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Tyler O’Connell K. Tyler O’Connell of Morris James.

Disclosure-only settlements of M&A class actions have received increased scrutiny since decisions like the Delaware Court of Chancery’s 2016 Trulia opinion and the U.S. Court of Appeals for the Seventh Circuit’s Walgreens decision from later that year. Those decisions critiqued the then-prevalent practice of stockholder-plaintiffs bringing M&A strike suits and then quickly exchanging broad, classwide releases for supplemental disclosures of questionable value and fee awards to plaintiffs counsel under the “corporate benefit” doctrine. As a result, the path to quickly resolving M&A class actions has shifted toward individual plaintiffs agreeing to dismiss their claims without prejudice to other class members in exchange for supplemental disclosures and mootness fees under the “corporate benefit” doctrine. The U.S. District Court for the District of Delaware’s recent decision in Scott v. DST Systems, (D. Del. Aug. 23, 2019), should be of great interest to parties facing such issues, particularly defendants who wish to moot a disclosure-based lawsuit without paying fees to plaintiffs counsel.

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