March 11 could be a big day in the history of the Delaware Chancery Court—or at least in the life of Wilson Sonsini Goodrich & Rosati partner David Berger. That’s the day that Gregory Williams, a special counsel appointed by Vice-Chancellor J. Travis Laster, is scheduled to file a report addressing how the Chancery Court should deal with lawyers who appear to engage in “forum shopping” and “collusive” behavior when litigating, and settling, class actions in multiple jurisdictions. Berger could be considered Exhibit A in the matter, given the blistering remarks Laster aimed his way during a December status conference on a class action lawsuit. At that hearing the vice-chancellor railed against what he deemed Berger’s questionable tactics in defending Nighthawk Radiology in a class action lawsuit connected to its $170 million merger with Virtual Radiologic Corporation announced last September. At stake for Berger: his ability to litigate in the country’s most important business court. At stake for everyone else: the rules and guidelines for plaintiffs and defense lawyers litigating a swelling wave of merger-related class actions.
It’s no secret that shareholder suits seeking to block corporate mergers have surged during the past year, with a growing number being filed in state and federal courts, as well as in Chancery Court. In 2010 there were 327 deal-related class actions filed, compared to only 27 in 2006, according to Securities Class Action Services. One recent transaction, Qualcomm Inc.’s $3.1 billion acquisition of Atheros Communications, sparked nine class action lawsuits. “It used to be that in significant [merger] deals, you would tell the client to expect to be sued,” says Kirkland & Ellis partner Yosef Riemer. “Now you have that expectation about really small transactions, as well as an expectation that there will be [suits in] multiple forums.”
