                             COURT OF CHANCERY
                                   OF THE
 SAM GLASSCOCK III           STATE OF DELAWARE                COURT OF CHANCERY COURTHOUSE
  VICE CHANCELLOR                                                      34 THE CIRCLE
                                                                GEORGETOWN, DELAWARE 19947


                         Date Submitted: November 6, 2015
                          Date Decided: December 2, 2015

Joseph L. Christensen, Esquire                 Bradley D. Sorrels, Esquire
Joseph Christensen P.A.                        Wilson Sonsini Goodrich & Rosati, PC
921 Orange Street                              222 Delaware Avenue
Wilmington, DE 19801                           Wilmington, DE 19801

Peter B. Andrews, Esquire                      William M. Lafferty, Esquire
Craig J. Springer, Esquire                     Ryan D. Stottmann, Esquire
Andrews & Springer, LLC                        Morris Nichols Arsht & Tunnell LLP
3801 Kennett Pike                              1201 N. Market Street
Building C, Suite 305                          Wilmington, DE 19801
Wilmington, DE 19807

Seth D. Rigrodsky, Esquire
Brian D. Long, Esquire
Gina M. Serra, Esquire
Jeremy J. Riley, Esquire
Rigrodsky & Long, P.A.
Righter Parkway, Suite 120
Wilmington, DE 19803

              Re:    In re Riverbed Technology, Inc. Stockholders Litigation,
                     Consol. Civil Action No. 10484-VCG

Dear Counsel:

      Early in my tenure on the bench, I described the realm of corporate law as not

just different from the arena of commonplace torts and contracts, but, in paraphrase
of L. P. Hartley, as a “foreign country.”1 The foundation for that remark was

apparent in my Memorandum Opinion2 in this matter, in which I referred at length

to the many agency problems that complicate the seemingly simple matter of

deciding whether to approve the settlement of a run-of-the-mill merger litigation,

and the odd position the Court finds itself in regarding such a settlement: it acts both

as a kind of surrogate fiduciary for the class in evaluating the settlement and as a

surrogate market in setting fee awards, with regard to which it must attempt to

efficiently incentivize corporate litigation.

      In addressing the settlement and the award of counsel fees in this matter, I had

before me the presentations of learned counsel for the individual Plaintiffs and the

Defendants, parties that were by that point no longer adversarial. In addition, for the

reasons set out at length in the Memorandum Opinion, those presentations, while no

doubt erudite and sincere, were necessarily colored by the interests of counsel

themselves and their clients, interests not indisputably aligned with the class for

which I was charged with acting. I also had the benefit of the presentation, in

briefing and argument, of a stockholder–objector (the “Objector”), who provided a

perspective aligned, presumably, with his fellow stockholders.             The previous




1
  Dias v. Purches, 2012 WL 689160, at *1 (Del. Ch. Mar. 5, 2012) (citing L. P. HARTLEY, THE
GO-BETWEEN 17 (N.Y.RB Classics 2002) (1953)).
2
  In re Riverbed Tech., Inc. S’holders Litig., 2015 WL 5458041 (Del. Ch. Sept. 17, 2015).

                                            2
sentence is qualified because the Objector purchased his stock specifically with the

aim of presenting his objection, which he has advanced generically in academic

literature. His counsel here, however, presented objections specific to the settlement

under consideration. The Objector seeks fees in connection with his opposition to

the settlement, an opposition that, for reasons addressed fully in the Memorandum

Opinion, was unsuccessful. I am again put in a situation that is unusual for a

common-law judge: examining whether a party–objector, in the context of my

consideration of a proposed settlement in a corporate class action, merits a fee award

as having bestowed a benefit on the stockholder class even where the objection is

unsuccessful; and, if so, determining an equitable award in light of the service

rendered, mindful that such an award will simulate a market mechanism,

encouraging or discouraging such objections in the future.

       My consideration must start with the following premise: in considering

class-action settlements, I must act, not just in a manner consistent with the law, but

in light of the interests of the plaintiff class, which do not necessarily align with

those of the individual plaintiffs and the defendants in the matter before me. In such

a situation, while it is inaccurate to refer to the Court as a true fiduciary for the class,

the Court must surely act in the interest of the class in evaluating a settlement, and

its actions therefore are reminiscent of those of a fiduciary. In that light, the

relationship of the Court with the stockholder class is unlike that with ordinary

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litigants, who are entitled only to an impartial and thoughtful application of the law

from the Court; in assessing a proposed settlement, the Court must act on behalf of

the class. The class, therefore, has an interest in, and may be benefitted by,

submissions that aid the Court in this function, in a way that is fundamentally

different from the interest of an individual litigant in the aid provided to the Court

by an amicus, for example, no matter how helpful the Court may find such

assistance. In other words, the effect of an amicus submission is to assist the Court

in reaching the correct legal result, whereas the effect of an objector’s submission in

this context, if it is helpful to the Court, is to benefit the class itself. For this reason,

I conclude, a departure from the American Rule3 may be warranted, and equity may

support a fee award to an objector, where the efforts of the objector better enabled

the Court to act in the interests of the class, even where the suggestions of the

objector were not adopted by the Court. Our case law supports this reasoning.4

       A second premise is important here: a perverse incentive to object could be

created if counsel fees are granted in such a situation too liberally or with too much

regularity. In fact, it should be a rare occurrence indeed where an objector receives

a fee award for proposing, unsuccessfully, that a settlement of a class action be




3
  Under the American Rule, followed by the Delaware courts, each litigant is responsible for its
own attorney fees. Kaung v. Cole Nat. Corp., 884 A.2d 500, 506 (Del. 2005) (citation omitted).
4
  See In re Amsted Indus. Inc. Litig., 1988 WL 92736, at *12 (Del. Ch. Aug. 24, 1988), aff’d sub
nom, Barkan v. Amsted Indus., Inc., 567 A.2d 1279 (Del. 1989).
                                               4
rejected.

       I apply these premises to the following factual scenario: the parties proposed

a settlement of merger litigation in which the Plaintiff, on behalf of the stockholder

class, proposed to settle for disclosures to the stockholders—already made—in

return for a broad release of merger-related claims, known and unknown, where the

factual investigation done indicated that potential breach-of-duty litigation was

unlikely to be fruitful. The disclosures were of marginal materiality. The proposed

settlement, in other words, appeared to be an exchange of little for little. The

proposed settlement, moreover, was in line with settlements routinely approved by

this Court in the past, but came at a time when the Court’s treatment of such

settlements was in flux, partly in recognition of the inability of the Court to

understand fully what potential claims might exist only to be extinguished by the

usual broad release.5 The presentation of the Objector limned the general problem

inherent in this scenario but also advocated against the settlement based upon the

specific terms proposed and the investigation undertaken, in a way I explicitly found

persuasive.6 In light of the nature of the proposed settlement, then, and at this

particular time of re-examination of the utility to the class of disclosure-only



5
  See generally In re Susser Holdings Corp. S’holder Litig., C.A. No. 9613-VCG (Del. Ch. Sept.
15, 2015) (TRANSCRIPT); Acevedo v. Aeroflex Holding Corp., C.A. No. 9730-VCL (Del. Ch.
Jul. 8, 2015) (TRANSCRIPT); In re Intermune, Inc., S’holder Litig., C.A. No. 10086-VCN (Del.
Ch. Jul. 8, 2015) (TRANSCRIPT).
6
  See In re Riverbed, 2015 WL 5458041, at *6.
                                              5
settlements in return for broad releases of liability, I found the Objector’s elucidation

of issues helpful in reaching a decision. This is true despite the fact that I found that

the proposed settlement was appropriate, a finding made in light of the specific

circumstances described here, including that the settlement was entered in accord

with what had been standard practice and that facts specific to this case convinced

me that harm to the class from the proposed release was particularly unlikely. Since

my determinations were made on behalf of the stockholders, and since the

presentation of the Objector was helpful in those determinations, the Objector

conveyed a benefit to the class, and some fee award is therefore appropriate.

       The Objector seeks fees but has not suggested an appropriate amount. Any

fee here must be made in light of the factors set out by our Supreme Court in

Sugarland.7 These factors include:

       (i) the amount of time and effort applied to the case by counsel for the
       plaintiffs; (ii) the relative complexities of the litigation; (iii) the
       standing and ability of petitioning counsel; (iv) the contingent nature of
       the litigation; (v) the stage at which the litigation ended; (vi) whether
       the plaintiff can rightly receive all the credit for the benefit conferred
       or only a portion thereof; and (vii) the size of the benefit conferred.8

The most important factor is the benefit conferred. Here, the Objector points to the

elucidation of the issues that he argued supported the rejection of the settlement,



7
 Sugarland Indus., Inc. v. Thomas, 420 A.2d 142 (Del. 1980).
8
 In re Plains Res. Inc., 2005 WL 332811, at *3 (Del. Ch. Feb. 4, 2005) (citing Sugarland, 420
A.2d at 149–50).
                                               6
which I have found above to have been beneficial to the class. The Objector also

suggests that his opposition to the award of an attorney fee to the Plaintiffs worked

a benefit on the class. I found a Plaintiffs’ fee award warranted, but in an amount

less than the Plaintiffs sought. The calculation of such a fee award is a matter with

which I was already familiar, however, and the Objector’s argument was not helpful

in that regard. Thus the benefit to the class was limited to the Objector’s arguments

in opposition to the settlement itself.

       In producing what I must view—in light of my decision to approve the

settlement—as a modest benefit to the class, counsel for the Objector necessarily

reviewed the record closely, reviewed the proposed settlement and the case law, and

drafted briefing in opposition to the settlement. He also presented oral argument.

Counsel for the Objector states candidly that he applied more time here than would

have been the case had this not been the first such objection for which he advocated,

and that the effort expended is not, therefore, a persuasive factor.9 While the issues

underlying the settlement were not novel or difficult, as stated above the framework

under which the Court examines such settlements was in something of a state of flux

and was ripe for re-examination. Taking these factors, together with the other

Sugarland factors, into account, a modest fee to the Objector’s counsel is called for


9
  The Objector’s counsel reported that he worked 244 hours on this matter between his retention
in May 2015 and the oral argument regarding the settlement held on July 27, 2015. Application
for Objector’s Attorney’s Fees and Expenses, at 14.
                                              7
in equity. The Objector is awarded $10,000 in way of his counsel’s fee, and in

addition, his costs in the amount of $837.

      To the extent the foregoing requires an Order to take effect, IT IS SO

ORDERED.

                                             Sincerely,

                                             /s/ Sam Glasscock III

                                             Sam Glasscock III




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