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Stein v. Blankfein

Court of Chancery of Delaware

July 23, 2019

Shiva Stein
v.
Lloyd C. Blankfein, et al.,

          Date Submitted: July 22, 2019

          Brian E. Farnan, Esquire Michael J. Farnan, Esquire Rosemary J. Piergiovanni, Esquire Farnan LLP

          Anthony A. Rickey, Esquire Margrave Law LLC

          Jeremy D. Eicher, Esquire Eicher Law LLC

          Kevin G. Abrams, Esquire J. Peter Shindel, Jr., Esquire Matthew L. Miller, Esquire Abrams & Bayliss LLP

          Kevin M. Gallagher, Esquire Robert L. Burns, Esquire Richards, Layton & Finger, P.A.

         Dear Counsel:

         I have the Objector's Application for Certification of an Interlocutory Appeal as well as the Director-Defendants' Response. I must consider a request for certification in light of Supreme Court Rule 42. As many decisions of our courts have made clear, the purpose of Rule 42 is to prevent wasteful piecemeal litigation from overwhelming the docket of the Supreme Court. Accordingly, "[n]o interlocutory appeal will be certified by the trial court or accepted by [the Supreme Court] unless the order of the trial court decides a substantial issue of material importance that merits appellate review before a final judgment."[1] To the extent this is considered as a truly interlocutory appeal, I find that adherence to Rule 42 precludes certification. To the extent this appeal is subject to the Collateral Order Doctrine, such analysis is outside the purview of the trial court review mandated by Rule 42.

         I. INTERLOCUTORY APPEAL

         The decision subject to the request for certification here involves an award for attorneys' fees under the corporate benefit doctrine. The case involved direct and derivative claims brought by a stockholder of Goldman Sachs, with respect to which the parties had reached a settlement agreement. Settlement of these claims required approval by this Court. Under the proposed settlement, derivative claims, which belong to the corporation, would be released in return for the corporation-for whose benefit the Plaintiff was purportedly acting-adopting some minor hygienic practices. The Objector appeared at the Settlement Hearing and opposed the settlement. I found the objection helpful, but independently concluded that the settlement was not fair to the corporation or its stockholders. Accordingly, I denied the settlement. The matter then proceeded on a motion to dismiss, which I granted in part and denied in part. The remaining issue involves an allegation of self-dealing on the part of the Director-Defendants.

         As I expressed in my Letter Order of July 1, 2019 regarding the Objector's fee request, the objection was helpful to me. The rationale of my decision to deny the motion to approve the settlement was, however, my own. Nonetheless, for the reasons stated in the Letter Order, I found that the Objector had worked a substantial benefit on the corporation.

         In evaluating the appropriate fee under the corporate benefit doctrine, I applied the factors delineated by our Supreme Court in Sugarland Industries, Inc. v. Thomas.[2] Applying those factors to the facts at hand, I found an attorneys' fee award to the objector, exclusive of costs, in the amount of $100, 000.00 to be appropriate.

         It is this decision that is subject to this request for an interlocutory appeal. Rule 42(b)(2) sets out the criteria I must consider upon a motion for certification.[3] I address, in turn, the criteria identified by the Objector as applicable:

         (A) Does the interlocutory order involve a question of law resolved ...


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