AMC Entertainment : 2023-0215 amc amended settlement memo op. final 08-11-23

IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE

IN RE AMC ENTERTAINMENT	)
HOLDINGS, INC. STOCKHOLDER	) Consol. C.A. No. 2023-0215-MTZ
LITIGATION	)

MEMORANDUM OPINION

Date Submitted: July 26, 2023

Date Decided: August 11, 2023

Gregory V. Varallo, Daniel E. Meyer, BERNSTEIN LITOWITZ BERGER & GROSSMAN LLP, Wilmington, Delaware; Mark Lebovitch, Edward Timlin, BERNSTEIN LITOWITZ BERGER & GROSSMAN LLP, New York, New York; Michael J. Barry, Kelly L. Tucker, Jason M. Avellino, GRANT & EISENHOFER, P.A., Wilmington, Delaware; Thomas Curry, SAXENA WHITE P.A., Wilmington, Delaware, Attorneys for Plaintiffs Allegheny County Employees' Retirement System and Anthony Franchi.

Raymond J. DiCamillo, Kevin M. Gallagher, Matthew W. Murphy, RICHARDS, LAYTON & FINGER, P.A., Wilmington, Delaware; John A. Neuwirth, Joshua S. Amsel, Tanner S. Stanley, WEIL, GOTSHAL & MANGES LLP, New York, New York, Attorneys for Defendants AMC Entertainment Holdings, Inc., Adam M. Aron, Denise Clark, Howard W. Koch, Jr., Kathleen M. Pawlus, Keri Putnam, Anthony J. Saich, Philip Lader, Gary F. Locke, Lee Wittlinger, and Adam J. Sussman.

ZURN, Vice Chancellor.

Common stockholders of AMC Entertainment Holdings, Inc. ("AMC" or the "Company") brought direct claims on behalf of a putative class of common stockholders, and have reached a settlement with the defendants, AMC's directors and the Company.

The settlement consideration consists of additional shares of common stock awarded to current common stockholders to offset the dilutive effects of the conduct underlying the plaintiffs' claims. In return, the plaintiffs and defendants suggest the class should release claims relating to that conduct. As Delaware law requires, the parties submitted the settlement terms to the Court for approval. The plaintiffs' counsel have also requested fees based on the settlement's benefit to AMC's stockholders.

This is my second opinion considering the settlement terms. The first was issued on July 21, 2023, and declined to approve the settlement because the release was unsound (the "July 21 Opinion").1 This opinion adopts the defined terms used in the July 21 Opinion, assumes the parties' familiarity with the July 21 Opinion, and refers readers to that decision for the necessary background regarding the underlying transactions and this litigation.

The day after the July 21 Opinion, the parties cut the offending provision from

1 In Re AMC Ent. Hldgs., Inc. S'holder Litig., ---A.3d ---,2023 WL 4677722 (Del. Ch. July 21, 2023). The July 21 Opinion is also available at Docket Item ("D.I.") 581.

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the release and asked the Court to consider the settlement as revised. This opinion considers that revised settlement.

The Court's consideration of a proposed settlement comprises four tasks. First, the Court must determine whether the class should be certified under Court of Chancery Rule 23, and if it should be certified as opt-out or non-opt-out. In this opinion, I certify the class as a non-opt-out class under Rules 23(a), 23(b)(1), and 23(b)(2). I decline to afford the right to opt out.

Second, the Court must review the adequacy of notice of the proposed settlement to the class. I conclude the notice was sufficient and its delivery was adequate. Under Delaware law, only stockholders of record are required to receive notice when the class is certified as a non-opt-out class. Here, comprehensive electronic notice, coupled with supplemental but imperfect postcard notice, was adequate notice under Delaware law.

Third, the Court must review the terms of the proposed settlement for reasonableness, and determine whether to approve it. I conclude the settlement is reasonable. While the plaintiffs' fiduciary duty claim had merit, a remedy for that claim that is equitable and beneficial to the class overall is challenging to identify. The plaintiffs' statutory claim had no merit. The release of those claims, and others with the identical factual predicate to the plaintiffs' complaints, is sufficiently supported by the settlement consideration.

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And finally, if the settlement is approved, the Court must resolve the plaintiffs' petition for an award of attorney's fees and expenses. I award plaintiffs' counsel fees worth 12% of the settlement consideration. The plaintiffs' requests for modest incentive awards is granted.

An objector moved for a stay pending appeal if the settlement was approved, indicating an intention to appeal the July 21 Opinion's holding that the release does not improperly release future claims. This opinion concludes such a stay would not be appropriate.

1. BACKGROUND2

The day after the July 21 Opinion, the parties amended the release in the

2 Citations in the form of "D.I. -" refer to docket items in In re AMC Entertainment Holdings, Inc. Stockholder Litigation, C.A. No. 2023-0215-MTZ (Del. Ch.), formerly Allegheny County Employees' Retirement System v. AMC Entertainment Holdings, Inc., et al., C.A. No 2023-0215-MTZ (Del. Ch.). Citations in the form of "2023-0216, D.I. -" refer to docket items in Usbaldo Munoz, et al. v. Adam M. Aron, et al., C.A. No. 2023-0216-MTZ (Del. Ch.). Citations in the form of "Hr'g Tr. -" refer to the Settlement Hearing held on June 29 and 30, 2023. D.I. 578; D.I. 579.

The facts are drawn from the allegations of the Allegheny complaint, the operative complaint, "from the affidavits and supporting documents submitted in connection with the application for court approval," and public filings. D.I. 1 [hereinafter "Non-Op. Compl."]; 2023-0216, D.I. 1 [hereinafter "Op. Compl."]; In re Activision Blizzard, Inc. S'holder Litig., 124 A.3d 1025, 1030 (Del. Ch. 2015); In re Rural Metro Corp. S'holders Litig., 2013 WL 6634009, at *7 (Del. Ch. Dec. 17, 2013) ("Applying [Delaware] Rule [of Evidence] 201, Delaware courts have taken judicial notice of publicly available documents that 'are required by law to be filed, and are actually filed, with federal or state officials.'" (quoting In re Tyson Foods, Inc. Consol. S'holder Litig., 919 A.2d 563, 584 (Del. Ch. 2007))); accord Wal-MartStores, Inc. v. AIG Life Ins. Co., 860 A.2d 312, 320 n.28 (Del. 2004) (holding that the court may take judicial notice of public documents such as SEC filings that are required by law to be filed).

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Proposed Settlement.3 They filed a joint letter asking the Court to take the revised terms under advisement without requiring additional formal notice to the putative class, to continue to stay proceedings against the defendants, and to ultimately approve the Proposed Settlement.4 AMC announced the amendment the next business day, July 24.5

That same day, objector Rose Izzo filed a "Motion for Clarification of the Scheduling Order or, Alternatively, for Maintaining of Status Quo Order Pending Appeal."6 Izzo reiterated her desire to become lead plaintiff and sought clarification as to whether the July 21 Opinion was a "final determination" so she could "file a prompt motion to intervene."7 If the July 21 Opinion was not a "final

1. D.I. 582.
2. Id. at 2-3 & n.1.
3. AMC Entertainment Holdings, Inc., Current Report (Form 8-K) (July 24, 2023) ("On July 22, 2023, the parties filed an addendum to the Stipulation in an effort to address the issues with the scope of the release raised by the Court and requested that the Court approve the settlement with the revised release set forth in the addendum."). AMC and Plaintiffs' counsel posted the parties' July 22 letter on their respective websites. Presentations, AMC
   THEATRES INVESTOR RELATIONS, https://investor.amctheatres.com/financial- performance/presentations/default.aspx (last visited Aug. 9, 2023); Settlement Information, GRANT & EISENHOFER, P.A., https://www.gelaw.com/settlements/amc (last visited Aug. 9, 2023); AMC Case Documents, FIELDS KUPKA & SHUKUROV LLP, https://fksfirm.com/case-notices/ (last visited Aug. 9, 2023); Related Cases, BERNSTEIN LITOWITZ BERGER & GROSSMAN LLP, https://www.blbglaw.com/news/updates/2023-04-03-blbg-secures-additional-shares-for-amc-stockholders-in-landmark-recapitalization- settlement (last visited Aug. 9, 2023).
4. D.I. 583.
5. Id. ¶¶ 2-3, 5.

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