Dias v. Purches, C.A. No. 7199-VCG (Del. Ch. Oct. 1, 2012).
Issue Addressed: This case discussed the award of counsel fees in connection with a class action settlement. The court discounted the amount that would otherwise be awarded due to the majority of boilerplate claims that were added to the single meritorious one.
In applying the standards for fee awards in class actions announced in the 1980 Delaware Supreme Court decision in Sugarland Indus., Inc. v. Thomas, the court also relied on the Chancery decision in the matter of In Re Sauer-Danfoss Inc. Shareholder Litigation, C.A. No. 5162-VCL (Del. Ch. Apr. 29, 2011), which catalogued a series of cases, with a comparison of the benefit/disclosure in those cases, and the fee awarded for the supplemental corrective disclosure.
The court in this matter found that $400,000 was on the low end of that Sauer-Danfoss scale. Because the court found in this case that there was only one good claim and 64 “poor” claims, in order to incentivize attorneys to eschew “larding a complaint with obviously meritless claims” the court discounted the fee award in this case to two-thirds of the low under of $400,000, for a total award of $266, 667. The court also rejected an unusual claim by the defendants for attorneys fees based on Rule 11 or an exception to the American Rule for bad faith.
A prior Chancery decision highlighted on these pages here provides more background detail.