disclosure claim in Delaware

2025Considering this reality, quibbles with a financial advisor’s work simply cannot be the basis of a disclosure claim.”). 63 Loudon v. Archer-Daniels-Midland Co., 700 A.2d 135, 145 (Del. 1997). 22 For these reasons, Plaintiff has failed to identify any disclosure deficiency sufficient to render the stockholder vote uninformed.

2023The Loudon decision, for example, states that damages will be available when a disclosure violation results in “deprivation of stockholders’ economic or voting rights.” 700 A.2d at 142 ; accord id. at 147 .

2022Ch. 1998). 210 Id. 211 Louden v. Archer–Daniels–Midland Co., 700 A.2d 135, 142 (Del. 1997). 212 Skeen v. Jo-Ann Stores, Inc., 750 A.2d 1170, 1172 (Del. 2000). 213 Malone, 722 A.2d at 12 . 214 Shell Petroleum, Inc. v. Smith, 606 A.2d 112, 115 (Del. 1992) (citing Barkan v. Amsted Indus., 567 A.2d 1279, 1289 (Del. 1989). 63 “When determining whether there has been a disclosure violation, a proxy statement should be read as a whole.”215 Thus, it is not dispositive that a sentence or particular characterization read in isolation may be misleading if the misleading nature of that sentence or charact

2022Directors are required to provide stockholders with “accurate and complete information material to a transaction or other corporate event that is being presented to them for action.”78 The Plaintiff has not pled that the 2021 proxy statement requested stockholders to take any action in connection with the March 2020 Awards and therefore cannot establish liability for insufficient disclosure. 79 Altogether, the Plaintiff has not made out a standalone basis for liability based on bad faith or inadequate disclosure. 76 Id. at 33. 77 The only reference in the Complaint close to addressing a disclo

2023Rosenblatt v. Getty Oil Co., 493 A.2d 929, 944 (Del. 1985) (quoting TSC Indus., Inc. v. 110 Northway, Inc., 426 U.S. 438, 449 (1976)). 25 investor to change his vote . . . .” 111 Instead, “there must be a substantial likelihood that the disclosure . . . would have been viewed by the reasonable investor as having significantly altered the ‘total mix’ of information made available.” 112 To plead a disclosure violation, “a plaintiff must demonstrate a substantial likelihood that, under all the circumstances, the omitted fact would have assumed actual significance in the deliberations of the reaso

2023Rosenblatt v. Getty Oil Co., 493 A.2d 929, 944 (Del. 1985) (quoting TSC Indus., Inc. v. 110 Northway, Inc., 426 U.S. 438, 449 (1976)). 25 investor to change his vote . . . .” 111 Instead, “there must be a substantial likelihood that the disclosure . . . would have been viewed by the reasonable investor as having significantly altered the ‘total mix’ of information made available.” 112 To plead a disclosure violation, “a plaintiff must demonstrate a substantial likelihood that, under all the circumstances, the omitted fact would have assumed actual significance in the deliberations of the reaso

2020Co., Inc., 843 A.2d at 721-22 (holding that a plaintiff cannot state a disclosure claim by “quibbling with the substance of a banker’s opinion” or arguing that the opinion reaches the “wrong” conclusion on value). ” This, of course, does not mean that Plaintiffs’ valuation evidence is not relevant to their claim that the Merger is the product of an unfair process resulting in an unfair price. 8° Tesla Proxy at 59. 81 PX 158 at 6. 24 Discovery has uncovered evidence that raises a genuine issue regarding whether these statements were accurate.*?

2020Co., Inc., 843 A.2d at 721-22 (holding that a plaintiff cannot state a disclosure claim by “quibbling with the substance of a banker’s opinion” or arguing that the opinion reaches the “wrong” conclusion on value). ” This, of course, does not mean that Plaintiffs’ valuation evidence is not relevant to their claim that the Merger is the product of an unfair process resulting in an unfair price. 89 Tesla Proxy at 59. 81 PX 158 at 6. 24 Discovery has uncovered evidence that raises a genuine issue regarding whether these statements were accurate.** The parties quibble about what exactly the proxy’s

2018It also is far from clear what a fairness opinion would look like for this type of transaction. 103 See In re MFW, 67 A.3d at 501 (“[I]f the majority-of-the-minority vote were tainted by a disclosure violation . . . the defendants’ motion would fail” and entire fairness review would apply). 104 Stroud v. Grace, 606 A.2d 75, 84 (Del. 1992). 105 Rosenblatt v. Getty Oil Co., 493 A.2d 929, 944 (Del. 1985) (quoting TSC Indus., Inc. v. Northway, Inc., 426 U.S. 438, 449 (1976)). 106 Arnold v. Soc’y for Savings Bancorp, Inc., 650 A.2d 1270, 1277 (Del. 1994). 33 disclose all available information,’ but

2018Mar. 31, 2017) as revised (Apr. 11, 2017). 119 Id. at *13. 120 650 A.2d 1270 . 37 material omission.121 This holding, however, “turn[ed] on [a] partial disclosure issue.”122 “[D]irectors are under a fiduciary obligation to avoid misleading partial disclosures.”123 Therefore, “once defendants travel[] down the road of partial disclosure . . . they . . . [have] an obligation to provide the stockholders with an accurate, full, and fair characterization of those historic events.”124 Here, plaintiff has not alleged that there was partial or incomplete disclosure of alternatives to the Reclassificat

2024“When confronting a disclosure claim, a court therefore must engage in a context[] 43 Pl.’s Answering Br. 29. 44 Id. at 22–23. 12 specific analysis to determine the source of the duty, its requirements, and any remedies for breach.” In re Wayport, Inc. Litig., 76 A.3d 296, 314 (Del.

2023Delaware courts apply a materiality standard when determining whether a plaintiff adequately alleged a disclosure claim under Court of Chancery Rule 12(b)(6). 50 They have also traditionally applied the materiality standard when determining whether a supplemental disclosure provided a fee- justifying benefit. 51 In Trulia, however, Chancellor Bouchard announced that he would only approve disclosure-only settlements where the disclosures were “plainly material.”52 Under this formulation of the materiality standard, the issue of materiality should not be “a close call.” 53 By creating a defendan

2023Rosenblatt v. Getty Oil Co., 493 A.2d 929, 944 (Del. 1985) (quoting TSC Indus., Inc. v. 110 Northway, Inc., 426 U.S. 438, 449 (1976)). 25 investor to change his vote . . . .” 111 Instead, “there must be a substantial likelihood that the disclosure . . . would have been viewed by the reasonable investor as having significantly altered the ‘total mix’ of information made available.” 112 To plead a disclosure violation, “a plaintiff must demonstrate a substantial likelihood that, under all the circumstances, the omitted fact would have assumed actual significance in the deliberations of the reaso

2023Rosenblatt v. Getty Oil Co., 493 A.2d 929, 944 (Del. 1985) (quoting TSC Indus., Inc. v. 110 Northway, Inc., 426 U.S. 438, 449 (1976)). 25 investor to change his vote . . . .” 111 Instead, “there must be a substantial likelihood that the disclosure . . . would have been viewed by the reasonable investor as having significantly altered the ‘total mix’ of information made available.” 112 To plead a disclosure violation, “a plaintiff must demonstrate a substantial likelihood that, under all the circumstances, the omitted fact would have assumed actual significance in the deliberations of the reaso

2021Plaintiff argues that, “[d]espite knowing that the FTC was investigating LendingClub over deceitful conduct against borrowers, Defendants . . . falsely represented that the [FTC] investigation related to the board review and 167 See Rojas, 2019 WL 3408812 , at *14 (rejecting the theory that the board demonstrated a conscious disregard for its duties “simply because . . . the Los Angeles City Attorney initiated coordinated civil proceedings against [the company] and three of its competitors asserting complex . . . claims that have been disputed vigorously”). 42 previously disclosed internal con

2021The PE Funds had already exited their investments in Zimmer by that point and, given the lack of any alleged ties between a majority of the Demand Board and the PE Funds, why the directors would that the omission be intentional and constitute more than an error of judgment or gross negligence.”). 229 Id. 230 See Malone, 722 A.2d at 14 (explaining that a disclosure violation must be made “in bad faith, knowingly or intentionally”); cf. infoUSA, Inc. S’holders Litig., 953 A.2d 963, 990 (Del.

2025See In re Santa Fe, 669 A.2d at 69-70 (finding lower court properly considered the Joint Proxy statement for purposes of the disclosure claim to understand what was disclosed in the Joint Proxy, Page 12 of 13 Don’t use… Project X (program run by Topstep for the firm’s top performing traders) because [Project X] shares all the data between all the prop firms now by the way.

2017In re Santa Fe Pacific Corp. S’holder Litig., 669 A.2d 59, 69 (Del. 1995) (“It was certainly proper to consult the Joint Proxy to analyze the disclosure claim because the operative facts relating to such a claim perforce depend upon the language of the Joint Proxy.

2023Dec. 18, 2009) (“[Q]uibbles with a financial advisor’s work . . . cannot be the basis of a disclosure claim.”) 139 See In re Sauer-Danfoss Inc. S’holders Litig., 65 A.3d 1116, 1132 (Del.

2023Dec. 18, 2009) (“[Q]uibbles with a financial advisor’s work . . . cannot be the basis of a disclosure claim.”) 139 See In re Sauer-Danfoss Inc. S’holders Litig., 65 A.3d 1116, 1132 (Del.

2024“When confronting a disclosure claim, a court therefore must engage in a context[] 43 Pl.’s Answering Br. 29. 44 Id. at 22–23. 12 specific analysis to determine the source of the duty, its requirements, and any remedies for breach.” In re Wayport, Inc. Litig., 76 A.3d 296, 314 (Del.

2021The omitted disclosure thus does not support a disclosure claim. 112 Finally, the plaintiff contends that the Merger Disclosures did not describe “the import of the changes to the Go-Shop.” Id.

2024In addition, facts are not necessarily material merely because a stockholder may find them to be “helpful.” Skeen v. Jo-Ann Stores, Inc., 750 A.2d 1170, 1174 (Del. 2000) (“Appellants are advocating a new disclosure standard in cases where appraisal is an option.

2022Ch. 1998). 210 Id. 211 Louden v. Archer–Daniels–Midland Co., 700 A.2d 135, 142 (Del. 1997). 212 Skeen v. Jo-Ann Stores, Inc., 750 A.2d 1170, 1172 (Del. 2000). 213 Malone, 722 A.2d at 12 . 214 Shell Petroleum, Inc. v. Smith, 606 A.2d 112, 115 (Del. 1992) (citing Barkan v. Amsted Indus., 567 A.2d 1279, 1289 (Del. 1989). 63 “When determining whether there has been a disclosure violation, a proxy statement should be read as a whole.”215 Thus, it is not dispositive that a sentence or particular characterization read in isolation may be misleading if the misleading nature of that sentence or charact

2023Motors (Hughes) S’holder Litig., 897 A.2d 162, 168 (Del. 2006). 18 the complaint to consider “the content of documents that are integral to or incorporated by reference into the complaint.”82 “The trial court may also take judicial notice of matters that are not subject to reasonable dispute.”83 “The public policy behind these exceptions is plain: allegations largely predicated upon documents not presented to the Court in the pleadings should not escape the Court’s review under Rule 12(b)(6) . . . .” 84 Building on these principles, this Court has clarified the framework for determining whethe

2023Motors (Hughes) S’holder Litig., 897 A.2d 162, 168 (Del. 2006). 18 the complaint to consider “the content of documents that are integral to or incorporated by reference into the complaint.”82 “The trial court may also take judicial notice of matters that are not subject to reasonable dispute.”83 “The public policy behind these exceptions is plain: allegations largely predicated upon documents not presented to the Court in the pleadings should not escape the Court’s review under Rule 12(b)(6) . . . .” 84 Building on these principles, this Court has clarified the framework for determining whethe

2022Ch. 2010). “[R]equiring disclosure of every material event that occurred and every decision not to pursue another option would make proxy statements so voluminous that they would be practically useless.” In re Lukens Inc. S’holders Litig., 757 A.2d 720, 736 (Del.

2020C. § 102(b)(7) shields a board from duty-of-care claims, this means a plaintiff must demonstrate that a majority of the board was not disinterested or independent, 62 In re Cornerstone Therapeutics Inc, S’holder Litig., 115 A.3d 1173, 1175 (Del. 2015); see also Lukens, 757 A.2d at 732–34. 63 Cornerstone, 115 A.3d at 1179 .

2008See Orman v. Cullman, 794 A.2d 5, 41 (Del.Ch.2002) ("Furthermore, in Arnold v. Society for Savings Bancorp, Inc., our Supreme Court held that a disclosure claim could be dismissed pursuant to a § 102(b)(7) exculpatory provision when the Court determined that there was no breach of the duty of loyalty and that the disclosure violation there was consistent with a good faith omission.”). 57 .

2008See Orman v. Cullman, 794 A.2d 5, 41 (Del.Ch.2002) ("Furthermore, in Arnold v. Society for Savings Bancorp, Inc., our Supreme Court held that a disclosure claim could be dismissed pursuant to a § 102(b)(7) exculpatory provision when the Court determined that there was no breach of the duty of loyalty and that the disclosure violation there was consistent with a good faith omission.”). 57 .

2021P at 17–25. 166 See id. 58 As discussed above, stockholders considering a proposed merger “are entitled to a fair summary of the substantive work performed by the investment bankers upon whose advice the recommendations of their board as to how to vote on a merger or tender offer rely.”167 But “Delaware law does not require disclosure of a play-by- play of negotiations leading to a transaction or of potential offers that a board has determined were not worth pursuing.”168 And a disclosure claim will not be supported where it “boil[s] down to an argument that plaintiff disagreed with a Special

2008Feb. 3, 2005) ("At this early stage, plaintiffs have demonstrated a 'sufficiently colorable claim’ that the disclosures contained in News’ proxy materials are materially deficient or misleading and that there is a ‘possibility of a threatened irreparable injury,’ namely the loss of the ability by the Fox shareholders to have all pertinent information available at the time they decide whether to tender their shares into the exchange offer, if expedition is not granted.”); In re MONY Group Inc. S’holder Litig., 852 A.2d 9, 18 (Del.Ch.2004) ("This disclosure violation threatens irreparable harm b

2018Inc. S’holder Litig., 852 A.2d 9, 31 (Del.

2008Feb. 3, 2005) ("At this early stage, plaintiffs have demonstrated a 'sufficiently colorable claim’ that the disclosures contained in News’ proxy materials are materially deficient or misleading and that there is a ‘possibility of a threatened irreparable injury,’ namely the loss of the ability by the Fox shareholders to have all pertinent information available at the time they decide whether to tender their shares into the exchange offer, if expedition is not granted.”); In re MONY Group Inc. S’holder Litig., 852 A.2d 9, 18 (Del.Ch.2004) ("This disclosure violation threatens irreparable harm b

1980A. D., Del.Supr., 405 A.2d 123, 125 (1979), the Court reiterated “that the requirement of disclosure by the attorney announced in Husband S. v. Wife S. [Del.Supr., 294 A.2d 89, 93 (1972)] remains relevant under the current statute.” The disclosure requirement under Husband S. v. Wife S. includes “the requirement of an affidavit of the wife’s counsel as to what fees and expenses, if any, have been received or will be received from any other source.” As in Husband B.

1980A. D., Del.Supr., 405 A.2d 123, 125 (1979), the Court reiterated “that the requirement of disclosure by the attorney announced in Husband S. v. Wife S. [Del.Supr., 294 A.2d 89, 93 (1972)] remains relevant under the current statute.” The disclosure requirement under Husband S. v. Wife S. includes “the requirement of an affidavit of the wife’s counsel as to what fees and expenses, if any, have been received or will be received from any other source.” As in Husband B.

1980A. D., Del.Supr., 405 A.2d 123, 125 (1979), the Court reiterated “that the requirement of disclosure by the attorney announced in Husband S. v. Wife S. [Del.Supr., 294 A.2d 89, 93 (1972)] remains relevant under the current statute.” The disclosure requirement under Husband S. v. Wife S. includes “the requirement of an affidavit of the wife’s counsel as to what fees and expenses, if any, have been received or will be received from any other source.” As in Husband B.

1980A. D., Del.Supr., 405 A.2d 123, 125 (1979), the Court reiterated “that the requirement of disclosure by the attorney announced in Husband S. v. Wife S. [Del.Supr., 294 A.2d 89, 93 (1972)] remains relevant under the current statute.” The disclosure requirement under Husband S. v. Wife S. includes “the requirement of an affidavit of the wife’s counsel as to what fees and expenses, if any, have been received or will be received from any other source.” As in Husband B.

2023Morgan concerned an alleged disclosure violation for which no “quantifiable amount” of damages could be inferred from stockholders “individually . . . being deprived of their right to cast an informed vote.” 906 A.2d at 773 (emphasis omitted).

2021Morgan Chase & Co. S’holder Litig., 906 A.2d 766 , 771–73 (Del. 2006) (classifying as derivative a disclosure claim in the context of a merger because, “[e]ven if it were assumed that improper proxy disclosures induced JPMC’s shareholders to approve the merger (including the $7 billion overpayment), the harm resulting from the overpayment was to JPMC.”). 100 Compl. ¶ 7.

2023Ltd. v. Brown & Williamson Tobacco Corp., 509 U.S. 209, 224 (1993) (emphasis omitted) (quoting Brown Shoe Co. v. United States, 370 U.S. 294, 320 (1962)). 161 Harrison Aire, Inc. v. Aerostar Int’l, Inc., 423 F.3d 374, 387 (3d Cir. 2005) (citing Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U.S. 477 , 488–89 (1977)), cert. denied, 547 U.S. 1020 (2006).

2023Ltd. v. Brown & Williamson Tobacco Corp., 509 U.S. 209, 224 (1993) (emphasis omitted) (quoting Brown Shoe Co. v. United States, 370 U.S. 294, 320 (1962)). 161 Harrison Aire, Inc. v. Aerostar Int’l, Inc., 423 F.3d 374, 387 (3d Cir. 2005) (citing Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U.S. 477 , 488–89 (1977)), cert. denied, 547 U.S. 1020 (2006).

2023Ltd. v. Brown & Williamson Tobacco Corp., 509 U.S. 209, 224 (1993) (emphasis omitted) (quoting Brown Shoe Co. v. United States, 370 U.S. 294, 320 (1962)). 161 Harrison Aire, Inc. v. Aerostar Int’l, Inc., 423 F.3d 374, 387 (3d Cir. 2005) (citing Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U.S. 477 , 488–89 (1977)), cert. denied, 547 U.S. 1020 (2006).

2023Ltd. v. Brown & Williamson Tobacco Corp., 509 U.S. 209, 224 (1993) (emphasis omitted) (quoting Brown Shoe Co. v. United States, 370 U.S. 294, 320 (1962)). 161 Harrison Aire, Inc. v. Aerostar Int’l, Inc., 423 F.3d 374, 387 (3d Cir. 2005) (citing Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U.S. 477 , 488–89 (1977)), cert. denied, 547 U.S. 1020 (2006).

2023Ch. 2011); In re MONY Gp., Inc. S’holder Litig., 853 A.2d 661, 682 (Del.

2023See MONY Gp., 853 A.2d at 682 (“[P]roxy materials are not required to state . . . legal theories or plaintiff’s characterization of the facts.” (internal quotation marks omitted)). 169 See Loudon, 700 A.2d at 143 (“[E]ven when material facts must be disclosed, negative inferences or characterizations of misconduct . . . need not be articulated.”). 170 See Sauer-Danfoss, 65 A.3d at 1132 (“Omitting a statement that the board did not do something is not material, because ‘requiring disclosure of every material event that occurred and every decision not to pursue another option would make proxy st

2023Ltd. v. Brown & Williamson Tobacco Corp., 509 U.S. 209, 224 (1993) (emphasis omitted) (quoting Brown Shoe Co. v. United States, 370 U.S. 294, 320 (1962)). 161 Harrison Aire, Inc. v. Aerostar Int’l, Inc., 423 F.3d 374, 387 (3d Cir. 2005) (citing Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U.S. 477 , 488–89 (1977)), cert. denied, 547 U.S. 1020 (2006).

2023Ltd. v. Brown & Williamson Tobacco Corp., 509 U.S. 209, 224 (1993) (emphasis omitted) (quoting Brown Shoe Co. v. United States, 370 U.S. 294, 320 (1962)). 161 Harrison Aire, Inc. v. Aerostar Int’l, Inc., 423 F.3d 374, 387 (3d Cir. 2005) (citing Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U.S. 477 , 488–89 (1977)), cert. denied, 547 U.S. 1020 (2006).

2024Feb. 1, 2008), aff’d, 965 A.2d 676 (Del. 2009))); Zirn v. VLI Corp., 681 A.2d 1050, 1057 (Del. 1996) (“The partial disclosure rule is implicated only where the omission of a related fact renders the partially disclosed information materially misleading.”); see also O’Reilly v. Transworld Healthcare, Inc., 745 A.2d 902, 916 (Del.

2024To resolve the issue of whether the Proxy was deficient for failing to disclose Kirkland’s conflicts, we instead ask whether a reasonable stockholder would consider the information regarding Kirkland’s conflicts important in deciding how to vote.111 Again, because an advisor’s concurrent engagement with a transaction counterparty can present legitimate concerns regarding the advisor’s objectivity, we disagree with the Chancellor’s determination that those representations were not material.112 109 Bench Ruling at 31. 110 Id. 111 See Kahn v. Tremont Corp., 694 A.2d 422, 429 (Del. 1997) (“[P]rofe

2022That said, “it is well settled that a third party who knowingly participates in the breach of a fiduciary’s duty becomes liable to the beneficiaries of the trust relationship.”69 Key to the Plaintiffs’ disclosure claim is their allegation that “Defendants’ misleading statements and omissions . . . would have dissuaded any rational stockholder from seeking appraisal.”70 The Plaintiffs also assert that, by telling stockholders that the fair value of GGP would be “greater than, the same as or less than” the Per-Share Merger Consideration of 31 cents, the Appraisal Rights Notice erroneously gave t

2020Ch. 1999). 60 Malpiede, 780 A.2d at 1083–84. 61 Id. at 1084, 1094–95. 17 monetary damages, like Plaintiff here, must plead facts sufficient to state a non- exculpated fiduciary duty claim.62 One way to state a non-exculpated claim against a director protected by a 102(b)(7) provision is to plead facts for each director “supporting a rational inference that the director harbored self-interest adverse to the stockholder’s interest, acted to advance the self-interest of an interested party from whom they could not be presumed to act independently, or acted in bad faith.”63 The same standard gover

2022Ch. 1998). 210 Id. 211 Louden v. Archer–Daniels–Midland Co., 700 A.2d 135, 142 (Del. 1997). 212 Skeen v. Jo-Ann Stores, Inc., 750 A.2d 1170, 1172 (Del. 2000). 213 Malone, 722 A.2d at 12 . 214 Shell Petroleum, Inc. v. Smith, 606 A.2d 112, 115 (Del. 1992) (citing Barkan v. Amsted Indus., 567 A.2d 1279, 1289 (Del. 1989). 63 “When determining whether there has been a disclosure violation, a proxy statement should be read as a whole.”215 Thus, it is not dispositive that a sentence or particular characterization read in isolation may be misleading if the misleading nature of that sentence or charact

1996Assuming arguendo that Bank of Boston participated substantially in the process, plaintiff cannot state a claim against Bank of Boston apart from aiding and abetting. 19 Plaintiff relies on Shell Petroleum, Inc. v. Smith, Del.Supr., 606 A.2d 112 (1992), for the proposition that a “substantial role” alone suffices to find Bank of Boston Hable for the disclosure violation.

2022Ch. 1998). 210 Id. 211 Louden v. Archer–Daniels–Midland Co., 700 A.2d 135, 142 (Del. 1997). 212 Skeen v. Jo-Ann Stores, Inc., 750 A.2d 1170, 1172 (Del. 2000). 213 Malone, 722 A.2d at 12 . 214 Shell Petroleum, Inc. v. Smith, 606 A.2d 112, 115 (Del. 1992) (citing Barkan v. Amsted Indus., 567 A.2d 1279, 1289 (Del. 1989). 63 “When determining whether there has been a disclosure violation, a proxy statement should be read as a whole.”215 Thus, it is not dispositive that a sentence or particular characterization read in isolation may be misleading if the misleading nature of that sentence or charact

2000See In re The Disney Co. Derivative Litig., 731 A.2d at 365-80 .