Creatures of Habit: Predictions About Delaware’s Future Treatment of Disclosure Only Settlements and What It Means for Plaintiffs’ Attorneys Seeking a Pay Day

Abstract

Scholars agree that in order for states to either obtain or maintain the business of corporate merger litigation, they must engage in competition with one another. Delaware has participated in this competition in the past to maintain its position as the country’s leading forum for corporate merger litigation. One of the most prominent aspects of this type of litigation is the “disclosure only settlement.” In the 2016 case In re Trulia, the Delaware Court of Chancery broke from a well-established precedent of approving disclosure only settlements and indicated it would be applying a heightened level of scrutiny to them. As a result of this heightened standard, it is likely that plaintiffs’ attorneys will seek out other forums that do not apply such a level of scrutiny to disclosure only settlements. If Delaware wishes to maintain its status as the leading forum for corporate litigation, it will need to employ new strategies. To this end, Delaware has suggested that plaintiffs use something known as the “mootness dismissal scenario” to circumvent the heightened scrutiny that comes with this common type of settlements. This Note hypothesizes that Delaware will continue to promote the mootness dismissal scenario in an attempt to remain competitive. It will be left to plaintiffs’ attorneys to respond by either continuing to file suit in Delaware or testing the waters in what may be friendlier jurisdictions.