In Re Novell, Inc. Shareholder Litigation,
Cons. C. A. No. 6032-VCN (Del. Ch. Aug. 30, 2011). Read letter ruling here.
Whether interim application for fees in class action should be deferred as
premature. Short Answer: Yes.
This letter decision reiterated the inclination of at
least one member of the Court of Chancery to defer interim applications
for fees in class actions. Accord: Frank v. Elgamal. (See
summary of decision reaching same result in different Chancery case here.)
Compare: In re Del Monte Foods Company Shareholder Litigation. (See
of recent decision from different member of the court granting interim
application for fees.)
The Court briefly reviewed the general rule, known as the
American Rule, that each party pays its own fees. In class actions there
is an exception based on the corporate benefit doctrine and related
theories. In this case the Court emphasized that, as a starting point for
the analysis, it is within the Court's discretion whether to grant an interim
fee application. Based on the record presented thus far, even
though the Court might agree that a fee award ultimately would be
appropriate, the Court did not need to determine that issue at this stage
because there was no exigency or special circumstance that supported an
immediate consideration of the interim application. Thus, the Court
exercised its discretion to defer ruling on the application until the remaining
claims were litigated. The Court provides copious case citations to
support its reasoning and conclusion at footnotes 11 and 21.
Read more Delaware business
litigation case summaries and commentary on Delaware
Corporate and Commercial Litigation Blog, a blog hosted by Francis G.X.
Pileggi, of Eckert Seamans.
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