In a recent bench ruling, the Delaware Court of Chancery refused to approve a proposed class action settlement in which the benefit to the class was “disclosures only”, and the court dismissed the case as to the named plaintiff. The court was also critical of the broad release that was proposed. This case was filed in connection with Hewlett-Packard’s $2.7 billion acquisition of Aruba Networks. The case is styled In Re Aruba Networks, Inc. Stockholder Litigation, Cons. C.A. No. 10765-VCL (Del. Ch. Oct. 9, 2015)(Transcript). My gratitude is owed to Kyle Wagner Compton, the editor of the unparalleled scholarly publication called The Chancery Daily, for alerting me to the transcript, as well as for the TCD’s exemplary coverage of all things relating to the Court of Chancery.
The Aruba decision has already been explained in such extensive detail by Kevin LaCroix on his blog called The D&O Diary, that I encourage readers to review his treatment of the case at the foregoing link. In addition to linking to Liz Hoffman’s Wall Street Journal article about the Aruba ruling, he also refers to related decisions by Chancery in other disclosure-only cases, including the Riverbed opinion that was highlighted on these pages. The only place online that one can find a more extensive and scholarly treatment of the Aruba case is on The Chancery Daily, which is available by subscription–and is well worth the price.
Supplement: Professor Stephen Bainbridge comments on this ruling.