Fee Dispute Hotline
(312) 907-7275

Assisting with High-Stakes Attorney Fee Disputes


News Blog

Facebook to Pay $69M in Attorney Fees in Mooted Shareholder Action

October 26, 2018 | Posted in : Expenses / Costs, Fee Award, Fee Award Factors, Fee Request

A recent Law 360 story by Christopher Cole, “Facebook to Pay $69M in Atty Fees for Mooted Stock Suit,” reports that Facebook Inc. has agreed to shell out nearly $69 million in attorneys' fees in a mooted shareholder lawsuit over a nixed plan to reclassify the company's stock, according to a deal reached Wednesday in Delaware Chancery Court.  The deal ends a battle over fees that dragged on well after the suit itself ended last year, but amounts to only around half of what the shareholders suing the social media giant initially asked for.  The shareholder group — represented by Grant & Eisenhofer PA, Kessler Topaz Meltzer & Check LLP and Prickett Jones & Elliott PA -- aimed in part to keep Facebook CEO Mark Zuckerberg from retaining power after relinquishing his shares.

The attorneys had argued they were owed $129 million for taking on Facebook, which jettisoned the stock plan just days before the case was headed to trial.  In an order giving a green light to the compromise sum, the court said $68.7 million would fully satisfy and resolve all claims in an earlier move for fees by the shareholders' counsel.  "The foregoing payment shall fully satisfy and resolve all claims in the fees and expenses motion, and plaintiffs' counsel shall not seek any additional fees, expenses, or costs related to the [case] from any source," Vice Chancellor J. Travis Laster wrote.  The order noted that Facebook continues to deny "any and all allegations that they engaged in wrongdoing in any way," but said the company has agreed to resolve the fees and expenses due to further litigation risk.

The dispute started after the social media hub unveiled a plan to reclassify its shares that would have created a new class of stock.  The shareholders who sued contended that it would have allowed Zuckerberg to maintain his voting power in the company even after selling off much of his Facebook wealth for charity as he has promised.

Facebook dropped the plan a few days before trial, but the legal team representing shareholders in the consolidated action later maintained they were owed $129 million for achieving the same result as they would have pursued in court.  It would have been one of the largest fee awards in the history of the Chancery Court.  In July, Vice Chancellor Laster said he wanted to hear testimony from Zuckerberg before ruling on a $129 million fee award.  Zuckerberg was scheduled to testify in late November.

The case is In re: Facebook Inc. Class C Reclassification Litigation, case number 12286-VCL, in the Court Of Chancery of the State Of Delaware.