SEAN J. GRIFFITH, Objector Below, Appellant,
SHIVA STEIN, derivatively on behalf of The Goldman Sachs Group, Inc., and individually as a Stockholder of The Goldman Sachs Group, Inc., Plaintiff Below, Appellee, and LLOYD C. BLANKENFEIN, M. MICHELE BURNS, GARY D. COHN, MARK A. FLAHERTY, WILLIAM W. GEORGE, JAMES A. JOHNSON, ELLEN J. KULLMAN, LAKSHMI N. MITTAL, ADEBAYO O. OGUNLESI, PETER OPPENHEIMER, DEBORA L. SPAR, MARK E. TUCKER, DAVID A. VINIAR, MARK O. WINKELMAN, and THE GOLDMAN SACHS GROUP, INC., Defendants Below, Appellees.
Submitted: August 19, 2019
Below-Court of Chancery of the State of Delaware C.A. No.
VALIHURA, VAUGHN, and SEITZ, Justices.
consideration of the notice of interlocutory appeal and the
documents attached thereto as well as the notice to show
cause and responses, it appears to the Court that:
objector below-appellant, Sean J. Griffith ("the
Objector"), has filed two appeals from a Court of a
Court of Chancery letter order, dated July 1, 2019, awarding
the Objector attorneys' fees and costs under the
corporate benefit doctrine ("Fee
Order"). In appeal No. 331, 2019, he petitions this
Court under Supreme Court Rule 42 to accept an interlocutory
appeal. In appeal No. 332, 2019, he asks this Court to accept
the appeal under the collateral order doctrine. For the
reasons set forth below, we refuse the interlocutory appeal
and dismiss the other appeal as duplicative.
Fee Order arises from a direct and derivative action brought
by a stockholder against certain directors of The Goldman
Sachs Group, Inc. ("Goldman Directors"). After the
parties reached a settlement and sought the Court's
approval of the proposed settlement, the Objector filed
objections. The Court of Chancery did not approve the
settlement,  and the parties proceeded to oral argument
on the Goldman Directors' pending motion to dismiss. The
Court of Chancery granted in part and denied in part the
motion to dismiss.
Objector filed a motion for $575, 000 in attorneys' fees
and costs under the corporate benefit doctrine. The Goldman
Directors opposed the motion, arguing that a fee award of
approximately $10, 000 was appropriate. The Court of Chancery
concluded that the objection was helpful and benefitted
Goldman, but noted that its conclusions in rejecting the
settlement were not "entirely congruent" with the
Objector's arguments. The Court of Chancery determined that a
fee award of $100, 000 was equitable, plus $1, 923.30 in
July 11, 2019, the Objector filed an application for
certification of an interlocutory appeal. The Objector argued
that the Fee Order determined a substantial issue of material
importance because it resolved an issue that went to the
merits of the case and the amount of the fee awarded could
discourage other objectors from challenging poor settlements.
The Objector also suggested that if the fee award was
considered a collateral issue, then it could be immediately
appealable under the collateral order doctrine. As to the
Rule 42(b)(iii) criteria, the Objector contended that the Fee
Order addressed a question of first impression-the
appropriate fee for a successful, activist objector. The
Objector also argued that there were conflicting trial court
decisions on fee awards to objectors and that interlocutory
review would serve considerations of justice.
Goldman Directors opposed the application for certification.
They argued that the Fee Order did not determine a
substantial issue of material importance because it was a
collateral matter that did not decide the merits of the case.
As to the Rule 42(b)(iii) criteria, the Goldman Directors
argued that the order did not decide a legal issue of first
impression, but applied settled law for the determination of
fee awards. The Goldman Directors also contended that there
was no conflict on a question of law and that interlocutory
review would not serve considerations of justice.
July 23, 2019, the Court of Chancery denied the application
for certification. Applying the Rule 42(b)(iii) criteria, the
Court of Chancery concluded that the Fee Order did not
involve a question of law resolved for the first time in
Delaware, but simply applied established principles of the
corporate benefit doctrine. The Court of Chancery found that
the fact that the application of the corporate benefit
doctrine led to different fee awards in different cases did
not mean there were conflicting trial court decisions on a
question of law. As to the possibility that the Fee Order
could discourage beneficial objections to settlements, the
Court of Chancery decided that interlocutory review would
serve considerations of justice, but that this factor was of
"slight weight." The Court of Chancery concluded that
the likely benefits of interlocutory review did not outweigh
the probable costs, such that interlocutory review was in the
interest of justice.
Court of Chancery declined to address whether the Fee Order
was appealable under the collateral order doctrine, leaving
that issue to this Court. These appeals followed.
Applications for interlocutory review are addressed to the
sound discretion of the Court. In the exercise of our
discretion and giving great weight to the Court of
Chancery's thoughtful analysis in denying the application
for certification, this Court has concluded that the
application for interlocutory review does not meet the strict
standards for certification under Supreme Court Rule 42(b).
The case is not exceptional,  and the potential benefits of
interlocutory review do not outweigh the inefficiency,
disruption, and probable costs caused by an interlocutory
appeal. We therefore refuse the interlocutory
appeal in No. 331, 2019.
Turning to appeal No. 332, 2019, the Clerk issued a notice
directing the Objector to show cause why this appeal should
not be dismissed as duplicative of the interlocutory appeal.
The Objector was also directed to state the basis for his
position that the Fee Order was appealable under the
collateral order doctrine. In his response, the Objector
argues that the Fee Order falls within the collateral order
doctrine because it determines an issue independent of the
underlying litigation, it is binding on a non-party, and it
will have a substantial, continuing effect on stockholders
and Delaware corporations outside of this State as it will
discourage objections to unfair settlements. The Goldman
Directors disagree, arguing that the Fee Order simply
reflects an exercise of discretion under settled principles
and that the Objector's speculation is not the type of
important right to be reviewed under the collateral order
The collateral order doctrine is characterized as "a
common law recognition that certain collateral orders
constitute final judgments." Under the collateral
order doctrine, "orders which a) determine matters
independent of the issues involved in the proceeding itself,
b) bind persons who are non-parties in the underlying
proceeding, and c) have a substantial, continuing effect on
important rights are final and subject to immediate appellate
review." Having carefully considered the Fee
Order and the parties' positions, we conclude that the
Fee Order does not fall within the collateral order doctrine.
The Fee Order, which awarded $100, 000 of the $575, 000 in
attorneys' fees sought by the Objector under the
corporate benefit ...