In the wake of the SPAC frenzy, which peaked in 2021, investors have filed a significant number of SPAC-related lawsuits, including not only securities class action lawsuits, but also including Delaware direct action breach of fiduciary duty suits. The Delaware actions have so far in at least some cases proven to be successful. More recently, however, the Delaware courts have projected impatience and even fatigue with these kinds of suits, and in at least one recent case, granted the defendants’ motion to dismiss. However, in a more recent case, the Delaware Chancery Court, although noting that the plaintiff’s allegations are “not strong” and “close to the line between an adequate and an inadequate claim,” denied the defendants’ dismissal motion. There are several interesting features to court’s opinion, as discussed below. The Delaware Chancery Court’s October 18, 2024, opinion can be found here.Continue Reading Del. Court Denies Dismissal Motion in SPAC-Related Action

Long-time readers know that the significant amount of SPAC activity in past years led to a surge in SPAC-related litigation. Some of this litigation has taken the form of traditional securities class action lawsuits. However, among the more noteworthy developments in the rise of SPAC-related litigation has been the emergence of a separate type of suit, the Delaware direct action breach of fiduciary class action lawsuit, sometimes referred to a MultiPlan claim in reference to the first suit of the type to be filed. As detailed below, these kinds of lawsuits have gone through a relatively swift evolution. Many of the these kinds of cases remain pending, have not yet reached the settlement stage. However, the GeneDX lawsuit, which is one of these kinds of cases, recently settled for $21 million, subject to court approval. There are a number of interesting aspects of this settlement, as discussed below. The parties settlement stipulation in the case can be found here.Continue Reading Delaware SPAC-Related Direct Action Breach of Fiduciary Duty Suit Settles for $21 Million

As readers of this blog know, one of the vestiges of the SPAC frenzy that peaked in 2021 is a large volume of SPAC-related securities class action litigation; indeed, as I have recently noted, SPAC-related securities class action lawsuits continue to be filed. In addition to these federal court securities suits, prospective claimants with SPAC-related grievances have also filed Delaware state court breach of fiduciary duty actions, a form of litigation often referred to as “MultiPlan actions,” in reference to the MultiPlan lawsuit, which, as discussed here, was the first of these Delaware court actions to survive a motion to dismiss. Since the ruling in the MultiPlan case, plaintiffs have largely been successful in surviving dismissal motions in these kinds of cases.

However, as discussed in a June 2024 memo from the Skadden law firm (here), in May 2024, the Delaware Court of Chancery granted the motion to dismiss in the SPAC-related direct action breach of fiduciary duty suit relating to Canoo Inc., a company that was the result of a 2020 merger with a publicly traded SPAC, Hennessy Capital Acquisition Corp. IV. According to the law firm memo, the Court’s ruling was the first opinion granting a motion to dismiss in a MultiPlan claim. As discussed below, the Court’s opinion reflects a number of interesting observations about the lawsuit and claims of this type. A copy of the Court’s May 31, 2024 opinion can be found here. Continue Reading Delaware Court Grants Dismissal Motion in SPAC Transaction Proxy Disclosure Case