Business Court Approves Non-Opt-Out Class Settlement in Merger Case

The North Carolina Business Court has seemed to settle upon a methodology in approving “disclosure only” settlements in merger cases. Following Judge Gale’s decision in In re Harris Teeter Merger Litigation, Judge Bledsoe certified a non-opt-out settlement class last week in In re PokerTek Merger Litigation, No. 14-CVS-105679 (Jan. 22, 2015), observing that such classes have become the norm both in Business Court and in Delaware. The key to such certification, as Judge Bledsoe observed, was that the case involve predominantly “equitable claims,” rather than claims for “money judgments.” As Justice Scalia recognized in analyzing Federal Rule 23, this is an important distinction: Rule 23(b)(2) “does not authorize class certification when each class members would be entitled to an individualized award of monetary damages.” Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541, 2557 (2011) (observing that “[o]ne possible reading of [Rule 23(b)(2) is that it applies only to requests for . . . injunctive or declaratory relief” on behalf of the class as a whole). Although the federal courts, since Wal-Mart, have been more active in rejecting proposed settlements on commonality grounds, see, e.g., Rodriguez v. National City Bank, 726 F.3d 372 (3d Cir. 2013), a case in which plaintiffs seek to enjoin a merger on behalf of a class of shareholders does not typically present these difficulties. The procedure in PokerTek followed what is fast becoming a template: (i) filing of a complaint seeking injunctive relief; (ii) settlement discussions that yield an MOU; (iii) an agreement to provide additional disclosures to shareholders; (iv) an agreement not to oppose fees up to a certain amount; and (v) withdrawal of the request for injunctive relief, including a release in favor of the defendants by the settlement class.