Elizabeth Morrison v. Ray Berry

COURT OF CHANCERY
OF THE
SAM GLASSCOCK III STATE OF DELAWARE COURT OF CHANCERY COURTHOUSE
VICE CHANCELLOR 34 THE CIRCLE
GEORGETOWN, DELAWARE 19947
Date Submitted: July 7, 2021
Date Decided: July 12, 2021
Joel Friedlander, Esq. John Reed, Esq.
Jeffrey M. Gorris, Esq. DLA Piper LLP (US)
Christopher M. Foulds, Esq. 1201 N. Market Street, Ste. 2100
Friedlander & Gorris, P.A. Wilmington, DE 19801
1201 N. Market Street, Suite 2200
Wilmington, DE 19801 Patricia L. Enerio, Esq.
Heyman Enerio Gattuso & Hirzel LLP
William B. Chandler, III, Esq. 300 Delaware Avenue, Ste. 200
Brad Sorrels, Esq. Wilmington, DE 19801
Lindsay K. Faccenda, Esq.
Wilson Sonsini Goodrich & Rosati, PC
222 Delaware Avenue, Ste. 800 Kevin G. Abrams, Esq.
Wilmington, DE 19801 Matthew L. Miller, Esq.
Abrams & Bayliss LLP
20 Montchanin Road, Ste. 200
Wilmington, DE 19807
RE: Elizabeth Morrison v. Ray Berry, et al.,
C.A. No. 12808-VCG
Dear Counsel:
On July 7, 2021, I considered and approved the parties’ Stipulation and
Agreement of Compromise and Settlement1 in all respects and awarded attorneys’
fees to the Plaintiff. I reserved, however, on the Plaintiff’s application for an
1
Dkt. No. 322.
incentive fee to be paid from the award of fees to counsel.2 This Letter Decision
addresses the Plaintiff’s application for an incentive award.
“Delaware courts are reluctant to award lead plaintiffs anything other than
their out-of-pocket costs and expenses.”3 However, in some circumstances, this
Court will “give[] additional compensation [to class representatives] for shouldering
the extra burden in class action litigation.”4 This is done to reward the representative
for the “significant amount of time, effort and expertise expended,” especially
because the lead plaintiff “alone bear[s] certain costs of continued litigation while
receiving a disproportionately smaller pro-rata share of the marginal benefit.”5 In
such instances, the award to the representative “is not only a rescissory measure
returning certain lead plaintiffs to their position before the case was initiated, but an
incentive to proceed with costly litigation (especially costly for an actively
participating plaintiff) with uncertain outcomes.”6
Plaintiff awards, however, “should be rare. Only in the exceptional case
should such an application be granted.”7 That is to discourage the “overzealous”
plaintiff from “hold[ing]-up optimal settlements in the hopes of achieving a larger
2
Pl.’s Appl. for Settlement Approval, an Award of Att’ys’ Fees and Expenses, and an Incentive
Award to Pl., Dkt. No. 325.
3
Raider v. Sunderland, 2006 WL 75310, at *2 (Del. Ch. Jan. 4, 2006).
4
Id. at *1.
5
Id.
6
Id.
7
Oliver v. Boston University, 2009 WL 1515607, at *1 (Del. Ch. May 29, 2009).
2
settlement and, consequently, a larger bonus payment.”8 Further, in determining the
amount of the award to representative plaintiffs, the Court “notably ignore[s] the
benefit to the class”9 and focuses more on the particular expertise, time, and effort
devoted by the representative.10 For example, in Raider v. Sunderland, this Court
awarded the lead plaintiff a bonus payment of $42,400, which came out of the class
counsel’s fee.11 That award was based on the plaintiff representative’s expenditure
of “a total of 205 hours on matters beneficial to the class,” most of which was spent
on matters involving his expertise in “tax and financial analyses.”12 The Court found
that an hourly rate of $200 was suitable, applied it to the 205 hours, and added the
representative’s out-of-pocket expenses to arrive at $42,400.
Similarly, in Oliver v. Boston University, the Court awarded the lead plaintiff
$40,000.13 In that case, the lead plaintiff “devoted 2,000 hours” to the case, which
included being deposed extensively, helping with document review, attending each
day of trial, and interacting extensively with counsel.14 The Oliver lead plaintiff
further “recognized an important document from a large set of documents produced
that played a key role in supporting the class recovery” and had expertise as a trust
8
Raider, 2006 WL 75310, at *1.
9
Id. at *2.
10
See In re Orchard Enterprises, Inc. S’holder Litig., 2014 WL 4181912, at *13 n.8 (Del. Ch.
Aug. 22, 2014) (listing cases).
11
Raider, 2006 WL 75310, at *2.
12
Id.13
Oliver, 2009 WL 1515607, at *1.
14
Id.3
officer.15 And in Brinckerhoff v. Texas Eastern Products Pipeline Co., LLC, the lead
plaintiff spent about 1,000 hours assisting with the litigation, and was awarded
$100,000 by the court.16
The request for an incentive fee here is far more modest. The lead plaintiff
here, Elizabeth Morrison, seeks $5000 as an incentive, to be paid from the overall
fee award. She has been lead plaintiff for the several years this matter has been
pending and has contributed to the case as a litigant ought—that is, she has reviewed
the pleadings she was asked to sign. The Plaintiff’s counsel, however, concedes that
she has not engaged in actions beyond those expected of all litigants in this Court. I
do not mean to denigrate Ms. Morrison’s actions here as a litigant or class
representative. But her service was not of the type of those exemplary efforts of past
class representatives who did earn a fee. Granting her fee request would set a
precedent for giving all class representatives an award in the future, which would,
to my mind, set an inappropriate incentive, for the reasons mentioned above, and
would be a departure from our law as I understand it. Accordingly, her application
for an incentive award is denied.
IT IS SO ORDERED.
15
Id.16
986 A.2d 370, 396 (Del. Ch. 2010).
4
Sincerely,
/s/ Sam Glasscock III
Sam Glasscock III
cc: All counsel of record (by File & ServeXpress)
5