On November 28, Brooklyn Law School’s Center for the Study of Business Law and Regulation sponsored an event titled "The Promise and Perils of Shareholder Appraisal in Delaware." The event featured a presentation by the Law School’s Jurist-in-Residence, Vice Chancellor J. Travis Laster of the Delaware Court of Chancery, who taught a joint meeting of Professor Minor Myer’s Corporate Finance class and Professor Roberta Karmel's Corporations class while on his two-day visit to the Law School.
Vice Chancellor Laster’s presentation was followed by a panel discussion featuring three prominent corporate litigators. The panelists were: T. Brad Davey, partner at Potter Anderson & Corroon LLP in Wilmington, Del.; David A. Jenkins, partner at Smith Katzenstein Jenkins LLP in Wilmington; and Paul K. Rowe, partner at Wachtell Lipton Rosen & Katz in New York. The program was moderated by Professor Minor Myers.
Vice Chancellor Laster began by outlining the broad policy considerations at play in applying and fashioning the appraisal remedy. He cited issues such as the type of transactions amenable to appraisal, methods of valuation applied in appraisal, and the timing of appraisal remedies within the timeline of deal consummation as implicating such policy considerations. He explained further that analysis of these issues depended on whether or not one viewed the appraisal remedy primarily as an exit mechanism, as a structural protection for minority shareholders, or even as an avenue for deal-related discovery.
The Vice Chancellor went on to discuss recent developments in Delaware case law, notably the emergence of a quasi-appraisal remedy for post-closing disclosure violations. He outlined the history of quasi-appraisal, tracing it from the Delaware Supreme Court’s famous 1983 Weinberger case to its recent Berger v. Pubco case. The availability of quasi-appraisal could alter the dynamics in traditional M&A litigation, where plaintiffs bring claims alleging inadequate disclosure and defendants are under pressure to settle them before the transaction closes.
The panelists weighed in on the desirability of various remedies shareholders have in M&A litigation, and examined possible strategies that plaintiffs and defendants might employ in the future, given the availability of the quasi-appraisal remedy. Among the consequences the panel considered were the number, frequency, and form of future shareholder actions in the context of public company mergers, as well as the possibility that the availability of the quasi-appraisal remedy in Delaware might further alter the jurisdictional calculus of parties involved in merger-related shareholder litigation.
By Adam Ludemann ’14
View photos of the event.