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Attorneys Seek Fees in $6M AMDI Med Tech Settlement

February 6, 2024 | Posted in : Contingency Fees / POF, Fee Award Factors, Fee Request, Hourly Rates, Lodestar Multiplier, Practice Area: Class Action / Mass Tort / MDL, Settlement Data / Terms

A recent Law 360 story by Jeff Montgomery, “Attys Seek $750K Fee in Del. For $6M Med Tech Co. Deal”, reports that, proposed class attorneys who secured a $6 million settlement from medical device company AMDI Inc. after a purportedly under-priced and conflicted stock sale to an interest of Oracle founder Larry Ellison have asked Delaware's Chancery Court to approve $750,000 in attorney fees for their work.

The proposal by Grant & Eisenhofer PA — made public after the lawyers filed a sealed version of the stipulation Jan. 29 in Chancery Court — would end a derivative suit filed by a minority stockholder of AMDI, a company formed to develop automated medical lab systems designed to hunt for pathogens, including the COVID-19 virus.

Ellison gained control of AMDI through a series of large investments dating to 2016 by Tako Ventures LLC, a venture capital firm he controls through a different LLC.  The investments gave Ellison the ability to oversee the appointment of three of the company's seven directors, in addition to other benefits he received as a controlling stockholder.

According to the complaint filed in October 2021, Ellison's stake in AMDI grew as the company worked to develop its "Autolab" system, which has faced rising costs and has yet to generate any revenue. When its lone big investor, Tako, stepped in with what became a $2 per-share $20 million additional stake, members of a board special committee began pressing for better terms and a larger investment.

If approved by the court, lawyers for the minority stockholders and special committee would receive $750,000, 12.5% of the $6 million settlement total, or about 56% of the amount called for under the lodestar multiplier ordinarily used in attorney fee calculations.  The multiplier calculates payments based on hours of work performed at an attorney's professional fee rates.  Attorneys for the minority stockholders "invested considerable time and effort in both developing and litigating this action," the proposal said. Given the stage of the litigation, the fee request "is well within, and often below, precedent awards."