Court Opinion

ID: 9930947
Source: CourtListenerOpinion
Date Created: 2024-02-07 21:04:32.458682+00
Date Added: 2024-06-11T12:12:49.763022
License: Public Domain

IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE

                                           Consolidated
 IN RE ORACLE CORPORATION DERIVATIVE
                                     C.A. No. 2017-0337-SG
 LITIGATION

                           MEMORANDUM OPINION

                      Date Submitted: November 17, 2023
                       Date Decided: February 7, 2024

Joel Friedlander, Jeffrey M. Gorris, and David Hahn, FRIEDLANDER & GORRIS,
P.A., Wilmington, Delaware; Christopher H. Lyons and Tayler D. Bolton,
ROBBINS GELLER RUDMAN & DOWD LLP, Wilmington, Delaware; OF
COUNSEL: Randall J. Baron and David A. Knotts, ROBBINS GELLER RUDMAN
& DOWD LLP, San Diego, California; Gregory Del Gaizo, ROBBINS LLP, San
Diego, California, Attorneys for Lead Plaintiffs Firemen’s Retirement System of St.
Louis and Robert Jessup.

Blake Rohrbacher, Susan M. Hannigan, Matthew D. Perri, Daniel E. Kaprow, and
Kyle H. Lachmund, RICHARDS, LAYTON & FINGER, P.A., Wilmington,
Delaware, Attorneys for Nominal Defendant Oracle Corporation.

Elena C. Norman, Richard J. Thomas, and Alberto E. Chávez, YOUNG
CONAWAY STARGATT & TAYLOR, LLP, Wilmington, Delaware; OF
COUNSEL: Peter A. Wald, LATHAM & WATKINS LLP, San Francisco,
California; Blair Connelly, LATHAM & WATKINS LLP, New York, New York,
Attorneys for Defendants Lawrence J. Ellison and Safra A. Catz.

GLASSCOCK, Vice Chancellor
         I once described the situation of the entrepreneurial plaintiff’s firm in

derivative litigation thus:

         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 opposite. 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 over an essentially loyal and careful sales process.1

         Here, briefly, Oracle Corporation purchased NetSuite in 2016. Defendant

Larry Ellison was a founder and major blockholder of both companies. Because he

stood on both sides of the transaction, because he had great influence in the operation

of Oracle’s business, and because his interest in NetSuite was greater than his

interest in Oracle, the opportunity for self-dealing was apparent. Plaintiffs and

others, stockholders of Oracle, sued derivatively, alleging that Ellison and Oracle

CEO Safra Catz had caused Oracle to overpay for NetSuite, and that a majority of

Oracle’s board of directors were not independent of Ellison. The matter survived a

motion to dismiss; the Company then appointed two new independent directors who

composed the majority of a special litigation committee (the “SLC”), which

investigated and determined that it was in Oracle’s best interests that the suit go

forward to a resolution, under the derivative Plaintiffs and their counsel. Much

litigation ensued, the matter was tried over ten days, and ultimately, I found that

1
    In re Xoom Corp. S’holder Litig., 2016 WL 4146425, at *5 (Del. Ch. Aug. 4, 2016).
                                                1
Ellison had insulated himself from the transaction so that no liability attached. The

Complaint was amended five times, and I delivered seven memorandum opinions of

the Court.2 Plaintiffs ultimately recovered nothing from the transaction litigation.

         After I found for Defendants, Plaintiffs moved for a mootness fee. They note

that during the pendency of the litigation, and (per Plaintiffs) in response thereto,

Oracle appointed two independent directors (the “New Directors”) referred to above,

who then served on the SLC. In Plaintiffs’ view, the litigation thus worked a

corporate benefit—increasing the percentage of independent directors—and

Plaintiffs are entitled to a mootness fee of $5 million, notwithstanding that

ultimately, Defendants prevailed in the litigation. Oracle disagrees, and the matter

has been briefed and argued.

         It is Plaintiffs’ position that the fact of the post-trial defeat of their claims is

inconsequential—the benefit was complete when the two New Directors were

appointed, five years before my post-trial opinion was issued. Oracle counters that

the hiring of the New Directors was not caused by the litigation; and that, in any

event, any benefit would be negative when netted against the cost of the litigation to

Oracle. More fundamentally, Oracle points out that for a plaintiff to be entitled to

fees for creating a corporate benefit, either the benefit must result from a settlement

of claims or, if the benefit is worked without a settlement, there must be a nexus

2
    See In re Oracle Corp. S’holder Litig., 2023 WL 3408772, at *16–17 (Del. Ch. May 12, 2023).
                                                2
between the theory of the action and the benefit; and not, as they characterize it here,

a mere fortuity only tangentially related to the litigation.

      I agree. The appointment of the New Directors did not moot any issues in the

case, nor was it an aim of Plaintiffs’ litigation. Assuming that there was a causal

relationship between the timing of the hiring of the New Directors and the

litigation’s survival of the motion to dismiss (which I do assume, without deciding)

the appointment was incidental to, not the aim of, the litigation. As Plaintiffs point

out, our courts have awarded fees under the corporate benefit doctrine for therapeutic

benefits reached in settlements, even where the therapeutic benefit was not sought

in the complaint. The benefit there was achieved through compromise of the claims

raised, however. Here, the matter was litigated through trial, unsuccessfully. The

appointment of the New Directors was not related to the causes of action raised in

the complaints themselves, and did not result from the compromise of those claims.

      This jurisdiction follows the American Rule on fees; each party bears her own.

An exception occurs where the litigation works a common benefit on a class or a

corporate entity; equity then requires that the party creating the benefit for the entity

not unduly bear the burden. But that is not the case here. If Plaintiffs are correct

that the New Directors were engaged primarily to serve on the SLC in response to

Plaintiffs’ suit, that is not a benefit created by the efforts of Plaintiffs—it is merely

                                           3
a collateral effect of this litigation, and awarding fees in this situation would create

an unwholesome incentive.

       Plaintiffs, it proves, had a bad bull. The ride was long and skillfully done, but

not a winner.        I feel sympathy for Plaintiffs’ counsel here, who proceeded

derivatively, in good faith and with great skill and vigor, at great cost and effort to

themselves.      Moreover, the SLC—acting for the Company—decided that the

litigation was in the best interests of Oracle, and recommended the derivative action

go forward to determine whether damages were available.3 Nonetheless, this is

counsels’ business model: sue derivatively, on a contingency basis, accept the freight

in a losing case, while seeking a multiple of a lodestar in a successful one. The fact

that this case consumed monumental effort on the part of some of the best in the

plaintiffs’ bar, like the fact of my sympathy, does not change that.

       My reasoning follows in more detail.

                                      I. BACKGROUND

       I limit my discussion of the facts to only those necessary to understand

my analysis.4

3
  In that sense, the litigation presumably worked a benefit, in the eyes of the SLC at least, on behalf
of Oracle. Plaintiffs have eschewed seeking fees in connection with this benefit, and I do not
consider it here.
4
  For interested readers who wish to read the entire factual background, please refer to my May
12, 2023, memorandum opinion. See In re Oracle Corp. Deriv. Litig., 2023 WL 3408772, at *3–
16.
                                                  4
       The initial complaint in this matter was filed on May 3, 2017, and a separate

action was filed on July 18, 2017.5 The actions were then consolidated, and the case

was reassigned to me.6 At that time, the operative complaint contained one count:

breach of fiduciary duty against thirteen directors on Oracle’s board, including

Defendants Ellison and Catz.7 Plaintiffs sought a declaration that the director

defendants had breached their fiduciary duties and sought money damages from the

named individual defendants.8             Defendants moved to dismiss the operative

complaint on October 27, 2017.9

       On March 19, 2018, I denied motions to dismiss under Court of Chancery

Rules 23.1 and 12(b)(6) after determining that Plaintiffs pled facts that made it

reasonably conceivable that a majority of the Oracle board of directors (“Oracle’s

Board”) lacked independence from Ellison.10 As a result of my memorandum

opinion, Plaintiffs voluntarily dismissed all individual defendants without prejudice,

other than Ellison and Catz.11

5
  In re Oracle Corp. Deriv. Litig., 2023 WL 3408772, at *16.
6
  Id.
7
  See Verified Deriv. Compl. ¶¶ 169–72, Fireman’s Ret. Sys. of St. Louis v. Ellison, C.A. No. 2017-
0519-JTL, Dkt. No. 1.
8
  See Verified Deriv. Compl., Prayer for Relief, Fireman’s Ret. Sys. of St. Louis v. Ellison, C.A.
No. 2017-0519-JTL.
9
  See Defs.’ Mot. to Dismiss the Verified Deriv. Compl., Dkt. No. 44; Nominal Def. Oracle Corp.’s
Mot. to Dismiss, Dkt. No. 45.
10
   In re Oracle Corp. Deriv. Litig., 2018 WL 1381331, at *20–23 (Del. Ch. Mar. 19, 2018).
11
   In re Oracle Corp. Deriv. Litig., 2023 WL 3408772, at *16; Defs.’ Stipulated Order of Dismissal
Without Prejudice, Dkt. No. 79.
                                                5
       On May 4, 2018, Oracle’s Board decided to appoint Charles Moorman IV and

William Parrett (the “New Directors”) to the Board.12 At that same meeting,

Oracle’s Board resolved to form a special litigation committee (the “SLC”) in

connection with this lawsuit.13 The New Directors accepted the offer to join Oracle’s

Board and the SLC.14

       On July 22, 2019, I granted Plaintiffs’ motion to file an amended derivative

complaint.15    The first amended complaint reasserted the count for breach of

fiduciary duty against the voluntarily dismissed individual defendants and added a

new claim against individual defendants affiliated with NetSuite for aiding and

abetting breaches of fiduciary duty.16 Plaintiffs sought a declaration in their favor

on both counts and requested money damages for the harm suffered by Oracle.17

       On August 15, 2019, the SLC informed the Court that it had concluded that

the litigation should proceed and that the Plaintiffs should be allowed to proceed on

Oracle’s behalf.18

12
   Transmittal Aff. of Daniel E. Kaprow, Esq. in Supp. of Nominal Def. Oracle Corp.’s Answering
Br. Opp’n Pls.’ Appl. for Att’ys’ Fees, Ex. 13, at 6, Dkt. No. 844.
13
   Id. at 4.
14
   See In re Oracle Corp. Deriv. Litig., 2019 WL 6522297, at *7 n.126 (Del. Ch. Dec. 4, 2019).
15
   Order Granting Pl.’s Mot. for Leave to File Am. Compl., Dkt. No. 138.
16
   Pl.’s Verified Am. Deriv. Compl. ¶¶ 145–53, Dkt. No. 139.
17
   Pl.’s Verified Am. Deriv. Compl. Prayer for Relief.
18
   Letter to Vice Chancellor Glasscock from Kevin R. Shannon on behalf of the SLC, Dkt. No.
146.
                                              6
       A second amended complaint was filed on November 27, 2019.19 The second

amended complaint reasserted Count I for breach of fiduciary duties against Oracle’s

directors and Count II for aiding and abetting breaches of fiduciary duties against

the NetSuite individual defendants.20 Plaintiffs sought the same monetary damages

and declarations sought in their first amended complaint.21

       Plaintiffs then filed a third amended complaint on February 18, 2020,

reasserting Count I for breach of fiduciary duty against the remaining Oracle

individual defendants and Count II for aiding and abetting breaches of fiduciary duty

against the NetSuite individual defendants.22 The relief sought by Plaintiffs in the

third amended complaint remained the same: declarations in favor of Plaintiffs and

monetary damages.23 I dismissed Count II of the third amended complaint on June

22, 2020.24

       Plaintiffs proceeded to file two more amended complaints: the fourth

amended complaint was filed on October 22, 2020,25 and the fifth amended

complaint was filed on December 11, 2020.26 These complaints reasserted Count I

for breach of fiduciary duty against the Oracle individual defendants and added a

19
   Verified Second Am. Deriv. Compl., Dkt. No. 271.
20
   Id. ¶¶ 170–74.
21
   Verified Second Am. Deriv. Compl. Prayer for Relief.
22
   Pl.’s Verified Third Am. Deriv. Compl. ¶¶ 201–07, Dkt. No. 315.
23
   Pl.’s Verified Third Am. Deriv. Compl. Prayer for Relief.
24
   In re Oracle Corp. Deriv. Litig., 2020 WL 3410745, at *16 (Del. Ch. June 22, 2020).
25
   Co-Lead Pls.’ Verified Fourth Am. Deriv. Compl., Dkt. No. 454.
26
   Co-Lead Pls.’ Verified Fifth Am. Deriv. Compl., Dkt. No. 484.
                                               7
new Count II for breach of fiduciary duty against defendant Renée James in her

capacity as chair of the special committee that was charged with considering the

challenged acquisition.27        The relief sought by Plaintiffs remained the same:

declarations in Plaintiffs’ favor and monetary damages.28

       A ten-day trial was held in July and August 2022. 29 On December 22, 2022,

Plaintiffs voluntarily dismissed defendant James with prejudice.30 I issued my post-

trial memorandum opinion on May 12, 2023, finding in favor of the Oracle

defendants.31

       On May 22, 2023, Plaintiffs applied for attorneys’ fees on the basis that

Plaintiffs’ prosecution of this lawsuit through trial conferred a corporate benefit on

Oracle because Oracle appointed the New Directors.32 Plaintiffs’ application for

attorneys’ fees was fully briefed on October 11, 2023.33 I heard oral arguments on

November 17, 2023, and consider the matter fully submitted as of that date.34

27
    See Co-Lead Pls.’ Fourth Am. Deriv. Compl. ¶¶ 217–29; Co-Lead Pls.’ Fifth Am. Deriv.
Compl., ¶¶ 223–35.
28
   See Co-Lead Pls.’ Fourth Am. Deriv. Compl. Prayer for Relief; Co-Lead Pls.’ Fifth Am. Deriv.
Compl. Prayer for Relief.
29
   In re Oracle Corp. Deriv. Litig., 2023 WL 3408772, at *17.
30
   Id.
31
   Id. at *36.
32
   Pls.’ Appl. for Att’ys’ Fees, Dkt. No. 836 (“Pls.’ Appl.”).
33
   See Pls.’ Reply Br. Opp’n Oracle’s Legal Defenses to Pls.’ Fee Application, Dkt. No. 868 (“Pls.’
RB”).
34
   See Judicial Action Form re: Pls.’ Mot. for Fees, Dkt. No. 871.
                                                8
                                      II. ANALYSIS

       Under the American Rule, “each party is normally obliged to pay only his or

her own attorneys’ fees, whatever the outcome of the litigation” 35 unless a special

circumstance exists dictating otherwise.36 One such special circumstance is the

corporate benefit doctrine, which allows a plaintiff to be awarded attorney’s fees

upon a showing that “(1) the suit was meritorious when filed, (2) the defendant took

an action that produced a corporate benefit before the plaintiffs obtained a judicial

resolution, and (3) the suit and the corporate benefit were causally related.”37 The

purpose of the corporate benefit doctrine “is to redistribute equitably a portion of the

benefit received by the corporation to the successful shareholder litigants in the form

of reimbursing their costs[,]”38 or, looking at it another way, to distribute equitably

the costs that produced that benefit.

       An often-invoked corollary of the corporate benefit doctrines is the “mootness

rule,” under which a plaintiff may be awarded attorneys’ fees “when claims have

been mooted . . . because of action taken by the defendants, and the action taken by

the defendants that rendered the claim moot simultaneously created the corporate

benefit that the plaintiff had [sought.]”39 “[T]here is a rebuttable presumption the

35
   Johnston v. Arbitrium (Cayman Islands) Handels AG, 720 A.2d 542, 545 (Del. 1998).
36
   Barrows v. Bowen, 1994 WL 514868, at *1 (Del. Ch. Sept. 7, 1994).
37
   EMAK Worldwide v. Kurz, 50 A.3d 429, 432 (Del. 2012).
38
   Dover Hist. Soc.’y, Inc. v. City of Dover Plan. Comm’n, 902 A.2d 1084, 1091 (Del. 2006).
39
   Crothall v. Zimmerman, 94 A.3d 733, 737–38 (Del. 2014).
                                               9
suit and the benefit were causally related because the defendant is in the best position

to know the events, reasons, and decision behind its action.”40

       The parties do not dispute that this lawsuit was meritorious when filed. While

the parties refer to Plaintiffs’ request for attorneys’ fees as a “mootness fee,” both

parties agree that the appointment of the New Directors did not render any claim

moot in this lawsuit.41 Rather, the dispute principally centers around the latter two

elements of the corporate benefit doctrine: whether the appointment of the New

Directors constitutes a corporate benefit and whether the litigation caused Oracle to

appoint the New Directors.42 I assume without deciding that the appointment of the

New Directors was accelerated so that the independent New Directors could serve

on the SLC investigating the merits of this litigation.

       The issue then becomes whether Oracle’s decision to appoint the New

Directors was a corporate benefit achieved via the litigation, and, if so, whether that

corporate benefit is sufficiently similar to the benefit sought by Plaintiffs through

this litigation to justify an award in equity.

40
   EMAK Worldwide, 50 A.3d at 433.
41
   See Oral Arg. on Pls.’ Mot. for Fees Tr. 53:16–23, Dkt. No. 872 (Plaintiffs’ counsel explaining
that “the word mootness is used loosely to say, unlike a settlement, when there is a unilateral act
by the defendants.”). Nor could Plaintiffs claim that the appointment of the New Directors
rendered any claim moot because the many amended complaints filed since the appointment have
not removed any claims present at the time of the appointment.
42
   See Nominal Def. Oracle Corp.’s Answering Br. Opp’n Pls.’ Appl. for Att’y’s Fees 19–27, Dkt.
No. 843 (“Def.’s Opp’n”).; Pls.’ Appl. 8–9; Pls.’ Reply Br. 8–20, Dkt. No. 868 (“Pls.’ RB”).
                                               10
       Corporate Benefit

       To constitute a corporate benefit, “the action must specifically and

substantially benefit the corporation and its stockholders[.]”43 “While the benefit

achieved may have an indirect economic effect on the corporation, . . . the benefit

need not be measurable in economic terms.”44 The corporate benefit may include

“[c]hanges in corporate policy . . . [which,] if attributable to the filing of a

meritorious suit, may justify an award of counsel fees.”45 This Court has “discretion

to deny attorneys’ fees ‘altogether if the Court finds that the litigation did not result

in any ascertainable benefit to the corporation.’”46

       Plaintiffs note that, after the appointment of the New Directors, the

composition of Oracle’s Board was evenly split between dependent and independent

directors, i.e., at least seven out of fourteen directors on Oracle’s Board were, on

their face, independent.47 According to Plaintiffs, this even split on Oracle’s Board

and the ability of Oracle’s Board to create a two-thirds majority independent SLC

constitute the corporate benefit conferred on Oracle by Plaintiffs’ litigation.48 The

43
   Garfield v. Boxed, Inc., 2022 WL 17959766, at *10 (Del. Ch. Dec. 27, 2022).
44
   Tandycrafts Inc. v. Initio P’rs, 562 A.2d 1162, 1165 (Del. 1989).
45
   Id.
46
   Off v. Ross, 2009 WL 4725978, at *4 (Del. Ch. Dec. 10, 2009) (quoting Greenfield v. Frank B.
Hall & Co., Inc., 1992 WL 301348, at *3 (Del. Ch. Oct. 19, 1992)).
47
   Pls.’ Appl. 2. I note that Plaintiffs assert the corporate benefit was conferred at the moment the
New Directors were appointed to the Board and to the SLC. See Pls.’ Appl. 8–9; Oral Arg. on
Pls.’ Mot. for Fees Tr. 20:22–21:10; 22:16–18.
48
   See Pls.’ Appl. 8–9.
                                                11
addition of the independent directors, according to Plaintiffs, also improved the

ability of Oracle’s Board “to deal with future conflict transactions, or [ ] to actually

deal with the disposition of the litigation plus future conflict transactions[.]”49 Thus,

Plaintiffs ask that I assess the value of this corporate benefit as of the day that the

New Directors were appointed to the Oracle Board and the SLC, that is May 4,

2018.50

       In support of their contention, Plaintiffs point to several cases where this Court

decided that the appointment of independent directors conferred a corporate

benefit.51 Defendants retort that the appointment of two independent directors, even

in Plaintiffs’ view, results only in a still-conflicted (non-majority-independent)

board; and that the resulting “even split” is insufficient to assist Oracle’s Board in

overcoming future Court of Chancery Rule 23.1 motions or approving transactions

that may otherwise be subject to scrutiny as conflicted.52 Therefore, according to

Defendants, the appointment of the New Directors did not confer a significant or

substantial corporate benefit necessary to grant Plaintiffs’ fee application.

49
   Oral Arg. on Pls.’ Mot. for Fees Tr. 55:9–16.
50
   See id. at 20:22–21:10; 22:16–18.
51
   See Pls.’ Appl. 5–8 (gathering cases).
52
   Def.’s Opp’n 29–30. Defendants also argue that, to the extent the New Directors’ appointments
conferred a corporate benefit to Oracle, the “net benefit” is greatly diminished (even completely
offset) by the costs Oracle incurred in defending this litigation through a trial where the Oracle
Board was ultimately vindicated. Id. at 27–32. For purposes of considering Plaintiffs’ application
for fees, I need not reach the “net benefit” analysis and, therefore, decline to address whether it is
applicable in this context.
                                                 12
        Plaintiffs have requested that I not consider the actions of the SLC or the

results of the SLC’s investigation.53 Accordingly, I limit my consideration of the

effect of the New Directors’ appointment as of the date of their appointment, that is

May 4, 2018.54 Even if I were to consider that the appointment of the New Directors

enabled Oracle to create a majority independent SLC, the creation of the SLC alone

did not confer a specific or substantial benefit to Oracle or its stockholders. That is

evidenced by Plaintiffs’ continued prosecution of the breach of fiduciary duty claim

investigated by the SLC.55

        In appropriate circumstances, appointment of independent directors to a board

can constitute a corporate benefit.56 However, to the extent a corporate benefit was

conferred on Oracle by the appointments of the New Directors, I find it insufficient

to warrant granting Plaintiffs’ request for fees. The cases upon which Plaintiffs rely

in asserting that the appointment of independent directors alone confers a corporate

benefit differ from this case in an important manner: the appointments in cases cited

53
   See Oral Arg. on Pls.’ Mot. for Fees Tr. 6:4–8, 20:16–18; Pls.’ Appl. 4; Pls.’ RB 24 (“Plaintiffs
are not claiming that the creation of an SLC was itself a benefit. Plaintiffs are not seeking a fee
based on the work of Plaintiffs’ counsel during or after the SLC process.”). The SLC ultimately
determined that it would be in the best interest of the corporation for Plaintiffs to litigate the claims
on behalf of Oracle. In re Oracle Corp. Deriv. Litig., 2023 WL 9053148, at *2 (Del. Ch. Dec. 28,
2023).
54
   See Pls.’ RB 23.
55
   See In re Oracle Corp. Deriv. Litig., 2023 WL 3408772.
56
   See Tandycrafts, 562 A.2d at 1165 (explaining that “[c]hanges in corporate policy . . . if
attributable to the filing of a meritorious suit, may justify an award of counsel fees” under the
corporate benefit doctrine).
                                                  13
by Plaintiffs were therapeutic benefits achieved through settlements, involving the

compromise of claims in return for the beneficial acts.57 Here, there was no

settlement reached in this lawsuit at all, let alone one that achieved the appointment

of the New Directors as a therapeutic benefit. Rather, the parties here spent years

litigating this suit instead of “obtain[ing] the remedial benefits quickly,

consensually, and without being forced to engage in protracted litigation.”58

       Looked at another way, the existing directors did not breach fiduciary duties

in the NetSuite Acquisition. The fact that the New Directors were brought on in

response to this lawsuit did not supplement the (loyal) board in a way that conferred

a benefit in the context of this litigation. If the New Directors were not appointed to

complete a majority independent special litigation committee, the result of this

57
   See City of Miami Gen. Emps.’ & Sanitation Emps.’ Ret. Tr. v. Foley, C.A. No. 2020-0650-
KSJM, at 16–18, 45, 48 (Del. Ch. June 21, 2022) (TRANSCRIPT) (approving request for
attorneys’ fees as part of settlement of derivative action where the corporation appointed two new
independent directors, among other corporate governance reforms, prior to final resolution of the
case); In re Tile Shop Hldgs., Inc. S’holder Deriv. Litig., C.A. No. 10884-VCG, at 7–10, 12–13,
41–43 (Del. Ch. Aug. 23, 2018) (TRANSCRIPT) (approving request for attorneys’ fees as part of
settlement of derivative action where the company appointed an independent director, among other
corporate governance reforms, prior to full briefing and oral arguments on a motion to dismiss);
Hollywood Firefighters’ Penion Fund v. Malone, 2021 WL 5179219, at *6, 10–11 (Del. Ch. Nov.
8, 2021) (approving attorney’s fees as part of a settlement where the individual defendants’ voting
power was decreased rather than appointment of independent directors to create a facially
independent board); In re TerraForm Power, Inc. Deriv. Litig., C.A. No. 11898-CB, at 13–14, 19–
20 (Del. Ch. Dec. 19, 2016) (TRANSCRIPT) (approving attorneys’ fees as part of settlement
where the company appointed three independent directors to create a majority independent board,
where plaintiffs sought the appointment of one independent director).
58
   Almond ex rel. Almond fam. 2001 Tr. v. Glenhill Advisors LLC, 2019 WL 1556230, at *8 (Del.
Ch. Apr. 10, 2019), aff’d 224 A.3d 200 (Del. 2019) (TABLE).
                                               14
lawsuit would be the same. Thus, in the context of this litigation, the benefit to the

Company is not substantial.

       This reasoning is bolstered, in my view, by the disconnect between the aim of

the litigation and any benefit; the relationship between the suit and benefit is

attenuated at best. Defendants point out that Plaintiffs did not seek the appointment

of independent directors at any time during this litigation, and argue that the benefit

worked is not “similar” to the relief sought, as required before a mootness fee is

justified under our caselaw.59 To meet this “similarity” standard, the “claimed

benefit must have some relationship to the grievance which led to the filing of the

complaint.”60

       Plaintiffs’ grievance that prompted the initiation of this litigation and spurred

Plaintiffs to prosecute the litigation through trial has always been a complaint that

Ellison caused Oracle to overpay for NetSuite. Throughout the life of this litigation,

Plaintiffs have sought monetary damages Plaintiffs claimed Oracle incurred because

of the over-priced acquisition of NetSuite, as directed by Ellison.61 Beyond alleging

59
   Def.’s Opp’n 20–23.
60
   Eisenberg v. Chi. Milwaukee Corp., 1988 WL 112910, at *5 (Del. Ch. Oct. 25, 1988); see also
Golubinski ex rel. Novavax, Inc. v. Douglas, C.A. No. 2021-0172-JTL, at 82–88 (Del. Ch. Oct. 18,
2022) (TRANSCRIPT) (reviewing cases and concluding “that there has to be some connection
between the relief that the plaintiffs wanted and what the mooting action provided. In the words
of the standard, it has to be ‘same or similar.’”), aff’d 299 A.3d 2 (Del. 2023) (TABLE).
61
   See Verified Deriv. Compl. Prayer for Relief, Fireman’s Ret. Sys. of St. Louis v. Ellison, C.A.
No. 2017-0519-JTL; Pl.’s Verified Am. Deriv. Compl. Prayer for Relief; Verified Second Am.
Deriv. Compl. Prayer for Relief; Pl.’s Verified Third Am. Deriv. Compl. Prayer for Relief; Co-
                                               15
sufficient relationships between the defendant directors and Ellison to survive the

Rule 23.1 motion to dismiss for demand futility, Plaintiffs’ focus in this lawsuit has

never been about the perceived or facial independence of Oracle’s Board. To the

extent that the appointment of the New Directors to Oracle’s Board empowered the

creation of a majority independent SLC, that “benefit” is unrelated to the grievance

that led to Plaintiffs filing suit.

       Plaintiffs counter that this Court has previously recognized that granting relief

in the form of appointment of an independent director is “difficult for the Court to

judicially order,”62 and rarely sought. Thus, according to Plaintiffs, a denial of their

fee request on this ground would prevent future plaintiffs from settling lawsuits

“through governance reforms, or the addition of a new director,” except in the

unlikely event that “the complaint specifically requested such relief.”63 Therefore,

Plaintiffs posit that if I disallow fees under the “similarity” standard, a pernicious

result would obtain; derivative plaintiffs could not settle damages claims in

consideration for therapeutic benefits. This runs counter, per Plaintiffs, to cases

where attorneys’ fees have been awarded when defendants appointed independent

Lead Pls.’ Verified Fourth Am. Deriv. Compl. Prayer for Relief; Co-Lead Pls.’ Verified Fifth Am.
Compl. Prayer for Relief.
62
   Pls.’ RB 14 (quoting In re Terraform Power, Inc. Deriv. Litig., C.A. No. 11898-CB, at 20 (Del.
Ch. Dec. 19, 2016) (TRANSCRIPT)).
63
   Pls.’ RB 13.
                                               16
directors to their boards of directors and to special litigation committees, even where

the relevant complaints did not request such relief.64

       To my mind, the fear that settlement for therapeutic benefits would be

inhibited by denying fee-shifting here is misplaced. The cases Plaintiffs cite are

distinguishable because there, the attorneys’ fees were granted in connection with

settlements of—compromises of the claims inhering in—the derivative actions.65

The court presumably analyzed the give-and-get of the proposed settlement, found

a relationship between claims and benefit, and sufficient resulting value to support

release of the claims. Here, again, the instant case did not settle and was litigated,

unsuccessfully, through trial. Plaintiffs have limited their request to the benefit

conferred upon the New Directors’ appointment to the Oracle Board and SLC in

May 2018. While the creation of the SLC to investigate Plaintiffs’ allegations is

64
   See Pls.’ RB 10–13 (gathering cases).
65
    See City of Miami Gen. Emps.’ & Sanitation Emps.’ Ret. Tr. v. Foley, C.A. No. 2020-0650-
KSJM, at 16–18, 45, 48 (Del. Ch. June 21, 2022) (TRANSCRIPT) (approving request for
attorneys’ fees as part of settlement of derivative action where the corporation appointed two new
independent directors, among other corporate governance reforms, prior to final resolution of the
case); Lao v. Dalian Wanda Grp. Co., Ltd, C.A. No. 2019-0303-JTL 9, at 22–23 (Del. Ch. Nov.
30, 2022) (TRANSCRIPT) (partially approving attorneys’ fees as part of settlement of a derivative
action where the corporation appointed a new independent director to the board and special
litigation committee that investigated the allegations in the operative complaint).
                                               17
related to the initiation of this lawsuit, this creation was incidental to, and not the

aim of, Plaintiffs’ lawsuit.

      Thus, the appointment of the New Directors to Oracle’s Board is not the “same

or similar” benefit that Plaintiffs sought in filing this derivative action, and worked

an insubstantial benefit under the peculiar circumstances of this litigation. In fact,

the derivative litigation, well-intentioned, well-tried and brought in good faith,

nonetheless came at substantial costs to the Company, with litigation continuing for

years after the New Directors’ appointment.

                                III. CONCLUSION

      Upon the specific facts here, Oracle’s decision to appoint the New Directors

does not constitute a specific or significant corporate benefit sufficient to justify

awarding Plaintiffs attorneys’ fees in light of the ultimate outcome of this litigation.

And to the extent the appointment of the New Directors benefitted the corporation,

Plaintiffs did not seek this form of relief and the creation of the majority independent

SLC was not the same or similar benefit as the monetary damages that Plaintiffs

sought in bringing this suit. Therefore, Plaintiffs’ application for attorneys’ fees is

DENIED.      The parties should submit a form of order consistent with this

memorandum opinion.

                                          18