Augenbaum v. Forman , ( read opinion here). In this letter opinion, the Chancery Court reviews an application for attorneys’ fees after a memorandum of understanding was signed as part of a settlement of a complaint that contested a merger. The complaint was filed nine days after a Merger Agreement was signed. An amended complaint was filed alleging disclosure violations. During discovery the plaintiff became convinced that the merger price was fair and negotiated a settlement to correct materially misleading disclosures. A Memorandum of Understanding (“MOU”) allowed for a payment of up to $450,000 in attorneys’ fees but the defendants argued that they should not be paid more than $75,000.
The Court applied the Sugarland factors for determining the amount of attorneys’ fees to award. In this case, the Court was satisfied that the supplemental disclosures that resulted from the complaint included useful information and that permitted the stockholders to view the final price term from a materially different perspective. This holding was despite no fiduciary misconduct being revealed. The Court ultimately awarded $225,000 in attorneys’ fees in light of the entirely therapeutic nature of the benefit conveyed which was also admittedly modest.