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James L. Gale

This chapter takes a close look at shareholder class actions following the Delaware Court of Chancery’s 2016 opinion in In re Trulia, Inc. subjecting disclosure settlements to heightened judicial scrutiny. Although Trulia reduced the number of disclosure settlements in Delaware, plaintiffs have shown continued willingness to present such settlements in courts outside of Delaware, where judges may face substantive and procedural obstacles to applying the same standards. The chapter reports on the considerations facing judges outside of Delaware in evaluating disclosure settlements under Trulia. First, it draws a distinction between the corporate benefit doctrine and the common fund doctrine to shed light on how Trulia may be applied differently in different states. The chapter then discusses the considerations involved when a court is to apply Delaware law or another state’s laws including class action procedures, professional responsibility regarding attorney’s fees, and evidentiary rules in assessing the materiality of disclosures.