OPINION
Tesla and Delaware Supreme Court Justice Valihura Urge Delaware Chancery Court to Cut
Chancellor Kathaleen McCormick’s Outrageous $176 Million Attorney Fees
Dear Friends,
Read the Law360 story below with great interest, as I did, folks. Tesla attorneys are asking the Chancery Court to award $40 million in class attorney fees, down from an out-of-control $176.2 million attorney fee, awarded in January by our corrupt Chancery Court Chancellor Kathaleen McCormick.
I find Justice Karen Valihura to once again be the sober, adult voice in the room, pointing out in the story:
“Tesla makes the interesting observation in their brief that your fee is $60 million over and above the
entire budget for the entire judiciary in the state of Delaware, for a case that settled.”
She intelligently follows her first point with an even more sobering summary:
“At some point, do we have to be concerned about the public perception of the size of
the fee as a matter of acceptable corporate governance and our oversight?”
As far as I’m concerned, the lower astronomical fee is best, folks. Let’s follow Valihura’s lead here. See the Law360 story and let me know what YOU think. I appreciate your feedback.
Sincerely Yours,
JUDSON Bennett–Coastat Network
Tesla Urges Del. Justices To Cut $176M Atty Fee In Options Suit
By Jeff Montgomery
Law360 (October 29, 2025, 4:33 PM EDT) — Warning of a “shaking of public confidence,” a Tesla Inc.
attorney on Wednesday asked Delaware’s Supreme Court to cut a $176.2 million class attorney fee
award to $40 million in a case that saw Delaware’s chancellor cancel $730 million in the electric car
company’s director stock options.
Morgan L. Ratner of Sullivan & Cromwell LLP told the five justices that the fee award is “a windfall
any way you slice it,” falling just short of the highest fee-multiplier-based amount ever awarded by a
Delaware court in a derivative case.
The court “needs to explain why that kind of extraordinary result is fitting,” Ratner argued.
At issue is Chancellor Kathaleen St. J. McCormick’s decision in January granting the fee to McCarter &
English LLP, Fields Kupka & Shukurov LLP and Bleichmar Fonti & Auld LLP after more than four years
of litigation over claims that Tesla’s directors raked in “outrageous” compensation packages that cost
the company hundreds of millions of dollars.
Tesla’s attorneys argued that the Chancery decision relied on an 11.6-times multiplier of class
attorneys’ “lodestar” fees, producing a rate of $8,200 per hour. That compared with a $5,000 hourly
fee and seven-times multiple awarded in a $1 billion cash settlement in a Dell Technologies Inc. case
focused on claims targeting Dell’s effort to exchange Class V stock for shares of Dell common stock.
That case was decided in the Court of Chancery in 2023 and affirmed last year.
“This is not just a matter of an abuse of discretion, choosing one number or the other,” Ratner said.
“I think the court got it legally wrong” in settling on an 11.6-times fee multiplier.
But Samir Shukurov of Fields Kupka & Shukurov LLP, counsel for lead plaintiff Police and Fire
Retirement System of the City of Detroit, said Tesla incorrectly argued for a grant date fair value
rather than the $458 million based on the time of settlement.
“I believe everyone agrees we have real current market value of breaching fiduciaries,” Shukurov told
the justices. “Our argument is it’s not an abuse of discretion to use real, current, market-day values
as recorded in the stipulation.”
Justice Karen L. Valihura asked Shukurov what the justices should do with public policy concerns
focused on past fee award litigation.
“Tesla makes the interesting observation in their brief that your fee is $60 million over and above the
entire budget for the entire judiciary in the state of Delaware, for a case that settled,” Justice
Valihura said. “At some point, do we have to be concerned about the public perception of the size of
the fee as a matter of acceptable corporate governance and our oversight?”
Shukurov argued that Tesla’s multiplied hourly rate of $8,200 fell between the $5,300 paid in the Dell
litigation and $9,700 paid for class attorneys who handled the Activision Blizzard Inc. case, which
settled last year.
Justice Abigail M. Legrow said, “It may be there is value in these returned options, from Tesla’s
perspective, but why is that value based on the strike price, or the value to directors, as opposed to some other value to Tesla that isn’t in the record?”
“I think all the values are in the record,” Shukurov said. “We agreed on the real, current, present day
value of the options. What Tesla is saying is, ‘That’s fine for settlement approval. We need a different
number for fee approval — we need to disconnect those two things.'”
Chief Justice Collins J. Seitz Jr. told Ratner, “In the case law that we have about these kinds of
benefits, we said they’re hard to quantify, therefore we typically don’t try to quantify that benefit, but
there the benefit arguably was quantified.”
The high court is being asked to make a decision about “where to draw the dividing line between
benefits to stockholders and benefits to the corporation,” Justice Seitz said, but “I must tell you, I am
struggling with it.”
Ratner said the trial court needed to recognize that the $8,200-per-hour rate used for the fee
calculation “is extraordinary, and needs to explain why that kind of extraordinary result” fits case law.
“This is an extraordinary fee award for what is really an ordinary amount of litigation,” Ratner said.
The Detroit retirement system is represented by Andrew S. Dupre of Akerman LLP, Derrick Farrell,
Javier Bleichmar, Joseph A. Fonti, Nancy A. Kulesa, George N. Bauer and Thayne Stoddard of
Bleichmar Fonti & Auld LLP and William J. Fields, Christopher J. Kupka and Samir Shukurov of Fields
Kupka & Shukurov LLP.
Elon Musk and the other Tesla parties are represented by Raymond J. DiCamillo, Kevin M. Gallagher
and Kyle H. Lachmund of Richard Layton & Finger PA and Vanessa A. Lavely of Cravath Swaine &
Moore LLP.
Tesla is represented by John L. Reed and Ronald N. Brown of DLA Piper, Jason C. Jowers, Brett M.
McCartney and Sarah T. Andrade of Bayard PA and Brian T. Frawley, Matthew A. Schwartz, Jeffrey B.
Wall and Morgan L. Ratner of Sullivan & Cromwell LLP.
The case is In re: Tesla Inc. Director Compensation Stockholder Litigation, consolidated, case
numbers 52,2025 and 53,2025, in the Supreme Court of the State of Delaware. The lower court case
is Police and Fire Retirement System of the City of Detroit v. Elon Musk et al., case number 2020-
0477, in the Court of Chancery of the State of Delaware.
–Editing by Brian Baresch.