Perhaps the longest-running litigation in recent Delaware Court of Chancery history has been settled, after the plaintiff class lost at trial. The Jan. 20 settlement hearing in In re Trados Shareholder Litigation, Con. C.A. 1512-VCL, is interesting for several reasons, apart from finally concluding that long run. First, some background helps to understand why.

Trados involved the always-difficult task of sorting out the respective rights of preferred and common stockholders when they are cashed-out of a company in a merger. It began as an appraisal action filed by a former Trados Inc. employee who still owned a substantial amount of his stock. In the course of discovery in the appraisal action, the plaintiffs attorneys uncovered evidence that the insiders had breached their fiduciary duties by the way they had set up the merger. The attorneys then filed a class action to recover for those breaches of duty. After years of hard-fought litigation, the court agreed the defendants had violated their duties to the stockholder class. However, the court also concluded the merger price was fair. Hence, there were no damages to recover. Despite their loss, the plaintiffs attorneys were able to secure a $4.5 million settlement in post-verdict mediation, with the defendants thereby avoiding an appeal.

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