Delaware state Supreme Court.
The Delaware Supreme Court on Friday upheld a vice chancellor’s decision to award a former director of OptimisCorp. $1.8 million to cover the cost of successfully defending allegations that he had plotted to remove the physical services company’s chief executive back in 2012.
The ruling from the high court brought an end to more than four years of litigation stemming from claims that William Horne and other OptimisCorp. directors bribed a female employee to make false claims that the company’s CEO, Alan Morelli, had sexually harassed her. The case was dismissed in 2015 and Horne filed a complaint for indemnification the following year.
Back in March, Vice Chancellor Joseph R. Slights III ruled that all of the claims against Horne arose by reason of his position as chief financial officer from 2008 to 2013, and he was thus entitled to fees and expenses for having defended the case. The vice chancellor later approved Horne’s request for $91,000 to the costs of his indemnification suit.
A three-judge panel of the Supreme Court upheld both decisions Friday afternoon, just two days after hearing the appeal.
Slights’ ruling earlier this year said that the “sordid” nature of the underlying litigation justified Horne’s request for indemnification, a benefit he clearly deserved as an officer of the company.
“Given the complexity of the issues, the duration and scope of discovery, the extensive pretrial motion practice and the lengths to which Horne was forced to go to defend himself—a trial and post-trial appeal—it is clear that the requested fees are reasonable on their face,” Slights wrote.
Morelli had sued over his unexpected ouster in 2013, accusing Horne and others of manufacturing the harassment controversy in an effort to wrest away control of OptimisCorp.
Former Vice Chancellor Donald F. Parsons Jr. later scrapped all of Morelli’s claims as unproven in a 214-page opinion. But he also used controversial language in describing Morelli’s position, saying Morelli thought himself a “super-director whose powers trump the board’s statutory authority.”
An en banc panel of the Supreme Court in April upheld a no damages ruling because Morelli’s status was eventually restored in a separate Section 225 action.
However, Chief Justice Leo E. Strine Jr. blasted what he termed Parsons’ “tendentious” description and analytical framework, which he said could be seen as giving board factions the go-ahead to lie to fellow board members, “so long as the faction subjectively believes that its intended end is good for the corporation.”
Friday’s ruling, however, avoided the drama of the appeal in the underlying case, as Strine affirmed in a terse one-page order. He was joined by Justices Karen L. Valihura and James T. Vaughn Jr.
Attorneys from both sides were not immediately available to comment.
Horne was represented by Bruce E. Jameson and Eric J. Juray of Prickett, Jones & Elliott. OptimisCorp. was represented by John G. Harris of Berger Harris.
