Litigation

Chancery Approves Class Action Fees For Settlement Resulting in Revised Proxy Disclosures Only

By Francis G. X. Pileggi, Esq.

In re: James River Group, Inc. Shareholders Litigation, 2008 WL 160962 (Del. Ch., Jan. 8, 2008), read letter decision here. This Chancery Court decision addresses the request for attorneys' fees based on a class action settlement approved last month. The consideration on which the settlement was based consisted entirely of revised proxy statement disclosures.

The court recited the standard in Delaware that governs the award of fees in representative cases: (i) benefits achieved by the litigation; (ii) efforts of counsel and amount of time spent on the case; (iii) the contingent nature of the fee; (iv) difficulty of the litigation; and (v) the standing and ability of counsel. See Sugarland Indus. v. Thomas, 420 A.2d 142, 149-50 (Del. 1980). 

The request was for $450,000 in fees and over $20,000 in costs. The case was consolidated with a similar action in North Carolina that was then brought in Delaware. The fees for those attorneys was not separately requested, but the court presumed that they would be sharing in the fees awarded to the Delaware attorneys. Counsel submitted detailed descriptions of their time which separated the hours spent prior to the Memo of Understanding (settlement agreement) and the amount of time in confirmatory discovery as well as the time spent to prepare the fee application. The defendants argued for a lower but unspecified amount of fees.

The final award by the court was $400,000 in total fees and costs based on the importance of the added disclosures and the numbers of hours spent by counsel. In footnote 7 the court noted other similar cases where the awards  from the court were for $450,000 and $225,000 but nonetheless reasoned that each case must stand on its own. 

The court  added that it must use its discretion to "further the policy objectives of encouraging monitoring behavior by stockholders and protecting the assets of Delaware corporations from unreasonable opportunistic demands."

Full post as published by Delaware Corporate and Commercial Litigation Blog on January 20, 2008 (boomark / email).