Nakatsukasa v. Furiex Pharms., Inc.

Nakatsukasa v. Furiex Pharms., Inc., 2015 NCBC 68.

STATE OF NORTH CAROLINA IN THE GENERAL COURT OF JUSTICE

SUPERIOR COURT DIVISION

COUNTY OF WAKE 14 CVS 6156

WALTER NAKATSUKASA, Individually and

)

on Behalf of All Others Similarly Situated,

)

Plaintiff )

)

v. )

)

FURIEX PHARMACEUTICALS, INC., JUNE )

S. ALMENOFF, PETER B. CORR, )

STEPHEN R. DAVIS, WENDY L. DIXON, )

FREDRIC N. ESHELMAN, STEPHEN W. )

KALDOR, ROYAL EMPRESS, INC. and )

FOREST LABORATORIES, INC., )

Defendants )

STATE OF NORTH CAROLINA IN THE GENERAL COURT OF JUSTICE

SUPERIOR COURT DIVISION

COUNTY OF WAKE 14 CVS 6955

CHRISTOPHER SHINNEMAN, Individually )

and on Behalf of All Others Similarly )

Situated, )

Plaintiff )

)

v. )

)

FURIEX PHARMACEUTICALS, INC., )

FREDRIC N. ESHELMAN, JUNE S. )

ALMENOFF, PETER B. CORR, WENDY L. )

DIXON, STEPHEN W. KALDOR, STEPHEN )

R. DAVIS, ROYAL EMPRESS, INC. and )

FOREST LABORATORIES, INC., )

Defendants )

ORDER FINALLY APPROVING SETTLEMENT AND AWARDING ATTORNEYS' FEES

THIS MATTER comes before the Court on Plaintiffs' Motion for Final Approval of

Settlement ("Approval Motion") and Motion for Award of Attorneys' Fees and Expenses ("Fee

Motion," together with Approval Motion, "Motions"). Both Motions are unopposed by

Defendants, and the Court, after appropriate notice to potential class members was provided

as required by the Court's Order Preliminarily Approving Settlement, received no objection

to the settlement conditionally entered on or about January 15, 2015 ("Settlement"). On June

2, 2015, the Court held a hearing on the Motions and is satisfied as to the fairness,

reasonableness, and adequacy of the Settlement, and the fairness and reasonableness of the

fees, costs, and incentives provided herein. Therefore, the Court GRANTS the Approval

Motion, CERTIFIES the class as defined below for settlement purposes only, APPROVES the

Settlement, and GRANTS, in part, the Fee Motion for the reasons below.

Rabon Law Firm, PLLC, by Gary W. Jackson, Esq., and Brodsky & Smith, LLC by

Evan J. Smith, Esq. for Plaintiffs.

Wyrick Robbins Yates & Ponton, LLP by Lee M. Whitman, Esq. for Defendants Furiex

Pharmaceuticals, Inc., June S. Almenoff, Peter B. Corr, Stephen R. Davis, Wendy L.

Dixon, Fredric N. Eshelman, Stephen W. Kaldor.

Robinson, Bradshaw & Hinson, P.A. by Adam K. Doerr, Esq., David C. Wright, III,

Esq., and Robert W. Fuller, Esq., and Covington & Burling LLP by Mark P. Gimbel,

Esq. and Christopher Y.L. Yeung, Esq. for Defendants Forest Laboratories, Inc. and

Royal Empress, Inc.

McGuire, Judge.

Background

1. Plaintiffs in these actions, Walter Nakatsukasa and Christopher Shinneman,

are former shareholders of Furiex Pharmaceuticals, Inc. ("Furiex").

2. On April 28, 2014, Furiex announced that it had entered into an Agreement

and Plan of Merger ("Merger Agreement") with Forest Laboratories, Inc. ("Forest") and Royal

Empress, Inc. Pursuant to the terms of the Merger Agreement, Furiex shareholders would

have the right to receive $95.00 per share plus a Contingent Value Right of up to $30 per

share in exchange for their Furiex shares.

3. Following the announcement of the Merger, four putative class-action lawsuits

challenging the Merger were filed, all of which the parties agree arise from the same set of

operative facts and involve the same putative class: Kollman v. Furiex Pharmaceuticals, Inc.

et al., Case No. 9599, and Powell v. Furiex Pharmaceuticals, Inc. et al., Case No. 9603, filed

on May 1 and 2, 2014, respectively, in the Court of Chancery of the State of Delaware

(together, the “Delaware Actions”); the Nakatsukasa Action, filed on May 12, 2014; and the

Shinneman Action, filed on May 28, 2014 (together, the “North Carolina Actions” and

together with the Delaware Actions, the “Actions”).

4. On June 4, 2014, Furiex filed its Definitive Proxy Statement on Schedule 14A

("Proxy") with the Securities and Exchange Commission ("SEC"). On the same date, Plaintiffs

in all four actions filed substantively identical amended complaints. The amended complaints

alleged, among other disclosure issues, that the Proxy failed to disclose whether

confidentiality agreements entered into between Furiex and potential buyers contained

standstill or "don't ask, don't waive" provisions ("DADW provisions").

5. On June 11, 2014, the parties to the North Carolina actions agreed to an

expedited discovery schedule which included an agreement to stay all further proceedings in

the Delaware Actions. After reviewing documents produced during this expedited discovery,

Plaintiffs' concluded that five confidentiality agreements entered into between Furiex and

potential buyers contained DADW provisions. Additionally, Plaintiffs determined that the

Proxy failed to provide Furiex shareholders with "material information concerning, among

other things, the process which resulted in the [m]erger, Furiex's financial projections, and

the financial analyses by [Bank of America Merrill Lynch ("BAML")] and Credit Suisse

Securities (USA) LLC [("Credit Suisse")] underlying each advisor's fairness opinion."1

6. As part of the resolution of this matter, Furiex notified the parties to the five

DADW provisions that it would waive those provisions. Having resolved the DADW issue,

Plaintiffs' counsel engaged in vigorous, arm's-length negotiations which ultimately resulted

1 Pls.' Mem. Supp. Mot. Prelim. Approval of Settlement 3-4.

in the execution of a Memorandum of Understanding on June 23, 2014. In addition to waiving

the DADW provisions, the negotiated settlement provided Furiex shareholders with

supplemental disclosures that Plaintiffs believed resolved their remaining claims. On June

23, 2014, Furiex filed these supplemental disclosures on Schedule 14A with the SEC.

7. On July 1, 2014, Furiex stockholders voted to approve the Merger.

Approximately 79.86% of Furiex’s outstanding common stock was voted at the meeting, of

which a majority voted in favor of the Merger.

8. On January 15, 2015, the parties executed a Stipulation and Agreement of

Compromise, Settlement, and Release ("Stipulation"), and on February 9, 2015, Plaintiffs

filed their Unopposed Motion for Preliminary Approval of Settlement, Certification of

Settlement Class, Approval of Class Notice and Final Approval Hearing Scheduling. On

March 23, 2015, the Court entered its Order Preliminarily Approving Settlement and

Providing for Notice ("Preliminary Approval Order"), and noticed a hearing for approval of

the final settlement for June 3, 2015. The parties subsequently provided written notice to

class members advising them, inter alia, of their rights to object to the proposed settlement.

Neither the Court nor the parties received any objection to the Settlement, either before,

during, or after the June 3 hearing.

9. On May 22, 2015, Plaintiff filed the Motions, along with supporting affidavits

and other materials. On June 3, 2015 the Court held a hearing on the motions for final

approval and for attorneys’ fees.

Class Certification

10. Rule 23 of the North Carolina Rules of Civil Procedure ("Rule(s)") governs class

actions. Under that rule, the trial court has broad discretion in determining whether to certify

a case as a class action. Harrison v. Wal-Mart Stores, Inc., 170 N.C. App. 545, 547 (2005).

The Court, in its discretion, may certify a class action if certain requirements are satisfied.

First, parties seeking to employ the class action procedure pursuant to our

Rule 23 must establish the existence of a class. A class exists when each of the

members has an interest in either the same issue of law or of fact, and that

issue predominates over issues affecting only individual class members. The

party seeking to bring a class action also bears the burden of demonstrating

the existence of other prerequisites: (1) the named representatives must

establish that they will fairly and adequately represent the interests of all

members of the class; (2) there must be no conflict of interest between the

named representatives and members of the class; (3) the named

representatives must have a genuine personal interest, not a mere technical

interest, in the outcome of the case; (4) class representatives within this

jurisdiction will adequately represent members outside the state; (5) class

members are so numerous that it is impractical to bring them all before the

court; and (6) adequate notice must be given to all members of the class.

Beroth Oil Co. v. N.C. Dep't of Transp., 367 N.C. 333, 336 (2014) (citations omitted). "When

all the prerequisites are met, it is left to the trial court's discretion whether a class action is

superior to other available methods for the adjudication of the controversy." Id.

11. Here, the class representatives' claims are typical of claims of the putative

class, are common to all Furiex shareholders in the defined time period,2 and predominate

over any potential individual claim that might be asserted by the class representatives. The

common questions of fact involved in this matter included whether Defendants failed to

provide all Furiex shareholders with material information necessary for them to make an

informed vote on the merger. Those factual issues give rise to the same legal issues; to wit,

whether the Furiex Board breached any fiduciary duties and whether the shareholders are

entitled to any relief. Because these issues predominate over any individual issue or interest

of the class representatives, a class exists.

2 The class definition, as defined in the Preliminary Approval Order, includes "any and all record and

beneficial owners of Furiex common stock during the period beginning April 28, 2014, through the

date of the consummation of the Merger, including any and all of their respective successors in interest,

predecessors, representatives, trustees, executors, administrators, heirs, assigns or transferees,

immediate and remote, and any person or entity acting for or on behalf of, or claiming under, any of

them, and each of them, excluding Defendants, members of the immediate family of any Defendant,

any entity in which a Defendant has or had a controlling interest, and the legal representatives, heirs,

successors or assigns of any such excluded person." ("Class," composed of "Class Members").

12. Additionally, the Court concludes that the class representatives have no

conflict of interest with the class, and that they, as former shareholders, have a genuine

personal interest in the outcome of the case and that interest is shared by all class members.

Accordingly, Plaintiffs fairly and adequately represent the interests of all members of the

class.

13. The class here consists of more than three thousand shareholders who,

collectively as of March 17, 2014, own over ten million shares of Furiex common stock.

Clearly, the class is so numerous that it is impractical to bring all members before the Court.

See Pitts v. Am. Sec. Ins. Co., 144 N.C. App. 1, 18 (2001) (finding that numerosity

requirement had been satisfied where the class appeared, based on the plaintiff's good faith

estimate, to include in excess of one thousand persons).

14. Because Plaintiffs have satisfied all class action prerequisites, this Court has

the discretion to determine whether a class action is superior to other methods for

adjudication of this controversy. Beroth Oil Co., 367 N.C. at 336. After thoroughly reviewing

the Approval Motion, the affidavits and evidence provided in support of the Approval Motion,

and other appropriate matters or record, the Court concludes, in its discretion, that class

certification is proper in this matter. Plaintiffs additionally ask the Court to certify this class

as a non-opt-out class, one in which the class members lack the ability to exclude themselves

from class and, thus, the preclusive effect of any class settlement. See Ehrenhaus v. Baker,

216 N.C. App. 59, 78 (2011). As the North Carolina Court of Appeals has recognized, a class

may be certified without opt-out rights when the primary relief sought is not monetary, but

injunctive or declaratory. Id. at 79. Here, Plaintiffs primarily seek, and the Settlement

primarily provides, for the waiver of the DADW agreements and additional disclosures to

shareholders of information related to the merger between Furiex and Forest. Accordingly,

the Court concludes that a non-opt-out class is both permitted under North Carolina Rule 23

and is appropriate in these Actions. See Ehrenhaus, 216 N.C. App. at 81 (finding that non-

opt-out class was appropriate where the "predominant claim [in the action] was Ehrenhaus's

attempt to enjoin the [m]erger").

15. Accordingly, the Court certifies the following non-opt-out Class solely for the

purpose of effectuating the Settlement:

any and all record and beneficial owners of Furiex common stock during the period

beginning on April 28, 2014 through the date of the consummation of the Merger,

including any and all of their respective successors in interest, predecessors,

representatives, trustees, executors, administrators, heirs, assigns or transferees,

immediate and remote, and any person or entity acting for or on behalf of, or claiming

under, any of them, and each of them, excluding Defendants, members of the

immediate family of any Defendant, any entity in which a Defendant has or had a

controlling interest, and the legal representatives, heirs, successors or assigns of any

such excluded person.

The Settlement

16. The Court now turns to the Settlement itself to determine whether the

Settlement is "fair, reasonable, and adequate." Ehrenhaus, 216 N.C. App. at 73 (internal

citations omitted). The burden of showing that the Settlement satisfies this standard rests

on Plaintiffs. Id. The determination of whether Plaintiffs have satisfied this burden rests in

the trial court's sound discretion. Id.

17. Although the Court may consider a variety of factors in evaluating the

settlement, the court of appeals has identified two key factors in determining whether to

approve a proposed settlement of a class action lawsuit. "The first is the likelihood the class

will prevail should litigation go forward and the potential spoils of victory, balanced against

benefits to the class offered in the settlement." Ehrenhaus, 216 N.C. App. at 74. "The second

is the class's reaction to the settlement." Id.

18. As to the first factor, the Court recognizes that the expedited nature of the

relief sought in Plaintiffs' Amended Complaints and the expedited discovery schedule

obtained in these actions resulted in the execution of the Memorandum of Understanding

just nineteen days after the Amended Complaints were filed. Within this short period of time,

however, Plaintiffs' counsel were able to obtain and review discovery of public and non-public

information, and succeeded in obtaining the DADW waivers and additional material

disclosures beneficial to shareholders.

19. A number of courts have recognized that obtaining waivers or revisions of deal

protection agreements, such as a waiver of DADW provisions, provides the opportunity for a

topping bid and, in turn, for stockholders to receive greater value. See In re Compellent

Techs., Inc., 2011 Del. Ch. LEXIS 190 at *54 (Del. Ch. Dec. 9, 2011); In re Del Monte Foods

Co. S'holder Litig., 2011 Del. Ch. LEXIS 94 at *44-45 (Del. Ch. Jun. 27, 2011). This

opportunity "to obtain the highest possible price for shareholders" is precisely the relief

sought by Plaintiffs.3

20. Plaintiffs obtained significant additional disclosures concerning the merger

with Forest, including additional detailed information about the financial analyses

performed by BAML and Credit Suisse upon which those banks based their opinions that the

transaction was fair. Again, courts have acknowledged the value of such information to

shareholders considering a proposed sale.

[W]hen a banker’s endorsement of the fairness of a transaction is touted to

stockholders, the valuation methods used to arrive at that opinion as well as

the key inputs and range of ultimate values generated by those analyses must

also be fairly disclosed. Only providing some of that information is insufficient

to fulfill the duty of providing a fair summary of the substantive work

performed by the investment bankers upon whose advice the recommendations

of the board as to how to vote . . . rely.

In re Netsmart Techs., Inc. S’holders Litig., 924 A.2d 171, 203-204 (Del. Ch. 2007) (quotation

and footnote omitted); see also In re Pure Resources, Inc. Stockholders Litigation, 808 A.2d

421, 449 (Del. Ch. 2002) (“The real informative value of the banker’s work is not in its bottom-

3 Am. Compl. (14 CVS 6156), prayer for relief ¶ B.

line conclusion, but in the valuation analysis that buttress that result.”). The disclosures

also clearly were material. BioClinica, Inc. S’holder Litig., Consol. C.A. No. 8272-VCG, 2013

Del. Ch. LEXIS 52, at *18 (Del. Ch. Feb. 25, 2013) (“Generally, the failure of a company to

disclose management’s financial projections in its proxy materials, when those projections

have been relied on by a financial advisor to render a fairness opinion, is a material omission

that will sustain injunctive relief if not corrected.”).

21. In addition, Defendants "were adamant that they would not address the

disclosures absent a settlement or Court order."4 Accordingly, to obtain the supplemental

disclosures, Plaintiffs were forced to decide whether to obtain the Settlement or pursue

litigation to obtain the same information. Given the deference afforded to directors of

corporations under the business judgment rule, Plaintiffs chose the former approach.5

22. The value of the DADW waivers and supplemental disclosures perhaps

explains the lack of any objection by class members to the Settlement. The lack of any

objection from the class is a strong indication of the Settlement's reasonableness and should

be afforded significant weight in the Court's consideration of the Approval Motion. See

Ehrenhaus, 216 N.C. App. at 74 ("[T]he reaction of the class to the settlement is perhaps the

most significant factor to be weighed in considering its adequacy." (alteration in original)

(quoting Sala v. Nat'l R.R. Passenger Corp., 721 F.Supp. 80, 83 (E.D. Pa. 1989)).

23. Ultimately, after thorough consideration of the nature and strength of

Plaintiffs' claims, the potential defenses they faced, the urgency with which the action was

initiated and the short time in which the primary issues were resolved, and the lack of any

objection to the Settlement, the Court concludes, in its discretion, that the Settlement is fair

and reasonable and should be approved.

4 Pls.' Mem. Supp. Mot. Final Approval of Settlement 20.

5 Id.

Attorneys' Fees6

24. Plaintiffs also move the Court to approve their request for an award of

$695,000 in attorneys' fees and costs. The Settlement Agreement provides that Plaintiffs'

have "reserve[d] the right to make a petition for an award of attorneys' fees and expenses to

the Court . . . in an amount not to exceed six hundred ninety five thousand dollars ($695,000

USD)."7 The request is comprised of $660,431.31 in attorneys' fees, and $34,568.69 in costs.

The attorneys' fees include a $2,000 incentive award for each of the two North Carolina class

representatives.8 The Fee Motion is not opposed by Defendants. The settlement of this action

is not contingent on the award of attorneys' fees to Plaintiffs' counsel, and the Plaintiffs and

class members are not being asked to pay any of the fees and costs. Each of Plaintiffs' counsel

have submitted affidavits attesting to the hours expended, billing rates, and any costs

incurred by their respective law firms. Plaintiffs' Counsel, however, have not submitted

detailed billing records regarding specific tasks and hour expended for each task. Rather,

they have provided totals of hours expended by various attorneys' who have worked on the

case grouped into broad categories such as "pleadings and motions," "legal and other

research," and "other court appearances and preparation." Plaintiffs' out-of-state counsel also

6 Plaintiff does not point to any statutory authority for an award of attorneys' fees in this case, and

North Carolina's appellate courts have not recognized an award of fees based on the "common benefit"

doctrine. In re Wachovia Shareholder Litig., 168 N.C. App. 135 (2005). Plaintiffs appear to base the

request for fees solely upon the contractual agreement contained in the Settlement Agreement.

Generally, in North Carolina attorneys' fees may not be recovered either as costs or damages absent

statutory authority. G.E. Betz, Inc. v. R.C. Conrad, __ N.C. App. __, __, 752 S.E.2d 634, 654 (2013)

("Generally, a successful litigant may not recover attorneys' fees unless such recovery is expressly

authorized by statute."); Stillwell Enterprises v. Interstate Equipment, 300 N.C. 286, 289 (1980).

Nevertheless, the Court recognizes that such fee agreements arising from settlements of class actions

have been enforced by this court, and the Court will presume that it has authority to enforce the

agreement for an award of attorneys' fees in this case. See In re Harris Teeter Merger Litigation, 2014

NCBC LEXIS 47, at **19-22 (2014, Gale, J.)

7 Stipulation of Settlement ¶ 18.

8 Mem. Supp. Mot. Attorneys' Fees 2, 4.

have provided information regarding each firm's experience and expertise in this type of

litigation.

25. While a court may not modify a contractual attorneys' fees arrangement

reached in a settlement of a Rule 23 class action, it nevertheless must review the fees sought

for reasonableness and must approve any fees paid by way of settlement. See Ehrenhaus,

216 N.C. App. at 74 ("While any 'compromise' in a class action must be reviewed by a court,

a court cannot modify a purely contractual settlement."). Here, the parties agreed that

Plaintiffs could apply to the Court for an award of attorneys' fees and costs of up to $695,000.

The determination of the amount of attorneys' fees to be awarded is in the sound discretion

of the Court. G.E. Betz, Inc. v. Conrad, __ N.C. App. __, __, 752 S.E.2d 634, 654 (2013).

Accordingly, the issue before the Court is whether Plaintiffs' request for the full $695,000 is

reasonable.

26. Plaintiffs have submitted affidavits establishing that Plaintiffs' attorneys

expended 701.3 hours pursuing this action, which would have generated attorneys' fees of

$388,465.00 at the respective attorneys' "normal" billing rates (the "lodestar" amount).9 They

seek $660,431.31 in attorneys' fees based upon a "1.70 multiplier" of the lodestar amount,

based primarily on their contention that similar multipliers have been applied by courts in

other jurisdictions.10 Plaintiffs have not cited to any North Carolina appellate decision

approving use of a multiplier, but contend that it is proper in this case.

27. In recent years, the North Carolina Court of Appeals has identified two similar,

but not identical, sets of criteria to be considered in determining the reasonableness of

requested attorneys' fees. In G.E. Betz, the Court of Appeals cited with approval the factors

enunciated in United Laboratories, Inc. v. Kuykendall, including:

9 Mem. Supp. Mot. Attorneys' Fees 4.

10 Id. at 4, n. 7.

the time and labor expended, the skill required, the customary fee for like

work, [] the experience or ability of the attorney . . . the novelty and difficulty

of the questions of law[,] the adequacy of the representation[,] the difficulty of

the problems faced by the attorney[,] especially any unusual difficulties[,] and

the kind of case for which fees are sought and the result obtained.

G.E. Betz, __ N.C. App. at __, 752 S.E.2d at 655 (quoting United Labs., Inc. v. Kuykendall,

335 N.C. 183, 195 (1993)).

28. In Ehrenhaus, the court of appeals held that the reasonableness of attorneys'

fees is governed by Rule 1.5 of the Revised Rules of Professional Conduct of the North

Carolina State Bar ("RPC"). 216 N.C. App. at 96. RPC 1.5 provides that "[a] lawyer shall not

make an agreement for, charge, or collect an illegal or clearly excessive fee or collect a clearly

excessive amount for expenses." Id. at 96. The factors to be utilized when determining

whether a fee is clearly excessive include the following:

(1) the time and labor required, the novelty and difficulty of the questions

involved, and the skill requisite to perform the legal service properly; (2) the

likelihood, if apparent to the client, that the acceptance of the particular

employment will preclude other employment by the lawyer; (3) the fee

customarily charged in the locality for similar legal services; (4) the amount

involved and the results obtained; (5) the time limitations imposed by the client

or by the circumstances; (6) the nature and length of the professional relationship

with the client; (7) the experience, reputation, and ability of the lawyer or lawyers

performing the services; and (8) whether the fee is fixed or contingent.

Id. at 96-97 (quoting RPC 1.5(a)(1)-(8)).

29. The Court concludes that the attorneys' fees requested in this case should be

assessed against the Ehrenhaus factors, which include all or almost all of the factors

endorsed by the Court in G.E. Betz.

30. The Fee Motion is unopposed, and Plaintiffs have provided sufficient

information and evidence to establish the reasonableness of their fee request under several

of the RPC 1.5 factors. Plaintiffs' counsel has provided sufficient evidence of the time and

labor required to litigate the case. Plaintiffs' counsel also has established that they obtained

a highly favorable result for Plaintiffs and the class by requiring Defendants to waive the

DADW agreements and provide further disclosures favorable to Furiex shareholders.

Additionally, the time limitations imposed by the need to obtain the waiver and disclosures

in the face of an imminent shareholder vote were substantial. Finally, the unopposed

information provided by Plaintiffs' counsel establish the experience, skill, and ability of

Plaintiffs’ counsel.

31. The remaining factors raise more difficult issues. It seems clear, and Plaintiffs

do not claim otherwise, that this was the first and only matter in which Plaintiffs' counsel

has represented the named Plaintiffs. Accordingly, the "nature and length of the professional

relationship" does not weigh in favor of the fees being requested in this action.

32. Similarly, while Plaintiffs' contend that "Plaintiffs and their counsel

understood that prosecution of this Action would and did necessitate considerable time and

resources that otherwise could have been spent on other matters,"11 they have not provided

any specific evidence or examples of matters that counsel were unable to accept because of

work on this case. Counsel represent that they spent substantial time in litigating the case

and reaching the settlement, but the large number of firms engaged in performing the work

strongly suggests to the Court that this case would not have "preclude[d] other employment

by the lawyer[s]" involved. Accordingly, this factor must be weighed, at best, neutrally in

determining the reasonableness of the fee request.

33. The Court is most concerned with the issues of "the novelty and difficulty of

the questions involved, and the skill requisite to perform the legal service properly" and "the

fee customarily charged in the locality for similar legal services". Plaintiffs merely contend

that "the Action involved questions regarding the mechanics of deal protection provisions,

relative valuation analyses developed by skilled and well-known financial advisors, and

11 Mem. Supp. Mot. Attorneys' Fees 8.

issues of North Carolina law pertaining to direct and derivative claims."12 While Plaintiffs'

out-of-state counsel have established that they are skilled practitioners in the area of

shareholder litigation arising from mergers and acquisitions, they have not provided any

explanation of why such skills could not be obtained in North Carolina.

34. In assessing an award of attorneys' fees in North Carolina the "rates in the

geographic area of the litigation are relevant to the reasonableness determination." G.E.

Betz, Inc., __ N.C. App. at __, 752 S.E.2d at 655 (citations omitted). Nevertheless, "although

community rates may be the starting point, the trial court must conduct further inquiry when

local counsel do not have the expertise to adequately represent a client." Id. Where an hourly

rate far in excess of local rates is to be awarded, the court must make findings demonstrating

why the fees are "reasonable." Id., __ N.C. App. at __, 752 S.E.2d at 657 (vacating and

remanding trial court's order awarding fees "double those billed in the community where the

litigation took place" because trial court failed to conduct any inquiry as to whether that work

could have been performed "by local counsel at reasonable rates within the community").

35. Here, Plaintiffs seek $660,431.31 in attorneys' fees for 701.3 hours of

professional time expended. This works out to an effective hourly rate of $941.72.13 See In re

Sauer- Danfross Inc. Shareholder Litig., 65 A.3d 1116, 1139 (Del. Ch. Apr. 29, 2011)

("Traditionally, we have used hours worked to calculate an effective hourly rate that can be

examined to guard against windfall compensation when awarding large fees.") Plaintiffs

contend that the Court should apply a "multiplier" of 1.7 to bridge the difference between the

$388,465 lodestar amount and the $660,431.31 in fees they seek. As noted above, Plaintiffs

have not cited to, and this Court is unable to find, any reported case in which a North

12 Id. at 7.

13 None of Plaintiffs out-of-state attorneys charged a rate this high, but did charge attorneys' time at

rates ranging from $275 – $800 per hour.

Carolina court has applied a "multiplier" to increase the lodestar amount. Accordingly, the

Court believes the best course is to assess the requested fees as if Plaintiffs were seeking an

award of $941.72 per hour, and to consider such request based on whether special legal skills

and experience were involved that are not available in North Carolina, the rates charged by

attorneys for comparable work in the local area, and in light of the result obtained for the

amount of work expended.

36. Here, the record is devoid of any evidence regarding the availability of local

attorneys' with the necessary skills and experience to pursue this type of shareholder

litigation. Nevertheless, at the hearing, Plaintiffs' local counsel represented to the Court that

he did not believe there were a substantial number of attorneys in North Carolina

prosecuting this type of shareholder action. Accordingly, despite the lack of specific

information and evidence about whether there exists North Carolina counsel qualified to

pursue such litigation, the Court finds that this factor weighs in favor of awarding a premium

rate.

37. With regard to the rates generally charged for sophisticated business litigation

in North Carolina, this Court has recognized as recently as 2014 that an hourly rate of

$321.91 per hour was "reasonable" in North Carolina for business litigation. In re Harris

Teeter, 2014 NCBC 44, ¶ 63 (N.C. Super. Ct. Sep. 24, 2014). The undersigned's own

experience is that rates of approximately $300 – $550 per hour are typical of the fees charged

for this type of work in Wake County, North Carolina. Here, Plaintiffs' requested fees would

compensate Plaintiffs' counsel at a rate of almost $950 per hour. The Court concludes that

the rates charged in the local geographic area for like work weighs against Plaintiffs' fees

request.

38. As noted above, Plaintiffs' counsel obtained a very good result for the class.

Securing the waiver of the DADW provisions and the additional disclosures conferred a

significant benefit on Furiex's shareholders by providing both the opportunity for a higher

bid from another entity and important information that shareholders could use in

determining whether to approve the merger. This factor weighs in favor of the requested fee

award.

39. On the other hand, the amount and type of work performed is, at best, a neutral

factor. Plaintiff's counsel expended just 701.30 hours to obtain the settlement. Plaintiffs

only took only two depositions during the litigation.14 Plaintiffs' counsel reviewed only

approximately 1000 pages of non-public documents.15 Plaintiffs cite the attorneys' fees

awards in In re Harris Teeter and In re Progress Energy Shareholder Litigation, as examples

of cases in which the Court has awarded "reasonable attorneys' fees and expenses in

resolution of a class action."16 In Harris Teeter, the plaintiffs' counsel secured additional

disclosures from Harris Teeter in connection with its proposed merger. In re Harris Teeter,

2014 NCBC 44, ¶¶ 46-48. In that case, the plaintiffs' counsel reviewed 92,000 pages of

documents, among other work, and sought $295,260.71 in fees for 917.20 hours of work

performed. Id. at ¶ 63. The Court noted that this equated to an hourly fee of $321.91, which

the Court held to be reasonable in light of rates typically charged in North Carolina. Id.

40. In Progress Energy, the plaintiffs also secured additional disclosures in

connection with Progress' merger with Duke Energy Corporation. In re Progress Energy

Shareholder Litigation, 2011 NCBC 44, ¶ 14 (N.C. Super. Ct. Nov. 29, 2011). In the

settlement agreement, the parties agreed that Progress would pay attorneys' fees and

expenses of "up to $550,000." Id. at ¶ 20. Plaintiffs' counsel actually expended 3,088 hours on

the litigation and had lodestar fees of $1,510, 302, but sought attorneys' fees of only $402,271.

14 Mem. Supp. Mot. Attorneys' Fees 7.

15 Id. at 3.

16 Id. at 2-3.

Id. at ¶ 27. The plaintiffs' counsel reviewed 160,000 pages of documents, took depositions,

and issued 10 third-party subpoenas. Id. The Court determined that the request amounted

to a fee of $130 per hour which was "well below the typical and customary rate charged by

attorneys' in North Carolina for similar litigation." Id. at ¶ 56.

41. The awards in Harris Teeter and Progress Energy demonstrate the

extraordinary amount of attorneys' fees Plaintiffs seek in this matter. The $941.72 per hour

effective rate that Plaintiffs' request is almost three times the fee approved in Harris Teeter,

and seven times the hourly rate approved in Progress Energy. Granted, Plaintiffs' counsel

did secure the waiver of the DADW provisions, a significant benefit to shareholders that was

not present in Harris Teeter and Progress Energy. That additional benefit, however, does

not justify the substantially greater effective hourly rate Plaintiffs' request in this case.

42. Here, even if the Court applies the high end of the North Carolina rates it

believes are charged for similar work, or $550 per hour, the lodestar amount would be

$385,715, or almost exactly the actual lodestar as established by Plaintiffs' own billing

records. Nevertheless, the Court recognizes that the parties have contractual agreement,

and the requested fees fall within the amount that Defendants agreed they would be willing

to pay. Plaintiffs' counsel also obtained waiver of DADW provisions, a significant benefit to

the class that was not present in Harris Teeter or Progress Energy. Finally, the information

before the Court supports the conclusion that Plaintiffs' out-of-state counsel provided legal

expertise that may not be readily available in North Carolina. Accordingly, the Court will

exercise its discretion to award Plaintiffs' counsel attorneys' fees of $504,000, which includes

the $2,000 incentive payments to the two North Carolina representatives.

43. Plaintiffs' requested costs of $34,568.69 are reasonable under the

circumstances, and the Court in its discretion awards the full amount of the costs.

44. Accordingly, the Court concludes that Plaintiffs should be awarded

$538,568.69 in attorneys' fees and costs.

THEREFORE, IT IS HEREBY ORDERED, ADJUDGED, and DECREED, THIS 1st

DAY OF July, 2015, AS FOLLOWS:

45. Unless otherwise defined herein, all defined terms shall have the meanings as

set forth in the Stipulation.

46. The Notice of Pendency of Class Action, Proposed Settlement of Class Action,

Settlement Hearing and Right to Appear (the “Notice”) has been given to the Class pursuant

to and in the manner directed by the Scheduling Order, proof of the mailing of the Notice has

been filed with the Court and full opportunity to be heard has been offered to all parties to

the Actions, the Class and persons in interest. The form and manner of the Notice is hereby

determined to have been the best notice practicable under the circumstances and to have

been given in full compliance with each of the requirements of North Carolina Rule of Civil

Procedure 23, due process and applicable law, and it is further determined that all members

of the Class are bound by the Order and Final Judgment herein.

47. Based on the record of the Actions, the Court expressly and conclusively finds,

pursuant to North Carolina Rule of Civil Procedure 23, as follows:

a. that (i) the Class, as defined below, is so numerous that separate joinder of all

members is impracticable, (ii) there are questions of law and fact common to the Class, (iii)

the claims of Plaintiff are typical of the claims of the Class, and (iv) Plaintiff and his counsel

have fairly and adequately protected the interests of the Class; and

b. that the requirements of North Carolina Rule of Civil Procedure 23 have been

satisfied;

48. The Actions are finally certified as a class action, pursuant to North Carolina

Rule of Civil Procedure 23, on behalf of a mandatory, non-opt-out class consisting of any and

all record and beneficial owners of Furiex common stock during the period beginning on April

28, 2014 through the date of the consummation of the Merger, including any and all of their

respective successors in interest, predecessors, representatives, trustees, executors,

administrators, heirs, assigns or transferees, immediate and remote, and any person or entity

acting for or on behalf of, or claiming under, any of them, and each of them (the “Class,” to

be composed of “Class Members”).

49. Pursuant to North Carolina Rule of Civil Procedure 23, Plaintiffs Walter

Nakatsukasa and Christopher Shinneman are finally certified as the Class Representatives.

Brodsky & Smith, LLC and Ryan & Maniskas, LLP is finally certified as Class Counsel.

50. The Stipulation and the terms of the Settlement as described in the Stipulation

and the Notice are found to be fair, reasonable, adequate, and in the best interests of the

Class, and are hereby approved pursuant to North Carolina Rule of Civil Procedure 23. The

Parties are hereby authorized and directed to comply with and to consummate the Settlement

in accordance with the terms and provisions set forth in the Stipulation, and the Clerk of

Court is directed to enter and docket this Order and Final Judgment in the Actions.

51. This Order and Final Judgment shall not constitute any evidence or admission

by any Party herein of any wrongdoing with respect to any claims asserted in the Actions and

should not be deemed to create any inference that there is any liability therefor.

52. The Actions are hereby DISMISSED WITH PREJUDICE on the merits and,

except as provided herein, without fees or costs.

53. Plaintiffs in the Delaware Actions shall move or otherwise apply for the

dismissal, with prejudice and without fees or costs except as provided herein, of the Delaware

Actions within five (5) business days.

54. The Plaintiffs and each and every member of the Class shall be deemed to have,

and by operation of this Order and Final Judgment shall have, completely, fully, finally and

forever discharged, released, settled, and dismissed with prejudice on the merits any and all

manner of claims, demands, rights, actions, causes of action, liabilities, damages, losses,

obligations, judgments, duties, suits, costs, expenses, matters and issues known and

unknown, contingent or absolute, suspected or unsuspected, disclosed or undisclosed,

liquidated or unliquidated, matured or unmatured, accrued or unaccrued, apparent or

unapparent, including, without limitation, unknown claims that could have been, or in the

future can or might be asserted in any court, tribunal or proceeding, against Defendants,

BAML, Credit Suisse, and their respective predecessors, successors in interest, parents

(including, without limitation, Forest Laboratories, LLC and Actavis Plc and its

subsidiaries), subsidiaries, affiliates, representatives, attorneys (including Defendants’

Counsel), agents, trustees, executors, heirs, spouses, marital communities, assigns or

transferees and any person or entity acting for or on behalf of any of them and each of them,

and each of their predecessors, successors in interest, parents, subsidiaries, affiliates,

representatives, attorneys, agents, trustees, executors, heirs, spouses, marital communities,

assigns or transferees and any person or entity acting for or on behalf of any of them and

each of them (including, without limitation, any investment bankers, accountants, insurers,

reinsurers or attorneys of the foregoing and any past, present or future officers, directors and

employees of any of them) (individually a “Released Party,” and collectively, the “Released

Parties”), by Plaintiffs or any member of the Class in their capacity as stockholders, related

to the Merger, in any forum, including, without limitation, class, derivative, individual, or

other claims, whether state, federal, or foreign, common law, statutory, or regulatory,

including, without limitation, claims under the federal securities laws or state disclosure

laws, arising out of, related to, or concerning (i) the allegations contained in the Actions, (ii)

the Merger or any amendment thereto, including, without limitation, the adequacy of the

consideration to be paid to Furiex shareholders in connection with the Merger, (iii) any

agreements, and disclosures relating to the Merger, and any compensation or other payments

made to any of the Defendants in connection with the Merger, (iv) the Supplemental

Disclosures, any amendments thereto or any other disclosures relating to the Merger, or any

purported failure to disclose, with or without scienter, material facts to stockholders in

connection with the Merger, (v) the statutory or other legal or fiduciary obligations, if any, of

the Defendants or any Released Party in connection with the Merger, or (vi) any purported

aiding and abetting of any alleged breach of duty, law or other obligation relating to the

foregoing (collectively, the “Settled Claims”); provided, however, that the Settled Claims shall

not include the right of the Plaintiffs or any members of the Class to enforce in the Court the

terms of the Stipulation or the Settlement or any claims for appraisal, if any, pursuant to 8

Del. C. § 262.

55. Defendants and Released Parties shall be deemed to have, and by operation of

this Order and Final Judgment approving the Settlement shall have, completely, fully, finally

and forever released Plaintiffs and their counsel from all claims or sanctions, known or

unknown, accrued or unaccrued, arising out of or in any way related to the instituting,

prosecution, settlement or resolution of the Actions, provided however, that the Defendants

and Released Parties shall retain the right to enforce in the Court the terms of the Stipulation

and the Settlement and to oppose or defend any appraisal proceeding brought by any Class

Member.

56. The releases contemplated by the Stipulation and the Settlement extend to

claims that the parties granting the release (the “Releasing Parties”) do not know or suspect

to exist at the time of the release, including, without limitation, claims which if known, might

have affected the Releasing Parties’ decision to grant the release. Plaintiffs, each member of

the Class, the Company and its stockholders shall be deemed to (i) relinquish, to the extent

applicable, and to the full extent permitted by law, the provisions, rights and benefits of

Section 1542 of the California Civil Code; and (ii) waive any and all provisions, rights and

benefits conferred by any law of any state or territory of the United States, any foreign

jurisdiction, or principle of common law, which is similar, comparable or equivalent to

California Civil Code § 1542, which provides:

A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE

CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT

THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM

MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE

DEBTOR.

57. Plaintiffs acknowledge, and the members of the Class shall be deemed by

operation of the entry of this Order and Final Judgment approving the Settlement to have

acknowledged that the foregoing waiver (of the “Unknown Claims”) was separately bargained

for, is an integral element of the Stipulation and the Settlement, and was relied upon by each

and all of the Defendants in entering into the Stipulation and the Settlement.

58. Plaintiffs’ counsel is hereby awarded attorneys’ fees and expenses in the

amount of $538,568.69, which amount the Court finds to be fair and reasonable and which

shall be paid to Plaintiffs’ counsel in accordance with the terms of the Stipulation. The Court

also finds to be fair and reasonable incentive payments of $2,000.00 each to Plaintiffs Walter

Nakatsukasa and Plaintiff Christopher Shinneman to be paid from the amount of attorney's

fees and expenses awarded.

59. Plaintiffs and Class Members, and any of their respective successors in

interest, predecessors, representatives, trustees, executors, administrators, heirs, assigns or

transferees, immediate and remote, are hereby individually and severally permanently

barred and enjoined from commencing, prosecuting, instigating or in any way participating

in the commencement or prosecution of any action asserting any Settled Claims, either

directly, representatively, derivatively or in any other capacity, against any of the Released

Persons.

60. The effectiveness of the provisions of this Order and Final Judgment and the

obligations of Plaintiffs and Defendants under the Settlement were not conditioned upon

Court approval of Plaintiffs’ Counsel’s application for an award of attorneys’ fees, costs or

expenses.

61. Without affecting the finality of this Order and Final Judgment, jurisdiction is

hereby retained by this Court for the purpose of protecting and implementing the Stipulation

and the terms of this Order and Final Judgment, including the resolution of any disputes

arising out of the Stipulation or Settlement, and for the entry of such further orders as may

be necessary or appropriate in administering and implementing the terms and provisions of

the Settlement and this Order and Final Judgment.

This the 1st day of July, 2015.

/s/ Gregory P. McGuire

Gregory P. McGuire

Special Superior Court Judge

for Complex Business Cases