Seventh Circuit Adopts Trulia Standard For Disclosure-Only Settlements

Last week, in an opinion authored by Judge Richard Posner, the U.S. Court of Appeals for the Seventh Circuit rejected a proposed class-action settlement arising from Walgreen Co.'s acquisition of the Swiss-based pharmacy company, Alliance Boots GmbH. In re Walgreen Co. Stockholder Litigation, No. 15-3799 (7th Circ. Aug. 10, 2016). Judge Posner's sharply-worded opinion endorsed the Delaware Chancery Court's holding in In re Trulia, Inc. Stockholder Litigation, 129 A.3d 884, 894 (Del. Ch. 2016) and represents another blow to disclosure-only settlements of merger litigation.

The plaintiffs in Walgreens brought suit after the company filed a proxy statement seeking shareholder approval for its plan to acquire Alliance Boots. Shortly before the shareholder vote on the proposed transaction, the parties agreed to a settlement requiring Walgreens to issue several supplemental disclosures in exchange for a narrow release of claims. The settlement also authorized class counsel