The Court approved an award of attorneys’ fees of $4 million to class counsel. It found the fees to be reasonable under the percentage of fund approach, the lodestar-multiplier approach, and the fee factors considered in North Carolina cases based on Rule 1.5 of the North Carolina Rules of Professional Conduct.
This Motion to Intervene before the Court in this class action case against Microsoft was filed not by a potential party, but by a group of lawyers seeking to share in any fee award to plaintiff’s counsel. The Court refused to allow the lawyers to intervene, because lawyers who have never been counsel of record cannot have an interest in a settlement. Allowing intervention, which would have led to a fee dispute, would have delayed implementation of the settlement.
The Court declined to award attorneys’ fees under the Unfair and Deceptive Practices Statute. It found that there was no unwarranted refusal to fully resolve the matter, the case involved unique issues of law, and the defendant had valid reasons to refuse to settle this matter and to litigate it to conclusion.
This opinion on attorneys’ fees was issued in tandem with the opinion in In re Wachovia Shareholders Litigation. Lawsuits had filed over a tender offer for the company, which led the Board of Directors to conduct an auction process which led to a higher price per share. Thereafter, class counsel and the defendant had agreed to permit the Court to set the fee, not to exceed $450,000, and the defendant had agreed not to object.
The Court considered, as it would have if there had been an objection: (1) whether the action was meritorious at the time it was filed, (2) whether there was an ascertainable benefit received by the class, and (3) whether there was a causal connection between the action and the benefit. The Court approved a fee of $450,000, although it found that there were some "close questions," particularly whether the filing of the lawsuit had been a direct cause of the increase in price paid for the company.
The Court noted that an award of fees acts as a check on management. The Court has an obligation "to balance the need for incentives for shareholders to protect their interest with the need to keep litigation costs at a level which does not inhibit merger activity."
The Court discussed, on a prospective basis, whether the law firm which did not become appointed as lead counsel could be compensated for its work. It noted that the decision of the law firm to be lead counsel would not ordinarily turn on which firm was the first to file.
It discussed the importance of making a shareholder inspection request under the North Carolina statute before rushing to the courthouse, cited substantial Delaware precedent on this point, and held that "failure to use inspection of books and records may result in a finding that the suit was not meritorious when filed."
The Court considered an award of attorneys fees following its determination that certain termination provisions of a merger agreement were invalid. This opinion was issued in tandem with opinion in In re Quintiles Transnational Shareholders Litigation.
Fee applications were made by attorneys representing a class of shareholders, as well as attorneys representing a derivative plaintiff. The Court observed that the derivative action did not fit well in the "fast paced" context of litigation over a merger. It stated that such claims were more suited to being litigated as shareholder rights claims as opposed to corporate (derivative) claims for breach of fiduciary duty.
The Court refused to award attorneys fees in the derivative action, observing that it "was filed solely to get a piece of the litigation fee pie." It was also critical of the failure of the derivative plaintiff to seek a shortening of the statutory 90 day waiting period. Finally, the derivative action was moot, as the merger it sought to challenge had already occurred.
The Court observed, in dicta, that "the hourly rate claimed by New York counsel is astonishingly out of line with market rates."
On the class action claims, the Court determined that it could award fees, even though the litigation had not created a common fund. It then analyzed the fee request and discussed the level of specificity it expected in fee applications.
This is the third of a series of cases involving Sunbelt, this one involving the successful plaintiff’s request for attorneys’ fees pursuant to N.C.G.S. §75-16.1.
The case considered post-trial motions, after plaintiff did not prevail on its claims for defamation and unfair and deceptive practices. The court awarded costs for expert witness fees, pursuant to its discretionary authority under under N.C.G.S. §6-20. The Court also awarded attorneys’ fees pursuant to N.C.G.S. §75-16.1, which permits an award of attorneys’ fees when the plaintiff knew, or should have known, that its unfair and deceptive trade practices action was frivolous. THe Court found that the plaintiffs had prosecuted their case in a frivolous and malicious manner, and that they had pursued it not to recover actual damages, but rather to "punch a lottery ticket or as an ‘industry cause.’"
The determination of reasonable attorneys’ fee under nationwide class action settlement is within the Court’s discretion. The court considered Model Rule of Professional Conduct 1.5(b) in making its award. It rejected the percentage of fund approach given the uncertainty of the amount that might ultimately be awarded to the members of the class. Class counsel had the obligation to present time records which justified their fee request, the Court would not ask for them.
The Court considered an award of attorneys’ fees to class counsel, who had settled eleven separate antitrust class actions, including one in North Carolina.
The value of the settlement to the North Carolina class was slight. The Court observed that it was a cost of litigation settlement of approximately three cents on the potential dollar of liability, which resulted in a benefit of $1.23 per class member, which it characterized as a "poor result."
The Court declined to follow the lead of the other Courts which had ruled on fee awards for the settlement (which had allowed a 25% fee), and followed the hybrid approach that it had adopted in the Senergy case. After extensive analysis, the Court awarded a fee of approximately 10%.
Class action counsel were entitled to an award of attorneys’ fees where the settlement had created a common fund. The Court discusses various applications to an award of fees, including the lodestar method and the percentage method, and elects to take a hybrid approach which takes into account the reasonableness of the fees under the Rules of Professional Responsibility.
The Court further determines that the fee award must be based on the actual benefits received by class members.
After noting issues involving "consortium litigation" by the lawyers for the class, the Court holds that "class counsel in cases similar to this would be well advised to maintain and submit to the court detailed time records which would help the court" in resolving issues regarding fees.