In Re Mindbody, Inc. Stockholder Litigation

IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE

IN RE MINDBODY, INC., ) CONSOLIDATED
STOCKHOLDER LITIGATION ) C.A. No. 2019-0442-KSJM

MEMORANDUM OPINION

Submitted: June 5, 2023
Decided: November 15, 2023

Joel Friedlander, Jeffrey M. Gorris, Christopher M. Foulds, FRIEDLANDER &
GORRIS, P.A., Wilmington, Delaware; Gregory V. Varallo, Andrew E. Blumberg,
BERNSTEIN LITOWITZ BERGER & GROSSMANN LLP, Wilmington, Delaware;
Jeroen van Kwawegen, BERNSTEIN LITOWITZ BERGER & GROSSMANN LLP,
New York, New York; Co-Lead Counsel for Lead Plaintiffs and Petitioners Luxor
Capital Partners, L.P., Luxor Partners Offshore Master Fund, LP, Luxor Wavefront,
LP, and Lugard Road Capital Master Fund, LP.

Lisa A. Schmidt, Robert L. Burns, Matthew D. Perri, John M. O’Toole, RICHARDS,
LAYTON & FINGER, P.A., Wilmington, Delaware; Matthew Solum, P.C., John Del
Monaco, Jeffrey R. Goldfine, Jacob M. Rae, KIRKLAND & ELLIS LLP, New York,
New York; Counsel for Defendants Richard Stollmeyer, Vista Equity Partners
Management, LLC, Torreys Parent, LLC, and Torreys Merger Sub, Inc., and
Respondent Mindbody, Inc.

McCORMICK, C.
This stockholder class action arises from the 2019 acquisition of Mindbody, Inc.

by Vista Equity Partners Management, LLC for $36.50 per share. On March 21,

2023, the court issued a post-trial opinion holding Mindbody’s former CEO and Vista

jointly and severally liable to the class for damages in the amount of $1 per share.

Closing a chapter, this decision resolves the parties’ disputes over the form of final

order and judgment. The parties’ chief disagreement concerns whether the court

should apply a settlement credit of $27 million toward the final damages award. This

decision holds that the non-settling defendants are not entitled to a $27 million

settlement credit. The other major clash concerns whether the lead plaintiffs in the

fiduciary action, who also petitioned for appraisal of their shares, can elect to collect

the merger consideration and class remedy and, if so, what effect the election has on

the appraisal action. This decision holds that the appraisal petitioners can elect to

receive the merger consideration and class remedy and deconsolidates the fiduciary

and appraisal actions to permit immediate appeal of the post-trial decision. Lastly,

this decision addresses open issues concerning interest, costs, and attorney’s fees.

I. FACTUAL BACKGROUND

As described in greater detail in the March 21, 2023 Post-Trial Memorandum

Opinion (the “Post-Trial Opinion”),1 former Mindbody stockholders brought this class

action challenging the all-cash acquisition of Mindbody by Vista for $36.50 per share.

The lead plaintiffs are a group of former Mindbody stockholders referred to as

1 In re Mindbody, Inc. S’holder Litig., 2023 WL 2518149 (Del. Ch. Mar. 15, 2023)

(“Post-Trial Op.”).
“Luxor.”2 Luxor also petitioned for appraisal pursuant to 8 Del C. § 262 with another

group of former Mindbody stockholders referred to as “Blue Mountain”3 (and with

Luxor, the “Appraisal Petitioners”).4 The court consolidated the fiduciary and

appraisal actions on October 2, 2019.5

After fact discovery closed, Luxor filed the Second Amended Verified

Consolidated Class Action Complaint (the “Complaint”).6 As amended, the Complaint

asserted breach of fiduciary duty claims against Mindbody’s former CEO, Richard

Stollmeyer, and the Mindbody board nominee of private equity fund Institutional

Venture Partners (“IVP”), Eric Liaw, alleging that the two conspired in their efforts

to tilt the sale process in Vista’s favor. The Complaint also asserted claims for aiding

and abetting against IVP and Vista. Liaw, IVP, and Vista moved to dismiss, and

Stollmeyer moved for summary judgment.7 The court denied the motions.8

2 “Luxor” is Luxor Capital Partners, L.P., Luxor Capital Partners Offshore Master

Fund, LP, Luxor Wavefront, LP, and Lugard Road Capital Master Fund, LP.
3 “Blue Mountain” is Blue Mountain Credit Alternatives Master Fund L.P.,
BlueMountain Logan Opportunities Master Fund, L.P., BlueMountain Foinaven
Master Fund L.P., BlueMountain Fursan Fund L.P., and BlueMountain Kicking
Horse Fund L.P.
4 See Luxor Cap. P’rs v. Mindbody, 2019-0293-KSJM.

5 C.A. No. 2019-0442-KSJM, Dkt. 37. All docket (“Dkt.”) citations refer to C.A. No.
2019-0442-KSJM.
6 Dkt. 336 (“Compl.”).

7 See Dkt. 338 (Liaw and IVP Mot. to Dismiss); Dkt. 342 (Vista Mot. to Dismiss); Dkt.

345 (Stollmeyer Mot. for Summary Judgment).
8 See Dkt. 398 (In re Mindbody, Inc., S’holder Litig., 2021 WL 5565172 (Del. Ch. Nov.

29, 2021)); Dkt. 399 (In re Mindbody, Inc., S’holder Litig., 2021 WL 5564687 (Del. Ch.
Nov. 29, 2021)); Dkt. 401 (In re Mindbody, Inc., S’holder Litig., 2021 WL 5834263
(Del. Ch. Dec. 9, 2021)).

2
On December 17, 2021, the court granted Luxor’s unopposed motion to certify

the “Class” comprising:

all holders of Mindbody . . . common stock as of the closing
of the merger with affiliates of Vista . . . on February 15,
2019 (“Closing”), whether beneficial or of record, including
their legal representatives, heirs, successors in interest,
transferees and assignees of all such foregoing holders, but
excluding (i) defendants in this action, (ii) any person who
is, or was at the time of Closing, an officer, director, or
partner of Mindbody, Vista, or [IVP], (iii) the immediate
family members, meaning the parents, spouse, siblings, or
children, of any of the foregoing, (iv) any trusts, estates,
entities, or accounts that held Mindbody shares for the
benefit of any of the foregoing, and (v) the legal
representatives, heirs, successors in interest, successors,
transferees, and assigns of the foregoing[.]9

On January 18, 2022, Luxor moved to sever and stay its claims against Liaw

and IVP because they had agreed in principle to settle those claims for $27 million.10

The court granted the motion on February 8.11

On February 26, 2022, Luxor, Liaw, and IVP submitted their Stipulation and

Agreement of Settlement (the “Settlement Agreement”).12 As reflected in the

Settlement Agreement, Luxor agreed to release all claims on behalf of the Class

arising out of the allegations in the Complaint relating to the Merger against Liaw

and IVP (the “Settling Defendants”).13 In exchange, the Settling Defendants agreed

9 Dkt. 406 ¶ 1.

10 Dkt. 417.

11 Dkt. 432.

12 Dkt. 451.

13 Settlement Agr. ¶ 1(x).

3
to pay the Class $27 million. The Settlement Agreement required that the

prospective judgment include a bar order preventing “any claims for contribution

under 10 Del. C. § 6304(b)” based on the released claims against the Settling

Defendants.14 The bar order stated that:

pursuant to 10 Del. C. § 6304(b), any joint damages
recoverable against all other alleged tortfeasors, including
Non-Settling Defendants, will be reduced by the greater of
(a) the Settlement Amount, and (b) the pro rata share of
the responsibility for such damages, if any, of Settling
Defendants, should it be determined that any of the
Settling Defendants are joint tortfeasors.15

At a June 8, 2022 hearing, the court approved the settlement including the bar

order and awarded $8,556,142.95 in attorney’s fees and expenses. The awarded

expenses included $666,142.95 in expenses incurred through January 18, 2022.16

The remaining claims against Stollmeyer and Vista (the “Non-Settling

Defendants”) marched on in parallel toward trial, which took place over eight days

between February 28 and March 9, 2022.17 The parties then completed post-trial

briefing and oral argument.

In the final footnote of their post-trial answering brief, the Non-Settling

Defendants asserted that any compensatory damages awarded to the Class “must

account for the settlement of Luxor’s claims against Liaw and IVP[.]”18

14 Settlement Agr. ¶ 18.

15 Id.

16 Dkt. 481.

17 See Dkts. 461–468 (Trial Tr.).

18 Dkt. 485 at 121 n.493.

4
The Post-Trial Opinion found the Non-Settling Defendants jointly and

severally liable to the Class for $1 per share. The court held Stollmeyer liable for $1

per share for breaching fiduciary duties in connection with the sale process (the

“process damages”). The court held Stollmeyer and Vista jointly liable for $1 per

share for breaching fiduciary duties in connection with the disclosures and for aiding

and abetting in those breaches (the “disclosure damages” or “Weinberger damages”).

The court held, however, that the class is “not entitled to a double recovery” and that

“[a]ll that the class can recover is $1 per share.”19

The Post-Trial Opinion ordered the Non-Settling Defendants to pay costs and

further ordered payment of prejudgment interest in the amount of 5% over the

Federal Reserve discount rate compounded quarterly on the damages award.20

The Post-Trial Opinion directed the parties to confer on a form of final order.21

The parties failed to agree and filed cross motions for entry of a final order and

judgment.22 Co-Lead Counsel for Luxor (“Co-Lead Counsel”) also moved for an award

of attorney’s fees. The motions were fully briefed as of May 30, 2023,23 and the court

heard oral argument on June 5, 2023.24

19 Post-Trial Op., 2023 WL 2518149, at *47.

20 Id. at *47–48.

21 Id. at *48.

22 Dkt. 499 (Pls.’ Mot.); Dkt. 503 (Defs.’ Mot.).

23 Dkt. 499 (“Pls.’ Opening Br.”); Dkt. 504 (“Defs.’ Opening Br.”); Dkt. 509 (“Pls.’ Reply

Br.”); Dkt. 511 (“Defs.’ Reply Br.”).
24 Dkt. 515 (June 5, 2023 Hr’g Tr.).

5
II. LEGAL ANALYSIS

This analysis addresses five sets of issues raised by the parties in the following

order. First, are the Non-Settling Defendants entitled to a $27 million settlement

credit toward the $1-per-share damages award? Second, can the Appraisal

Petitioners elect the Class remedy and, if so, what is the effect of that election? Third,

how should the court calculate interest on the damages award? Fourth, can Co-Lead

Counsel recover costs previously reimbursed from the settlement fund? Fifth, what

amount of attorney’s fees should the court award Co-Lead Counsel?

A. The Settlement Credit

The Delaware Uniform Contribution Among Tortfeasors Act (“DUCATA”)

establishes the legal framework applicable when a plaintiff releases only some joint

tortfeasors through settlement. DUCATA codifies a right of contribution among joint

tortfeasors25 and defines “joint tortfeasors” as “[two] or more persons jointly or

severally liable in tort for the same injury to person or property, whether or not

judgment has been recovered against all or some of them.”26 Under DUCATA, such

a release does not discharge the non-settling joint tortfeasors, but rather, reduces the

claim against the other tortfeasors “in the amount of the consideration paid for the

release, or in any amount or proportion by which the release provides that the total

claim shall be reduced, if greater than the consideration paid.”27

25 10 Del. C. § 6302(a) (“The right of contribution exists among joint tortfeasors.”).

26 10 Del. C. § 6301.

27 10 Del. C. § 6304(a).

6
The Non-Settling Defendants ask that the court apply DUCATA to reduce the

total damages award in the amount of the $27 million settlement consideration.

Luxor does not dispute that if the Settling Defendants are joint tortfeasors, then the

Non-Settling Defendants are entitled to a credit equal to the full amount of the

settlement consideration, $27 million. Luxor argues, however, that a settlement

credit is inappropriate for three reasons. First, Luxor contends that the Non-Settling

Defendants waived their right to seek a credit by failing to raise the argument before

their post-trial answering brief.28 Second, Luxor argues that the trial record does not

support a finding that the Settling Defendants were joint tortfeasors.29 Third, Luxor

maintains that the doctrine of unclean hands bars the settlement credit.30 Because

this decision concludes that the Non-Settling Defendants waived their right to seek

a settlement credit, the court does not reach Luxor’s second or third arguments.

“Waiver is fundamentally an issue of fairness: the belated presentation of an

argument can deprive the opposing party of notice and the opportunity to respond.”31

This court has struggled to define when a defendant has waived its ability to

seek a settlement credit. That struggle stems in part from tension between the

28 See Pls.’ Opening Br. at 3–11; Pls.’ Reply Br. at 9–17; Defs.’ Opening Br. at 25–30;

Defs.’ Reply Br. at 13–18.
29 See Pls.’ Opening Br. at 11–16; Pls.’ Reply Br. at 17–19; Defs.’ Opening Br. at 12–

24; Defs.’ Reply Br. at 7–13.
30 See Pls.’ Opening Br. at 17–20; Pls.’ Reply Br. at 19–22; Defs.’ Opening Br. at 30–

31; Defs.’ Reply Br. at 18–20.
31 Jung v. El Tinieblo Int’l, Inc., 2022 WL 16557663, at *9 (Del. Ch. Oct. 31, 2022)

(citations omitted).

7
competing desires of avoiding trial by ambush and promoting fair and orderly

proceedings. On the one hand, the court enforces the waiver doctrine to prevent

prejudice by surprise. On the other hand, the court has acknowledged that forcing

defendants to present evidence on joint tortfeasor status at a bench trial puts them

in the awkward position of arguing that they should not be held liable, but if they

are, they took the wrongful actions in tandem with other joint tortfeasors.32 In light

of this awkwardness, the court has permitted parties to pursue claims for

contribution after the court has made liability determinations.33

Allowing litigants to pursue claims for contribution post-trial deviates from the

norm in jury trials. In Ikeda v. Molock, the Delaware Supreme Court held that a

defendant seeking a damages award based on relative fault must file a cross-claim

against settling tortfeasors before trial to allow the jury to make factual findings

related to that claim.34 The Supreme Court reasoned that a “jury may not properly

32 See Teachers’ Ret. Sys. of Louisiana v. Greenberg, C.A. No. 20106-VCS, Dkt. 460 at

45:1–11 (Del. Ch. June 13, 2007) (TRANSCRIPT) (“That’s an awkward, weird trial to
have . . . . I will not have some sort of bifurcated thing where I get to have a week,
you know, with one face of Strine, who hears of the evidence about no one did
anything wrong, and then [] the second face of Strine and the second week shows up
and has to hear about how awful [defendants] are but that their three bosses didn’t
know about it.”); see also Odyssey P’rs, L.P. V. Fleming Cos., Inc., 1997 WL 38134, at
*3 (Del. Ch. Jan. 24, 1997) (denying leave to assert a third-party claim for
contribution against a fifth director defendant before trial when the request
“certainly represent[ed] an attempt to use the joinder of party rules to gain tactical
advantage”).
33 See In re Rural/Metro Corp. S’holders Litig., 102 A.3d 205, 245 (Del. Ch. 2014).

34 See Ikeda v. Molock, 603 A.2d 785, 787 (Del. 1991) (“Accordingly, the filing of a

cross-claim is a prerequisite to the apportionment of liability between joint tort-
feasors based upon relative degrees of fault.”).

8
fulfill its role as trier of fact unless the questions to be decided by the jury are litigated

at trial[,]” where those questions include the relative degree of fault among joint

tortfeasors.35

In In re Rural/Metro Corp. Stockholders Litigation, this court addressed

whether the requirement of Ikeda applies in bench trials.36 There, a group of

defendants settled on the eve of trial. The remaining defendant, RBC, filed a

cross-claim against the settling defendants requesting that the court reduce the

damages recoverable against RBC under DUCATA based on their degrees of relative

fault. The cross-claim did not allege that the settling defendants had committed

wrongdoing. The cross-claim also did not allege that the settling defendants were

joint tortfeasors, and RBC did not advance that theory at trial. Yet when the plaintiff

argued that RBC had waived its right to argue in post-trial proceedings that the

settling defendants were joint tortfeasors, the court disagreed. In arriving at this

holding, Vice Chancellor Laster reasoned that although Ikeda requires a formal joint

tortfeasor cross-claim in a jury trial, “the same strictures do not apply in a bench

trial[.]”37 Rather than having to argue a joint tortfeasor theory at trial, RBC “simply

had to do so based on the record created at trial and in light of the factual findings”

in the post-trial opinion.38 The Delaware Supreme Court affirmed.39

35 Id.

36 102 A.3d 205, 244–45 (Del. Ch. 2014).

37 Id. at 244.

38 Id. at 245.

39 RBC Cap. Mkts., LLC v. Jervis, 129 A.3d 816, 871 (Del. 2015)

9
Under Rural/Metro, therefore, the Non-Settling Defendants’ failure to prove

joint tortfeasor status at trial does not automatically bar them from seeking a

DUCATA settlement credit post-trial. Still, the question remains whether the waiver

doctrine should preclude a settlement credit under the circumstances of this case.

The court is forced to conclude that the Non-Settling Defendants waived their

right to seek judgment reduction under DUCATA by not preserving the issue in any

manner whatsoever before trial. In Rural/Metro, RBC both filed a crossclaim for

contribution and raised the issue in the pre-trial stipulation and order. These actions,

though relatively ministerial, were the bare minimum necessary to place the

plaintiffs on notice that RBC intended to claim a settlement credit, which gave the

plaintiffs the opportunity to defend against this possibility. Here, by contrast, the

Non-Settling Defendants did not attempt to assert a crossclaim before trial or raise

the issue in pre-trial briefing, the pretrial order, or during the pretrial conference.

Rather, they did not raise the issue until the last footnote (footnote 493) on the very

last page (page 121) of their very last post-trial brief.40 To Luxor, the Non-Settling

Defendants’ failure to raise DUCATA issues timely cleared the path for a trial

strategy that aggressively implicated both Liaw and IVP, including in cross

examinations of key witnesses such as Liaw, Stollmeyer, and Professor Jesse Fried.

At trial, Luxor elicited testimony that would speak to the Settling Defendants’

joint tortfeasor status. Luxor showed that IVP’s Mindbody investment represented

40 Dkt. 485.

10
an unrealized gain of $68 million and that IVP was looking to liquidate its holdings.41

Luxor questioned Liaw about his conversation with Stollmeyer immediately after the

Audit Committee discussed the impact of reduced guidance for Q4.42 Luxor also

offered evidence that Liaw advocated to retain Qatalyst as Mindbody’s financial

adviser because Qatalyst “emphasized its relationship with Vista and recommended

a quick sale process.”43 Luxor advanced its theory in post-trial briefing that

Stollmeyer was incentivized to push for a sale at a time when Liaw was still on the

Board.44 This testimony led the court to conclude that Liaw’s role in the sale process

was “rife with the potential for conflict.”45 It is hard to believe that Luxor would have

gone so aggressively after Liaw and IVP had they known that they would have be

stuck later defending the actions of Liaw and IVP to avoid a settlement credit under

DUCATA.

Luxor cites Advanced Fluid System, Inc. v. Huber, and that case provides some

support for finding waiver here.46 Advanced Fluid addressed Pennsylvania’s

analogous joint tortfeasor statute within the context of a trade secrets case in which

one co-defendant settled before trial. When the non-settling defendants failed to raise

41 Post-Trial Op., 2023 WL 2518149, at *7.

42 Id. at *18–19.

43 Id. at *22.

44 See, e.g., Dkt. 477 (Pls.’ Opening Post-Trial Br.) at 9–13; see also Dkt. 484 (Pls.’

Answering Post-Trial Br.) at 9 (“Defendants have no answer to Stollmeyer’s behind-
the-scenes conniving with Liaw to encourage a quick sale.”).
45 Post-Trial Op., 2023 WL 2518149, at *6.

46 381 F.Supp.3d 362 (M.D. Pa. 2019), aff’d, 958 F.3d 168 (3d Cir. 2020).

11
the possibility of a settlement credit during the bench trial or in post-trial briefing,

the federal district court held that they had waived the right to seek a set-off. The

Third Circuit affirmed.47 To be sure, Advanced Fluid is not binding authority, but it

illustrates that failing to timely assert DUCATA claims can have harsh

consequences.

There is parity in finding that the Non-Settling Defendants waived their right

to a settlement credit, given that the court held that Luxor waived claims for aiding

abetting in process breaches against Vista. In the Post-Trial Opinion, the court held

that Luxor waived the process-based claims against Vista by failing to adequately

preserve them prior to trial.48 The court was convinced that Luxor’s failure to assert

claims for process breaches against Vista meant that Vista was not prepared to

defend against them. The corollary is true here—the Non-Settling Defendants’

failure to raise DUCATA issues prior to trial meant that Luxor was not on notice of

the need to defend against these arguments. Given this prior reasoning, a conclusion

that Vista did not waive its right to a settlement credit by failing to preserve it prior

to trial would seem to apply a double standard. The court finds waiver.

Contrary to the Non-Settling Defendants’ argument, this outcome does not

result in a windfall to the Class. DUCATA makes clear that adversarial principles

47 Advanced Fluid Sys., Inc. v. Huber, 958 F.3d 168 (3d Cir. 2020).

48 See Post-Trial Op., 2023 WL 2518149, at *42–43.

12
apply to judgment debtors seeking a settlement credit.49 This aspect of the statute

reflects a policy determination favoring the injured plaintiff “rather than an admitted

or adjudged [tortfeasor] bearing less than the full cost of his or her negligent

conduct.”50 Here, the Non-Settling Defendants waived their DUCATA arguments by

failing to take minimal steps to preserve them.

B. Appraisal Petitioners’ Remedy

The parties dispute whether the Appraisal Petitioners can elect to receive

Class damages absent Mindbody’s approval.51 If the Appraisal Petitioners can elect

the Class remedy, then the court must determine the effect of that election on the

appraisal proceedings, including whether the appraisal proceedings should be

deconsolidated to permit immediate appeal.

1. Availability Of The Class Remedy

The Delaware courts addressed an appraisal petitioner’s ability to elect to

receive a class remedy for fiduciary breach in Cede & Co. v. Technicolor, Inc.52 and In

re Dole Food Co., Inc. Stockholder Litigation.53

49 See, e.g., 10 Del. C. §§ 6304(a), (b) (placing the burden of proving joint tortfeasor

status on the judgment debtor); Med. Ctr. of Del., Inc. v. Mullins, 637 A.2d 6, 8 (Del.
1994).
50 Mullins, 637 A.2d at 10 (citing State Farm Mut. Auto. Ins. Co. v. Nalbone, 569 A.2d

71, 75 (Del. 1989)).
51 See Defs.’ Opening Br. at 35–37; Defs.’ Reply Br. at 21–24; Pls.’ Reply Br. at 24–25.

52 542 A.2d 1182 (Del. 1988).

53 2015 WL 5052214 (Del. Ch. Aug. 27, 2015).

13
In Cede, a stockholder commenced an appraisal proceeding related to a

controller squeeze-out merger. During discovery, the stockholder uncovered evidence

of the directors’ fiduciary breaches and brought a class action for breach of fiduciary

duties seeking rescissory damages. The Delaware Supreme Court affirmed this

court’s finding that the stockholder had standing to pursue the claims for fiduciary

breach, holding: “Fairness and consistency require equal recourse for a former

shareholder who accepts a cash-out offer in ignorance of a later-discovered claim

against management for breach of fiduciary duty and a shareholder who discovers

such a claim after electing appraisal rights.”54

The Supreme Court also held that the stockholder’s appraisal and fiduciary

claims should be consolidated for trial and that the stockholder did not have to elect

a remedy prior to trial. The court concluded by acknowledging that consolidation

may impose “certain procedural difficulties” on this court, but that the opposite result

would impose perverse incentives on defendants while disadvantaging potential

stockholders who seek to vindicate their rights.55

Although the court allowed the stockholder to pursue simultaneously claims

for appraisal and fiduciary breach, the court described the claims as “alternative

causes of action[,]”56 observed that the stockholder would be limited to a “single

54 Cede, 542 A.2d at 1188.

55 Id. at 1192.

56 Id. at 1189; see also id. at 1191–92 (describing the causes of action as “in the

alternative to”).

14
recovery judgment[,]”57 and noted that a recovery on the claim for breach of fiduciary

duty could “moot” the appraisal petition.58

In Dole, Vice Chancellor Laster determined post-trial that a class action

stockholder-plaintiff had proven under the entire fairness standard that the

controller and his colleague breached their fiduciary duties.59 Consistent with Cede,

the Vice Chancellor had consolidated the fiduciary and appraisal claims for trial.

Post-trial, the Vice Chancellor awarded a “fairer price” remedy to the class members,

resulting in an incremental award of 20% of the deal price. 60 Noting that the

appraisal petitioners were members of the defined class, the Vice Chancellor

concluded that they were “entitled to the remedy provided by this decision.”61

Echoing Cede, the Vice Chancellor observed that the appraisal petitioners could not

receive a double recovery and that “the damages award potentially renders the

appraisal claim moot.”62 He instructed the parties to meet and confer on a path

forward.

Here, as in Cede and Dole, the court consolidated the fiduciary breach and

appraisal claims for trial, the Appraisal Petitioners were not required to make a

57 Id. at 1192.

58 Id. at 1189.

59 Dole, 2015 WL 5052214 at *1.

60 Id. at *45.

61 Id. at *47.

62 Id.

15
binding election as to remedy before trial, and the Appraisal Petitioners are members

of the Class.63

As a result, under Cede and Dole, the Appraisal Petitioners can elect to receive

the merger consideration along with the Class’s $1-per-share damages award.

2. Effect Of Election

The conclusion that Appraisal Petitioners can elect the Class remedy gives rise

to additional questions: Can the Appraisal Petitioners pursue appraisal after electing

the Class remedy? What are the effects of the Post-Trial Opinion on fair value?

Should the court deconsolidate the actions?

The answer to the first issue—whether Appraisal Petitioners can have both

options—requires a deeper dive into Cede, which changed how this court treats

appraisal petitioners pursuing concurrent claims for fiduciary breach. Before Cede,

the court narrowly interpreted the appraisal statute to mean that an appraisal

petitioner loses “for the time being all the substantial rights of a stockholder[,]”

including receiving the merger consideration.64 An appraisal petitioners’ right was

considered “primarily that of a monetary claimant against the consolidated or

surviving corporation” and “more nearly analogous to that of a creditor than to that

of a stockholder.”65

63 Dkt. 405. Both the Settling and Non-Settling Defendants consented to the class
definition. Id.
64 Southern Production Co. v. Sabath, 87 A.2d 128, 134 (Del. 1952).

65 Id.; see also Dofflemyer v. W. F. Hall Printing Co., 432 A.2d 1198, 1202 (Del. 1981)

(applying Sabath’s rationale to all-cash merger); Braasch v. Goldschmidt, 199 A.2d
760, 766–67 (Del. 1964) (holding that appraisal petitioner could not maintain

16
Then came Cede. There, the Delaware Supreme Court acknowledged the

preceding cases but concluded that an appraisal petitioner did not lose standing to

“assert a timely filed private cause of action premised upon a claim of unfair dealing,

illegality, or fraud.”66 Citing to Weinberger and Rabkin, the high court highlighted

the “disparate nature” of appraisal and entire fairness proceedings because they

“serve different purposes and are designed to provide different, and not

interchangeable, remedies.”67 Quoting Weinberger, the court observed that the

appraisal remedy “may not be adequate in certain cases, particularly where fraud,

misrepresentation, self-dealing, deliberate waste of corporate assets, or gross and

palpable overreaching are involved[.]”68 The court thus concluded that allowing

appraisal petitioners to pursue claims for fiduciary breach was necessary to avoid a

rule that would “effectively immunize” a fiduciary from answering to a claim for their

wrongdoing.69

The court in Cede also rejected the defendants’ argument that allowing the

appraisal and fiduciary breach claims to proceed concurrently would be unfair to the

defendants. The court held that since the plaintiff is “simply pleading alternative

representative action challenging merger as unfair because the effect of the appraisal
election “was to convert the status of the plaintiffs therein from that of stockholders
of the corporation to that of creditors thereof”).
66 Cede, 542 A.2d at 1188.

67 Id. at 1186 (citing Weinberger v. UOP, Inc., 457 A.2d 701, 714 (Del. 1983); Rabkin

v. Philip A. Hunt Chem. Corp., 498 A.2d 1099 (Del. 1985)).
68 Id. at 1187 (quoting Weinberger v. UOP, Inc., 457 A.2d 701, 714 (Del. 1983)).

69 Cede, 542 A.2d at 1189.

17
causes of action,” there is no risk of a double recovery.70 The court viewed

consolidation as “necessary to put [the plaintiff] in a position equivalent to the

position it would arguably be in had defendants exercised ‘complete candor’ in

disclosing all material information associated with the merger[.]”71

By permitting a stockholder to pursue appraisal claims as a “alternative” cause

of action, and limiting a stockholder to a “single recovery,” Cede aimed to minimize

unfairness to the respondent—a stockholder may pursue many theories but may

recover under just one. The implied message is that the choice of paths is binary.72

Applying the reasoning of Cede here, if the Appraisal Petitioners elect the

Class remedy, then they must be treated as members of the Class. The members of

the Class received $36.50 per share from Mindbody in the Merger and then received

an additional $1 per share from the Non-Settling Defendants through the Post-Trial

Opinion. If, however, the Appraisal Petitioners elect to pursue their appraisal claims,

then they may not receive the Class remedy and the court will determine the fair

value of the Appraisal Petitioners’ shares.

The Non-Settling Defendants argue that this outcome is inconsistent with

8 Del. C. § 262 governing appraisal. More than 60 days after the date of a merger,

Section 262 requires an appraisal claimant to obtain the corporation’s consent before

70 Id.

71 Id. at 1191 (quoting Weinberger, 457 A.2d at 710).

72 Cede, 542 A.2d at 1189; see also id. at 1191–92 (describing the causes of action as

“in the alternative to”).

18
it can withdraw its petition for appraisal.73 Although the Non-Settling Defendants’

correctly read the text of Section 262, their interpretation that it forecloses the

Appraisal Petitioners from electing the Class remedy ignores Cede and Dole. As Class

members, the Appraisal Petitioners can opt to receive the same Merger consideration

as the Class. If they opt to receive this consideration, then as discussed above, they

are barred from seeking appraisal as a double recovery. Were it otherwise, then Cede

and Dole’s permission to appraisal petitioners to avoid making a binding election

before trial would be meaningless. Cede and Dole contemplate that, upon court

approval, an appraisal claimant can elect to receive the merger consideration and

Class damages over the respondent’s objection, and this decision follows that

precedent.

This decision does not resolve the second issue—the effect of the findings in

the Post-Trial Opinion on fair value.74 To be clear, the factual findings of the Post-

Trial Opinion bind the parties; they cannot relitigate them. But it is premature to

assess the effect of those findings on fair value. The court did not determine the fair

value calculation in the Post-Trial Opinion, and the court is not going to determine

fair value unless the Appraisal Petitioners elect to pursue appraisal.75

73 8 Del. C. § 262(k).

74 The Appraisal Petitioners ask the court to treat the $37.50 figure as a “floor” for a

fair value determination, and the Non-Settling Defendants ask for a finding that fair
value is less than $30. See Pls.’ Reply Br. at 26–29; Defs.’ Opening Br. at 39–43; Defs.’
Reply Br. at 29–33.
75 Compare In re Appraisal of Columbia Pipeline Gp., Inc., 2019 WL 3778370 (Del.

Ch. Aug. 12, 2019), with, In re Columbia Pipeline Gp., Merger Litig., 299 A.3d 393
(Del. Ch. 2023) [hereinafter Columbia II].

19
The answer to the last issue—whether to deconsolidate—is easy. Luxor asks

the court to deconsolidate the fiduciary and appraisal actions to permit an appeal of

the fiduciary action, which will inform its decision on whether to elect the Class

remedy.76 This approach makes a lot of sense. “It is well settled that ‘the trial court

has discretion to resolve scheduling issues and to control its own docket.’” 77 If the

parties wish to appeal the Post-Trial Opinion, it would be helpful to do so promptly

before this court values the Appraisal Petitioners’ shares in an appraisal proceeding.

A result at the appellate level could sway the appraisal petitioners to elect Class

damages, or, in the alternative, give the parties more concrete findings to use in the

appraisal proceedings. Either way, the benefits of consolidation have been achieved

by trying the actions together; at this stage, it makes more sense to deconsolidate.

C. Interest

The parties dispute a host of issues concerning interest: Is the Class entitled

to interest on the nominal damages award?78 Are the Appraisal Petitioners entitled

to equitable interest on the withheld merger consideration if they elect the Class

remedy.79 Should the court should toll interest in the appraisal proceedings?80

76 Pls.’ Opening Br. at 24 –25; Pls.’ Reply Br. at 30; Defs.’ Opening Br. at 38–39; Defs.’

Reply Br. at 24–28.
77 Coleman v. PricewaterhouseCoopers, LLC, 902 A.2d 1102, 1107 (Del. 2006)
(citations omitted).
78 Defs.’ Opening Br. at 33; Defs.’ Reply Br. at 20–21; Pls.’ Reply Br. at 23.

79 Pls.’ Opening Br. at 20–24; Pls.’ Reply Br. at 24–31.

80 Defs.’ Opening Br. at 39 (“At a minimum, if the appraisal decision is delayed, the

continued accrual of interest should be tolled.”).

20
In Delaware, prejudgment interest is awarded as a matter of right and

computed from the day payment is due.81 “Prejudgment interest serves two

purposes: first, it compensates the plaintiff for the loss of the use of his or her money;

and, second, it forces the defendant to relinquish any benefit that it has received by

retaining the plaintiff's money in the interim.”82 This court has “broad discretion,

subject to principles of fairness, in fixing the rate to be applied.”83 “[A] court may, in

its discretion, deny a plaintiff interest if he delayed prosecution of his claim.”84

1. Prejudgment Interest On Nominal Damages

The Non-Settling Defendants argue that prejudgment interest should not

accrue on the nominal damages award of $1 per share because the damages award

was not “‘readily ascertainable’ prior to the [Post-Trial Opinion]”85 and that

“uncertainty” over the extent of the harm from the disclosure claims “precludes the

application of [prejudgment] interest.”86

81 Moskowitz v. Mayor and Council of Wilmington, 391 A.2d 209, 210 (Del. 1978).

82 Brandywine Smyrna, Inc. v. Millennium Builders, LLC, 34 A.3d 482, 486 (Del.

2011); see also Wacht v. Continental Hosts, Ltd., 1994 WL 728836, at *2 (Del. Ch. Dec.
23, 1994); Trans World Airlines, Inc. v. Summa Corp., 1987 WL 5778, at *1, *4 (Del.
Ch. Jan. 21, 1987), aff'd, 540 A.2d 403 (Del. 1988).
83 Summa Corp. v. Trans World Airline, Inc., 540 A.2d 403, 409 (Del. 1988) (citing

Lynch v. Vickers Energy Corp., 429 A.2d 497, 506 (Del. 1981)).
84 Id. (citing Moskowitz, 391 A.2d at 211 (Del. 1978)).; see also Citadel Hldg. Corp. v.

Roven, 603 A.2d 818, 826 (Del. 1992) (observing that “the trial court has some
discretion in fixing the amount of interest where there has been inordinate delay
caused by one of the parties” but that “the determination of the date when payment
was due is ordinarily a question of law subject to plenary review” on appeal (citing
Watkins v. Beatrice Cos., Inc., 560 A.2d 1016 (Del. 1989)).
85 Defs.’ Opening Br. at 33.

86 Defs.’ Reply Br. at 20–21.

21
The Non-Settling Defendants base this argument on a 1986 wrongful death

case out of the Delaware Superior Court, Kunstek v. Alpha-X Corp.87 There, the

Superior Court declined to award prejudgment interest on the wrongful death award

that was not “readily ascertainable.”88 The court observed that arriving at an exact

figure required “complex computation[s]” and difficult estimations of lost support, pay

increases, consumption, and other factors.89

Kunstek is limited to its facts. A few years after Kunstek, the Superior Court

appeared to cabin its holding to circumstances where “a claim calls for commingling

damages for personal injuries and economic loss arising therefrom or the complex

computations required in determining economic loss relating to a death[.]”90 That

does not describe this case.

Moreover, Kunstek seems based on the “historic rule” that treated prejudgment

interest as a “penalty on defendants who failed to pay promptly” that “would be

awarded only if damages were ‘liquidated’ or ‘ascertainable.’”91 Over the course of

the last century, courts came to view prejudgment interest not as a penalty but as a

87 1986 WL 5875 (Del. Super. Ct. May 15, 1986). The cases relied on by the court in
Kunstek are all wrongful death or personal injury cases. See Lum v. Nationwide Mut.
Ins. Co., 1982 WL 1585 (Del. Super. Ct. Apr. 27, 1982), aff’d, 461 A.2d 693 (Del. 1983)
(holding no prejudgment interest on complex wrongful death suit); Harris v. Capano
Hldgs., Inc., 1981 WL 1724 (Del. Super. Ct. Nov. 17, 1981) (same for personal injury).
88 Kunstek, 1986 WL 5875, at *1.

89 Id.

90 Nutt v. GAF Corp., 1987 WL 12419, at *1 (Del. Super. Ct. May 21, 1987).

91 Restatement (Third) of Torts: Remedies § 14 cmt. c (Am. L. Inst., Tentative Draft

No. 2, 2023).

22
form of compensation.92 Delaware courts came to view prejudgment interest as

serving both compensatory and disgorgement purposes. 93 Indeed, courts have noted

a long history under Delaware law of awarding prejudgment interest as a matter of

right without regard to the nature of the underlying damages.94 Given the antiquated

reasoning on which Kunstek rests, this court should be reluctant to apply its holding

to new circumstances.

Although the Non-Settling Defendants’ authority does not support their

position, it is worth questioning whether the Class has a right to prejudgment

interest on the nominal damages. Both the compensatory and disgorgement purposes

of prejudgment interest arise from the premise that the damages award was

“plaintiff’s money”—money that the plaintiff would have had in her possession absent

wrongdoing. That purpose is not served if nominal damages are merely symbolic.

This begs the question of the nature of the Weinberger-style per-share nominal

damages for disclosure violations: What purpose do they serve?

Weinberger damages for disclosure violations are not merely symbolic, as Vice

Chancellor Laster persuasively concluded in Columbia II.95 There, as here, the court

92 Id. (discussing the evolution of the doctrine of prejudgment interest, observing that

“[c]ourts and legislatures increasingly recognized that interest is not a penalty, but
an essential element of full compensation”).
93 See Moskowitz, 391 A.2d at 210.

94 See generally Super. Tube Co. v. Del. Aircraft Indus., 60 F.Supp.573 (D. Del. 1945)

(cataloguing centuries of cases applying prejudgment interest without regard to the
nature of underlying damages); E. M. Fleischmann Lumber Corp. v. Resources Corp.
Int’l, 114 F.Supp. 843 (D. Del. 1953) (same).
95 299 A.3d at 409 (Del. Ch. 2023).

23
awarded per-share “nominal” damages for disclosure violations, which the Vice

Chancellor calculated as $0.50 per share or 1.96% of the equity value.96 In arriving

at this outcome, the Vice Chancellor helpfully identified multiple throughlines

connecting the Post-Trial Opinion, Weinberger, and other decisions of this court

awarding damages for disclosure violations.97 Each decision based the per-share

award on “contemporaneous valuations of the target company”98 and the “back-and-

forth negotiations” between the parties.99 The Post-Trial Opinion described the per-

share award as a “division of the merger surplus[.]”100 As the Vice Chancellor held

in Columbia II, the cases collectively support a rule that “when disclosure violations

have deprived stockholders of their ability to cast an informed vote on a matter

affecting their economic interests, then a court can award damages equal to a

relatively small percentage of the equity value of each share.”101

96 Id. at 498.

97 Columbia II, 299 A.3d. at 495–96 (discussing the Post-Trial Opinion; Weinberger v.

UOP, Inc., 1985 WL 11546 (Del. Ch. Jan. 30, 1985), aff’d, 497 A.2d 792 (Del. July 9,
1985) (TABLE); Smith v. Shell Petroleum, Inc., 1990 WL 186446, at *5 (Del. Ch. Nov.
26, 1990), aff’d, 606 A.2d 112 (Del. 1992) (awarding $2 per share where the award
was proportionate to headline value of undisclosed assets of $3 per share not reflected
in share price); Gaffin v. Teledyne, Inc., 1990 WL 195914, at *18 (Del. Ch. Dec. 4,
1990), aff’d in part, rev’d in part on other grounds, 611 A.2d 467 (Del. 1992) (reversing
class-wide dimension of $1 per share award based on a lack of record evidence)).
98 Id. at 496 (citing Verition P’rs Master Fund Ltd. v. Aruba Networks, Inc., 210 A.3d

128, 137 (Del. 2019)); see also id. at 497 (citing In re Dunkin’ Donuts S’holders Litig.,
1990 WL 189120, at *9 (Del. Ch. Nov. 27, 1990) (“A buyer’s internal valuations carry
an extra imprimatur of reliability and are likely to provide more persuasive evidence
of value than the buyer's actual bids[.]”).
99 Columbia II, 299 A.3d at 497.

100 Post-Trial Opinion, 2023 WL 2518149, at *47.

101 Columbia II, 299 A.3d at 409.

24
The court’s analysis in Columbia II reveals one implied justification for the

methodologies employed when calculating Weinberger damages—that disclosure

violations affecting votes on economic rights impair those economic rights. Under

this justification, Weinberger damages are compensatory. The cases discussed in

Columbia II suggest an additional justification for Weinberger damages—to

redistribute merger consideration surplus retained due to wrongdoing. Under this

justification, Weinberger damages are a form of disgorgement. In all events,

Columbia II made clear that per-share “nominal” damages are not “symbolic.” That

is, it “is not the symbolic award of $1 that a court grants when no greater damages

were suffered or proven.”102 Rather, it is nominal in the sense that it is a “relatively

small percentage of the value of each share.”103

Given the compensatory and disgorgement nature of Weinberger damages,

there is no reason to conclude that prejudgment interest should not accrue on that

amount.104

102 Columbia II, 299 A.3d at 495 (citing Macrophage Therapeutics, Inc. v. Goldberg,

2021 WL 2582967, at *22 (Del. Ch. June 23, 2021); Ravenswood Inv. Co., L.P. v. Est.
of Winmill, 2018 WL 1410860, at *25 (Del. Ch. Mar. 21, 2018); Penn Mart
Supermarkets, Inc. v. New Castle Shopping LLC, 2005 WL 3502054, at *16 (Del. Ch.
Dec. 15, 2005)).
103 Columbia II, 299 A.3d at 409.For this reason, Columbia II advocated redubbing
per-share nominal damages awarded in this context as “disclosure damages.” Id. at
495. The court agrees that “disclosure damages” or “Weinberger damages” is more
accurate.
104 And to the extent Delaware courts must look to whether the damages awarded

were “ascertainable” before a finding of liability, then the reasoning discussed above,
along with the studies concerning the value of voting rights relied on by the Vice
Chancellor as crosschecks in Columbia II, instructs that Weinberger damages are

25
2. Equitable Interest On Merger Consideration

The Appraisal Petitioners request an order that they are entitled to equitable

interest on the merger consideration if they elect the Class remedy.105

Awarding equitable interest is consistent with the purpose of awarding a

prevailing party prejudgment interest. Applied to this context, those purposes are to

compensate the stockholder for the loss of its money and force the surviving company

to relinquish the benefit of retaining it. Here, Stollmeyer and Vista are adjudicated

wrongdoers. There is no equity in allowing them to retain the economic value of the

merger consideration for the duration of the litigation.

Manti Holdings, LLC v. Authentix Acquisition Company, Inc. supports

awarding equitable interest on the withheld Merger consideration.106 There,

stockholders attempted to exercise their appraisal rights and abstained from

receiving merger consideration. Although the court ultimately concluded that the

stockholders were barred from seeking appraisal under a stockholder agreement, the

court awarded equitable interest at the legal rate on the withheld merger

consideration from the date of the merger. The court reasoned as follows:

Through the 2017 Merger, the merger consideration
became available to Petitioner. Nonetheless, they had
significant questions regarding their contractual and
statutory rights and in good faith tested those rights by
filing an appraisal petition. The litigation required the
resolution of several novel issues at the intersection of

sufficiently ascertainable. Columbia II, 299 A.3d at 498 (discussing “[s]tudies in
which scholars have valued voting rights”).
105 Pls.’ Reply Br. at 24.

106 2020 WL 4596838 (Del. Ch. Aug. 11, 2020).

26
contract and corporate law, and has been lengthy. The
equities of the situation are this: the Petitioners were
stripped of their stock and entitled to consideration
therefore from the time of the 2017 Merger. These funds of
the Petitioners have been held by the Respondent for the
duration of tis now-lengthy action. It would, to my mind,
be inequitable not to award interest on that amount. It is
within the Court’s discretion to award such interest.107

The Delaware Supreme Court affirmed the award of equitable interest.

Examining “the totality of these circumstances,” the high court observed that

“although the merger consideration was deposited in a non-interest-bearing account,

the fact remains that the Petitioners were deprived of the beneficial use of their

property for an extended period of time to resolve a dispute regarding a merger

agreement to which they did not agree[.]”108 The court further observed that, during

that period, the company and the acquiror “had the power to choose and control where

the funds belonging to the Petitioners were deposited.”109

Mehta v. Smurfit–Stone Container Corporation is also instructive.110 There,

the question was whether the surviving corporation was entitled to withhold the

merger consideration from a former stockholder who demanded appraisal but failed

to file an appraisal petition within the statutory time limit. The court ordered the

company to pay the merger consideration, “plus an award of pre- and post-judgment

107 Id. at *10 (emphasis added).

108 Manti Hldgs, LLC v. Authentix Acq. Co., Inc., 261 A.3d 1199, 1229 (Del. 2021).

109 Id.

110 2014 WL 5438534 (Del. Ch. Oct. 20, 2014).

27
interest running from September 25, 2011, the day after the 120-day filing period

ran, until the date of payment.”111

Manti and Mehta weigh in favor of awarding equitable interest here. Here, as

in Manti, the Appraisal Petitioners had significant questions regarding their rights

and in good faith tested them. Moreover, unlike Manti and Mehta, Luxor prevailed

on the fiduciary claims. Thus, Mindbody and Vista obtained the economic benefit of

holding petitioners’ merger consideration in a wrongful merger.

As Class members, the Appraisal Petitioners are entitled to elect a remedy that

compensates them for the adjudicated appropriate value of the merger consideration

($37.50 per share). If the Appraisal Petitioners opt for the Merger consideration plus

Class damages, then they are owed equitable interest on the withheld merger

consideration for the appraisal shares.

3. Tolling Interest

The court has deconsolidated the fiduciary and appraisal proceedings to allow

for an immediate appeal of the Post-Trial Opinion. An immediate appeal would help

inform the Appraisal Petitioners’ election concerning the Class remedy and promote

judicial economy. But it would also delay resolution of the appraisal proceeding.

Mindbody—or, the real party in interest, Vista—therefore asks that the court toll

interest in the appraisal proceeding pending the Appraisal Petitioners’ election of

remedies.112

111 Id. at *6.

112 Defs.’ Opening Br. at 39.

28
The court is sympathetic to Vista’s concern. Of course, the appraisal statute

offers one way to address that concern. Section 262(h) permits a corporation to

prepay appraisal claimants in an amount of the corporation’s choosing to stop accrual

of interest.113 And Mindbody has taken advantage of that statute to a degree.114 That

said, if appeal of the fiduciary action or time spent while the Appraisal Petitioners

determine whether to elect the Class remedy has the effect of delaying the appraisal

action, then tolling arguments might resonate, and Vista may reassert them after the

Appraisal Petitioners make their election.115

D. Costs

The Post-Trial Opinion awarded costs to Luxor under Court of Chancery Rule

54(d).116 “Delaware law dictates that, in fee shifting cases, a judge determine whether

the fees requested are reasonable.”117 “The trial court has broad discretion in

113 8 Del. C. § 262(h).

114 See Dkt. 499 (Blumberg Aff.) ¶ 13.

115 See generally Moskowitz, 391 A.2d at 211 (identifying “whether the plaintiff has

been guilty of delay in pursuing his claim” as a factor to consider when computing
prejudgment interest, and noting that “[w]hile interest is a matter of right in
Delaware, the Trial Court does have some discretion in determining the amount of
interest where there has been undue delay in the process of a lawsuit . . . ; for it is
improper for a plaintiff to benefit by his failure to prosecute his own claim” (citation
omitted)).
116 Post-Trial Op., 2023 WL 2518149, at *48; Ct. Ch. R. 54(d).

117 Mahani v. Edix Media Gp., Inc., 935 A.2d 242, 245 (Del. 2007); Peyton v. William

C. Peyton Corp., 8 A.2d 89, 91–92 (Del. 1939) (‘[T]he Court should have authority to
consider and determine the reasonableness of the [costs], where such expense is
objected to as being excessive.”); Gaffin v. Teledyne, Inc., 1993 WL 271443, at *2 (Del.
Ch. July 13, 1993) (reviewing reasonableness of costs).

29
determining the amount of fees and expenses to award.”118 Prevailing party costs

under Rule 54(d) do not cover all litigation expenses, but rather, only those

“necessarily incurred in the assertion of [the prevailing party’s] rights in court.”119

Co-Lead Counsel submitted affidavits itemizing $180,301.24 in costs

recoverable under Court of Chancery Rule 54(d).120 The Non-Settling Defendants

challenge only $32,657.80 of that amount on the ground that it was incurred before

January 18, 2022,121 and thus previously reimbursed to counsel from the settlement

fund. Luxor argues that, effectively, the Class covered this portion of the recoverable

costs, which the Post-Trial Opinion assessed against the Non-Settling Defendants,

and thus the Non-Settling Defendants should not reimburse the Class. Luxor’s

position is not unreasonable, but it is inconsistent with the court’s Order and Final

Judgment approving the settlement. That Order provided that the $32,657.80 in

“Litigation Expenses shall be paid solely out of the Settlement Fund.”122 Luxor is not

entitled to the $32,657.80 that the court previously ordered be paid from the

settlement fund.

118 Black v. Staffieri, 2014 WL 814122, at *4 (Del. Feb. 27, 2014); see also Lynch v.

Gonzalez, 2020 WL 5587716, at *7 (Del. Ch. Sept. 18, 2020), aff’d, 253 A.3d 556 (Del.
2021) (noting the court’s discretion in awarding costs under Rule 54(d)).
119 Donovan v. Delaware Water & Air Resources Corn., 358 A.2d 717, 723 (Del. 1976)

120 Dkt. No. 499 (Friedlander Aff. & Blumberg Aff.); Pls.’ Opening Br. at 26.

121 Defs.’ Opening Br. at 32–33.

122 Dkt. 481 ¶ 12.

30
E. Attorney’s Fees

Co-Lead Counsel request a fee award equal to 33% of the $1 per-share Class

remedy excluding shares held by any Appraisal Petitioner.123

“The Court of Chancery has broad discretion in fixing the amount of attorney

fees to be awarded.”124 In exercising this discretion, the Court applies the five

Sugarland factors: “1) the results achieved; 2) the time and effort of counsel; 3) the

relative complexities of the litigation; 4) any contingency factor; and 5) the standing

and ability of counsel involved.”125

When the benefit achieved is quantifiable, “Sugarland calls for an award of

attorney[’s] fees based upon a percentage of the benefit.”126 To select the appropriate

percentage, this court follows the stage-of-case method set out in Americas Mining

Corp.127 Under that method, this court awards a percentage-based fee that turns on

the stage of the litigation and efforts undertaken by counsel.128 Those percentages

range from 10% for an early-stage settlement to a maximum of 33% for a post-trial

adjudication.129 “Other Sugarland factors may cause the court to adjust the

123 Pls.’ Opening Br. at 26 –33; Pls.’ Reply Br. at 32–34.

124 Johnston v. Arbitrium (Cayman Islands) Handels AG, 720 A.2d 542, 547
(Del. 1998).
125 Ams. Mining Corp. v. Theriault, 51 A.3d 1213, 1254 (Del. 2012) (citing Sugarland

Industries Inc. v. Thomas, 420 A.2d 142, 149–50 (Del. 1980)).
126 In re Activision Blizzard, Inc. S’holder Litig., 124 A.3d 1025, 1070 (Del. Ch. 2015).

127 Ams. Mining Corp., 51 A.3d 1213.

128 In re Dell Techs. Inc. Class V S’holder Litig., 300 A.3d 679, 687 (Del. Ch. 2023).

129 Ams. Mining Corp., 51 A.3d at 1259–60; Dell, 300 A.3d at 699.

31
indicative fee up or down, but the starting point under Americas Mining is a

percentage calculation.”130

Under this approach, which aligns the interests of counsel with the interests

of the stockholders, “[a] percentage of a low or ordinary recovery will produce a low

or ordinary fee; the same percentage of an exceptional recovery will produce an

exceptional fee. The wealth proposition for [counsel] is simple: If you want more for

yourself, get more for those whom you represent.”131

This case went as far as a case can go before a trial court. In these

circumstances, it is appropriate to award fees in the amount of the maximum

percentage of the common fund.132 None of the other Sugarland factors warrant a

downward adjustment.

Co-Lead Counsel’s request for an award of 33% of the common fund excluding

damages payable to Appraisal Petitioners is granted.133

130 Dell, 300 A.3d at 692 (quoting In re Orchard Enters. Inc. S’holder Litig., 2014 WL

4181912, at *8 (Del. Ch. Aug. 22, 2014)).
131 Id.

132 See generally Pls.’ Opening Br. at 29–32 (citing cases).

133 The Non-Settling Defendants request that the court order Co-Lead Counsel to

disclose their fee agreement. They suspect that Co-Lead Counsel did not represent
the Appraisal Petitioners on a fully contingent basis and they demand that the fee
agreement be disclosed to inform the fee award. Co-Lead Counsel represented at oral
argument that, upon personal review of the appraisal fee arrangements, the
Appraisal Petitioners’ fee arrangements were entirely contingent. June 5, 2023 Hr’g
Tr. at 70:16–24. Given this representation, the court the Non-Settling Defendants’
request for discovery.

32
III. CONCLUSION

The Non-Settling Defendants are not entitled to a settlement credit. The

Appraisal Petitioners may elect to receive the merger consideration and Class

damages. The fiduciary and appraisal actions shall be deconsolidated, allowing for

immediate appeal of the Post-Trial Opinion. If Luxor elects to receive the Class

damages and merger consideration, then Luxor is entitled to equitable interest.

Prejudgment interest is awarded on both the process damages and disclosure

damages. The Non-Settling Defendants may re-assert their tolling arguments if the

Appraisal Petitioners pursue appraisal. Luxor’s proposed bill of costs is approved

except for amounts previously reimbursed from the Settlement Fund. Co-Lead

Counsel is entitled to a fee award equal to 33% of the damages award excluding any

damages payable to the Appraisal Petitioners. The parties are instructed to prepare

a form of final order consistent with this decision within five days. It is possible that

the court failed to resolve one of the many issues raised in the rich thicket of disputes

concerning the form of final order; the parties’ briefing did not join issues neatly. If

the parties believe that the court missed something, then they are instructed to

contact Chambers immediately to schedule a status conference.

33