get an “intergalactic” claim release may be over. As Alison Frankel put it in a September 18, 2015 post on her On the Case blog (here), last week’s Delaware Chancery Court developments may represent “a turning point in M&A shareholder litigation in Delaware Chancery Court.”
Continue Reading Delaware: Time’s Up for Disclosure-Only Settlements in Merger Objection Suits?

doleA frequent theme these days in the world of corporate and securities litigation is the complaint about merger objection litigation – how virtually every deal announced attracts at least one lawsuit, and how all too often the cases are resolved on the basis of a disclosure-only settlement and the payment of the plaintiffs’ attorneys’ fees, an arrangement that produce no benefit for anyone except the lawyers. However, a recent Delaware Chancery court post-trial opinion provides a sharp reminder that some merger transactions can include some real problems.
Continue Reading A Closer Look at the Massive $148 Million Damages Award Against Dole’ s CEO and General Counsel