In 2016, beginning with In Re Trulia Inc. Stockholder Litigation, C.A. No. 10020-CB (Del. Ch. Jan. 22, 2016) (see blog post here), the Court of Chancery has issued a wave of decisions analyzing the granting of fees in the context of disclosures. In Trulia, the Court of Chancery set forth the standard that disclosure-only settlements will only be approved if the supplemental disclosures address a “plainly material” misrepresentation or omission, and the releases provided to D&Os are narrowly circumscribed.
Notably, in Trulia, the Court explained that the “plainly material” standard for supplemental disclosures does not apply to a mootness fee award. This rationale was subsequently followed in Louisiana Municipal Employees’ Retirement System v. Black, C.A. No. 9410-VCN (Del. Ch. Feb. 19, 2016) (see blog post here) (noting that Trulia does not require a ‘plainly material’ inquiry in the mootness fee award context).
The recent Court of Chancery opinion of In re Xoom Corporation Stockholder Litigation, C.A. No. 11263-VCG (Del. Ch. Aug. 4, 2016) clarified the standard for supplemental disclosures on a mootness fee application. Vice Chancellor Glasscock ruled that a mootness fee “can be awarded if the disclosure provides some benefit to stockholders, whether or not material to the vote. In other words, a helpful disclosure may support a fee award in this context.”