COURT OF CHANCERY OF THE STATE OF DELAWARE M ORGAN T

. Z URN V ICE C HANCELLOR L EONARD L. W ILLIAMS J USTICE C ENTER 500 N. K ING S TREET , S UITE 11400 W ILMINGTON , D ELAWARE 19801

- 3734 October 6, 2023 Gregory V. Varallo, Esquire Ber n ste i n Litowitz Berger & Grossman LLP 500 Delaware Avenue Suite 901 Wilmington, DE 19801 Rudolf Koch, Esquire Richards, Layton & Finger, P.A. One Rodney Square 920 North King Street Wilmington, DE 19801

RE : In re Edgio, Inc. St

ockholders Litigation , Consol. C.A. No. 2022

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- MTZ

De ar Counsel : I write regarding the parties ’ settlement stipulation (the “Stipulation ”) a nd
proposed scheduling order , both of which were filed on September 29 , 2023

. 1 As
is typical with proposed sett lements i n this Court , the parties seek entry of the
scheduling order, which “ tentatively approves the form a nd content of the notice

and sets forth the manner in which notice is to be given. ” 2 The Sti pulation

conte mplates notice by pu blication in lieu of mailing
, an d the def en dants filed a

let ter in support

. 3 As explained below, the Court is amenable to service by

1 Docket I tem ( “ D.I

. ” ) 61 at Stipulation f or Compromise & Settlement [hereinafter

“ Stip. ” ] ; D.I. 61 at Proposed Order.

2 2 Do nald J. Wolfe & Michael A. Pitte ng er, Corporate and Commercial Practice in th e Delaware Court of Chancery § 1 3 .03 [e] , at 13

- 23 (2nd ed. 2022 ) [hereinafter “ Wolf e & Pittenge r ” ] ; D. I. 61 at Proposed Order ¶ 10.

3 D.I. 62 at Ltr.In re Edgio, Inc. S ’ holders Litig.

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publication if the parties provide additional information as to why publication is

approp riate under the circumstance s. Addit ionally , the noti ce to st ockholders,

attached as E xh ibit C to the Stipulation (the “Notice ” )
, is inadequate because it

does not se t forth the plaintiffs ’ the ory of the case. T he parties must submit a

revised notice before the Court wi ll approve the proposed scheduling order

.
I. Noti ce By Public ation

I b egin with the parties ’ request that I allow notice exclusively by
publication , as set forth i n paragraph 10 of the Sti pulation

. Th at paragraph
provides :
( i) Defendants shall ca use Edgio [, Inc.] to fi le a Form 8

- K with the SEC t ha t dis closes the S ettlement and attaches a copy of the Notice and this Stipulation as exhibits; (ii) Defendants shall cause Edgio to post a copy of the Notice and this Stipulation on Edgio’s website; (iii) Co

- Lead Counsel shall post a copy of the Notice and this Stipulation on the website of Bernstein Litowitz Berger & Grossmann LLP; and (iv) Defendants shall cause Edgio to post a copy of the Notice on Edgio’s social media accounts on LinkedIn, X (formerly Twitter ), Facebook, an d Instagram. 4

4 Stip

. ¶ 10.In re Edgio, Inc. S ’ holders Litig.

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Court of Chanc er y Rul e 23 require s that parties notice a “ propos ed dismissal
or settlement . . . in the manner directed by the Court. ” 5 “N otice may be given by
any appropriate means approved by the Court, including first

- cl ass U.S. mail,

em a il, or publication. ” 6 “Dela wa re co urt s will in terpret the notice requirement so
that it does not unduly burden the parties

. ” 7

N otice by mai l su pplemented by additional forms of notice will often satisf y

Rule 23 ’s requirement s

. 8 But maili ng notic e can be expensive and imp ose an

5 Ct. Ch. R. 23 (f) ( 3)

. Rule 23 was amend ed on Sep te mber 25, 2023. In re : Amendments to Rules 7, 10, 17

– 25, and 171 of the Court of Chancery Rules, Sections , III, IV, and X VI (Del. Ch. S e pt. 25, 2023) (ORDER ).

6 Ct. C h. R. 2 3 ( f

)(3)( C ).

7 1 R. Franklin Balotti & Jesse A. Finkelste in, T he Delaware Law of Corporation s & Bus iness Organizations § 13. 1 9 [B ], at 13

- 11 5 ( 4th ed. Sup p. 2023

- 1 )

. 8 See 2 David A. Drexler et al

. , Delaware Corporation L aw and Prac tice § 42.05[2] , at 42

- 46 to

- 47 (2022) [hereinafter “ Drexler ” ] ( “ Customarily , after a stipulation of set tlement is filed, the parties submit and the Court en ter s a scheduling order which: . . . directs the notice be mailed to stockholders, and in some instances be published or

o therwise dissem inated by a specific date . . . . ” ) ; see also 7B Charles A. Wright & Arthur R. Miller, Federal Practice & Procedure § 1797.6 (3d ed. A pr. 2023 u pdate ) [hereinafter “ Wright & Miller ” ] ( “ Of co urse, notice by mail to all of the identified cla ss members informing them of the proposed action and indicating that t hey have a ri gh t to pa rticipate and voice their objections will suffice

. ” ); Qian Xiong Lin v. DJ ’ s Int ’ l Buffet Inc. , 2019 WL 5842798, at *5 (E.D.N.Y. N o v. 7, 2019) ( “ The typical methods for disseminating notice to putative collective action members are th rough the Uni te d State s mail and by posting hard copies at D efendants ’ place of business. ” ).In re Edgio, Inc. S ’ holders Litig.

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unnecessa r y burden wh ere notice by publication would be adequate

. 9 The Court
may order notice by publication where notice by mail does n ot c onfer sufficient

benefits to out weigh its relative cost

. To aid the Court in making that

determination, Rule 23 provides tha t “ [t] he pa rties m ust provide the Court with

in f ormation sufficient to rule on whether to require notice and in what form

. ” 10

And t he part ies must show that notice by publication would “ reach th e majori ty of

interested stockholders

. ” 11

O ur case law provid es examples of the ways parties can make this showing

.
One considerati on is the cost of mailing
, 12 which is best evaluated against the

9 See 2 Wolfe & Pittenger § 12.03 , at 12

- 3 5 ( “ Where the cla s s is large, compli ance with t his notice requirement can be a n expensive undertaking. ” )

. 10 Ct. Ch. R. 2 3 ( f

)(3)(B).

11 In re Madison Square Garden Ent. Corp. S ’ holders Litig.
, 2023 WL 3696664, at *2 (Del. Ch. May 26, 2023) (internal quotation mar ks omitted) (quoting In re Wel l s Fargo & Co. S ’ holder Deriv

. Litig

. , 445 F. Supp. 3d 508, 517

– 18 (N.D. Cal. 2020))

. 12 See Madiso n Square Garden
, 2023 WL 3696664, at *1 ( requiring notice by mail to record stockholders and considering the “ modest ” cost of “ betw een $ 7 5, 0 00 and $83,876 ” ) ; Franc hi v. Barab e , C.A. No. 2020

- 0648

- KSJM
, at D.I. 50 (Del. Ch. May 3, 2022) (ORDER) ( allowing notice by publication and reasoning “ roughly $30,000 ” in mailing costs would be meaningf ul t o th e company ) ; Rux v. M eyer , C.A. No. 11577

- CB
, a t D .I. 95 (Del. Ch. Oct. 23, 2009) ( ORDER) ( allowing notice by publication and considering that “ a mailing would involve printing and maili ng of an estimated 340,000 notices at cost of several hundred thousa n d dollars (plus brokerage search co sts ) ” ) ; see
a lso 7C Wright & Miller § 183 9 ( “ If there is an extremely large number of stockholders so that the cost of mailing the notice would be burd ensome, the court may decide to allow the notice to b e published in appropriate newspape rs or perio dicals. ” )

.In re Edgio, Inc. S ’ holders Litig.

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comp any ’s size and financial condition. 13 Another consideration is whet her the

company has h istorically communicate d with its stockh olders via mail, or if it
frequently uses ele ctronic means

. 14 The Court has also considered the extent to
which the proceedings are covere d by the press
, 15 t he percent age of shares held by

instit uti ons as opposed to individuals
, 16 and the trading volume o f t he c ompany ’s

13 See T h iel e v. Kashiv Bios ciences, LLC , C.A. No. 2022

- 0272

- LWW , at D.I. 64 (Del. Ch. May 15, 2023) (ORDER) ( allowing notice by publication and co nsidering the company ’ s market capitalizat i on of $566 million) ; Franc hi , C.A. No. 2020

- 0648

- KSJM
, at D.I. 50 ( allowin g no tice by publication in part because the company was “ a small clinical

- stage biote ch nology company ” ).

14 Madison Square Garden
, 2023 WL 3 696664 , at *1 ( requir ing notice to record holders by mail and considering that the co mpany “ ‘ does occasionally commun i cate with stockholders of record by paper mail as appropriate, ’ incl u ding providing ‘ proxy statements to record holders by paper mail ’ ” (cit ation omitted ) ) ; Thiel e , C.A. No. 2022

- 0272

- LWW , at D.I. 64 ( allowing notice by publication and considering that th e comp any “ d oes not normally distribute paper ma t erials to its stockholders but

comm unicates through the ‘ notice only ’ option offered by the SEC to avoid the cost and expens e of mailing, which has successfully produced a quorum for annual meetings ” ) ; Franc h i , C. A. No. 2020

- 0648

- KSJM
, at D .I. 50 ( allowing notice by publication and consideri ng that the company “ routinely c ommu nicates with stockho lders through the

‘ notice only ’ option provided by the SEC
, which has successfully produced [a] quorum ” ).

15 See In r e AMC Ent. H ldgs. , Inc. S ’ holder Litig.
, 2023 WL 5165606, at *16 (Del. Ch. Aug. 11, 2023) ; City of Monroe Emp s. ’ Ret

. Sys

. v. Murdoch , C. A. No. 2017

- 0833

- AGB
, at D.I. 17 (Del. Ch. Nov. 28, 2017) (ORDER) ( “ Given the significant amount of press attention th i s settlement ha s received, the Court is satisfied with the manner of provid ing

n otice set forth in paragraphs 6

– 7 and will not require a mai ling

. ” )

. 16 Dollens v. Goosehea d Ins

. , Inc. , C.A. No. 2022

- 101 8

- JTL , at D.I. 17 (Del. Ch. Oct. 3, 2 023) ( ORDER) ( all o wi ng notice b y publication where approximately 99% of the defendant ’ s stock was held by institutional investor s ) ; AMC
, 2023 WL 5 165606, at * 16 ( “ The Company distributed notice electronically and by publi ca tion: on AMC ’ s investor relations website, on AMC ’ s T witter account, via a Form 8

- K, over PR Newswire , and onIn re Edgio, Inc. S ’ holders Litig.

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stock

. 17 Additionally
, t he parties should explain why they have chosen the form s

of notice they seek. 18 Armed with this information, the Court can co n sider whether

th e proposed forms of notice are suf ficient under the circumstances

. Here, t h e defendants argu e that maili ng should not b e required beca use (1)

“ [a] s a technology company, Edgio’s st ockholders frequently receive

communications about the company through notice by pub licatio n ” ; (2) E dgio is “a
modestly sized public company ”; (3) the expense of mailing “would burden Edgio
financially and ther e is no reason to believe it would provide any meaningful
countervailing benefit ”; and (4) “ the natur e of the settlement, includin g the lack of

pa yment t o stockholders, further supports the positio n that notice by publication is
appropriate in light of the likely costs of effecting notice by mail. ” 19 The

Depository Trust Company ’ s Legal Notice Syst em. In most instances, for publicly traded companies with a higher percentage of institutional st ockh olders, this is enough [for beneficial hold ers]. ” ( fo otnote omitted) )

. 17 Madison Square Garden
, 2023 WL 36 96664, at *1 ( allowing notice by publication to beneficial sto ckholders and considering that the company “ aver ages trading volumes in the hundreds of thousands of shares per day ” ).

18 See In re AMC S ’ h o lder Liti g. , Consol. C.A. No. 2023

- 02 15

- MTZ, at D.I. 175 at 3

– 5 (Del. Ch. Apr

. 28, 2023)

. 19 D.I. 6 2 at Ltr. at 3

– 4

. The defendan ts also cited the former version of Rule 23.1 as the governing standard f

or this class action governed by Rule 23.In re Edgio, Inc. S ’ holders Litig.

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defendants note that Edgio has 224,956,212 shares of common sto ck outstanding

and 2 46 stockholders of record. 20

T hese broad statements
, unsupported by any facts, have not provide d the

Court “ wit h information sufficien t to rule on whether to require notice a nd in what

for m, ” as required by our rules. 21 F i rst , i t is not clear what types of

communications Edgio stockholders have receive d thr o ugh electro nic means or

what those means were ; the fact that Edgio is itself a “ technology company ” does
little to inform how it has historically communicated with its s tockholders

.
S econd, a n argument that mailing is too expensive should be support ed by

information about the comp any ’ s s ize and market capitalization ; Edgio merely

refers to itself as “ m ode stly si zed. ” 22 Third
, that argument should also be
supported by an e stimated cost of mailing n otice , and postcard notice, to Edgio ’ s

20 Id. at 4 n .1.

21 Ct. C h. R. 23 ( f

)(3)(B).

22 T he Sti pulation provide s th at the “ Defendants shall pay any and all Notice C osts regardless of t he form or manner of notice ordered by the Court

. ” Stip . ¶ 11. For purpo ses of this letter, and consistent with the phrasing o f the defendants ’ l etter, I assume that Edgio wil l incur the mailing expenses. Se e 2 Wolfe & Pittenger § 13.03[e] , at 13

– 2 5 ( “ T ypica lly , the corporate defendant undertakes the task and expense of mail ing the requisite notice of settlement to stockholder s or class members. ” ).In re Edgio, Inc. S ’ holders Litig.

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record and beneficial sto ckholde rs

. 23 Fo u rth, it is un clear how the “nature of the
settlement” supports forgoing notice by mail . If the defendants conte nd the C ourt

should consider t he nature o f the settlement
, they should explain their po sition and

state the lega l basis for it.
The pa rties m ust also pro vide sup port for their chosen forms of notice . First

and fore most, they should inform the Court whether notice by email would be

feasible , an d if not, why

. 24 The parties must also explain why posting on their
respective social me dia acc ounts is l ikely to reach a significant portion of Ed gi o ’s

stoc kholders ; relevant information might include whether Edgio communicate d

with its sto ck holders on the specif ied social media platforms

.
The Cou rt is amenable to all owing not ice by p u blication

. Once the parties
provide additional information, the Court will determine whether the proposed

means are appropriate under the circumst anc es.

23 At ti mes, the Court requires settlement notices to be sent t o only record stockholders

. See In re Activision Blizzard, Inc. S ’ holder Litig. , 124 A.3d 1025, 1061 (Del. Ch. 2 015)

. T he parties should provide separate cost estimates f or sending n ot ice to rec ord and bene ficial stockholders

. 24 Madison Square Garden
, 2023 WL 3696664, at *1 (explaining the Court previously sent a le tter t o the parties asking if “ giving notice by em ail or social media would be a via ble option ” ).In re Edgio, Inc. S ’ holders Litig.

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II. The N otice Is Inadeq uate A s Currentl y Drafted

.
A dditionally, the Not ice is inadequate. Court of Ch a n cery Rule 23 (f)(D)(iv)
requires that
, “[u]nless the Court orders otherwise
, the notice of a proposed
dismissal or settlement must clearly and concisely state, i n plain, easily unders tood
language [ ,] . . . a summary of the claims, issues, defenses, and re l i ef that the class
action sought
, ” among other things. 25

Here, the complain t ’s theory is that Ed gio ’s b oar d of d irectors cau sed Edgio
to acquire College Parent , L.P. and enter into a stoc kholders ’ agreement as part of

a scheme to entrench i tself i n the f ace of a n activist threat. 26 T hat is also the theory
that the parties brief

ed and argued at the motion to dismiss stage. 27 My motion to

25 Ct. Ch. R . 23 ( f

)(3)(D) ; see also 2 Drexler § 42.05[ 3 ] , at 42

- 47 ( “ [T]he notice must disclose the nature of the action as set forth in the pleadings, the evidence
, [and] the pos itions taken by the parties

. . . . ” (citing Pri n ce v. Bensigner , 244 A.2d 89, 92 (Del. C h. 19 68) ) ; 2 Wolfe & Pittenger § 13.03[e] , at 13

- 26 ( “ [Notice ] is sufficient if the not ice outlines the pleadings , the evidence assembled , and the partie s ’ claims and positio ns

. . . . ” )

. 26 See , e.g. , D.I. 1 at Compl. ¶ 80 ( “ [T]he Direc tor Defendants bre a ched their fidu ciary duties to Plaintiff and the Class by prioritizing their own personal, fin ancial, and/or reputational interests and approving the Acqu isition and the Stockholders ’ Agreement, which the y used to entrenc h themselves

. . . . ” ).

27 See, e.g

. , D.I. 25 at 1 ( “ The Complaint all eges an unusual claim that garden

- variety stand still provisi ons entered into pursuant to a stock issuance approved by in dependent directors and disinterested stockholders are per se entre nchment devices that merit enhance d scrutiny. ” ); D .I. 29 at Ans. Br. 2 ( “ [T] he Board used [provi sions in the stockho lder s ’ agreement ] to entrench t hemselves in offi ce. ” )

.In re Edgio, Inc. S ’ holders Litig.

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dismiss ru ling held that “ it [w as] reasonable to infer that the Board negotiated for

and obtained [ provisions in the st o ckholders ’ agreement ] to defend again st a
perceived threat of activism ” and that “ Unocal enhanced scrutiny applie [d] at the
ple ading stage. ” 28 While the N o tice explains the s tockholders ’ a greeme nt ’ s

relev ant t erms , it describes the underlying action only a s “ asserting a claim for
breach of fiduciary duty in connection with the Board’s approval of the [Co llege

Parent ] Acquisition and the Stockholders’ Agreement

. ” 29 The only reference to the

motion to dismiss decisi on reads , in fu ll: “ On May 1, 2023, the Co u rt issued a
Memorandum Opinion denying the Motion to Dismiss. ” 30 The Notice ’s di scussi on

o f the relevant claims and issues does not tell stockholders what the plaintiffs
claimed the defendants did wrong. It falls short of R u le 23 ’s requiremen t s

. 31 The

pa r ties must amend the N otice to p rov i de a summary of the claims and issues in the

case.

28 In re Edgio, Inc. S ’ holders Litig.
, 2023 WL 3167648, at *17 (Del. Ch. May 1, 2023) (di scussing Unocal Corp. v. Mesa P e troleum Co. , 493 A.2d 946 (Del. 1985) ).

29 S tip. , Ex. C ¶ 10 ; see also id. ¶ 11 (s ame ).

30 Id. ¶ 19

. 31 Ct. Ch. R. 23 ( f

)(3)(D)

.In re Edgio, Inc. S ’ holders Litig.

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III. C onclus ion
If the parties wish to proceed with thei r request to notice th e s et t lem ent by
publication in li eu of mailing, they mu st provide additional informa tion to enab l e

the Court to a ssess whether such no tice is appropriate under the circumstances.
The Court will require that noti ce be given at least s ixty days in advance of t he

hea ring currently scheduled for December 15, 2023. If the pa rties intend t o k eep

that dat e , they should provide this information and made the requested revisions as

soon as possibl e.

Since r ely,

/s/ Morgan T. Z

urn

Vice Ch an cellor

MTZ/m s

cc : All Coun sel of Record, v ia Fi l e & S e rve Xpress