COURT OF CHANCERY
OF THE
STATE OF DELAWARE
MORGAN T. ZURN LEONARD L. WILLIAMS JUSTICE CENTER
VICE CHANCELLOR 500 N. KING STREET, SUITE 11400
WILMINGTON, DELAWARE 19801-3734
September 15, 2023
Michael J. Barry, Esquire Raymond J. DiCamillo, Esquire
Grant & Eisenhofer P.A. Richards, Layton & Finger, P.A.
123 Justison Street, 7th Floor 920 North King Street
Wilmington, DE 19801 Wilmington, DE 19801
Thomas Curry, Esquire Gregory V. Varallo, Esquire
Saxena White P.A. Bernstein Litowitz Berger & Grossman LLP
824 North Market Street, Suite 1003 500 Delaware Avenue, Suite 901
Wilmington, DE 19801 Wilmington, DE 19801
Theodore A. Kittila, Esquire Anthony A. Rickey, Esquire
Halloran Farkas + Kittila LLP Margrave Law LLC
5801 Kennett Pike, Suite C/D 3411 Silverside Road, Suite 104
Wilmington, DE 19807 Wilmington, DE 19810
RE: In re AMC Entertainment Holdings, Inc. Stockholder Litigation,
Consol. C.A. No. 2023-0215-MTZ
Dear Counsel and Ms. Izzo:
I write to address objector Rose Izzo’s motion for an award of attorneys’
1
fees. For the below reasons, I award Izzo’s counsel $212,700.00 in fees. I also
approve Izzo’s request for a $3,000 incentive fee, to be paid out of her counsel’s
fee.
A. Background
The parties to this action sought approval of a class action settlement that
contemplated the payment of AMC Entertainment Holdings Inc. (“AMC” or the
“Company”) common stock to class members as consideration for their release of
certain claims (the “Settlement Shares”). At the time, the plaintiffs’ counsel
1
Docket Item (“D.I.”) 655 at Mot.
In re AMC Ent. Hldgs., Inc. S’holder Litig.,
Consol. C.A. No. 2023-0215-MTZ
September 15, 2023
Page 2 of 9
estimated the value of the Settlement Shares exceeded $129 million.2 They sought
a fee of $20 million, or 15.5% of this value.3 Izzo appeared as an objector and
asserted a flurry of challenges to the proposed settlement, including that the
requested fee percentage was excessive.4 She also argued that settlement approval
could have an adverse effect on the Company’s stock price, and so the award of
attorneys’ fees should be derived from a post-settlement approval valuation of the
Settlement Shares.5 I approved the settlement and fixed the fee percentage at 12%,
to be applied upon issuance and valuation of the Settlement Shares. 6
The Settlement Shares have since been issued. Pursuant to my instructions,
the parties agreed the value of the Settlement Shares to the class was
$47,992,395.54.7 A 12% fee based on that figure totals $5,759,087.46,
representing a more than $14 million discount from the original request.8
Izzo now claims credit for that discount. She seeks $650,000 in attorneys’
fees and a $3,000 incentive fee for Izzo to be paid out of her counsel’s fee. The
parties took no position on Izzo’s requests.9
2
D.I. 206 at Op. Br. 30–31.
3
Id. at 51, 57.
4
D.I. 450 at Corrected Transmittal Aff. of Thomas Curry in Support of Pls.’ Reply in
Further Supp. of Settlement, Award of Att’ys’ Fees and Expenses, and Incentive Awards,
Ex. 2 at 53–54 [hereinafter “Izzo Obj.”].
5
Id. at 47–48.
6
In re AMC Ent. Hldgs., Inc. S’holder Litig., 2023 WL 5165606, at *40 (Del. Ch.
Aug. 11, 2023). The August 11 opinion is also available at docket item 615. For a more
complete recitation of the brief yet extensive history of this litigation, I refer readers to
my July 22 and August 11 opinions in this matter. In re AMC Ent. Hldgs., Inc. S’holder
Litig., — A.3d —, 2023 WL 4677722 (Del. Ch. July 21, 2023); In re AMC, 2023 WL
5165606. The July 21 opinion is also available at docket item 581.
7
D.I. 663 at 3.
8
Id. ¶ 1.
9
D.I. 658, Ex. A.
In re AMC Ent. Hldgs., Inc. S’holder Litig.,
Consol. C.A. No. 2023-0215-MTZ
September 15, 2023
Page 3 of 9
B. Analysis
“[A] litigant or a lawyer who recovers a common fund for the benefit of
persons other than himself or his client is entitled to a reasonable attorney’s fee
from the fund as a whole.”10 The Court has “considerable discretion when
deciding the appropriate fee award.”11 In exercising that discretion, the Court will
apply the Sugarland factors, which include: “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.”12 The
most important factor is the benefit created by the litigant.13
1. The Benefit Achieved
I begin by determining whether Izzo was responsible for the reduction in
attorneys’ fees. As stated, the plaintiffs’ counsel originally requested a fee equal to
15.5% of the value of the Settlement Shares, which the plaintiffs estimated
exceeded $129 million. Izzo advocated for that percentage to be cut to 10%, and
for the valuation of the Settlement Shares to be reduced. I ultimately awarded 12%
of the value of the Settlement Shares at the time they were paid. The market, and
so the parties, valued the Settlement Shares at substantially less than Plaintiffs’
counsel had predicted. The lower percentage, and more significantly the lower
value, resulted in a considerable fee reduction. Izzo argues that she contributed to
this reduction in three ways.
First, Izzo takes credit for the decision to defer valuing the Settlement Shares
until they were issued to the class. Her objection argued that AMC’s retail
stockholder base would consider the consummation of the settlement agreement as
10
Americas Mining Corp. v. Theriault, 51 A.3d 1213, 1252–53 (Del. 2012) (internal
quotation marks omitted) (quoting Boeing Co. v. Van Gemert, 444 U.S. 472, 478 (1980));
Korn v. New Castle Cnty., 922 A.2d 409, 412 (Del. 2007) (“The ‘common fund’
exception enables a litigant who succeeds in conferring a monetary benefit upon an
ascertainable class of individuals to recover costs from the fund that he or she created.”).
11
Griffith v. Stein ex rel. Goldman Sachs Grp., Inc., 283 A.3d 1124, 1139 (Del. 2022).
12
Americas Mining, 51 A.3d at 1254.
13
Id. (“Delaware courts have assigned the greatest weight to the benefit achieved in
litigation.”).
In re AMC Ent. Hldgs., Inc. S’holder Litig.,
Consol. C.A. No. 2023-0215-MTZ
September 15, 2023
Page 4 of 9
a “betrayal” and divest their holdings, causing the market price to “tumble.”14 Izzo
argued that the plaintiffs’ counsel should bear some of this particular risk,
suggesting that “the most easily administrable solution would be to rule first on the
Settlement and then, if it becomes final, address Plaintiffs’ fee petition after the
[conversion of preferred shares into common].”15
I found, and still find, Izzo’s reasoning to delay valuing the settlement
consideration unpersuasive—she proffered no evidence to support her predicted
mass exodus of aggrieved retail investors and a resulting material impact on
AMC’s common stock price.16 I decided to defer valuation of the Settlement
Shares and therefore the fee, but for different reasons. Having found there was no
need to definitively value the Settlement Shares for purposes of settlement
approval, I deferred valuation of the Settlement Shares until the time they were
issued to the class. As I explained in approving the settlement:
Under these circumstances, speculating as to the future value of a
share of AMC common stock makes little sense. I leave it to the
parties to confer on the value of the Settlement Shares as crystallized
at the time those shares are issued, and on what 12% of that value
represents. The parties should derive Plaintiffs’ counsel’s fee from
the closing price of AMC common stock on the date Settlement
Shares are issued.17
Izzo’s objection on this point was not helpful, and the fact we reached the same
conclusion alone does not warrant an award of attorneys’ fees.18
Second, Izzo argued that the settlement was an early-stage settlement,
meriting a fee award of 10% to 15%. In determining that the plaintiffs’ fee request
was excessive, I explained that “[w]hile the settlement followed highly expedited
written and document discovery, the settlement is still an early-stage settlement”
14
Izzo Obj. 47.
15
Id. at 48.
16
This is true notwithstanding the fact that AMC’s common stock price declined
following settlement approval.
17
In re AMC, 2023 WL 5165606, at *40.
18
Griffith, 283 A.3d at 1139.
In re AMC Ent. Hldgs., Inc. S’holder Litig.,
Consol. C.A. No. 2023-0215-MTZ
September 15, 2023
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and that “[t]he most justifiable ‘paid separately’ percentage is 13%.”19 Again, Izzo
and I reached the same conclusion, but her argument was too underdeveloped to be
persuasive or useful.
Third, Izzo alerted the Court to the existence of Seb Investment Management
AB v. Symantec Corp., a California decision that addressed concerns that the
plaintiffs’ counsel and their client in that case “engaged in a play to pay.”20 There,
the District Court for the Northern District of California ordered the parties to
allow class members a new opportunity to opt out of the class after finding “no
clear-cut evidence of a quid pro quo emerged, [though] discovery did show that
[Bernstein Litowitz Berger & Grossman LLP’s] initial explanation to the Court
proved misleading.”21 It held that “in future cases, [Bernstein Litowitz Berger &
Grossman LLP] in seeking appointment as class counsel shall bring this order to
the attention of the assigned judge and the decision-maker for the lead plaintiff
who is to select counsel.”22 The plaintiffs’ counsel failed to bring this ruling to my
attention, and I considered this fact in my consideration of counsel’s standing.23
Together, several factors weighing on the plaintiffs’ counsel’s standing
resulted in a 0.5% reduction in their fee award. That 0.5% reduction reflects
savings of $239,961.98. I expressly considered three separate inputs to that
downward adjustment, of which the nondisclosure of the California case was one.
Thus, I conclude that Izzo was responsible for one third, or $79,987.33, of the
resulting reduction.
2. The Secondary Sugarland Factors
I now turn to the secondary Sugarland factors as applied to that benefit to
the class and AMC. “Secondary factors include the complexity of the litigation,
19
In re AMC, 2023 WL 5165606, at *37 (quoting In re Dell Techs. Inc. Class V
S’holders Litig., 2023 WL 4864861, at *34 (Del. Ch. July 31, 2023)).
20
Seb Inv. Mgmt. AB v. Symantec Corp., 2021 WL 1540996, at *1 (N.D. Cal. Apr. 20,
2021).
21
Id. at *2.
22
Id.
23
In re AMC, 2023 WL 5165606, at *39.
In re AMC Ent. Hldgs., Inc. S’holder Litig.,
Consol. C.A. No. 2023-0215-MTZ
September 15, 2023
Page 6 of 9
the standing and skill of counsel, and the contingent nature of the fee arrangement
together with the level of contingency risk actually involved in the case.”24
In my August 11 decision, I explained that “[t]his litigation was both
complex and challenging,” and that the plaintiffs “filed claims applying a novel
legal theory, crafted in a changing legal landscape, to sophisticated financial
engineering.”25 Izzo was faced with substantially similar legal challenges, and the
complexity of the litigation warrants an upward adjustment.26 Izzo’s counsel, who
are known to and respected by this Court, undertook this representation on a
contingency fee basis.
I find that a one-third contingency fee is appropriate.27 Applying a one-third
contingency fee to the $79,987.33 benefit Izzo caused entitles Izzo to an award of
approximately $27,700.00.
3. Additional Benefits
But Izzo’s counsel did more than secure a benefit for the class: they were
helpful to the Court. When a case settles, the parties seeking approval of their
settlement drop their adversarial weapons and work together towards the common
goal of securing settlement approval. This one-handed clapping makes it more
difficult for the Court to ensure that the proposed settlement is fair. Objectors can
assist the Court by scrutinizing the parties’ agreement and identifying issues that
might betray its unfairness to absent class members.28
24
Judy v. Preferred Commc’n Sys., Inc., 2016 WL 4992687, at *15 (Del. Ch.
Sept. 19, 2016).
25
In re AMC, 2023 WL 5165606, at *38.
26
In re Activision Blizzard, Inc. S’holder Litig., 124 A.3d 1025, 1072 (Del. Ch. 2015)
(“All else equal, litigation that is challenging and complex supports a higher fee award.”).
27
See Stein v. Blankfein, 2019 WL 2750100, at *2 (Del. Ch. July 1, 2019).
28
See In re Amsted Indus. Inc. Litig., 1988 WL 92736, at *11 (Del. Ch. Aug. 24, 1988)
(“This effort, while it failed to win acceptance of his position, contributed to the class in
increasing the assurance that a fair compromise had been reached.”), aff’d sub nom.
Barkan v. Amsted Indus., Inc., 567 A.2d 1279 (Del. 1989).
In re AMC Ent. Hldgs., Inc. S’holder Litig.,
Consol. C.A. No. 2023-0215-MTZ
September 15, 2023
Page 7 of 9
In most circumstances, even where an objector offers such assistance, her
counsel is typically entitled to fees only where “his efforts improved the final
settlement or he conferred a benefit on the class.”29 But in “a very rare case . . . an
objector will be awarded a fee on the basis that he did benefit the class by
substantially assisting the court in its evaluation of the proposed settlement.”30
This is one of those very rare cases. The parties reached their settlement and
urged expedited approval before the discovery record was presented to the Court,
and the absent class members were vocal and diverse and unrepresented. Izzo’s
work provided the adversarial perspective of Delaware attorneys on an expedited
and complex settlement that posed several novel procedural and substantive
difficulties. Izzo’s counsel fought for access to and then reviewed the discovery
record, filed a comprehensive and multifaceted objection, took exceptions to the
Special Master’s report and recommendation, and zealously advocated for her
many positions at the hearing. To be sure, some of her challenges were weak, and
served more as a distraction rather than a helpful check on the merits of the
settlement.31 Nevertheless, it is clear that Izzo took a serious, thorough look into
the merits, which were far from straightforward.
And Izzo weighed in on not only the merits of the settlement, but also other
issues the Court had to address on the path to the merits. She offered represented
advocacy on objector access to discovery32 and the withdrawal of one of the
representative plaintiffs.33
29
Schultz v. Ginsburg, 965 A.2d 661, 670–71 (Del. 2009), overruled on other grounds by
Urdan v. WR Cap. P’rs, LLC, 244 A.3d 668 (Del. 2020).
30
Amsted Indus., 1988 WL 92736, at *12; see also In re Riverbed Tech., Inc. S’holders
Litig., 2015 WL 7769861, at *3 (Del. Ch. Dec. 2, 2015).
31
See, e.g., Izzo Obj. 13–19 (explaining why each representative plaintiff is not an
“Ape”).
32
D.I. 311 at Ltr.
33
D.I. 357 at Response.
In re AMC Ent. Hldgs., Inc. S’holder Litig.,
Consol. C.A. No. 2023-0215-MTZ
September 15, 2023
Page 8 of 9
Under these rare circumstances, and gauging the extent to which Izzo’s work
was helpful to the Court, the forgoing warrants a fee award of $185,000.00, equal
to around two-thirds of her counsel’s lodestar of $277,960.00.34
This leaves the question of who should pay that fee. Izzo did not suggest
who should pay, and her proposed order leaves the question open.35 When Izzo
presented her motion to the parties, they took no position. Izzo’s counsel’s
advocacy was helpful to the Court in part due to the lack of adversarial advocacy
between the parties in the settlement context. And so I believe it is fair, and within
my discretion, to split the objector’s fee between the defendants and the plaintiffs’
counsel.
4. Izzo’s Incentive Fee
Izzo has requested an incentive fee of $3,000 to be paid out of any fee award
to her counsel. The Court may grant incentive awards to representative plaintiffs
where justified by the factors identified in Raider v. Sunderland: (i) the “time,
effort and expertise expended by the class representative,” and (ii) the “benefit to
the class.”36 She points out she was an active litigant, attended the settlement
hearing, and, like the representative plaintiffs, “endured an unusual level of
harassment.”37 As explained in my August 11 decision, this was a difficult case for
all involved.38 Under the unique circumstances of this case, Izzo’s requested fee is
warranted.
C. Conclusion
Izzo’s counsel is entitled to a fee award of $27,700.00 for the reduction in
attorneys’ fees, to be paid by the Company. Her counsel is also entitled to
34
D.I. 655 at Mot. ¶ 27.
35
D.I. 655 at Proposed Order ¶ 3.
36
Raider v. Sunderland, 2006 WL 75310, at *2 (Del. Ch. Jan. 4, 2006).
37
D.I. 655 at Mot. ¶ 31.
38
In re AMC, 2023 WL 5165606, at *41 n.367 (explaining the requested $5,000 incentive
fees may be low considering, among other things, “Plaintiffs, like their counsel and the
Court, were subject to an unusual level of harassment from the time of filing the
complaints throughout this settlement process”).
In re AMC Ent. Hldgs., Inc. S’holder Litig.,
Consol. C.A. No. 2023-0215-MTZ
September 15, 2023
Page 9 of 9
$185,000.00, to be split between the defendants and plaintiffs’ counsel.39 Izzo is to
be paid an incentive fee of $3,000 from that amount. To the extent an order is
necessary, IT IS SO ORDERED.
Sincerely,
/s/ Morgan T. Zurn
Vice Chancellor
MTZ/ms
cc: All Counsel of Record, via File & ServeXpress
39
Izzo did not separately request expenses, and so no separate award of expenses will be
issued.