A Vice Chancellor of the Delaware Chancery Court cited Recent Developments in Shareholder Litigation Involving Mergers and Acquisitions, a report by Cornerstone Research, in a ruling on Stourbridge Investments LLC v. Bersoff, a matter involving breach of fiduciary duty claims regarding a merger agreement. The plaintiff had moved for an expedited hearing on an application for preliminary injunction. In its teleconferenced ruling, the court commented on the recent increase in litigation involving mergers and acquisitions, stating:
As we know from scholarly studies, the past decade has witnessed a dramatic transformation in the nature of public company M&A litigation. In 2010, 84.2 percent of announced deals attracted lawsuits. In 2010 and 2011, according to Cornerstone Research, 91 percent attracted lawsuits. According to the data for 2011, in the same study, 96 percent of deals valued at $500 million or more attracted lawsuits. That’s compared to 53 percent in 2007.
The court went on to describe how these trends affected its thinking:
I don’t think for a moment that 90 percent—or based on recent numbers, 95 percent of deals are the result of a breach of fiduciary duty. I think that there are market imbalances here and externalities that are being exploited. What this means is that this Court needs to think carefully about balancing.
The court determined that the case did not include any colorable claims and denied the motion to expedite.