In re Duke Energy Corp. Deriv. Litig.
Brown, Jr., Esquire Marcus Montejo, Esquire Prickett, Jones
Kenneth J. Nachbar, Esquire Susan W. Waesco, Esquire
Alexandra M. Cummings, Esquire Morris, Nichols, Arsht &
A. Jenkins, Esquire Kathleen M. Miller, Esquire Robert K.
Beste, Esquire Kelly A. Green, Esquire Smith, Katzenstein
& Jenkins LLP
Friedlander, Esquire Christopher P. Quinn, Esquire
Friedlander & Gorris, P.A.
hearing on the settlement of this matter held January 13,
2017, I awarded legal fees in the amount of $5, 940, 000.
Consistent with the law of the case, I directed the firm of
Prickett, Jones & Elliott ("PJ&E") to
propose an Order of Distribution by which various
Plaintiffs' firms involved in this and related litigation
should join in the distribution of the aggregate fee award.
PJ&E has made such a proposed distribution. Two of the
Plaintiffs' firms seeking fees disagree with the proposed
distribution. The parties have provided me with memoranda.
The following is my decision on the exceptions to the
proposed order filed by PJ&E. The remaining objectors are
Levy & Korinsky LLP ("L&K"), a firm which
participated in this (consolidated) action, and
Plaintiffs' counsel in a Federal action, Tansey v.
Rogers (referred to as "Tansey Counsel").
first to the exceptions to the Order made by Tansey Counsel.
An award of attorneys' fees under the Corporate Benefit
Doctrine is controlled by the factors set out by out Supreme
Court in Sugarland. The presumption is that the common fund or
benefit created by the litigation is the result of
plaintiff's litigation in that matter. Where attorneys
not participating in the matter that produced the settlement
at issue seek to participate in an award of fees, the burden
is on those counsel to demonstrate that the actions of those
counsel casually contributed to a discreet portion of the
benefit produced. Where this burden is met, outside
counsel's fees are limited to an appropriate award based
on that discreet portion of benefits to which they
Counsel argues that $25 million of the cash portion of the
settlement was caused in substantial part by their efforts in
the federal action. In short, Tansey Counsel argues that the
settlement was due to securities law exposure, and not
primarily to the potential for common-law liability
represented by this action.
considering the positions of the parties, I conclude that
there is a substantial likelihood that the litigation in
Tansey added to pressure that caused the Defendant, Duke
Energy Corp., to settle. Specifically, the Tansey litigation
presented alternative theories of liability that I find had
an effect on the motivation for Duke to make a cash
settlement in this action. The question, then, is how to
arrive at an appropriate fee on behalf of the Tansey Counsel.
I find that Plaintiffs' counsel have met their burden to
show some responsibility for the monetary award here. In
applying the Sugarland factors, typically, the most important
is the result achieved. In a contingent fee case, where a
discreet fund has been created, the Court typically looks at
a percentage of the fund in making the award. The loadstar
amount, the amount that plaintiffs' counsel would have
achieved based on time expended, together with out-of-pocket
costs, is typically only a check on the amount awarded, and
is not used to set the award itself. The concern is that such a
quantum meruit approach to litigation could lead to perverse
incentives, and that it would not adequately compensate
counsel operating on a contingent-fee basis for the risk
however, I must presume that counsel in this action produced
the benefit, including the common fund, and in addition have
found that Tansey Counsel contributed to creation of the
common fund as well. In this case, therefore, it seems
appropriate to me to award Tansey Counsel their loadstar
amount together with out-of-pocket costs.
turn to the actions of L&K and its contribution to the
corporate benefit. L&K sought to lead this consolidated
Delaware action. Nonetheless, the former judicial officer
handling this matter established PJ&E as lead counsel.
That firm appointed L&K to "a committee of the
whole." That body, however, was not active, and it does
not appear that any actions of L&K, post-consolidation,
contributed to the corporate benefit. PJ&E and L&K
disagree as to the extent that L&K's actions in the
suit originally brought by L&K (the Burdine matter)
materially added to the corporate benefit here. Pursuant to
the law of the case, PJ&E proposed an award to L&K of
$25, 000.00. L&K argues that its pre-consolidation work
merits a far larger portion of the settlement fee awarded.
difficult at this juncture to determine, in a non-arbitrary
fashion, a fair amount for L&K's pre-consolidation
effort. It is not the extent of that effort, of course, that
must be compensated, but rather the effect of that effort on
the creation of the common benefit here. I do note,
however, that PJ&E describes L&K's position in
this regard as "identical" to that of Regor, Eagle
and Squire, PC ("Regor"), another firm representing
a pre-consolidation stockholder-plaintiff in this litigation.
PJ&E proposes allocating $100, 000 to Regor. It is
difficult to understand how, having recommended that as an
equitable distribution, PJ&E can resist a similar amount
foregoing reason, the proposed Order of PJ&E with respect
to distribution of the legal fees awarded in this matter is
approved, with the exception of the amount that should be
paid to Tansey Counsel, which must be computed based on the
loadstar, and the distribution of $100, 000 to L&K.
Plaintiffs' counsel should ...