In re Dole Food Co. Inc. Stockholder Litigation, CA 8703-VCL

Background

Dole completed a going‑private merger on Nov. 1, 2013; merger consideration of $13.50/share was distributed to record holders through DTC and its nominee Cede.
Plaintiffs sued fiduciaries on behalf of unaffiliated Dole holders; parties settled for $2.74/share plus interest and the court approved the settlement in Feb. 2016.
The settlement contemplated a traditional claims process administered by A.B. Data; class size was 36,793,758 shares but claimants submitted facially valid claims for 49,164,415 shares.
A.B. Data and class counsel investigated but could not reconcile the ~12.37 million‑share overclaim because DTC’s ledger did not reflect all trades during the high‑volume T+3 window and short sales/stock‑lending created competing valid claims to the same underlying shares.
Reconstructing true ownership would require records from 800+ DTC participants and a massive forensic audit; the court found such an effort impracticable, costly, and unlikely to produce reliable results.
Class counsel proposed instead to distribute the settlement pro rata to record holders (including Cede) via DTC — the same mechanism used for the merger payment — and the court granted the request.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether the plan of allocation may be modified to replace the claims process with a DTC pro rata distribution to record holders	Claims process is unworkable given overclaims and DTC ledger limits; DTC distribution is feasible, cost‑effective, and mirrors how merger consideration was distributed	(Implicit) Adhere to approved claims process and settlement terms; validation should occur under the existing procedure	Court found good cause to modify the allocation; approved distribution to record holders via DTC
Whether distributing via DTC is consistent with Delaware law on record vs beneficial owners	Settlement arises from property rights in shares; record holders at closing held the claims and distribution to them is appropriate	Beneficial owners may assert equitable claims and might be disadvantaged by a record‑holder distribution	Court: Delaware law permits treating record holders as the parties to be recognized for distribution; beneficial owners’ rights lie in private contractual remedies against intermediaries
Whether the modified method is equitable given overclaims (49M claims vs 36.8M class shares)	Pro rata distribution among claimants would unjustly dilute true class members; using DTC prevents paying excluded or invalid claimants and allocates disputes to intermediaries who have records	Allowing distribution via DTC could route funds to excluded holders or create burdens on beneficial owners	Court accepted safeguards: parties will provide list of excluded accounts to DTC; DTC can tailor distribution to omit excluded holders; disputes between beneficial owners and custodians are not part of settlement administration
Whether adequate notice and administrative steps are required after modification	Class counsel proposed supplemental notice and minimal additional admin costs; DTC fees minimal	(Implicit) Any change requires court‑approved notice and administrative oversight	Court approved form of supplemental notice to be mailed to all who received prior notice/proof of claim; authorized modest additional admin costs and DTC fees

Key Cases Cited

Enstar Corp. v. Senouf, 535 A.2d 1351 (Del. 1987) (corporation need only recognize record holders)
Olivetti Underwood Corp. v. Jacques Coe & Co., 217 A.2d 683 (Del. 1966) (record‑holder recognition rules)
Am. Hardware Corp. v. Savage Arms Corp., 136 A.2d 690 (Del. 1957) (principle that record holders are the corporation’s recognized shareholders)
Salt Dome Oil Corp. v. Schenck, 41 A.2d 583 (Del. 1945) (early precedent on record holder recognition)
In re Activision Blizzard, Inc. S’holder Litig., 124 A.3d 1025 (Del. Ch. 2015) (settlement/notice principles and recognition of record holders for notice purposes)
In re Phila. Stock Exch., Inc., 945 A.2d 1123 (Del. 2008) (plan of allocation must be reasonable)
Schultz v. Ginsburg, 965 A.2d 661 (Del. 2009) (reasonable allocation may consider relative values of competing claims)