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The Delaware Court of Chancery’s decision in In re Trulia Stockholder Litigation, 129 A.3d 884 (Del. Ch. 2016), was hailed as a meaningful step toward curtailing lawsuits alleging that corporate boards were breaching their fiduciary duties in nearly every public company merger transaction. The vast majority of those actions resolved quickly, before a stockholder vote (or closing of a tender offer), for nothing more than additional disclosures to stockholders in already-lengthy proxy or solicitation/recommendation statements. In exchange, corporate defendants received releases of any and all claims relating to the merger, and plaintiff’s counsel received a fee for the “corporate benefit” they provided. That all came to an end in Trulia, following mounting criticism from the corporate community of what many called a deal tax and increasing skepticism by the Delaware courts. [see note 1] Or did it?

Since Trulia, there has been a decline in Delaware in the number of run-of-the-mill challenges to nearly every public company merger transaction. That decline is likely attributable to Delaware’s disfavor of disclosure-only settlements, as expressed in Trulia, coupled with at least two other important developments: (1) the Delaware Supreme Court’s decision in Corwin v. KKR Financial Holdings, 125 A.3d 304 (Del. 2015), which held that a fully-informed and uncoerced vote in favor of a merger by a majority of a corporation’s stockholders invokes the business judgment rule standard of review; and (2) an amendment to the Delaware General Corporation Law that permits Delaware corporations to adopt forum selection bylaws to drive lawsuits concerning their internal affairs to Delaware.

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