Can Members Of A Mandatory Class Action Opt Out?

Keywords: Adequacy, Class Action Settlements, Rule 23(b)(1), Rule 23(b)(2).

A recent decision from the Delaware Supreme Court is a reminder that the members of a mandatory class—one in which the class isn't guaranteed opt-out rights—sometimes may be given the right to opt out in order to pursue their own individual actions.

The decision, In re Celera Corp. Shareholder Litigation(pdf), addressed a class settlement of claims that the directors of Celera Corp. had breached their fiduciary duties in agreeing to a merger with Quest Diagnostics. The settlement promised "therapeutic benefits" to the class of Celera shareholders, such as additional disclosures and changes to the merger agreement that made it easier for Celera to entertain other offers. But the settlement gave class members no damages, it released all shareholder claims related to the merger, and it barred class members from opting out to pursue individual actions. The chancery court certified the class