The Delaware Court of Chancery recently selected lead counsel and lead plaintiffs in response to competing motions in connection with class action stockholder litigation, applying the well-worn principles in Hirt v. U.S. Timberlands Service Co., 2002 WL 1558342, at * 2 (Del. Ch. July 3, 2002). In the course of applying those factors to the facts of the instant case, moreover, the court addressed the substantive issues of law that have wider application to those engaged in corporate litigation. In re Investors Bancorp, Inc. Stockholder Litigation, C.A. No. 12327-VCS (Del. Ch. Aug. 12, 2016). The following bullet points are useful for the toolbox of corporate litigators:
- The Delaware courts have recognized other “tools at hand” in addition to using § 220 to obtain information before preparing a plenary complaint. They include media reports and governmental agencies such as the SEC. This discussion was in the context of comparing the pleadings of one of the plaintiffs’ counsel competing for lead counsel position who availed himself of § 220 prior to filing the complaint, and the other competing counsel who did not use § 220. The court also provides a useful comparison of the pros and cons of using § 220 before preparing a plenary complaint as well as the procedural merits and disadvantages of using § 220. See footnotes 11 and 12. The court also discussed the impact of the filing of a plenary complaint while a Section 220 case is pending–regarding the same issues raised in the Section 220 case.
- The court discussed the standards of review that would be applicable to challenge a board decision involving allegedly excessive compensation, and those instances in which the board’s decision to approve compensation might be subject to either the BJR or the entire fairness standard. See footnotes 18 and 19 and accompanying text.
- The court analyzed those circumstances in which a series of transactions will be considered either separately or collectively based on the particularized facts, and whether the transactions constituted a single, self-interested scheme and/or a quid pro quo. See footnote 20.