George Assad v. Roelof Botha

COURT OF CHANCERY
OF THE
STATE OF DELAWARE
LORI W. WILL LEONARD L. WILLIAMS JUSTICE CENTER
VICE CHANCELLOR 500 N. KING STREET, SUITE 11400
WILMINGTON, DELAWARE 19801-3734

Date Submitted: July 28, 2023
Date Decided: October 30, 2023

Kimberly A. Evans, Esquire Raymond J. DiCamillo, Esquire
Block & Leviton LLP Srinivas M. Raju, Esquire
3801 Kennett Pike, Suite C-305 Richards, Layton & Finger, P.A.
Wilmington, Delaware 19807 920 North King Street
Wilmington, Delaware 19801

RE: George Assad v. Roelof Botha, et al.,
C.A. No. 2022-0691-LWW
Dear Counsel:

This letter resolves the plaintiff’s mootness fee application. The plaintiff

initially sought to enjoin a merger because of purportedly deficient disclosures.

After a final proxy statement was filed that mooted one of his claims, the plaintiff

amended his complaint to raise additional disclosure challenges. Supplemental

disclosures were then issued to moot the amended claims.

The plaintiff now seeks an $850,000 mootness fee. The defendants contest

the fee application, arguing that the supplemental disclosures were immaterial. They

contend that if any fee were awarded, it should not exceed $75,000.

As discussed below, I conclude that most of the disclosures are minimally

helpful rather than material. They largely relate to a separate transaction that was
C.A. 2022-0691-LWW
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not the subject of a stockholder vote. There are two exceptions. It is reasonably

conceivable that omissions of the compensation paid to and a potential conflict of

one of the company’s financial advisors would give rise to a meritorious claim. A

mootness fee of $100,000 is awarded for these material—and unremarkable—

disclosures.

I. BACKGROUND

Unless noted otherwise, the following background is drawn from the

pleadings and exhibits to the parties’ briefs.1 Given the posture of the case, I am not

making factual findings.

A. The Merger and Issuance

In July 2022, Unity Software, Inc. announced a $4.4 billion proposed merger

with ironSource Ltd.2 In accordance with New York Stock Exchange rules, Unity

stockholders were asked to approve an “issuance of shares of Unity common

stock . . . in connection with the merger.”3 The share issuance would fund Unity’s

1
Verified Am. S’holder Class Action Compl. (Dkt. 17) (“Am. Compl.”). Exhibits to the
Transmittal Affidavit of Kimberly A. Evans in Connection with Plaintiff’s Application of
an Award of Attorneys’ Fees and Expenses are cited as “Pl.’s Ex. __.” Dkts. 44, 47.
2
See Pl.’s Ex. 1 (Definitive Joint Proxy Statement/Prospectus, filed on Sept. 8, 2022)
(“Proxy”).
3
Id. at 1; see Am. Compl. ¶ 4.
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acquisition of ironSource. The merger closed on October 7, 2022, after 99.27% of

the Unity stock voting (or 70% of the outstanding shares) approved the issuance.4

B. Unity’s Advisors on the Merger and the PIPE

Morgan Stanley served as Unity’s financial advisor and provided a fairness

opinion on the merger.5 Unity paid Morgan Stanley $25 million for its services, with

$2.5 million paid post-fairness opinion and the remaining $22.5 million paid post-

closing.6 In addition, Morgan Stanley assisted a Special Finance Committee of

Unity’s board with evaluating a private investment in public equity (PIPE)

transaction.7

The PIPE transaction was not a financing mechanism for the merger.8 The

PIPE was structured as convertible notes to raise additional capital that could offset

any dilution resulting from the merger through a post-closing stock repurchase

program.9 The PIPE was conditioned on Unity stockholders approving the share

4
Defs.’ and Nominal Def.’s Opp’n to Pl.’s Appl. for an Award of Atty’s’ Fees and
Expenses (Dkt. 53) Ex. 1.
5
Proxy 25.
6
Id. at 113.
7
Id. at 90.
8
Id. at 87; see id. at 59 (“The proceeds from the PIPE Closing are expected to be used
following the closing of the merger to partially fund the repurchase of up to $2.5 billion of
shares of Unity common stock in open market transactions.”).
9
Id. at 132-33.
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issuance.10 Stockholder approval of the PIPE was neither required nor requested.11

No fairness opinion was provided on the proposed PIPE.12

In July 2022, Unity also engaged Goldman Sachs & Co. LLC “to provide

financial advice to Unity in connection with the potential acquisition of

ironSource.”13 Goldman Sachs did not deliver a fairness opinion to Unity or provide

financial analysis on the PIPE.14 Unity agreed to pay Goldman Sachs $2 million

upon the consummation of the merger.15

Both Goldman Sachs and Morgan Stanley advised the Unity board on an

unsolicited proposal from AppLovin Corporation received after the announcement

of the ironSource merger.16 AppLovin proposed an all-stock acquisition of Unity,

conditioned on terminating the agreement with ironSource.17 On September 12,

2022, AppLovin announced that it was no longer interested in exploring a

transaction with Unity.

10
Proxy 2, 4.
11
Decl. of Luis Visoso in Supp. of Defs.’ Answering Br. in Opp’n to Pl.’s Mot. for Prelim.
Inj. (Dkt. 21) (“Visoso Decl.”) ¶ 6.
12
Visoso Decl. ¶¶ 9-10.
13
Proxy 94; see id. at 94-96 (detailing the services provided by Goldman Sachs).
14
Visoso Decl. ¶ 10.
15
Proxy 94.
16
Id. at 95-96; see Am. Compl. ¶ 5.
17
Am. Compl. ¶ 5.
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C. The Initial Registration Statement and the Complaint

On July 29, 2022, Unity filed its initial Form S-4 Registration Statement with

the Securities and Exchange Commission (SEC) to solicit stockholder approval of

the issuance (the “Initial Registration Statement”).18

On August 8, the plaintiff filed a complaint in this court advancing a single

count for breach of fiduciary duty against Unity’s directors and officers for failing

to disclose all material information in advance of the stockholder vote.19 The

complaint highlighted that, through the PIPE, Unity would issue $1 billion of

convertible notes to Unity’s two largest stockholders: Silver Lake and Sequoia

Capital.20 The plaintiff asserted that the Initial Registration Statement was deficient

because it failed to disclose:

• “[w]hether Morgan Stanley ha[d] provided any services to or
received any compensation from any of Silver Lake, Sequoia
Capital, or ironSource during the two years” before issuing its
fairness opinion;

• “the substance of Goldman Sachs’ financial advice to the Board
and Special Committees”;

18
Id. ¶ 4.
19
Verified S’holder Class Action Compl. (Dkt. 1) (“Compl.”).
20
“Silver Lake” refers collectively to Silver Lake Alpine II, L.P., Silver Lake Partners VI,
L.P., and their affiliates. “Sequoia Capital” refers collectively to Sequoia Capital
Operations, LLC and its affiliates. See Proxy 3, 86.
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• “the amount and structure of Goldman Sachs’ compensation for
advising Unity and the Special Committees in connection with
the transactions”; and

• “whether Goldman Sachs ha[d] provided any services to or
received any compensation from any of Silver Lake, Sequoia
Capital, Unity, or ironSource during the two years immediately
preceding the announcement of the Merger.”21

In conjunction with its complaint, the plaintiff moved for expedition and a

preliminary injunction.22 The defendants agreed to expedited discovery and

produced documents to the plaintiff, including Morgan Stanley’s financial analysis

of the PIPE.

D. The Final Registration Statement and the Amended Complaint

On September 8, 2022, Unity filed its final Form S-4 Registration Statement

with the SEC (the “Final Registration Statement”).23 The Final Registration

Statement disclosed the amount and structure of the fees Unity would pay Goldman

Sachs for its advice.24 This information had been omitted from the Initial

Registration Statement.

21
Compl. ¶ 5.
22
Dkt. 1.
23
See generally Proxy.
24
Id. at 94.
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On September 9, the plaintiff filed an amended complaint.25 He sought three

additional disclosures:

• “[t]hat Morgan Stanley was concurrently representing
counterparties to those transactions, i.e., CVC Capital Partners
(ironSource’s largest stockholder), Silver Lake, and Sequoia
Capital”;

• regarding “[t]he tens of millions of dollars of compensation
received by Morgan Stanley and Goldman Sachs from
counterparties to the Merger and/or the PIPE in the two years
immediately preceding the signing of the Merger agreement for
advisory and financing services”; and

• “[a]ny description of the valuation analysis performed by
Morgan Stanley on the PIPE.”26
Between September 9 and September 19, the parties briefed the plaintiff’s

preliminary injunction motion.27

E. The Supplemental Disclosures

On September 21—one day before the preliminary injunction hearing—Unity

issued supplemental disclosures in a Form 8-K filed with the SEC (the

“Supplemental Disclosures”).28 Unity explained that it “d[id] not believe any

supplemental disclosures [we]re required” or that the Supplemental Disclosures

25
Dkt. 17.
26
Am. Compl. ¶ 6.
27
Dkts. 16, 21-22.
28
Pl.’s Ex. 3 (“Suppl. Disclosures”).
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were “material.”29 It further stated that the Supplemental Disclosures were being

issued “solely to moot the unmeritorious disclosure claims and minimize the risk,

costs, burden, nuisance and uncertainties inherent in litigation, and without

admitting any liability or wrongdoing.”30

The Supplemental Disclosures provided:

• a description of Morgan Stanley’s valuation of the PIPE;

• information about prior engagements and compensation paid to
Goldman Sachs by ironSource, Silver Lake, Sequoia Capital, and
CVC Capital; and

• information about prior engagements and compensation paid to
Morgan Stanley by Silver Lake, Sequoia Capital, and CVC
Capital.31
F. The Fee Application

On March 15, 2023, the plaintiff applied for an $850,000 mootness fee.32 On

May 1, the defendants filed an opposition to the application.33 They argued that the

plaintiff failed to identify any material deficiencies in Unity’s disclosures and was,

29
Id. at 2.
30
Id.
31
Id. at 2-3.
32
Dkt. 43.
33
Dkt. 53.
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if anything, entitled to a nominal fee.34 On May 18, the plaintiff filed a reply in

further support of his fee request.35

On July 6, Chancellor McCormick issued an opinion in Anderson v. Magellan

Health, Inc. that clarified the standard for mootness fees.36 On July 10, I invited the

parties to file supplemental letters addressing whether Magellan affected their

arguments.37 The parties each filed letters in response to my request on July 28.38

The plaintiff’s fee application was taken under advisement at that time.

II. ANALYSIS

To recover fees for a mooted claim, a plaintiff must show that: (1) “the suit

was meritorious when filed”; (2) the “action producing [a] benefit to the corporation

was taken by the defendants before a judicial resolution was achieved”; and (3) “the

resulting corporate benefit was causally related to the lawsuit.”39 Only the first

element is meaningfully in dispute. After considering whether the plaintiff’s claims

34
Id. at 10-11.
35
Dkt. 58.
36
298 A.3d 734 (Del. Ch. 2023).
37
Dkt. 61.
38
Dkts. 62, 63.
39
Allied Artists Pictures Corp. v. Baron, 413 A.2d 876, 878 (Del. 1980).
C.A. 2022-0691-LWW
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were meritorious when filed, I assess the appropriate fee for the benefit caused by

the plaintiff.

A. Meritorious When Filed

“Meritorious when filed” means that the plaintiff’s claim “meet[s] the

pleading standard of Rule 12(b)(6).”40 For a breach of fiduciary duty claim

concerning disclosures, the inquiry centers on whether the challenged misstatements

or omissions were material.41 “Information is material ‘if there is a substantial

likelihood that a reasonable shareholder would consider it important in deciding how

to vote’ . . . such that it would be viewed as ‘significantly alter[ing] the “total mix”

of information made available.’”42

The plaintiff’s claims concerned three categories of disclosures: (1) Morgan

Stanley’s financial analysis of the PIPE; (2) Morgan Stanley’s purported conflicts;

40
Magellan, 298 A.3d at 747; see also Chrysler Corp. v. Dann, 223 A.2d 384, 387 (Del.
1966) (“A claim is meritorious within the meaning of the rule if it can withstand a motion
to dismiss on the pleadings if, at the same time, the plaintiff possesses knowledge of
provable facts which hold out some reasonable likelihood of ultimate success.”).
41
See In re Trulia, Inc. S’holder Litig., 129 A.3d 884, 898 (Del. Ch. 2016) (holding that
supplemental disclosures must “address a plainly material misrepresentation or omission”);
In re Sauer-Danfoss Inc. S’holders Litig., 65 A.3d 1116, 1123 (Del. Ch. 2011) (explaining
that “[f]or a disclosure claim to . . . provide a compensable benefit to stockholders, the
supplemental disclosure that was sought and obtained must be material”); see also
Magellan, 298 A.3d at 749 (stating that the court “will award mootness fees based on
supplemental disclosures only when the information is material”).
In re MultiPlan Corp. S’holders Litig., 268 A.3d 784, 816 (Del. Ch. 2002) (quoting
42

Morrison v. Berry, 191 A.3d 268, 282-83 (Del. 2018)).
C.A. 2022-0691-LWW
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and (3) Goldman Sachs’ compensation and purported conflicts. The information in

the first two categories is immaterial. Only certain information in the third category

would sustain a meritorious breach of fiduciary duty claim.

1. Disclosures About the PIPE

Unity’s Supplemental Disclosures included a summary of Morgan Stanley’s

financial analysis of the PIPE as presented to the Special Finance Committee.43

Unity stated that “Morgan Stanley’s review assigned a theoretical valuation to the

Pipe Transaction of 111% of par.”44 It further disclosed Morgan Stanley’s

“indicat[ion] that publicly marketed convertible notes price on average at a

theoretical value of approximately 102%[.]”45

This information would not be material to Unity stockholders. Directors are

expected to disclose a “fair summary” of “substantive work performed by the

investment bankers upon whose advice the recommendations of their board as to

how to vote on a merger or tender rely.”46 But Unity stockholders were not being

43
Suppl. Disclosures 2-3.
44
Id. at 2.
45
Id. at 3.
46
In re Pure Res., Inc. S’holders Litig., 808 A.2d 421, 449 (Del. Ch. 2002). The only cases
that the plaintiff cites concern the need to provide a fair summary of analyses underlying
fairness opinions. The plaintiff does not challenge Unity’s disclosures regarding Morgan
Stanley’s fairness opinion on the merger. And Morgan Stanley did not provide a fairness
opinion on the PIPE. See supra note 12 and accompanying text.
C.A. 2022-0691-LWW
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asked to (or required to) vote on the PIPE.47 The only matter up for a vote was

whether Unity should issue the additional shares needed to complete the merger.48

Neither the issuance nor the merger was contingent on the PIPE.49

Further, Unity disclosed both the purpose and terms of the PIPE transaction.

Stockholders were told that the PIPE was intended to fund an optional repurchase of

Unity stock that might occur after the merger.50 The Final Registration Statement

explained that $1 billion of convertible notes would be issued, that the notes would

bear interest at a rate of 2.0% per annum with interest payable semi-annually in

arrears, and that they will mature in five years.51 The additional details provided in

the Supplemental Disclosures about Morgan Stanley’s analysis were

inconsequential to stockholders voting on the share issuance.52

47
See Proxy 1, 6; Visoso Decl. ¶ 6.
48
Cf. Arnold v. Soc’y for Sav. Bancorp, Inc., 650 A.2d 1270, 1277 (Del. 1994) (explaining
that Delaware law mandates that fiduciaries fully disclose all material information within
their control when seeking stockholder action) (citation omitted).
49
The plaintiff argues that “[n]either the Merger nor the PIPE could happen without
stockholders approving the Issuance.” Pl.’s Reply in Supp. of Appl. for an Award of
Att’ys’ Fees and Expenses (Dkt. 58) (“Pl.’s Reply”) ¶ 13. But both the merger and
issuance—the matter on which stockholders were asked to vote—could happen
irrespective of the PIPE.
50
Proxy 59.
51
Id.
52
Cf. Pure Res., 808 A.2d at 449 (holding that directors were required to disclose a “fair
summary” of “substantive work performed by the investment bankers” on the transaction
for which stockholder approval is requested).
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2. Morgan Stanley’s Purported Conflicts

The plaintiff alleged that the Final Registration Statement was deficient

because it did not mention Morgan Stanley’s concurrent representations of CVC

Capital, Silver Lake, and Sequoia Capital or the compensation Morgan Stanley

received from them.53 The Supplemental Disclosures mooted this claim by stating

that Morgan Stanley had provided unrelated “financial advisory and financing

services” to Silver Lake and its affiliates for fees of “$10 million-$25 million.”54 In

addition, the Supplemental Disclosures explained that Morgan Stanley provided

similar services for “CVC Capital Partners network and CVC funds[’] portfolio

companies and Silver Lake (including affiliates) that were unrelated to the proposed

merger with ironSource for which it expected to be paid customary fees if the

transactions were completed.”55 Unity also disclosed that Morgan Stanley had

recently begun an “additional assignment for Sequoia” that was “unrelated to the

proposed merger with ironSource” for which Morgan Stanley expected “customary

fees.”56

53
Am. Compl. ¶ 6.
54
Suppl. Disclosures 3. Unity explained that Morgan Stanley had done no work for
Sequoia Capital and its affiliates in the previous two years. Id.
55
Id.
56
Id.
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The plaintiff contends that these Supplemental Disclosures are material

because they concern Morgan Stanley’s concurrent representation of “a

counterparty.”57 Yet, the only parties to the merger were Unity and ironSource.58

Silver Lake and Sequoia Capital were investors in Unity, holding 12% and 13% of

Unity’s stock.59 Although Sequoia Capital and Silver Lake each had employees

serving on the Unity board, they are not alleged to have individually or collectively

held control.60

In the plaintiff’s view, Sequoia Capital and Silver Lake are pertinent due to

their planned participation in the PIPE.61 But, as discussed above, the PIPE was a

separate transaction—one unnecessary to complete the merger and not subject to a

Unity stockholder vote.62 Morgan Stanley’s work for Sequoia Capital and Silver

Lake would have been unimportant to a reasonable Unity stockholder deciding how

to vote on the share issuance in connection with the ironSource merger.

57
Pl.’s Appl. for an Award of Att’ys’ Fees and Expenses (Dkt. 43) ¶ 13 n.22 (citing cases
regarding the disclosure of bankers’ relationships with transactional counterparties).
58
Proxy 1, 5; see also Visoso Decl. ¶ 5.
59
Proxy 4.
60
Id.; Visoso Decl. ¶ 6.
61
See Proxy 3-4.
62
See supra notes 8, 10-11 and accompanying text.
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The disclosures about CVC Capital would be equally insignificant to a Unity

stockholder voting on the issuance. CVC Capital was also not a counterparty to the

merger. At the time of the vote, it was a minority (31.7%) stockholder of

ironSource.63 There is no suggestion that Unity had a direct relationship with CVC

Capital or its affiliates, negotiated with CVC Capital, or reached any agreement with

CVC Capital.64

3. Goldman Sachs’ Compensation and Purported Conflicts

After the plaintiff filed his complaint, Unity disclosed in the Final Registration

Statement that Goldman Sachs would receive contingent compensation for its

financial advice to Unity.65 Additional disclosures about Goldman Sachs’ potential

conflicts were prompted by the plaintiff’s amended complaint. Specifically, the

Supplemental Disclosures described Goldman Sachs’ compensation from

ironSource, Silver Lake, Sequoia Capital, and CVC Capital in unrelated matters.66

It is reasonably conceivable that the plaintiff’s claim about the failure to

disclose Goldman Sachs’ compensation from Unity and from ironSource during the

previous two years was meritorious when filed. “[F]ull disclosure of investment

63
Proxy 209.
64
See Visoso Decl. ¶ 7; Proxy 1, 3-4.
65
Proxy 94.
66
Suppl. Disclosures 3.
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banker compensation and potential conflicts” is expected given the banker’s

“central” role “in the evaluation, exploration, selection, and implementation of

strategic alternatives.”67 According to the Final Registration Statement, Goldman

Sachs played such a role.68 Goldman Sachs was engaged to “provide financial

advice to Unity in connection with the potential acquisition of ironSource.”69

Among other things, Goldman Sachs provided the Unity board with financial

analysis on AppLovin’s August 2022 proposal to combine with Unity.70

67
Vento v. Curry, 2017 WL 1076725, at *2 (Del. Ch. Mar. 22, 2017) (quoting In re Del
Monte Foods Co. S’holders Litig., 25 A.3d 813, 832 (Del. Ch. 2011)); see also In re Del
Monte Foods Co. S’holders Litig., 2011 WL 2535256, at *9-12 (Del. Ch. June 27, 2011)
(describing a claim for the failure to disclose “quantified . . . fees the bankers would earn
for the Merger” as meritorious and warranting an interim fee); In re Atheros Commc’ns,
Inc. S’holder Litig., 2011 WL 864928, at *8 (Del. Ch. Mar. 4, 2011) (observing that the
“incentives are so great” in advisors’ contingency fees that “stockholders should be made
aware of them” and that a “contingent fee structure is material” to stockholders’ decisions
on whether to support a transaction).
68
See Proxy 94-96 (describing Unity board meetings attended by Goldman Sachs and
Goldman Sachs’ summaries of “financial information of Unity, ironSource, and AppLovin
to the Unity board”). The lack of a fairness opinion issued by Goldman Sachs was not
necessarily fatal to the plaintiff’s claim. See, e.g., In re Pattern Energy Grp. Inc. S’holders
Litig., 2021 WL 1812674, at *25, *72 (Del. Ch. May 6, 2021) (concluding that the failure
to disclose compensation a financial advisor would receive in connection with the
transaction supported a reasonably conceivable claim for breach of fiduciary duty though
the financial advisor did not provide a fairness opinion); Ortsman v. Green, 2007 WL
702475, at *1 (Del. Ch. Feb. 28, 2007) (granting a motion for expedited discovery into
conflicts with the target’s financial advisor though the target retained a separate financial
advisor to provide a fairness opinion).
69
Proxy 94.
70
Id. at 96.
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Generally, the disclosure of the specific fees a financial advisor received from

unrelated work for a transactional counterparty is immaterial where the relationship

and its rough scale are disclosed. For example, in In re Xoom Corporation

Stockholder Litigation, a disclosure of the sum paid to the target’s financial advisor

from the acquiror in prior matters was deemed “mildly helpful” where stockholders

were already told that the advisor had performed a material amount of services for

the acquiror.71 Stockholders could gauge the advisor’s compensation incentives

from the target compared to its ties to the acquiror.

By comparison, Unity’s initial disclosures about Goldman Sachs’ incentives

were deficient.72 Before the mooting disclosures in the Final Registration Statement

and Form 8-K were issued, Unity stockholders lacked clarity into the form and

71
2016 WL 4146425, at *4 (Del. Ch. Aug. 4, 2016) (holding that disclosures about the
amount and magnitude of a financial advisor’s prior engagements for the counterparty’s
parent were “mildly helpful” rather than material where stockholders “had already been
told that the advisor had done work for the acquirer and were aware that a second advisor
had been retained” to address the first advisor’s conflict); see also In re Micromet, Inc.
S’holder Litig., 2012 WL 681785, at *12 (Del. Ch. Feb. 29, 2012) (explaining that
disclosure of “the actual amount of fees paid by Micromet to Goldman” would not be
material to stockholders since the recommendation statement disclosed “that Goldman
ha[d] performed certain services for Micromet in the past and received compensation for
those services”); but see In re Art Tech. Grp., Inc. S’holders Litig., Consol. C.A. No. 5955-
VCL, at 102 (Del. Ch. Dec. 20, 2010) (TRANSCRIPT) (enjoining a transaction where the
proxy omitted the financial advisor’s aggregate compensation for prior four years).
72
Proxy 94 (disclosing that Goldman Sachs had “informed the Unity board regarding the
investment banking services it had provided to and the amount of fees received from
ironSource . . . in the two years prior”).
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magnitude of Goldman Sachs’ compensation from Unity relative to its recent

engagements with ironSource. Goldman Sachs’ work for ironSource is of some

increased importance given the relative amount of its compensation from Unity (i.e.,

$15 million versus $2 million).73

As with Morgan Stanley, however, the Supplemental Disclosures about

Goldman Sachs’ work for Silver Lake, Sequoia Capital, and CVC Capital would not

have been material to a reasonable Unity stockholder voting on the share issuance.

Silver Lake, Sequoia Capital, and CVC Capital were not counterparties to the

merger. They are stockholders of Unity or ironSource, and (in the case of Silver

Lake and Sequoia Capital) parties to the PIPE.

* * *

It is reasonably conceivable that the disclosures about Goldman Sachs’

compensation from Unity in connection with the merger and from ironSource in

prior engagements would have been deemed material. This benefit was provided to

73
Compare id. (disclosing that Unity would pay Goldman Sachs $2 million upon the
completion of its merger with ironSource), with Suppl. Disclosures 3 (disclosing that
ironSource paid Goldman Sachs approximately $15 million over the prior two years for
financial advisory and underwriting services).
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Unity stockholders as a result of the plaintiff’s lawsuit.74 None of the other

challenged disclosures would have supported a meritorious claim.75

B. The Fee Award

The next step in my analysis is to quantify an appropriate fee for the portions

of the plaintiff’s claims that were meritorious when filed and yielded a benefit.

This court considers the Sugarland factors when fashioning a fee award,

including: (1) the results achieved; (2) whether counsel was working on a contingent

basis; (3) the time and effort of counsel; and (iv) counsel’s standing and ability.76

Delaware courts generally assign “the greatest weight to the benefit achieved in

74
The defendants assert that the disclosure of the $2 million Goldman Sachs would receive
from Unity was made “[f]ollowing comments from the SEC” on the Initial Registration
Statement. Defs.’ and Nominal Def.’s Opp’n to Pl.’s Appl. for an Award of Att’ys’ Fees
and Expenses (Dkt. 53) (“Defs.’ Opp’n Br.”) 6. Beyond that statement, they do not argue
that the disclosure lacks a causal relation to the plaintiff’s lawsuit. They have failed to
demonstrate that the lawsuit did not “in any way” cause the disclosure. Tandycrafts, Inc.
v. Initio Partners, 562 A.2d 1162, 1165 (Del. 1989) (“Once it is determined that action
benefitting the corporation chronologically followed the filing of a meritorious suit, the
burden is upon the corporation to demonstrate ‘that the lawsuit did not in any way cause
their action.’”) (citation omitted). There is nothing in the record to support a conclusion
that the disclosure was made due to the SEC’s comments rather than the plaintiff’s
complaint. As to the disclosure about Goldman Sachs’ work for ironSource, the defendants
do not dispute that it was prompted by the amended complaint.
75
The plaintiff argues that the defendants “cannot credibly” maintain that his claims lack
merit since they “conceded” otherwise by issuing mooting disclosures. Pl.’s Reply ¶ 2. I
disagree. Even if the risk of an injunction were slight, the defendants were entitled to moot
the plaintiff’s claims for the sake of deal certainty. That strategic choice does not
automatically entitle the plaintiff to a fee.
76
See Sugarland Indus., Inc. v. Thomas, 420 A.2d 142, 149 (Del. 1980).
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litigation.”77 In sizing the value of a disclosure benefit, the court looks to comparable

cases.78

Here, the plaintiff seeks $850,000 for the Supplemental Disclosures and the

Goldman Sachs compensation-related disclosure in the Final Registration Statement.

That would be a stretch even if the mooting disclosures were all material. The Court

of Chancery has observed that post-Trulia negotiated fee awards for material

disclosures have an “effective upper bound” of $450,000—absent “[e]xceptional

circumstances.”79 In opposing the application, the defendants submit that any fee

award should not exceed $50,000 to $75,000.80 This range is consistent with the

$75,000 value recently attributed to marginally beneficial disclosures.81

77
Americas Mining Corp. v. Theriault, 51 A.3d 1213, 1254 (Del. 2012).
78
See Garfield v. Boxed, Inc., 2022 WL 17959766, at *15 (Del. Ch. Dec. 27, 2022); see
also Sauer-Danfoss, 65 A.3d at 1136 (“A court can readily look to fee awards granted for
similar disclosures in other transactions because enhanced disclosure is an intangible, non-
quantifiable benefit.”).
79
Magellan, 298 A.3d at 750; see also Bednar v. Cleveland Biolabs, Inc., 2023 WL
3995121 (Del. Ch. June 13, 2023) (ORDER) (describing a fee award of $450,000 as at the
“high end” of the negotiated “going rate” for a set of material disclosures post-Trulia).
80
Defs.’ Opp’n Br. 14.
81
See Magellan, 298 A.3d at 750 (“[S]everal post-Trulia fee awards or agreements have
valued marginally helpful supplemental disclosures that contextualize other information
disclosed to stockholders at $75,000.”); see also Matthew D. Cain et al., Mootness Fees,
72 Vand. L. Rev. 1777, 1803 (2019) (describing median mootness fees negotiated in
federal litigation as ranging from $50,000 to $150,000).
C.A. 2022-0691-LWW
October 30, 2023
Page 21 of 23

The defendants cite to Rodden v. Bilodeau as analogous authority.82 There,

the plaintiff argued that the company failed to disclose the amount of compensation

its financial advisor received from the company and the company’s counterparty for

unrelated engagements. The company mooted the claim by disclosing the amounts

of the compensation. Vice Chancellor Slights concluded it was “reasonably

conceivable” that the information would be “deemed material” since it would help

stockholders “contextualize the magnitude” of the financial advisor’s “potential

conflict[s] of interest.”83 He awarded a fee of $75,000, rather than the $215,000

requested by the plaintiff.

At the other extreme is the Hollywood Firefighters’ Pension Fund v. Malone

decision relied on by the plaintiff.84 There, the plaintiffs alleged that the defendants

failed to provide material disclosures about the fairness of the merger, management’s

voting power post-closing, and management’s participation in merger negotiations.85

Multiple supplemental disclosures were issued, including about potential financial

advisor conflicts and the potential personal conflicts of a special committee member

82
C.A. No. 2019-0176-JRS (Del. Ch. Feb. 28, 2020) (TRANSCRIPT).
83
Id. at 21.
84
2021 WL 5179219 (Del. Ch. Nov. 8, 2021).
85
Id. at *5.
C.A. 2022-0691-LWW
October 30, 2023
Page 22 of 23

tasked with negotiating and approving the merger.86 The court awarded a mootness

fee of $800,000 for the supplemental disclosures.87

The disclosures at issue here are more like those in Rodden than in Malone.

As in Rodden, without knowing the scale of Goldman Sachs’ previous work for

ironSource, Unity stockholders would have been unable to effectively “contextualize

the magnitude” of any potential conflict of interest Goldman Sachs might have in

advising Unity on the merger.88 But in Rodden, the disclosures only concerned

compensation for unrelated transactions. Unity’s disclosure of Goldman Sachs’

compensation for its advice on the merger itself supports a higher value. After

considering this precedent (and other cases cited by the parties) as well as the

relevant benchmarks for mootness fee awards, I conclude that a fee of $100,000 is

warranted.

The remaining Sugarland factors are a wash. The plaintiff’s counsel invested

substantial time pursuing their preliminary injunction motion on a contingent

basis—though a portion of that time was spent on meritless claims. They are

86
Id.
87
Id. at *8; see also In re Arthrocare Corp. S’holder Litig., C.A. No. 9313-VCL, at 28, 32-
33 (Del. Ch. Nov. 6, 2014) (TRANSCRIPT) (describing a range of $800,000 to $1 million
in fees as merited for various disclosures pertaining to conflicted financial advisors and
financing sources).
88
Rodden, C.A. No. 2019-0176-JRS, at 21; see supra note 73 and accompanying text.
C.A. 2022-0691-LWW
October 30, 2023
Page 23 of 23

unquestionably skilled and able. This case was not, however, complex and the

litigation ended before a hearing was held.

The amount of time and effort expended by counsel serves as a crosscheck.89

The plaintiff’s counsel invested a total of 271.55 hours in the litigation, yielding a

lodestar of $212,708.75.90 The $100,000 fee award represents a 0.47 multiplier,

which is in line with that deemed “reasonable” in similar circumstances.91

III. CONCLUSION

For the reasons set forth above, the plaintiff’s counsel is awarded a mootness

fee of $100,000. The parties are directed to file a proposed form of implementing

order within 14 days.

Sincerely yours,

/s/ Lori W. Will

Lori W. Will
Vice Chancellor

89
Sauer-Danfoss, 65 A.3d at 1138.
90
See Dkts. 46-47. Expenses total $9,890.21.
91
See Magellan, 298 A.3d at 751-52 (describing a multiplier of 0.52x as “reasonable” in
the context of a mootness fee award for marginally useful disclosures).