NOT PRECEDENTIAL

UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT

______________ No. 15

- 2831

______________ ELI MOR, derivatively on behalf of AMERISOURCEBERGEN CORPORATION and individually on behalf of himself and all other similarly

- situated sha reholders of

AMERISOURCEBERGEN CORPORATION

v. STEVEN COLLIS, RICHARD GOCHNA UER, RICHARD GOZON, EDWARD HAGENLOCKER, KATHLEEN HYLE, MICHAEL LONG, HENRY MCGEE, CHARLES COTROS, JANE HENNEY, and AMERISOURCEBERGEN CORPORATION Eli Mor, Appellant

__________ ____ On Appeal from the United States District Court

for the District of Delaware (D.C. No. 1 : 1 3

- c v - 0 0 242 ) District Judge: Honorable Richard G. Andrews

______________ Submitted under Third Circuit LAR 34.1(a)

March 17 , 201 6 Before : CHAGARES, RESTREP O , and VAN ANTWERPEN, Circuit Judges (Filed: July 7, 2016 )2 ______________ OPINION *

______________ RESTREPO , Circuit Judge
On October 28, 2014, the District Court approved the parties’ negotiated settlement of this shareholder derivative class action , reserv ing the issue of the amount of attorney s’ fees to be awarded to plaintiff, Eli Mor

. A lthough the District Court awarded attorney s’ fees to plaintiff by Memorandum and Order filed July 1, 2015 , the Court awarded substantially less than the uncontested fees requested by p laintiff that had been negotiated by the parties and included in the S tipulation of S ettlement entered into by the parties (“Stipulation”)

. See Mor v. Collis , No. 13

- 0242, 2015 WL 4036167, *7 (D. Del. June 30, 2015). Mor has filed an appea l of th at Memorandum and Order , and no party has filed opposition to this appeal

. 1 For the reasons explained below, w e vacate th at portion of the Memorandum and Order awarding fees and expenses, and we remand for further proceedings consistent with this O pinion.
I .

* This disposition is not an O pinion of the full Court and, pursuant to I.O.P. 5.7, does not constitute binding precedent.

1 Under the Stipulation, the parties mutually agreed that the fee request was fair and reasonable, plaintiff’s counsel agreed to waive any right to seek or collect any award of attorneys’ fees, or reimbursement of costs a nd expenses, exceeding $1,000,000 in total, and defendants agreed not to oppose the fee petition. See Stip. dated 8/15/13, at 7 , ¶¶ 1

- 2. Thus, defendants are not participating in this appeal.3

On February 15, 2013, Mor filed a Complaint in the District Court derivatively on behalf of AmerisourceBergen Corporation (“ABC” or “the Company”) and individually on behalf o f himself and all other similarly

- situated shareholders of ABC , nam ing as defendants nine members of the Company’s Board of Directors (“Board”) 2 and ABC, as
nominal defendant

. The Complaint alleged the Board exceeded its authority under the Company’s shareholder

- approved Equity Incentive Plan (“Plan”) resulting in a brea ch of fiduciary duties, waste of corporate assets, and unjust enrichment

. Mor ’s claims stemmed from his alleg ations that in 2012 the Board granted 758,810 stock awards to defendant Steven Collis, the Company’s President, Chief
Executive Officer and a D i rector , thereby exce eding the alleged 300,000

- share limit permitted to be granted to any individual participant in one calendar year under the Plan.
Mor claim ed the Board members did not act in good faith toward the Company when they breach ed their fiduci ary duties by approving these improper stock options and by filing with the U.S. Securities and Exchange Commission (“SEC”) on January 18, 2013 a Proxy Statement (“2013 Proxy”) allegedly contain ing materially false and misleading omissions that rendered sh areholders unable to make informed decisions at the 2013 Annual Meeting of Stockholders. On April 12, 2013, d efendants filed a mo tion to dismiss p laintiff’s Complaint , and the motion was subsequently briefed by the parties . In the meantime, on April 26 2013,

non - party ICLUB Investment Partnership (“ICLUB”) wrote the District Court advising of

2 Plaintiff states that Director Douglas Conant was not name d as a defendant because he joined the Board subsequent ly to the events challenged in the Complaint. See Pl.’s Br. 4 n.1.4

a related action it had filed in the U.S. District Court for the Eastern District of Pennsylvania

. Further, on July 11, 2013, KBC Asset Management N.V. (“KBC”) mo ved to intervene.
T he parties to this action entered into and filed the Stipulation of Settlement on August 15, 2013. The Stipulation states that on February 19, 2009, ABC’s stockholders approved the Company’s Management Incentive Plan which provides for a 300,000

- share limit on grants of awards to eligible individuals in any calendar year commencing on or after January 1, 2009. O n May 14, 2009 , ABC’s Board declared a two

- for

- one split of the outstanding shares of common stock, and on June 10, 2009, p ursuant to its authority under the Plan, the Compensation Committee of the Board proportionally increased the maximum award limit to any eligible individual in any calendar year to 600,000 shares, effective June 15, 2009, to reflect the stock split. See S tip. 2 , ¶¶ 1

- 3. The Stipulation further states that on May 6, 2011, with its regular 10

- Q filing with the SEC, ABC filed the renamed Equity Incentive Plan, amended and r e stated effective January 1, 2011, but this document did not reflect the Compensatio n Committee’s June 10, 2009 adjustment of the 300,000

- share individual limit to a 600,000

- share individual limit. Id. at 2, ¶ 4. The Stipulation also reflects that t he Compensation Committee granted Collis awards covering a total of 872,423 shares during the 2012 calendar year. Id. at 3, ¶ 8. Ten days after the filing of plaintiff’s Complaint, ABC filed on February 25, 2013
a Form 8

- K with the SEC that attached an electronic version of a Written Consent of the Compensation Committee, dated Jun e 10, 2009, that limited the grants of awards to5

eligible individuals in any calendar year to 600,000 shares of common stock. Id. at 4, ¶ 12. The Stipulation reflects that defendants deny that they have breached any duty, o r violated any law, or engaged in any wrongdoing, or have any liability arising out of the facts and circumstances described in plaintiff’s Complaint. Id. at 4, ¶ 13. The Stipulation further acknowledges that the settlement is a result of arms’ length negotiations to settle
and resolv e the dispute. Id. at 4, ¶ 15. Under the Stipulation , d efendants agreed to cancel “ 272,423 of the stock options awarded to Collis on November 14, 2012 pursuant to the Plan

. ” Id. at 5, ¶ II(A)(1). The Stipulation also provide s certain prop hylactic cor porate governance reforms for a period of at least five years, including the requirement that the General Counsel of the Company verify that all awards made under the Plan are compliant and certify that all amendments to the Plan have been disclosed in the Company’s SEC filings.
The Sti pulation further provide s that p laintiff would file an application for an award of attorneys’ fees and reimbursement of costs and expenses in an amount not to exceed $1,000,000 , an amount which “[t]he Parties mutually agre e[d] [was] fa ir and reasonable.” Id. at 7. D efendants agreed not to oppose p laintiff’s fee application so long as it did not seek an amount in excess of the agreed upon fee. Indeed, upon execution of the Stipulation, d efendants paid the agreed

- upon fee to p laintiff’s counsel. Under the Stipulation, payment of the fee award is subject to plaintiff’s counsel ’s obligation to make appropriate refunds or repayments to ABC in the event of any failure to obtain final approval of the settlement, if the amount o f fees and expenses actually awarded is less6

than the full amount of the fee award, or if the amount of fees and expenses is reduced by the Court. Id. at 8. 3
The District Court dismissed the m otion to d ismiss and the m otion to i ntervene by Order date d August 16, 2013 , and the Court stayed the Stipulation of Settlement until such time as KBC had resolve d its books and records request. On September 10, 2013,
p laintiff moved to lift the stay. However, following briefing by the parties , on October 21, 2 013 the Court declined to lift the stay and scheduled a status conference to be held on December 20, 2013. On February 4, 2014, the Court of Chancery of the State of Delaware granted the Company’s motion for judgment on the pleadings as to KBC’s books a nd records demand pertaining to ABC’s allegedly excessive grants of stock options in 2012, in that any shareholder derivative claims were made moot in light of ABC’s aforementioned cancellation of the excess options

. The District Court then scheduled anot her status conference to be held May 5, 2014. On July 23, 2014, counsel for KBC wrote the District Court to advise that the books and records demand had been resolved with respect to the excessive awards and that KBC no longer sought to intervene and did not object to the Court’s consideration of the proposed settlement. The Court then entered an Order on August 6, 2014 preliminarily approving the settlement, and p laintiff moved for final approval of the settlement and award of attorneys’ fees.

3 Thus, plaintiff represents that if this appeal is unsuccessful, plaintiff’s counsel will be requir ed to reimburse defendants $450,0 00. See Pl.’s Br. 8.7

ICLUB the reafter objected to the settlement and moved for its own attorneys’ fees,
which p laintiff opposed. By Order dated October 17, 2014, the District Court directed
p laintiff and ICLUB “to submit, under oath, detailed time records related to this case for
each of its attorneys, with their usual hourly billing rates.” The parties agreed to revise the settlement language, and ICLUB withdrew its objection. Following a hearing on October 28, 2014, t he District Court issued a Final Order and Judgment approving the settlement that same date , reserving the issues on attorneys ’ fees

. II. On July 1, 2015, the District Court file d its Memorandum and Order addressing
p laintiff’s and ICLUB’s requests for attorneys’ fees. The Court denied ICLUB’s request
for fees and awa rd ed p laintiff attorneys’ fees and expenses in the amount of $550,000. 4
The Court found that this litigation resulted in , among other things, the creation of a common fund equaling $5.048 million. The District Court pointed out, “In diversity cases, we apply state rules concerning the award of attorneys’ fees.” Mor , 2015 WL 4036167, at *2 (quoting Sec. Mut. Life Ins. Co. of N.Y. v. Contemporary Real Estate Assocs. , 979 F.2d 329, 331

- 32 (3d Cir. 1992)) (internal quotations omitted). Thus, the Distri ct Court applied Delaware law in determining its award of attorneys’ fees in this diversity action.
The C ourt noted that, under Delaware law, “[i]n the realm of corporate litigation, the Court may order the payment of counsel fees and related expenses t o a plaintiff

4 Since this appeal only involves the District Court’s award of fees and expenses to p laintiff, the denial o f ICLUB’s request for fees is not addressed herein.8

whose efforts re s ult in the creation of a common fun d , or the conferring of a corporate benefit.” Id. (quoting Tandycrafts, Inc. v. Initio Partners , 562 A.2d 1162, 1164 (Del. 1989) (citations omitted)). Th e common fund doctrine states that “a litigant or a lawyer who recovers a common fund for the benefit of persons other than himself or his client is entitled to a reasonable attorney’s fee from the fund as a whole.” Americas Mining Corp.

v. Theriault , 51 A.3d 1213, 1252

- 53 (Del. 2012) (quo ting Boeing Co. v. Van Gemert , 444 U.S. 472, 478 (1980) (citations omitted))

. T he District Court noted that a determination of a reasonable award of attorneys’
fees i s within the Court’s “ sound judicial discretion.” Mor , 2015 WL 4036167, at * 3 (quoting In re Infinity Broad casting Corp. S ’ holders Litig. , 802 A.2d 285, 293 (Del. 2002)). The Court considered the following factors, referred to as the Sugarland factors: “(1) the results accomplished for the benefit of the shareholders; (2) the efforts of co unsel and the time spent in connection with the case; (3) the contingent nature of the fee; (4) the difficulty of the litigation; and (5) the standing and ability of counsel involved.” Id. (quoting Infinit

y Broad casting , 802 A.2d at 293); see Sugarland In dus. , Inc. v. Thomas , 420 A.2d 142, 149 (Del. 1980). After evaluating the relevant factors, t he District Court “appl[ied] the percentage of the common fund method to determine a reasonable fee award.” Mor , 2015 WL 40336167, at * 5

. In doing so, the Cou rt pointed out that the agreed

- upon $1 million fee award amounted to 19.8% of the common fund. The District Court recognized that “ a court should give weight to an agreement regarding attorneys’ fees,” id. (quoting In re Abercrombie & Fitch Co. S’holders Derivative Litig. , 886 A.2d 127 1 , 1275 (Del. 2005)) ,9

but stated that “ t he weight given derives from and depends on the court’s sense of confidence that the negotiations over the fee agreement were conducted in good faith and had no effect on the other term s of the settlement,” id. (quoting In re Prodigy Comm c’ns Corp. S ’ holders Litig. , No. 19113, 2002 WL 1767543, *6 (Del. Ch. July 26, 2002)).
D espite finding “no doubt that the parties negotiated the settlement in good faith,”
the C ourt “believe[d] that the amount of attorney’s fees agreed upon far exceed[ed] what [was] appropriate in this case.” Id. Indeed, the Court stated that “but for the agreement, I would think $250,000 was about what reasonable attorney’s fees would be.” Id. Ultim ately, howeve r, the Court concluded: “ In light of the Delaware Supreme Court’s
statements in Americas Mining regarding settlements that occur in the early stages of litigation, and according to my own busines s judgment, I think a reasonabl e fee award is $550,000, which is roughly 10% of the common fund plus $50,000 for the corporate governance reforms.” Id. Mor has appealed from that portion of the District Court’s July 1, 2015 Memorandum and Order awarding him $550,000 in attorneys’ fees and expenses.
I II . 5

5 The District Court had jurisdiction pursuant to 2 8 U.S.C. § § 1332(a) a nd 1367(a)

. We exercise appellate jurisdiction pursuant to 28 U.S.C. § 1291. We review the District Court’s award of attorneys’ fees for an abuse of discretion, “which can occur if the judge fails to apply the proper legal standard or to follow proper pr ocedures in making the determination , or bases an award upon findings of fact that are clearly erroneous.” In re Rite Aid Corp. Sec. Litig. , 396 F.3d 294 , 299 (3d Cir. 2005) (quoting In re Cendant Corp. PRIDES Litig. , 243 F.3d 722, 727 (3d Cir. 2001) (int ernal quotations omitted)). “ The standards employed calculating attorneys’ fees awards are legal questions subject to plenary review, but ‘ [t]he amount of a fee award . . . is within the district court’s discretion so long as it employs correct standards and procedures and makes findings of fact not clearly erroneous. ’ ” Id. (quoting Pub. Int. Research Grp. of N.J., Inc. v. Windall , 51 F.3d 1179, 1184 (3d Cir. 1995) (internal quotations omitted)).10

Mor d oes not argue that the District Court erred in choosing to apply Delaware law in this case. However, c iting both federal and Delaware caselaw i n his brief, Mor argues that the District Court’s award in this action impermissibly deviates from governing law , whether federal law or Delaware law is applied

. See Pl.’s Br. 21

- 22. “State rules concerning the award or denial of attorneys’ fees are to be applied in cases where federal jurisdiction is based on diversity

. . . , provided such rules do not run

cou nter to federal statu t es or policy considerations.” McAdam v. Dean Witter Reynolds,
I nc. , 896 F.2d 750, 775 n.47 (3d Cir. 1990). In any event, i n this appeal, as Mor suggests,

see Pl.’s Br. 22 (citing Dewey v. Volkswagen Aktiengesellschaft , 558 F. App

. 1 91, 196 (3d Cir. 2014) (non

- precedential) ), we need not decide what law governs an award of attorneys’ fees since b oth federal law and Delaware law apply the percentage o f the common fund approach in awarding attorneys’ fees , and there is no sound reason t o believe the result of this appeal would be different depending on the law applied

. See, e.g., Rit e Aid , 396 F.3d at 306 (“the percentage of common fund approach is the proper method of awarding attorneys’ fees”) ; Americas Mining , 51 A.3d at 1258, 1261 ( finding that , under Delaware law, an award of attorneys’ fees in a case involving a common fund
i s properly based upon a percentage of the benefit achieved in the litigation and pointing out that federal cases consider reasonableness factors “which are sim ilar to [the] Sugarland factors” )

. I V . Reviewing courts retain a special and predominant interest in the fairness of class action settlements and attorneys’ fee s awards. Cend ant , 243 F.3d at 731. Thus, we have11

an “interest as a reviewing court in ens uring that district courts fulfill their obligations and comply with [applicable] instructions and guidelines.” Id. While “fee award
reasonable ness factors ‘need not be applied in a formulaic way,’” see In re AT&T Corp. Sec. Litig. , 455 F.3d 160, 166 (3d Cir. 2006) (citing Rite Aid , 396 F.3d at 301)), district courts must “clearly set forth their reasoning for fee awards so that we will have a sufficient basis to review for abuse of discretion,” id. at 166 (quoting Rite Aid , 396 F.3d at 301). “There ar e two primar y methods for calculating attorneys’ fees: the percentage

- of

recovery method and the lodestar method.” Cendant , 243 F.3d at 732 (footnote omitted). The percentage

- of

- recovery method is generally favored in cases involving a common fund. Id. ( ci ting In re Prudential Ins. Co. Am. Sales Practice Litig. , 148 F.3d 283, 333 (3d Cir. 1998) ) . Indeed, “[t]he percentage

- of

- recovery method has long been used in this Circuit in common

- fund cases.” Id. at 734. As explained above, the District Court
app lied that met hod in determining the amount of fees and expenses to award plaintiff’s
counsel. Mor argues, first, that the District Court misapprehended the facts relevant to his application for attorneys’ fees and , second, that the Court abused its di sc retion by conducting a flawed and arbitrary percentage

- of

- recovery analysis. In support of his first contention, Mor initially argues that the District Court relied on a n erroneous understanding of the inception of the case. In particular, he argues that the Court failed to recognize the degree of sophistication of this litigation.12

In considering the complexity of the litigation, the District Court stated that “[t]he present case was less complicated than most shareholder derivative actions ,” noting th at the “case was developed from public disclosures.” Mor , 2015 WL 4036167, at * 4 . The Court further state d that “this matter would have been an appropriate matter for a demand on the board.” Id. The Court describes the underlying events in this case as “a ‘one

- off’ mistake by ABC,” and concludes that “ABC should, of course, have been more careful, but what happened here was not corporate malfeasance, it was corporate carelessness.”
Id. Therefore, the District Court found that “[t]he relative straightf orwardness of this case suggests a smaller fee award.” Id. We cannot say that the District Court abused its discretion insofar as it described this case as neither legally nor factually complex. Plaintiff ’s Complaint alleged that
defen dants exceeded t heir au thority by granting Collis stock awards during the 2012 calendar year greater than the maximum amount permitted under the Plan. F ollowing the parties’ negotiations and the filing of the Stipulation only six months after the Complaint was filed , the parties a cknowledged , among other things, that the Compensation Committee of the Board increased the maximum total individual stock awards permitted in a calendar year , effective June 15, 2009, to 600,000 to reflect the stock split , s ee Stip.
2 , ¶ ¶ 1

- 4 , b ut the parties further acknowledged that Collis’ awards covered a total of 872,423 shares during the 2012 calendar year , id. at 3, ¶ 8 . While we recognize that other issues wer e involved, including the timing of the filing of the Written Consent disclos in g the adjusted maximum individual stock awards permitted under the Plan and the need for corporate governance reforms, we agree that this litigation was not particularly13

complicated and that was a factor to be considered in determining reasonable attorneys ’ fees to be awarded

. Nevertheless, as Mor points out, the record does not appear to support the District Court’s assertion that “what happened here was not corporate malfeasance, it was corporate carelessness,” see Mor , 2015 WL 4036167, at *4, and the District Court does not point to anything in the record supporting such a conclusion. While the record does not necessarily support the contrary conclusion, and the Stipulation reflects that defendants deny that they have breached any duty or engaged in a ny wrongdoing , see Stip. at 4, ¶ 13, the District Court’s statement is not supported by the record. Similarly , the record a lso does not support the conclusion that this was necessarily “a ‘one

- off ’ mistake,” Mor , 2015 WL 4036167, at *4, and it is not cl ear what th e Court relied on in making th i s ass ertion

. In other words, the District Court points to nothing to support the implication that the type of events which plaintiff’s Complaint challenged would not have occurred again. Further, to the extent th at the Court impl ies that a demand letter to the Board in this case would have resolved this dispute, again the District Court points to nothing in the record which support s tha t conclusion. A s Mor points out , in def e ndants’ motion to
di smiss the Complain t, as well as in the Stipulation, defendants deny any Plan violation or wrongdoing actually occurred. Plaintiff further states that he did not make a demand upon the Board relating to excess stock awards because a majority of the Board members were incapa ble of objectiv el y considering any such demand, rendering any such demand futile

. S ee Pl.’s Br. 3 (citing A31, ¶ 42)

. Plaintiff points out that, among other thin g s, at14

the time plaintiff filed his Complaint, a m ajority of the Board either participated in the grants or, in Collis’ case received the grants , id. at 3 (citing A31, ¶ 41; A32, ¶¶ 44

- 45). In any event , to the extent that by concluding that “this matter would have been an appropriate matter for a demand on the board ,” see Mor , 2015 WL 4036167, a t *4, the District Court was implying that a demand would have resolved this case in the first instance , the Court failed to provide any basis for such a conclusion

. In considering the complexity of the litigation, the District Court also stated that th e “case was developed from the public disclosures,” and the Court asserted “the only complexity was the jockeying among the shareholders’ attorneys for their pieces of the pie.” Id. However, it is not clear what the District Court was relying on in makin g this assertion and suggesting that the alleged Plan violation would have been detected despite the investigation by p laintiff’s counsel. While other related actions were filed by ICLUB and KBC, those actions were filed after plaintiff’s counsel had issu ed a press release announcing their investigation into this issue, see A95. Again, while the conclusion that this case was relatively uncomplicated is not per

se an abuse of discretion, t he aforementioned unsupported assertion s by the District Court
in support of its award of fees a ffected the weight the District Court gave to the relevant factors , and also could have had a significant effect on the Court’s ultimate determination

as to what amount of fees would be a reasonable award. Since the District Co urt failed to “clearly set forth [its] reasoning ” in support of multiple factual assertions it provided in support of its award of attorneys’ fees, we do not have a “ sufficient basis to review for15

abuse of discretion,” see AT&T Corp. , 455 F.3d at 166 (qu oting Rite Aid , 396 F.3d at 301), and a remand is warranted. Mor next argues that the District Court undervalued the recovery obtained by plaintiff. In particular, Mor contends that although the District Court stat ed that it accept ed that the benefit to ABC as a result of plaintiff’s efforts resulting in the cancellation of stock options awarded to Mr. Collis had a value of $5.048 million, language in the Cour t’s discussion belies that conclusion

. In discussi ng the benefit conferred to ABC, the Dis tric t Court pointed out that, pursuant to the Stipulation, the Company cancelled the excess 272,423 stock options which h ad been awarded to Mr. Collis in 2012 and that plaintiff’s and ICLUB’s experts agreed that the spread value of those cancelled options, as of the cancellation date, August 7, 2013, would have been about $5.048 million. See Mor , 2015 WL 4036167, at
*3. The District Court noted that it accepted plaintiff’s argument “that the cancellation of Mr. Collis’s excess stock options created a common f und in the amount of $5.048 million

– the ‘spread value’ of the 272,423 cancelled options,” id. , and the Court specifically stated that “for [the] purpose of this analysis, I accept that the benefit to ABC is $5.048
million , ” id. at *4 (emph. added). Such a conclusion with respect to the benefit to ABC resulting from plaintiff’s efforts is not an abuse of discretion.
T he Court state d that it accepted th is amount as the common fund benefit conferred in this litigation for purposes of its analysis , and w e do not agree with Mor’s
contention that the District Court did not “truly factor into its analysis” the $5.048 million as the benefit conferred to ABC as a result of the cancelled excess options, see Pl. ’s Br.16

18. Neverth e less, the following portion of t he Court’s Memorandum Opinion gives us
pause: In my opinion, however, the common fund calculated

by determining the spread value of the returned excess stock options overstates the significance of the recovery predicated as it is by the value of a volatile ass et on the day it was returned. O nce the various lawsuits and records demands were made in February 2013, the excess stock options were, for all practical purposes, frozen. They were going to end up back with ABC. On February 15, 2013, the sto ck closi ng price was $45.24 per share. The spread value t hen was $1,370,287.69. As of June 29, 2015, the per share value of ABC stock was about $106, more than double what it was on August 7, 2013. Thus, depending on the perspective taken, the benefit to A BC caused solely by this lawsuit is smaller than Plaintiff’s argument suggests, as most of the benefit has arisen from the rapid appreciation of the stock. Nonetheless, for purpose of this analysis, I accept that the benefit to ABC is $5.048 million.
Mor , 2015 WL 4036167, at * 4

. I n light of the fact that the Court specifically

“ accept [ ed ]” the $5.048 million as “ the benefit to ABC ” for purposes of its analysis, id. , the District Cour t ’s purpose in includ ing this discussion in support of its Memorandum Opi nion is not altogether clear

. Moreover, among other things, the Court fails to provide a basis as to why conceptually freezing the value of the options at the time of this suit’s inception, would be appropriate. In any event, since the Court specifically indicated that it was considering the $5.048 million as the benefit conferred as a result of the cancellation of the options, any conclusions that may have been based on this alternative “perspective” shared by the District Court, would be error in that i t is inconsistent with the District Court’s explicit finding that the value to ABC of the cancellation of the17

excess shares was $5.048 million and, moreover, the Court failed to provide any basis for using the value of the options at the time of this lawsu it’s inception

. Finally, with regard to the District Court ’s factual findings supporting its award of fees, Mor argues that the Court failed to credit the significant majority of hours work ed by plaintiff’s counsel. Specifically, Mor complains that the C ourt ignored the hours spent litigating the case subsequent to the beginning of settlement discussions. In considering the time and effort expended by plaintiff’s counsel, the District Court found the following:

The parties were in the very ear ly stages of litigation when settlement discussions began, and settled the case before any discovery had commenced. Nevertheless, Plaintiff’s counsel spent 63.5 hours on the case prior to filing the complaint, and another 172 hours through the motion to di smiss. Thus, Plaintiff’s attorneys spent a total of 235.5 hours, amounting to around $150,000 in attorney’s fees, prior to shifting their focus to settlement. The early stage at which the case settled, and the low number of hours spent prior to settlement, suggest a smaller fee award. Id. at *4. The Court was correct in pointing out that settlement discussion s began in the early stages of litigation . In fact, the parties filed the Stipulation only six months after the filing of plaintiff’s Complaint , def endants’ motion to dismiss never needed to be resolved by the Court , and there is no mention in the record before us that any depositions were taken

. However, the District Court did not explain why it ignored or failed to acknowledge the hours spent by plaintiff’s counsel in connection with th is case subsequent to “shifting their focus to settlement,” see id. Plaintiff argues in his brief that18

counsel worked 741 hours litigating the action , s ee Pl.’s Br. 20 (citing A138 ¶ 5; A218 ¶ 4), and that all of c ounsel’s efforts “were necessary to the successful prosecution of this litigation, ” id. at 21.
I n determining the amount of fees to award, the District Court considered the Sugarland factors

. S ee Mor , 2015 WL 4036167, at * 3 (citing Infinity Broad castin g , 802 A.2d at 293 (identifying the Sugarland factors))

. As the District Court identified, see id. , t he Supreme Court of Delaware has described the “ time and effort ” factor as “the efforts of counsel and the time spent in connection with the case.” See I nfinity Broad casting , 802 A.2d at 293 (citing Sugarland Indus. , 420 A.2d at 1 4 9) ; see also Gunter v. Ridgewood Energy Corp. , 223 F.3d 190, 195 n.1 (3d Cir. 2000) (including “the amount of time devoted to the case by plaintiffs’ counsel” as a factor to cons ider in setting a fee award)

. Here, the District Court neither explain ed why it only acknowledged about one

third of the total hours plaintiff allegedly spent in connection with the case , nor did the Court provide a basis or authority for doing so

. V.
In addition to challenging the aforementioned fact ual conclusions upon which the District Court based its decision , Mor challenges the percentage

- of

- recovery analysis conducted by the Court , and also argues that the District Court’s award of fees conflicts

w ith public policy

. Mor does not challenge the fact that the District Court applied the percentage

- of

- recovery method of calculation or the factors which the Court considered in determining the amount of a reasonable award. Rather, he argues that the Dist rict19

Court failed to awa rd an amount of fees within “the lower bound of the applicable range(s)” consistent with other cases. See Pl.’s Br. 22.
It is unnecessary for us to address the specific percentage of the benefit conferred by the District Court or whether it is consistent with public policy, in light of the fact that the case is being remanded for a proper consideration and re - weighing of the relevant fact ors based on facts supported by the record in this case consistent with this Opinion

. Neve rtheless, we point out that the Delaware Supreme Court in Americas Mining emphasized , “ T he percentage awarded as attorneys’ fees from a common fund is committed to the sound discretion of the [trial] Court” who has “broad discretion” in applying the reason ableness factors under the circumstances of the case. Americas Mining , 51 A.3d at 1262 ; see also Northeast Women’s Ctr. v. McMonagle , 889 F.2d 466, 475 (3d Cir. 1989) ( The amount of a fee award is within the district court’s discretion so long as it “empl oys correct standards and procedures , and makes findings of fact no t clearly erroneous

. ”) . Thus, the Court in Americas Mining “decline[d] to impose . . . the mandatory use of any particular range of percentages , ” see Americas Mining , 51 A.3d at 1261, 6 and reaffirmed that “the multiple factor Sugarland approach to determining attorneys’ fee awards remained adequate for purposes of applying the equitable common fund doctrine,” id. at 1258 (citing Goodrich v. E.F. Hutton Grp., Inc. , 681 A.2d 1039,

6 Although Americas Mining involved the C ourt’s refusal to impose a mandatory range of percentages for determining fees in “megafund cases,” the Court was clearly “reaffirm[ing]

. . . [ its ] holding in Sugarland [which] set[] forth the proper factors for determining attorneys’ fees awards in all c ommon fund cases , ” see Americas Mining , 51 A.3d at 1261, and confirming that the “percentage awarded as attorneys’ fees from a common fund is committed to the sound discretion of the [trial] Court,” id. (citing Chrys l er Corp. v. Dann , 223 A.2d 384, 386 (De l. 1966)).20

1050 (Del. 1996)) ; see also Cendant , 243 F.3d at 736 (“These varying ranges of attorneys’ fees confirm that a district court may not rely on a formulaic application of the appropriate range in awarding fees but must consider the relevant circumstances of the particul ar case.”). “Delaware courts have assigned the greatest weight to the benefit achieved in litigation.” Americas Mining , 51 A.3d at 1254. In this case, for the reasons explained above, in considering the relevant reasonableness factors, the District Co urt failed to provide a sufficient explanation and based its award on certain factual assertions which appear to have no basis in the record and which certainly could have had a significant effect on the ultimate award of attorneys’ fees. Therefore, to th at extent, Mor is correct that the percentage

- of

- recovery analysis was flawed.
VI. Mor argues that the District Court failed to properly value the corporate therapeutics obtained by plaintiff. In discussing the benefit co nferred as a result of counsel’s efforts, the District Court acknowledged that, as a result of the Stipulation of Settlement, “ABC received an additional benefit in the form of corporate governance reforms that are intended to prevent future violations of the compensation limits provided by ABC’s equity incentive plan.” Mor , 2015 WL 4036167, at *4. Citing Ryan v. Gifford , No. 2213

- CC, 2009 WL 18143, *10 (Del. Ch. Jan. 2, 2009), the District Court noted that “‘significant corporate governance reforms designed to prevent future wrongful op tion grants’ [are] ‘properly considered by the Court in determining a fee award,’” see Mor , 2015 WL 4036167, at *4 (quoting Gifford , 2009 WL 18143, at * 13) ,21

and that “corporate governance reforms can provide a substantial corporate benefit, even if they ar e nonpecuniary in nature,” id. However, the District Court’s explanation for awarding $50,000 for the corporate governance reforms is inadequate in that it is unclear from the District Court’s Opinion its basis for asserting that A BC’s reform s resulting
f rom this litigation were “modest,” despite the fact that they appear to be significant therapeutic reforms to prevent future wrongful options from being granted. Without further explanation , it is not clear that the amount of the award for the negotiated corporate governance reforms is not arbitrary.
VII. For reasons explained above, t he District Court’s award of attorneys’ fees and
expenses was at least partially based on factual assertions w hich were not supported by
the record , and the District Court f ailed to provide an adequate explanation in support of its award so that we, as a reviewing court, have a sufficient basis to review for abuse of discretion . Accordingly, that portion of the District Court’ s Memorandum and Order awarding plaintiff $550,00 0 in attorneys’ fees and expenses is vacated, 7 and we remand to the District Court for an award of fees and expenses consistent with this Opinion. 8

7 In addition to awarding fees and expenses to plaintiff, the District Court’s Memorandum and Order filed July 1, 2015 also denied ICLUB’s petition for attorneys’ fees, but t his appeal only involves the District Court’s award of fees and exp enses to plaintiff.

8 Plaintiff argues that he “incurred substantial expenses in the course of litigation that were not addressed in the [District Court’s] Opinion, including $11,587 in expert fees, and totaling $14,606.” See Pl.’s Br. 30. On remand, th e District Court should address the issue of plaintiff’s expenses in awarding attorneys’ fees and expenses. See Goodrich , 6 8 1 A.2d at 1045 (“[Plaintiff’s] attorneys, whose efforts resulted in the creation of [a]22

common fund, are entitled to receive a reas onable fee and reimbursement for expenses from that fund.”).