In re Riverbed Technology, Inc. S'holders Litig.

Delaware Court of Chancery · 2015 · Corporations

Updated August 22, 2026

Corporationsclass action settlementobjector attorney's feesAmerican Ruleobjector feesclass settlementstockholder classequity

Facts

The parties proposed a merger-litigation settlement in which the stockholder class would receive disclosures that had already been made in exchange for a broad release of merger-related claims, including unknown claims. The court had previously found the disclosures only marginally material, but also found that the factual investigation suggested breach-of-duty litigation was unlikely to be fruitful and that harm from the release was particularly unlikely in this case. A stockholder-objector, who had purchased stock with the aim of objecting, opposed the settlement and argued both the general problem with disclosure-only settlements for broad releases and the specific deficiencies of this proposed settlement and investigation. Although the court ultimately approved the settlement, it found the objector's presentation persuasive and helpful in evaluating the settlement on behalf of the class.

Issue

May a stockholder-objector in a corporate class-action settlement receive an attorney's fee award when the objection did not succeed in defeating the settlement, but the objection nonetheless helped the court better evaluate the settlement in the interests of the class? If so, what fee is appropriate under Delaware law?

Rule

In evaluating a proposed class-action settlement, the Court of Chancery acts in a role akin to a surrogate fiduciary for the class. Because helpful objections in that setting can benefit the class itself, equity may justify a departure from the American Rule and permit a fee award to an objector even when the objection is unsuccessful, if the objector's efforts better enabled the court to act in the interests of the class. Such awards should be rare, and the amount is determined under the Sugarland factors, with the benefit conferred as the most important factor.

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One of 10 multiple-choice questions for this case. Pick an answer to see why.

A Delaware court in Wilmington reviews a proposed settlement of a stockholder class action challenging a merger. The settling parties support the deal, but stockholder Nora Patel files an objection that the judge ultimately rejects; in the opinion approving the settlement, the judge explains that Patel's briefing sharpened the court's understanding of the release's risks and helped the court evaluate the settlement for the class.

If Patel later seeks attorney's fees, which is the best answer?

Explanation. The majority held that, in reviewing a class settlement, the court acts in a surrogate-fiduciary-like role for the class. Therefore, equity may justify departing from the American Rule where an unsuccessful objector's efforts better enable the court to act in the interests of the class. Success in blocking the settlement is not required, but the objection must confer a real benefit on the class.