Emma Weiss *
After an escalation in deal litigation that culminated with challenges to 95% of $100,000,000 deals, merger objection litigation that ends in disclosure-only settlements has become a topic of great concern. These cases are concerning because it seems implausible that 95% of all mergers are executed carelessly. The problematic cases all follow a similar pattern. When a merger is announced, multiple shareholder plaintiffs challenge the transaction in multiple jurisdictions. Plaintiffs and corporate defendants then quickly agree to a disclosure-only settlement, wherein the plaintiffs receive trivial supplemental disclosures about the transaction. In return, defendants receive a broad release from liability for future claims. The parties then seek the court’s approval of the settlement, and upon receiving approval, the plaintiffs’ attorney is rewarded with significant attorney’s fees. This cycle is so common it has been dubbed a “deal tax” or “transaction tax.”
* J.D. Candidate, 2018, University of Richmond School of Law; B.A., 2015, Virginia Polytechnic Institute and State University. I would like to thank the University of Richmond Law Review staff and editors for their assistance in making this piece publishable. I would also like to thank Professor Jessica Erickson for her invaluable advice and guidance throughout the writing process.