Cain et al. Release Updated Figures on M&A Litigation

Matthew D. Cain, Jill Fisch, Steven Davidoff Solomon and Randall S. Thomas have updated The Shifting Tides of Merger Litigation, a paper that surveys trends in mergers and acquisitions (M&A) class action litigation.  The new version adds updated statistics for the first ten months of 2017, including two important data points.  First, the overall rate of M&A litigation (as defined in the paper) rose from 73% in 2016 to 85% in 2017.  Second, the percentage of cases brought in federal courts rose from 39% in 2016 to 87% in 2017, while the percentage of cases brought in Delaware fell from 34% to 9% over the same period.  Additionally, the paper now describes a dramatic rise of mootness fees and merger litigation dismissals in cases brought in federal courts.

These figures suggest that the immediate decline in deal litigation that followed the Delaware Court of Chancery’s opinion in In re Trulia, Inc. Stockholder Litigation, 129 A.3d 884 (Del. Ch. 2016) has been short-lived.  Rather, plaintiffs’ counsel responded to increased scrutiny in Delaware by filing cases in jurisdictions where they are more likely to receive either mootness fee awards or court approval of a disclosure settlement (a trend that was already apparent by the middle of 2017).  At least based on this data, Trulia appears to have transformed the “merger-tax” phenomenon from a Delaware problem to federal problem.