Trulia 2.0? The Case for a ‘Plainly Beneficial’ Standard

November 11, 2024

Publication| Corporate Transactions| Corporate Governance| Mergers & Acquisitions| Special Committees & Investigations| Corporate & Chancery Litigation

In 2016, the Delaware Court of Chancery held in In re Trulia Inc. Stockholder Litigation that what it called “disclosure settlements”—settlements in which a class of stockholders solely received supplemental proxy disclosures in exchange for a classwide release of claims—“would be met with continued disfavor unless the supplemental disclosures address a plainly material misrepresentation or omission.” The Trulia court sought to address the inherent difficulty of quantifying the often theoretical benefits that disclosure-only settlements purported to provide by applying a “plainly material” standard that eliminated the need for future decisions to make close materiality calls.

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