Merger Class Actions in Delaware and the Symptoms of Multi-Jurisdictional Litigation

Recent research on corporate litigation has focused on three trends: the growth in percentage of mergers that result in litigation, the migration of cases away from Delaware, and the increasing prevalence of merger litigation occurring simultaneously in multiple jurisdictions. This Article uses a new and unique dataset of public company litigation to track how these trends have affected filings and litigation tactics in the Delaware Court of Chancery from 2004 to 2011. The data confirm that Delaware appears to have experienced a decline in filings during the early and middle periods of the sample, but the data also shows that there has been a sharp increase in the number of the number of acqusition-related cases filed in Delaware in 2010 and 2011. The rise of concurrent, multi-jurisdictional litigation and the litigation tactics that it encourages are the likely reasons for the growth of acquisition-related cases in Delaware. While some plaintiffs’ attorneys may have left Delaware to escape the Chancery’s threats of lower attorneys’ fees and merit-based selection of lead counsel, in the current environment a Delaware filing may provide strategic advantages as foreign jurisdictions become saturated with filings. For example, lawyers may try to take control of a case by moving for expedited proceedings in Delaware or they may try to complicate negotations over the selection of lead plaintiffs’ counsel. The threat of using these tactics may increase the possibility that a plaintiff will receive some share of a fee award either in Delaware or in a case being litigated elsewhere. This Article explores how the rules Delaware uses to manage deal cases may enable strategic behavior in the context of multi-jurisdictional litigation. This discussion provides reasons to believe that the use of tactics such as requesting expedited proceedings, contesting consolidation of cases, and involving out-of-state counsel earlier in proceedings should increase as multi-jurisdictional litigation increases. The empirical evidence provides substantial support for these theories. The Article concludes with an assessment of how the observed increase in strategic tactics may affect debates over how and whether to respond to the rise of multi-jurisdictional litigation

Rationality\u27s Reach

Economic analysis and the rational actor model have dominated contracts scholarship for at least a generation. In the past fifteen years or so, however, a group of behaviorists has challenged the ability of the rational choice model to account for consumer behavior. These behaviorists are not trying to dismantle the entire enterprise. They generally accept the fundamentals of economic analysis but argue that the rational actor model can be improved by incorporating evidence of decisionmaking flaws that people exhibit. Oren Bar-Gill has been one of the foremost and influential proponents of a behaviorist take on contracts, and his recent book, Seduction by Contract: Law, Economics, and Psychology in Consumer Markets, is the culmination of these efforts. In the book, he portrays consumers as the targets of temptation. The tempters are credit card, subprime mortgage, and cell phone companies that structure contracts in ways that exploit the behavioral weaknesses of some consumers. They seduce by offering upfront lures like frequent-flier miles, interest-only payments, and ostensibly free cell phones. But these contracts also bury deferred penalties such as escalating interest rates and a bevy of fees. The later costs are a source of regret for consumers and, in Bar-Gill’s view, may warrant regulation that can limit this undesirable seduction. Bar-Gill builds his analysis around a framework that emphasizes the problems with contractual complexity and deferred costs. Complexity can obscure the content of contracts, and consumers may be overly optimistic about what they do not know. This effect, Bar-Gill argues, can lead people to make errors when they assess the value of a bargain (p. 10). Deferred costs, meanwhile, exploit the intense preference that some consumers may have for immediate gratification (pp. 21–23). This myopia leads them to underestimate whether and how often they will fall prey to the deferred fees that many consumer contracts impose. Throughout the book, Bar-Gill recommends the same salve for both ills. Targeted disclosure, he argues, is a minimally intrusive way to improve consumer- purchasing decisions (pp. 32–43). It can correct optimism by alerting people to the cost of terms that may be buried in contracts, and it can minimize myopia by informing people about typical usage patterns. In this Review, I contrast Bar-Gill’s analysis of complexity and deferred costs with an analysis of these problems that uses a pure rational choice model. My goal is to evaluate which of these approaches fares better at explaining the necessarily limited evidence we have about consumer responses to contractual complexity and deferred costs

Lobbying, Pandering, and Information in the Firm

In their classic and insightful article on team production in corporate law, Margaret Blair and Lynn Stout identify the minimization of rent-seeking as one of the chief benefits of vesting ultimate authority over a firm with the board of directors. In their analysis, this problematic rent-seeking arises when parties need to divide the gains from production after the fact. The squabbling that is likely to ensue may threaten to eat away most, or all, of the gains that come from productive activity. If parties know that this sort of rent-seeking will occur, they may not engage in productive activity in the first place. Parties view the board’s ability to act—or threaten to act—as a neutral arbiter to divide the gains from production as a mechanism that preserves the incentive to engage in productive activity. While this is a creative and plausible account of the board’s role and of its enduring success, the presence and prominence of the board introduces new opportunities for rent-seeking and other similarly distortive activity. In this Article, the authors identifies the rent-seeking and related problems that the board creates rather than solves. Like Blair and Stout, this Article draw on insights from the theory of the firm literature to understand the incentives that firm managers may have to shade, contort, and otherwise manipulate the information that the board receives. Particularly, this Article focuses on two specific behaviors that the informational dynamic between managers and the board engenders: lobbying and pandering. Part II describes the literature on influence costs and applies that literature to the problems faced by the board. Part III works through a recent model of pandering and analogizes that model to the interaction between the board and management. Part IV concludes by relating the problems of lobbying and pandering to the team production model of corporate law

The Shareholder Wealth Effects of Delaware Litigation

We collect data on the record of every action in over one thousand cases involving public companies from 2004 to 2011 in the Delaware Court of Chancery, which is the leading court for corporate law disputes in the United States. We use these data to estimate how markets respond to Delaware litigation events and characteristics such as case initiations, procedural motions, case quality, and judge identity. We find that negative abnormal returns are associated with the filing of derivative and contract cases, but we observe little effect associated with the filing of the average merger challenge. When we include measures of case quality, we see that higher quality cases increase the expected impact of derivative and contract litigation on firm value. We also develop evidence that tactics associated with multijurisdictional litigation are associated with a weakened impact of litigation on firm value. This evidence is consistent with the belief that the presence of litigation in another jurisdiction allows defense lawyers to bid down competing groups of plaintiffs’ lawyers during settlement negotiations. Finally, we show that abnormal returns are not associated with information on judicial assignment at the time of case filing, nor are they associated with judge identity at case resolution. These results suggest that the judicial impact on shareholder wealth at the time of judicial assignment and the time of case termination is too small to be statistically detected

The Shareholder Wealth Effects of Delaware Litigation

We collect data on the record of every action in over one thousand cases involving public companies from 2004 to 2011 in the Delaware Court of Chancery, which is the leading court for corporate law disputes in the United States. We use these data to estimate how markets respond to Delaware litigation events and characteristics such as case initiations, procedural motions, case quality, and judge identity. We find that negative abnormal returns are associated with the filing of derivative and contract cases, but we observe little effect associated with the filing of the average merger challenge. When we include measures of case quality, we see that higher quality cases increase the expected impact of derivative and contract litigation on firm value. We also develop evidence that tactics associated with multijurisdictional litigation are associated with a weakened impact of litigation on firm value. This evidence is consistent with the belief that the presence of litigation in another jurisdiction allows defense lawyers to bid down competing groups of plaintiffs’ lawyers during settlement negotiations. Finally, we show that abnormal returns are not associated with information on judicial assignment at the time of case filing, nor are they associated with judge identity at case resolution. These results suggest that the judicial impact on shareholder wealth at the time of judicial assignment and the time of case termination is too small to be statistically detected

A national harmonised data collection network for neurodevelopmental disorders: A transdiagnostic assessment protocol for neurodevelopment, mental health, functioning and well-being

BACKGROUND: Children with neurodevelopmental disorders share common phenotypes, support needs and comorbidities. Such overlap suggests the value of transdiagnostic assessment pathways that contribute to knowledge about research and clinical needs of these children and their families. Despite this, large transdiagnostic data collection networks for neurodevelopmental disorders are not well developed. This paper describes the development of a nationally supported transdiagnostic clinical and research assessment protocol across Australia. The vision is to establish a harmonised network for data collection and collaboration that promotes transdiagnostic clinical practice and research. METHODS: Clinicians, researchers and community groups across Australia were consulted using surveys and national summits to identify assessment instruments and unmet needs. A national research committee was formed and, using a consensus approach, selected assessment instruments according to pre-determined criteria to form a harmonised transdiagnostic assessment protocol. RESULTS: Identified assessment instruments were clustered into domains of transdiagnostic assessment needs, which included child functioning/quality of life, child mental health, caregiver mental health, and family background information. From this, the research committee identified a core set of nine measures and an extended set of 14 measures that capture these domains with potential for further modifications as recommended by clinicians, researchers and community members. CONCLUSION: The protocol proposed here was established through a strong partnership between clinicians, researchers and the community. It will enable (i) consensus driven transdiagnostic clinical assessments for children with neurodevelopmental disorders, and (ii) research studies that will inform large transdiagnostic datasets across neurodevelopmental disorders and that can be used to inform research and policy beyond narrow diagnostic groups. The long-term vision is to use this framework to facilitate collaboration across clinics to enable large-scale data collection and research. Ultimately, the transdiagnostic assessment data can be used to inform practice and improve the lives of children with neurodevelopmental disorders and their families

Global, regional, and national burden of chronic kidney disease, 1990–2017 : a systematic analysis for the Global Burden of Disease Study 2017

Background Health system planning requires careful assessment of chronic kidney disease (CKD) epidemiology, but data for morbidity and mortality of this disease are scarce or non-existent in many countries. We estimated the global, regional, and national burden of CKD, as well as the burden of cardiovascular disease and gout attributable to impaired kidney function, for the Global Burden of Diseases, Injuries, and Risk Factors Study 2017. We use the term CKD to refer to the morbidity and mortality that can be directly attributed to all stages of CKD, and we use the term impaired kidney function to refer to the additional risk of CKD from cardiovascular disease and gout. Methods The main data sources we used were published literature, vital registration systems, end-stage kidney disease registries, and household surveys. Estimates of CKD burden were produced using a Cause of Death Ensemble model and a Bayesian meta-regression analytical tool, and included incidence, prevalence, years lived with disability, mortality, years of life lost, and disability-adjusted life-years (DALYs). A comparative risk assessment approach was used to estimate the proportion of cardiovascular diseases and gout burden attributable to impaired kidney function. Findings Globally, in 2017, 1·2 million (95% uncertainty interval [UI] 1·2 to 1·3) people died from CKD. The global all-age mortality rate from CKD increased 41·5% (95% UI 35·2 to 46·5) between 1990 and 2017, although there was no significant change in the age-standardised mortality rate (2·8%, −1·5 to 6·3). In 2017, 697·5 million (95% UI 649·2 to 752·0) cases of all-stage CKD were recorded, for a global prevalence of 9·1% (8·5 to 9·8). The global all-age prevalence of CKD increased 29·3% (95% UI 26·4 to 32·6) since 1990, whereas the age-standardised prevalence remained stable (1·2%, −1·1 to 3·5). CKD resulted in 35·8 million (95% UI 33·7 to 38·0) DALYs in 2017, with diabetic nephropathy accounting for almost a third of DALYs. Most of the burden of CKD was concentrated in the three lowest quintiles of Socio-demographic Index (SDI). In several regions, particularly Oceania, sub-Saharan Africa, and Latin America, the burden of CKD was much higher than expected for the level of development, whereas the disease burden in western, eastern, and central sub-Saharan Africa, east Asia, south Asia, central and eastern Europe, Australasia, and western Europe was lower than expected. 1·4 million (95% UI 1·2 to 1·6) cardiovascular disease-related deaths and 25·3 million (22·2 to 28·9) cardiovascular disease DALYs were attributable to impaired kidney function. Interpretation Kidney disease has a major effect on global health, both as a direct cause of global morbidity and mortality and as an important risk factor for cardiovascular disease. CKD is largely preventable and treatable and deserves greater attention in global health policy decision making, particularly in locations with low and middle SDI