Alden Smith and John W Gosselin v Jerome W Van Gorkom et al No Civil Action 6342 Court of Chancery of Delaware New Castle 1985 Del Ch LEXIS 516 October 9 1985 Submitted October 11 1985 COUNSEL 1 William Prickett PRICKETT JONES ELLIOTT KRISTOL SCHNEE 1310 King Street P O Box 1328 Wilmington Delaware 19899 for Plaintiffs Robert K Payson POTTER ANDERSON CORROON 350 Delaware Trust Building P O Box 951 Wilmington Delaware 19899 for Individual Defendants A Gilchrist Sparks III MORRIS NICHOLS ARSHT TUNNELL Wilmington Tower P O Box 1347 Wilmington Delaware 19899 for Defendants GL Corporation Trans Union Corporation and New T Co JUDGES Before BERGER OPINIONBY BERGER OPINION BERGER On October 7 1985 after due notice by mail and publication this Court held a hearing to consider a proposed settlement of the above captioned action There were no objections raised by any of the more than 10 000 former stockholders of Trans Union Corporation Trans Union and after considering the record as a whole the memoranda and affidavits submitted in support of the proposed settlement the substantial monetary benefit to the class and the risks and additional expenses and delay of continued litigation among other factors this Court approved the proposed settlement as being fair reasonable and in the best interests of the class Pursuant to the settlement 2 a fund in the amount of 23 5 million was created for the benefit of the class of former Trans Union stockholders identified in this Court s Order dated July 30 1985 At the settlement hearing counsel for plaintiffs in this action the Delaware Action and counsel for plaintiffs in a related action captioned Ridings v Canadian Imperial Bank of Commerce Trust Company Bahamas Limited No 81 C 486 N D Ill the Federal Action requested an award of attorneys fees and expenses to be paid from the settlement fund in the amount of 5 5 million This is the decision on the application for attorneys fees and expenses In Delaware the amount of attorneys fees to be awarded is a matter of discretion Krinsky v Helfand Del Supr 156 A 2d 90 1959 In determining a reasonable award the results achieved through the litigation are generally the primary consideration Other factors include the time and effort expended by counsel the complexity of the litigation the standing and ability of counsel and the contingent nature of the fee arrangement Sugarland Industries Inc v Thomas Del Supr 420 A 2d 142 1980 Roizen v Multivest Inc Del Ch Civil 3 Action No 6535 Brown C December 27 1982 The lodestar or Lindy approach adopted by our federal courts is not followed in Delaware Sugarland Industries Inc v Thomas supra Rosen v Smith Del Ch Civil Action No 7863 Hartnett V C September 18 1985 Viewed solely from the perspective of the monetary benefit conferred by the litigation counsel for plaintiffs suggest that the requested award which amounts to approximately 23 4 of the 23 5 million settlement fund is within the range of percentages found to be reasonable See Sugarland Industries Inc v Thomas supra 20 as to that portion of the benefit directly resulting from the litigation Singer v Magnavox Del Ch Civil Action No 4929 Brown V C August 20 1980 28 However in recent settlements involving fee awards in excess of one million dollars the fee award as compared to the benefit achieved has been significantly lower See e g In Re Crocker Shareholders Litigation Del Ch Civil Action No 7405 Consolidated Hartnett V C May 21 1985 award of 75 million where value of settlement estimated to be 35 million to 70 million Joseph v Shell Oil Company 4 Del Ch Civil Action No 7450 Consolidated Hartnett V C April 19 1985 15 million fee award where benefit was 205 million The fees requested in these multimillion dollar settlements appear to reflect a tacit understanding that a percentage of recovery approach should be tempered in cases involving substantial recoveries Under the facts of this case however I conclude that the application by plaintiffs counsel is reasonable and should be granted The Delaware Action was filed almost five years ago and has been vigorously litigated throughout that time period At the outset plaintiffs took substantial expedited discovery and briefed and argued their motion to preliminarily enjoin the Trans Union case out merger at 55 per share After injunctive relief was denied plaintiffs spent the next eight months taking additional discovery and otherwise preparing for trial Following the trial and post trial briefing plaintiffs again suffered an adverse decision Their appeal to the Delaware Supreme Court was briefed and argued not once but three times and resulted in a much publicized 3 2 opinion reversing the trial court Smith v Van Gorkom Del Supr 488 A 2d 858 5 1985 The Supreme Court held that the defendant directors did not exercise informed business judgment in approving the proposed merger were grossly negligent in approving amendments to the merger proposal and failed to disclose all material facts to the Trans Union stockholders The case was remanded to this Court for a trial on damages But for the skill and persistence of plaintiffs counsel it is reasonable to assume that the class of former Trans Union stockholders would have received nothing beyond the merger consideration of 55 per share Even after prevailing in the Supreme Court plaintiffs faced a serious risk that their hard fought victory would be a hollow one Issues of value upon which plaintiffs damages trial would hinge tend to be very close questions Moreover the Supreme Court decision did not address any liability on the part of the corporate defendants Following remand the corporate defendants sought dismissal and the parties had briefed that issue before the settlement was achieved If the individual defendants were found to be the only parties potentially liable in the Delaware Action plaintiffs would have faced the additional risk that the individual 6 defendants would be unable to fully satisfy a judgment entered against them Counsel were representing plaintiffs essentially on a contingency basis and as a result did not maintain meticulous time records However at the Court s request counsel in the Delaware Action submitted affidavits reconstructing their hours over the past five years The affidavits confirm what could otherwise have been inferred from a review of this litigation counsel devoted substantial time to obtaining this recovery for the class Approximately 12 000 hours went into the Delaware Action and senior
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