Sjunde AP-Fonden v. Activision Blizzard, Inc.

IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE SJUNDE AP-FONDEN, ) ) Plaintiff, ) ) v. ) C.A. No. 2022-1001-KSJM ) ACTIVISION BLIZZARD, INC., ) ROBERT KOTICK, BRIAN KELLY, ) ROBERT MORGADO, ROBERT ) CORTI, HENDRIK HARTONG III, ) CASEY WASSERMAN, PETER ) NOLAN, DAWN OSTROFF, BARRY ) MEYER, REVETA BOWERS, ) KERRY CARR, MICROSOFT ) CORPORATION, and ACTIVISION ) BLIZZARD, INC., as successor to ) ANCHORAGE MERGER SUB INC., ) ) Defendants. ) MEMORANDUM OPINION APPROVING SETTLEMENT AND AWARDING ATTORNEYS’ FEES Date Submitted: September 15, 2026 Date Decided: October 23, 2026 Michael Hanrahan, Corinne Elise Amato, Kevin H. Davenport, Stacey A. Greenspan, Christine N. Chappelear, Kirsten M. Valania, PRICKETT, JONES & ELLIOTT, P.A., Wilmington, Delaware; Lee D. Rudy, Eric L. Zagar, J. Daniel Albert, Lauren C. Lummus, Nakib A. Kabir, KESSLER TOPAZ MELTZER & CHECK, LLP, Radnor, Pennsylvania; Counsel for Plaintiff Sjunde AP-Fonden. Edward B. Micheletti, Jenness E. Parker, Lauren N. Rosenello, Michelle L. Davis, SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP, Wilmington, Delaware; Joel Friedlander, Jeffrey M. Gorris, Christopher M. Foulds, David Hahn, Matthew D. Venuti, FRIEDLANDER & GORRIS, P.A., Wilmington, Delaware; Counsel for Defendants Robert Kotick, Brian Kelly, Robert Morgado, Robert Corti, Hendrik Hartong III, Casey Wasserman, Peter Nolan, Dawn Ostroff, Barry Meyer, Reveta Bowers, and Kerry Carr. Michael A. Barlow, Shannon M. Doughty, QUINN EMANUEL URQUHART & SULLIVAN, LLP, Wilmington, Delaware; Alex Spiro, David S. Mader, QUINN EMANUEL URQUHART & SULLIVAN, LLP, New York, New York; Leonidas Angelakos, QUINN EMANUEL URQUHART & SULLIVAN, LLP, Redwood Shores, California; Counsel for Defendant Robert Kotick. Elena C. Norman, Daniel M. Kirshenbaum, YOUNG CONAWAY STARGATT & TAYLOR, LLP, Wilmington, Delaware; Lindsay C. Harrison, Alex S. Trepp, JENNER & BLOCK LLP, Washington, D.C.; Stephen L. Ascher, Elizabeth A. Edmondson, JENNER & BLOCK LLP, New York, New York; Counsel for Defendants Microsoft Corporation and Activision Blizzard, Inc. Brian E. Farnan, Michael J. Farnan, FARNAN LLP, Wilmington, Delaware; Vincent R. Cappucci, Robert N. Cappucci, Joshua K. Porter, Jonathan H. Beemer, Jessica A. Margulis, ENTWISTLE & CAPPUCCI LLP, New York, New York; Andrew J. Entwistle, ENTWISTLE & CAPPUCCI LLP, Austin, Texas; Counsel for Objectors The Arbitrage Fund, AltShares Merger Arbitrage ETF, AltShares Event-Driven ETF, Water Island LevArb Fund, LP, and Water Island Merger Arbitrage Institutional Commingled Master Fund LP. McCORMICK, C.  A stockholder plaintiff brought this class action challenging Microsoft Corporation’s acquisition of Activision Blizzard, Inc. An epic battle ensued. After nearly four hard-fought years of litigation, the parties laid down their steel and agreed to settle. To secure a global release of claims arising from the merger, the defendants would pay $250 million—among the largest ever settlement funds in a stockholder litigation challenging a third-party merger. The parties moved for approval of the settlement, and the plaintiff petitioned for an award of attorneys’ fees. A final challenger then emerged. An arbitrage fund objects to the settlement, though not based on the settlement consideration, from which the fund stands to receive around $250,000. Rather, the fund objects to the extent the settlement extinguishes federal securities claims it filed on behalf of stockholders who sold their Activision shares before the merger closed. Citing due process concerns and class certification requirements, the fund asks the court to carve out the federal securities claims from the release. But the defendants bargained for a broad release covering the overlapping facts at issue in this action and the federal action. Carving out the federal securities claims from the release would upend the settlement and deprive class members (including the fund) of incredibly beneficial settlement consideration. Contrary to the fund’s arguments, neither due process rights nor class certification requirements demand this outcome. This decision thus overrules the objection, approves the $250 million settlement, and awards the plaintiff’s counsel fees in the amount of $60 million plus reasonable expenses. I. FACTUAL BACKGROUND When approving a settlement and evaluating a fee request, the court must evaluate the proposed terms of the settlement against the strength of the claims asserted and the efforts of counsel.1 The background that follows contextualizes that analysis, largely by adumbrating the court’s prior decisions in this action.2 These are not factual findings. A. This Litigation Regulators began investigating sexual harassment at Activision in 2018. When they made their findings public in mid-2021, Activision’s stock price plunged and the company began hemorrhaging senior leadership. In November 2021, investigative journalists blamed Activision’s CEO Robert Kotick for the toxic workplace culture, prompting Kotick to openly question his future as leader of the company. Later that month, Microsoft proposed to a weakened Kotick that Microsoft 1 See In re Caremark Int’l Inc. Deriv. Litig., 698 A.2d 959, 961 (Del. Ch. 1996) (“[T]he facts stated hereafter represent the court’s effort to understand the context of the motion from the discovery record, but do not deserve the respect that judicial findings after trial are customarily accorded.”). 2 See Sjunde AP-Fonden v. Activision Blizzard, Inc., 2024 WL 863290, at *8–10 (Del. Ch. Feb. 29, 2024), as corrected (Mar. 19, 2024) [“Activision I”] (denying in part first motion to dismiss); Sjunde AP-Fonden v. Activision Blizzard, Inc., 2024 WL 863325, at *2–3 (Del. Ch. Feb. 29, 2024) [“Activision II”] (addressing motion to dismiss Plaintiff’s Section 251(c) claim; denying in part Microsoft and the merger subsidiary’s motion to dismiss; and denying Plaintiff’s motion for partial summary judgment); Sjunde AP-Fonden v. Activision Blizzard, Inc., 2025 WL 2803254, at *3 (Del. Ch. Oct. 2, 2025) [“Activision III”] (denying in part second motion to dismiss); see also In re Activision Blizzard, Inc., 2025 WL 1276988, at *1 (Del. Ch. May 2, 2025) [“Section 205 Decision”] (awarding Plaintiff’s counsel mootness fees after entering judgment for Activision and Microsoft under 8 Del. C. § 205 in the Section 205 Action and preserving aspects of Plaintiff’s claims in this action in the process). 2 buy Activision.3 In January 2022, the Activision board of directors (the “Board”) approved a draft merger agreement. Activision then executed the final agreement (the “Merger Agreement” setting out the terms of the “Merger”) on January 18, 2022, and issued the proxy statement on March 21, 2022.4 The Activision stockholders approved the Merger on April 28, 2022. Plaintiff Sjunde AP-Fonden owned Activision stock. On March 7, 2022, Plaintiff served a demand under Section 220 of the Delaware General Corporation Law (the “DGCL”) to inspect Activision’s books and records to investigate potential wrongdoing in connection with the Merger.5 After Plaintiff filed a Section 220 complaint on March 24, 2022, Activision produced some documents in response.6 Plaintiff initiated this action on November 3, 2022, before the Merger closed, against Kotick, Activision, Board members, Microsoft, and the Merger subsidiary (collectively, “Defendants”). Plaintiff claimed that Kotick and the Board breached their fiduciary duties in connection with the Merger and that Microsoft aided and abetted those breaches. Plaintiff also claimed that Defendants violated multiple provisions of the DGCL governing board negotiation and board and stockholder approval of merger agreements. In part, Plaintiff challenged the Board’s decision to 3 C.A. No. 2022-1001-KSJM, Docket (“Dkt.”) 171 (“Third Am. Compl.”) ¶¶ 94, 96. 4 Id. ¶¶ 186, 245. 5 See Dkt. 427 (“Stipulation”) ¶ M. 6 See id. ¶¶ N–O; see also Third Am. Compl. ¶¶ 306–11. 3 delegate negotiation of the provision of the Merger Agreement limiting dividends as a violation of Section 141(c) of the DGCL (the “Dividend Claim”).7 By July 18, 2023, the Merger Agreement’s outside termination date, the Merger had not received antitrust clearance. On that date, the Board executed a letter agreement that Kotick had negotiated with Microsoft (the “Letter Agreement”). The Letter Agreement extended the termination date to October 18, 2023; eliminated Activision’s right to collect a $3 billion termination fee otherwise due July 18; narrowed Activision’s right to terminate the Merger Agreement; and eliminated or waived various conditions to closing. It also allowed Activision to pay a one-time dividend for fiscal year 2023 of $0.99 per share (the “2023 Dividend”). By authorizing the 2023 Dividend, the Letter Agreement partially mooted the Dividend Claim and mitigated damages.8 Plaintiff argued, however, that the 2023 Dividend gave rise to other claims because Activision allegedly paid the dividend on treasury stock (the “Treasury-Dividend Claim”). Ultimately, Defendants restructured the transaction in response to regulatory concerns. The Merger closed on October 13, 2023.9 At closing, Plaintiff tendered over 900,000 Activision shares that it held since before the Merger was announced.10 7 Dkt. 1 (“Compl.”) ¶¶ 287–88. 8 Dkt. 429 (“Pl.’s Opening Br.”) at 37. 9 Id. ¶ L. 10 Dkt. 434 (“Pl.’s Reply Br.”), Ex. 33 at 30. 4 While the Merger was pending, Plaintiff had sold 130,641 and purchased 115,332 shares.11 Meanwhile, the parties agreed to bifurcate proceedings to address aspects of Plaintiff’s statutory claims at the outset of the litigation. In Activision I and Activision II, the court dismissed some of Plaintiff’s statutory claims and denied Plaintiff’s motion for summary judgment. The court sustained the Dividend Claim and other statutory claims, finding it reasonably conceivable that Defendants violated multiple provisions of the DGCL when approving the Merger. The court observed that judicial ratification under Section 205 of the DGCL could validate the Merger. On May 2, 2024, Microsoft and Activision filed an action to validate the Merger under Section 205 of the DGCL. The parties stipulated to a resolution of the Section 205 Action, and the court entered the stipulated proposed order, thereby validating the Merger.12 The parties agreed that validation of the merger resolved all of Plaintiff’s Section 251 claims and had no effect on its fiduciary claims or the Dividend Claim.13 Plaintiff then moved for mootness fees, which the court granted.14 After Activision I and Activision II, Plaintiff amended the complaint twice, adding disclosure claims, theories of conversion (with earlier-pled theories, the 11 Id. at 29–30. 12 C.A. No. 2024-0466-KSJM, Dkt. 27. 13 Id. ¶¶ 3–4. 14 Section 205 Decision, 2025 WL 1276988, at *14. 5 “Conversion Claims”), fiduciary claims based on the Letter Agreement, and the Treasury-Dividend Claim.15 Defendants moved to dismiss again. This round was even more epic than the others. The parties submitted 590 pages of briefs with 63 exhibits. Plaintiff moved to convert aspects of the motion to dismiss into a motion for summary judgment and submitted 84 additional pages of briefing and Rule 56(f) affidavits including 95 exhibits. Defendants then moved to strike the Rule 56(f) affidavits, adding another 44 pages to the pile. In Activision III, the court denied the motion to dismiss Plaintiff’s core Revlon claims and the Dividend Claim and dismissed some of the Conversion Claims along with the aiding and abetting claims.16 The court converted aspects of Defendants’ motion challenging the Treasury-Dividend Claim to a motion for summary judgment. On December 22, 2025, Kotick, Activision, Microsoft, and the Director Defendants filed answers and counterclaims totaling roughly 1,500 pages. Activision and Microsoft each filed a counterclaim under Section 205 seeking to eliminate the Dividend Claim and the remaining Conversion Claims.17 Kotick counterclaimed for abuse of process, alleging that Plaintiff filed this action despite knowing that the sexual misconduct issues were fabricated by regulators, unions, the media, and Activision’s competitors to help an Activision competitor. 15 C.A. No. 2022-1001-KSJM, Dkt. 136; Third Am. Compl. 16 Activision III, 2025 WL 2803254, at *3–4. 17 Stipulation ¶ VV. 6  In early 2026, Plaintiff moved to stay discovery on Kotick’s counterclaim and filed motions to dismiss all of the counterclaims. Plaintiff also moved to strike Kotick’s 97-page “Preliminary Statement” as an improper pleading.18 B. The Settlement Parallel to their prodigious litigation efforts, the parties engaged in mediation. They held their first in-person mediation on November 21, 2024 with Judge Layn Phillips and Greg Danilow.19 That effort was unsuccessful. They tried again on March 20, 2026.20 On March 25, 2026, Judge Phillips made a mediator’s proposal for the all-in cash settlement of $250 million.21 The parties’ third mediation session on April 3, 2026 led to a term sheet based on the mediator’s proposal (the “Term Sheet”).22 The parties then negotiated the Stipulation and Agreement of Settlement, Compromise, and Release (the “Stipulation” setting forth the “Settlement”), which they signed and filed on May 21, 2026. With the Stipulation, the parties filed a proposed schedule for presenting to the court the Settlement and related issues, including class certification and Plaintiff’s anticipated fee petition. The court approved the Scheduling Order on June 8, 2026, setting the settlement hearing for September 15, 2026.23 18 Id. ¶ XX. 19 Id. ¶ CCC. 20 Id. ¶ DDD. 21 Id. ¶ EEE. 22 Id. ¶ FFF. 23 Dkt. 428. 7  C. The Objection The Scheduling Order established an objection deadline of August 31, 2026. One subset of the proposed class—a collection of merger-arbitrage funds led by The Arbitrage Fund (the “Fund”), which are lead plaintiffs in a related federal securities class action—filed an objection. 24 The Fund acquired shares of Activision stock after the company announced the Merger.25 The Fund sold 26,600 shares and held 819,477.26 It has received at least $811,282.23 from the 2023 Dividend and $77,850,315 in Merger consideration.27 The Fund appeared and presented argument in support of the objection during the September 15, 2026 settlement hearing.28 II. LEGAL ANALYSIS The parties have moved for class certification and approval of the Settlement, including the release of claims and the plan of allocation. And Plaintiff has moved for an award of attorneys’ fees and expenses. Because the Fund’s objection challenges 24 See Dkt. 432 (“Obj.”) at 1; Pl.’s Opening Br., Ex. 3. Like the Fund, the other lead plaintiffs are also merger-arbitrage funds managed by Water Island Capital. Those funds include AltShares Merger Arbitrage ETF; AltShares Event-Driven ETF; Water Island LevArb Fund, LP; and Water Island Merger Arbitrage Institutional Commingled Master Fund LP. These funds also purchased Activision shares after the Merger was announced. Dkt. 435 (“Defs.’ Resp. to Obj.”), Ex. J, sub-ex. A, Sched. A at 1. 25 Id. 26 Id. 27 See id. 28 The Fund filed 29 pages in support of its objection. The court allowed the Fund to file an additional 24-page reply brief, Dkt. 439, Ex. 1, on the eve of the settlement hearing, over Plaintiff’s objection. Dkt. 443 (“Settlement Hr’g Tr.”) at 6:16–20. 8 aspects of class certification and the scope of the release, the analysis addresses the objection first. A. The Objection Three weeks after the parties signed the Term Sheet, the Fund filed suit in federal court, asserting federal securities law claims (the “Federal Claims”) on behalf of Activision stockholders who sold shares during the Merger’s twenty-one-month pendency (the “Seller Class”). The Fund does not object to the fairness of the Settlement,29 from which the Fund stands to receive approximately $250,000 based on the shares it held.30 Rather, the Fund seeks to carve out the Federal Claims from the proposed release.31 The Fund’s limited objection targets the proposed class and the proposed release. The proposed class includes all former holders of Activision common stock who held stock at any time from the January 18, 2022 announcement of the Merger through the October 13, 2023 closing of the Merger, and their transferees, successors, and assigns (the “Settlement Class”).32 The Settlement Class includes the Seller Class. The proposed release extends to claims by any Settlement Class member 29 Obj. at 1. 30 See Pl.’s Opening Br. at 7, 26. 31 See Obj. at 1, 13 (stating that the Fund “wish[es] to continue to pursue [its] Federal Claims . . . while the Chancery Plaintiff seeks this Settlement of its state law breach of fiduciary duty claims”). 32 Stipulation § I(d). 9 asserted in any forum that arise out of the facts alleged in this action (the “Release”).33 The Release thus extends to the Federal Claims. Although the Settlement Class includes the Seller Class members, the Seller Class members have no rights to bring or benefit from the claims asserted in this action based on the shares they sold.34 And although the Release extends to the Federal Claims, the Federal Claims are personal claims that could not have been brought in this court.35 Thus, as the Fund observes, the parties ask the court to release the Federal Claims “for no consideration, through a settlement in a state court in which [the Seller Class] did not and could not have chosen to litigate their [Federal Claims].”36 The Fund argues that this outcome is fundamentally unfair and asks the court to expressly exclude both the Seller Class from the Settlement Class and the Federal Claims from the Release.37 33 Id. § I(cc). 34 As this court has explained, stockholder claims associated with the rights carried by Activision shares of common stock, like those asserted in this action, are “a property right associated with the shares. By default, that property right travels with the shares. By selling their shares, the members of the Seller Class defeased to their purchasers any right they had to bring or benefit from these claims.” In re Activision Blizzard, Inc. S’holder Litig., 124 A.3d 1025, 1044 (Del Ch. 2015) [“Activision OG”]. 35 See id. at 1056 (“A Rule 10b-5 claim under the federal securities laws is a personal claim akin to a tort claim for fraud.”); Matsushita Elec. Indus. Co., Ltd. v. Epstein, 516 U.S. 367, 370 (1996) (stating that federal courts have exclusive jurisdiction over claims arising from the Securities Exchange Act of 1934). 36 Obj. at 3. 37 Id. at 24. 10  Though framed as limited in scope, the Fund’s objection has far-reaching consequences. As is common, Defendants require that the Settlement include a global release that achieves global peace.38 If the Seller Class is excluded from the Settlement Class and the Federal Claims are excluded from the Release, there will be no settlement.39 The Fund’s objection threatens to upend the $250 million settlement fund. The Fund’s briefing presents three reasons for rejecting this landmark settlement.40 The Fund first argues that releasing the Federal Claims under these circumstances violates the Seller Class members’ due process rights. The Fund next contends that Plaintiff is not adequate to represent the Settlement Class if the Settlement Class includes members of the Seller Class. The Fund further argues that even if releasing the Federal Claims does not violate due process, and even if Plaintiff is adequate, this court should defer to the federal court to assess the merits of the Federal Claims. None of these arguments justify the relief the Fund seeks. Approving the Release does not violate the Fund’s due process rights. “Under controlling Delaware Supreme Court precedent, a settlement can release claims of negligible value to achieve a settlement that provides reasonable consideration for meaningful claims.”41 “If it appears that those claims are weak or of little or no 38See In re Phila. Stock Exch., Inc., 945 A.2d 1123, 1137 (Del. 2008); In re Countrywide Corp. S’holders Litig., 2009 WL 846019, at *10 (Del. Ch. Mar. 31, 2009). 39 See Stipulation §§ VII(1)(b), X(1), X(3). 40The Fund’s briefing did not present these as three discrete arguments. This decision reorganizes the thoughts to make better sense of them. 41 Activision OG, 124 A.3d at 1044 (citing Phila. Stock Exch., 945 A.2d at 1140). 11 probable value or would not likely result in any recovery of damages by individual stockholders, it is fair to bar those claims as part of the overall settlement.”42 “The court’s ability to bar weak personal claims extends to federal securities claims, even though the claims could not be litigated in this court.”43 The Delaware Supreme Court rejected the Fund’s due process argument over thirty years ago in Nottingham Partners v. Dana.44 There, the high court affirmed approval of a settlement that released federal securities claims that had been stayed pending resolution of state settlement proceedings.45 An objector pursuing federal securities claims argued that the due process clause of the U.S. Constitution required that an absent class member with a money damages claim be afforded the opportunity to opt out of a settlement. In rejecting this argument, the high court held that constitutional due process requires notification but not a right to opt out of the class.46 Nottingham held that a trial court has the discretionary power when certifying the class “to provide for an opt out right . . . if it believes that an opt out right is 42 In re Triarc Cos., Inc., 791 A.2d 872, 876 (Del. 2001). 43 Activision OG, 124 A.3d at 1068 (citing Matsushita, 516 U.S. 367). 44 564 A.2d 1089 (Del. 1989). 45 Id. at 1091 & n.1. 46 Id. at 1101.The day before the settlement hearing, the Delaware Supreme Court reaffirmed Nottingham’s due process requirements for an objector to a non-opt-out class. IsZo Cap. LP v. Brandenburg, 2026 WL 2689902, at *5 (Del. Sep. 14, 2026) (ORDER) (Objector “received the full discovery record, briefed its objection, was heard at length, and had its request thoughtfully considered on the merits. In short, [it] received the process it was due.”). 12 necessary to protect the interest of absent class members.”47 In exercising this discretion, the court “must balance the equities of the defendants’ desire to resolve all claims in a single proceeding against the individuals’ interest in having their own day in Court.”48 Nottingham reflects Delaware policy favoring settlements releasing exclusively federal claims in the interest of “achiev[ing] a comprehensive settlement” of claims based on the same operative alleged facts—such as the same merger.49 When conducting this balancing analysis to determine whether to extend opt- out rights to class members, this court has focused on the value of the claims being released. In Philadelphia Stock Exchange, for example, the Delaware Supreme Court affirmed the Court of Chancery’s refusal to grant an opt-out right despite the “almost certain outcome” that objectors would pursue further litigation regarding the same transactions “in a different forum.”50 The high court held that, because the “economic benefits” afforded by the settlement dwarfed the “minimal value of the claims being surrendered,” the trial court properly denied opt-out rights.51 Reinforcing this outcome, the court held that such opt-out rights “would utterly defeat the purpose of the settlement.”52 The high court held that “the settlement must either be as broad 47 Nottingham, 564 A.2d at 1101. 48 Id. 49 Id. at 1106; Matsushita, 516 U.S. at 376–77. 50 Phila. Stock Exch., 945 A.2d at 1137. 51 Id. 52 Id. 13 in scope as the law would allow and bind all class members, or there would be no settlement.”53 Similarly, in earlier class litigation challenging a different corporate transaction at Activision, the court approved a settlement that released federal securities claims without allocating any consideration to those claims.54 The court observed that it is fair to bar federal securities claims as part of an overall settlement “[i]f it appears that those claims are weak or of little or no probable value or would not likely result in any recovery of damages by individual stockholders.”55 The court held that the federal securities claims were of little or no value and were unlikely to result in recovery because they had not been asserted and were thus “entirely hypothetical.”56 Federal law is the same. In Matsushita, the Supreme Court of the United States addressed the preclusive effect in federal court of a Court of Chancery 53 Id. 54 Activision OG, 124 A.3d at 1068. 55 Id. (quoting Triarc, 791 A.2d at 876). 56 Id. This court routinely approves non-opt-out class settlements releasing federal claims of minimal value over the objections of class members seeking to pursue such claims in federal court. See, e.g., In re Countrywide Corp. S’holders Litig., 2009 WL 2595739, at *4, *7 (Del. Ch. Aug. 24, 2009) (releasing the objector’s “potential federal securities law claims [of] no obvious value,” certifying a non-opt-out class, and approving the settlement), aff’d sub nom. Ark. Tchr. Ret. Sys. v. Ciafa, 996 A.2d 321 (Del. 2010); In re Cox Radio, Inc. S’holders Litig., 2010 WL 1806616, at *2, *19, *23 (Del. Ch. May 6, 2010) (releasing weak federal claims for no consideration over an objection by the plaintiffs in a pending federal class action, certifying the class, and approving the settlement), aff’d, 9 A.3d 475 (Del. 2010) (TABLE). 14 judgment approving a class settlement that released federal securities claims.57 The Court reasoned that state courts do not infringe on federal courts’ exclusive jurisdiction over federal securities claims by evaluating the strength of those claims in the settlement context.58 Further, because the underlying dispute in that case was based on state law claims within the state court’s jurisdiction, federal courts were bound by the preclusive effect of the judgment releasing the federal securities claims.59 Thus, the Court held that state courts may approve release of exclusively federal claims in class settlements.60 Thus, under well-established Delaware and federal law, this court has the ability to approve the Release, which releases the Federal Claims, if those claims are of little or no value or unlikely to lead to recovery for the class members. That is not a due process violation. The Fund’s attack on Plaintiff’s adequacy to represent the Class similarly fails. The Fund initially argued that Plaintiff is inadequate because Plaintiff did not sell its shares and thus could not have filed the Federal Claims.61 But that is false. Like the Fund, Plaintiff sold a portion of its Activision shares before the Merger. Plaintiff actually sold more shares than the Fund. And Plaintiff was thus as well-positioned as the Fund to pursue the Federal Claims. Confronted with this fact, the Fund 57 516 U.S. at 369–71. 58 Id. at 382–83. 59 Id. at 386–87. 60 Id. at 369. 61 Obj. at 13. 15 pivoted to argue that Plaintiff harbors disqualifying conflicts because it did not pursue the Federal Claims and now advocates in favor of releasing those claims. But if the Federal Claims had value, Plaintiff would be more incentivized than the Fund to pursue them. The analysis once again reduces to the question of whether the Federal Claims have value. There is no reason to defer to the federal court on this issue. Deferring to the federal court would delay settlement approval. And each day of delay would cost the Settlement Class nearly $10,000 in interest.62 The Settlement Class need not bear the costs of waiting for the federal court. This is a benefit of Matsushita, which enshrined a state court’s ability to consider the fairness of a settlement that releases federal securities claims.63 The Fund cites In re MCA, Inc.,64 for the proposition that a federal court must first “determine[] the merits of the [federal] claims” released by a proposed settlement.65 But MCA does not stand for that proposition. MCA rejected the initial settlement in the litigation that later gave rise to Matsushita.66 The MCA court did not reject the first settlement because of a blanket requirement that federal claims 62 Settlement Hr’g Tr. at 16:13–17. 63 See Matsushita, 516 U.S. at 385 (State court litigants are “able to waive, or ‘release,’ the right to litigate Exchange Act claims in a federal forum as part of a settlement agreement. . . . [A] statute conferring exclusive federal jurisdiction for a certain class of claims does not necessarily require resolution of those claims in a federal court.”). 64 598 A.2d 687 (Del. Ch. 1991), 65 Obj. at 18. 66 The Court of Chancery subsequently approved a second settlement that was the focus of the Court’s analysis in Matsushita. 16 be evaluated in federal court. Quite the opposite. In MCA, the court ultimately concluded that “the only claims” encompassed by the settlement’s release with “any substantial merit” were federal securities claims.67 The state law claims, by contrast, were “at best, extremely weak”; their settlement “ha[d] little or no value to the class.”68 MCA directs that this court evaluate the strength of the federal claims when analyzing a settlement that releases them. Nottingham is again instructive. There, the Delaware Supreme Court rejected the objector’s argument that ruling on the value of federal securities claims interferes with the jurisdiction of the federal court. The high court observed that the “law has uniformly distinguished between the approval of a general release and dismissal or adjudication of an exclusively federal claim. The former is within a state court’s power, the latter is not.”69 The same is true here. Evaluating the strength of the claim does not interfere with the federal court’s jurisdiction; the federal court can determine whether to enforce the Release and dismiss the Federal Claims. As explained in Matsushita, this court need not wait to release federal securities claims.70 Waiting deprives the 67 598 A.2d at 696 (emphasis added). 68 Id. at 694–95. 69 Nottingham, 564 A.2d at 1104; see also Matsushita, 516 U.S. at 376–84; In re AMC Ent. Hldgs., Inc. S’holder Litig., 299 A.3d 501, 526 (Del. Ch. 2023); In re Faraday Future Intelligent Elec. Inc., S’holder Litig., 2025 WL 445038, at *8 & nn.81–82 (Del. Ch. Feb. 10, 2025). 70 516 U.S. at 377–78 (taking no issue with the Delaware Supreme Court’s view that “on-going or future” federal claims may be released.). 17 Settlement Class of the Settlement’s considerable value and the parties of the global peace for which they negotiated. The Federal Claims have little or no value, in this court’s assessment. Although only the federal court can rule on their merits, in this court’s view, the Fund—or any plaintiff pursuing the Federal Claims—would struggle to achieve a meaningful recovery due to statute of limitations arguments and difficulties proving loss causation. The Fund filed its suit in federal court on April 27, 2026—four years after Activision announced the Merger, two and a half years after the Merger closed, and three weeks after the parties executed the Term Sheet.71 The Fund advances two federal securities law claims. Count I alleges that Activision, Kotick, and Activision director Brian Kelly (collectively, the “Federal Defendants”) violated Section 10(b) of the Exchange Act and SEC Rule 10b-5.72 Count II alleges that Kotick and Kelly violated Section 20(a) of the Exchange Act.73 The gravamen of the Federal Claims is that the Federal Defendants caused Activision to make materially misleading statements in connection with the Merger, deflating Activision’s stock price and in turn causing harm to the Seller Class.74 In particular, the Fund alleges that the Federal Defendants falsely asserted that the 71 Pl.’s Opening Br. at 6. 72 Id., Ex. 3 (“Federal Compl.”) ¶¶ 177–87. 73 Id. ¶¶ 188–94. 74 See id. ¶ 13. 18 Merger was financially fair, failed to disclose an agreement that offset the reverse termination fee, and concealed dividend payments to an Activision subsidiary.75 The relevant statute of limitations for these claims is the earlier of two years after a reasonably diligent plaintiff would have discovered, or the Fund actually discovered, the facts constituting the alleged violation of federal securities law.76 As such, the Federal Claims would be time-barred if a reasonably diligent plaintiff would have discovered the necessary underlying facts before April 27, 2024. To answer this question, the court must determine when a reasonably diligent plaintiff would begin an investigation—taking account of the notice provided by lawsuits, news articles, analyst reports, and financial filings related to its investment—and when such an investigation would have yielded fruitful results.77 The parties in this action are well-positioned to argue when a reasonably diligent plaintiff ought to have discovered the information supporting the Federal Claims, given their intimate familiarity with this case earned through years of hard- fought litigation. By contrast, the Fund appeared to do little independent legwork beyond cribbing from the filings in this case.78 The court agrees with the parties that 75 Id. ¶¶ 134–54. 76 28 U.S.C. § 1658(b)(1); Merck & Co. v. Reynolds, 559 U.S. 633, 637 (2010); see also In re Exxon Mobil Corp. Sec. Litig., 500 F.3d 189, 202 (3d Cir. 2007) (affirming the trial court’s dismissal of a § 20(a) claim because the underlying § 10(b) claim was time-barred). 77 Pension Tr. Fund for Operating Eng’rs v. Mortg. Asset Securitization Transactions, Inc., 730 F.3d 263, 276–79 (3d Cir. 2013). 78 See Settlement Hr’g Tr. at 42:16–47:6 (“We responded to what we saw being filed [in the Court of Chancery] . . . We simply were monitoring litigation and saw that the Chancery plaintiffs were not asserting these claims.”). 19 the facts underlying each of the three materially misleading statements alleged in the Federal Claims could have been discovered more than two years before the Fund filed its suit. By the end of 2022, a reasonably diligent plaintiff would have begun its investigation into the purported fairness of the Merger. In the first half of 2022, Activision’s SEC filings disclosed lawsuits alleging that the Merger price was lower than what Activision’s internal projections suggested the stock was worth.79 And by November, Plaintiff had filed its lawsuit challenging the fairness of the Merger.80 Further, the record indicates that such an investigation would have borne fruit within a matter of months. By June 2022, Plaintiff had obtained the Long-Range Plan undercutting the $95 Merger consideration.81 And when the Fund’s counsel sought information from Defendants under Rule 5.1, it received that information in less than a month.82 Thus, no later than mid-2023, a reasonably diligent plaintiff would have discovered the facts necessary to challenge any alleged misrepresentations regarding the Merger’s fairness. The same is true for any alleged misstatement regarding an agreement to offset the termination fee. The Fund claims that the Federal Defendants did not 79 See Defs.’ Resp. to Obj., Ex. D at 9–10, 71–72 (disclosing, in March 21, 2022, proxy statement, books and records demands alleging “that management may have attempted to validate the consideration through downward adjustments to the Long- Range Plan”); id., Ex. F at 27 (disclosing the same in May 3, 2022 10-Q). 80 Compl. 81 Pl.’s Opening Br. at 55–56. 82 See id. at 19; Dkts. 285, 308. 20 reveal that Activision agreed to purchase cloud services from Microsoft for an amount equal to one-third the reverse termination fee, rendering statements about the fee misleading.83 The terms of this agreement were contained in a company disclosure letter. The Merger Agreement repeatedly references the company disclosure letter.84 Plaintiff’s original complaint does as well, describing its efforts to acquire the letter through a books and records request and characterizing the document as necessary to understand the “entire agreement of merger.”85 Plaintiff acquired documents describing the relevant terms of the cloud services agreement in 2022 and the company disclosure letter itself in March 2024.86 Therefore, a reasonably diligent plaintiff would have discovered the facts necessary to challenge the alleged misstatements related to the reverse termination fee more than two years before the Fund filed its complaint. And all the facts necessary to allege that the Federal Defendants misrepresented the nature of the dividend payment to Activision’s subsidiary were publicly available by 2023 when that payment was announced. The Merger Agreement specified that the shares owned by the subsidiary were common stock and would remain outstanding after the Merger closed.87 The allegedly misleading 83 Federal Compl. ¶ 144. 84 Defs.’ Resp. to Obj., Ex. A at 58–59. 85 Compl. ¶¶ 5–6, 157, 262–267, 279. 86 Pl.’s Opening Br. at 53–54; see also id., Ex. 25 at Activision_0000504 (stating a “key parameter[]” of the Merger was Activision “purchasing cloud services from [Microsoft] in an amount equal to one-third of the termination fee over a seven-year term”). 87 Defs.’ Resp. to Obj., Ex. A at 3, A-11, A-17, A-22. 21 statements Activision made in its SEC filings announcing the dividend stated the dividend would be paid on Activision’s outstanding common stock.88 A reasonably diligent plaintiff would have investigated the dividend and whether its payment on common stock held by the Activi