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CALIFORNIA CORPORATE & SECURITIES LAW

How To Confer A $6.9 Million Benefit For Less Than A Half Dollar

In March 2011, the three-member compensation committee of EchoStar Corporation awarded options to purchase 1.5 million shares of company stock to its Chairman, Charles W. Ergen.  According to EchoStar’s proxy statement for its 2012 annual meeting, the aggregate grant date fair value of the award was $21.6 million.  There was just one problem, the plan…

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Dismissal Based On Forum Non Conveniens Does Not Trigger Fee Shifting

California generally follows the “American Rule” with respect to attorney’s fees.  Trope v. Katz, 11 Cal.4th 274, 278 (1995).  Under the American Rule, each party to a lawsuit must ordinarily pay his own attorney’s fees.  A contract may provide, however, that the prevailing party to an action on the contract may recover attorney’s fees.  Sometimes these clauses are unilateral…

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Court Holds Indemnity Provision Provides No Right To Attorney Fees

Contractual indemnity provisions often broadly provide for the payment of the indemnified party’s attorney fees.  In Alki v. Superior Court, 2016 Cal. App. LEXIS 892 (Cal. Ct. App. 2016), for example, a fund administration agreement required a hedge fund to indemnify its administrator for all losses, including attorney fees “resulting in any way from performance…

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Here’s One Way To Recover Attorneys’ Fees Without Adopting A Fee Shifting Bylaw

With the ongoing hullabaloo concerning the legislative demise of fee shifting bylaw provisions under Delaware law, little attention has been paid to California law.  More importantly, no one seems to have noticed that California law already provides a mechanism for the collection of attorneys’ fees and other costs by the prevailing corporation or defendant in a derivative suit…

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It’s Time To Put A Stop To Fee-Shifting (But Not In the Way You Might Think)

The problem with “fee-shifting bylaws” starts with the name.  A better name might be “anti fee-shifting bylaws” because they end the fee shifting that otherwise applies.  Without fee-shifting bylaws, plaintiffs’ attorneys are encouraged to bet with the stockholders’ money.  This is, of course, unfair to the stockholders.  Society also suffers because the current fee-shifting regime…

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Do Some Companies Already Have Fee-Shifting Provisions (And Not Know It)?

A lot of folks these days are arguing and writing about fee-shifting bylaws as if they were some kind of novel and sudden irruption, like Athena bursting from Zeus’ skull.  This overlooks the existence of fee-shifting provisions in a myriad of existing contracts.  Arguably, some of these provisions may already applicable to derivative plaintiffs. When it comes to attorney’s…

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Defendant Prevails On Non-Existent Contract

Sometimes, the law simply gets “curiouser and curiouser”.  Last week, I happened across a decision by the Fourth District Court of Appeal that reached the remarkable conclusion that a defendant was the prevailing party on a contract that it had proved didn’t exist.  Douglas E. Barnhart, Inc. v. CMC Fabricators, Inc., 2012 Cal. App. LEXIS 1202 (Nov.…

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