In re Sauer-Danfoss Inc. Shareholders Litigation
2011 Del. Ch. LEXIS 64
| Del. Ch. | 2011Background
- The plaintiffs held an undisclosed number of Sauer-Danfoss shares and sued after Danfoss A/S announced a plan to launch a tender offer for the minority shares.
- After filing, the plaintiffs did not actively litigate and pursued a disclosure-only settlement; talks later broke down.
- Danfoss and Sauer-Danfoss voluntarily disclosed information; Danfoss later withdrew the tender offer, mooting the action.
- The plaintiffs’ firms seek $750,000 for purported corporate-benefit disclosures; defendants oppose the award.
- Twelve disclosures were at issue; ten were immaterial, one addressed an incorrect 52-week high/period, and one was arguably material.
- The court ultimately awards $75,000 for the one material disclosure correcting Lazard’s 52-week-high/matching period description.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Meritorious when filed | Plaintiffs allege the suit was meritorious when filed. | Defendants argue no meritorious disclosure claims existed at filing. | Meritorious when filed determined by amended complaint; the amended claims credit the benefit. |
| Materiality of disclosures | Plaintiffs contend eleven disclosures were material to stockholders. | Defendants contend most disclosures were immaterial or not remedial. | Only one disclosure was material; the rest did not benefit stockholders. |
| Credit for March 31 and April 5–6 disclosures | Plaintiffs seek credit for disclosures raised before filing or tied to settlement talks. | Defendants argue those disclosures lack a meritorious disclosure claim or materiality. | March 31 disclosures denied; eleven April disclosures mostly denied as immaterial; one item later acknowledged as material. |
| Amount of the fee award | Plaintiffs seek a substantial fee reflecting the disclosed benefits. | Defendants urge a lower fee given minimal substantive benefit and limited litigation effort. | Award limited to $75,000 for the sole material disclosure; overall award reflecting modest benefits. |
Key Cases Cited
- Chrysler Corp. v. Dann, 223 A.2d 384 (Del. 1966) (meritorious-when-filed standard)
- Allied Artists Pictures Corp. v. Baron, 413 A.2d 876 (Del. 1980) (mooted cases still require meritorious suit and benefit consideration)
- Burry Biscuit Corp. v. Rosenthal, 209 A.2d 459 (Del. Ch. 1949) (benefit to stockholders can support fee when dispute moots)
- United Vanguard Fund, Inc. v. TakeCare, Inc., 693 A.2d 1076 (Del. 1997) (causally related corporate-benefit fee framework)
- In re Netsmart Techs., Inc. S’holders Litig., 924 A.2d 171 (Del. Ch. 2007) (materiality and disclosure analysis in fee awards)
- In re Lukens Inc. S’holders Litig., 757 A.2d 720 (Del. Ch. 1999) (non-disclosed events vs. material omissions)