MATTHEW SCIABACUCCHI, on behalf of himself and all others similarly situated, Plaintiff,
MATTHEW B. SALZBERG, JULIE M.B. BRADLEY, TRACY BRITT COOL, KENNETH A. FOX, ROBERT P. GOODMAN, GARY R. HIRSHBERG, BRIAN P. KELLEY, KATRINA LAKE, STEVEN ANDERSON, J. WILLIAM GURLEY, MARKA HANSEN, SHARON MCCOLLAM, ANTHONY WOOD, RAVI AHUJA, SHAWN CAROLAN, JEFFREY HASTINGS, ALAN HENDRICKS, NEIL HUNT, DANIEL LEFF, and RAY ROTHROCK, Defendants, and BLUE APRON HOLDINGS, INC., STITCH FIX, INC., and ROKU, INC.,
Submitted: April 30, 2019
M. Heyman, Melissa N. Donimirski, HEYMAN ENERIO GATTUSO &
HIRZEL LLP, Wilmington, Delaware; Jason M. Leviton, Joel A.
Fleming, BLOCK & LEVITON LLP, Boston, Massachusetts;
Counsel for Plaintiff.
William B. Chandler III, Randy J. Holland, Bradley D.
Sorrels, Lindsay Kwoka Faccenda, WILSON SONSINI GOODRICH
& ROSATI, P.C., Wilmington, Delaware; Boris Feldman,
David J. Berger, WILSON SONSINI GOODRICH & ROSATI, P.C.,
Palo Alto, California; Counsel for Defendants Katrina Lake,
Steven Anderson, J. William Gurley, Marka Hansen, Sharon
McCollam, Anthony Wood, Ravi Ahuja, Shawn Carolan, Jeffrey
Hastings, Alan Hendricks, Neil Hunt, Daniel Leff, Ray
Rothrock, and Nominal Defendants Stitch Fix, Inc. and Roku,
Catherine G. Dearlove, Sarah T. Andrade, RICHARDS, LAYTON
& FINGER, P.A., Wilmington, Delaware; Michael G.
Bongiorno, WILMER CUTLER PICKERING HALE AND DORR LLP, New
York, New York; Timothy J. Perla, WILMER CUTLER PICKERING
HALE AND DORR LLP, Boston, Massachusetts; Counsel for
Defendants Matthew B. Salzberg, Julie M.B. Bradley, Tracy
Britt Cool, Kenneth A. Fox, Robert P. Goodman, Gary R.
Hirshberg, and Brian P. Kelley, and Nominal Defendant Blue
Apron Holdings, Inc.
their initial public offerings, the three nominal defendants
adopted provisions in their certificates of incorporation
that required any claim under the Securities Act of 1933 to
be filed in federal court (the "Federal Forum
Provisions"). The plaintiff challenged the validity of
the provisions, and the parties cross-moved for summary
judgment. This court held that the provisions are ineffective
(the "Merits Decision"). See Sciabacucchi v.
Salzberg, 2018 WL 6719718 (Del. Ch. Dec. 19, 2018).
on the benefit conferred by the Merits Decision, the
plaintiff applied for an all-in award of attorneys' fees
and expenses in the amount of $3 million. The defendants
opposed the award, arguing that the plaintiff should receive
at most $364, 723 plus expenses.
controlling authority governing fee awards is Sugarland
Industries, Inc. v. Thomas, 420 A.2d 142 (Del. 1980). In
that decision, the Delaware Supreme Court identified factors
for this court to consider when determining a reasonable fee.
See id. at 149-50. More recently, the Delaware
Supreme Court has summarized the relevant factors concisely:
"1) the results achieved; 2) the time and effort of
counsel; 3) the relative complexities of the litigation; 4)
any contingency factor; and 5) the standing and ability of
counsel involved." Ams. Mining Corp. v.
Theriault, 51 A.3d 1213, 1254 (Del. 2012).
determining the size of an award of attorney's fees,
courts assign the greatest weight to the benefit achieved by
the litigation." Franklin Balance Sheet Inv. Fund v.
Crowley, 2007 WL 2495018, at *8 (Del. Ch. Aug. 30,
2007). "Secondary factors include the complexity of the
litigation, the standing and skill of counsel, and the
contingent nature of the fee arrangement together with the
level of contingency risk actually involved in the
case." Olson v. ev3, Inc., 2011 WL 704409, at
*8 (Del. Ch. Feb. 21, 2011). "Hours worked are
considered as a crosscheck to guard against windfall awards,
particularly in therapeutic benefit cases." Id.
benefit is quantifiable, then "Sugarland calls
for an award of attorneys' fees based upon a percentage
of the benefit." Ams. Mining, 51 A.3d at 1259.
The Americas Mining decision provided guideline
ranges for this court to consider when awarding fees.
Id. at 1259-60. Selecting an appropriate percentage
requires an exercise of judicial discretion, but the use of
guideline ranges helps promote consistent awards so that
similar cases are treated similarly. See id. at
cases where the value of the benefit is not easily
quantified, this court often looks to "[p]recedent
awards from similar cases." Olson, 2011 WL
704409, at *8. Like the use of guideline ranges, reliance on
precedent promotes fairness and fulfills the equitable
principle that "like cases should be treated
The Results Achieved
case, the plaintiff achieved a significant and substantive
result by successfully invalidating the Federal Forum
Provisions. Because the value of the relief is
non-quantifiable, the plaintiff looked to precedent to
determine an appropriate fee. He found an analogous case in
the litigation that generated the principal authority on
which the Merits Decision relied: Boilermakers Local 154
Retirement Fund v. Chevron Corp., 73 A.3d 934 (Del. Ch.
2013). The plaintiffs in the Boilermakers litigation
and their affiliates initially sued eleven different
companies that had adopted bylaw provisions that selected the
courts of the State of Delaware as the exclusive forum for
internal-affairs claims. They also sued four other companies
that had proposed to adopt comparable provisions in their
certificates of incorporation.
the plaintiffs filed suit, nine of the companies that had
adopted bylaw provisions voluntarily eliminated them. The
four companies that had proposed to adopt charter-based
provisions voluntarily withdrew their proposals. Two of the
companies that had adopted exclusive-forum bylaws stood by
their provisions, and the litigation over those provisions
eventually generated the Boilermakers decision.
voluntarily withdrawing their provisions and proposals, the
other thirteen companies mooted the plaintiffs'
challenges and provided the plaintiffs with a basis to seek a
fee award. The plaintiffs approached the companies to discuss
an aggregate award, and six of the defendants made a joint
offer back to the plaintiffs. See In re Exclusive Forum
Provision Mootness Fee Petitions (Exclusive
Forum), Consol. C.A. No. 7216-CS, at 17- 18 (Del. Ch.
May 29, 2012) (TRANSCRIPT). After further discussion, defense
counsel asked the plaintiffs to reframe their request as a
per-company figure. See id. at 56.
settlement discussions eventually broke down, and the
plaintiffs filed a fee petition against each company. In
their petitions, the plaintiffs requested an award of $400,
000 for each company that had withdrawn a bylaw, for a total
award of $3.6 million from those defendants. The plaintiffs
requested $500, 000 for each company that had withdrawn a
charter provision, for a total award of $2 million from those
defendants. See id. at 56-57. The petitions were
later consolidated into a single proceeding.
Justice Strine, then serving as Chancellor, convened an
office conference to discuss the petitions. The bulk of the
conference focused on the plaintiffs' request for a total
of $3.6 million from the nine defendants who had withdrawn
their bylaw provisions. See Exclusive Forum, Consol.
C.A. No. 7216-CS, at 34, 56-57. Then-Chancellor Strine
described this figure as "nothing at all shocking"
and something that did not "strike [him] as absurd when
you think about it globally." Id. at 31, 37. He
pointed out that the plaintiffs had taken on "a hotly
contested, open issue" and that the defendants
"gave them their victory." Id. at 11, 13;
see id. at 59.
Chancellor also explained that the plaintiffs' request
appeared reasonable when judged against fee awards in other
therapeutic benefit situations:
Here, let's not pretend -- there's one simple reason
why the defendants themselves can't say that this is an
insubstantial issue. It's because their own clients chose
to make it a bylaw; right? So there's a certain dignity
to a ...