The Court of Chancery in this stockholder class action refused to award attorneys’ fees where the Court found the plaintiff proved at trial that the controller breached his fiduciary duties in a self-dealing merger transaction, but the Court but also found the plaintiff failed to prove damages. Because the plaintiff failed to obtain damages and there was no common fund from which to seek fees, the plaintiff sought fees for having proven a breach of the duty of loyalty as an exception to the American Rule that each party bears its own fees and costs. The Court rejected plaintiff’s request for three reasons. First, because the plaintiff proved nothing other than nominal damages, the plaintiff obtained no tangible benefit. Second, despite finding a breach, the Court also found that the controlling stockholder was acting with the belief his conduct would benefit the company and its stockholders. And the controlling stockholder carried his burden at trial by proving that his conduct benefited the stockholders. Finally, in these circumstances, the Court saw no reason to invoke equity to shift fees because bringing a case on a contingency basis and winning only nominal damages is a “known risk.”
