Supreme Court Upholds Standing of Class Representative Who Sold Shares Before Class Certification

Must a shareholder class representative in a breach of fiduciary duty action own stock in the corporation continuously through the final class certification to have standing to represent the class? And when should the Court of Chancery exercise its discretion to allow a shareholder to opt out of a 23(b)(2) class action, which ordinarily does not include opt-out rights? The Delaware Supreme Court answered both questions last month in In re Celera Shareholder Litigation , No. 212, 2012 (Del. Dec. 27, 2012). In affirming and reversing the Court of Chancery, the Supreme Court held that a shareholder class representative need not own stock through final class certification to have standing to represent the class, but under the circumstances of the case, the Court of Chancery should have exercised its discretion to allow the appellant to opt out of the shareholder class so that it could pursue its individual claims for monetary damages against the defendants.

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