Dear Friends, 

Look at this greedy money-grab in legal fees by the Friedlander & Gorris law firm, which the Delaware Chancery Court approved! Charging and getting a WHOPPING $14 million on a $71 million settlement and it being allowed is outrageous. I was never a math professor folks, but that’s 20%! In my book, that’s Mafia fees! If that were my credit card company, I would cancel my credit card for charging such outrageous, exorbitant 20% fees!

Delaware Chancery Court Vice Chancellor J. Travis Laster approved the proposed settlement, saying it’s “fair and reasonable.” Ludicrous on every level in my view! How this absurdity is allowed is unbelievable and an insult to all of Delaware and its citizens who have to put up with this arbitrary and capricious behavior by those running the Chancery Court!  There is no doubt folks, in my opinion, that the Delaware Chancery Court, while not necessarily providing equity, has indeed become a viable industry, which allows and facilitates the making of tons of money by those connected lawyers who participate in its operation?!

Please read the article below and send your feedback on this, folks. It’s always welcome and appreciated, whether you agree or disagree. 

Respectfully Yours, 

JUDSON Bennett–Coastal Network 

Story from Law360: 

Chancery OKs $71M Premier Deal, $14M Four-Firm Fee

By Leslie A. Pappas

Law360 (June 25, 2024, 4:45 PM EDT) — Shareholder attorneys led by Friedlander & Gorris who negotiated a $71 million settlement to end derivative Delaware Chancery Court litigation with healthcare-purchasing giant Premier Inc. will get $14 million for their efforts, the total fee award they sought.

At a web-based hearing Tuesday morning, Delaware Vice Chancellor J. Travis Laster approved the proposed settlement and the requested fee award, calling $71 million a “fair and reasonable” result for a “complex case,” and the $14 million award appropriate for litigation that raised “serious and reasonable claims.”

The settlement ends two years of derivative litigation from shareholders represented by Friedlander & Gorris PA, Robbins Geller Rudman & Dowd LLP, Shobe & Shobe LLP, and VanOverbeke Michaud & Timmony PC.

The City of Warren General Employees Retirement System sued the board and top officers of the health care group-purchasing giant in March 2022, challenging a corporate restructuring in 2020 that eliminated the company’s dual-class structure and included a $473.5 million termination payment on tax receivable agreements with certain holders of Class B stock.

Headquartered in Charlotte, North Carolina, Premier went public in 2013 with two classes of stock: Class A stock, which was publicly traded; and Class B stock, which was held exclusively by healthcare companies affiliated with Premier directors and other pre-IPO investors.

The TRAs, which were negotiated with Premier directors and insiders just before the company went public, required the company to make cash payments to certain Class B stockholders whenever the company took advantage of certain types of tax savings from deferred tax assets.

The 2020 restructuring eliminated that liability for the company via a one-time early payout that terminated the tax receivable agreements. But shareholders asserted that the tax assets were worth $225 million less than what the company paid for them.

In their complaint, revised in May, shareholders questioned why the board used a 1.15% discount rate to calculate the TRA payout, rather than a 10% discount rate, which had been used several years earlier when the board negotiated a separate TRA buyout with one of its largest members, the Greater New York Hospital Association.

If the case had gone to trial, the board would have had to justify the “low” 1.15% rate, Vice Chancellor Laster said at the hearing Tuesday. “If there’s any number that jumps out in the case, it’s that one,” he said.

Shareholders obtained books and records from the company and investigated for about a year and a half before filing the 75-page complaint in March 2022, Jeffrey M. Gorris of Friedlander & Gorris PA, an attorney for the shareholders, told the court at the hearing Thursday.

The tax receivable agreements “are simple at the basic level, but the nuances get pretty complicated,” he said. Proving the case would have been “challenging,” he said.

Defendants never filed a motion to dismiss. Shareholders decided to go into mediation mid-way through the case after weighing the risks of ongoing litigation, Gorris told the court.

“We thought mediation would be a good idea,” Gorris said. “We got a feel from the defendants that they had a very different view of the case than we did.”

William Lafferty of Morris Nichols Arsht & Tunnell LLP, an attorney for some of the company’s directors, told the court Tuesday that the litigation was “hard fought all the way.”

If the case had gone to trial, defendants could have shown that the transaction was fair, but the company nevertheless decided that settling the case would be a better use of time and energy, Lafferty said.

“This company wanted to move forward with its business and without litigation overhang,” Lafferty said. “Settling this litigation and moving forward was the right thing for this company.”

Although mediations in June and October did not result in a settlement, the parties continued talking afterward and on Nov. 29 agreed to settle the action for a $71 million cash payment.

Parties announced the settlement in February, saying the directors’ and officers’ insurance carriers would pay the entire settlement amount.

City of Warren General Employees Retirement System is represented by Joel Friedlander, Jeffrey M. Gorris, and Christopher M. Foulds of Friedlander & Gorris PA, Randall J. Baron and Benny C. Goodman III of Robbins Geller Rudman & Dowd LLP, Gladriel Shobe and Jarrod Shobe of Shobe & Shobe LLP, and Thomas C. Michaud of VanOverbeke Michaud & Timmony PC.

Premier Inc. is represented by Steven S. Scholes, Ashley R. Altschuler, Harrison S. Carpenter, and Kevin M. Regan of McDermott Will & Emery LLP.

Certain director defendants are represented by William M. Lafferty, Thomas W. Briggs Jr., and Matthew R. Clark of Morris Nichols Arsht & Tunnell LLP.

The special committee defendants are represented by Gregory P. Williams, Blake Rohrbacher, Kevin M. Gallagher, Matthew W. Murphy, Nicole M. Henry and Andrew L. Milam of Richards Layton & Finger PA.

The case is City of Warren General Employees Retirement System v. Michael Alkire, et al., case number 2022-0207, in the Court of Chancery of the State of Delaware.

–Additional reporting by Jeff Montgomery. Editing by Peter Rozovsky.