Brody v Catell

[*1] Brody v Catell 2007 NY Slip Op 51297(U) [16 Misc 3d 1105(A)] Decided on June 27, 2007 Supreme Court, Kings County Demarest, J. Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. This opinion is uncorrected and will not be published in the printed Official Reports.

Decided on June 27, 2007
Supreme Court, Kings County

Adele Brody, individually and on behalf of all others similarly situated, Plaintiff,

against

Robert B. Catell, Andrea Christensen, Robert J. Fani, Alan H. Fishman, James R. Jones, James L. LaRocca, Gloria C. Larson, Stephen W. Mickessy, Edward D. Miller, Vicki L. Pryor, Keyspan Corporation, and National Grid, PLC, Defendants.



8835/06



Counsel for Plaintiff:

Joseph H. Weiss, Esq.

Mark D. Smilow, Esq.

Ilya Nuzov, Esq.

Weiss & Lurie

551 Fifth Avenue

New York, New York 10176

For Defendant National Grid

Jeremy A. Berman, Esq.

Skadden, Arps, Slate Meagher & Flom, LLP

4 Times Square

New York, New York 10036-6522

For Keyspan Corp, Robert B. Catell, Andrea Christensen, Robert J.l Fani,

Alan H. Fishman, James R. Jones, James L. Larocca, Gloria C. Larson, Stwphen W. McKessy, Edward D. Miller, and Vikki L. Pryor:

Michael J. Chepigna, Esq.

Paul C. Glucknow

Simpson Thacher and Bartlett, LLP

425 Lexington Avenue

New York, New York 10017

Carolyn E. Demarest, J.

The instant application by plaintiff, supported by defendants, seeks final approval of a class action settlement negotiated between the parties and tentatively approved by the Court, subject to a Fairness Hearing which was held on April 24, 2007, and an award of attorneys' fees. The motion is granted to the extent, and for the reasons, set forth herein.

Keyspan Corporation ("Keyspan") is a New York Corporation based in Brooklyn, New York. It is the largest distributor of natural gas in the Northeastern United States and the largest owner of electric generation in New York State. National Grid PLC ("National") is an international energy delivery business incorporated under the laws of England and Wales, based in London, England. It has a substantial presence in the United States, transmitting and distributing gas and electricity to parts of New York, Massachusetts, New Hampshire and Rhode Island. The individual defendants are the members of Keyspan's Board of Directors. Robert Catell is Keyspan's Chairman and Chief Executive Officer. Robert Fani is Keyspan's President and Chief Operating Officer. The remaining named Directors are independent Board members, not employed by Keyspan. Plaintiff Adele Brody has been a Keyspan stockholder for more than twenty years and, on October 31, 2006, owned 569.605 shares.

Facts

On February 17, 2006, defendant Keyspan announced that it was in negotiations regarding possible "combinations". On February 27, 2006, Keyspan and defendant National [*2]announced that National would acquire all of Keyspan's stock in an all-cash buy-out valued at approximately 7.3 billion dollars, with an enterprise value of 11.8 billion dollars. While Keyspan would survive as a separate company, it would become a wholly-owned subsidiary of National. Each share of Keyspan stock would entitle the owner thereof to $42.00 in cash; the shareholders would receive no stock in exchange and their interests in Keyspan would terminate upon surrender of their shares. National will also assume 4.5 billion dollars in Keyspan debt. The merger was unanimously approved by the Boards of both companies. A preliminary Proxy Statement detailing the proposed merger was filed with the SEC on April 28, 2006.

The complaint was initially filed on March 20, 2006, alleging that the proffered consideration of $42.00 per share was undervalued, "inadequate and unfair" and did "not provide Keyspan shareholders with a meaningful premium over market" in light of Keyspan's position as the largest distributor of natural gas in the Northeastern United States. Noting that, under the terms of the proposed merger, defendant Catell would become Deputy Chairman of National and that all Board members would receive a substantial return for their shares of Keyspan, plaintiff alleged a breach of fiduciary duty by all the Board members in agreeing to accept inadequate consideration for Keyspan's stock. The complaint sought certification of plaintiff as the representative of a class of all similarly situated Keyspan common stock shareholders, excluding any person or entity affiliated with defendants, an order permitting the prosecution of plaintiff's action as a class-action, injunctive relief preventing the consummation of the proposed merger or rescinding such merger if already consummated, and an accounting as to damages. In an Amended Complaint, plaintiff recited additional allegations that the individual defendants had breached their fiduciary duty to plaintiff by placing their own interests above those of Keyspan's stockholders, by favoring National's offer over other undisclosed bids, specifically that of Con Edison, based upon their own self-interest, and by publishing misleading information and omitting to publish relevant information that would accurately disclose the value of Keyspan shares and the merits of the proposed buy-out. The Amended Complaint joined National as a defendant.

On April 19, 2006, Keyspan and the individual defendants moved to dismiss the original complaint. The Amended Complaint was subsequently served on May 26, 2006, and, prior to plaintiff's serving a response to the pending dismissal motion, the parties began to explore a possible settlement. The motion to dismiss was held in abeyance while the parties reviewed the merits of the proposed merger. The preliminary Proxy Statement was revised to provide additional disclosure and was reviewed by plaintiff's counsel.

On June 28, 2006, a Memorandum of Understanding regarding the terms of a settlement was entered. On July 11, 2006, in anticipation of the vote of stockholders regarding the merger, a final Proxy Statement was mailed to the stockholders which incorporated the additional information required by plaintiff. Additional discovery, including depositions of Keyspan personnel and advisors involved in the negotiations with National and review of both public and confidential documents, continued through the summer. On August 18, 2006, Keyspan's shareholders overwhelmingly approved the merger by a vote of 91.92% in favor, 6.27% opposed and 1.82% abstaining.

A Stipulation of Compromise and Settlement was entered among the parties on October 20, 2006, subject to Court approval. The Stipulation provides for certification of the action as a class action on behalf of "all persons and entities who owned (beneficially or otherwise) the [*3]common stock of Keyspan at any time during the period from November 12, 2004 through and including October 20, 2006 (the "Settlement Class Period"), excluding Defendants, members of the Defendants' immediate families, any entities in which any Defendant has or had a controlling interest, any entities that are a parent or subsidiary of or are controlled by KeySpan or National Grid, and any affiliates, legal representatives, heirs, predecessors, successors and assigns of any of the Defendants". It provides, in consideration of the additional disclosure provided to shareholders as deemed necessary by plaintiff and the opportunity afforded plaintiff's counsel to discover and review the basis for defendants' decision regarding the proposed merger so as to confirm its fairness to members of the class, for a non-opt out settlement of all equitable claims, excluding potential claims for monetary damages, and for discontinuance and dismissal of all claims asserted in the Amended Complaint or that "could have been set forth" therein, with prejudice, and for payment by defendants of plaintiff's reasonable attorneys' fees up to $350,000, all subject to Court approval. The payment of fees to plaintiff's counsel is expressly contingent upon the closing of the merger.[FN1]

Following review of the proposed terms of settlement and supporting documents, on January 26, 2007, this Court signed an order preliminarily approving the proposed settlement ("Settlement"), subject to a Fairness Hearing, conditionally certifying the class as defined above, approving plaintiff as an adequate representative of the class and the law firm of Weiss & Lurie as qualified to represent the plaintiffs, and setting the Fairness Hearing for April 24, 2007, upon notice as provided therein. A total of 227,815 notices were sent to shareholders and their representatives and brokers by mail, in addition to a website posting, describing the class, the Proposed Settlement, the Fairness Hearing and the procedures for exclusion from the class or for making objection to the Settlement. According to the Settlement Administrator, only fourteen requests for exclusion from the class were received. Pending the Fairness Hearing, four shareholders gave written notice of their objection to the Proposed Settlement and the award of counsel fees, one of whom also appeared by her attorney-husband at the Fairness Hearing.

Three shareholders appeared at the Fairness Hearing on April 24, 2007, to challenge the Proposed Settlement. Benjamin Vinar, Esq., appeared for his wife Rochelle to argue that the Settlement, which effects no change in the price paid per share, confers no meaningful benefit upon the shareholders but is a "sham" for the benefit solely of the attorneys in recovering their fees. John Frusci joined in Mr. Vinar's remarks, contending that a fair price would be $70 per share based upon the present value of National's stock at $80 per share. Mr. Frusci complained that the negotiations had not been contemporaneously disclosed publicly and objected to the sale of an essential American utility to a foreign company. This last objection is not properly before this Court which is not authorized to review the wisdom of the proposed transaction in light of the public interest (such determination having been vested by law in the various administrative [*4]agencies which must approve the merger), but must review the Settlement only with respect to its fairness to the shareholders who have overwhelmingly voted to approve the merger. Lee Nixon, holder of 40 shares and a former employee of Brooklyn Union Gas, which was merged into Keyspan in 1998, also objected to the lack of notice regarding the negotiations and the inadequacy of the price, as well as the sale to a foreign corporation.

At the conclusion of the Fairness Hearing, following presentation of arguments by plaintiffs' and defendants' counsel responsive to the objections raised, the Court granted the joint motion to approve the Settlement. A determination regarding attorneys' fees was reserved.

Discussion

Class Certification

There is no doubt that certification of the proposed class is appropriate here or that Adele Brody is an appropriate representative thereof.

CPLR 901 and 902 together set forth the criteria to evaluate the propriety of class certification and must be applied with equal, if not greater, scrutiny to actions certified for purposes of settlement. Klein v. Robert's American Gourmet Food, Inc., 28 AD3d 63, 70 (2d Dep't, 2006). Some of the criteria set forth in these two statues will overlap. CPLR 901 requires a finding that joinder of all members of the class is impracticable due to numerosity, that common questions of law or fact as to all members predominate, that the representative party's claims are typical of the class, that the representative party will fairly and adequately protect the interests of the class and that a class action is a superior method for the efficient and fair adjudication of the controversy. Matter of Colt Industries Shareholder Litigation, 77 NY2d 185, 194 (1991). CPLR 902 further requires the court to consider the interest of individual class members in controlling the litigation, the impracticability of separate prosecutions, whether other litigation is pending regarding the same controversy, the desirability of concentrating the litigation in a particular forum and the difficulty in managing a class action. An assessment of these factors in the context of the instant action clearly supports the certification of the proposed class.

Plaintiff Adele Brody is one of 66,039 shareholders of Keyspan common stock (as of July 5, 2006), easily satisfying the required element of numerosity. The impracticability of separate litigation is self-evident. Moreover, only the owners of Keyspan common stock during the specified Settlement Class Period are members of the proposed class and are identically situated with respect to all questions of both law and fact; there is no question that Adele Brody, as a twenty-year shareholder with 570 shares of common stock, is typical and will fairly and adequately protect the interests of all class members. Given the identity of interest of the approximately 66,000 shareholders of 175,018,608 shares of common stock (as of July 3, 2006) in obtaining a fair return for the forced sale of their stock in the merger herein, a class action is clearly a superior means to assure such result. While individual members of the class may differ as to their views of the merger, there is no indication of other pending litigation and no expressed interest by any other class member in controlling the litigation. Keyspan is a utility company based in and serving the residents of Kings County; it is appropriate therefore to concentrate the litigation in this County. There is no difficulty associated with the management of a class action in this case.

Accordingly, independent of the merits of the proposed Settlement, class certification is granted and plaintiff is determined to be an appropriate representative. [*5]

Plaintiff's counsel, Weiss & Lurie, has submitted a Firm Biography which recites its extensive prior experience relating to securities litigation and class action representation and the substantial sums recovered in numerous cases across the United States. The accolades of other judges quoted therein satisfies this Court that plaintiff's counsel is well-suited to prosecuting this matter on behalf of the certified class. Plaintiff herself attests to the fact that Joseph Weiss, named partner of Weiss & Lurie, has been known to her since 1984 and has satisfactorily represented her in prior litigation.

Approval of the Settlement

CPLR 908 requires Court approval of the dismissal, discontinuance or compromise of a class action. In approving a class action settlement, the Court must determine whether the proposed settlement is fair, adequate, reasonable, and in the best interests of the class members. In re Colt Industries, 77 NY2d at 197; Klein v. Robert's American Gourmet, Inc., 28 AD2d at 73; Marisol A.v. Giuliani, 185 F.R.D. 152, 162 (SDNY 1999).

The Amended Complaint sought injunctive relief precluding the consummation of the proposed merger, or, if the merger had already been effected, the rescission of such merger, an accounting of damages to Keyspan as a result of any improprieties or breach of duty in the negotiation of the merger, and an allowance for reasonable attorneys' fees. All of the relief requested is equitable in nature. See In re Colt Industries, 77 NY2d 191. The Settlement herein, negotiated at arm's length between defendants' counsel and counsel for plaintiffs, provided plaintiff's counsel the opportunity to scrutinize the merits of the transaction through discovery of internal and confidential information not available to the public and through direct examination of the individuals who assessed the transaction on behalf of Keyspan. Plaintiff's counsel was specifically made privy to the details of confidential alternative bids for the stock and assets of Keyspan, some of which were comprised entirely of offers to exchange shares of Keyspan for shares in the bidder. Counsel has concluded, following their investigation, that, despite the initial allegations of self-dealing and collusion by Board Members resulting in inadequate compensation to the class members, the terms of the merger are fair to the shareholders of Keyspan and that the Settlement is, accordingly, fair, reasonable, adequate to the class members and in their best interests (Declaration of Mark D. Smilow, ¶ 26). This conclusion is premised upon counsel's assessment of the benefits of the Settlement to the shareholder class as a result of counsel's independent examination of the merits of the proposed transaction, and the modifications made to the Proxy Statement so as to provide the shareholders with additional information upon which to base their own determinations to vote in favor of or against the proposed merger, as well as the risks and costs of continued litigation. The opinion of experienced counsel, like plaintiffs' counsel here, is a legitimate factor for the Court's consideration. In re Colt Industries, 155 AD2d 154, 160 (1st Dep't, 1990). The opinion of plaintiffs' attorneys has been validated by the results of the vote of the shareholders on August 18, 2006, approving the terms of the merger by a significant majority, presumably based upon the information contained in the Proxy Statement which was substantially enhanced through counsel's efforts.

Factors to be evaluated by the Court in determining whether to approve a class action settlement, in addition to the judgment of counsel, include the likelihood that plaintiffs will [*6]succeed on the merits, the extent of support from the parties, whether the settlement was reached through good faith, arm's-length bargaining and the nature of the issues of law and fact. Klurfeld v. Equity Enterprises, Inc., 79 AD2d 124, 133 (2d Dep't, 1981). The costs and risks of further litigation should also be considered. Marisol A.v. Giuliani, 185 F.R.D. at 162.

There is no indication here that the Settlement was not reached through good faith, arm's-length negotiations and vigorous investigation and inquiry by plaintiffs' counsel into the merits of the proposed merger. All counsel have affirmed that their negotiations were arm's-length and truly adversarial. The history of the negotiations between Keyspan and National, as revealed in the Proxy Statement and the confidential information provided in the course of this litigation, establishes that Keyspan's Directors evaluated various alternatives in assessing the appropriate course to effectuate the best return for the stockholders, including continuing the corporate enterprise as constituted. Negotiations were entertained with several bidders. Ultimately, the most competitive alternative to the National offer, which was revealed in the Proxy Statement at plaintiff's insistence, was a fixed exchange of Keyspan stock for shares of Company A valued at $41.39 per share, $.61 less than the National offer which was approved by the shareholder vote, notwithstanding the express disclosure that the exchange of shares for cash would preclude the shareholders' future participation in potential earnings growth. As revealed in the Proxy Statement, Keyspan's Board also obtained a commitment from National that Keyspan would maintain its presence in Brooklyn and continue to support obligations to Keyspan retirees, employees and the community.

The price per share to be paid by National represents a premium of over 16% more than Keyspan's share price of $36.18 on February 16, 2006, the last trading day prior to the public announcement of negotiations. Keyspan's investment banker, Lazard Freres & Co., LLC, after analyzing the proposed merger based upon numerous factors, including comparisons to other comparable companies in the industry, Keyspan's own financial history, and the future prospects for earnings growth, among others, concluded that the $42 per share consideration to be paid to the shareholders upon the merger "is fair, from a financial point of view, to such holders" (Lazard letter of 2/25/06, Annex B to Final Proxy Statement).

This Court's scrutiny of the Proxy Statement and the information contained therein, particularly the detailed description of the history of the negotiations, beginning in mid -2002 with a routine analysis of options for Keyspan's potential future growth in consultation with Keyspan's financial advisors, Lazard Freres, and the initial overtures with National beginning in November, 2004, upon which followed discussions with other prospective bidders, and culminating in the choice, on February 25, 2006, to accept National over its closest competitor, "Company A", which declined to improve its offer when contacted on February 24, 2006, leads to the conclusion that plaintiffs' probability of success, were litigation to continue, is not great. Defendants remain steadfast in their position that plaintiffs' suit lacks merit. The Board has meticulously set forth its reasons for approving the merger and recommending it to the shareholders, all of which have been corroborated by financial analysis and documentation. Risks were also described and considered. Given the applicability of the Business Judgment Rule, which requires that deference be accorded the determination of the Board in the absence of fraud, illegality or self-dealing, and the extensive disclosure and explanation provided in the Proxy Statement, there is little likelihood that plaintiffs would prevail in further litigation. See Auerbach v. Bennett, 47 NY2d 619, 634 (1979) ("While the court may properly inquire as to the [*7]adequacy and appropriateness of . . . investigative procedures and methodologies, it may not under the guise of consideration of such factors trespass in the domain of business judgment."); Nemazee v. Premier Purchasing Partners, L.P., 24 AD3d 196, 197 (1st Dep't 2005);Kimeldorf v. First Union Real Estate Equity and Mortgage Investments, 309 AD2d 151, 156-158 (1st Dep't, 2003).

The Board unanimously approved the merger and recommended it to the class members. The shareholders, upon a full disclosure of the manner in which the Board reached its decision, overwhelmingly agreed through their vote to approve the merger. Following notice to the shareholders (virtually all of whom were given actual notice) of the proposed Settlement and the right to be excluded, only fourteen, representing 6,332 shares, requested exclusion and only three, representing 4,659 shares, objected. Such an imprimatur of approval by the vast majority of the subject class indicates that the stock price represented fair value and that the terms of the Settlement are adequate. In re Austrian & German Bank Holocaust Litigation, 80 F. Supp 2d 164, 175 (SDNY 2000); Marisol A.v. Giuliani, 185 F.R.D. at 163; Rosenfeld v. Bear Stearns & Co., Inc., 237 AD2d 199, 200 (1st Dep't, 1997).[FN2] .

All of the objectors who appeared at the Fair Hearing were given a full opportunity to express their views, notwithstanding the failure to comply with the terms of the Notice of Proposed Settlement of Class Action, Settlement Fairness Hearing and Right to Appear, and Application of Plaintiff's Counsel for an Award of Fees and Expenses. This Court has considered their objections in reaching its decision herein. The most frequent objection relates to attorney's fees which, contrary to the perceptions of the objectors, will be paid entirely by defendant National if the merger is consummated and, under the terms of the Settlement, not at all if the merger is aborted. Thus, the class members are not affected by the amount or payment of fees to the plaintiff's attorneys and will suffer no loss whatsoever as a result thereof. The price per share will remain the same.

The Court has already addressed the objection to a foreign corporation taking over a significant domestic utility, noting that it is not the role of this Court to determine whether the proposed transaction is in the public interest as that decision rests in the hands of the various regulatory agencies whose approval is required. In any case, National is already supplying gas and electric service to four million Americans in New York and other states in the Northeast.

Finally, the strongest objection has been to the lack of disclosure regarding the negotiations and the stock price. The former complaint, the lack of disclosure, has actually been remedied through counsel's efforts in gaining a modification of the Proxy Statement. The suggestion that the shareholders should have been apprised of the details of the negotiations as they progressed is simply unrealistic. Confidentiality is a common and essential condition to such negotiations. As heretofore noted, a thorough review of the supporting documents sustains the adequacy of the stock price. The suggestion that the price for Keyspan's stock should be equivalent to that of National is completely unrealistic. National is a much larger company with [*8]significantly greater assets to support its greater stock price.

Counsel for all parties support the proposed Settlement, despite their differing views as to the merits of this action, because it obviates the need for additional protracted and costly litigation. This is a legitimate consideration for the Court as well, particularly where it appears that the optimum benefit of such litigation has already been achieved. See Lowenschuss v. Bluhdorn, 613 F.2d 18, 19-20 (2d Cir. 1980).

The Settlement does not afford a monetary return to the plaintiff class. However, through the efforts of plaintiffs' counsel, the merits of the proposed merger have been independently vetted and revealed to the class members, who have determined that it is desirable and provides a favorable return on their investment. Such benefit is both sufficient and meaningful. See, e.g., Rosenfeld v. Bear Stearns & Co., Inc, 237 AD2d 199; In re New York Stock Exchange/Archipelago Merger, 12 Misc 3d 1184 (A) (Sup Ct, NY Co., 2005). Under the circumstances, the equitable relief requested, enjoining or rescinding the merger, is no longer appropriate. Nor does the evidence, as revealed to plaintiffs' counsel, support the claims of breach of fiduciary duty resulting in damages to Keyspan. Further litigation would therefore be wasteful, both to the parties and to the Court in the investment of judicial resources. Ultimately, continued litigation might well also frustrate the interests of the class by preventing consummation of the merger.

Accordingly, this Court finds that the criteria for approval of a class action settlement have been fully satisfied and the Settlement is approved as fair, reasonable, adequate and in the best interests of the class.

Attorney's Fees

As noted, the benefit derived from the efforts of plaintiffs' counsel was not monetary. The ultimate result of the approval of the Settlement will be the dismissal and discontinuance, with prejudice, of the claims made. However, a significant benefit was conferred on the plaintiff class through counsel's substantial efforts. The value to shareholders of obtaining additional disclosure of information is well-recognized. See, e.g., In re Texaco, Inc. Shareholder Litigation, 20 F. Supp. 2d 577, 581 (SDNY 1998); Rosenfeld v. Bear Stearns, 237 AD2d 199; In re NYSE/Archipelago Merger Litigation, 12 Misc 3d 1184 (A). Moreover, here, the veracity and reliability of the representations made to the shareholders in the Proxy Statement were independently tested by plaintiffs' counsel through review of thousands of documents, including confidential, non-public documents, and the depositions of Keyspan's financial advisors. As a result of counsel's efforts, the class members were able to cast a well-informed vote regarding the proposed merger, confident that the representations upon which they relied, contained in the Proxy Statement modified and expanded under plaintiffs' counsel's guidance, were accurate and provided a complete explanation of the reasons for the Board's decision. Such a benefit is surely meaningful to the stockholders who are being asked to surrender their shares for cash compensation.

The proper method to determine the reasonable value of legal services rendered in a case such as this is the lodestar computation of reasonable hourly rate times hours expended, adjusted for various factors including 1) the novelty and difficulty of the issues, 2) the skill of counsel in performing the services required, 3) preclusion from other employment as a result of efforts expended on the instant case, 4) the nature of the fee, whether fixed or contingent, 5) time [*9]constraints of the case, 6) the relationship with the client, 7) the amount involved and the results obtained, 8) the undesirability of the case and 9) awards in similar cases. Matter of Rahmey v. Blum, 95 AD2d 294,303-304 (2nd Dep't, 1983); Friar v. Vanguard Holding Corp., 125 AD2d 444,447 (2d Dep't, 1986). Six hundred seventy-five and a half hours were expended by five attorneys and a paralegal on behalf of the class. Their efforts are itemized in a time breakdown for each individual. The Firm Biography details the credentials of the attorneys who worked on the case. This Court is satisfied that the basic lodestar calculation submitted by plaintiffs' counsel is properly substantiated and, based upon the benefit conferred, represents a fair and reasonable compensation to the experienced counsel here, who are well versed in the complex field of securities litigation.

CPLR 909 provides for an award of reasonable attorney's fees to the representative of a class in a class action which has achieved a favorable result for the class. The statute also provides, in the Court's discretion, for the recovery of such fees from the opponent of the class. Defendants have stipulated to pay such fees up to the specified amount and plaintiff requests no more despite the documentation submitted which shows a total lodestar value of the actual services rendered to be $360, 671.25 plus actual expenses incurred of $14, 323.80. Defendants have indicated that they view the $350,000 request to be reasonable.

Notwithstanding the general assent to the sum requested, however, the Court bears the responsibility to assess the reasonableness of such fees. See, Klein v. Robert's American Gourmet Food, Inc., 28AD3d 74-75; In re Texaco Inc. Shareholder Litigation, 20 F. Supp. 2d 589; General Motors Corp.v. Villa Marin Chevrolet, Inc., 240 F. Supp. 2d 182, 185 (EDNY 2002).An agreed sum in substantial disparity to the reasonable value of the services rendered would raise suspicions of collusion among counsel. There is, in fact, no evidence of such collusion here. Although the hourly rates attributed to the individuals that worked on this case for plaintiffs is clearly generous, the fees are in line with current hourly rates for sophisticated securities practitioners in New York City. Since the recovery of fees was at all times, and remains, contingent, a factor to be considered in evaluating the reasonableness of a fee and the propriety of enhancing a fee over the lodestar calculation (see Goldberger v. Integrated Resources, Inc., 209 F.3d 43, 53 (2d Cir. 2000)), and the sum requested is already discounted from the actual fees claimed to have been earned, further reduction by the Court is not warranted. The sum requested has been well-documented with time records and a detailed description of the work performed. In light of the extensive discovery conducted, the hours are not excessive.

That the payment of attorney's fees is not a condition of the Settlement and, in fact, will not occur if the merger does not close is of significance. Under the terms of the Settlement (paragraph 10), defendants have agreed to pay plaintiff's reasonable attorney's fees and expenses, as approved by the Court, up to $350,000. This sum is significantly lower than the fees recently requested or approved in other, comparable cases. See, e.g., Klein v. Robert's American Gourmet Food, Inc., 28 AD3d 74-75 ($790,000); In re Colt Industries, 155 AD2d at 161 ($425,000); Rosenfeld v. Bear Stearns, 237 AD2d at 199 ($560,000). The payment of these fees will have no impact upon the amount received by members of the class for their shares. Moreover, since the fees are only payable upon finalization of judgment and closing of the merger, upon which National will assume the full cost thereof, Keyspan's financial well-being as [*10]an independent entity will also not be impacted should the merger fail to close. Under the circumstances, plaintiff's counsel has conferred a very significant benefit upon the class at no cost to the class members. The sum requested is clearly reasonable and proportionate to the value of the services rendered.

Conclusion

The Court has observed first-hand the diligent and highly competent performance of their professional duty by all counsel on behalf of their clients, by Weiss & Lurie for plaintiffs, Simpson Thatcher and Bartlett for the Keyspan defendants, and Skadden Arps Slate Meagher and Flom for National. All parties have been ably and vigorously represented.

The result achieved, a fair and complete disclosure to the shareholders of the terms of the merger, their own proposed compensation and the manner in which the Board of Directors reached their decision to accept the proposed merger, which included negotiations with various other bidders with alternative proposals, provided meaningful value. The Settlement serves the interests of the class members by putting an end to litigation which has already served its primary purpose. Such complex and difficult litigation, if pursued, would surely be costly to all parties and might well thwart the judgment of the shareholders, as reflected in their vote approving the merger, that the merger is fair and desirable. Moreover, the probability of success, in light of counsel's investigation, is extremely attenuated. The Court finds, based upon a careful scrutiny of the Proxy Statement, the documentation supplied, the comments of the objectors and the representations of counsel, that the Settlement is fair, adequate, reasonable and in the best interests of the members of the class and that the attorney's fees, as stipulated therein, are reasonable.

The uncontested motion of plaintiff for final certification of the class and approval of the Settlement and for an award of reasonable counsel fees in the sum of $350,000, inclusive of costs incurred, which is supported by defendants, is granted. An order to that effect has been signed.

The Court wishes to acknowledge, as did Counsel Douglas Kraus, appearing for National at the Fairness Hearing, the vital contribution of those shareholders who appeared in opposition to the Settlement. Although their complaints have been determined by the Court to lack merit sufficient to deny approval of the Settlement as fair, adequate and in the best interests of the class as a whole, their concerns have been taken into consideration. Their participation has, therefore, served the interests of their fellow shareholders, and indeed, the public, in ensuring the integrity of the decision by the Board of Directors and the vote of the shareholders, as well as the proceedings before this Court. All parties have benefitted from the contributions of these dissenters who took the time and trouble to demand a full hearing.

The foregoing constitutes the decision and order of the Court.

E N T E R :

J.S.C. Footnotes

Footnote 1:According to the Merger Agreement, the transaction is expected to close no later than August 25, 2007. This date may be extended, however, upon consent of the parties. Because the merger involves public utilities, numerous governmental approvals are required. At the time of the Fairness Hearing, the Public Service Commissions of New York and New Hampshire and the Federal Communications Commission (which must approve the transfer of telecommunications licenses held by both corporate defendants) had not acted to approved the transaction.

Footnote 2:It is further noted that, in the six months between the announcement of the National merger and the shareholder vote, no competing bidder emerged with a better offer. Such "market check" has been found to support the fairness of an existing offer. In re MONY Group Inc. Shareholder Litigation, 852 A.2d 9, 23 (Del. Ch. 2004).