Sean Griffith‘s work with disclosures-only deal litigation settlements is featured in the May 2016 issue of The M&A Journal. In addition to focusing on Griffith’s innovative shareholders project, the issue includes a transcription of a colloquy with one of his students presenting an analysis of a case.
From “Yours, Truly”:
From 2013 through 2015, judge after Delaware judge began voicing severe criticisms of disclosure- only settlements in rulings that nevertheless often upheld the enemy they denounced. It was not lost on M&A practitioners that the Chancery Court’s five judges were all beginning to express the same disapproval for the practice. “This suggested that something was afoot,” recalls Fordham Law Schools Professor Griffith. The judiciary was forming a posse poised to close off the box canyon into which plaintiffs’ lawyers and their clients were being herded, largely by the forum selection statute.
From “The Professor’s Project”:
The academy is not always the remote ivory tower it is sometimes seen to be. In 2015, Penn Law published an article by Professor Sean Griffith, the T.J. Maloney chair in Business Law at Fordham Law School, University of Pennsylvania School of Law Professor Jill E. Fisch, and Professor Steven Davidoff, then of Ohio State University and now at UC Berkeley Law School. It was the first analysis of the effect of disclosure-only settlements on shareholders. Entitled “Confronting the Peppercorn Settlement in Merger Litigation: An Empirical Analysis and a Proposal for Reform,” the article quickly became an important cudgel that the Delaware courts were happy to wield.
…
In addition to his co-authored study, Professor Griffith himself entered the litigation fray. Over the last months of 2015, the professor bought a small number of shares in around 50 to 60 companies usually right after the announcement of a merger. With help from a former corporate litigation lawyer at Paul Weiss who had just opened his own solo practice, Professor Griffith set himself up as an objector protesting disclosure-only settlements and submitting amicus briefs arguing that his research demonstrated that such agreements gave shareholders nothing and instead required to give up all future claims against the defendants.
From “Fordham Law School Students Join the Debate on Disclosure Suits”:
Editor’s Note: Professor Sean Griffith, the T. J. Maloney chair in Business Law at Fordham Law School, turned his M&A seminar into a group of associates or law clerks, a research team that studied the professor’s portfolio of companies, and wrote and delivered arguments both for and against disclosureonly shareholder suits. What follows is a transcript of Hunter Book’s presentation on the subject in a Fordham Law class room recently.
Hunter Book: Your Honor, may it please the court. This case is about an unwarranted divestment of shareholder rights by the plaintiffs who seek to engage in a trade of a global release for meaningless disclosures. Now, in order to approve this trade, this court has to be convinced that the “give” is equivalent to the “get.” In this case that would require the disclosures to be of such magnitude that they would justify such a broad global release which encompasses claims that have not been investigated or litigated or even known about. So, in deciding whether to approve this, the court should act as the fiduciary of the shareholders in deciding whether this is a fair transaction.
Moreover, in determining whether a disclosure is material, and can act as consideration, the court should be convinced that there is substantial likelihood that a reasonable investor would view it as important information in deciding how to vote. And that means, in this context, that the disclosure would have to cut against the management’s recommendation regarding the vote in this transaction.