COURT OF CHANCERY OF THE S AM G LASS C OCK III V ICE C HANCELLOR STATE OF DELAWARE C OURT OF C HANCERY C OURTHOUSE 34 T HE C IRCLE G EORGETOWN , D ELAWARE 19947 Date Submitted: May 31, 2016 Date Decided: August 4, 2016 Blake A. Bennett, Esquire Cooch and Taylor, P.A. The Brandywine Building 1000 West Street, 10 th Floor Wilmington, DE 19801 Seth D. Rigrodsky, Esquire Brian D. Long, Esquire Gina M. Serra, Esquire Jeremy J. Riley, Esquire Rigrodsky & Long, P.A. 2 Righter Parkway, Suite 120 Wilmington, DE 19803 A. Thompson Bayliss, Esquire Sarah E. Hickie, Esquire Abrams & Bayliss LLP 20 Montchanin Road, Suite 200 Wilmington, DE 19807

Re: In re Xoom Corporation Stockholder Litigation , Consolidated C ivil Action No. 112 63

- VCG
Dear Counsel: This matter is before me on Plaintiffs’ application for attorneys’ fees, in what is known as a mootness proceeding. Specifically , in connection with a cash

- out merger of their corporation, purported representatives of a stockholder class alleged insufficient and misleading disclosures in addition to price and process deficiencies in connection with the merger; the corporation made some of the disclosures
demanded , in response to the litigation, thereby mooting those claims; and subsequently, the Plaintiffs voluntarily dismissed the action with respect to the2

individual plaintiffs only. The Plaintiffs now seek an award of attorneys’ fees for
the benefit worked on all stockholders, consistent with this Court’s recommended procedure under In re Trul ia , Inc. Stockholder Litigation

. 1

I. BACKGROUND The underlying action concerns the merger, announced July 1, 2015, between PayPal Holdings, Inc. (“PayPal”) and Xoom Corporation (“Xoom” or the “Company”), through which PayPal acquired Xoom for $25.00 per sha re (the “Merger”). The Merger closed on November 12, 2015, after receiving near

unanimous stockholder approval. 2
The Plaintiffs filed their initial individual complaints in the wake of the announcement of the Merger, between July 8, 2015 and July 15, 2015 , alleging unfair price and process claims against the “Individual Defendants,” directors of Xoom, and aiding and abett ing claims against the merging parties

. The Company
filed a proxy on Schedule 14A (the “Preliminary Proxy”) with the Securities and Exch ange Commission (“SEC”) on July 21, 2015. Eight days later, on July 29, 2015, the Plaintiffs filed their Verified Consolidated Class Action Complaint (the “Complaint”), adding the allegation that the Individual Defendants breached their fiduciary duties b y filing a false and materially misleading Preliminary Proxy to

1 129 A.3d 884 (Del. Ch. 2016). 2 See Trans. Aff. of Sarah E. Hickie, Esq., Ex. A (September 2015 Form 8

- K ), at 2

.3

induce Xoom stockholders to support the unfair deal. Depending on how the deficiencies recited are counted, t he Plaintiffs alleged thirty

- eight mal

- disclosures requiring relief. 3
The Plaintiffs moved to e xpedite on August 5, 2015. Two days later, the Company filed a definitive proxy on Schedule 14A (the “Definitive Proxy”) with the
SEC , supplementing the disclosures contained in the Preliminary Proxy (the “Supplemental Disclosures”). I heard argument on Plaintiffs’ Motion to Expedite on August 14, 2015

— following utterance of the Definitive Proxy

— after which I denied expedition. On November 19, 2015, the Plaintiffs voluntarily dismissed the action with prejudice as to the Plaintiffs o nly, reserving the right to seek a mootness fee. The Plaintiffs filed an application for fees (the “Fee Application”) on January 19, 2016 , and a fter full briefing, I heard argument on May 10, 2016

. I requested
additional information , and the matter was s ubmitted for decision thereafter. The Plaintiffs seek $275,000 i n attorneys’ fees, noting that their efforts in bringing this litigation caused Xoom to make four Supplemental Disclosures in its Definitive Proxy , thereby mooting four disclosure cla ims asser ted in Plaintiffs’ Complaint . The Supplemental Disclosures pertain to (1) the amount of fees received by Qatalyst

—

the Company’s financial advisor

— within the past two years from

3 See Am. Compl. ¶¶ 115

– 18.4

eBay Inc. (“eBay”) , former owner of PayPal ; 4 ( 2 ) the value to the Company of any potential recovery for a $30 million loss due to fraud (the “BEC Fraud ”) ; (3) certain
elements of the financial analyses performed by Qatalyst ; and (4) details of conversations regarding post

- closing employment between PayPal and members of the Company ’s board of directors (the “Board”) and management

. I describe each
of the Supplemental Disclosures below.

1. Qatalyst Fees The Preliminary Proxy provides: Qatalyst Partners provides investment banking and other services to a wide range of corporations and i ndividuals, domestically and offshore, from which conflicting interests or duties may arise. In the ordinary course of these activities, affiliates of Qatalyst Partners may at any time hold long or short positions, and may trade or otherwise effect transac tions in debt or equity securities or loans of Xoom, Parent, Holdings or eBay, or certain of their respective affiliates. During the two year period prior to the date of Qatalyst Partners' opinion, no material relationship existed between Qatalyst Partners or any of its affiliates and Xoom, Parent, Holdings or eBay pursuant to which compensation was received by Qatalyst Partners or its affiliates other than Qatalyst acting as financial advisor to eBay in connection with (i) its acquisition of Braintree, Inc . in December 2013 and (ii) its proposed sale of eBay Enterprise; however, Qatalyst Partners and/or its affiliates may in the future provide investment banking and other financial services to Xoom, Parent, Holdings or eBay and any of their respective affil iates for which it would expect to receive compensation. 5

4 eBay was PayPal’s corporate parent for thirteen years until S ummer 2015, when eBay spun off PayPal almost simultaneously with PayPal’s a cquisition of Xoom. 5 See Trans. Aff. of Kent Bronson, Esq. , Ex. D ( “Preliminary Proxy” ), at 47

– 48

.5

The Plaintiffs argue that the Preliminary Proxy improperly failed to disclose the amount of compensation Qatalyst received from Xoom, PayPal, and eBay in connection with services provided over the last several years. The Definitive Proxy added the following Supplemental Discl osure: “During the two year period ended August 6, 2015, Qatalyst Partners received compensation for services provided to eBay of approximately $7 million and will receive a customary fee upon the closing of the proposed sale of eBay Enterprise.” 6 The Pla intiffs argue that this information is relevant and important to stockholde rs because it informed them of the magnitude of the potential conflict of one of the Company’s financial advisors, and that the Board was at least aware of, and had considered, the potential conflict.

2. The BEC Fraud The Company disclosed in its Preliminary Proxy that “[o] n January 5, 2015, Xoom announced that it had been a victim of a business e

- mail compromise that was carried out against Xoom in late December 2014, as more fully dis closed in Xoom’s
Form 8

- K filed with the SEC on January 5, 2015.” 7 T he Plaintiffs argue that the Preliminary Proxy was improperly “silent as to whether, and the extent to which, the Board considered the possibility of recouping the millions lost in the BE C Fraud,” and that “Xoom stockholders are entitled to know both the value attributed to any

6 See Trans. Aff. of Kent Bronson, Esq. , Ex. F ( “Definitive Proxy” ), at 48

. 7 Preliminary Proxy, at 29.6

potential recovery as well as whether such recovery was factored into the Acquisition price.” 8 The Plaintiffs also contend that this information is significant
bec ause it bears on the Board’s “ st ance, willingness and abilities to prevent and recover losses incurred as a result of a threat. ” 9 The Defini tive Proxy added the following S upplemental D isclosure: “As disclosed in our 2014 Annual Report,
Xoom recorded a loss o f $30.8 million in the fourth quarter of 2014 in connection
with the business e

- mail compromise. As our chief executive officer indicated on our February 10, 2015 earnings call, the Company does not expect any material
recovery. ” 10

3. Multiples in Qatalyst Financial Analysis The Preliminary Proxy did not disclose the selected multiples used by Qatalyst in its Illustrative Selected Companies and Illustrative Selected Transactions analysis, providing only the media n numbers. The Supplemental Disc losure provided the comparable companies’ individual multiples. The Plaintiffs argue that this disclosure “was valuable and material because multiples are a crucial element of
these market

- based analyses, as these analyses are fundamentally based on
compa rison and relative valuation.” 11

8 Pl’s Mot. to Expedite (“MTE”) 13. 9 Pl ’ s Opening Br. 15

– 16. 10 Definiti ve Proxy, at 29. 11 MTE , at 22.7 4. Management Employment The Preliminary Proxy was silent as to the details of discussions with Xoom management about the retention of certain employees

. The Supplemental Disclosure disclosed that such communications had taken place, the extent of those communications, and the intention to retain Xoom’ s CEO post

- Merger , but that no specific employment terms had been discussed. The Plaintiffs contend that these disclosures are relevant and material because they “speak to whether there are individual interests held by management and/or the Board in play which could potentially override the interests of shareholders.” 12

* * * The Defendants contend that Plaintiffs’ Fee Application should be denied in its entirety because the Supplemental Disclosures did not significantly alter the total mix of information, and therefore were immaterial; in the alternative, they argue that, should the Court determine some fee is appropriate , the Sugarland 13 factors cannot support an award close to the $275,000 that Plaintiffs seek.

II. ANALYSIS This Court follows the American Rule, under which parties are responsible for their own fees and costs. 14 Exceptions exist. The theory under which a mootness

12 Pl’s Opening Br. 16. 13 Sugarland Indus

. , Inc. v. Thomas , 420 A.2d 142 (Del. 1980). 14 See, e.g. , Horsey v. Horsey , 2016 WL 1274021 , at *1 ( Del. Ch. Mar. 21, 2016).8

fee is awarde d is a subspecies of the common

- benef it doctrine, which recognizes that , where a litigation provides a benefit to a class or group, costs necessary to the generation of tha t benefit should also be shared by the group or its successor. 15 Here, the Plaintiffs generated four additional disclosures, which the Defendants concede resulted from the litigation. The question is whether those disclosures added value to the stockholders, and , if so, how much of Plaintiffs ’ costs should thus be bo rne by the Defendants, in equity. I first address whether the Supplemental D isclosures must have been material to stockholders to support an award of fees. This Court in Trulia made clear that, to support a settlement and class

- wide release based on discl osures only, the materiality of the disclosures to stockholders must be plain. 16 The mootness context, in my view, supports a different analysis. That is because , here, the individual P laintiffs have surrendered only their own interests; the dismissal is to them only, not to the stockholder class. Thus, with respect to the class, there is no “give” to balance against the disclosure “ get ” ; the benefit is the “ get ” of the disclosures, with no waiv er

15 Fees may be awarded “where litigation is rendered moot through resulting action by the defendants.” Waterside Partners v. C. Brewer & Co., Ltd. , 739 A.2d 768, 770 (Del. 1999). A party is entitled to fees where “the suit was meritorious when filed; actio n producing benefit to the corporation was taken by the defendants before a judicial resolution was achieved; and the resulting corporate benefit was causally related to the lawsuit.” Allied Artists Pictures Corp. v. Baron , 413 A.2d 876, 878 (Del. 1980). 16 Trulia , 129 A.3d at 898 (“ [P] ractitioners should expect that disclosure settlements are likely to be met with continued disfavor in the future unless the supplemental disclosures address a plainly material misrepresentation or omission

. . . .” ) (emphasi s added).9

of class rights to be set against that benefit

. 17 Therefor e, a fee can be awarded if the disclosure provides some benefit to stockholders, whether or not material to the vote. In other words, a helpful disclosure may support a fee award in this context. In examining whether and to what extent a fee is appropriate here, I am guided by the factors our Supreme Court enumerated in Sugarland Industries, Inc. v. Thomas

. 18 Most impor tant here is the benefit worked; any disclosure benefit is , of course, unquantifiable, and the fee awarded therefore is unavoidably arbitrary to some degree. I note first that the S upplemental D isclosure regarding the confl ict of the financial advisor, although providing some information as to magnitude lacking in the initial disclosure, was only mildly helpful to stockholders. While banker conflicts can be central to the primary consideration on which the stockholders must

vote

— the sufficiency of the consideration

— here, stockholders had already been told that the advisor had done work for the acquirer and were aware that a second advisor had been retained. In this context, the amount of fees received in the two years
before the M erger from the acquirer’s parent

— $7 million

— adds some detail that is mildly helpfu l to stockholders. Next, with respect to t he information provided

17 Of course, the cost s of litigation borne by corporations theoretically affects deal prices generally. 18 The Sugarland factors are: “(1) the benefit achieved in the action; (2) the contingent nature of the undertaking; (3) the difficulty of the litigation and the efforts of counsel; (4) the quality of the work performed; and (5) the standing and ability of counsel.” Franklin Balance Sheet Inv

. Fund v. Crowley , 2007 WL 2495018, at *12 (Del. Ch. Aug. 30, 2007).10

r egarding the lack of value the C ompany ascribed to potential recovery in regard to the BEC F raud, this is in formation I consider somewhat valuable at best; it clarified
that an asset of the C ompany was (in management’s view) worthless, but did not provide information contrary to that view or otherwise call the M erger consideration into question

. Similarly , I find the Supplemental D isclo sure that provided
stockholders with information abo ut management discussions of future employme nt with the acquirer only somewhat of value. In other circumstances, this ty pe of disclosure might be important to stockholders evaluating a sale, but here, the discussions revealed were at a general level only, and, importantly in my view, this was a sale where PayPal was the only bidder; in other words, this was not a case where one bidder might receive an advantage over another due to management concerns about future employment. Finally, I find that the suppl emental dis closure
of additional financial metrics concerning Qatalyst’ s comparable

- companies analysis are of minimal benefit to a stockholder considering this M erger. Of the four disclosures that resulted from the litigation, those involvin g the
banker co nflict and post

- M erger employment discussions are the most valuable. None of the four is particularly strong. Cumulatively , I find the Supplemental Disclosures represent a modest benefit to the stockholders.
T he Plaintiffs see k a fee of $275,000 for havi ng produced the benefits described above . They affirm that attorney time invested, another Sugarland factor,11

is 63 hours in regard to the Supplemental D isclosures achieved , implying a rate of something over $4 , 000/hour, which they ch aracterize as reasonable given the contingent nature of the representation. I take this representation of time invested as made in good faith, but also recognize the difficulty in segregating out time productively spent obtaining disclosures from time spent, unfruitful ly, on the many unsuccessful allegation s brought by the Plaintiffs. The Defendants, for their part, advocate for no fee, in light of what they characterize as the non

- materiality of the Supplemental D isclosures. I have found above that the standard is be nefit to the class, not materia lity, and I have found some benefit here. In the merger context, under our model, this Court relies on the plaintiffs’ bar, as representatives of stockholders , to vindicate those stockholders’ rights to a fair
transaction and an informed vote. Given the fast

- moving process typical in the merger context, it is common that suit is filed at a preliminary phase of the proceedings. The decision of plaintiffs’ counsel , proceedi ng on a contingent

- fee basis, to pursue such litigatio n involves significant risk; any recovery to counsel is contingent on producing value for the stockholder class. Because no recovery is available absent value so produced, when counsel have in fact worked a benefit on the class, this Court must award a fe e sufficient to encourage wholesome levels of litigation.12

The position of the Plaintiffs’ counsel is reminiscent of a rodeo bull

- rider. The cowboy gets his bull by the luck of the draw. A “good” bull is aggressive and vigorous; a “bad” bull is the opposi te. A successful ride of a good bull results in a high score. It takes a good rider to ride a good bull, but not even a great rider can wring a high score from a bad bull. Not even great counsel can wring significant
stockholder value from litigation ov er an essentially loyal and careful sales process. Where litigation develops significant stockholder value, this Court will set fees accordingly. Here, I find that the S upplemental D is closures worked a modest benefit on the stockholders, and that in light of that benefit and the other Sugarland factors, and in light of the stage of the litigation at which settlement occurred, that

a n award of fees and costs of $5 0,000 is appropriate here. To the extent the foregoing req uires an Order to take effect, IT IS SO
ORDERED.

Sincerely , /s/ Sam Glasscock III Sam Glasscock III