The Delaware Court of Chancery’s ruling last month approving a non-opt-out class action settlement in In re Celera Corp. Shareholder Litig.1 is essential reading for practitioners involved in merger litigation. Vice Chancellor Donald F. Parsons Jr. held that the U.S. Supreme Court’s decision in Wal-Mart Stores v. Dukes2 did not disturb longstanding Delaware practice in fiduciary duty stockholder litigation of certifying a non-opt out class under Chancery Court Rules 23(b)(1) and (b)(2). In addition, the court offered pointed guidance to plaintiffs considering selling all their shares of the relevant stock before the merger closes and continuing to seek to represent the interests of stockholders after the sale.
Background
The Celera decision arose from lead plaintiff New Orleans Employee Retirement System’s (NOERS) motion in the Delaware Court of Chancery for approval of a proposed class action settlement of stockholder claims relating to Quest Diagnostics’ acquisition of diagnostic testing company Celera Corporation. Quest announced a two-step acquisition of Celera: first, a tender offer by Quest for all shares of Celera at $8 per share and, second, a back-end merger in which Quest would cash out any remaining stockholders at the same price.
