A New Jersey appeals court this week upheld an award of attorney fees to a plaintiff in a shareholder derivative suit, invoking the "common fund" exception to the American Rule even though there was no actual pot of money created by the litigation. The court found that an award of fees out of "a fund in court" was appropriate because the derivative action resulted in tangible benefits for the defendant company, which included "unquantifiable savings from elimination of past mismanagement and misconduct."
October 18, 2007 at 12:00 AM
1 minute read
The original version of this story was published on Law.Com
A New Jersey appeals court on Monday upheld an award of counsel fees to a plaintiff in a shareholder derivative suit, invoking the “common fund” exception to the American Rule even though there was no actual pot of money created by the litigation.
The exception, found in Rule 4:42-9(a)(2), allows the court to award fees out of “a fund in court,” and the court found such an award is appropriate where a derivative action results in conferral of benefits upon the defendant company.
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