Court Opinion

ID: 4702965
Source: CourtListenerOpinion
Date Created: 2021-07-12 21:03:36.687265+00
Date Added: 2024-06-11T08:06:27.874028
License: Public Domain

COURT OF CHANCERY
                                      OF THE
    SAM GLASSCOCK III           STATE OF DELAWARE                  COURT OF CHANCERY COURTHOUSE
     VICE CHANCELLOR                                                        34 THE CIRCLE
                                                                     GEORGETOWN, DELAWARE 19947

                               Date Submitted: July 7, 2021
                               Date Decided: July 12, 2021

    Joel Friedlander, Esq.                          John Reed, Esq.
    Jeffrey M. Gorris, Esq.                         DLA Piper LLP (US)
    Christopher M. Foulds, Esq.                     1201 N. Market Street, Ste. 2100
    Friedlander & Gorris, P.A.                      Wilmington, DE 19801
    1201 N. Market Street, Suite 2200
    Wilmington, DE 19801                            Patricia L. Enerio, Esq.
                                                    Heyman Enerio Gattuso & Hirzel LLP
    William B. Chandler, III, Esq.                  300 Delaware Avenue, Ste. 200
    Brad Sorrels, Esq.                              Wilmington, DE 19801
    Lindsay K. Faccenda, Esq.
    Wilson Sonsini Goodrich & Rosati, PC
    222 Delaware Avenue, Ste. 800                   Kevin G. Abrams, Esq.
    Wilmington, DE 19801                            Matthew L. Miller, Esq.
                                                    Abrams & Bayliss LLP
                                                    20 Montchanin Road, Ste. 200
                                                    Wilmington, DE 19807

                 RE:    Elizabeth Morrison v. Ray Berry, et al.,
                        C.A. No. 12808-VCG

Dear Counsel:

         On July 7, 2021, I considered and approved the parties’ Stipulation and

Agreement of Compromise and Settlement1 in all respects and awarded attorneys’

fees to the Plaintiff.      I reserved, however, on the Plaintiff’s application for an

1
    Dkt. No. 322.
incentive fee to be paid from the award of fees to counsel.2 This Letter Decision

addresses the Plaintiff’s application for an incentive award.

       “Delaware courts are reluctant to award lead plaintiffs anything other than

their out-of-pocket costs and expenses.”3 However, in some circumstances, this

Court will “give[] additional compensation [to class representatives] for shouldering

the extra burden in class action litigation.”4 This is done to reward the representative

for the “significant amount of time, effort and expertise expended,” especially

because the lead plaintiff “alone bear[s] certain costs of continued litigation while

receiving a disproportionately smaller pro-rata share of the marginal benefit.”5 In

such instances, the award to the representative “is not only a rescissory measure

returning certain lead plaintiffs to their position before the case was initiated, but an

incentive to proceed with costly litigation (especially costly for an actively

participating plaintiff) with uncertain outcomes.”6

       Plaintiff awards, however, “should be rare. Only in the exceptional case

should such an application be granted.”7 That is to discourage the “overzealous”

plaintiff from “hold[ing]-up optimal settlements in the hopes of achieving a larger

2
  Pl.’s Appl. for Settlement Approval, an Award of Att’ys’ Fees and Expenses, and an Incentive
Award to Pl., Dkt. No. 325.
3
  Raider v. Sunderland, 2006 WL 75310, at *2 (Del. Ch. Jan. 4, 2006).
4
  Id. at *1.
5
  Id.
6
  Id.
7
  Oliver v. Boston University, 2009 WL 1515607, at *1 (Del. Ch. May 29, 2009).
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settlement and, consequently, a larger bonus payment.”8 Further, in determining the

amount of the award to representative plaintiffs, the Court “notably ignore[s] the

benefit to the class”9 and focuses more on the particular expertise, time, and effort

devoted by the representative.10 For example, in Raider v. Sunderland, this Court

awarded the lead plaintiff a bonus payment of $42,400, which came out of the class

counsel’s fee.11 That award was based on the plaintiff representative’s expenditure

of “a total of 205 hours on matters beneficial to the class,” most of which was spent

on matters involving his expertise in “tax and financial analyses.”12 The Court found

that an hourly rate of $200 was suitable, applied it to the 205 hours, and added the

representative’s out-of-pocket expenses to arrive at $42,400.

       Similarly, in Oliver v. Boston University, the Court awarded the lead plaintiff

$40,000.13 In that case, the lead plaintiff “devoted 2,000 hours” to the case, which

included being deposed extensively, helping with document review, attending each

day of trial, and interacting extensively with counsel.14 The Oliver lead plaintiff

further “recognized an important document from a large set of documents produced

that played a key role in supporting the class recovery” and had expertise as a trust

8
  Raider, 2006 WL 75310, at *1.
9
  Id. at *2.
10
   See In re Orchard Enterprises, Inc. S’holder Litig., 2014 WL 4181912, at *13 n.8 (Del. Ch.
Aug. 22, 2014) (listing cases).
11
   Raider, 2006 WL 75310, at *2.
12
   Id.
13
   Oliver, 2009 WL 1515607, at *1.
14
   Id.
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officer.15 And in Brinckerhoff v. Texas Eastern Products Pipeline Co., LLC, the lead

plaintiff spent about 1,000 hours assisting with the litigation, and was awarded

$100,000 by the court.16

         The request for an incentive fee here is far more modest. The lead plaintiff

here, Elizabeth Morrison, seeks $5000 as an incentive, to be paid from the overall

fee award. She has been lead plaintiff for the several years this matter has been

pending and has contributed to the case as a litigant ought—that is, she has reviewed

the pleadings she was asked to sign. The Plaintiff’s counsel, however, concedes that

she has not engaged in actions beyond those expected of all litigants in this Court. I

do not mean to denigrate Ms. Morrison’s actions here as a litigant or class

representative. But her service was not of the type of those exemplary efforts of past

class representatives who did earn a fee. Granting her fee request would set a

precedent for giving all class representatives an award in the future, which would,

to my mind, set an inappropriate incentive, for the reasons mentioned above, and

would be a departure from our law as I understand it. Accordingly, her application

for an incentive award is denied.

         IT IS SO ORDERED.

15
     Id.
16
     986 A.2d 370, 396 (Del. Ch. 2010).
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                                           Sincerely,

                                           /s/ Sam Glasscock III

                                           Sam Glasscock III

cc:   All counsel of record (by File & ServeXpress)

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