Baker v. Sadiq, CA 9464-VCL

Minority stockholders of NavSeeker, Inc. sued derivatively, alleging the controlling stockholder (HIMEX) misappropriated technology assets worth about $25 million.
Minority non‑affiliated investors owned 10.75% of NavSeeker; a full corporate recovery would have yielded an indirect investor benefit of roughly $2.69 million.
Parties settled using the "transitive property": defendants paid $2.75 million in cash for a buyout of minority holders and $500,000 of debt was discharged—total corporate‑level benefit acknowledged as $3.25 million.
Plaintiffs’ counsel reserved the right to litigate attorneys’ fees, sought $6 million+, and argued fees should be measured by the implied $25 million derivative recovery with defendants jointly and severally liable.
Defendants contended the recoverable benefit was the actual stockholder‑level settlement and that only NavSeeker (the nominal plaintiff entity) should pay any fee award.
Vice Chancellor Laster concluded the measurable benefit was $3.25 million, awarded 20% ($650,000) in fees and expenses, and held only NavSeeker liable for payment.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Proper valuation of benefit for fee calculation	Use the implied derivative recovery (~$25M) to value benefit	Use the actual stockholder‑level settlement ($3.25M) as the benefit	Court: benefit capped at $3.25M (the settlement actually achieved)
Appropriate percentage of benefit for fees	Higher percentage justified by contingency and limited options to press settlement	Lower percentage because settlement occurred pre‑trial and limited discovery	Court: 20% of $3.25M = $650,000 (falls in 15–25% range for meaningful litigation)
Who must pay the fee award	Defendants (controllers) should be jointly and severally liable because they benefitted	Only NavSeeker (entity) should pay; controllers not directly liable on this record	Court: only NavSeeker liable; no precedent to impose liability on controllers on this record
Effect of using the transitive property on fee awards	Should not reduce fees merely because recovery was recast as investor‑level	Recasting to investor relief is dispositive; fees based on actual benefit conferred	Court: formal structure matters; fee based on actual investor‑level benefit achieved

Zapata Corp. v. Maldonado, 430 A.2d 779 (Del. 1981) (governs special litigation committee review doctrine)
Sugarland Indus., Inc. v. Thomas, 420 A.2d 142 (Del. 1980) (sets factors for assessing fee reasonableness and favors percentage‑of‑benefit approach)
Goodrich v. E.F. Hutton Gp., 681 A.2d 1039 (Del. 1996) (Court of Chancery must independently determine fee reasonableness)
Ams. Mining Corp. v. Theriault, 51 A.3d 1213 (Del. 2012) (Delaware Supreme Court: greatest weight to benefit achieved; provides percentage guidance)
In re Activision Blizzard, Inc. S’holder Litig., 124 A.3d 1025 (Del. Ch. 2015) (discusses complexities of awarding investor‑level recoveries instead of entity remedies)
In re El Paso Pipeline P’rs L.P. Deriv. Litig., 132 A.3d 67 (Del. Ch. 2015) (investor‑level recoveries from derivative claims are possible but are the exception)