Topic: Settlement

DELAWARE CHANCERY COURT DISMISSES CLAIMS DUE TO A PRIOR BROAD SETTLEMENT RELEASE

By Scott Waxman and Thomas Meyer

In Geier v. Mozido, LLC, C.A. No. 10931-VCS (Del. Ch. Sept. 29, 2016) (Slights, V.C.), the Delaware Court of Chancery granted the motion of Mozido LLC (“LLC”) and Mozido, Inc., a subsidiary of LLC (“Inc.” and together with LLC, “Defendants”), to dismiss claims relating to incentive options promised, but not delivered, to a former director of LLC (“Plaintiff”).

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Plaintiff’s Counsel Recovery in a Derivative Case Settling Under the Transitive Property Limited to Actual Benefit to Plaintiffs

By: Nicholas Froio and David Noll

In Baker v. Sadiq, C.A. No. 9464-VCL (Del. Ch. August 16, 2016), the Court held that the proper calculation of an attorney’s contingency fee for a derivative action settled using the transitive property is based upon the actual settlement value. Baker concerned fees owed to plaintiff’s counsel (“Counsel”) after the settlement of a derivative action by minority shareholders for misappropriation by the majority shareholder.  The settlement of those claims was a buyout of the minority shareholders at a better pro rata value than could be expected from the derivative action.  By holding that the appropriate measure of fees is based upon actual cash payments, Plaintiff’s counsel received approximately one ninth of its expected award to be collected from an entity with no assets.

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In re Orchard Enterprises, Inc. Stockholder Litigation, Consolidated C.A. No. 7840-VCL

By Scott Waxman and Porter Sesnon

On August 22, 2014, Vice Chancellor Laster approved a fee award for counsel to certain plaintiff-stockholders related to a settlement of a class action claim alleging breaches of fiduciary duties related to a freeze-out merger.  The settlement amounted to $10.725 million. In the same opinion, V.C. Laster denied a fee award due to lack of standing to counsel for other stockholders in the same freeze-out merger, who separately litigated an appraisal claim, and which was relied upon by the successful class action plaintiffs.

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