In In re Nine Systems Corporation Shareholders Litigation, the Delaware Court of Chancery awarded the plaintiff attorneys’ fees even though the court previously declined to award plaintiff damages for the defendants’ breach of duty of loyalty.
The underlying litigation established that the defendants had conducted a self-interested recapitalization. Nevertheless, the court refused to award monetary damages because the ultimate pricing was fair and the plaintiffs suffered no quantifiable damage. The court granted the plaintiffs leave to petition the court for an award of attorneys’ fees and costs.
The court found that the unusual circumstances of this case supported an equitable shifting of fees. The plaintiffs held reasonable concerns about the recapitalization, the defendants’ actions hindered legal action and the plaintiffs were able to prove that the defendants breached their duty of loyalty. Under these circumstances, the court held that the defendants’ conduct supported a shifting of fees. The court also found that the fact that plaintiff’s attorney pursed the case solely on a contingency basis was not a reason to deny the request for attorneys’ fees.
In re Nine Systems Corporation Shareholders Litigation, C.A. No. 3940-VCN (May 7, 2015)