SEAN J. GRIFFITH, Objector Below, Appellant, v. SHIVA STEIN, derivatively on behalf of The Goldman Sachs Group, Inc., and individually as a Stockholder of The Goldman Sachs Group, Inc., Plaintiff Below, Appellee, and LLOYD C. BLANKENFEIN, M. MICHELE BURNS, GARY D. COHN, MARK A. FLAHERTY, WILLIAM W. GEORGE, JAMES A. JOHNSON, ELLEN J. KULLMAN, LAKSHMI N. MITTAL, ADEBAYO O. OGUNLESI, PETER OPPENHEIMER, DEBORA L. SPAR, MARK E. TUCKER, DAVID A. VINIAR, MARK O. WINKELMAN, and THE GOLDMAN SACHS GROUP, INC., Defendants Below, Appellees.
Nos. 331, 2019 and 332, 2019
IN THE SUPREME COURT OF THE STATE OF DELAWARE
Submitted: August 19, 2019; Decided: August 29, 2019
Court Below—Court of Chancery of the State of Delaware, C.A. No. 2017-0354-SG
ORDER
Upon consideration of the notice of interlocutory appeal and the documents attached thereto as well as the notice to show cause and responses, it appears to the Court that:
(1) The objector below-appellant, Sean J. Griffith (“the Objector“), has filed two appeals from a Court of a Court of Chancery letter order, dated July 1, 2019, awarding the Objector attorneys’ fees and costs under the corporate benefit doctrine (“Fee Order“).1 In appeal No. 331, 2019, he petitions this Court under
(2) The Fee Order arises from a direct and derivative action brought by a stockholder against certain directors of The Goldman Sachs Group, Inc. (“Goldman Directors“). After the parties reached a settlement and sought the Court‘s approval of the proposed settlement, the Objector filed objections. The Court of Chancery did not approve the settlement,2 and the parties proceeded to oral argument on the
(3) The Objector filed a motion for $575,000 in attorneys’ fees and costs under the corporate benefit doctrine. The Goldman Directors opposed the motion, arguing that a fee award of approximately $10,000 was appropriate. The Court of Chancery concluded that the objection was helpful and benefitted Goldman, but noted that its conclusions in rejecting the settlement were not “entirely congruent” with the Objector‘s arguments.4 The Court of Chancery determined that a fee award of $100,000 was equitable, plus $1,923.30 in costs.5
(4) On July 11, 2019, the Objector filed an application for certification of an interlocutory appeal. The Objector argued that the Fee Order determined a substantial issue of material importance because it resolved an issue that went to the merits of the case and the amount of the fee awarded could discourage other objectors from challenging poor settlements. The Objector also suggested that if the fee award was considered a collateral issue, then it could be immediately appealable under the collateral order doctrine. As to the Rule 42(b)(iii) criteria, the Objector contended that the Fee Order addressed a question of first impression—the appropriate fee for a successful, activist objector. The Objector also argued that
(5) The Goldman Directors opposed the application for certification. They argued that the Fee Order did not determine a substantial issue of material importance because it was a collateral matter that did not decide the merits of the case. As to the Rule 42(b)(iii) criteria, the Goldman Directors argued that the order did not decide a legal issue of first impression, but applied settled law for the determination of fee awards. The Goldman Directors also contended that there was no conflict on a question of law and that interlocutory review would not serve considerations of justice.
(6) On July 23, 2019, the Court of Chancery denied the application for certification.6 Applying the Rule 42(b)(iii) criteria, the Court of Chancery concluded that the Fee Order did not involve a question of law resolved for the first time in Delaware, but simply applied established principles of the corporate benefit doctrine.7 The Court of Chancery found that the fact that the application of the corporate benefit doctrine led to different fee awards in different cases did not mean there were conflicting trial court decisions on a question of law.8 As to the possibility that the Fee Order could discourage beneficial objections to settlements,
(7) The Court of Chancery declined to address whether the Fee Order was appealable under the collateral order doctrine, leaving that issue to this Court. These appeals followed.
(8) Applications for interlocutory review are addressed to the sound discretion of the Court.11 In the exercise of our discretion and giving great weight to the Court of Chancery‘s thoughtful analysis in denying the application for certification, this Court has concluded that the application for interlocutory review does not meet the strict standards for certification under
(10) The collateral order doctrine is characterized as “a common law recognition that certain collateral orders constitute final judgments.”14 Under the collateral order doctrine, “orders which a) determine matters independent of the issues involved in the proceeding itself, b) bind persons who are non-parties in the underlying proceeding, and c) have a substantial, continuing effect on important
NOW, THEREFORE, IT IS HEREBY ORDERED that the interlocutory appeal in No. 331, 2019 is REFUSED and the appeal in No. 332, 2019 is DISMISSED. The filing fee paid by the appellant shall be applied to any future appeal he files from a final order entered in the case.
BY THE COURT:
/s/ James T. Vaughn, Jr.
Justice