Despite an unusual level of disagreement between Delaware's Supreme and Chancery courts in 2017, a sense of direction seems has emerged as to some hotly debated areas of corporate law heading into the New Year.

In the past year, the state's five justices parted ways with the trial court at a rate not seen in years, issuing a total of eight full reversals of Chancery Court rulings, compared to just two in each of the preceding two years.

However, the high court in 2017 delivered its clearest statements yet on to how handle the divisive issue of deciding fair value in appraisal actions, and the Chancery Court continued to build out its body of post-Trulia case law. A major theme of the year, said corporate law expert Lawrence Hamermesh, was a reduction in shareholder litigation that has curbed abusive practices, but may have also made some good cases harder to bring.

“I think the overarching theme is the evolution of shareholder litigation,” said Hamermesh, professor of corporate and business law at Widener University Delaware Law School. “It's hard to look at things and conclude that's not been cut back.”

After Trulia effectively put an end to disclosure-only settlements in Delaware, plaintiffs have opted to take their disclosure suits either to other states or to federal courts. Litigation in the Chancery Court has instead focused on claims for post-closing money damages and cases for statutory relief, such as books-and-records suits and appraisal actions.

In a win for plaintiffs, the Chancery Court this year notably held that business judgment presumptions would not apply in determining whether a claim is colorable under Section 220 of the Delaware General Corporation Law. Rather, the court indicated that it would continue to require plaintiffs to show a “credible basis” to suspect wrongdoing in order to state a proper purpose for inspection of corporate documents.

Meanwhile, spurred largely by the rise of appraisal arbitrage, appraisal suits have become an increasingly important part of the Chancery Court's docket. The practice, where investors would purchase stock after the announcement of a merger with an eye toward exercising a statutory right to receive fair value instead of merger consideration, has sparked a lively debate over the role of deal price in assessing how much a company was worth at the time of the sale.

As a result, the Chancery Court has taken on most of the burden in determining what valuation methods are most appropriate in the cases before it. In some cases, the trial court has relied on deal price as the best indicator of fair value, but in other notable instances, the court either eschewed deal price entirely or gave it little weight in finding fair value below the deal price.

While the Supreme Court in 2017 rejected the proposition from companies and scholars that the courts should always defer to the transaction price resulting from an arm's-length, conflict-free sale process, the high court signaled its clear preference for using deal price in cases that involve a robust and competitive sale process.

The Supreme Court, in two separate reversals, rejected the Chancery Court's finding that a “private equity carve-out” diminishes the reliability of the deal price, in one instance stating, “We do not understand the logic of this finding.”

“The Supreme Court has all but said to use the deal price … if there's a showing that the sale price is reasonable,” Hamermesh said.

Going forward, Hamermesh said, it is clear that the Chancery Court would follow the high court's instruction, though it may struggle with determining how to calculate merger synergies, which may impact whether the deal price was reasonable.