On August 4, in In re Xoom Corp. Stockholder Litigation, Vice Chancellor Glasscock signaled a limitation on the Court of Chancery’s recent caselaw critical of attorneys’ fee awards for additional merger disclosures. The Court awarded $50,000 even though it held that the disclosures had only modest value because there was no release; plaintiffs’ claims had therefore been mooted, not settled.
A little background: in September 2015, Vice Chancellor Glasscock approved a merger settlement awarding fees which exchanged supplemental disclosures for a broad release of claims, but he criticized such settlements and warned against future Court approval (Riverbed). In January 2016, Chancellor Bouchard rejected a disclosure-only settlement that did not address a “plainly material misrepresentation or omission” (Trulia); in August, Judge Richard Posner of the U.S. Court of Appeals for the Seventh Circuit did the same (Walgreens).
In Xoom, plaintiffs sought fees for supplemental disclosures made in connection with the merger of Xoom Corporation into PayPal Holdings, Inc. The Court ruled, however, that the mootness context supported a different analysis than recent prior cases. This case, to the contrary, did not involve a broad release of claims. Thus, plaintiffs had provided a benefit to the class without giving anything up. While the disclosures worked only a modest benefit, the Court nonetheless awarded some of the fees requested “to encourage wholesome levels of litigation.”
Filed under: Attorneys' Fees, Court of Chancery
Delaware Corporate Law Update 