IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE …blogs.reuters.com/alison-frankel/files/2015/03/activision-levi.pdf · 13321:brf:10273754.docx.1 in the court of chancery of the

13321:BRF:10273754.DOCX.1

IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE

IN RE ACTIVISION BLIZZARD, INC. ) CONSOLIDATED

STOCKHOLDER LITIGATION ) C.A. NO. 8885-VCL

MARK S. BENSTON’S AND MILTON PFEIFFER’S

APPLICATION FOR AN AWARD OF ATTORNEYS’ FEES

February 20, 2015

OF COUNSEL:

LEVI & KORSINSKY, LLP

Eduard Korsinsky

Douglas E. Julie

30 Broad Street, 24th

Floor

New York, NY 10004

(212) 363-7500

SMITH, KATZENSTEIN & JENKINS LLP

David A. Jenkins (ID No. 932)

Neal C. Belgam (ID No. 2721)

800 Delaware Avenue, Suite 1000

P.O. Box 410

Wilmington, DE 19899

(302) 652-8400

[email protected]

Attorneys for Plaintiff Mark S. Benston and

Movant Milton Pfeiffer

EFiled: Feb 20 2015 06:40PM EST Transaction ID 56808637

Case No. 8885-VCL

In re Activision Blizzard, Inc. Stockholder Litigation

C.A. No. 8885-VCL (consol.), application (Del. Ch. Feb. 20, 2015)

www.chancerydaily.com

i

TABLE OF CONTENTS

Background ................................................................................................................ 1

I. The Transaction ............................................................................................... 1

II. Pfeiffer Prevents an Early Settlement Worth $41 Million Agreed to by

Pacchia ............................................................................................................. 2

III. The Consolidated Action and Proposed Settlement ........................................ 4

ARGUMENT ............................................................................................................. 7

I. Our Actions Provided A Benefit By Preventing The Inferior Hayes

Settlement And By Articulating An Insider Trading Claim Worth $1.622

Billion .............................................................................................................. 7

A. The Inferior Hayes Settlement Would Have Been Consummated And

Likely Approved But For Our Efforts. ....................................................... 8

B. Movants’ Contributed To The Settlement By Articulating A Strong

Brophy Claim That Could Have Forced A Disgorgement Of $1.622

Billion In Trading Profits .........................................................................11

II. Movants Should Be Awarded 10% Of The Attorneys’ Fees ........................16

CONCLUSION ........................................................................................................17




ii

TABLE OF AUTHORITIES

Cases

Ams. Mining Corp. v. Theriault,

51 A.3d 1213 (Del. 2012) ....................................................................................... 7

Brophy v. Cities Service Co.,

70 A.2d 5 (Del. Ch. 1949) ............................................................................ passim

In re Orchard Enterprises Stockholder Litigation,

2014 2014 Del. Ch. LEXIS 151 (Del. Ch. Aug. 22, 2014) ..................................16

Kahn v. Kolberg Kravis Roberts & Co., L.P.,

23 A.3d 831 (Del. 2011) .......................................................................... 13, 14, 15

Latesco, L.P. v. Wayport, Inc.,

2009 Del. Ch. LEXIS 145 (Del. Ch. July 24, 2009) ............................................15

Smith, Katzenstein & Jenkins LLP v. Fid. Mgmt. & Research Co.,

2014 Del. Ch. LEXIS 56 (Del. Ch. Apr. 16, 2014) ..........................................7, 16

Sugarland Industries, Inc. v. Thomas,

420 A.2d 142 (Del. 1980) ....................................................................................... 7




1

Mark S. Benston (“Benston”) and Milton Pfeiffer (“Pfeiffer”, and with

Benston, “Movants”) apply for an award of attorneys’ fees for their role in causing

the benefits to Activision, Inc. (“Activision” or the “Company”) stemming from

the current pending settlement (the “Proposed Settlement”). But for the efforts of

Movants’ counsel, this case would have very likely settled in October 2013, when

Lead Plaintiff Anthony Pacchia (“Pacchia”) and other litigating Activision

stockholders agreed to a $41 million settlement reached after no discovery and

under the threat of a potential ratifying vote. Movants also articulated a strong

insider trading claim that exposed Defendants to $1.622 billion in liability, which

allowed Pacchia to obtain what he characterizes as an undiscounted “full recovery”

of $275 million on the claims he pursued. While Pacchia’s counsel did the bulk of

the work and deserve the bulk of the credit, they could have achieved none of this

had it not been for the efforts of Movants and their attorneys. Accordingly,

Movants seek a fair fee for the benefits obtained by their counsel.

BACKGROUND

I. The Transaction

On July 25, 2013, Activision and Vivendi S.A. (“Vivendi”) entered into an

agreement, in which Vivendi, Activision’s controlling stockholder at the time,

agreed to sell a majority of its Activision stock to the Company at a substantial

discount (the “Transaction”). Vivendi sold 428,676,471 shares of Activision stock




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at $13.60 per share, or approximately $5.83 billion, when the stock was trading at

approximately $15.18 per share. As part of the Transaction, ASAC II LP

(“ASAC”) entered into an agreement with Vivendi to acquire the remaining

Activision stock sold by Vivendi at the same discount received by Activision,

purchasing 171,968,042 shares for approximately $2.3 billion in cash using mostly

borrowed funds (the “Private Sale”). ASAC is an investment vehicle controlled by

Activision insiders Robert A. Kotick (“Kotick”) and Brian G. Kelly (“Kelly”).

II. Pfeiffer Prevents an Early Settlement Worth $41 Million Agreed to by

Pacchia

On August 1, 2013, Todd Miller (“Miller”) filed a derivative complaint in

California Superior Court in Los Angeles County challenging the Transaction. On

September 11, 2013, Douglas M. Hayes (“Hayes”) and Pacchia each filed

complaints in this court challenging the Transaction. Miller, Hayes, and Pacchia all

alleged, inter alia, that Kotick and Kelly had usurped a corporate opportunity.

Hayes uniquely alleged that the process violated Activision’s certificate of

incorporation, and on that ground he moved for a temporary restraining order

enjoining consummation of the transaction.1

1 Pacchia’s suggestion that he was the only stockholder who “aimed to . . . make

the case that the Transaction was the product of breaches of fiduciary duty and that

BKBK or ASAC were not entitled to control over the Company or their unrealized

gains” is not accurate. (See Opening Brief to Approve the Settlement, Recertify the

Class, Approve the Fee Application, and Approve the Special Award to Plaintiff

(“Brief”) at 12.) Miller’s complaint charged breaches of fiduciary duty within days




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On September 18, 2013, counsel delivered a demand under oath pursuant to

8 Del. C. § 220 to Activision on behalf of Pfeiffer seeking inspection of books and

records in connection with the Transaction. Activision did not provide Pfeiffer any

books or records.

On September 19, 2013, the Court granted Hayes’s motion for a temporary

restraining order. (ID 54237771.) Defendants immediately appealed.

On October 7, 2013, Hayes, who had been conducting settlement

negotiations with Defendants, presented counsel for Pfeiffer, Pacchia, and Miller

with a proposed settlement (the “Hayes Settlement”). Under the Hayes Settlement

Activision would distribute pro rata to Activision’s stockholders $15 million in

cash from Vivendi and $70 million of Activision’s treasury stock. ASAC, Vivendi,

and other Defendants would be excluded from obtaining settlement payments.

Activision would also adopt corporate governance provisions, including multiple

changes to its bylaws and certificate of incorporation. Although Pacchia and his

counsel say they “were not impressed with th[is] proposed settlement … [,]

initially elect[ing] not to join it[,]” they quickly signed on when told they were

necessary parties. (See generally ID 54602205.) We opposed the Hayes

Settlement, and refused to sign on, because we were uncomfortable with the level

of the announcement of the Transaction (as did the later Hayes and Benston

complaints), and Pacchia effectively abandoned his claim to seek disgorgement

from ASAC. (See id. at 49.)




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of due diligence that preceded the settlement (none) and the size and structure of

the settlement (Activision paying its stockholders largely using their own equity),

and expressed as much to counsel for Hayes and Pacchia. Defendants required a

global settlement and our refusal apparently derailed the proposed settlement.

On October 10, 2013, the Supreme Court reversed the temporary restraining

order and remanded for further proceedings. (ID 54364655.) The Transaction

closed on October 11, 2013.

III. The Consolidated Action and Proposed Settlement

On November 2, 2013, the Court consolidated the Hayes and Pacchia actions

and directed their counsel to file supplemental papers supporting their lead counsel

motions. (ID 54486363.) In response to this order, we informed the Court that we

were still seeking to inspect Activision’s books and records and that, because we

had not yet received any documents, we were not in a position to decide whether to

pursue litigation with respect to the Transaction. (ID 54555467.) We also informed

the Court and the parties that we would be pursuing a potential insider trading

claim that had not been asserted by either Hayes or Pacchia.

Because Activision still refused to comply with our Section 220 demand

letter, we filed a complaint against Activision under Section 220 on November 12,

2013. In the course of prosecuting that lawsuit, which took months, we drafted

multiple briefs, including an opposition to Activision’s motion for judgment on the




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pleadings and a pre-trial brief, engaged in contentious discovery negotiations,

responded to document requests and interrogatories, and Pfeiffer gave his

deposition.

On December 3, 2013, the Court appointed Pacchia as lead plaintiff,

Bouchard Margules and Friedlander, P.A. and Bragar Eagel & Squire, PC as Co-

Lead Counsel, and Rosenthal, Monhait & Goddess, P.A. as Delaware Liaison

Counsel. (ID 54644019.)

On December 17, 2013, we delivered a second demand letter to Activision

seeking books and records related to the Transaction on behalf of Benston, a much

larger stockholder than Pfeiffer. Again, Activision refused to provide Benston with

any books and records, and on January 2, 2014, we filed a complaint under Section

220 on behalf of Benston. We exchanged discovery requests, negotiated, and

drafted a pre-trial brief before reaching a settlement in which Activision agreed to

provide us with documents on February 12, 2014.

During and after the drafting of our complaint using the Section 220

documents, we discussed with Pacchia’s counsel the omission of claims for insider

trading pursuant to Brophy v. Cities Service Co., 70 A.2d 5 (Del. Ch. 1949)

(“Brophy”) and its progeny. We were unable to reach an agreement, and on March

14, 2014, we filed a complaint challenging the Transaction, seeking, inter alia,

disgorgement of the trading gains made by Kotick, Kelly, and ASAC in connection




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with the Transaction. (ID 55152132.) On April 9, 2014, we moved for Benston to

be appointed as co-lead plaintiff and for Smith Katzenstein & Jenkins LLP (“SKJ”)

and Levi & Korsinsky, LLP (“LK”) to be appointed as co-lead counsel for the

purposes of prosecuting Brophy claims. On June 6, 2014, the Court denied that

motion.

On November 19, 2014, Pacchia advised the Court of the terms of his

settlement with Defendants. (ID 56361556.) Under the Proposed Settlement,

Defendants and their insurers will pay Activision a total of $275 million, the Board

will expand by two seats to be filled by independent directors, Activision will

adopt certain amendments to its bylaws and certificate of incorporation, and

section 3.07 of the stockholders agreement will be amended to reduce the

applicable “Stockholder Percentage Interest” (i.e., the voting rights cutback) for

ASAC from 24.9% to 19.9%. (ID 56502722.) On February 11, 2015, Pacchia filed

his Brief.

In investigating and challenging the Transaction SKJ and LK devoted a total

of 1265.1 hours. (Affidavit of David A. Jenkins (“Jenkins Aff.,”), ¶3; Transmittal

Affidavit of Eduard Korsinsky in Support of Milton Pfeiffer’s and Mark S.

Benston’s Motion for an Award of Attorneys’ Fees ¶ 3.), and incurred expenses of

$10,500.02 (Jenkins Aff., ¶4).




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ARGUMENT

I. Our Actions Provided A Benefit By Preventing The Inferior Hayes

Settlement And By Articulating An Insider Trading Claim Worth $1.622

Billion

In stockholder derivative actions, the amount of an attorneys’ fee award is

left to the discretion of the Court. Ams. Mining Corp. v. Theriault, 51 A.3d 1213,

1255 (Del. 2012). In awarding attorney’s fees, the Court considers the factors

described in Sugarland Industries, Inc. v. Thomas, 420 A.2d 142 (Del. 1980),

which is primarily the benefit achieved, as well the contingent nature of the

representation, the time and effort expended by counsel, the quality of the work

performed, the standing and skill of the lawyers involved, whether the plaintiff can

claim all credit for the benefits achieved or only a portion thereof, and the

complexity of the case. Id. at 149-50. Any award of attorneys’ fees is contingent

upon the benefit being causally related to the efforts of counsel. Smith, Katzenstein

& Jenkins LLP v. Fid. Mgmt. & Research Co., 2014 Del. Ch. LEXIS 56, at *35

(Del. Ch. Apr. 16, 2014).

The efforts of Movants’ counsel prevented an inferior settlement from being

consummated, paving the way for the Proposed Settlement currently before the

Court. Our efforts in articulating a strong Brophy claim also contributed to the

Proposed Settlement by creating a real risk of a $1.622 billion disgorgement that




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Defendants did not face from the theory pursued by Pacchia. We therefore seek an

award of attorneys’ fees for these contributions to the Proposed Settlement.

A. The Inferior Hayes Settlement Would Have Been Consummated And

Likely Approved But For Our Efforts.

As Pacchia explains in his Brief, the Proposed Settlement secures many

benefits for Activision and, indirectly, its stockholders. These benefits would not

exist without the efforts of Movants’ counsel. But for the rejection of the Hayes

Settlement, this action would have settled for only $41 million in real value.2

In October 2013, Hayes negotiated with Defendants to settle his action on a

global basis. On October 7, 2013, Hayes’s counsel then approached counsel for

Pacchia, Miller, and Pfeiffer seeking their agreement to the settlement. Pacchia and

Miller signed on. However, Pfeiffer refused to agree, because we were not

comfortable with no due diligence having been performed, much of the Hayes

Settlement was illusory, and because we suspected substantial money was being

left on the table. Pacchia now attempts to claim joint credit with Pfeiffer for

2 Although the Hayes Settlement gave the appearance of being an $85 million

settlement, because of the settlement’s structure, it included only approximately

$41 million in new money for the stockholders. The Hayes Settlement’s $70

million stock dividend would not have been new cash but would have been

Activision distributing to stockholders equity that was already theirs. Because

ASAC and Vivendi were excluded from the stock dividend, the public

stockholders would have seen only approximately $41 million in new money in

cash from Vivendi and from the equity dilution of the Defendants. (Accord Brief at

9.)




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scuttling that pact. (See Brief at 3, 10.) But this is inaccurate. Pacchia’s counsel

previously established the true timeline for the Court in a sworn affidavit, which

explained:

• On October 8, 2013, Pacchia initially declined to participate the Hayes

Settlement at a time when his counsel “understood that Mr. Pacchia’s lack of

consent would not affect a settlement.” (ID 54602205 ¶ 6.)

• At 10:09 a.m., the following day, October 9, 2013, Hayes’s counsel advised

Pacchia’s counsel that defendants refused to settle without Pacchia joining

the settlement. (Id. ¶ 9.) At “approximately noon” – i.e. two hours later –

Pacchia’s counsel conveyed their agreement to the settlement “because

[they] had no desire to block it.” (Id. ¶ 12.)

• Minutes later, Hayes’s counsel sent a draft memorandum of understanding

(“MOU”) to Pacchia’s counsel, and at 2:27 p.m. Pacchia’s counsel received

a final version of the MOU. Pacchia’s counsel “paused to consider whether

[Pfeiffer’s] apparent opposition to the proposed settlement should affect

[Pacchia’s] decision to support the proposed settlement.” However,

Pacchia’s counsel did not bother to contact Pfeiffer’s counsel before

executing the MOU 77 minutes after they received it, at 3:44 p.m. (See id. ¶

16.)

Pacchia’s attempt to equate his temporary reluctance to enter into the

settlement with Pfeiffer’s actual stopping of the settlement is inaccurate. Pacchia’s

objection did not last through the distribution of the draft MOU, which was

succeeded by a MOU executed by Pacchia designed to afford the settling parties

flexibility in the event that Pfeiffer remained a holdout, which he did. (See id. ¶ 13.)

Defendants were willing to enter into the Hayes Settlement as long as Hayes,




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Pacchia, Miller, and Pfeiffer all signed on. Only Pfeiffer refused. Thus, Pfeiffer is

the reason the Hayes Settlement was never consummated.3

Although we were very troubled with the Hayes Settlement, we believed

then, as now, that the settlement would very likely have been approved by the

Court given that it was nominally valued at $85 million, a significant recovery by

any measure. At the time of the Hayes Settlement, there was a scheduled

stockholder vote with respect to the Transaction, and stockholders likely would

have approved the Transaction, which removed Vivendi as the majority

stockholder and was highly accretive.4 Although the Hayes Settlement returned

only $41 million to Activision’s public stockholders, this was more than the zero

dollars stockholders appeared likely to receive if they voted to ratify the

Transaction. Defendants could have also credibly argued that Vivendi would back

out of the Transaction and force a destructive special cash dividend if the

settlement was rejected. (See Brief at 15 (discussing Vivendi’s plans to force a

3 While Pacchia agreed to support the Hayes Settlement and formally executed the

MOU 77 minutes after receiving it, his counsel later challenged the premature

settlement under the same grounds that Pfeiffer actually based his refusal to sign

on, arguing in support of his motion to appoint lead counsel: “If this is just a

breach of fiduciary duty case, you would never look to settle it early on. You

would never say, ‘I want to settle this case without discovery. I don’t even want to

know what’s in those documents.’ . . . It is no way how to litigate a fiduciary duty

case.” (ID 54698689 at 43.) 4 On October 10, 2013, the day the Supreme Court vacated this Court’s preliminary

injunction order, Activision’s stock opened at $16.45 per share – 21% more than

the Transaction repurchase price.




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cash dividend).) The Hayes Settlement was also supported by premier law firms,

including Bouchard Margules and Friedlander, P.A. and Prickett, Jones & Elliott,

P.A.

Accordingly, but for Pfeiffer’s efforts (and his efforts alone), Activision and

its stockholders would have mostly likely been stuck with the much inferior

settlement agreed to by Hayes, Miller, and Pacchia himself.

B. Movants’ Contributed To The Settlement By Articulating A Strong

Brophy Claim That Could Have Forced A Disgorgement Of $1.622

Billion In Trading Profits

Both Movants also substantially contributed to the Proposed Settlement by

articulating a strong Brophy theory of liability. Pacchia states that the “the

settlement consideration approximates what plaintiff could expect to recover at

trial” and that full disgorgement of the trading gains made by ASAC was not

available on the claims he chose to pursue. (Brief at 49.) However, Pacchia also

identifies at least six strong counterarguments Defendants could have made to

rebut Pacchia’s core theory of usurpation of corporate opportunity.5 Pacchia does

5 (See Brief at 46 (“Articulate witnesses, skilled counsel, and polished experts

would contend [on Defendants’ behalf] that (i) the Transaction was highly

beneficial to Activision and its stockholders, (ii) BKBK’s personal investment of

$100 million was instrumental to putting a deal together and the positive stock

price reaction, (iii) it was beneficial to take the stock in ASAC off the market for

one to four years, (iv) the secondary offering proposed by Vivendi was not viable,

was presented for tactical reasons, and posed the risks that Vivendi might retain a

large stake or the stock price might not increase as much as it did, (v) it was

unreasonable to negotiate an alternative transaction structure given the billions of




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not explain why Defendants would capitulate without obtaining any discount to the

potential monetary award that Pacchia could have secured at trial.

The disconnect between Pacchia’s positions that the settlement was not

discounted and that Defendants had credible defenses leads to the conclusion that

Defendants offered a “full recovery” on Pacchia’s claims (see Brief at 4) because

they remained concerned about a greater source of liability. The reason Defendants

are willing to pay $275 million, giving up the entire 10% discount ACAS obtained

in the Private Sale, is because they faced a risk of full disgorgement of their profits

under the Brophy theory pursued by Movants. Pacchia’s expert calculates ASAC’s

total trading gains as of August 28, 2014 as $1.622 billion. (ID 56793312, Ex. 8,

Ex. C at 29.) Accordingly, the Proposed Settlement, which might represent the

most Pacchia could have recovered on his theory, represents a return of only 17%

of ASAC’s August 28, 2014 profits, or 39% of their $712.8 million profits one

trading day after the closing of the Transaction. In effect, Defendants, who know

dollars needed to eliminate Vivendi’s controlling stake, and (vi) any hypothetical

alternative structure is too speculative to credit.”).) It is also not clear that a

usurpation of corporate opportunity claim truly existed here because there is

evidence suggesting that the Board passed on a bigger transaction because of

concerns over the amount of leverage a bigger transaction would require.




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that full disgorgement is a possibility (Id., Ex. 31.), are paying $275 million in

exchange for keeping $1.447 billion.6

While Pacchia explains that full disgorgement of ASAC’s entire profit is not

available under the theory he pursued (Brief at 49), full recovery from ASAC is

certainly available under Brophy. See Kahn v. Kolberg Kravis Roberts & Co., L.P.,

23 A.3d 831, 838-39 (Del. 2011) (“it is inequitable to permit the fiduciary to profit

from using confidential corporate information” and that “equity requires

disgorgement of that profit”). The rationales offered by Pacchia as to why full

disgorgement against ASAC would not be available under a usurpation of

corporate opportunity theory are not valid excuses for insider trading and are

therefore inapplicable in the Brophy context.7

Although Pacchia asserts that a Brophy claim would be “meritless,” his basis

for this assertion requires him to invent a new element for the Brophy test. (Brief at

19.) Specifically, Pacchia asserts that a Brophy claim would fail because the

6 Pacchia’s concerns about a “dissipation” associated with a full disgorgement are

misplaced. (Id.) No judgment would reduce ASAC’s trading gain from $1.622

billion to only $275 million; for that to happen, Activision’s stock would have to

free fall from more than $23 per share to less than $16. If anything, the expectancy

of a large influx of cash from ASAC to Activision would likely cause Activision’s

stock price to increase. 7 In his Brief, Pacchia states that “[w]e thought disgorgement of ASAC’s gains was

unlikely, because third-party equity capital was a necessary component of a

repurchase transaction, the limited partners in ASAC were logical people to solicit

investment from, they incurred risk, and they were each kept at a distance from the

deal negotiations.” (Brief at 49.)




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Transaction was “negotiated by Activision fiduciaries (i.e., Kotick and Kelly, and

Vivendi) with equivalent access to confidential information.” (Id. at 19-20.) This is

not a defense to a successful Brophy claim.

A successful Brophy claim requires only proof that: “(1) the corporate

fiduciary possessed material, nonpublic company information; and (2) the

corporate fiduciary used that information improperly by making trades because

[]he was motivated, in whole or in part, by the substance of that information.”

Kahn, 23 A.3d at 838 (citation omitted). Facts sufficient to prove both elements

strongly exist here. Kotick, Kelly, and ASAC knew material, nonpublic company

information about the Transaction that allowed them to enter into the Private Sale.

Prior to entering into the Transaction, Kotick, Kelly, and ASAC knew that the

Company was about to buy from Vivendi a significant amount of its own stock at a

10% discount and that Vivendi would no longer be the controlling stockholder.

The change in Vivendi’s status would eliminate the overhang of uncertainty and

control on Activision’s stock and would allow the Company’s stock to be included

in major stock indices. The impending selloff by Vivendi was plainly material

information, and prior to entering into the Transaction Vivendi stated its belief that

the price of Activision’s stock would likely rise after the Transaction became

public—Vivendi wanted to profit from that expected price increase. (ID 55173919

¶ 105.) In addition, prior to entering into the Transaction, Kotick, Kelly, and




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ASAC knew that Activision would report positive second quarter 2013 financial

results, which were announced the day after the Transaction was executed.

Following the disclosure of this material, nonpublic information, Activision’s stock

rose 15%.

There is also no principled basis to add new elements to the Supreme

Court’s formulation of the Brophy test. Pacchia makes no argument as to why the

knowledge of the insider-trading fiduciary’s counterparty should be relevant to a

Brophy claim. And it should not be – a counterparty to an insider-trade may not be

motivated to maximize price per share, such as here where Vivendi was focused

first on liquidity. Further, Pacchia’s new element would result in insiders bullying

other fiduciaries to sign off on the insider trading, which is precisely what occurred

here. Pacchia’s new element would defeat the Supreme Court’s prophylactic rule

underlying Brophy, which is solely concerned with the abuse of the corporate-

fiduciary relationship. Kahn, 23 A.3d at 837 (“Public policy will not permit an

employee occupying a position of trust and confidence toward his employer to

abuse that relation to his own profit.” (quoting Brophy, 70 A.2d at 7) ); see also

Latesco, L.P. v. Wayport, Inc., 2009 Del. Ch. LEXIS 145, at *22 (Del. Ch. July 24,

2009) (“A Brophy claim … arises out of the misuse of corporate property--that is,

confidential information--by a fiduciary of the corporation[.]”).




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The additional claim articulated by Benston and Pfeiffer presented a real

threat of liability to Defendants, and had the potential for far more liability to

ASAC than the claim Pacchia pursued.

II. Movants Should Be Awarded 10% Of The Attorneys’ Fees

As demonstrated above, our efforts derailed an inferior settlement and made

the superior Proposed Settlement possible. Although it is not possible to precisely

calculate our responsibility for the increase in the settlement consideration and we

did not have any part in negotiating the present settlement, Pacchia would not be

here but for our efforts. This Court has addressed shared-credit situations before. In

In re Orchard Enterprises Stockholder Litigation this Court stated that: “[i]n the

two most common shared-credit scenarios—those involving topping bidders or

special committees—the actor not principally responsible for generating the benefit

appears to have been credited with 20% to 25% of the benefit conferred.” 2014

Del. Ch. LEXIS 151, at *16-17 (Del. Ch. Aug. 22, 2014); see also Smith,

Katzenstein & Jenkins LLP, 2014 Del. Ch. LEXIS 56, at *49-50 (same). In

recognition of Movants’ efforts and responsibility in causing the Proposed

Settlement, the Court should award Movants’ 10% of the Proposed Settlement’s

attorneys’ fees, or $7,250,000.




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CONCLUSION

For the forgoing reasons, Pfeiffer and Benston request an award of

attorneys’ fees of $7,250,000.

February 20, 2015

OF COUNSEL:

LEVI & KORSINSKY, LLP

Eduard Korsinsky

Douglas E. Julie

30 Broad Street, 24th

Floor

New York, NY 10004

(212) 363-7500


/s/ David A. Jenkins

David A. Jenkins (ID No. 932)

Neal C. Belgam (ID No. 2721)

800 Delaware Avenue, Suite 1000

P.O. Box 410

Wilmington, DE 19899

(302) 652-8400

[email protected]

Attorneys for Plaintiff Mark S. Benston and





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IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE IN RE ACTIVISION BLIZZARD, INC. ) CONSOLIDATED STOCKHOLDER LITIGATION ) C.A. NO. 8885-VCL

CERTIFICATE OF COMPLIANCE WITH TYPEFACE REQUIREMENT AND TYPE-VOLUME LIMITATION

1. This brief complies with the typeface requirement of Ct. Ch. R. 171

(d)(4) because it has been prepared in Times New Roman 14-point typeface using

Microsoft Word 2010.

2. This brief complies with the type-volume limitation of Ct. Ch. R.

17l(f)(l) because it contains 3,928 words, which were counted by Microsoft Word

2010.


/s/ David A. Jenkins David A. Jenkins (ID No. 932) Neal C. Belgam (ID No. 2721) 800 Delaware Avenue, Suite 1000 P.O. Box 410 Wilmington, DE 19899 (302) 652-8400 Attorneys for Plaintiff Mark S. Benston and



Case No. 8885-VCL




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CERTIFICATE OF SERVICE

I certify that on February 20, 2015, copies of (1) MILTON PFEIFFER’S

AND MARK S. BENSTON’S APPLICATION FOR AN AWARD OF

ATTORNEYS’ FEES, (2) CERTIFICATE OF COMPLIANCE WITH

TYPEFACE REQUIREMENT AND TYPE-VOLUME LIMITATION, (3)

DAVID A. JENKINS and (4) AFFIDAVIT OF EDUARD KORSINSKY were

caused to be served by e-file on the following:

Michael Hanrahan, Esquire Gary F. Traynor, Esquire Paul A. Fioravanti, Esquire Patrick Flavin, Esquire Eric J. Juray, Esquire PRICKETT, JONES & ELLIOTT, P.A. 1310 King Street P.O. Box 1328 Wilmington, DE 19899 Edward P. Welch, Esquire Edward B. Micheletti, Esquire Sarah Runnells Martin, Esquire Lori W. Will, Esquire SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP One Rodney Square Wilmington, DE 19801

Joel Friedlander, Esquire Jeffrey M. Gorris, Esquire Albert Carroll, Esquire FRIEDLANDER & GORRIS, P.A. 222 Delaware Avenue, Suite 1400 Wilmington, DE 19801 Edward M. McNally, Esquire P. Clarkson Collins, Esquire MORRIS JAMES LLP 500 Delaware Avenue, Suite 1500 P.O. Box 2306 Wilmington, DE 19899 Angela C. Whitesell, Esquire POTTER ANDERSON & CORROON LLP 1313 North Market Street P.O. Box 951 Wilmington, DE 19899


Case No. 8885-VCL




13321:COS:10273591.DOCX.1

R. Judson Scaggs, Jr., Esquire Shannon E. German, Esquire MORRIS, NICHOLS, ARSHT & TUNNELL 1201 N. Market Street Wilmington, DE 19801 Jessica Zeldin, Esquire ROSENTHAL, MONHAIT & GODDESS, P.A. 919 Market Street, Suite 1401 P.O. Box 1070 Wilmington, DE 19899-1070

Collins J. Seitz, Jr., Esquire Garrett B. Moritz, Esquire SEITZ, ROSS, ARONSTAM & MORITZ LLP 100 S. West Street, Suite 400 Wilmington, DE 19801 Raymond J. DiCamillo, Esquire Susan M. Hannigan, Esquire RICHARDS, LAYTON & FINGER, P.A. 920 N. King Street Wilmington, DE 1801

/s/ David A. Jenkins David A. Jenkins (ID No. 932)




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IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE …blogs.reuters.com/alison-frankel/files/2015/03/activision-levi.pdf · 13321:brf:10273754.docx.1 in the court of chancery of the