Metals News
Delaware Court Affirms $2 Bln Southern Copper Judgment
industry news
Aug 28,2012

Aug 27 (Reuters) - The Delaware Supreme Court affirmed on Monday a $2 billion judgment awarded to Southern Copper Corp by a lower court that found it had overpaid to acquire a company from its controlling shareholder.

The state's highest court also affirmed a $304 million attorneys' fee approved by the Court of Chancery for the lawyers representing the shareholders who brought the case, although one justice dissented.

The ruling stems from a 2005 deal in which Southern Copper bought Minera Mexico from Grupo Mexico, which also controlled Southern Copper.

Chancery Court judge Leo Strine ruled in October that Southern Copper overpaid by $1.263 billion, and ordered Grupo Mexico to repay the difference to Southern Copper. Strine added interest to the damage award which brought the total to about $2 billion.

Grupo Mexico did not immediately respond to a request for comment.

Shares of Southern Copper were down 0.6 percent at $32.29 on the New York Stock Exchange in afternoon trading. Shares of Grupo Mexico were down 1.8 percent at 40.40 pesos on the Mexican stock exchange.

The Supreme Court rejected the defendant's main argument that Strine had overstepped his bounds by refusing to modify the trial scheduled to accommodate a witness from Goldman Sachs Group Inc, which had advised Southern Copper's board. 

The case focused attention on Strine, who handed down the judgment and the huge attorneys' fee just months after becoming the court's first new chief judge in 14 years.  

The attorneys' fee is the largest ever of its kind awarded by Delaware's Court of Chancery, one of the country's busiest courts for big shareholder disputes. Defendants blasted the fee for amounting to $35,000 an hour, more than 30 times the rate in comparable cases.

The fee was awarded to the firms of Prickett, Jones & Elliott of Wilmington, Delaware and Kessler Topaz Meltzer & Check of Radnor, Pennsylvania.

Ronald Brown of Prickett Jones and Lee Rudy of Kessler Topaz declined to comment.

The Supreme Court said in its 110-page opinion that the greatest weight in determining a fee award should be placed upon the value of the judgment.

Justice Carolyn Berger dissented on the fee award. She wrote that Strine did not apply the court's "Sugarland" factors for determining fees, which takes into account variables such as time spent on a case and complexity of the litigation.

"In sum, the trial court said that the fundamental test for reasonableness is whether the fee is setting a good incentive, and that the only basis for reducing the fee would be envy," wrote Berger. "That is not a decision based on Sugarland."

Southern Copper
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