AMC: Is This the Closing Credits, a Post-Credits Scene, or a New Sequel Trailer?

Situating ourselves in the AMC/DCC Universe; just kidding, it's actually a novella

It’s been a long time since we popped the first batch of popcorn and dared to mention the AMC case in a post back on March 7th, right before the now-somewhat-infamous stockholder vote was held (and then held in abeyance by the Court at the agreement of the parties, in the even-more-[in]famous Status Quo Order, which -- as of this writing -- is still in effect).

What a Trip

And what a long, strange trip it has been since then.

It's hard to believe it’s only been four months, because a lot has transpired. We’ve been through so much: insanely late nights, a complete backgrounder on the entire sordid tale, an insanely-long disquisition on a single motion to take the plaintiffs’ depositions, the unsealing of the complaint and other documents, not to mention, the botched attempt to settle without notice to the class, and along the way, various updates, debriefs, and attempts to recap the situation, and even a bit of unmitigated gloating and some moments of contrition. Most recently, things culminated in a two-day hearing in Delaware that many of you listened to, and about which you have been somewhat-patiently awaiting my thoughts.

Let me preface this, as always and again by saying, no, I will not edit myself down, or make myself smaller, or shorter-winded, or less voluminous, to meet your standards or desires. And although I suppose I might apologize generally that a product or service does not exist to meet your desires out there in the world, I will not apologize that it is not me. I am not here to serve everyone. If I am not here to serve you in this format, so be it. You actually do not need to comment on that, if you can believe it. Some of you apparently find that very hard to believe. Please, do us all a favor if this annoys you and rage quit now while you’re less behind. If you are going to complain because this piece is a bazillion (23,103) ((yes, seriously)) words long, just don’t. And trust me, it discusses every ridiculous aspect of Delaware everything, and it roams all over the blessed place. If you’re not into that, you should definitely leave, fair warning. If you are looking for a debrief, this ain’t it. I’m sorry that I’m not sorry. And by all means, if you would like my concision, my precision, and my impeccably-formed thoughts, tailored immaculately for your absolutely particular ends to your exacting standards, you are more than welcome to pay my hourly rate.

Anyhoo, by the time I hit publish on this piece (or in any event, by the time the first person has a chance in Hades of making it through to the end of reading it), the Opinion may have even beat me to the punch and most of these thoughts been rendered superfluous, this diegesis perhaps relegated to the dustbin of history as just so much more profligate post-hoc noise from the online commentariat, but regardless of the timing of things, it’s my hope that our work at TCD (throughout this case and all the others that we cover) functions to some degree in the manner and spirit of Vice Chancellor Laster’s brief assumption of the Statler-esque character at the Bench and Bar back in June when he sat himself down next to Vice Chancellor Fioravanti, who was previously situated in the quite balcony-like upper corner of the room, and upon whom (I imagine) VCL somewhat foisted the role of Waldorf, when he shouted down to Chancellor McCormick and Vice Chancellors Cook and Will, who themselves were at the front of the room and about to begin their presentation -- in a quintessentially pitch-perfect heckler tone, admonishing them lovingly to: “Tell the truth!”

Law, Equity, and All the Rest

There are a million things I’ve thought about this case, and probably a thousand things I’ve forgotten already, and I’ll try to cover as much of the landscape here as I can to close this out. Because, honestly? I’m ready to move on. But before that, let’s go on a journey, one last time over this ground, with this crew, for old times’ sake. Shall we? You should probably get a beverage. This is going to be a long haul. If that’s not your cup of tea, feel free to exit out.

I know some of you have a lot at stake in this case, and I guess that’s capitalism for ya – you’re allowed to make those choices, for better or for worse, and with fewer and fewer guardrails and protections. And unfortunately, as Vice Chancellor Zurn recently reiterated in another case, the Delaware Court of Chancery is proudly a court of limited jurisdiction, as Vice Chancellors Slights observed in Perlman v. Vox Media: “the Court may hear a claim only if it is equitable in nature, if it seeks equitable relief, or if there's a statutory basis for jurisdiction.”

Many of the kinds of legal claims and legal complaints that people have with AMC that they have brought to the Delaware Court of Chancery over the past long hundred and thirty-odd days since the case was filed back in late February have been just that – claims and complaints that would actually sound in law, if at all. The distinction might not be one that resonates loudly or clearly to the untrained ear, but the distinction is nonetheless important.

The distinction between law and equity is a somewhat squishy one, due to the fact that many courts effectively have to serve both roles, and as many times as I tried to explain it on various podcasts (find them here if you want to relive last year in excruciating detail, or get a Twitter v. Musk-skewed backgrounder on the Court of Chancery), I haven’t landed on an incredibly simplified way to carve up the distinction (shocking, I know). The oversimplification is that there are two types of claims: legal and equitable. In general, if you are pursuing a legal claim, you are asking a court to award money damages, but if you are bringing an equitable claim, you are asking a court to either make something happen (like, say, forcing Elon Musk to close on the Twitter acquisition) or stop a particular action or event from happening (like, say, stopping the results of the March 14th AMC vote from being effectuated and preventing the collapse of AMC common and preferred stock).

So, the most notable power of the Court of Chancery as a court of equity is its ability to issue injunctions and temporary restraining orders and these powers are most frequently exercised in corporate differences over mergers or acquisitions. Many times, a plaintiff will seek temporary relief to preserve the status quo until a trial or hearing can occur, as originally occurred in the AMC matter.

As the sine qua non history on the Court of Chancery states: “equitable judging [] requires an individual craftsman to analyze the facts, apply the ancient principles, carve the specific remedy and communicate the result. The product is human art; it cannot be scientifically produced.” 

The Court of Chancery is one of the very few remaining pure courts of equity in this country where legal claims are mostly only heard ancillary to equitable ones under what we call the “clean-up doctrine” (or, lamentably, under one of the statutory grants including that newer bit of statutory carve-out that has herniated into a bit of a problematic bulge over the past few years, but which the courts have managed to shove back into some workable shape with the “Order to Put Things Back In Their Proper Place” which is technically called the Cross-Designation Order for § 111 cases or something less snarky than my rendition, but there should definitely be a spidermanpointing.gif meme for it because that order is only re-designating the originally-properly designated judges for the job that they originally had until someone had the bright idea to slip a bill to the judiciary for signature that expanded the Court of Chancery’s jurisdiction in a way that has since required the Court of Chancery to do a bunch of work undoing that expansion of its jurisdiction. Harumph.)

I think I have digressed, but since we are talking about the legislature, this is probably the best time of any to let you know that the DGCL amendment that absolutely most definitively was not (was) created around the facts of the AMC case passed the legislature despite a fine effort by Representative Madinah Wilson-Anton to put forth a Proposed Amendment to the Proposed Amendment that would have actually cabined the originally-proposed amendment to doing what it said it was going to do, and not a whole bunch of other unlimitedly-dilutive things, but you know – what can I say – my blog posts and tweets were not enough to overcome desperate pleas from scammy corporations like Nikola sent to the entirety of the Delaware legislature that absolutely do not read like total desperation (yes they do). Because honestly, don’t you think if they could just up and leave Delaware, they would? You think they have loyalty? Ha! Instead of sending desperate letters in the middle of the night whinging and talking about jobs? A company like Nikola? Seriously, give me a break. I mean, that’s always the threat: we’ll have to leave Delaware! You wouldn’t want us to leave Delaware! And no, of course, we wouldn’t. But why do you think they protest so much? Because there are a million complexities and complicacies facing general counsel when deciding where to incorporate, and if you think that screwing over stockholders in this one particular way is going to take the cake and make the move to … where are you moving to exactly again? … lemme know when you get there … anyway, if you think all the other benefits that Delaware brings -- one or two of which are ackshually integrity and stockholder protections, by the way -- are not going to keep companies incorporating here, well, you might be a Delaware legislator who got the wool pulled over their eyes again and voted out of fear or ignorance to pass the bill that will allow companies to issue unlimited new shares under a new voting standard. No more majority of outstanding shares required. All you need now is a majority of votes cast. You can already see Nikola jumping into action to take advantage. I’m sure they won’t be the last. (But muh capital markets access, they said! I know, y’all have had such a hard time accessing the capital markets over the past decade. It’s been truly devastating, the lack of access to capital markets, my g-d, I don’t know how any companies have even survived. /s) If you want to learn more about the original proposed amendment (now the law) and its overreach, read the synopsis of Rep. Wilson-Anton’s proposed amendment thereto, which garnered eleven votes but ultimately failed. Once you really see what a company can do with headroom without even a vote on forward splits and a reduced voting standard on reverse splits, it’s … eye-opening. Also, feel free to join your hedge fund bros and be insanely condescending when you tell me the ways in which I don’t understand this issue. It’s totally the case that the more condescendingly you say something, the more convincing your argument is. Did they teach you that at Wharton? Because when I took Negotiations with Diamond at Wharton, I learned a totally different way of being. Anyhoo.

AM-See You on the Other Side

I guess it’s time to actually talk about the AMC case on all fours, how we got here, what just happened, where we are, what I think will happen, and how this whole thing might end. Deep breaths.

Let’s dive in behind the paywall. If you need a free trial because you aren’t going to give a single f—k about the Delaware Court of Chancery after the AMC case is over, you can access one here, or email me. If you would prefer to whine about me earning a living for the work that I do, please do not. Conversely, if you are awesome and you can, become a Founding Member and show off how much you just are the rockstar that you are.

First, a little level-setting exercise. We are here on the approval of a settlement in a class action context. Hence the “approval” aspect of the settlement, because otherwise, we would have been out of here a long, long time ago. Because usually, in a normal case, when the two parties to the case decide to settle the case, the case just … ends. But things get a lot more complicated in the class action context, because you don’t really just have the two parties. Because the one party – the plaintiff (or in this case, formerly three, but now two, representative plaintiffs) is just that: representative of the class. So, they are acting as a bit of a stand-in of sorts for all the other absent class members, because it would be a bit impracticable (understatement of the century) to have a lawsuit with millions of actual, known, named plaintiffs, so [fast forwarding noise past a reductive take on a whole bunch of legal history that I do not actually know], someone was smart enough to think up the class action system, which I’m sure actually developed as a patchwork of rulesets and caselaw developments across many jurisdictions rather than springing forth out of one person’s mind, obviously. Let me let Quillen say it better than me, in a citation from the Iomega settlement in the Delaware Superior Court from back in 2001:

This Court is mindful that class actions serve an “obvious social purpose” of permitting numerous claimants with small claims the ability to assert those claims, “a simple strength in numbers concept.” See Mentis v. Delaware American Life Insurance Company, Del.Super., C.A. No. 98C-12-023 WTQ, Quillen, J. (May 30, 2000). On the one hand, class actions permit the assertion of numerous claims in an economically feasibly manner; on the other hand, individual recovery on a per claim basis is “sometimes modest to the extent of meaningless.” Id.

As I’ve mentioned before, there is nonetheless still a bit of tension that Vice Chancellor Zurn pointed to at the outset of the hearing, when it comes to the actual mechanics of how settlements of class actions are processed through the courts, because the fact of the matter is that class actions frequently end in settlement and not in full blown trials (although that’s certainly not always the case):

“This court works best when there are two sides to frame the issues in the crucible of adversary litigation, and Delaware law has observed that settlements, in particular, can benefit from a wider range of views, and we’ve certainly benefitted from that in this case thanks to AMC’s retail stockholder base. The settlement has offered the Court and the parties the opportunity to meaningfully engage with our settlement procedures and policies with unprecedented vigor.” 

It's the “two sides to frame the issues in the crucible of adversary litigation” that is really missing in the settlement context, and as I have said many times in the last few months, that really gets lost when both parties slide over to the same side of the “v.” after finalizing the settlement term sheet. In some ways, it then becomes The Court v. Plaintiff & Defendant’s Settlement Proposal and then sometimes the objectors show up to weigh in on the battle. That’s not a perfect, or perhaps even a very good metaphor, but in general, things become very squirrely, and one thing that AMC stockholders noticed very early on here was that they did not – in the main – all feel represented by class counsel. Now, in one sense, of course not. Because there are several million of them, and they are humans, and they do not agree about anything. They disagree about every major issue, and most all the minor ones; they have an incredibly difficult time finding common ground about anything, and in fact, the inherent nature of the transaction that AMC effectuated made this case particular bizarre from the jump because it immediately pitted two classes of stockholders nearly against each other as an arbitrage opportunity emerged when the common and preferred stock, which were originally (allegedly) intended to trade at parity, diverged in price.

We can – and I’m sure will – argue until the end of time about whether the original issuance of the preferred equity units was dilutive (as of the moment of issuance, or perhaps only when they later issued them into the market and not merely originally as a dividend, or perhaps only upon the ultimate collapse of the preferred back into the common, or maybe only as of the moment when that collapse is a fait accompli in the mind of some omniscient being) and whether this settlement is “relutive" (or whether that is even a word), but those are not things I’m going to dive too deeply into, because – on the merits of all the other issues at play here – I don’t think most of that sits at the crux of the matter.

Caveat Lectors

Let me back up a bit and give you some caveats here, as I am wont to do. I have no idea what the Court is going to say about this settlement. I only know what I know about Delaware law. I only know what I personally think about Rule 23 and all its intricacies, and in the end, obviously what I think is – to a certain degree – meaningless. As always, you should rely on absolutely nothing that I say for any purposes because doing so would be ignorant because I’m not your lawyer, I’m not your financial advisor, I’m sure as shit not your mommy, and I’m definitely not your therapist. I like talking to you about law things, and I like nerding out on the internet with you, and I think we should keep doing it because it’s fun and enjoyable, and we both get to learn new things, but don’t trip, that’s all we are here for.

I also don’t have any idea when the Court is going to put out its ruling. I know it’s not going to be last week. Maybe it will be ten minutes after I finally hit publish on this thing and I finally close my eyes to get some sleep. I do know it’s going to be a written opinion because the Court said so, in writing. I know that in most normal cases (this one is not one), the Court rules on settlements in bench rulings, which are oral rulings that are made during the final fairness hearings, a grandiose version of which we just had over two days at the end of June in this case. I also know that Vice Chancellor Zurn didn’t rule at that hearing, just like she said she wasn’t going to. So, this case is already not going like the normal case, because – as I just said – nothing about this case is normal. So, it would be weird and stupid of me to guess how this case is going to go because nothing is standard about it. I do know other facts, but I have to be honest, many of you are very bad at extrapolating from factual statements when I make them. But I’ll say some facts again, and you can do with them as you will.

The standard timeline [for a ruling in a case] is 90 days. This is obviously not a standard case. First of all, it’s expedited both from the preliminary injunction phase, but also even in the settlement phase. And 90 days is for non-expedited cases where evidence closes and then a decision has to be made after the case is taken under advisement, for example at the close of post-trial briefing or when the final brief in a series is filed. Here, in one sense, she has had much of this evidence for a solid 30-60 days already, so she's had something of a headstart, but also, she’s had a whole lot of other things going on, so it will really depend on how much time pressure she feels from the parties, and to be fair, it’s not something they pressed incredibly hard at the hearing although in their briefing they did both some low-key and high-key attempts to push on the dials of despair to get a quick ruling. (“You wouldn’t want anything to happen to this company while we awaited this ruling, now would you, Your Honor?”) That being said, many of many of the Chancellors’ and Vice Chancellors’ rulings have been taking well longer than the 90-day guideline (and we are frequently reminded that it is a guideline and that it begins the end of the month in which the case is taken under advisement, although that little tidbit doesn’t do any work here, since the case was taken under advisement on the last day of the month). The other facts are that the Vice Chancellor has turned everything else in this case around basically on a dime, issuing many of her letter opinions in a matter of days. She has been incredibly expedient, far moreso than even the parties, even having to jiggle their chains many times to kickstart them into a higher gear when they weren’t going to be able to stay on their own preferred (and much begged-for) schedule.

The Battle Royale

All that being said, there’s a lot of work to do here, and there are a lot of other things going on, so I just do not know how fast heaven and earth can be moved, and I deign not venture a guess. Vice Chancellor Zurn appears to be going into a trial on Monday morning that seems not to be settling and will run for seven full trial days, which is almost approaching a Chancery-outer bound of about ten days in these modern times. (I’m reminded of a recent minute order from Vice Chancellor Laster, chastising the parties for competing proposals for an 8- or 12-day trial with the reprimand of: “Both sides have suggested numbers of trial days and witnesses that are unmoored from reality. This is not that big a case.”) Vice Chancellor Zurn’s trial – presuming it does not settle over the weekend – will run from Monday, July 10th through Tuesday, July 18th. Perhaps that means the Opinion will pop out fully-formed Monday morning before market open like Athena out of Zeus’ skull, idek. The woman has pulled off more amazing feats before, but there’s so much to process here, from the nuances of the Coster v. UIP II decision from the Delaware Supreme Court, which literally took us all last weekend to parse for our main publication, to the complexities of the issues surrounding the scope of this release, some of which the Vice Chancellor raised for the first time at the hearing … it just seems like there might be at least a week or two more worth of work to do, at least. And all I know is that she will do whatever it takes, and whatever she does, it will have been the right thing, and it will have absolutely nothing to do with when your blessed options expiry date may be.

In one sense, the two-day hearing was long and fascinating; in another sense, it was over far too soon and it ended with a whimper instead of a bang, although Skyler was nothing to shake a stick at. Obviously, not getting to hear from the full complement of boisterous and passionate objectors was disappointing in its own way, but to me – the wonky nerd – it was even more disappointing not getting to hear debate about certain points of law that I thought were still somewhat unsettled in view of various issues that had been raised over the course of the litigation. And I suppose I always feel that way after oral argument. I want it to cover the entire landscape, but it inevitably only hits certain highpoints, and it never quite drills all the way down into the minutiae in a way that’s entirely satisfying, and there are always points that don’t get addressed, and things that get overlooked or omitted entirely. Also, please stop interrupting the judge when she is trying to have thoughts and formulate questions out loud, for the love of g-d. But, perhaps in part as a consequence of the weirdness with the fire drill and the bizarre tenor of the first day and the quasi-calmmotion thereafter, there wasn’t much direct discussion about some aspects of the letter that was sent in advance of the hearing. Perhaps this is because the response by the parties entirely addressed the concerns, but there was a lot going on, and I want to take a look, at the contents of the letter and its context more broadly. And in the end, we will good and finally circle back, in some incredibly grand arc, to that letter and I will actually figure out what it was all about, just like the hokey pokey.

Maybe I should step back for a minute and just remind you again that we are here, after the last seventy-odd days of a mad notice and objections period because Vice Chancellor Zurn did not do what literally every commentator on Planet Earth except for me was saying that she would absolutely do; what Antara literally bet (and lost) five billion dollars that she would do, that they could have absolutely not lost if they had just skipped that last celebratory drink and bought access to my Substack and listened to what I said about how she was absolutely not going to do, which was lift the Status Quo Order back in April without putting this settlement through its proper paces, you know, for like … due process and whatever. But do you know why people thought that she was going to do the opposite of what she did? Do you know why everyone else got it so wrong? Well, I think it’s because, not so long ago, they probably would have been right. But my analysis was about what Vice Chancellor Zurn would do, and she’s newish to the Court, and my dudes (literally) were – as The Dude says – “livin’ in the past, man” and not actually thinking through what this Court would do. Of the ten judicial officers sitting on the Delaware Court of Chancery at the moment, eleven if you count Master Griffin sitting in something like emeritus / retired / senior status, there are:

• Chancellor McCormick (November 1, 2018)

• Vice Chancellor Laster (October 9, 2009)

• Vice Chancellor Glasscock (Master, 1999; VC, 2011)

• Vice Chancellor Zurn (Master, 2016; VC, October 4, 2018)

• Vice Chancellor Fioravanti (February 10, 2020)

• Vice Chancellor Will (May 26, 2021)

• Vice Chancellor Cook (July 21, 2022)

• Master Griffin (July 2017)

• Master Molina (January 2019)

• Master Mitchell (December 2022)

• Master David (January 2023)

(Seated) left to right, Vice Chancellor Morgan T. Zurn, Vice Chancellor J. Travis Laster, Chancellor Kathaleen St. J. McCormick, Vice Chancellor Sam Glasscock III, Vice Chancellor Paul A. Fioravanti, Jr., (Standing) Master in Chancery Loren Mitchell , Master in Chancery Patricia W. Griffin (Retired), Vice Chancellor Lori W. Will, Vice Chancellor Nathan A. Cook, Master in Chancery Selena E. Molina, Master in Chancery Bonnie W. David

When I called chambers for something the other day, I got routed to a weird part of the phone tree, and I realized for the first time that they still haven’t changed the answering service from saying “for Chancellor Bouchard’s Chambers, dial…” Yeah, I don’t think that one’s going to ring through.

This data means that only three of the sitting Vice Chancellors were on the bench prior to 2018 (and Zurn was a Master in Chancery from 2016–2018). If your heuristics involve thinking about things very much beyond pre-pandemic times, and I promise you from listening to y’all think out loud in between the lines of your briefs, a lot of them do, you are – as they say – living in the past.

Now, of course, case law is all about living in the past, to a certain degree! Delaware corporations need the certainty that a staid and sacrosanct body of case law provides! Harumph and but of course, Dear Sir! The thing about it is, though, it turns out that case law is quite subject to interpretation, and you know, it always has been. Remember that quote? “Equitable judging [] requires an individual crafts[person] to analyze the facts, apply the ancient principles, carve the specific remedy and communicate the result. The product is human art; it cannot be scientifically produced.” Well, it turns out that art, like everything else, evolves. And – as they say – evolve or die. Because ancient principles of equity they may be, but application and analysis, if it is truly in service of equity, will always keep pace with the times. That’s all to say that all it took to know how Vice Chancellor Zurn was going to rule on the Motion to Lift the Status Quo Order was literally to take more than two seconds to think about the equitable principles underpinning the concerns animating the situation, then perhaps take a glance at the case law that would guide her thinking as to the specific situation, and voilà, all you had to do was not think that the Old Boys Club™️ would be enough to ride your Fast Track Ticket to glory. Tragically, those tickets expired sometime around the end of last decade.

Power Is As Power Does

But here’s the thing about Delaware. And we are going to get back to the letter that kicked off this whole conversation, I have not forgotten where we are going. The thing about Delaware, and the Court of Chancery or the corporate law bar in particular, especially the old guard (which, to be clear, obviously still exists in large part, even if it’s not represented any longer on the bench) – the thing about it is this: although I have frequently lauded certain aspects of The Delaware Way, I certainly do not want to give the false impression that everything is fairies and roses. Because there are certain problems, and one of them is the way that the corporate law bar gatekeeps out ideas that do not serve its own ends. Let me tell you how this works, and how I have seen it playing out at times in this case. Sometimes the way you will see it play out is like this: the people in power do things behind closed doors, in dark, smoky rooms, they don’t ever fully explain the genesis of their thinking on things, they don’t ever “show their work,” and then when someone suggests an alternative interpretation or way of thinking about something, or would just like to know more about what in the world is going on, they just scoff at the outsider fatuity of such a notion or question or inquiry, and don’t address the actual concerns or engage on the merits of the question at all. If the person raises their voice, they scoff with greater disdain or perhaps even express a mild amount of pity for the person’s willingness to debase themselves in such a way. They might then disengage entirely, with an air of moral superiority. They sometimes do things in a way that is mostly obfuscating, then act like anyone who properly interprets such behavior as effectively -- if not intentionally -- nefarious is stupid and/or jejune, thus disincentivizing anyone from ever speaking up for fear of looking like an idiot. Oh, and they will always get their panties in an enormous twist and stand up and throw their hands in the air with an objection to the metaphorical and/or literal judge at even the faintest hint from the opposing counsel or anyone else who would dare besmirch their reputational honor with even a sideways glance or insinuation of any such behavior! This is The Other Delaware Way™️ -- and what it’s hella good at is maintaining the status quo in power, because if you even so much as suggest that perhaps the way that everyone has always been doing things isn’t the only, oh-so-obvious way of doing things, you’re liable to get patted on the head, or tut-tutted out of the room, and that’s if they are in a good mood. If you’re lucky, they’ll laugh out loud at you, if you’re not so lucky, you’ll hear them laughing when you’re a little ways down the hall. If they are in a bad mood or you’re facing a power imbalance, the outcomes can be far worse.

But you know what the thing is? It’s really unfair to pin this on Delaware, because it’s really not a Delaware-specific problem, nor a Delaware-specific solution to keeping power in power. To be fair, it’s not even a patriarchy-particular solution to a patriarchal-particular problem, either. It’s just that the patriarchy has been using the tools at hand for as long as it’s been in power, but really, this is the way that power entrenches itself everywhere. These are simply tried and true means for any kind of power system to maintain itself in place. Mock outsiders. Scoff at attempts for the lower levels of the intelligentsia (yes, it too is a caste system) to gain understanding and comprehension about systems that they do not immediately grok; laugh at them when they misperceive something; embarrass them when they make small errors; pity them when they fail to achieve instant perfection in all things. A small amount of shaming in high society goes a long way. And I actually don’t even think it’s necessarily consciously bad behavior on a lot of people’s parts – some of them were literally born this way, it’s part and parcel with the silver spoon; they cannot help themselves. They were raised to react and interact in certain ways; they were taught and rewarded for “good” behavior. They probably think they are being polite! It’s called “polite society” for a reason, after all.

And here’s the thing: there’s a certain amount of je ne said quo-i don’t give a hoot required to operate effectively in an environment like this, if you are going to make any kind of difference. You have to be willing to be embarrassed, even a little bit mortified once in a while. You have to be willing to be wrong. You have to be willing to overstep the line sometimes. You have to be willing to say the wrong thing to get to the right thing. You have to be willing to be too much because the whole vibe is to please, for the love of g-d, sit down and just shut upppppp already, let the [mainly old white dudes] do what they were doing before you got here, for gods’ sake. Welp, it turns out, that’s kind of my whole vibe.

Please note that I don’t miss the irony in the notion that Elon Musk, man-whom-I-relentlessly-drag-on-the-interwebs, probably fancies himself to be standing up to traditional power systems in much the same way. And for a brief stint, I admired him for that. And in an incredibly (very, very, very) narrow way, I still do. Tragically, any kind of positive view of that tiny shard of his personality is offset by the myriad other negative externalities he thoughtlessly causes as well as the internalities he harbors without a whit of self-reflection, so it’s very much insufficient to carry even a fleeting moment, nevermind the day. But I do think this is one of the things that people like about him. Narrowly, it can be good. And go figure, people are made up of a myriad of characteristics and nuanced personality traits, some good, some bad, some awful, and I spent the better part of last year maintaining an absolutely rigorously unbiased opinion on Musk while people trashed him in my feed because I had nothing against the guy when he first sued Twitter. I laughed with a little vicarious cringe when he was on SNL, because hey, I’d probably be cringe on SNL, too, and I put a $100 deposit on a Cybertruck, so drag me now, because sue me, it was the pandemic, and I was in existential despair, and I had just played Cyberpunk 2077 and I just wanted to feel something. But I saw him interact with the legal system and the world over the intervening twelve months, and I watched with intricate horror what he did to Twitter 1.0 and I formed an opinion of who he is, based upon facts. And my opinion of how he disrespects the law and how he treats other human beings is not a favorable one. And my opinion of how he takes most of his positive traits like, “post funny memes!” (I like to post funny memes, too!) way too far without absolutely any concern for the consequences, is a negative one.

For example, I wrote the above diatribe many hours ago, and in while I was off working, he was fixing to provide a working example in his ongoing petty battle with Mark Zuckerberg over the launch of the new Threads app, which is very likely to be called a Twitter killer, but the only thing that will ever have killed Twitter will have been Elon Musk’s bad forking choices.

So, yes, he’s a manchild, and I find his behavior ridiculous and stupid, and I tried to give him the benefit of the doubt, but just for the avoidance of doubt, he’s totally serious in that tweet, he’s literally not kidding, they were going to have a cage match, but his literal Mommy wouldn’t let him, so now he’s proposing that they actually measure dicks for some reason. I don’t even know what is going on anymore. But where was I? Something about how Elon takes everything too far, I think.

I mean, it’s the same as with anything else, if you take the desire to stand up to institutionalized-power-that-is-in-power-only-because-it’s-always-been-in-power too far, and if you forget that the actual people in power also frequently know a lot of smart and useful things that you do not know, and that they have information (and even wisdom) that you do not have, and if you lose all sense of direction or humility or wherewithal, you will end up beclowning yourself repeatedly, particularly if – like Elon – you have unlimited resources and zero constraints on your actions. Happily for me, I face neither of those illimitations.

Anyhoo, Delaware, like any good power-entrenching system -- particularly a very small and incredibly insulated one -- has spent a non-trivial part of literal decades quietly shaming people into submission by the most marginal of means, with just a whisper or soupçon of threatened embarrassment, with the smallest and most subtle insinuation that if you don’t let that fanciful little new-fangled argument go, your reputation will be sullied and you’ll never make partner or get that promotion, you silly little girl. If you don’t keep doing all the backward old things in all the absolutely asinine old ways, you’ll never get anywhere, and you’ll probably get thrown out of the tribe forever. Well, as they say: with all due respect, NO.

And I do mean with all due respect, and a lot of respect is due in very many ways. Many of the institutions and people in power in Delaware deserve respect, and loads of it. I think you will have seen, if you have been following closely, or even if you have just been kind of dropping in here and there, that I heap heavy dollops of praise upon this venerable Court and its members, and for this, they are incredibly deserving. But y’all, they are also new (and also the bench and the bar are not the same thing, I’m just sayin’). And some of the old guard deserve a similar veneration, and others, not as much. And that’s – in a lot of ways – absolute heresy to say, particularly in Delaware, and the new guard would generally be prompted to take immediate and public issue with it if called upon to do so by tradition, but I don’t know, part of me would hope that deep in their heart of hearts, a couple of them might not entirely disagree with me on this, implicitly or explicitly, in word, deed, or spirit: it’s a new world, baby.

I think, though, I have somehow again digressed. We were talking about this letter in advance of the hearing, and before that, the letter opinion on the Motion to Lift the Status Quo Order, and actually, now that I think of it, another letter, too: the April 28th letter from Vice Chancellor Zurn to the Parties Regarding Revisions to the Settlement Documents. Let’s take the last one first, because it will serve as a sufficient exemplar to bring this home to the point for now.

Nothing Changes if Nothing Changes

This letter was filed around lunchtime on a Friday at the end of April, back when we were young and free and thought that this whole thing might not be such an entire, elaborate clusterfck. We had no idea what it would look like to try to have meaningful Rule 23 engagement with an engaged and vibrant retail stockholder base, we had no idea about anything. We were metaphorical spring chickens, babes in the proverbial woods. And this letter freaked everyone all the way out. Because this letter was taking all the things that all the stockholder class action lawyers in Delaware had just been able to sleep on for the past few decades, and really not have to trouble themselves about, and it was suddenly calling them into question. Like, yes, we have always done it that way, but oh my god, what if that’s no longer a good enough answer for why we are doing things? Because in Delaware, for much of the time, “because we have always done it that way” does a lot of work. It’s a heuristic that travels. It lifts weights, girl. And when someone comes along and that someone is someone who holds power in the situation, say, someone like the Vice Chancellor of the Court of Chancery who happens to hold your Status Quo Order in her hands, and she says, “hold up, just wondering but, I’m actually not clear that’s a good enough reason, so I’d like to clarify that we’re not just doing what we’ve always done just because we’ve always done it, and we’re going to actually do what we should do here, and we’re going to follow deez rules,” well, you will find some people a wee bit freaked tf out.

Because, let’s be honest, lawyers who bill a lot of money per hour actually don’t like to work that much when they don’t have to. Like, yes, they do a lot of work, and proud we are of all of them, but when you ask them to explain or justify something that they think is just sofaking obvious, they really don’t like having to do it. Especially when they actually don’t know the answer off the top of their heads, because they have never really actually thought it all the way through, and really couldn’t be bothered to do the intellectual work. Sometimes there’s even a little bit of stompy-feet energy to the tune of why-do-you-have-to-be-such-a-pain-in-the-butt-this-is-the-way-it’s-always-been-done-it’s-obviously-right-just-trust-me-bro-for-god’s-sake-if-it-turns-out-I-have-a-justification-and-have-to-explain-it-anyway-I’ll-be-so-annoyed.

These kinds of people, and this kind of energy really irritates the bejeezus out of me, ngl. I’m a born teacher and a born learner, and these kinds of people, whatever they are, they are the opposite. They can’t be troubled to teach people things, they don’t have time to explain anything, they are always too busy or too smarmy or too smart or too whatever to deign to think through anything, and sometimes I suspect that they are actually just not that smart and they really don’t, in fact, know the answer, so they just act a fool to try to get out of having an intellectual conversation about anything. But, again, I digress. (Also, to those people who are my people who are the opposite of these people, I again give you my deepest thanks and gratitude. You are my lifelines, my rays of sunshine, my oases in the desert and I boop you all on the collective noses with love.)

Some of these awful kinds of people popped up during the time of this letter. They were really down with the tyranny of their prior form. Some of them had a straight-up aneurysm that their standard form of notice was being questioned by the Court, despite the fact that it’s absolutely sensible in this case (or really any case) to question “the way it’s always been done” and to say what the Court said, while still acknowledging that the parties negotiated for the kind of settlement that they did, especially since the transactional gymnastics performed by the company here caused some very unique and unusual inter- and sub-class cross-holder conflicts that give rise to unprecedented considerations that the Vice Chancellor probably saw better and earlier than anyone else did, which sure as shit had never been fleshed out before under the Court’s prior engagements with Rule 23.

And that’s the thing about all of this – so much of Rule 23 was not previously pressure tested, not like in the pressure cooker sense, not in any serious, high-stakes, insanely-bleeding edge ways, under the rigors of direct engagement with pro se litigants and navigating the novel issues relating to high-percentage retail stockholdership of a meme stock. Everything about this case was new and uncharted. Del. Ch. Ct. Rule 23 was a thin and flimsy scaffold suddenly trying to hold up a 60-story skyscraper.

In this letter, Vice Chancellor Zurn did two main things. First, she required that some fairly misleading – to anyone with eyes that weren’t reading in an entire sea of case law and the whole backstory, kit, and caboodle – be removed from the language of the proposed documents concerning how the Opt-Out class certification process works, so that it would more properly comport with reality; and she carefully nuanced out the idea that the plaintiffs had come into the Court saying that the defendants had relied upon the class members to save the company from the brink of bankruptcy but were now facing precisely the problem that these same class members were too uninvolved and unparticipatory as to be unwilling to vote on a Share Increase Proposal as the predicate for their Complaint (on the one hand) while also arguing alongside defendants, now that they were in settled alignment that publication notice would be sufficient via 8-K, Twitter, and website postings, etc. The Vice Chancellor saw the contradiction inherent in those positions, and – although it would have been one picture that she certainly could have drawn within the lines of a certain type of painting – chose instead to require “individual notice to all members who can be identified through reasonable effort” via postcards mailing, recognizing that although “the cost of notice by mail here is higher than usual, [] in [her] view, that burden accompanies selling large quantities of stock to retail investors.”

This is the kind of insightful and thoughtful consideration that the Vice Chancellor has given to this case from the jump. And the other two letters that I mentioned were no different. I wish that VCZ would drink from Vice Chancellor Laster’s faucet for a few days and perhaps end up putting out a 200-page opinion because it could so easily be sent directly to the printer to serve as the new casebook for Rule 23 in Fall 2023 semesters all around the country. But given that Zurn’s outlier was a 100-pager last year beyond her 72- and 82-pagers that topped the list below that, I think we’re more likely to see something in the 42-82 page range, but maybe we’ll be pleasantly surprised with a long and thorough explication of all that Her Honor has digested through the past several months of this insanely deep dive. I want to know everything.

So, anyway, there were several times in this case where questions were asked about things that were perhaps “standard practice” and those questions were for good and valid reason, but I fear that a lesser person, perhaps one with more concern for their own egoic trappings and lesser concern for due process than Vice Chancellor Zurn, perhaps, would have avoided engaging on them altogether, would have avoided even asking any questions for fear of herself being questioned, and … you know … instead might have just stamped that rubber thumper, baby. Because, lord knows, the case law standards could have justified it. Because that’s what I’m saying, those “ancient principles”? They are pret-ty flexible, and it’s the artistry that makes the difference in the application and embodiment of equity. And yes, sometimes artists get lazy. But not this one. So, trust that whichever way she comes out on this, she will have put in the work, and the decision will be based on a solid, actually equitable application of reason and facts to the law by someone whose judgment I find to be quite integrous. I’m not sure what else we can ask for from a legal system, tbh. It’s more than we get from most corners of it lately.

But back to these letters. I mean, as for the other one I mentioned, we all know by now about the letter opinion to deny the Motion to Lift the Status Quo Order. That one made waves, although it was just a very obvious application of the law, y’all. Sometimes just doing the thing is what’s radical, especially when billions of dollars are betting on you just to do what folks in the past might have unthinkingly done in a less rigorous manner. Anyhoo, the other letter was the one that was sent right before the oral argument, and it was responded to by both Allegheny and Franchi separately, and the Vice Chancellor engaged with the issues in more depth and at a different tack on oral argument. We’ll actually get to all of that soon. In a weird way, the mention of the letters have served their purpose.

Let me be clear about something after I write a 7,500 word apparently prefatory remark that could easily be reductively read as me being a warrior for some sort of fundamental zeitgeist-power-structural-shift and then cite fleetingly to Vice Chancellor Zurn’s letters about an opt-out, postcard notice, a ruling, some prehearing questions, and such and so forth. Perhaps you are shaking your head wondering what the bleep those things have to do with one another. I truly do not blame you, but maybe one or two of you out there will get it, and that will be enough. You know that expression “heroes don’t always wear capes”? It’s something like that. Sometimes just asking questions is a lot. Sometimes not doing the thing that everyone expects is a big deal. Sometimes interrogating what’s always been done takes moxie. There’s just this thing for me: most of what VCZ puts out has this strongly competing dgaf / very much gaf energy, which I love, because the emphasis is all exactly in the right places, concerned with what is concerning and not with what is not. I’ve alluded to this before and it’s hard to describe. I think why she sometimes seems so radical to me, yet at the same time quite conservative and staid, is because she has this internal compass that is pointed toward the law and the minutiae and the equitable outcome all at the same time, and in a way that I think is kinda magnificent, and she does things in another way that someone like Elon Musk gets credit for but doesn’t ever actually do – she truly considers things from first principles, but like, really. With integrity, and grit, and hard work. She builds things with solid foundations, and she gets in the weeds, deeply. She doesn’t just accept that “this is the way that it’s always been done.” She investigates why and whether that actually makes sense. And so, despite how daunting the work to be done in this case seems to little ‘ol me to be, I’m confident that however her ruling comes out, I will learn so much from it. And yes, of course, I’m sure I’ll have even more to say.

Speaking of little ol’ me, looking at the billing for the Twitter matter last year that came out in the suit that Musk has filed against Wachtell, I hope you can get a modicum of appreciation for the fact that when I try to debrief these cases, I am literally attempting to do the work of armies of lawyers, with me and the stolen moments from a few members of my team when I can catch them not crazy busy with all the other work that they do, and when I have time from all the work that I have to do as Editor-in-Chief of our daily publication, trying to keep up with every other case that is coming in and out of this Court. So, please understand that this is one matter among literally hundreds, and tracing every citation and nit back to its home follicle is something that I love to do, but it’s also something that I need help doing, so please, if you think that you are the kind of person who wants to read and summarize corporate case law all day, for the love of g-d email me, because we are taking applications for new team members to help us out with our workload, and we don’t worry with people who don’t love to work, but also, I’m a very fun boss. And I promise you will learn things.

Speaking of learning things, as I attempted to take a view forward to consider how this Opinion might look, I’ve tried to go back through the case law that the Vice Chancellor and her law clerks have cited throughout this case to wade into the sea that they are swimming in, to get a sense for what the water is like there. And, I have to tell you, it’s been enlightening. I found so many threads to pull on that were like little vortexy, swirling pools of interesting citations and decisions, and strands of case law. And many of them sucked me straight underwater into a million little mermaid-rabbit holes. But let me try to focus for a second and explain where I think the rubber is going to meet the road on this settlement’s approval or rejection or modification. I think there are two key aspects, and you heard about them if you listened to the hearing with any kind of ears: 1.) the scope of the release, which yes, I’ve been harping on since Day Zero, 2.) somewhat relatedly -- the “give and the get,” including the newest gloss on Blasius from the Supreme Court.

Approve or Approve Not, There is No Cry[ing in the Court of Chancery]

The Vice Chancellor either has to approve or reject the settlement. And I think if she rejects the settlement, it will be either on the basis of the overbreadth of the release, or something around the disparity of the “give and the get” on a temporal axis but I think it’s highly unlikely that the latter point would arise without reference to the former. So, because many people want this sprawling judicial event to be over at some point in the foreseeable future, everyone and their internet brother has been trying to find language in the various settlement documents to support their pet theory that the Vice Chancellor also has the power to do some magical third thing which sounds suspiciously like “blue penciling” to adjust the scope of the release and I’m here to tell you that I really do not think that she is going to do that, for many reasons, including: 1.) the provisions y’all are reading don’t say what you think they do; 2.) the Order and Final J. doesn’t even include the release language for her to blue pencil even if she wanted to, and 3.) blue penciling isn’t a thing that judges in the Delaware Court of Chancery do as a matter of policy or law, regardless of whatever stock language got stuck into these documents, she is not going to be bullied or cajoled by the tyranny of the form, I do not believe, as much as I too would like for this national nightmare to end.

Let’s just start with the procedural stuff before we get to the merits, and let’s walk through these points in order.

There are two pieces of language in the various documents that people have mainly latched onto as evidence that they think supports their pet theory that she can just change the terms of the settlement and approve it voilà! with new terms, despite the fact that is just not how anything works. But, to not be the guy who just shushes you and says, silly boys, tricks are for kids, and that’s not the way this works, let me walk you through why that’s not the way this works. First, people have started to fixate on language in the stipulation that says: “Modification of the Stipulation: Without further approval from the Court, the Parties are hereby authorized to agree to and adopt such amendments or modifications of the Stipulation or any exhibits attached thereto to effectuate the Settlement that: (a) are not materially inconsistent with this Order and Final Judgment; and (b) do not materially limit the rights of AMC and its stockholders in connection with the Settlement.”

Ok, but y’all are reading that paragraph in very weird and funny ways, and most of the time, it doesn’t mean anything like what you want it to mean. First of all: this is giving the parties the ability to modify the stipulation “without approval from the Court” – it’s not giving the Court authority to make changes, and parts (a) and (b) basically limit this to stenographer’s changes. Because anything that we are talking about changing to the scope of the release to make a difference (to remove the federal securities claims or the APE claims, for example) would be materially inconsistent with the Order and Final J. or would materially limit the rights of AMC or its stockholders, depending on how you looked at it. To be clear, the Court doesn’t have the Stipulation in front of it to just edit willy-nilly, so that’s just not going to happen. The document that the Court is being asked to enter is the Order and Final J., and let’s talk about that for a minute.

One quick step back: when the settlement was drafted, it included – as all settlements do – several parts. It included the following documents:

• Stipulation And Agreement of Compromise, Settlement, and Release (aka, “The Stip”)

• Exhibit A; Scheduling Order with Respect to Notice and Settlement Hearing (aka, “The Scheduling Order”)
  Exhibit B; Notice of Pendency of Stockholder Class Action and Proposed Settlement, Settlement Hearing, and Right to Appear (aka, “The Notice”)

• Summary Notice of Pendency of Stockholder Class action and Proposed Exhibit D; Exhibit C; Settlement, Settlement Hearing, and Right to Appear (aka, “The Summary Notice”)

• Exhibit D; Proposed Order and Final Judgment (aka, “The Order and Final J.”)

Now, I’ve mentioned this before, but despite being mentioned as being “attached” to the Notice, Exhibit D is in fact, not attached anywhere, and due to some weird freak of FSX nature, when the document got picked up by Bloomberg and Westlaw, it got tagged as a sealed filing, so it wasn’t accessible to the public on those sites, although it did get picked up by Docket Alarm, it wasn’t actually attached to the Notice as advertised on any of the firms’ websites, per the disclosure, but here I am just being a pedant again. (But, my g-d, why can’t anyone just attend to the freaking details and satisfy my perfectionism, is that too much to ask?)

Anyhoo, Exhibit D is a big deal for other non-pedantic reasons because it’s kind of the rug that ties the room together, in the sense that the Stipulation (the actual contract between the parties that is the settlement frfr) says that “[i]n consideration for the full and final release, settlement, dismissal, and discharge of any and all of the Released Plaintiffs’ Claims against the Released Defendants’ Persons, upon entry of the Order and Final Judgment, AMC, on behalf of Defendants, shall, promptly following the Conversion, issue the Settlement Payment to the record holders of Common Stock as of the Settlement Class Time (after giving effect to the Reverse Stock Split).”

So, when proposed orders like this are submitted for signature by the judge, sometimes they will redraft them newly and then sign them, sometimes they will literally blue pen [not conceptually blue pencil] them with the numbers and dates filled in the blanks in ink and then scan a hand-drafted copy, sometimes they will do it electronically in another fashion. This is a court that crafts bespoke solutions depending on the needs of the case and time. You may recall, if you were paying an incredibly close level of attention to detail, that the Status Quo Order was submitted as a Stipulation and [Proposed] Order Concerning Plaintiffs' Motions for Expedited Proceedings and Entry of a Status Quo Order but the Order Concerning Plaintiffs' Motions for Expedited Proceedings and Entry of a Status Quo Order that was granted was not simply a regurgitation of that document with the “and [Proposed]” language crossed out with a blue pen, as some judges might do, but rather, a clean and redrafted document that VCZ entered on the docket as her own.

And you know? There are no two ways around it. This Order and Final J. isn’t getting entered as is, with dollar amounts entered in chicken scratch, scanned in for posterity. First, because I realized as I thought about it more that I don’t really know what Zurn’s handwriting looks like, which made me realize that when I think about her signature, all I see is the /s/ Morgan T. Zurn in Times New Roman, which made me realize that I am not sure I have seen a handwritten scanned order from VCZ, as I have from many of the others like Glasscock and Laster (who still owes the world the even pages of the Order and Final J. from last week that didn’t make it through the scanner, speaking of which). Maybe there has been one, but it's not top of mind. What I have seen are many, many re-typed, like-new, re-cast orders that get entered from whole cloth with the dates entered and things filled in electronically. But that’s only the first way around it. The second way is much more important. That is this:

You see that part there after Little Romanette (i)? Yeah, well, Mr. Munoz ain’t in the game no more, so at minimum, he’s going to have to be edited out of the proceedings, I say at minimum, presuming that the Vice Chancellor is satisfied that Mr. Franchi can remain, which she seemed mostly satisfied with, at least in terms of her follow-up questioning from the letter we touched upon briefly above, although … did we really ever get back to discussing it? Not entirely, but anyhoo. What we know is that there aren’t only going to be additions per the Mad Libs-style planned fill-in-the-blanks, but there are going to be deletions, too. And if you’re going to delete a plaintiff, you might consider tinkering a little under the hood with the release language, because there have been some concerns raised about the overbroad scope of the release, as we heard about a lot at the hearing, which I do believe I discussed previously at great length.

However, there’s a wee bit (/s) of an issue with this theory, in addition to the fact that it’s against public policy, Court precedent, and largely just all other factors render it very unlikely to happen other than in some fantasy world where we can all just put this thing behind us and finally move on because we just really, really want to. I mean, maybe the judge ends up wanting it to that badly, also, and she finds a way! I don’t know!

One very interesting thing that I noticed as I started going back to look at other proposed Orders and Final J. from recent settlements, is that many (most) ((all)) of them include the defined terms explicitly, whereas this one includes a whereas clause that states: “WHEREAS, except for terms defined herein, the Court adopts and incorporates the definitions in the Stipulation for purposes of this Order and Final Judgment.” Huh. How [in]convenient. I’m not convinced this is something unique to this settlement, it’s probably just one way of structuring the document set, with a referent instead of an actual term set in the document to be entered by the Court. However, this gives VCZ much less flexibility to do what some people have been proposing / wishing for / praying for / doing raindances to various gods about re: “blue penciling” the scope of the release because while she could perhaps push the boundaries of her authority (she’s the judge, after all) if she feels it is in service of equity, she really cannot edit documents that are not in front of her for review and entry. And I have a very difficult time thinking that she’s going to go so far off the reservation as to import entire sections of another document and then edit them … for all the reasons that I mentioned above, and then some, that’s just not going to happen, not matter how much wish fulfillment you try to heap upon it.

But we’ll come back to that – for now, this discussion spawned off a misreading of a single piece of language from the stipulation, and I said there were two things that people were wildly misreading – so here’s the other: this stock language from the Scheduling Order is also getting a lot of traction on social media and around the interwebs: “The Court may approve the Settlement at or after the Settlement Hearing, according to the terms and conditions of the Stipulation, as it may be modified by the Parties, without further notice to Settlement Class Members.” The thing about this? First, it’s more stock language not to be given inordinate weight, and y’all aren’t giving enough weight to the “according to the terms and conditions of the Stipulation” because those very specific and particular terms and conditions are onerous, and they are very clear about what can and can’t be done here. Second, it says the Court may approve the Settlement as it may be modified by the Parties, which I suppose could allow for the parties to change the settlement in advance of the Court’s approval, but y’all, they aren’t going to unless the judge makes them and she’s currently reviewing the version that’s on the docket for approval, so we’re just back to waiting for her to approve or reject the settlement as it is currently submitted, and it’s gonna have to be a rejection for them to be forced to make any changes.

And the thing is that rejecting this settlement has a clear implication, and that is that it triggers a termination right, and one of the clear predicates for the triggering of that termination right is even spelled out by an “avoidance of doubt” clause, just in case anyone has any lingering doubts: “For the avoidance of doubt, the Parties stipulate and agree that […] any change to the scope or substance of the Releases provided for in this Stipulation and the Settlement would constitute a material change that gives rise to each of the Parties’ rights to terminate this Stipulation and the Settlement.”

Ok, so, let’s set that aside for now, because we’ll come back to it later and I don’t want to … you know … go insane before I am done here and I’m having a hell of a time keeping myself inside the boundaries of these tiny little outlines I’m laying out for myself. They are so confining!

In any case, can we just admit here that the Court has two options: approve as is, or “reject and suggest”? I mean, look, I think we can agree on this: there’s no world in which the Court is just going to tell the parties to go pound sand. It’s not like the Court is going to say, haha — your settlement sucks, see you later, byeeeee! That’s not really VCZ’s vibe. She’s either going to lay out a long disquisition on all of the reasons why this settlement is actually, perhaps regrettably, the best the law in the Delaware Court of Chancery can provide, or she is going to say perhaps lamentably, that the law will not allow the settlement to be approved as is, and that it will require the following tweaks to be entered and that the parties should get on that ish, especially if there is a looming financial crisis on the horizon.

Let me just try to once and for all put to rest another annoyingly persistent bit of misinformation on the internet, which is that somehow the Vice Chancellor can just “dismiss” the whole case from where she currently sits. I’ve said it many times but that’s not on the proverbial docket, and as many times as you cite to me the line in the Scheduling Order that says “iv. determine whether the Action should be dismissed with prejudice and the Releases provided under the Stipulation should be granted;” I’m going to continue to explain to you that you keep thinking that it’s some disjunctive / in the alternative kind of thing when it is absolutely not like an a la carte menu, and you are completely missing the point, and you are completely missing the and and the meaning of the entire document, and I don’t mean to sound like the bros whom I lambasted above, but please listen to me when I tell you that she is not simply going to dismiss the whole matter without consummating a settlement one way or the other, absent some very big changes on the docket that are nowhere near occurring at this time. That’s not how this works. As they say, that is not how anything works. I’m not saying these things could not somehow come to pass. I’m saying that they currently are not.

But since I do like trying to thread needles, and there’s some case law on “well, it’s okay if the Court makes changes to the terms of the settlement without renotice if the modifications are favorable to the class,” why not try to see if there’s a way to thread this one that would allow the Court to effectively Ghost Pencil™️ this settlement (I just made that up), with the blessing of the parties, without further notice to Settlement Class Members, in keeping with due process. This would basically grant the effective wishes of many because it would truncate the time required for the process by which the renegotiation and re-approval process would happen, because what most people would prefer not to do is to relive the last sixty days of our lives, if at all possible. I’m quite sure that if this kind of [something] penciling happens, it will not be by virtue of either of those two pieces of stock-ish language above, by the by, I think it would be because the parties willed it, and because the Court thought it to be in the discretion of its equitable powers for it to be so, in part because it would be in the company’s and the stockholders’ interests to avoid the spectre or actual occurence of a capitalization crisis (presuming that’s a real thing that can be proven up by those Bates citations, et seq.).

Ghost Penciling™️

Because this is the “some other third thing” – there’s approval as is, there’s rejection/renegotiation/renotice (actually, it should probably be rejection/renegotiation/renotice/reneging-rights, since it technically triggers a termination right, but so does anything other than outright approval) and then there’s what I now and forever in the future will call Ghost Penciling™️. And by that, I basically mean rejecting-but-of-course-framing-it-as-“if-you-do-this-I’ll-approve-and-oh-by-the-way-you-don’t-need-to-renotice.” The chances of Ghost Penciling™️ seem lower in this case than most for two reasons, to my mind: 1.) the high-profile nature of the case (although that could cut both ways, to a certain degree because only people living under rocks don’t know about this case by now, but by the same token, it's going to cause a massive uproar if a new settlement isn’t re-noticed, because people are still freaking out about the first round of notice), and 2.) the cross-holding clusterfckery of the class’ own adversity to its own members and other stockholders (which makes it much harder to say that any given action is “beneficial to the class” in any straightforward way).

Anyway, for an example of what I have now dubbed entirely without the imprimatur of anyone: Ghost Penciling™️, let’s look at Leo Schumacher v. Joseph Loscalzo, MD, PhD, et al. and Ionis Pharmaceuticals, Inc., C.A. No. 2022-0059, transcript (Del. Ch. Sept. 21, 2022). Because it both supports my assertion that blue penciling is not gonna happen but also gives us a kind of template for what ghost penciling might look like. Someone out there reading this right now is most definitely just for no real reason at all just hating this ridiculous term I’ve made up. I have no idea why, but I can already feel it. It’s somehow personally enraging to someone. That’s just how attorneys are. I would know, I’m one of them.

Anyway, I’ll sort that out with them when they inevitably DM me with their grave concerns about the way I have characterized this quirky and silly little fetishized concept that I have — you should be clear — completely and entirely made up. I mean, I think the trademark makes that clear, but also, it’s the name that I’ve made up, the general outline of what I’m talking about is what we are about to look at what happened in the following case. I am pretty sure that at least some of you are capable of discerning these details, but sometimes I admittedly get over my skiis, I’m self-aware enough to know that. Also, don’t look too long at the details or dates on this docket, or you will be very disappointed to see that many months past while the ghost ran its pencil over the docket from ruling to revised order and final j., but remember that most settlements do not occur in an expedited context, and usually people do not really give two shits about how long these things take to occur.

Here's some of the ruling, in relevant part, where Vice Chancellor Will breaks the bad news about her impending “rejection” (as she called it) of the settlement, due to the overbreadth of the release:

“Recently, the Delaware Supreme Court reversed Vice Chancellor Glasscock’s approval of a settlement that also concerned excessive director compensation claims because the release was overbroad. Griffith v. Stein. Now, there, the release swept in future claims, so the circumstances are admittedly different, but I want to read some language from that opinion that informs my thinking here and causes me to pause.

The Supreme Court said, “In the class action context, the Court of Chancery must scrutinize releases to ensure that the fiduciary nature of the class action is respected, and that its approval of any class-based settlement does not offend due process.” There, it was quoting from the Supreme Court’s 2012 Celera decision.

The Supreme Court in Stein went on to say, “To satisfy due process concerns, ‘[a] settlement can release claims that were not specifically asserted in an action but can only release claims that are based on the ‘same factual predicate’ or the ‘same set of operative facts’ as the underlying action.’” And there, the Supreme Court was citing to this Court’s 2006 decision in UniSuper v. News Corp.

Consistent with that guidance, I looked to the factual predicate in this action. I understand the need for finality and global peace, but given the recent Stein decision, I am concerned that overlooking the breadth of the release puts the settlement at even greater risk going forward and would defeat that goal. I would also be tempted to simply strike that part of the release, but I can’t blue pencil it. It would change the terms of the deal that you struck, and it would inject risk into the settlement process that our policies in support of voluntary settlement of claims are designed to address.

And so I can’t approve the settlement today. I don’t like doing this any more than the parties like it. I know a lot of work went into this settlement. I think there are positives to it, and I don’t take this lightly. I would have been strongly inclined to approve it, and otherwise overrule the objection, but given the recent attention by our Supreme Court to the scope of releases in these cases, and that the release explicitly goes too far in the area that I’ve pointed out, I can’t bless it.

I am, however, confident that when you return to the bargaining table, you can figure out a path forward that solves my concerns about the release, and I’m going to leave that to you-all to assess. In terms of next steps, I’m going to ask that you send me a letter and let me know how you’ve decided to go forward with the settlement, and subject to whatever you decide, I will be prepared to rule on any modification to the settlement, the remainder of the objection, and the fee application at that time, without further argument. […]

For the sake of clarity, I also don’t expect you to reissue notice. I think that notice of the hearing was adequate. And other than Mr. Cohen, no one has appeared to object.”

Because, of course, no one is going to like the term “ghost penciling” to be adopted for purely official purposes because it kinda infringes slightly on the “voluntary settlement” bit but who does not want to voluntarily comply with the wishes of the Court, and if you can be guided by the spirit ghost who is moved at the Court’s behest, it’s a win win win for everyone, right? Sometimes we have to be honest about what’s going on and stop pretending like what’s happening isn’t what’s happening.

Anyway, that transcript clip is enlightening, and sounds on point to an untrained ear, but there are also some points to distinguish, such as that this was a disclosure case, with only therapeutics, so it was more on all fours with Stein than we are here. But you can be sure, especially based on VCZ’s lines of questioning from the hearing, that she is doing some detailed laying out of the “factual predicate” given by the two complaints at issue in this matter and diving deeply into whether or not that § 242 claim merits such a big … oh, my god … I finally just realized what she was talking about! I have been struggling so much to figure out what part of the questioning from Thursday was about, because VCZ was so deep in the weeds about the value of the Blasius claim as between August and December, and I could not for the life of me figure out what the heck that could matter for, like how we were somehow or someway parsing value over time just could not at all register in my brain, but I think I just figured it out! Also, before I forget, I do not want to fail to mention that part when VCZ asked about “why not not cash, but therapeutics, in essence? Why didn’t we change anything at AMC?,” she asked. And the answer she got was basically something like, “you’ve told me you didn’t think the [shitty] therapeutics I brought to you in the past were shitty and so I didn’t bring you any this time.” Sorry, that’s not the exact language, but counsel cut themselves off so I had to fill in some things. The exact quote was, “I mean, normally, when people come before Your Honor with therapeutics — and I’ve brought what I thought were very valuable therapeutics, I mean, —” and then he literally never returned to the point, so the only thing I can imagine he was going to say was “you didn’t think they were valuable,” and so I merely interpolated the text from her perspective. I’m sure I got it wrong and will be summarily corrected. But I digress.

The Temporal / Value Release Axis

Back to my wild, harebrained theory, spawned just now, after writing 17,075 words this weekend, so take it with a grain of salt, but I think that she is looking at the § 242 claim and saying, okay, y’all, that claim was hanging on by a thread. I can no longer find the part in the transcript where she said this, but I remember it in my mind like a film strip. VCZ — unlike, with all due respect, and that is literally all of it, the Chancellor, whom y’all know I almost literally worship, but who does not have a poker face — VCZ does have a poker face, and her game is strong. But when she was talking about the § 242 claim in this part of the transcript that for some reason now persistently eludes me, she actually started to show something like irritation, concerning how this claim that was barely alive was doing such a heavy lift in carrying the release back. And then in the intervening time, it’s just gotten worse. The claim has just consistently weakened. Between document discovery, the legislature, VCL’s ruling, and the Supreme Court in Coster II, no one is doing it any favors. She sent a letter back in the day, which I pointed out to y’all, a little “modsbox” order as she calls them, where she picked up on this little screwy bit of language in one of her eagle eyed moments, to see if they were going to keep it in the case, and they said yes, but almost reluctantly. And then at argument on Thursday, they almost just seemed to say that they maybe weren’t even going to brief it if they had gone to a TRO hearing (which seemed to elicit another tiny bit of irritation from behind her stoic façade) but at the same time, the § 242 claim is anchoring the release back to August 4, 2022, which is incredibly valuable to AMC. Without that anchor, they have a much weaker release. Like, what is the release even worth to them if it doesn’t carry back beyond December? It’s an entirely different ballgame.

To be honest, at this time of night, in this light, the whole thing actually starts to look a little sketchy to me, if I’m not careful with where I let my mind go at this point, about how this all played out. But now I really understand all the questions about the timing of the Blasius claim, because this is some critical shit right here. Because if that Blasius claim doesn’t pull back to August, and she doesn’t find the § 242 claim sufficient to carry the release, and if you have to balance the temporal aspects of the “give and the get” of the claim and the release, which is not something I had deeply contemplated before, like if you have to lay them on a timeline and consider their heft in terms of value across time … that’s a whole different question about how it plays out. I had just kind of considered them to be all one lumpy “give” vs. all one lumpy “get” but of course, her thinking was so much more nuanced and vibrant. And then thinking about the dynamics animating these decisions about whether to keep which claims in play, and all of the “how the sausage is made” gets even sketchier … I’ll spare you my internal dialogue until I have an opportunity to consider it more responsibly. Needless to say, I think there are some fascinating considerations here.

But, to what I think might have been her point – the temporal / value aspect matters because the August through December time period is an insanely valuable time period for the release, and it’s an arguably lesser-value time period for the claims. And this all ties way back around to the beginning about that letter we first started talking about, or one of those letters that I kicked this whole thing off about, one of those Zurn-is-badass-who-isn’t-afraid-to-ask-questions letters? Yeah, the one that was asking questions and no one could really parse exactly what the in the world was going on, and why was she asking questions about Franchi and this August 3rd date, and I just kept thinking, trust me, bro, but not like that, like I trust that she knows what the [bleep] she’s doing even if I have no idea what it means right now, but now I think it’s all starting to make sense to me. Because there is this weird temporal value disjunct that seems off, and it all relates to this August to December timeframe, and so who held what claims during that timeframe matters to a certain degree, but just more broadly, the value of those claims over those time periods matters, because the release of those claims from those time periods is so critical. I’m not sure it’s something that is usually considered in precisely this way, or perhaps it’s just another feature / danger of having such an elongated class period, I don’t know. Or maybe it’s something that every class action plaintiffs broyler has studied since the dawn of time and will now re-educate me about, fantastic, I can’t wait. But, my god, the complications around all the analysis that is going into this ruling, and what is going to be so astounding is how simple she’s going to make it all look when it’s all said and done. I’m just here to make it seem as confusing as possible so that her Opinion looks like an absolute simplistic bit of Steve Jobs-level iPhone genius next to my Android app store clusterfuckery of unmitigated spam sessions in advance of her ruling.

But seriously, I don’t know how these judges do it. Obviously, with some incredibly bad ass clerks. But I don’t know how they do it. With incredible staff, but it’s just like turtles, it’s awesomeness and amazing minds all the way down.

Anyway, the real thrust of all this noise is the question of whether or not there is any value to the claims being released under the arguable overbreadth of this Capital “R” release. To be honest, I wish that the lawyering underlying all this had just been a bit cleaner, because I think there’s a real chance here that this is a lot of sound and fury in a very hot environment, but that it could all ultimately be signifying not much of anything. However, try telling that to a bunch of people who have a lot of very legitimate reasons not to trust any of the players involved (which I do not blame them for one bit), and try telling them to “just trust me bro” … yeah, I don’t think that’s a great strategy, but it turns out it’s also not the way that the law expects things to work, which we will see below, but first:

Meet The Twinklevoss Brothers ✨

So I listened to counsel for defendants address what I think was Vice Chancellor Zurn’s most compelling framing of the question regarding the release of the APE claims, and I admit – it took me a while to figure out what was going on here between all the temporality and the cross-holdings and the directionality of the consideration, and the distinction that they are so desperately trying to blur between conversion and consideration (which are really, seriously, not at all even arguably the same thing in any way and I don’t see how they can be substituted conceptually for one another), but anyway, I think this is the key problem, where VCZ says: “It seems that what we’ve got here is consideration that, again, improves the lot of the common – but the APE claims are being released, as well, for not just a margin of valuation, like, perhaps, the personal claims in Activision, but [the settlement consideration is] actively bad for them.” And this colloquy with counsel makes me so uncomfortable for reasons I can’t quite articulate, but his response is basically, “there’s going to be a transfer of value away from common to APEs [in the conversion, so] it would be particularly unfair – if plaintiffs are right and this is harmful to common stockholders and APEs are going to benefit at the end of the day, notwithstanding the settlement – for APEs then to be able to turn around and try to articulate a personal direct claim and recover on that claim strikes me as inappropriate […] if it weren’t the case that there was a value transfer, for lack of a better term, from common to APEs, which is still happening, it might be different. But there is here. And so I think there’s something particularly perverse about an APE holder then being able to turn around and sue us.”

The Court then asks: “Even if the APE holder qua APE holder has not received consideration for their release of that claim?”

To which counsel responds: “I do. I do. In this situation. And I think that’s important, because I think this is somewhat of a unique situation. But I think, under the circumstances, where, again, you’ve got this transfer of value, for lack of a better phrase – there’s an unfairness in then allowing an APE holder which is theoretically benefitting from that transfer of value to then come into court and try to have it both ways. Because, remember, you have to be a member of the class, an APE holder who is also a member of the class. So that person is getting a benefit wearing their common stockholder class, but then really trying to have it both ways with the claim, and that’s what we think is inappropriate.”

This is one of those things that just makes my brain hurt, and it will probably take me two weeks to figure out all the things that bother me about it, and I’ll wake up in the middle of the night two weeks from now, or be in the shower ten days from now, and go “holy shit omg I get it” and run around looking for a recording device or a keyboard to transcribe my thoughts. Because there is something funky with this logic, but I’m not sure I can totally pin it down.

First of all, that last sentence seems to contradict the entirety of what comes before it. Is it the wearing of the common stockholder hat that matters or not? Is it the getting of the common stockholder consideration benefit that makes the thing unfair or not? Because a couple of sentences before that, it was the fact that you were getting the benefit of the bargain of being an APE holder by virtue of the conversion (and the presumed / presumptive / assumed / alleged stock price increase that will occur, which – to me – just seems like what you bargained for when you bought APE on the open market, because you know, at first they promised that someday maybe but probably not soon this preferred stock would be convertible into common, I don’t know, y’all but if I just read this document and then looked at the results of the latest stockholder vote, I don’t know, I might think that the things were just definitely going to convert, unless I did a whole lot of other digging on the internet with like a $400k education and a whole lot of help from my friends. Also, what happens if the stock price later falls? What’s the timeline on this benefit / harm calculation? To what timeline do we ascribe the good parts of the settlement transaction bargain and not the bad? What if the reverse split and conversion doesn’t cover everyone in glory? Is it only relative glory to common? Isn’t this whole discussion just somehow so perverse, or is it just me?

Let’s step back: imagine my APE holders from my original example, but now let’s make them twin bros. So, each of my twin brothers, let’s call them the Twinklevosses, they each own 15 million APEs, which they bought on the open market. They didn’t ever own AMC, they don’t go to the movies, they only watch full-length videos that are uploaded illegally on Twitter, and they refuse to join Threads, because like the Winklevoss brothers, they also hate Mark Zuckerberg. Anyway, the Twinklevoss brothers both own their 15 million shares of APE and by the way, one of them read this thing on the internet and took it at its word that “upon stockholder approval one (1) AMC Preferred Equity Unit converts into one (1) share of common stock” and after some “DD” (that’s short for “due diligence” get your mind out of the gutter) he figured out that there was actually a stockholder vote back in March, and that the vote had passed, so he assumed that the conversion was imminent. He and his brother bought their APEs sometime after reading that and after the stockholder vote passed. Beyond that, he doesn’t really follow all the noise on Twitter about APEs because he bought one of those Bored APE NFTs and lost a bunch of money on it, so he muted the word so as to avoid being retraumatized on a daily basis.

Anyhoo, one night last week, the two brothers were up late playing a drinking game, and – long story short – one of them lost and, feeling like he wanted to exact a fine bit of revenge for a particularly cruel word his brother had said to him about his Bored APE investment, Bro #2 made Bro #1 buy 💯 shares of AMC stock. To add insult to injury, he forced him to do it using the Robinhood app.

What’s weird about this little “theoretical” situation is that you now have two APE holders who will be in a position that is only materially different by a matter of mere dollars and cents – at best – post reverse/split and conversion. One will be a member of the class, and one will not. Neither will have received any kind of notice of the settlement. None will be any the wiser. Neither seem like they should properly be members of this settlement class for any real reason, and neither appear to have a semblance of due process afforded to them. And assuming that Bro #2 is a HODL’er, and you know these guys are, there’s no way out for him. And maybe his APE claims are paltry. We really don’t know. Perhaps they are even non-existent. But do we even know this? On whose authority? One will have received no positive consideration from the settlement whatsoever, plus active harm from the settlement consideration, but at least he’ll still have his claims, fwiw. The other will have perhaps a single share or so of AMC common stock as consideration, after the reverse split and conversion, and will also have been actively harmed from the grant of consideration to the common class in much greater proportion, but will also have given up whatever 15 million dollars’ worth of claims are worth, to the tune of zero consideration paid. Seems whack, yo. And if it’s all for naught, then it just never should have been written this way. As much as I want this thing to be over, I don’t think the answer is just to sweep crappy claims under the rug. If they are valueless, the default should be for the claims to be freed from the jaws of the release without concern, not for the class to include them in the scope of the release without hesitation. That situates the burden in an undue position that doesn’t comport with notions of fairness. But don’t take it from me, listen to the caselaw.

Don’t Trust, Verify

Let’s look a little deeper into a sample of one of the cases that I’ve been swimming around in, like all these citations to In re Countrywide Corp., which VCZ has cited in at least three of her letters. This case has several opinions over a span of years, and it is fascinating. And it leads to, and is heavily cited in the In re Celera opinion from the Delaware Supreme Court, with which I had already familiarized myself, but now those citations hit different, as I better understood the underlying facts in the Countrywide matter. C’mon in, the water is fine.

As the Court of Chancery recognized in In re Countrywide Corp. S’holders Litig.: “The Court of Chancery must participate in the consummation of the settlement and ensure that the fiduciary nature of the class action is respected, and that its approval of any class-based settlement does not offend due process.” Rule 23(e)’s requirement that court approval be obtained before any settlement is consummated and the Court of Chancery’s role in reviewing the settlement is required to safeguard due process rights (citing Prezant v. DeAngelis, (Del. 1994) (finding the adequacy of the class representative has a constitutional dimension under the Due Process Clause of the United States Constitution)), to ensure that the settlement represents “a genuine bargained-for exchange between adversaries with a bona fide stake in the litigation,” and also that the settlement agreement’s terms “provide a benefit to the members of the class and not merely a promise to pay the fees of their counsel.”

The Court of Chancery’s role in approving class action settlements under Rule 23 “is intended to balance policies favoring settlement with concerns for due process” (citing Barkan v. Amsted Indus., Inc., (Del. 1989) (the Court of Chancery must balance “the policy preference for settlement against the need to insure that the interests of the class have been fairly represented”)).

“Equitable notions of fairness and efficiency justify the use of the class action device. Yet its departure from the usual course requires ardent respect for the limits of due process, limits that dictate when a party may be constitutionally bound by litigation conducted by another. Court of Chancery Rule 23 is designed to protect the due process rights of absent class members. Only through strict compliance with Rule 23 may a court’s judgment bind the absent members. Settlements reached in the absence of strict compliance will fail to deliver the ‘global peace’ defendants seek.” -- In re Countrywide Corp. S’holders Litig.

And that’s “Validity of a settlement does not depend on every compromised claim in a lawsuit being supported by independent consideration.” Polk, 507 A.2d 538.

But you remember that quote about artistry and craftspersonship and all that? Well, that’s the thing about case law. It can bring you to just about any outcome, if you’re being honest about your craft. Imagine application of some of these citations from Countrywide and how they could play in an Opinion in this matter. Of course, their rote application here would ignore the fact that Countrywide was a disclosure case where the underlying federal securities claims were deeply investigated and reviewed, where no monetary consideration was exchanged, just therapeutics, and various other distinguishing aspects on the facts. But such is the artisanal nature of analysis.

“Both the United States Supreme Court and the Delaware Supreme Court have recognized the validity of executing a general release that encompasses federal claims in the settlement of a state law class action.” See Matsushita Elec. Indus. Co., Ltd. v. Epstein, (U.S. 1996); Nottingham Partners v. Dana, (Del. 1989).

Yep, you could see how she could use that quote to go either way if she wanted to just approve the settlement as is, it could certainly support her in doing that. But, wait, there’s more.

“This Court has refused to certify a non-opt-out class action settlement releasing certain federal securities law claims when those claims were ‘the most prominent possible claims of those purposed to be adjudicated or released. . . .’ Raskin v. Birmingham Steel Corp. (Del. Ch. Dec. 4, 1990). That is not the case here, despite the fact that settlement negotiations secured no monetary consideration. Although the claims alleged in the Delaware Complaint were weak, the Court is not convinced, despite their weakness, that the underlying claims were not a more prominent body of possible claims than the federal securities law claims []. As a result, releasing federal securities law claims here does not run afoul of Raskin. The case is, however, instructive. As discussed in the Court’s previous opinion, Raskin teaches that, in the context of a proposed settlement, a court must evaluate not only claims asserted in the complaint but also those barred by the effect of any included release when assessing whether a case is one wholly or predominantly for a money judgment. The Court has sought to adhere to that principle.”

I think this last quote is what bothers me most about how things have shaken out here. There’s been no meaningful investigation of the claims. There was some handwaving at the hearing about how it had been done, and nothing came up. But there’s no briefing, there’s just vibes. There’s a bunch of “trust me, bro, it’s nothing” and maybe it isn’t, and maybe my ignorance on the matter is the problem here, but that’s why we have experts. Not so they can brush people off and say, “trust me, it’s nothing,” but so they can walk us through, step-by-step, as to why there’s nothing to be concerned about. Not so they can say things like, “if there was a claim, it would have been brought by now,” because I can think of a million practical and market-driven reasons why those claims would not have been brought by now that have absolutely nothing to do with their legal merit or validity, I don’t need to be a federal securities legal expert to have a lick of common sense.

But speaking of which, I remembered that this was discussed in the hearing, and I wanted to make sure I was giving everyone a fair shake, so I went back and parsed everything out, and well … uh … there seemed to be a bit of conflation going on, but maybe someone can come in and pat me on the head here and tell me I don’t know what’s going on, condescendingly, probably.

So, at oral argument, the following thing was said:

“This becomes important, Your Honor, to respond to concerns raised by many investors and objectors about why aren’t we bringing a securities fraud claim, or why don’t we try to get back the market cap drop.

And so, putting aside the legal impediments to invalidating the APEs, at this point, I just want to speak as a securities – a federal securities law litigant. You actually get back to equilibrium. Even though the spread was wide from the beginning, wider than it should have been, and it didn’t close up for various reasons, the total market cap of the company was still in that $15 – at some point $16 range after the APEs were issued. So there wasn’t loss causation, right?

Our initial briefing says we didn’t think there was a good fraud claim because the mirror voting wasn’t described by the board as it should have been under Delaware law. But it was disclosed we didn’t view any other aspect of the APEs as rising to the level of a material misstatement or omission. That’s why we don’t believe there was a securities fraud claim.”

Ok, first of all. I immediately went back to the “initial briefing” because I panicked for a second, thinking that I had overlooked a discussion about these claims that had been done pursuant to Raskin and Countrywide, and maybe here I am, just now getting on board, and silly little girl, always late to the party. But it turns out, there’s absolutely zippity zero that I can find in the initial briefing on any of this, but there is a section in the reply brief about common law fraud claims, which – and please, I don’t claim to be the expert here – seem to be fairly different in at least jurisdictionally from federal securities law claims, but in that clip above, where he’s you know, speaking as a “federal securities law litigant” (presumably he meant litigator), there’s a bit of conflation going on. Because in the reply brief, where there is a section on common law fraud, there’s no discussion whatsoever of federal securities claims, but I forgive myself for thinking I might have found something to that effect there. I did not. So, what we’ve got is bro telling us this, as follows: “[W]e didn’t view any other aspect of the APEs as rising to the level of a material misstatement or omission. That’s why we don’t believe there was a securities fraud claim.”

Later in the argument, plaintiff’s lawyer says: “We’re not aware of any claim the APEs could have. […] But, again, we’re not representing APEs. We don’t know if they have any claims. We don’t think they – they don’t have a Blasius claim. They don’t have a Section 242 claim. If anything, what’s alleged is their own – their creation is owed to a violation of either common law or statutory law. So I don’t know what claims we would really worry about, I guess.”

Maybe there are no federal securities fraud claims. Maybe there are no common law fraud claims. Maybe there are no personal claims whatsoever. Maybe this is as much investigation as one should ever hope to have, on a reply brief, in response to an objection … but is this the way that it has to happen? Does the burden fall this hard on the Court and objectors and random court watchers? How can that be the state of due process? That we just get lucky that we don’t happen to release valuable claims because “if they existed someone would have brought them because the plaintiffs bar are hungry and wouldn’t pass up a meal?”

I’m probably overtired, but, I guess the first question is, are we adhering to the teachings of the Court, reiterated in Countrywide, “[a]s discussed [in] Raskin [which] teaches that, in the context of a proposed settlement, a court must evaluate not only claims asserted in the complaint but also those barred by the effect of any included release when assessing whether a case is one wholly or predominantly for a money judgment.”

There is a bit of a rabbit hole to go down to address the fact that we are both in an injunctive relief posture, sort of here, but also receiving stock settlement as compensation, but also none of that quite goes to what “when assessing whether a case is one wholly or predominantly for a money judgment” in that quote is quite getting after, even though in Countrywide it’s read a bit more broadly than it was perhaps initially laid out originally in Raskin itself.

I think we can still ask the question, at least in spirit, though — can the Court here say that it has “sought to adhere to [this] principle” of having evaluated not on the claims asserted in the complaint but also those barred by the effect of any included release? I can say for sure that it has thus far hasn’t gotten much assistance from the named parties.

What are we supposed to tell the Twinklevoss brothers when they call asking about how they are differently situated, and why in the world that is fair? I really don’t know, but in the end, my feeling is that if the claims that are being waived are so unlikely to be brought, or so piss poor, or just truly nonexistent, then someone should have just properly briefed the issue like an actual lawyer, or just not have included them in the release in the first place, or now that you did that, don’t freaking worry about not releasing them, dude if they are such actual trash.

It’s not the claimants-who-want-to-keep-their-claims’ job to speculate on every possible claim they could have imho, if you can’t articulate what you think the claim is, then you shouldn’t be freaked out about not having it in the scope of your waiver, right? If it’s so nbd, then it’s nbd to not waive it. It’s a weird and strange burden shift that feels violative of due process to do things the other way around, especially in a case where it feels absolutely like no one has meaningfully investigated the claims on behalf of various sectors of the competing interests of the underlying class members here, for many complex and intricate social, financial, and “other” reasons. And as described above, the caselaw puts the burden on the Court (but, truly, thus, the parties, one would hope) to ensure this investigation has been done. Why would you try to release a claim that you thought didn’t exist? To what end? Why bring it up in the first place? It’s not like someone other than the defendants invented the idea of these claims that they are now looking at us cross-eyed when we say “what the bananas are these claims about” and they say, “I don’t know, what the bananas are these claims about?” It’s like, yo, dude, you are the ones who brought the whole idea to the table. You justify it. Or just Ctrl-Alt-Delete.

What the Fork Now

So, what does this all mean? You have read 20,000 words, and I still haven’t told you whether or not Vice Chancellor Zurn is going to approve this damn settlement, and you know what? I’m never going to! Joke’s on you! You should know that especially when I write long things, I become highly pessimistic, and tend to talk myself into things that some might refer to as “tizzies” although that may or may not be a politically correct term, I don’t know its etymology, but I actually don’t know if “politically correct” is a politically correct term, so let’s just drop this line of inquiry. My point being that you should take my tone and tenor with a bit of salt and some of that dilution y’all are so fond of, because you know, settlements are routinely approved in the Court of Chancery, and who am I to say what could happen? I’ve talked about this one before, and I’ve given you the run-down on the basics of the law, and you can apply your own rational thinking. And yes, the Special Master recommended overruling the objections, but in their original form, none of the objectors addressed the issues that Zurn herself addressed at the hearing squarely on their face, which I pointed out in my last piece on the topic. So, it seems like a quite possible outcome to affirm the ruling of the Special Master and yet still reject the settlement, because — as I feel I have discussed also ad nauseam — the Special Master’s purview was limited to what was brought by objectors, but the scope of the Vice Chancellor’s review is from whole cloth and Rule 23 and due process require a broad scope of legal review for various concerns not necessarily encompassed by the work of the Special Master. And I will say that the way that the Vice Chancellor almost conscientiously objected to engaging with the objector’s counsel at oral argument made me wonder if there wasn’t something in the Riverbed, so to speak, that has VCZ wanting to keep a clean delineation between what is hers and what is theirs, and to be able to say “these things were on my mind before y’all got here” so as not to run into any issues with what could be a really mettlesome series of follow-on litigations if there were modifications made to the scope of the release, for example, and one (but not all) of the objectors who happened to tangentially mention such a thing received some sort of benefit fee for advancing that ball. Natch, to be fair, one could always feel free to point to my podcast interview where we discussed the scope of the release including APE claims, which predates the objections deadline anyhoo. But look, maybe I’m — like Jim Carrey in Liar, Liar — an overreactor. It wouldn’t be the first time. Maybe the world hasn’t changed as much as I’d like, and somehow the language of the release is massaged in a way that is intellectually unsatisfying to me but practically speaking meets the moment, and maybe this whole thing moves on to the next phase. And maybe the Vice Chancellor gets creative and takes up an idea I heard to try to do something meaningful about notice requirements being zealously performed in the future and awards attorneys’ fees as a percentage of the postcards that were mailed prior to the proper deadline for appropriate receipt on the original timeline. Wouldn’t that be a hoot? What’s that? I’m getting a phone call. I have been enjoined from writing on Substack? By whom? Uh oh.

Anyway, I will say this — given the somewhat whacky scope of the release, it seems to me that a couple of options are on the table:

• VCZ gets comfortable with the fact that the additional claims being released are weak or non-existent, and unlike me, just gets over it, maybe people are just allowed to make up random claims and insert them in the release for fun, and we’re all supposed to just get over it maybe it’s … something like … “the give” is meh, “the get” is meh (ok, she’s definitely not going to put it like that lol) but that (this is the key part) and all that other stuff is whatevs … somehow the “benefit” of the conversion for APE holders is something akin to a type of consideration to satisfy Activision and Matsushita concerns, in a way that I truly understand less and less the more that I think about it.

  • Rant incoming: How could the conversion possibly function in this way for people who purchased APE on the open market when the conversion was a part of the benefit of the purchase bargain, and is not at all a benefit of the bargain as a function of their status as holders of AMC common? It’s not as though only APE holders who own AMC common stock are going to be converted! The whole proposition is non-sensical. Now it’s late at night and this theory is getting under my skin, and it seems to be the thing that defendants were hanging their hat on in defending against the most particular point that VCZ had as concerned this fine point of law. And I just don’t see it. Someone talk me down, someone tell me what I’m missing. It is not compelling, at all. The consideration for the settlement is what’s relevant, not the event that is the predicate for the lawsuit, what the heck does that even have anything to do with how you can say that class members / cross holders can’t come back and sue you on APE claims, as though they are getting the thing that they didn’t want qua class members, but you are saying that it benefitted them qua APE holders, out of the lawsuit? Excuse me? Qua APE holders, it was a benefit of the purchase of the APE security, my dudes. How many original dual holders even are there? Because there are many, many more — just on the numbers — pure post-purchase APE holders who could potentially have purchased an AMC share during the class period. To act like they are the outlier seems statistically berserk. But even if it is, it’s still conceptually bonkers to pretend like it’s not the consideration that is the relevant thing. Why does the conversion count at all in this equation? It’s a preexisting thing that has actually little to do with the settlement itself, it’s not even part of the settlement in a real sense, it’s what’s happening because the settlement gate is opening. It’s a thing that was arguably going to happen anyway, and the settlement is consideration for the fact that it is/was going to/will happen. Oh, g-d, I’m having flashbacks to before the motion to lift the status quo order when I took walks around the neighborhood and just talked my poor husband’s face off about how VCZ was never going to lift that damn SQO because it would have been ridiculous to do so, and the more I talked about it, the more certain I got that it was an absolutely insane thing to ask for. I don’t want these vibes. Someone please get them off me. I need to move on.

• VCZ gets comfortable in another way with the scope of the release ???

• VCZ has to stomach rejection/renegotiation/renotice/reneging-rights or Ghost Penciling™️

  • As I have said from the very beginning about Vice Chancellor Zurn, fīat jūstitia ruat cælum (h/t to a dear friend who put it more eloquently than “collateral consequences be damned”), which is only to say that she will do justice, and she will not fear doing what needs to be done if needs be, but she will also take seriously whatever there is to be taken seriously concerning the health and wellbeing of the corporation for the sake of its stockholders not least, as I said before, provided that those facts can be actually proven up by Bates numbers and real citations and evidence and not just more trust me bro energy.

As to the analysis of the strength of the actually asserted claims (such that they are), I’m still trying to sort out if we really have to analyze the case under the New World Order™️ of Coster v. UIP II, which I admittedly don’t totally comprehend as a procedural matter, temporally-speaking, because why would we be viewing the claims from August or December or April in view of July’s case law? I don’t get that. But I do have to admit that I loved VCZ’s gloss on Coster II from oral argument, which you might have seen from our deep dive Long Form investigation on July 5: 

. . . [W]hat I think I've heard you describe is that, basically, if we're in compelling justification land under Blasius, that's sort of enough to identify a threat that would trigger Unocal. And maybe that's not what you said, in which case I would appreciate clarification. But that, to me, seems like we are greatly expanding the zone of Unocal into financial decisions.

. . . I, frankly, don't have Coster up here with me. I'm still reacting, I think, like we all are. Do you think there's a way to read Coster to sort of be within the realm of Unocal and not to be even addressing whether Blasius still does what it does outside that realm?

. . . I think I might rephrase my question, which might have been a bad one. So Coster is in a Unocal setting, it's in a director-control setting. Is there a way to read the discussion of Blasius in a Unocal setting as being confined to the Unocal setting? In other words, is there a way to read Coster to not address what aspects of Blasius might exist outside of the Unocal setting?

Like Plato from Socrates, there’s almost nothing I love more than learning something by transcribing someone asking questions of another. The way that the questions illuminate an entire realm of thinking, it’s such a beautiful thing, and the way that these questions finally got an entire aspect of Coster II to gel for me. (And yes, Professor Bainbridge, I’m coming for your quickdraw collapse theory as soon as I get sufficient stamina regenerated, but in your heart of hearts, you knew I would be.)

The Way This Ends

Lastly, and in a way that will absolutely get short shrift here, there is an entire other gaping maw of questions around how the claims might be analyzed for an injunction, stay, and/or bond pending appeal. Amazingly, this case manages to run a through-line between and among all three of those concepts, in fact. It could be conceived of as demanding injunctive relief (either enjoining the lifting of the SQO or maintaining the injunctive relief of the SQO already in place) or staying the lifting of the SQO (depending on whether you want to characterize that as an injunctive relief request or a stay request) and then a bond, but not really a supersedeas bond, per se, because there’s no monetary damages award here to calibrate to meaningfully that needs to be protected exactly, there’s a much more amorphous concern that would be animating the setting of any bond amount for the arguable protection against the company’s solvency concerns, and oh, my god, will I ever get to rest again?

Remember how before I mentioned that the Stipulation (the actual contract between the parties that is the settlement frfr) says that “[i]n consideration for the full and final release, settlement, dismissal, and discharge of any and all of the Released Plaintiffs’ Claims against the Released Defendants’ Persons, upon entry of the Order and Final Judgment, AMC, on behalf of Defendants, shall, promptly following the Conversion, issue the Settlement Payment to the record holders of Common Stock as of the Settlement Class Time (after giving effect to the Reverse Stock Split).”

Yes, I mean, this is the way that it always works, right? The order and final j., as they are affectionately referred to in these parts, is the thing that ends the case. But this order and final j. has an important proviso that’s been the centerpiece of this entire case, and now it’s inextricably bound together with the approval of this settlement, temporally-speaking, which is this piece, as the Stipulation further describes: “Upon entry of the Order and Final Judgment, the Status Quo Order shall be immediately lifted and the Action shall be dismissed in its entirety and with prejudice.” Because that’s what Exhibit D also makes clear at ¶ 8: “The Status Quo Order entered by the Court on February 27, 2023, is lifted.” So, by its own terms, Exhibit D must be entered in order to effectuate the settlement’s approval, and Exhibit D lifts the Status Quo Order upon its entry.”

So, the way that this whole thing is written, if it’s approved and not rejected or ghost peppered, it’s supposed to be wham-bam-thank-you-uh-ma’am, I don’t think that’s a very appropriate turn of phrase, actually. Anyway, it’s supposed to go straight into effect by its own sort of operation. It gets entered, the SQO is lifted, upon the entry of the order and final j., the defendants “shall, promptly following the Conversion, issue the Settlement Payment” etc. etc. etc. You know, the balls can start rolling quickly. There’s the matter of the CUSIPs and who did what with the candlestick in the library and all, but I’ll leave the corporate lawyers to figure out the intricacies of all those particulars. Needless to say, things are going to go fast in a hurry, and get pretty weird. And yes, there are these issues — potentially, as I said — of appeals. Usually, you wouldn’t really have an appeal in a settlement context, but once you have objectors in the mix, there’s always the possibility of such an event, and it’s something that’s contemplated by all of the documents, and please don’t get me started on all of the complicacies described by Wolfe & Pittenger concerning how an Order and Final J. in a settlement context could actually be situated for interlocutory review because I went down that rabbit hole about a month ago and almost lost my mind and nearly flushed my copy of the Delaware Bible, but I have since recovered.

However, I had been thinking that there was some chance that VCZ might hold the fee ruling and issue the decision on the settlement separately, until I went back to review some more case law on this interlocutory appeal issue and found this gem, which would render her interim decision on only the merits of the settlement subject to an interlocutory appeal pending the outcome of the fee petition, so … yeah, it’s gonna be the whole kit and caboodle, I would say.

Pepsi Bottling Ventures v. Holben, citing Del. Bay Surgical Servs., P.A. v. Swier, (Del. Feb. 15, 2005) (“This Court consistently has held that a judgment on the merits is not final until an outstanding related application for an award of attorneys fees has been decided. In this case, attorneys fees were awarded as part of the November 30th judgment. The Superior Court, however, has yet to determine the appropriate amount of the award. The further action required by the Superior Court in this matter is not a purely ministerial act but an exercise of discretion by the court in fashioning an appropriate implementing order.”)

But since y’all are going to ask about all this injunction, stay, bond stuff anyway, fine, here, have a little taste:

F, M, K but make it [injunction, stay, bond]

“The filing of an appeal from a judgment of the Court of Chancery does not automatically stay the effectiveness of the judgment. Accordingly, depending upon the nature of the ruling, it may be appropriate to seek a stay or, in an extreme case, an injunction pending an appeal. Chancery Court Rules 62(c) and (d) address injunctions and stays pending appeal.

Rule 62(c) grants the Court of Chancery discretion to “suspend, modify, restore, or grant and injunction during the pendency of the appeal upon such terms as to bond or otherwise as it considers proper for the security of the rights of the adverse party.” Del. Ch. Ct. R. 62(c) Notwithstanding this explicit grant of authority, the entry of an injunction pending an appeal is an unusual occurrence. Often, when injunctive relief is sought at the post-judgment stage to abate a perceived threat pending appeal, similar relief already has been sought and denied on the merits in the first instance. Seemingly, under Rule 62(c), the Court of Chancery would typically consider the same factors pertinent to the issuance of a preliminary injunction. Thus, an application for an injunction pending an appeal is likely to fail if, as is often the case, the Court has already denied an application for injunctive relief.

Nevertheless, there may exist special circumstances warranting the imposition of an injunction pending appeal. [In one case where the Court found that appellee would incur little material cost if it were required to provide 14-day advance notice before taking adverse actions with respect to contested patents,] the Court reasoned that “[t]he harm to defendants if their right to proceed with their plan is delayed until the Supreme Court has an opportunity to consider the matter is likely to be less if my ruling is right than the harm to the plaintiffs if the transaction is permitted to proceed and my ruling is wrong.

More prevalent in the Court of Chancery than motions seeking injunctions pending appeal are motions for stays pursuant to Chancery Court Rule 62(d).

[…]

Supreme Court Rule 32 delineates the procedure and standard for obtaining a stay pending appeal. Rule 32(a) requires that a party seeking a stay file the motion in the first instance in the trial court, which may grant or deny the motion in its discretion. The Court of Chancery may exercise its discretion regarding the type, amount, and form of security, as other appropriate terms and conditions, in determining whether to approve the bond as ‘sufficient security.’

The Supreme Court of Delaware has looked to the following four factors in determining whether to exercise its own discretion to stay an order of the Court of Chancery pending an appeal: (1) the likelihood of success on the merits of the appeal; (2) whether the moving party would suffer irreparable injury if the stay were not granted; (3) whether any interested party would suffer substantial harm if the stay were granted; and (4) whether the public interest would be harmed if the stay were granted.”

Donald J. & Michael A. Pittenger, Corporate and Commercial Practice in § 18.09 at 18-21–23

There’s a fascinating question in my mind about whether or not we would be looking at an injunction or a stay in this case, if Vice Chancellor Zurn wanted to keep the Status Quo Order in place (or a reasonable facsimile thereof) pending the time for any appeals. Perhaps (and likely, for sure) this is all very clear in her mind in a way in which it is not for me, but it’s certainly complex, in my humble opinion.

Remember that the Stipulation has that “for the avoidance of doubt” clause, just in case anyone still has any lingering doubts: “For the avoidance of doubt, the Parties stipulate and agree that the Court’s refusal to lift the Status Quo Order in the Order and Final Judgment […] would constitute a material change that gives rise to each of the Parties’ rights to terminate this Stipulation and the Settlement.”

Now, if you want to be cute, and you know I love to be cute, it doesn’t say what would happen if the Court were to enter the Order and Final J. but immediately stay the lifting of the Status Quo Order from its entry of the Order and Final J., which would effectively constitute something like a refusal to lift the Status Quo Order but not technically be one inside of the Order and Final J., or some other such thing, because we all know how we got here in the first place was people being cute, might delete later kind of energy. 

There are so many nuances concerning the questions of appeal, injunction / stay, and bond; there’s no chance that I’m getting into them any more deeply at this hour after an entire weekend of having already said this much. Maybe later, if needs be. Maybe VCZ will have found us a path out of this darkness before then that I haven’t seen.

In any case, there’s presumably still a question about how this all interplays with the legislature’s enactment of the new § 242(d), which will go into effect on August 1, 2023. And if you’ve made it this far, you deserve to go completely off the reservation with me. Come on, take my hand, let’s dive into the abyss of meaningless and nihilistic absurdity.

On the one hand, it doesn’t make this case go away. It doesn’t absolve the board of their past behaviors, but let me tell you, steeping myself in the transcripts and briefing on these claims … uh, I wouldn’t want to have to be arguing to the judge right now why these claims deserve some sort of relief on their own merits, newly de novo, that’s for sure. I mean, let’s imagine AMC goes balls to the wall and just decides to get funky with it. Because look, in the time I’ve been writing this, Adam Aron seems to have had a stroke and is just posting through it on Twitter, writing absolutely insane batshit stuff to … I don’t know … stoke some weird conspiracies online? Or to try to be funny? I honestly have no idea.

One theory for the weird trolling of his own saviors:

I mean, if that’s the case, and if he is literally making fun of the people who spend all day defending him online, which it does kind of seem like he is doing … well, then who knows what he is capable of doing or convincing his company to do. I don’t know! How much power does he have at the company? Perhaps not much. Maybe legal has actual lawyers who want to do the right thing, and abide by laws and things. You might hope so, but hey, those folks are the ones who brought us these delights in the first place, so I’m not really convinced.

Anyway, if you want to be really pedantic about it, all the current Status Quo Order does is address the results of the March 14, 2023 special meeting and prevent AMC from effectuating the results of that vote or amending their Certificate of Incorporation as a result of any vote of shares at that meeting (or any adjournment thereof), so … I mean … if they wanted to incur the potential wrath of the Vice Chancellor and of their entire stockholder base, whom they don’t seem too troubled about insulting, now they only need a majority of the votes cast … if they think they can get ‘em, I don’t know. ::shrug:: I mean, what’s to stop them? Yeah, they will still have to deal with this lawsuit, but they can terminate the settlement agreement, and honestly, what’s left of the claims? File a compelling motion to dismiss if you’re the defendants, and really, why doesn’t she grant it at this point? Why doesn’t this happen? I know I’ve lost my mind here, but this is really the story I’ve been saying all along, I just came back around to it. And people on the internet keep yelling at me about how she can just dismiss the case, and I keep telling them that she can’t, but I honestly don’t stop to think about why not, and maybe they actually have a point under their incessant pointing to bad language in the Scheduling Order. They are just doing the best that they can. I mean, we’ve spent the past few weeks just totally trashing the claims, talking about how shitty they are, and having to denigrate them for the sake of getting this settlement to be approved by the Court, so it’s kind of like, “hey, be careful what you wish for!” Because if the Court now decides to look at them askance and triggers that termination right, well, then …

Also, in the tone and tenor of Samuel L. Jackson saying “SAY WHAT AGAIN, [REDACTED]” please read the following: “Someone tell me one more time that the amendments to the DGCL that just passed will not have any impact on currently pending litigation, I SERIOUSLY [bleeping] DARE YOU.”

Look, don’t everybody jump off the economic equivalent of the Golden Gate Bridge just because I have written 22,372 words and lost my blessed mind, okay? I’m tired and this case has driven me to the brink, and thanks for being here with me. If you skipped to the end, that was a really bad decision and you should not have done that. You are probably getting the wrong impression here, and this is absolutely not financial advice.

Here, let’s revisit what I said when I was probably better hydrated and rested when I thought about this more clearly a few weeks ago:

Let me be clear, this would be utterly insane, would require another vote, would certainly violate the spirit of the status quo order, and also risk getting another new injunction quickly issued as to the fiduciary duty claims not obviated by the passage of new legislation, since those claims for past behavior are arguably not addressed by the possible passage of § 242(d). But if AMC didn’t care about the reputational damage with the stockholders, stakeholders, or the Court, might they try?

Would the passage of the legislation change the status of the prior statutory violations, practically or conceptually? Would it metaphysically impact the status of the fiduciary duty claims, which were based on the concept of end-running around the prior instantiation of § 242, which was conceptually different from the new version of § 242(d), which would have (had it existed in the past) explicitly blessed what happened with the APE issuance?

Okay, welp, it turns out I had just as many questions back then, and the problem is that what has mostly transpired in the interim since then is – as I mentioned – we have all had to endure a lot of shit-talking about how weak these claims are, in order to justify their quick and easy settlement approval. ::sigh::

Here’s the thing that I think brought me back from the brink before, and can hopefully do the trick again: all evidence points to AMC really wanting this release. They want it big, they want it broad, they want it judicially sanctioned. Let’s hope, I suppose, that’s true. I don’t even know whose interests are protected by what mechanisms anymore, to be honest. It’s hard to say who is served by any of this, at some point.

I do not envy the Vice Chancellor’s job. Not even a little. But I respect the absolute heck out of her for doing it with the integrity and dedication that she does.

Much love,

Chance

Although Delaware law has traditionally favored a voluntary settlement of contested claims, see, e.g., Nottingham Partners v. Dana, (Del. Supr. 1989); Polk v. Good, (Del. Supr. 1986), the settlement of claims raised in a class action require certain safeguards to “insure that the interests of parties who are before the Court only vicariously are not inequitably abrogated.” Donald J. Wolfe, Jr. and Michael A. Pittenger, Corporate and Commercial Practice in the Delaware Court of Chancery, § 9-4[a] (2000). (“If settlements of pending litigation are the cherished offspring of the law, settlements of representative actions are no doubt the least ingratiating of the brood.”) Id.