A shareholder lawsuit regarding $2.5 million in bonuses given to executives of a pharmaceutical firm is the latest legal battle in an ongoing fight on the recent “loser pays” bylaw that may have been permitted from the Delaware Supreme Court early this year.
The bylaw, stemming from the Hemispherx BioPharma Inc. litigation, where a shareholder derivative case is responsible for the firm’s lawyer costs and other fees if the firm wins, can also be applied to pending cases and requiring shareholders to post a bond.
This time around, attorneys representing plaintiffs weren’t impressed, labelling the bylaw as an invalid and an unexpected turn against public policy ---- in a motion pleading a court judge in the Delaware Chancery Court to stop the fee-shifting provision. If motion fails, they’ll withdraw from the litigation.
Michael Kelly, who represents Hemishpherx, said if the fee-shifting right exists in Delaware, it’s a clear enough that such right exists at present.