Delaware Chancery Court Defers Decision On Application For Interim Fees In Class Action

In Frank v. Elgamal, C.A. No. 6120-VCN (Del. Ch. July 28, 2011), read letter ruling here, the Delaware Court of Chancery deferred making a decision on an application for interim fees in a class action challenging an acquisition.

Issue Addressed

Where post-complaint, supplemental disclosures partially mooted claims challenging a transaction, but price and process claims remain viable and are still pending, is an interim fee request covering the disclosure claims premature?

Background

This suit was brought to challenge an acquisition of American Surgical Holdings, Inc. by Great Point Partners I, L.P. Soon after the preliminary proxy statement was filed, this action was instituted, alleging breach of fiduciary duties, unfair price and process, inadequate disclosures, and related claims. A definitive proxy statement was filed about two weeks after a motion was submitted to the Court seeking expedited proceedings and a preliminary injunction. The additional disclosures obviated the need for a preliminary injunction and the merger closed about two months later.

Discussion

The Court began its discussion with a recognition of the American Rule which provides that, generally speaking, each party "pays their own way" for lawsuits.

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