Nature of the Case
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Facts
Quality announced that it had entered into a merger agreement whereby Apax would acquire Quality for $16 per share of its publicly-traded stock. This price we 62% over the $9.85 closing price per share on May 5, 2015, the day before the merger was announced. The transaction was valued at $800 million, including the assumption of Quality's debt by Apax. On June 8, 2015, Quality filed a preliminary proxy statement with the Securities and Exchange Commission (SEC). On June 17, 2015, Delman, a shareholder of Quality, filed a class action complaint against Quality, its board members, and Apax. Delman alleged a count against the board members for breach of fiduciary duties, a count against Quality and the board members for failure to disclose, and a count against Apax for aiding and abetting in the breaches of fiduciary duties. Delman alleged that Quality and its board members engaged in a flawed sale process and agreed to an inadequate sale price. Delman also alleged that Quality and its board members failed to include in the proxy statement information that is material to the shareholders' decisions on whether to approve the merger. The parties engaged in settlement negotiations, and Delman notified the court that there was no need to hold a hearing on his motion for preliminary injunction in light of the settlement negotiations. By August 2015 the parties had reached a settlement agreement. The agreement required Quality to serve its shareholders with supplemental disclosures containing information regarding the following: (1) potential conflicts of interest between Quality's senior management and Apax's expressed intention to retain Quality's management team as employees; (2) the potential conflicts of interest of Quality's investment banker, RBC, and its connection with Apax; and (3) the sale process and alternatives to the merger. On August 10, 2015, Quality filed the supplemental disclosures with the SEC. On August 18, 2015, 98.8% of the shareholders voted to approve the merger with Apax. On October 28, 2016, the parties entered into a formal stipulation of settlement. On December 16, 2016, the parties filed a joint motion for entry of an order granting a joint motion for all parties for notice and a hearing for settlement. The trial court entered the requested order on January 20, 2017. The order directed Quality to serve its shareholders with notice of the settlement, and it conditionally certified the shareholders as a class of plaintiffs. The order also designated Delman as the class representative preliminarily approved the settlement, and set a hearing for April 24, 2017. P filed an objection to the proposed settlement. He purchased $160 worth of Quality's shares after the merger was formally announced. P described himself as 'an activist investor who has served as a watchdog in the movement to curtail abusive [merger and acquisition] litigation.' P objected to the proposed settlement and class certification on four main grounds: (1) the supplemental disclosures were not plainly material to the shareholder's decision on whether to approve the merger, (2) the released claims had not been adequately investigated by plaintiffs' counsel, (3) questions remain regarding the adequacy of class counsel, and (4) plaintiffs' fee request should be rejected because the litigation did not provide a substantial benefit to the shareholders. P argued that Florida should adopt the test for approval of 'disclosure settlements' set forth in In re Trulia, Inc. Stockholder Litigation. The trial court entered an order partially approving the class action settlement. The trial court concluded that the settlement in this case 'survives the heightened scrutiny standard.' The court also found that the four requirements for class certification are present. The trial court ruled that because the settlement does not include plaintiffs' attorney's fees, the issue of fees would be determined in a truly adversarial process. The trial court approved the settlement, essentially reserving jurisdiction on the issue of attorney's fees. The trial court denied P's objection and his request for fees. P appealed. P argues (1) that the trial court erred in approving the settlement without applying the standard set forth in In re Trulia, (2) that the trial court erred in certifying the class without considering whether class counsel provided the class with adequate representation, and (3) that the trial court erred in denying his request for fees.
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