September 23, 2019

M&A Litigation: Feds Still Preferred Venue, But States Gain Ground

The latest edition of Cornerstone Research’s M&A Shareholder Litigation Study says that federal courts remained the preferred venue for M&A objection litigation in 2018, but that state courts have gained some ground. Here are some highlights:

– Lawsuits were filed in 82% of deals valued at more than $100 million in 2018. That’s the same level as 2017 and up from the 71% of deals that were litigated in 2016 (the year of the Trulia decision).

– The percentage of deals that resulted in lawsuits during 2018 was lower than the 90% averaged between 2009 and 2015

– The number of lawsuits filed per deal remained relatively constant at approximately 3. That remains lower than the pre-Trulia average of approximately 5 lawsuits per deal.

– Approximately 91% of 2018 M&A lawsuits were filed in federal court, compared to 97% in 2017. The pre-Trulia average was 26%.

– Approximately 34% of 2018 lawsuits were filed in state courts, compared to 18% in 2017. The pre-Trulia average was 97%.

The study says that the 3rd Circuit was by far the most popular venue for federal filings, and that the Delaware Chancery Court handled almost twice as many cases (13 cases) in 2018 than during 2017 (7 cases) – but that’s still way below the 37 cases that were filed in Delaware during 2016.

John Jenkins