In Re Trulia, Inc. Stockholder Litigation

129 A.3d 884 (Del. Chancery. 2016)

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Nature of the Case

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Facts

Trulia, Inc. (D), a Delaware corporation, is an online provider of information on homes for purchase or rent in the United States. Individual defendants were members of D's board of directors when the merger was approved. Zillow, Inc. (D), a Washington corporation, is a real estate marketplace that helps home buyers, sellers, landlords, and others find and share information about homes. Ps are stockholders in Trulia. On July 28, 2014, Trulia and Zillow announced that they had entered into a merger agreement under which Zillow would acquire Trulia for approximately $3.5 billion in stock. Trulia and Zillow would exist as wholly-owned subsidiaries of Holdco, and the former stockholders of Trulia and Zillow would receive, respectively, approximately 33% and 67% of the outstanding shares of Holdco. Ps filed class action complaints claiming that the individual defendants had breached their fiduciary duties and that Zillow, Trulia, and Holdco aided and abetted those breaches. Ps eventually filed a brief in support of their motion for a preliminary injunction. Ps asserted that the individual defendants had breached their fiduciary duties by 'failing to obtain the highest exchange ratio available for the Company's stockholders in a single-bidder process, failing to properly value the Company, agreeing to preclusive provisions in the Merger Agreement that impede the Board's ability to consider and accept superior proposals, and disseminating materially false and misleading disclosures to the Company's stockholders. On November 17, Trulia and Zillow filed a joint proxy statement regarding the transaction on Schedule 14A. On November 19, 2014, the parties entered into a Memorandum of Understanding detailing an agreement-in-principle to settle the litigation for certain disclosures to supplement those contained in the Proxy, subject to confirmatory discovery. Trulia filed a Form 8-K with the Securities and Exchange Commission containing the disclosures. Trulia's stockholders overwhelmingly supported the transaction. Of the Trulia shares that voted, 99.15% voted in favor of the transaction. On September 16, 2015, the Court held a hearing to consider the fairness of the terms of the proposed settlement. Defendants made no submissions concerning the proposed settlement before the hearing, and no stockholder filed an objection to it.