Blue Apron, Roku, Stitch Fix Owe $3 Million to Opposing Counsel

Blue Apron Holdings Inc., Roku Inc., and Stitch Fix Inc. must each pay $1 million in attorneys’ fees to the shareholder who successfully challenged corporate charter provisions requiring securities suits against them to be filed federal court.

Matthew Sciabacucchi won a Delaware Chancery Court ruling last year striking down those restrictive clauses, which all three companies included in their original charters when going public.

Vice Chancellor J. Travis Laster held in December that Delaware law permits forum selection clauses only for “internal” issues relating to corporate governance, not for “external” matters like securities suits that involve market behavior. The companies have appealed.

After Laster’s summary judgment decision, Sciabacucchi sought $3 million in attorneys’ fees. The companies countered that the plaintiff’s lawyers deserved only about $365,000.

Laster ruled against the companies again. The $3 million award matches what attorneys have gotten in Delaware for winning lawsuits seeking “non-quantifiable relief” that were about equally complex, risky, and time-intensive, the judge found. Moreover, Sciabacucchi’s lawyers won a “significant” precedent-setting decision, and they took the case knowing it was unlikely to settle, Laster said.

“Counsel faced legitimate contingency risk, and they continue to face contingency risk,” he wrote. “They faced significant adversaries who believed in the validity of the provisions they had adopted, and any outcome was likely to be an all-or-nothing proposition.”

If the companies win on appeal, Sciabacucchi’s lawyers will still get nothing, the judge noted.

He rejected the companies’ fee suggestion, saying the lodestar method they advocated is used in Delaware only when there are no analogous cases to draw from. The lodestar technique involves taking a reasonable number of hours worked on the case at a reasonable rate, then applying a multiplier reflecting degree of difficulty and risk.

Sciabacucchi was represented by Heyman Enerio Gattuso & Hirzel and Block & Leviton. Stitch Fix and Roku were represented by Wilson Sonsini Goodrich & Rosati. Blue Apron was represented by Richards Layton & Finger and Wilmer Cutler Pickering Hale & Dorr.

The case is Sciabacuchi v. Salzberg, Del. Ch., No. 2017-0931, 7/8/19.