These two opinions show different ways the Court of Chancery manages merger disputes. In Anthem-Cigna, the court treated Cigna’s contractual breaches as real, but ultimately converted the case into a causation problem because the merger would have failed anyway under the No Injunction Condition.[1][2]
In Zoox, the same court addressed a different kind of problem: parties using appraisal discovery like a substitute for books-and-records litigation. There, the court limited discovery to the level that would have been available in a Section 220 proceeding when the appraisal case was really a workaround.[3][4]
The court held that Anthem proved Cigna breached the Efforts Covenants, but that finding did not end the damages analysis. Cigna carried its burden on causation by showing that the merger would have failed even absent those breaches, because the No Injunction Condition still would not have been satisfied.[5][6]
The opinion describes a two-step causation framework: the plaintiff must show the breach materially contributed to the failure of the No Injunction Condition, and then the breaching party can escape liability by proving the condition would have failed anyway without the breach.[7]
Applying that framework, the court found that Cigna’s conduct made approval less likely, including withdrawal from integration planning, opposition to divestitures, resistance to mediation, and undermining Anthem’s defense. But the court still concluded that the DOJ and the courts would have blocked the merger because of anticompetitive effects in the national accounts market.[8]
On Anthem’s side of the case, the court emphasized that Cigna’s breaches mattered, but only as part of a larger contractual chain. The opinion’s practical message is that a proven efforts-covenant breach does not automatically produce expectation damages if the failed closing was independently inevitable.[9][10]
That is why the No Injunction Condition mattered so much. Once the court concluded that the antitrust blockade would have remained in place even without the breaches, the causal link between breach and lost deal value broke, and Anthem could not recover damages for those breaches.[11][12][13]
The court also rejected Cigna’s reverse termination fee claim. It held that Anthem validly terminated the merger under a different termination right that did not trigger the fee, and because Anthem’s termination came first, Cigna could not recover the reverse termination fee.[20]
So the result was symmetrical in an important sense: Anthem won on the existence of breach, but lost on damages, and Cigna also lost on its fee claim. The opinion leaves neither side with a monetary recovery from the failed merger.[21]
Zoox addresses a procedural concern rather than a contract-remedy issue. The court said appraisal discovery is broad, but it should not become a substitute for Section 220 when the real objective is pre-suit investigation of possible fiduciary claims.[22]
The court rejected a pure proportionality cut-off based on the petitioners’ small stake, explaining that the appraisal statute makes the “issues at stake” factor especially important.[23]
Instead of proportionality, the court used policy to impose a narrower rule: if an appraisal petition is an obvious replacement for an unavailable Section 220 action, discovery should not exceed what Section 220 would have allowed.[24]
The court applied that idea to the case before it by pointing to the petitioners’ timing, their dismissal of a Section 220 action, their stated desire to get at least the same material through appraisal, and the small economic value of the shares they were pursuing.[25]
Together, the opinions show the Court of Chancery policing two different forms of litigation overreach. In Anthem-Cigna, it refused to let a proven contractual breach become damages where causation failed because the merger would have been blocked anyway. In Zoox, it refused to let appraisal discovery function as a procedural end run around Section 220.[26][27][28][29]
Get more accurate answers with Super Pandi, upload files, personalized discovery feed, save searches and contribute to the PandiPedia.
Let's look at alternatives: