After an announced proposed merger or acquisition, shareholder class actions may be filed alleging breach of fiduciary duty by corporate officers in, inter alia, failing to disclose necessary information to shareholders and/or failing to achieve a greater purchase price and seeking to enjoin the merger. Shortly thereafter, a settlement may be proposed which, in exchange for a general release to the corporations and their officers, the defendant will disclose additional information to allow shareholders to make a more informed decision in approving or disapproving the proposed merger or acquisition. As with coupon settlements (see Dickerson, “Designing a Coupon Settlement to Maximize Its Value,” New York Law Journal, June 30, 2017; see also Dickerson, “Class Actions: The Law of 50 States, §9.01[c], Law Journal Press (2017)), the courts should carefully scrutinize disclosure-only settlements. See In re Walgreen Co. Stockholder Litigation, 2016 WL 4207962 (7th Cir. 2016) (court disapproved a proposed disclosure-only settlement citing and adopting the standard in In re Trulia, 129 A.3d 884, 894 (Del. Ch. 2016)); compare In re Subway Footlong Sandwich Marketing and Sales Practices Litigation, __F.3d__ (7th Cir. Aug. 25, 2017) (injunctive relief settlement “utterly worthless”).
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