It is\u00a0a nearly universal truth that counsel representing stockholder-plaintiffs in class or derivative litigation against (or on behalf of) Delaware entities will seek an award of fees and costs where their efforts have produced a benefit on behalf of the company or the class they represent.\u00a0 This might occur via settlement or upon a successful conclusion of the litigation.\u00a0 In\u00a0most instances where a\u00a0benefit is\u00a0achieved, that benefit\u00a0takes the form of a\u00a0“common fund” (where there has been a payment of money)\u00a0or some type of “therapeutic benefit” (for instance, amended disclosures or revised governance procedures).\u00a0 Counsel for stockholder-plaintiffs also have the ability to seek an award of fees and costs where the claims asserted in representative litigation are effectively mooted by the entity taking action in response to the claims.<\/p>\n
In recent months, the Court of Chancery has issued two letter decisions in which it refused to enter stipulations by the plaintiffs and the companies to dismiss the purportedly mooted litigation or to award a negotiated fee award to plaintiffs’ counsel unless and until the parties provided notice to the class of the dismissal and proposed fee award.\u00a0\u00a0 See<\/em> In re Zalicus, Inc. Stockholders Litig.<\/em><\/a>, Consol. C.A. # 9602-CB (Del. Ch. Jan. 16, 2015)(Chancellor Bouchard); and In re Astex Pharm., Inc. Stockholders Litig<\/a>.<\/em>, Consol. C.A. # 8197-VCL (Del. Ch. Aug. 25, 2014)(Vice-Chancellor Laster).\u00a0 In both of these letter decisions, the court noted the\u00a0benefit to the class of stockholders–on\u00a0whose behalf the litigation was being prosecuted–of having these types of mootness dismissals (with a fee award) exposed to the watchful eyes of the purported beneficiaries so that they may police any chance of an improper “buy-off” of plaintiffs’ counsel or to “object to the use of corporate funds” by “challeng[ing] the fee payment as waste in a separate litigation.”<\/p>\n These two letter decisions can be read as evidence of\u00a0the Court of Chancery’s re-affirmation of its role in scrutinizing the interactions of fiduciaries who purport to act on behalf of a class of stockholders or the company on one hand and the officers and directors of the company on the other.\u00a0 Whether these decisions\u00a0also signal an intent by the court to more carefully circumscribe fee awards for mooted claims (which\u00a0have not infrequently been in the neighborhood of $250,000-$500,000)\u00a0remains to be seen.<\/p>\n <\/p>\n","protected":false},"excerpt":{"rendered":" It is\u00a0a nearly universal truth that counsel representing stockholder-plaintiffs in class or derivative litigation against (or on behalf of) Delaware entities will seek an award of fees and costs where their efforts have produced a benefit on behalf of the company or the class they represent.\u00a0 This might occur via settlement or upon a successful … <\/p>\n Continue reading “Representative Litigation: “Mootness” Fee Awards”<\/span><\/a><\/p>\n","protected":false},"author":108,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[78,79,80,77],"ppma_author":[153],"class_list":["post-62","post","type-post","status-publish","format-standard","hentry","category-general","tag-class-action","tag-derivative-action","tag-fee-awards","tag-settlement"],"authors":[{"term_id":153,"user_id":108,"is_guest":0,"slug":"rlrenck","display_name":"Richard L. Renck","avatar_url":"https:\/\/blogs.duanemorris.com\/delawarebusinesslaw\/wp-content\/uploads\/sites\/16\/2014\/08\/renckrichard-125x150.jpg","author_category":"","last_name":"Renck","first_name":"Richard L.","job_title":"","user_url":"http:\/\/www.duanemorris.com\/attorneys\/richardlrenck.html","description":"Read Richard's bio.<\/a>"}],"_links":{"self":[{"href":"https:\/\/blogs.duanemorris.com\/delawarebusinesslaw\/wp-json\/wp\/v2\/posts\/62","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/blogs.duanemorris.com\/delawarebusinesslaw\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blogs.duanemorris.com\/delawarebusinesslaw\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blogs.duanemorris.com\/delawarebusinesslaw\/wp-json\/wp\/v2\/users\/108"}],"replies":[{"embeddable":true,"href":"https:\/\/blogs.duanemorris.com\/delawarebusinesslaw\/wp-json\/wp\/v2\/comments?post=62"}],"version-history":[{"count":0,"href":"https:\/\/blogs.duanemorris.com\/delawarebusinesslaw\/wp-json\/wp\/v2\/posts\/62\/revisions"}],"wp:attachment":[{"href":"https:\/\/blogs.duanemorris.com\/delawarebusinesslaw\/wp-json\/wp\/v2\/media?parent=62"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blogs.duanemorris.com\/delawarebusinesslaw\/wp-json\/wp\/v2\/categories?post=62"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blogs.duanemorris.com\/delawarebusinesslaw\/wp-json\/wp\/v2\/tags?post=62"},{"taxonomy":"author","embeddable":true,"href":"https:\/\/blogs.duanemorris.com\/delawarebusinesslaw\/wp-json\/wp\/v2\/ppma_author?post=62"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}