SEINFELD v. William C. Rand, Shareholder Objector. (2000)

Order, Supreme Court, New York County (Stephen Crane, J.), entered February 8, 1999, which, upon plaintiffs' application for attorneys' fees in a shareholders' derivative action, insofar as appealed from, referred to a Judicial Hearing Officer to hear and report with recommendations the issue of value of the benefit to the subject corporation of plaintiffs' recovery on its behalf, unanimously affirmed, without costs.

This Court previously reversed the motion court's denial of attorneys' fees to plaintiffs, holding that plaintiffs' efforts had conferred a substantial benefit upon the subject corporation, and that they were therefore entitled to attorneys' fees (246 A.D.2d 291, 676 N.Y.S.2d 579).   On remand, the motion court referred to a Judicial Hearing Officer not only the “amount of attorneys' fees and disbursements to be paid to plaintiffs' counsel”, but also “the value of the benefit to [the subject corporation] of plaintiffs' recovery on its behalf”. While we clearly found that a substantial benefit was conferred on the subject corporation, the referral was not improper since, if nothing else, the referral serves as a reminder that a factor in assessing the amount of the fee to be awarded is the degree to which plaintiffs' attorneys' services benefitted the corporation, and that such benefit must therefore be weighed and evaluated, even if unquantifiable (see, United Operating Co. v. Karnes, 482 F.Supp. 1029, 1031, 1032).

MEMORANDUM DECISION.