These days just about every public company merger transaction draws at least one merger objection lawsuit. These lawsuits formerly were filed in Delaware state court alleging violations of Delaware law, but since the 2016 Delaware Chancery Court decision in the Trulia case, in which the court expressed its distaste for this type of litigation, the lawsuits have been filed in federal court based on alleged violations of Section 14 of the Securities Exchange Act of 1934. These cases, through frequently filed, are rarely litigated. They typically are resolved by the defendants’ voluntary insertion of supplemental proxy disclosures and agreement to pay the plaintiff a “mootness” fee.

However, in a recent case a corporate defendant refused to update the proxy and succeeded in getting the case dismissed. As discussed in a recent law firm memo about the dismissal ruling, the “usual playbook” for these kinds of cases – making supplemental disclosures and paying a mootness fee – may not be the best approach, and the ruling itself may provide ammunition for companies that want to try an “alternative to the status quo.”
Continue Reading Is There an Alternative to the Status Quo on Merger Objection Lawsuits?