Nearly as certain as death, and far more than taxes, fiduciary duty litigation has become essentially automatic upon the announcement of a public company transaction. While a fraction of these class actions develop into contested litigation about the terms of a deal, the vast majority settle early, often for nothing more than additional disclosures in the merger proxy statement or other SEC filing and the payment of attorney fees.

Critics have often complained that these lawsuits, and these settlements, serve no useful purpose. But the courts have routinely approved such “disclosure-only” settlements throughout the merger litigation boom of the past 15 years. Now that seems to be changing.

In two cases last year, the Commercial Division of New York Supreme Court refused to approve “disclosure-only” settlements on the ground that they provided no substantial benefit to shareholders. As Justice Melvin Schweitzer noted in rejecting a settlement involving a large stock purchase agreement, a typical settlement requires absent class members to release all claims related to the transaction. Such a release, the court held, “cannot be justified” by the “trivial disclosure adjustments” obtained in many merger-case settlements.