In Re Activision Blizzard, Inc. Stockholder Litigation, Cons. C.A. No. 8885-VCL (Del. Ch. May 20, 2015). This Delaware Court of Chancery opinion refers to the settlement of $275 million in this case as the largest derivative settlement, and awards fees and expenses of $72.5 million to lead counsel. The fee award was based both on the amount of the monetary settlement as well as non-monetary corporate governance benefits. This opinion not only features a high amount of fees awarded in a derivative action, but also provides textbook articulations of important principles of Delaware law applicable to corporate litigation in connection with the settlement of class and derivative actions. In essence, the facts involve a restructuring that unfairly benefited insiders more than other stockholders as a whole. Prior Chancery decisions in this matter have been highlighted on these pages. The most efficient way to provide highlights of this 90-page magnum opus is to provide bullet points.
- The opinion explains the basis for the requirement that the court approve settlements of class and derivative actions. See page 26 (references are to the slip opinion hyperlinked above).
- A detailed and deep historical and policy analysis of the reasons for derivative actions in general is discussed, as well as the tension arising from DGCL Section 327.
- The court provides a list of the sections of the DGCL that, by contrast to derivative actions, provide a basis for direct claims by stockholders. See footnote 6.
- A helpful reminder of a well-established Delaware corporate law principle is noted; namely, that a controlling stockholder can rightly demand a premium for his shares in an amount not shared by other stockholders. See footnote 19.
Fee Awards in Settlement of Class and Derivative Actions
- The court recites the six factors that are applied to determine the “adequacy of the settlement consideration.” See page 63 and footnote 26.
- The court discusses the basis for the award of attorneys’ fees under the common benefit doctrine, and recites the Sugarland factors.
- The Court provides a helpful reference to the percentages applicable to settlements in common fund cases. The court refers to 10% to 15% as a range to apply to a common benefit fund settlement in “early stages” of the litigation. The court refers to a range of 15% to 25% after there has been discovery and motion practice; and a cap of 33%, for example, for settlements that occur post-trial. See page 77.
- Also helpful is a reference by way of citations to prior Chancery cases, of the amounts of fee awards granted in connection with non-monetary settlements that resulted in only corporate governance benefits. See footnote 30. [This should be compared to the different percentages applicable to so-called “bump” cases.]