A series of recent Delaware court decisions have caused some plaintiffs law firms to decide stockholder litigation should no longer be filed in the Delaware courts. This article will first explain the background to their views and then discuss whether they are right to be concerned about the future of stockholder litigation under Delaware corporate law. We first wrote about these developments in our April 22, 2017, article, available on our blog. This is an update.

The concern arises out of three developments in Delaware corporate litigation. First, in In re Trulia Stockholders Litigation, 129 A.3d 884 (Del. Ch. 2016), the Delaware Court of Chancery discouraged the filing of so-called “merger objection” suits that attacked almost every merger under Delaware law. The court refused to approve “disclosure-only” settlements of those suits that provide handsome fees to the plaintiffs lawyers in return for modest supplemental proxy disclosures. As a result, the plaintiffs bar largely stopped filing those suits in Delaware state courts and instead filed them in various federal courts alleging securities law violations. That trend has continued, even though the Trulia rationale has been increasingly followed by other courts.