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Mor v. Collis

United States District Court, D. Delaware

December 28, 2017

ELI MOR, Plaintiff,
v.
STEVEN COLLIS, et al., Defendants.

          MEMORANDUM

         On October 28, 2014, I entered a final order and judgment (D.I. 74), which did not decide one issue, namely, who should get "attorneys' fees" and "reimbursement of costs and expenses, " and how much that should be. (Id. at ¶ 14). Plaintiff was requesting $1, 000, 000 in attorneys' fees and expenses, a number to which Defendants had agreed. (D.I. 85-1, p. 5). On July 1, 2015, I issued an opinion deciding both parts of the issue, namely, that Plaintiff should get $550, 000 in "attorney's fees and expenses." (D.I. 78, p. 13).

         There followed an appeal. The Third Circuit vacated the "portion of the [opinion] awarding plaintiff $550, 000 in attorneys' fees and expenses, " and remanded "for an award of fees and expenses consistent with [the Court of Appeals' opinion]." (D.I. 85-1, p.21). The Court summed up its rationale as the award "was at least partially based on factual assertions which were not supported by the record, and [that I] failed to provide an adequate explanation ... so that... a reviewing court [has] a sufficient basis to review for abuse of discretion." (Id.). Thereafter, I had a status conference with the parties. (D.I. 87, 88). At my request, Plaintiff provided an update on his time and effort spent on this case subsequent to my July 1, 2015, order. (D.I. 89). In short, Plaintiffs attorneys' fees were an additional $101, 183.50, and Plaintiff had additional expenses of $ 3, 126.26. (Id.).

         The Court of Appeals' opinion pointed out one outright error in my earlier decision, namely, that I omitted to consider Plaintiffs expenses, which totaled $14, 606. (D.I. 85-1, p. 21 n.8). That was an oversight.[1] I should have awarded Plaintiffs expenses, which were reasonably incurred. I also believe that, since Plaintiff was successful in his appeal, I should award him his additional attorneys' fees and expenses. Thus, as a starting point, I would now award $651, 183.50 in attorneys' fees and $17, 732.26 in expenses, a total of $668, 915.76. Thus, with the understanding that the maximum amount that Plaintiff is seeking is still $1, 000, 000, 1 will consider the issues on which the Third Circuit remanded the case.

         The Third Circuit identified a number of issues, on which there was insufficient record or insufficient explanation, as issues that I needed to reconsider. I would summarize them as follows:

         1.1 did "not point to anything in the record supporting" my conclusion that "what happened here was not corporate malfeasance, it was corporate carelessness." To the same effect, I described what happened as "a 'one-off mistake." (D.I. 85-1, p. 13).

         2.1 "implie[d]" that a demand letter to the Board would have resolved the dispute, but did not support this with anything in the record. (Id.).

         3.1 "suggest[ed], " without making clear what the basis for me to say so was, that the Plan violation would have been detected without investigation by Plaintiffs counsel. (Id. at p. 14).

         4.1 undervalued the recovery obtained by Plaintiff. (Id. at pp. 15-17).

         5.1 undervalued the time spent by Plaintiffs counsel. (Id. at pp. 17-18).

         6.1 gave an inadequate explanation for awarding $50, 000 for the corporate governance reforms. (Id. at pp. 20-21).

         I think the biggest single factor in my thinking about the proper amount of attorney's fee award was my conclusion that this was a "one-off mistake." I based this conclusion on the explanation for the wrongfully issued stock options. That was counsel's explanation during one of the various status conferences I had with the parties. (D.I. 43 at 18 (Defendants' counsel: "one-time occurrence"); see also Id. at 10-11 (Plaintiffs counsel)). It was ABC's explanation in its August 7, 2013, Form 8-K filing with the SEC. In that filing, ABC explained that the wrongfully-issued 2012 award was the result of a change in the timing of when ABC reviewed equity awards.

In November 2012, the [Compensation and Succession Planning] Committee [of the Board of Directors] revised its policy on the timing of annual equity awards to executives and other eligible employees. Previously, the Committee reviewed annual equity awards in February or March of each year. The Committee now reviews annual equity awards in November of each year. As a result, fiscal year 2012 equity awards and fiscal year 2013 equity awards were made in the same calendar year.

(D.I. 30-3 at 3). The Form 8-K explanation is also consistent with the recitation of events in Defendants' motion to dismiss. (D.I. 12, pp. 13-14).

         In addition to ABC's explanation, which seems entirely plausible to me, the circumstances are consistent with the explanation. There was never any allegation that ABC disguised or otherwise covered up the award.[2] The components that made up the improperly awarded options were publicly disclosed, by which I mean that the amounts of awards were stated in public securities filings. Assuming, as I did, that the publicly reported Form 8-K explanation was an accurate one, and ...


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