Abstract
At the height of the merger-tax litigation bubble, the Delaware Court of Chancery issued its In re Trulia Stockholder Litigation decision, which disincentivized meritless M&A disclosure claims. Similarly, for the past several years, Delaware corporations have faced a wave of facial validity challenges to charter, bylaw, and governance-agreement provisions. Most of these claims end the same way: The corporation amends the challenged provision and pays a mootness fee, often while maintaining that the provision was lawful all along. Two recent Delaware Supreme Court decisions may disrupt that sequence. Kellner v. AIM ImmunoTech Inc. confirmed that a facial validity challenge fails unless the provision cannot operate lawfully under any set of circumstances, foreclosing claims built on hypothetical abuses. Moelis & Co. v. West Palm Beach Firefighters’ Pension Fund clarified that facial invalidity is not synonymous with voidness: A provision the corporation could have implemented by other lawful means is merely voidable, and challenges to it may be subject to cure, laches, and other equitable defenses. Because only a meritorious claim can support a mootness fee, those decisions substantially reduce the incentive to challenge long-standing, voidable governance provisions in the abstract. These opinions signal a preference to conserve judicial resources for live disputes challenging such governance arrangements where the plaintiff has real skin in the game, such as during a pending or threatened proxy contest.
Recommended Citation
Kyle A. Pinder, Life After Moelis: A Trulia Moment for Governance Claims?, 84 Wash. & Lee L. Rev. Online 33 (2026), https://scholarlycommons.law.wlu.edu/wlulr-online/vol84/iss1/2