By Tom Hals
Wilmington, Del, Sept 21 (Reuters) - Two law firms were
poised on Friday to collect a blockbuster $305 million in legal
fees for their work on a lawsuit, after Delaware's Supreme Court
declined to consider a challenge to the payout.
The fee award to law firms Prickett, Jones & Elliott of
Wilmington and Kessler Topaz Meltzer & Check of Radnor,
Pennsylvania, is believed to be the biggest ever awarded by the
Delaware's Court of Chancery. It is also one of the largest
legal fees awarded in securities class actions nationwide.
The fee was awarded in December for plaintiffs' attorneys
who brought a shareholder lawsuit on behalf of Southern Copper
The court's chief judge, Leo Strine, calculated the fee as
15 percent of the $2 billion judgment to be paid to Southern
Copper. Strine said at the time that the fee was meant as an
incentive for lawyers to achieve good outcomes for their
The judgment and fee were affirmed by the full Supreme Court
in August, although Justice Carolyn Berger dissented on the fee.
The defendants asked the Supreme Court to change its ruling
on the fee because the high court did not consider the limited
impact of the judgment on minority shareholders. The defendants
argued Grupo Mexico will pay the judgment largely for the
benefit of itself, because it owns 81 percent of Southern
The defendants argued the minority shareholders will get
just $386 million of the actual benefit. On that basis, they
argued the fee was not 15 percent, but 79 percent.
In a four-page ruling on Friday, the Supreme Court rejected
the motion for reargument on procedural grounds and because they
said no stockholder has a claim to any particular assets.
Strine ruled that Grupo Mexico could satisfy the judgment by
returning to Southern Copper an equivalent value of the Southern
Copper shares it held, but that the fee award had to be paid out
of the judgment in cash.
The judgment is due immediately, said plaintiffs' attorney
Ronald Brown of Prickett Jones in a voicemail message left with
Reuters. He said after 20 days if the judgment is not paid, it
can be satisfied by cancelling shares of Southern Copper stock
held by Grupo Mexico.
Brown also said a bond for the attorneys' fee had been
posted by Grupo Mexico. If the company did pay the plaintiffs'
attorneys next week the bond would be used to cover the payment.
An appeal to the U.S. Supreme Court is possible, but
unlikely. The judgment is increasing by $212,000 a day due to
interest costs, according to court records.
Lee Rudy, a partner with Kessler Topaz and Bruce Angiolillo,
a partner with Simpson Thacher & Bartlett, who argued the appeal
for the defendants, did not immediately return calls for
comment. Grupo Mexico did not immediately respond to a request
The fee award had set off a protest among critics of trial
lawyers, who pointed out it amounted to $35,000 an hour, or
about 10 times the going rate in class actions with
similar-sized judgments or settlements.
Other large fee awards in U.S. cases include fees and
expenses of $688 million for plaintiffs' lawyers in the Enron
Corp class actions, and $493 million for attorneys in the Tyco
International class actions.
The Enron and Tyco cases each required at least 88,000 hours
of work, according to a legal brief by defendants. In contrast,
the attorneys in the Southern Copper case invested 8,597 hours,
according to court records.
Strine ordered Grupo Mexico to pay the $2 billion judgment
and fee after finding that it coerced Southern Copper to overpay
for Minera Mexico in 2005. Grupo Mexico controlled both
companies at the time.
The lawsuit was what is known as a derivative suit. The
shareholders sued on behalf of the company and the judgment will
not be paid directly to stockholders but to Southern Copper. \
(Additional reporting by Gabriel Stargardter)
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