Chancellor Andre G. Bouchard of the Delaware Court of Chancery highlighted how his ruling in In re Trulia Inc., Stockholder Litigation earlier this year put the adversarial process “back in play” in merger settlements, during the 16th annual Albert A. DeStefano Lecture on Corporate, Securities and Financial Law on April 11.
“Every once in while a case comes along that allows you to do something…that can actually change the direction of the law or maybe even change the direction of practice. For me…Trulia was that opportunity,” Chancellor Bouchard said during his speech titled Disclosure Settlements – Before and After Trulia. “[Trulia was] the opportunity to do something more policy-oriented…to do something that could change the way business was being conducted…in the area of disclosure settlements.”
Going forward settlements based on supplemental disclosures that are not “plainly material” will be rejected. Instead, disclosure claims will be channeled down a mootness path, where material disclosures may still entitle plaintiffs to a fee but will not provide defendants with a broad release.