On July 8, 2019, Vice Chancellor J. Travis Laster of the Delaware Court of Chancery awarded $3 million to plaintiffs’ lawyers in Sciabacucchi v. Salzberg
, C.A. No. 2017-0931-JTL (Del. Ch. July 8, 2019). As we discussed in a prior post
, Vice Chancellor Laster had previously granted summary judgment to a shareholder challenging the validity of forum-selection charter provisions adopted by three corporations requiring shareholders to litigate claims under the Securities Act of 1933 in federal courts. Sciabacucchi v. Salzberg
, C.A. No. 2017-0931-JTL (Del. Ch. Dec. 18, 2018). Even though the relief awarded—the invalidation of the provisions—was non-monetary and non-quantifiable, plaintiff’s counsel argued that $3 million in aggregate fees was warranted because of the significance of the result achieved. The Court agreed.
The Court explained that “[i]n cases where the value of the benefit is not easily quantified, this court often looks to [p]recedent awards from similar cases.” Therefore, the Court relied primarily on precedent fee awards in analogous litigation involving challenges to exclusive-forum bylaws and emphasized that “the plaintiff achieved a significant and substantive result by successfully invalidating the Federal Forum Provisions.”
In further support of the substantial amount awarded, the Court highlighted several additional factors. For example, plaintiff advanced “nuanced public policy arguments” in this case that involved a “precedent-setting” issue of first impression that required a detailed understanding of both federal securities law and Delaware corporate law. Thus, the “degree of complexity posed by the litigation supports the reasonableness of the requested award.” The Court also took into consideration the fact that the case was litigated on a contingency basis and determined that the risk further justified the substantial reward. Indeed, the Court noted that “[i]t remains possible that on appeal, which the defendants have already attempted to pursue, the Delaware Supreme Court could disagree with the Merits Decision,” in which case “plaintiff’s counsel will receive zero.”