In Korn v. New Castle County, (Del. Supr., March 30, 2007, revised April 17, 2007), read opinion here, the Delaware Supreme Court reversed the Chancery Court, and the High Court ruled that the "common benefit" exception to the American Rule would apply in Delaware to allow attorneys’ fees to be awarded to a taxpayer who successfully argued that New Castle County was improperly amassing surplus funds. After suit was filed, those surplus funds were used to pay certain current expenses. The "common benefit" basis for awarding fees is often used in business enterprise litigation where, for example, a shareholder recovers funds that benefit the entire corporation.
The court noted that the equitable principle on which the common fund exception is based, is that all members of a class should not be unjustly enriched by the efforts of one person. This exception that allows fees to be awarded, requires that: (i) the claim be meritorious when filed; (ii) the action benefit an identifiable group; and (iii) the benefit be causally related to the lawsuit. There is a rebuttable presumption that if action is taken by the defendant that moots the complaint, then the benefit was causally related to the lawsuit, as here. The case was remanded to Chancery Court for a determination of an amount of legal fees to be awarded that would be reasonable in relation to the benefit conferred.