In continuance of its recent trend of skepticism towards "disclosure-only" settlements, the Court of Chancery in In re Trulia, Inc. Stockholder Litigation, C.A. No. 10020-CB (Del. Ch. Jan. 22, 2016), rejected a proposed stipulated settlement of a consolidated class action in which plaintiffs obtained supplemental proxy disclosures in exchange for a broad release for defendants. Further, this opinion articulates a new standard by which these settlements will be reviewed.
Prior ruling on approval of this settlement, Chancellor Bouchard requested the parties submit supplemental briefing on two issues: (1) "[I]n determining the benefit, is the standard that the supplemental disclosure must be deemed material in the traditional securities law sense of what materiality means, to alter the total mix of information, or is it something different? And if it’s something different — i.e., helpful information, or marginally useful information — whatever that standard may be, what is the standard?" and (2) "[W]hy does it make sense that the Court would be endorsing releases with unknown claims included in them?"