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Court Of Chancery Awards Loser Fees

In re Nine Systems Corporation Shareholder Litigation, C.A. No. 3940-VCN (May 7, 2015)

After years of litigating a breach of fiduciary duty case, the plaintiff won the battle but lost the war when the Court held that the defendants had breached their duties but there were no damages.  May the Court still award the plaintiffs attorney fees?  This decision, in what it describes as at the outer limits of the matter, agreed some fees were warranted, but cut the fee requests by over 80%.  After all, the defendants’ conduct was wrongful and it only seems fair they should have to pay something under the circumstances, at least when it was not clear at the outset that there were no damages. This last point make it likely that the decision will have a limited future impact when the risk of being wrong far outweighs the benefit of a partial fee award. Cases will still be filed in the hope of a settlement or victory, but not just because some fee might be won even in defeat.



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