WILLIAM B. CHANDLER III
CHANCELLOR
COURT OF CHANCERY
OF THE
STATE OF DELAWARE
COURT OF CHANCERY COURTHOUSE
34 THE CIRCLE
GEORGETOWN, DELAWARE 19947
Submitted: August 13, 2009
Decided: August 26, 2009
Michael Hanrahan
Paul A. Fioravanti, Jr.
Prickett, Jones & Elliot, P.A.
1310 King Street
Wilmington, DE 19801
Lisa A. Schmidt
Ethan A. Shaner
Richards, Layton & Finger, P.A.
One Rodney Square
P.O. Box 551
Wilmington, DE 19899
Re:
Kuo v. Genius Products, Inc., et al.
Civil Action No. 3329-CC
Dear Counsel:
This is my decision on defendants’ motion for reargument. Contrary to
defendants’ argument, this Court’s July 30 letter decision did not misunderstand the
material facts or misapply the law in this matter. First, this Court applied the
traditional Sugarland factors in determining an appropriate attorneys’ fee. The
benefit is only one of the factors under Sugarland and is not the sole determinant
of an appropriate fee award. In addition, the Court actually reduced the fee
significantly below what was requested. Second, again contrary to defendants’
argument, this Court did not erroneously conclude that the litigation had some
causal connection to the failure to effect the reverse split. Plaintiff was entitled to a
presumption that the litigation had a causal connection to the failure to effect the
reverse split. Defendants failed to rebut that presumption, and on this motion for
reargument simply rehash the very arguments that this Court rejected in its July 30
letter decision. Defendants do not point to any evidence in the record that would
overcome the presumption that the litigation was causally connected to the
defendants’ decision to abandon the reverse split. Instead, defendants ask the
Court to accept an alternative “plausible conclusion” that the board of directors
entered into settlement negotiations in this case simply to avoid the expenses
associated with briefing a motion to dismiss. No evidence is offered to support this
so called plausible conclusion and in any event it is insufficient to overcome the
strong presumption of a causal connection between the lawsuit and the
abandonment of the transaction in issue.
Ultimately, defendants’ motion for reargument appears to be a rehash of
contentions and arguments rejected in the Court’s July 30 letter decision. Indeed,
defendants appear to take the position in their motion for reargument that this
Court mistakenly gave more credit to the plaintiff’s lawsuit than it was due as a
cause of the board of directors’ action to abandon the transaction. Simply put, this
Court gave the lawsuit the presumption to which it is entitled under Delaware law
of being causally connected to the abandonment of the transaction. It was
defendants’ responsibility to offer evidence to rebut that presumption and
defendants failed to do so. It is noteworthy, in my opinion, that defendants’ motion
for reargument again fails to cite to any evidence in the record as factually
demonstrating that the lawsuit had no connection or relationship to the defendants’
action to abandon the disputed transaction.
Accordingly, for all the reasons above stated, as well as the reasons
expressed in this Court’s July 30 letter decision, the motion for reargument is
denied.
IT IS SO ORDERED.
Very truly yours,
William B. Chandler III
WBCIII:meg
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