July 24, 2018

Disclosure-Only Settlements: Florida Court Endorses Trulia

In In re: Trulia, the Chancery Court adopted a more demanding standard for approving disclosure-only settlements in merger objection litigation. Under the new regime, supplemental disclosures had to be “plainly material” in order to support a broad release & fee award.

Shortly after the Trulia decision, a few other courts decided to toe Delaware’s line – most notably the 7th Circuit with its decision in the Walgreen case.  But states have generally been slow to fall in line with Trulia, with a New York court notably rejecting its application in 2017.  However, in recent months, a New York decision suggests that the Empire State may be warming to Trulia, & at least one California court has endorsed the doctrine.

Now this D&O Diary blog says you can add at least one Florida Appellate Court to the list of courts in major jurisdictions that have signed on to Trulia:

In a series of rulings that culminated in the January 2016 decision in the Trulia case, the Delaware courts evinced their hostility to the disclosure-only settlements that so often characterize the resolution of merger objection lawsuits. Since that time claimants have been filing the merger objection suits in courts outside Delaware. The question has been whether the other courts where the merger objection cases are now being filed would follow Delaware’s strict Trulia standard when reviewing disclosure-only settlements. In a ruling late last week, an intermediate appellate court in Florida expressly adopted Delaware’s Trulia standard. The Florida ruling does raise hopes that other courts might follow as well, which in turn could help stem the tide of proliferating merger objection litigation.

John Jenkins