In the ever-evolving landscape of M&A litigation, a fresh ruling by the Delaware Court of Chancery has provided a newly sharpened tool for legal professionals navigating disclosure-related actions. The court has recently held that supplemental disclosures need to be “material” – a condition that isn’t met simply by virtue of their existence – in order to justify mootness fees. The case at the heart of this pivotal verdict is the Anderson v. Magellan Health, Inc., No. 2021-0202-KSJM (Del. Ch. July 6, 2023).
Underlying this newfound requirement is the law firm Jones Day’s assertion that simply providing supplemental disclosures for M&A transactions is not in itself sufficient for the award of mootness fees in litigation. There’s a need for guiding materiality, directing the relevance and importance of such disclosures.
This ruling has profound implications for M&A litigation, particularly in relation to the process of challenging disclosures during the transaction phase. By invoking the materiality requirement, the Delaware Court of Chancery has thrown a spanner into the age-old practice of settling simply for the availability of supplemental disclosures. It forces a reassessment in cases where the ‘material’ nature of disclosures might be subjective or difficult to establish.
As the world of corporate law continues to evolve, legal professionals would do well to keep a finger on the pulse of changes such as these. Concrete definitions of materiality and their implications on the disclosure process could very well influence case strategies and outcomes in the years to come.