EFiled: May 18 2022 09:33AM EDT

Transaction ID 67632122
Case No. 2021-0103-PAF
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE

ALAN KAHN, )
)
Plaintiff, )
)
v. ) C.A. No. 2021-0103-PAF
)
JAMES G. GIDWITZ, RALPH W. )
GIDWITZ, STEVEN GIDWITZ, ) PUBLIC VERSION OF
SCOTT GIDWITZ, THEODORE R. ) TRANS. ID 67614135
TETZLAFF, DARRELL M. TRENT, )
PETER E. THIERIOT, RYAN ) FILED: May 18, 2022
SULLIVAN, BEE STREET )
HOLDINGS LLC, and BEE STREET )
II, INC., )
)
Defendants. )

PLAINTIFF’S BRIEF IN SUPPORT OF APPROVAL

OF THE PROPOSED SETTLEMENT,
CLASS CERTIFICATION, AND FOR AN AWARD OF
ATTORNEYS’ FEES AND REIMBURSEMENT OF EXPENSES

OF COUNSEL: COOCH AND TAYLOR, P.A.

Carmella P. Keener (Bar No. 2810)
GARDY & NOTIS, LLP The Nemours Building
James S. Notis 1007 North Orange Street, Suite 1120
Jennifer Sarnelli P.O. Box 1680
126 East 56th Street, 8th Floor Wilmington, DE 19899-1680
New York, NY 10022 (302) 984-3816
(212) 905-0509
Counsel for Plaintiff
HAROLD B. OBSTFELD, P.C.
Harold B. Obstfeld
140 East 45th Street, 44th Floor
New York, NY 10017
(212) 696-1212

PUBLIC VERSION
 TABLE OF CONTENTS

Page
TABLE OF AUTHORITIES ............................................................................... iv

PRELIMINARY STATEMENT .......................................................................... 1

FACTUAL BACKGROUND AND PROCEDURAL HISTORY ........................ 3

A. Background of the Transaction ................................................ 3

B. Plaintiff’s Pre-Litigation Efforts and 220 Action ..................... 5

C. The Class Litigation ................................................................. 6

D. The Settlement ......................................................................... 8

ARGUMENT ....................................................................................................... 9

I. THE PROPOSED SETTLEMENT IS FAIR, REASONABLE, AND

ADEQUATE ....................................................................................................9

A. Delaware Law Strongly Favors Settlement .............................. 9

B. The Settlement Confers a Substantial Financial Benefit ..........10

C. The Settlement is Highly Favorable to the Proposed Class

in Light of the Risks and Uncertainties of Continued
Litigation ................................................................................11

1. Plaintiff Likely Would Have Established that Entire

Fairness Applied to the Merger .....................................11

2. Plaintiff Faced Significant Obstacles to Establishing

Unfair Price and Proving Damages ...............................12

3. Comparison of the Settlement Consideration to the

Merger Consideration Strongly Supports Approval ......15

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 D. The Settlement Was Reached Through Arms’-Length
Negotiations ............................................................................16

E. The Experience and Opinion of Counsel – and the Absence of

any Objection – Favor Approving the Settlement ...................16

F. The Plan of Allocation is Fair, Reasonable, and Adequate ......17

II. THE CLASS SHOULD BE CERTIFIED ................................................19

A. The Class Satisfies the Requirements of Rule 23(a) ................20

1. Numerosity ...................................................................20

2. Commonality ................................................................21

3. Plaintiff’s Claims Are Typical of the Proposed Class’s

Claims...........................................................................22

4. The Proposed Class’s Interests Are Fairly and

Adequately Protected ....................................................23

B. The Class Satisfies Rule 23(b)(1) and 23(b)(2) .......................23

1. Certification Under Rule 23(b)(1) is Appropriate ..........24

2. Certification Under Rule 23(b)(2) is Appropriate ..........25

C. The Remaining Requirements of Rule 23 are Satisfied ...........26

III. THE FEE AND EXPENSE AWARD SHOULD BE APPROVED ....26

A. The Applicable Standards for Attorneys’ Fees and

Expenses .................................................................................26

B. The 30% Price Bump Confers a Substantial Benefit ...............27

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 C. The Secondary Sugarland Factors Also Support the Fee and
Expense Award .......................................................................31

1. The Contingent Nature of the Litigation Supports the

Requested Fee and Expense Award ..............................31

2. Counsel Expended Significant Time and Resources to

Secure the Settlement ....................................................32

3. This Litigation Implicates Complex Issues ...................33

4. Counsel’s Standing and Ability Supports the Fee and

Expense Award .............................................................34

CONCLUSION ...................................................................................................35

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 TABLE OF AUTHORITIES
Page(s)
Cases

ACP Master, Ltd. v Sprint Corp.,

No. 8508-VCL, 2017 WL 3421142 (Del. Ch. July 21, 2017),
aff’d, ACP Master, Ltd. v Sprint Corp.,
184 A.3d 1291 (Del. 2018) ................................................................................13

Ams. Mining Corp. v. Theriault,

51 A.3d 1213 (Del. 2012) ............................................................................26, 32

Asbestos Workers Phila. Pension Fund v. Avril,

No. 2019-0633-SG (Del. Ch. Apr. 16, 2021) .....................................................28

Cede & Co. v. Technicolor, Inc.,

No. 7129, 2003 WL 23700218 (Del. Ch. July 9, 2004)
aff’d Cede & Co. v. Technicolor, Inc.,
884 A.2d 26 (Del. 2005) ....................................................................................14

City of Daytona Beach Police & Fire Pension Fund v. Examworks Grp., Inc.,
No. 12481-VCL (Del. Ch. Sept. 12, 2017).........................................................19

Crowhorn v. Nationwide Mut. Ins. Co.,

836 A.2d 558 (Del. Super. 2003) .......................................................................17

Dow Jones & Co. v. Shields,

No. 184,1991, 1992 WL 44907 (Del. Ch. Mar. 4, 1992) ....................................31

Emerald Partners v. Berlin,

840 A.2d 641 (Del. 2003) ..................................................................................13

Emerald Partners v. Berlin,

No. 9700, 1991 WL 244230 (Del. Ch. Nov. 15, 1991).......................................21

Forescout Techs., Inc. v. Ferrari Grp. Hldgs., L.P.,

No. 2020-0385-SG, 2020 WL 3971012 (Del. Ch. July 14, 2020) ......................32

Forsythe v. ESC Fund Mgmt. Co.,

No. 1091-VCL, 2012 WL 1655538 (Del. Ch. May 9, 2012) ............................... 9
iv
PUBLIC VERSION
Franklin Balance Sheet Inv. Fund v. Crowley,
No. 888-VCP, 2007 WL 2495018 (Del. Ch. Aug. 30, 2007)..............................33

Frederick Hsu Living Tr. v. Oak Hill Cap. Partners III, L.P.,
No. 12108-VCL, 2020 WL 2111476 (Del. Ch. May 4, 2020) ............................12

Hollywood Firefighters’ Pension Fund v. Malone,

No. 2020-0880-SG, 2021 WL 5179219 (Del. Ch. Nov. 8, 2021) .......................34

Hynson v. Drummond Coal Co., Inc.,

601 A.2d 570 (Del. Ch. 1991)............................................................................24

In re Activision Blizzard, Inc. S’holder Litig.,

124 A.3d 1025 (Del. Ch. 2015).............................................................. 10, 27, 33

In re AmTrust Fin. Servs. Inc. S’holder Litig.,

No. 2018-0396-LWW (Del. Ch. Nov. 22, 2021) .........................................passim

In re Calamos Asset Mgmt., Inc. S’holder Litig.,

No. 2017-0058-JTL (Del. Ch. Apr. 25, 2019) ....................................................15

In re Celera Corp. S’holder Litig.,

No. 6304-VCP, 2012 WL 1020471 (Del. Ch. Mar 23, 2012) .............................. 9

In re China Integrated Energy, Inc. S’holders Litig.,

No. 6625-VCL (Del. Ch. Dec. 2, 2015) .............................................................28

In re CNX Gas Corp. S’holders Litig.,

4 A.3d 397 (Del. Ch. 2010) ...............................................................................11

In re Cornerstone Therapeutics Inc., S’holder Litig.,

115 A.3d 1173 (Del. 2015) ................................................................................. 7

In re Cox Radio, Inc. S’holders Litig.,

No. 4461-VCP, 2010 WL 1806616 (Del. Ch. May 6, 2010) .................... 9, 10, 24

In re Del Monte Foods Co. S’holder Litig.,

No. 6027-VCL, 2011 WL 6008590 (Del. Ch. Dec. 1, 2011) .................. 15-16, 33

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In re Dole Food Co., Inc.,
No. 8703-VCL, 2017 WL 624843 (Del. Ch. Feb. 15, 2017) ..............................18

In re Ebix, Inc. S’holder Litig.,

No. 8526-VCS, 2018 WL 3570126 (Del. Ch. July 17, 2018) ....................... 19, 24

In re Emerson Radio S’holder Derivative Litig.,

No. 3392-VCL, 2011 WL 1135006 (Del. Ch. Mar. 28, 2011) ............................27

In re Homefed, Corp. S’holders Litig,

No. 2019-0592-LWW, 2022 WL 489484 (Del. Ch. Feb. 15, 2022) ............. 15, 28

In re Josephson Int’l, Inc.,

No. 9546, 1988 WL 112909 (Del. Ch. Oct. 19, 1988)........................................28

In re Lawson Software, Inc.,

No. 6443-VCN, 2011 WL 2185613 (Del. Ch. May 27, 2011)............................21

In re NCS Healthcare, Inc. S’holder Litig.,

No. 19786, 2003 WL 21384633 (Del. Ch. May 28, 2003) .................................33

In re Orchard Enters. S’holder Litig.,

No. 7840-VCL, 2014 WL 4181912 (Del. Ch. Aug. 22, 2014)...................... 10, 27

In re Phila. Stock Exch., Inc.,

945 A.2d 1123 (Del. 2008) ................................................................................21

In re Plains Res. Inc. S’holders Litig.,

No. 071-N, 2005 WL 332811 (Del. Ch. Feb. 4, 2005) .......................................31

In re Prospect Med. Hldgs., Inc. S’holders Litig.,

No. 5760-VCN (Del. Ch. Jan. 21, 2016) ............................................................19

In re Pure Res., Inc. S’holders Litig.,

808 A.2d 421 (Del. Ch. 2002)............................................................................11

In re Sauer-Danfoss S’holders Litig.,

65 A.3d 1116 (Del. Ch. 2011)............................................................................34

In re Siliconix Inc. S’holders Litig.,

No. 18700, 2001 WL 716787 (Del. Ch. June 19, 2001) .....................................11
vi
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In re Starz S’holder Litig.,
No. 12584-VCG, 2018 WL 4111944 (Del. Ch. Aug. 28, 2018) .........................25

In re Tesla Motors, Inc. S’holder Litig.,

No. 12711-VCS, 2022 WL 1237185 (Del. Ch. Apr. 27, 2022) ..........................13

In re Triarc Cos., Inc., Class & Derivative Litig.,

791 A.2d 872 (Del. Ch. 2001)............................................................................. 9

In re Volcano Corp. S’holder Litig.,

156 A.3d 697 (Del. 2017) ..................................................................................11

Jane Doe 30’s Mother v. Bradley,

64 A.3d 379 (Del. Super. 2012) .........................................................................16

Kahn v. M&F Worldwide Corp.,

88 A.3d 635 (Del. 2014) ....................................................................................11

Leon N. Weiner & Assocs., Inc. v. Krapf,

584 A.2d 1220 (Del. 1991) .........................................................................passim

Marie Raymond Revocable Trust v. Mat Five LLC,

980 A.2d 388 (Del. Ch. 2008)........................................................................ 9-10

N.J. Carpenters Pension Fund v. Infogroup, Inc.,

No. 5334-VCN, 2013 WL 610143 (Del. Ch. Feb. 13, 2013) ..............................23

Nottingham Partners v. Dana,

564 A.2d 1089 (Del. 1989) ..........................................................................20, 23

Olson v. ev3, Inc.,

No. 5583-VCL, 2011 WL 704409 (Del. Ch. Feb. 21, 2011) ........................ 28, 34

Orman v. Cullman,
794 A.2d 5 (Del. Ch. 2002) ...............................................................................12

Polk v. Good,
507 A.2d 531 (Del. 1986) ........................................................................ 9, 10, 16

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PUBLIC VERSION
Regal Entm’t. Grp. v. Amaranth LLC,
894 A.2d 1104 (Del. Ch. 2006)..........................................................................22

Rome v. Archer,
197 A.2d 49 (Del. 1964) ....................................................................................10

Rowe v. Everett,
No. 1967, 2001 WL 1019366 (Del. Ch. Aug. 22, 2001).....................................26

Ryan v. Gifford,
No. 2213-CC, 2009 WL 18143 (Del. Ch. Jan. 2, 2009) ............................... 16, 31

S. Muoio & Co. LLC v. Hallmark Entm’t. Invs. Co.,

No. 4729-CC, 2011 WL 863007 (Del. Ch. Mar. 9, 2011) ..................................14

Schultz v. Ginsburg,
965 A.2d 661 (Del. 2009) ..................................................................................17

Seinfeld v. Coker,
847 A.2d 330 (Del. Ch. 2000)............................................................................27

Spen v. Andrews Grp., Inc.,

Nos. 11400, 11612, 1992 WL 127512 (Del. Ch. June 5, 1992) ..........................17

Sugarland Industries, Inc. v. Thomas,

420 A.2d 142 (Del. 1980) ...................................................................... 26, 27, 34

Turner v. Bernstein,
768 A.2d 24 (Del. Ch. 2000) .............................................................................25

Verma v. Costolo, et. al.,

No. 2018-0509-PAF (Del. Ch. Aug. 6, 2021) ....................................................30

Weinstein v. RMG Networks Holdings Corp.,

No. 2018-0210-AGB (Del. Ch. July 10, 2020) ..................................................28

Weiss v. Burke,
No. 2020-0364-PAF (Del. Ch. Jun. 29, 2021) (“Nutraceutical”) ........... 15, 29, 30

viii
PUBLIC VERSION
Rules

Del. Ch. Ct. R. 23(a)(1)- (b)(2). .....................................................................passim

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PUBLIC VERSION
 Plaintiff Alan Kahn (“Plaintiff”) respectfully submits this Brief, together with

the Affidavit of James S. Notis, sworn to on May 13, 2022 (“Notis Aff.”), in support

of final approval of the proposed settlement (the “Settlement”) of this action (the

“Action”) pursuant to a Stipulation of Settlement dated January 4, 2022 (the

“Stipulation”), 1 and certification of the public stockholder class (the “Class”), and

Plaintiff’s counsel’s application for an award of attorneys’ fees and reimbursement

of litigation expenses.

PRELIMINARY STATEMENT

The Action challenges a going-private transaction whereby the Gidwitz

family that controlled Continental Materials Continental Materials Corporation

(“CMC” or the “Company”) bought out the public interest in the Company for

$9.50 cash per share. The Settlement provides for a $1.7 million settlement fund

(the “Settlement Amount”) or roughly $2.92 per share. That recovery represents a

30% increase above the $9.50 per share consideration received by CMC’s former

public stockholders and will be issued to CMC’s former public stockholders

through a direct distribution ensuring payment to stockholders without the need for

a costly claims process. The exceptional result was reached as a result of Plaintiff

1
A copy of the Stipulation was filed with the Court on January 5, 2022. Citations
to “¶__” refer to paragraphs in the Notis Aff., and citations to “Ex.__” are to exhibits
to the Notis Aff. To the extent not otherwise defined herein, capitalized terms have
the same meaning as in the Stipulation.
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PUBLIC VERSION
and his counsel’s litigation and pre-litigation efforts to challenge the controller’s

unchecked takeover of the minority stake of CMC at an unfair price.

Plaintiff now moves for final approval of the Settlement, certification of the

Class, and approval of an award of attorneys’ fees and expenses.

Plaintiff and Plaintiff’s counsel have determined that a Settlement on the

terms reflected in the Stipulation is fair, reasonable, and adequate to CMC’s former

public stockholders.

Additionally, contingent upon Court approval of the Settlement, Plaintiff’s

counsel seek an all-in award of attorneys’ fees and expenses in the aggregate amount

of $332,000 or roughly 19.5% of the Settlement Amount (the “Fee and Expense

Award”). Plaintiff’s ability to negotiate the Settlement Amount was only possible

as a result of Plaintiff’s counsel’s efforts in investigating and litigating the Action.

This exceptional result was achieved after Plaintiff commenced a books and records

action (the “220 Action”) and ultimately negotiated an 8,700+ page production of

internal materials and ESI. Plaintiff’s investigation revealed that

Plaintiff thus was able to negotiate access to these documents that

provided additional valuable insight into the going-private plan. Armed with these
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PUBLIC VERSION
documents, Plaintiff filed an exceptionally detailed and focused complaint to start

the Action, which the primary Defendants chose to answer and not move to dismiss.

Ultimately, Plaintiff’s efforts resulted in the outsized per share recovery in the

Settlement. Plaintiff’s application for the Fee and Expense Award fairly

compensates Plaintiff’s counsel in light of the size of the benefit conferred and the

contingency risk and investment of time and resources undertaken by counsel in

achieving that benefit and is consistent with this Court’s precedents in cases that,

while settled early, deliver meaningful recoveries to stockholders.

Pursuant to the Scheduling Order entered on January 26, 2022, notice of the

Settlement was mailed to the Class starting on March 3, 2022, and as of the date of

the filing of this brief, no objections have been filed.

FACTUAL BACKGROUND AND PROCEDURAL HISTORY

A. Background of the Transaction

CMC produces and/or sells various HVAC and construction products. ¶48.

The Company prior to the Merger was 61.3% owned by members of the Gidwitz

family, with James Gidwitz as Chairman and CEO and other Gidwitz family

members controlling a majority of the board. ¶6.

On February 18, 2020, Bee Street, which the Gidwitz family formed to

consolidate their CMC shares and pursue a going-private transaction, issued a press

release announcing it would commence an offer to tender and exchange all public
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PUBLIC VERSION
shares into the right to receive $9.50 cash per share in connection with a first step

tender offer (the “Tender Offer”). ¶¶6, 46.

The Tender Offer and later the back-end Merger did not follow the guidance

from the Delaware courts on how to protect minority stockholders and avoid entire

fairness review in a two-step going private transaction. Among other things, Bee

Street declined to adopt a non-waivable majority of the minority tender condition

and the Tender Offer filings failed to disclosure material information. ¶26.

On April 14, 2020, Bee Street completed the Tender Offer and accepted for

payment 427,321 shares of CMC stock tendered, for a total consideration of $4.06

million, which resulted in Bee Street owning approximately 89% of CMC’s

outstanding shares. ¶11. As Bee Street failed to reach the 90% threshold to complete

a back-end, short form merger and complete the going-private transaction, the

roughly 11% minority interest remained in public hands. Id. Bee Street then went

dark and delisted its shares from the NYSE on May 11, 2020. Id. On October 14,

2020, Bee Street, having acquired additional shares since going dark to reach the

90% threshold, completed the second step merger (the “Merger”) at the same $9.50

cash per share price paid in the Tender Offer, and thus consummated the going-

private transaction. ¶22.

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PUBLIC VERSION
 B. Plaintiff’s Pre-Litigation Efforts and 220 Action

After being contacted by Plaintiff in February 2020, Plaintiff’s counsel

conducted an investigation of the public facts and chose to pursue a demand for

books and records under 8 Del. C. §220 (the “220 Demand”) to investigate potential

fiduciary breaches. ¶¶6-8. The demand was received by CMC on March 9, 2020.

¶8. On March 13, 2020, CMC rejected the 220 Demand as improper but stated a

willingness to produce a limited set of final board minutes and certain valuation

information considered by Bee Street’s financial advisor, Duff & Phelps. ¶9.

On March 17, 2020 (just before the Tender Offer was then-set to expire),

Plaintiff commenced an action styled as Kahn v. Continental Materials Corporation,

C.A. No. 2020-0205-PAF (the “220 Action”), seeking to enforce the 220 Demand.

¶10. Plaintiff’s counsel and counsel for CMC then negotiated and agreed upon a

schedule in the 220 Action and a confidentiality agreement, and also sought to

negotiate an agreed document production to comply with the 220 Demand. ¶¶12-

13. CMC first started a rolling production of documents on March 30, 2020. ¶13.

The meet and confer sessions and negotiations between Plaintiff’s counsel and

counsel for CMC included discussion of ESI and emails exchanged between

¶14. Plaintiff’s counsel was also able to obtain unredacted versions of board

documents where the attorney client privilege claimed had been breached by the
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PUBLIC VERSION
presence of third parties. ¶¶14-15. By July 2020, plaintiff’s counsel and counsel for

CMC had successfully resolved the production disputes and CMC agreed to a large

production of documents. ¶17. CMC completed its agreed document production on

September 22, 2020, and plaintiff and CMC on September 23, 2020 agreed to a

stipulated dismissal of the 220 Action. ¶18. In sum, CMC produced 8,723 pages of

documents. ¶18.

C. The Class Litigation

Using the extensive tools at hand gained in the 220 document production,

Plaintiff’s counsel drafted a detailed class complaint challenging the Tender

Offer/Merger as an entire fairness transaction that was not entirely fair ab initio.

¶¶23-26.

The Action was commenced on February 5, 2021. ¶24. The Complaint named

as Defendants: Bee Street and its acquisition subsidiary; the CMC directors at the

time of the Tender Offer; and CMC COO Ryan Sullivan. Id. On May 11, 2021, all

Defendants other than Darrell M. Trent (“Trent”) and Peter E. Thieriot (“Thieriot”)

filed an Answer to the Complaint rather than move to dismiss. ¶32. Trent and

Thieriot, who were not part of Bee Street and were the only directors listed in the

Company’s SEC filings as independent directors, filed a motion to dismiss that

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PUBLIC VERSION
largely presented a Cornerstone2 defense for those non-controller directors. Id.

While Plaintiff had strong arguments in opposition to this motion given the

complaint’s well-pleaded allegations that these outside directors acted disloyally and

in bad faith, Plaintiff also recognized that the presence of Trent and Thieriot as

Defendants in the Action would have no effect on the valuation and price fairness

issues central to the case and did not at all increase the chances of recovery to the

stockholder class. ¶¶33-34. Therefore, Plaintiff on June 9, 2021 filed a notice of

voluntary dismissal as to Trent and Thieriot. ¶34.

On June 9, 2021, Plaintiff served document requests, which Defendants

responded to on July 16, 2021. ¶35. The parties then conducted a series of meet and

confer sessions regarding what documents were potentially left that had not already

produced in connection with the 220 Demand. ¶36. The 220 production was

extensive, included the emails and ESI

¶37. Plaintiff also succeeded in obtaining the

Id. The 220 production also included

important valuation information, including the materials provided to Duff & Phelps

and the projections Id.

2
In re Cornerstone Therapeutics Inc., S’holder Litig., 115 A.3d 1173 (Del. 2015).
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 Plaintiff believed that while additional document production could provide

further support for the claims asserted (apart from being somewhat duplicative of

what was already produced), the 220 production was already large and provided

documents needed to develop valuation models to support Plaintiff’s unfair price

claim. ¶38.

Plaintiff retained a financial expert to analyze CMC and develop different

valuation models. ¶39. The valuation work included analysis of each of the

Company’s operating divisions and also took into account the effects of certain post-

Tender Offer developments such as the Company’s receipt of a significant Paycheck

Protection Program loan in April 2020. Id. The financial expert had sufficient

internal valuation materials from the 220 production that together could be analyzed

with the projections to arrive at a more accurate view of CMC’s fair value

at the time of the Tender Offer and Merger. ¶¶39-40.

D. The Settlement

The Parties engaged in arm’s length settlement negotiations over the course

of two months and on October 6, 2021 reached an agreement in principle to settle

the Action for $1.7 million. ¶42. The $1.7 million Settlement amount represents a

gross recovery of approximately $2.92 per share based on the roughly 583,000

public minority shares – a more than 30% increase above the $9.50 per share price

already paid to stockholders in the Tender Offer and Merger. ¶44.

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 ARGUMENT

I. THE PROPOSED SETTLEMENT IS FAIR, REASONABLE,

AND ADEQUATE

A. Delaware Law Strongly Favors Settlement

Delaware law has long favored the voluntary settlement of contested claims.

See e.g., In re Celera Corp. S’holder Litig., No. 6304-VCP, 2012 WL 1020471, *8

(Del. Ch. Mar 23, 2012); In re Cox Radio, Inc. S’holders Litig., No. 4461-VCP, 2010

WL 1806616, at *8 (Del. Ch. May 6, 2010); In re Triarc Cos., Inc., Class &

Derivative Litig., 791 A.2d 872, 876 (Del. Ch. 2001) (“Delaware law favors the

voluntary settlement of corporate disputes.”). In reviewing a proposed settlement,

the Court is “not required to decide any of the issues on the merits,” but instead

determines from the facts and circumstances whether the settlement is fair,

reasonable, and adequate. Polk v. Good, 507 A.2d 531, 536 (Del. 1986); see

Forsythe v. ESC Fund Mgmt. Co., No. 1091-VCL, 2012 WL 1655538, at *2 (Del.

Ch. May 9, 2012) (the Court need not perform a “definitive evaluation of the case

on its merits” as doing so “would defeat the basic purpose of the settlement of

litigation”).

In considering the proposed settlement of a class action, the Court is called

upon to determine, in the exercise of its own judgment, whether the settlement is

fair, reasonable, and adequate. See, e.g., Cox Radio, 2010 WL 1806616, at *9; Marie

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PUBLIC VERSION
Raymond Revocable Trust v. Mat Five LLC, 980 A.2d 388, 401-02 (Del. Ch. 2008).

Of particular importance is the balancing of the strength of the benefits achieved

versus what is being released. See Cox Radio, 2010 WL 1806616, at *9. In

determining whether to approve a settlement, the Court weighs the “give” and the

“get.” In re Activision Blizzard, Inc. S’holder Litig., 124 A.3d 1025, 1064 (Del. Ch.

2015). To make this determination, the Court need not “decide any of the issues on

the merits.” Polk, 507 A.2d at 536; see also Rome v. Archer, 197 A.2d 49, 53 (Del.

1964) (“To do so would defeat the basic purpose of the settlement of litigation.”).

In exchange for a narrowly tailored release (the “give”) the proposed Class will

obtain an additional 30% in merger consideration (the “get”). Here, this analysis

weighs strongly in favor of approval of the Settlement.

B. The Settlement Confers a Substantial Financial Benefit

The financial benefit is significant and substantial: a cash payment of $1.7

million to the stockholder Class. The net settlement will be distributed on a pro rata

basis to the holders of the approximately 583,000 shares in the proposed Class.

¶¶43-44. This amounts to an over 30% price increase over the Tender Offer/Merger

price already paid to stockholders. ¶4. The $1.7 million cash payment is an “obvious

and self-pricing benefit.” In re Orchard Enters. S’holder Litig., No. 7840-VCL,

2014 WL 4181912, at *5 (Del. Ch. Aug. 22, 2014).

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PUBLIC VERSION
 C. The Settlement is Highly Favorable to the Proposed Class in
Light of the Risks and Uncertainties of Continued Litigation

The Settlement is fair, adequate, and reasonable when weighed against the

risks and uncertainties of continued litigation. Plaintiff viewed near zero risk of

establishing that entire fairness would apply and expected that Defendants would

struggle to meet their burden of establishing fair process at trial. However, Plaintiff

faced substantial obstacles with respect to price unfairness and damages.

1. Plaintiff Likely Would Have Established that Entire

Fairness Applied to the Merger

Plaintiff was confident that the Court would have subjected the Merger to

entire fairness scrutiny. The Delaware courts have provided controllers with

multiple paths to complete going-private transactions on terms that may avoid entire

fairness review, be it through (i) a negotiated merger agreement that follows Kahn

v. M&F Worldwide Corp. 3 and similar cases or (ii) a Siliconix 4-style non-coercive

unilateral tender offer that avoids negotiation with the controlled subsidiary.

3
88 A.3d 635 (Del. 2014); see also In re Volcano Corp. S’holder Litig., 143 A.3d
727 (Del. Ch. 2016), aff’d 156 A.3d 697 (Del. 2017) (TABLE) (applying M&F
requirements to negotiated tender offers).
4
In re Siliconix Inc. S’holders Litig., No. 18700, 2001 WL 716787 (Del. Ch. June
19, 2001); see also In re Pure Res., Inc. S’holders Litig., 808 A.2d 421 (Del. Ch.
2002); In re CNX Gas Corp. S’holders Litig., 4 A.3d 397 (Del. Ch. 2010).
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PUBLIC VERSION
 It was also unlikely that Defendants would succeed in shifting the burden

under entire fairness. See Frederick Hsu Living Tr. v. Oak Hill Cap. Partners III,

L.P., No. 12108-VCL, 2020 WL 2111476, at *34 (Del. Ch. May 4, 2020). There

was no special committee process, no effort to provide any independent

representation for the interests of minority stockholders, and the Tender Offer filings

omitted material information regarding management’s manipulation of the

projections, the limitations imposed on the Audit Committee’s retention of a

financial advisor, and the efforts of Trent and Thieriot to reconsider those board-

imposed limitations, among other things. See e.g., ¶¶26-32.

“Although not inevitable in every case, in those cases in which entire fairness

is the initial standard, the likely end result is that a determination of that issue will

require a full trial.” Orman v. Cullman, 794 A.2d 5, 20 n. 36 (Del. Ch. 2002)

(emphasis in original). Given Defendants’ failure to challenge Plaintiff’s entire

fairness allegation at a motion to dismiss and the facts developed from the 220

Action, this Action seemed poised to head to trial or settlement.

2. Plaintiff Faced Significant Obstacles to Establishing

Unfair Price and Proving Damages

Plaintiff possessed strong arguments that the Merger process was unfair. For

example, Defendants created

¶¶22,28. The Company

12
PUBLIC VERSION
then , and after Trent

and Thieriot retained Value Incorporated (“VI”) as the advisor to the Audit

Committee to provide a report to the full board, management directed VI to cut

projected revenues by another 15%. ¶¶28, 49. Plaintiff had strong arguments that

these projections were artificially deflated to support the $9.50 per share price the

controllers were willing to pay in the Merger. ¶28.

However, there were counter arguments that, notwithstanding the apparent

process failures, the price received by minority stockholders was entirely fair. See

ACP Master, Ltd. v Sprint Corp., No. 8508–VCL, 2017 WL 3421142, at *27 (Del.

Ch. July 21, 2017), aff’d, 184 A.3d 1291 (Del. 2018) (“fair price” can be “the

predominant consideration in the unitary entire fairness inquiry”); see also Emerald

Partners v. Berlin, 840 A.2d 641, 1 (Del. 2003) (deal price was fair despite process

flaws that raised serious questions as to the independent directors’ good faith); In re

Tesla Motors, Inc. S’holder Litig., No. 12711-VCS, 2022 WL 1237185, at *2 (Del.

Ch. Apr. 27, 2022) (transaction price entirely fair notwithstanding a “far from

perfect” process).

Defendants could argue that the Tender Offer/Merger price was a 22.3%

premium over CMC’s 60-day volume-weighted average share price and was above

the value ranges of both Duff & Phelps’s DCF and VI’s DCF. ¶¶40, 46-51.

Defendants could also argue that the onset of the COVID-19 pandemic materially
13
PUBLIC VERSION
lowered the Company’s valuation and rendered the prior projections unreliable. ¶45-

50. Indeed, the projections from were finalized

mostly in November 2019 and then presented as consolidated projections from CMC

management in December 2019. Id. The pandemic was not much on the horizon at

time the Tender Offer was announced on February 18, 2020. Id. Yet by the time

the Tender Offer closed on April 14, 2020, the pandemic was an unprecedented

economic event roiling global markets. Id. There was a very real risk that the

projections finalized in November 2019, even with the manipulation by CMC

management in December 2019 and January 2020, were no longer reliable estimates

of the Company’s future financial performance as of April 2020. ¶50.

Proving unfair price and damages at trial would have been difficult under

these circumstances, going beyond the typical battle of the experts as to the

Company’s valuation but also expert views as to the effects of an ongoing global

pandemic and how that might disrupt the Company’s operations and the operations

of the Company’s customers and suppliers. See Cede & Co. v. Technicolor, Inc.,

No. 7129, 2003 WL 23700218, at *2 (Del. Ch. July 9, 2004), aff’d in part & rev’d

in part, 884 A.2d 26, 35 (Del. 2005) (discussing challenges of a “battle of the

experts”); S. Muoio & Co. LLC v. Hallmark Entm’t. Invs. Co., No. 4729-CC, 2011

WL 863007, at *2 (Del. Ch. Mar. 9, 2011) (finding a transaction was entirely fair

because, among other things, “plaintiff’s expert lost” the “battle of the experts”).
14
PUBLIC VERSION
 3. Comparison of the Settlement Consideration to the
Merger Consideration Strongly Supports Approval

Another way to evaluate the Settlement is to calculate the per-share premium

to the deal price reflected by the settlement consideration. In Calamos, now-

Chancellor McCormick recognized that a premium to a transaction price of 5% or

more reflected a very strong recovery. See In re Calamos Asset Mgmt., Inc. S’holder

Litig., No. 2017-0058-JTL, Tr. at 93 (Del. Ch. Apr. 25, 2019) (TRANSCRIPT)

(Court: “I was intrigued by the idea that we all can have a Hanrahan gut check in

these actions, that we can all look to see whether the relative result was 5 percent or

less of the total settlement amount in determining whether it’s on par with other

stockholder class action settlements.”). Here the $2.92 per-share recovery the

proposed Class will receive in the Settlement represents over 30% over the $9.50

Tender Offer/Merger price and is exceptional. ¶4. The significant premium

represented by the Settlement exceeds by multitudes the price increase obtained in

other settlements approved by this Court. See, e.g., In re Homefed, Corp. S’holders

Litig., No. 2019-0592-LWW, 2022 WL 489484 (Del. Ch. Feb. 15, 2022) (approving

settlement which was an approximately 9.6% price increase); Weiss v. Burke, No.

2020-0364-PAF (Del. Ch. Jun. 29, 2021) (TRANSCRIPT) (hereinafter

“Nutraceutical”) (approving settlement amounting to 5.6% price bump); In re Del

15
PUBLIC VERSION
Monte Foods Co. S’holder Litig., No. 6027-VCL, 2011 WL 6008590 (Del. Ch. Dec.

1, 2011) (approving settlement, which was an approximately 2.4% price increase).

D. The Settlement Was Reached Through Arms’-Length

Negotiations

In assessing the fairness of a proposed settlement, Delaware courts place

considerable weight on whether the settlement was reached through adversarial,

arm’s-length negotiations. See, e.g., Ryan v. Gifford, No. 2213-CC, 2009 WL

18143, at *5 (Del. Ch. Jan. 2, 2009) (“The diligence with which plaintiffs’ counsel

pursued the claims and the hard fought negotiation process weigh in favor of

approval of the Settlement.”). Here, the Settlement is the product of several month

long informed, non-collusive, and often contentious negotiations between counsel.

¶42. The negotiations included a thorough analysis of the strengths and weaknesses

of the legal and factual issues in the case, including the risks associated with

continued litigation.

E. The Experience and Opinion of Counsel – and the Absence

of any Objection – Favor Approving the Settlement

Delaware courts also consider the opinion of experienced counsel in

determining the fairness of a settlement. See, e.g., Polk, 507 A.2d at 536 (noting the

court’s consideration of “the views of the parties involved” when determining the

“overall reasonableness of the settlement”); Jane Doe 30’s Mother v. Bradley, 64

A.3d 379, 396 (Del. Super. 2012) (“It is appropriate for the Court to consider the
16
PUBLIC VERSION
opinions of experienced counsel when determining the fairness of a proposed class

action.”). Here, Plaintiff’s counsel are experienced stockholder advocates who are

known to the Court. Ex. B-D. Through their experience, as well as the 220

documents reviewed and analyzed and reviewed by Plaintiff’s counsel and his

expert, Plaintiff’s counsel were well informed of the strengths and weaknesses of his

claims when negotiating the Settlement. Counsel’s view that the Settlement serves

the best interests of the proposed Class supports approval.

Additionally, to date, 5 no objections to the Settlement have been received, 6

further supporting approval. Spen v. Andrews Grp., Inc., Nos. 11400, 11612, 1992

WL 127512, at *1 (Del. Ch. June 5, 1992) (“In this case, no shareholders have

objected to the proposed settlement. That fact obviously weighs heavily in the

Court’s analysis.”); Crowhorn v. Nationwide Mut. Ins. Co., 836 A.2d 558, 563 (Del.

Super. 2003).

F. The Plan of Allocation is Fair, Reasonable, and Adequate

A plan of “allocation … must be fair, reasonable, and adequate.” Schultz v.

Ginsburg, 965 A.2d 661, 667 (Del. 2009). The additional $2.92 per share will be

automatically distributed to record holders, including Cede, who will in turn

5
Objections are not due until May 27, 2022. Any objections received by counsel
and not otherwise submitted to the Court in advance of the Final Approval hearing
will be provided to the Court by Plaintiff’s counsel.
6
¶55.
17
PUBLIC VERSION
distribute the funds to the Depository Trust & Clearing Corporation for automatic

distribution to beneficial holders. ¶43. Because the “settlement consideration can

be viewed as [additional] consideration the class should have received. . .

[d]istributing the [settlement funds] through record holders and DTC also makes

sense because that is how the merger consideration was distributed.” In re Dole

Food Co., Inc., No. 8703-VCL, 2017 WL 624843, at *6 (Del. Ch. Feb. 15, 2017).

This method is also more cost effective. Id. As a result, the proposed Class will

receive their significant price increase without any effort and with little

administrative cost, further increasing the financial benefit.

The Plan of Allocation further requires Defendants and their counsel to assist

counsel and the claims administrator to ensure that no portion of the Net Settlement

Amount is distributed to any Excluded Stockholder as defined in the Stipulation. 7

7
The Stipulation defines the Excluded Stockholders as (i) Defendants and the
members of their Immediate Family and any entity formed for the benefit of or under
the control of any of the foregoing individuals and entities; (ii) CMC, current or
former directors or executive officers of CMC at the time of the Tender Offer, and
the members of their Immediate Family and any entity formed for the benefit of or
under the control of any of the foregoing individuals and entities; and (iii) current or
former managers or members of Bee Street and the members of their Immediate
Family and any entity formed for the benefit of or under the control of any of the
foregoing individuals and entities. The Stipulation further provides, for the
avoidance of doubt, that Excluded Stockholders includes Peter E. Thieriot, Darrell
M. Trent, Paul Ainsworth, Nancy Gidwitz, Nancy Gidwitz Revocable Trust, Joyce
Gidwitz, Joyce Gidwitz Declaration of Trust, Pamela C. Gidwitz, Pamela C. Gidwitz
Revocable Trust, Mary Kathryn Gidwitz, Mary Kathryn Gidwitz Revocable Trust,

18
PUBLIC VERSION
This Court has approved similar plans of allocation in other actions challenging the

fairness of the merger consideration. See, e.g., City of Daytona Beach Police & Fire

Pension Fund v. Examworks Grp., Inc., No. 12481-VCL (Del. Ch. Sept. 12, 2017)

(Order) (approving nearly identical plan of allocation); In re Prospect Med. Hldgs.,

Inc. S’holders Litig., No. 5760-VCN (Del. Ch. Jan. 21, 2016) (Order) (settlement

agreement defined “Settlement Payment Recipients” as only those stockholders who

held stock on the effective date of the merger and received merger consideration).

II. THE CLASS SHOULD BE CERTIFIED

“Certification of a class under Court of Chancery Rule 23 is a two-step

process, which requires the purported class meet all four criteria within Court of

Chancery Rule 23(a) and at least one of the criteria within Court of Chancery Rule

23(b).” In re Ebix, Inc. S’holder Litig., No. 8526-VCS, 2018 WL 3570126, at *1

(Del. Ch. July 17, 2018). On January 26, 2022, the Court entered the Scheduling

Order that, among other things, conditionally certified a non-opt out class (the

“Class”) consisting of:

all record holders and beneficial owners of CMC common stock whose
shares were (i) tendered and exchanged into the right to receive $9.50
cash per share in connection with the first step Tender Offer and

Thomas R. Gidwitz, Thomas R. Gidwitz Revocable Trust, Betsy R. Gidwitz, Betsy

R. Gidwitz Revocable Trust, Julie Gidwitz, Julie Gidwitz Declaration of Trust, Jill
Gidwitz Zisook, Jill Gidwitz Zisook Declaration of Trust, Ronald Gidwitz, Ronald
J. Gidwitz Revocable Trust, James G. Gidwitz Revocable Trust, Steven B. Gidwitz
Living Trust, CMC Partnership, and GFAM CMC Partnership. Stipulation, ¶1(u).
19
PUBLIC VERSION
 subsequent offering period that expired on April 17, 2020; and/or
(ii) exchanged into the right to receive $9.50 cash per share in
connection with the second step Merger consummated on October 14,
2020, but in each case excluding the Excluded Stockholders as defined
in the Stipulation. [Trans. ID 67267239].

Final certification of the Class is appropriate because this Action satisfies Rule

23(a) and fits “within the framework provided for in subsection (b)” of Rule 23.

Nottingham Partners v. Dana, 564 A.2d 1089, 1095 (Del. 1989).

A. The Class Satisfies the Requirements of Rule 23(a)

1. Numerosity

Court of Chancery Rule 23(a)(1) requires that the class be “so numerous that

joinder of all members is impracticable….” Ct. Ch. R. 23(a)(1). The test for

numerosity is “not impossibility of joinder, but practicality.... Numbers in the

proposed class in excess of forty, and particularly in excess of one hundred, have

sustained the numerosity requirement.” Leon N. Weiner & Assocs., Inc. v. Krapf,

584 A.2d 1220, 1225 (Del. 1991); see also In re AmTrust Fin. Servs. Inc. S’holder

Litig., No. 2018-0396-LWW, Tr. at 32 (Del. Ch. Nov. 22, 2021) (TRANSCRIPT)

(“AmTrust”). Based on the stockholder lists provided by Defendants to the

administrator, there were over 300 stockholders, making it impracticable to join all

potential plaintiffs before this Court.

20
PUBLIC VERSION
 2. Commonality

Rule 23(a)(2) requires that there be “at least one question of law or fact

common to the members of the class.” Emerald Partners v. Berlin, No. 9700, 1991

WL 244230, at *3 (Del. Ch. Nov. 15, 1991). This requirement is satisfied “where

the question of law linking the class members is substantially related to the

resolution of the litigation even though the individuals are not identically situated.”

Weiner, 584 A.2d at 1225 (citations omitted). That class members have “different

interests and views will not defeat commonality, so long as the common legal

questions are not dependent on divergent facts and significant factual diversity does

not exist among individual class members.” In re Phila. Stock Exch., Inc., 945 A.2d

1123, 1141 (Del. 2008) (internal quotations and citations omitted).

The numerous factual and legal issues common to all proposed Class members

include, e.g., (i) whether Defendants breached their fiduciary duties to CMC’s

minority stockholders in connection with the Merger; and (ii) whether members of

the proposed Class have been injured by the wrongful conduct of the Defendants.

See AmTrust, Tr. at 32-33. This Action asserts claims that clearly “implicate the

interests of all members of the proposed class of shareholders” and, therefore, meets

the commonality requirement of Rule 23(a)(2). In re Lawson Software, Inc., No.

6443-VCN, 2011 WL 2185613, at *2 (Del. Ch. May 27, 2011).

21
PUBLIC VERSION
 3. Plaintiff’s Claims Are Typical of the Proposed Class’s
Claims

Rule 23(a)(3) requires that the “claims or defenses of the representative parties

are typical of the claims or defenses of the class[.]” Ct. Ch. R. 23(a)(3). Rule

23(a)(3) “focuses on whether the class representative’s claim…fairly presents the

issues on behalf of the represented class” and requires that “the legal and factual

position of the class representative must not be markedly different from that of the

members of the class.” Weiner, 584 A.2d at 1225-26 (citations omitted). “A

representative’s claim or defense will suffice if it ‘arises from the same event or

course of conduct that gives rise to the claims [or defenses] of other class members

and is based on the same legal theory.’” Id. at 1226 (citation omitted) (alteration in

original); see also Regal Entm’t. Grp. v. Amaranth LLC, 894 A.2d 1104, 1112 n.12

(Del. Ch. 2006) (noting that the test for typicality is “relatively non-stringent,” that

“courts have set a ‘low threshold’ for satisfying typicality” (citations omitted)).

Plaintiff’s claims arise from Defendants’ alleged breaches of fiduciary duties

in connection with the Tender Offer and Merger, and all proposed Class members

have the same interest in establishing those fiduciary breaches and resulting

damages. Thus, Plaintiff’s claims arise “from the same event or course of conduct

that gives rise to the claims [or defenses] of other class members and is based on the

same legal theory,” and typicality therefore is satisfied. Weiner, 584 A.2d at 1226

22
PUBLIC VERSION
(alteration in original); see also, AmTrust, Tr. at 33 (noting typicality was met

because “all class members, as stockholders, face[d] the same alleged injury from

the same alleged conduct, and the plaintiffs [were] affected the same as the rest of

the class members”).

4. The Proposed Class’s Interests Are Fairly and

Adequately Protected

Rule 23(a)(4) requires the class representative to “fairly and adequately

protect the interests of the class.” Nottingham, 564 A.2d at 1094-95. A class

representative is generally adequate if there is no “economic antagonism[] between

the representative and the class” and the class representative is represented by

“qualified, experienced, and competent” counsel capable of prosecuting the

litigation. N.J. Carpenters Pension Fund v. Infogroup, Inc., No. 5334-VCN, 2013

WL 610143, at *3 (Del. Ch. Feb. 13, 2013).

Here, there is no antagonism between Plaintiff and any member(s) of the

proposed Class. Plaintiff’s Counsel are known to this Court, and experienced and

capable of prosecuting the Action. Rule 23(a)(4) is satisfied.

B. The Class Satisfies Rule 23(b)(1) and 23(b)(2)

Once the prerequisites of Rule 23(a) are satisfied, a class action may be

certified if any of Rule 23(b)’s conditions are met. Here, the proposed Class should

be certified under Rules 23(b)(1) and (b)(2). “Delaware courts repeatedly have held

23
PUBLIC VERSION
that actions challenging the propriety of director conduct in carrying out corporate

transactions are properly certifiable under both subdivisions (b)(1) and (b)(2).” Cox

Radio, 2010 WL 1806616, at *8 (citation omitted). This Action challenges the

exercise of fiduciary responsibility in connection with the Merger. Therefore, this

Action is properly certifiable under both Rule 23(b)(1) and (b)(2). See Hynson v.

Drummond Coal Co., Inc., 601 A.2d 570, 579 (Del. Ch. 1991).

1. Certification Under Rule 23(b)(1) is Appropriate

Certification under Rule 23(b)(1) is appropriate here because if separate

actions were commenced by members of the proposed Class, Defendants and the

former CMC stockholders would be subject to the risk of inconsistent or varying

adjudications that would establish incompatible standards of conduct and would, as

a practical matter, be dispositive of the interests of other Class members. See

AmTrust, Tr. at 33-34. Absent certification, the proposed Class members would be

forced to pursue individual actions, and identically situated members could be

awarded different per-share damages, producing inequitable results and establishing

incompatible standards for Defendants. See Ebix, 2018 WL 3570126, at *5 (“[C]lass

certifications under Rules 23(b)(1) and (2) permit damages recoveries as long as

adjudication is uniform.”).

Additionally, certification under Rule 23(b)(1) is appropriate because Plaintiff

challenges a single course of conduct that “affects the stockholder class equally in
24
PUBLIC VERSION
proportion to their ownership interest,” and there is no “legitimate basis that a

defendant might be found liable to some plaintiffs and not to others.” Turner v.

Bernstein, 768 A.2d 24, 33 (Del. Ch. 2000) (internal quotations omitted); see also

In re Starz S’holder Litig., No. 12584-VCG, 2018 WL 4111944, at *1 (Del. Ch. Aug.

28, 2018) (certifying class under Rules 23(b)(1) and (2)).

2. Certification Under Rule 23(b)(2) is Appropriate

Certification pursuant to Rule 23(b)(2) is also appropriate. 23(b)(2) provides

for certification where the party opposing the class has acted or refused to act on

grounds generally applicable to the class, “thereby making appropriate final

injunctive relief or corresponding declaratory relief with respect to the class as a

whole.” Ct. Ch. R. 23(b)(2).

This Action concerns the unfairness of the Merger Price paid to the proposed

Class. Plaintiff alleges Defendants breached their fiduciary duties to the proposed

Class as a whole, and that all proposed Class members were harmed by that

misconduct. The particular facts related to any stockholder will not have any bearing

on the appropriate remedy. Thus, certification under Rule 23(b)(2) is appropriate

because Defendants’ misconduct applies equally to all proposed Class members, and

the proposed Class is being treated fairly with respect to the application of the

requested relief.

25
PUBLIC VERSION
 C. The Remaining Requirements of Rule 23 are Satisfied

Plaintiff and Plaintiff’s Counsel meet the remaining requirements of Rule 23.

Plaintiff has filed an affidavit in compliance with Rule 23 stating his support for the

Settlement. On March 3, 2022, notice was mailed to former CMC common

stockholders, and a copy of the notice was posted online at

https://www.rg2claims.com/continentalmaterials.html, along with the Stipulation. 8

III. THE FEE AND EXPENSE AWARD SHOULD BE APPROVED

Plaintiff’s Counsel requests an all-in Fee and Expense Award of $332,000,

representing approximately 19.5% of the Settlement Amount.

A. The Applicable Standards for Attorneys’ Fees and Expenses

The Court may award attorneys’ fees and expenses to counsel whose efforts

have created a common fund. Ams. Mining Corp. v. Theriault, 51 A.3d 1213, 1253-

55 (Del. 2012). In so doing, Delaware courts “examine the ‘totality of the

circumstances’” on a case-by-case basis. Rowe v. Everett, No. 1967, 2001 WL

1019366, at *27 (Del. Ch. Aug. 22, 2001). In determining an appropriate award of

attorneys’ fees and expenses, Delaware Courts look to the factors set forth in

Sugarland Industries, Inc. v. Thomas, 420 A.2d 142 (Del. 1980).

8
The settlement administrator’s affidavit of mailing will be filed on May 27, 2022,
in accordance with the Scheduling Order.
26
PUBLIC VERSION
 Counsel submits the benefit achieved – i.e., the $1.7 million cash common

fund, equaling a 30%+ price increase over the Tender Offer/Merger price – and other

Sugarland factors support the Fee and Expense Award.

B. The 30% Price Bump Confers a Substantial Benefit

“[T]he dollar amount of the [payment] created” is at the “heart of the

Sugarland analysis.” Seinfeld v. Coker, 847 A.2d 330, 336-37 (Del. Ch. 2000). The

$1.7 million cash common fund to be paid to former CMC public stockholders is

concrete and substantial.

This Court has advised counsel that “[t]he wealth proposition for plaintiffs’

counsel is simple: If you want more for yourself, get more for those whom you

represent.” Activision Blizzard, 124 A.3d at 1071, quoting Orchard, 2014 WL

4181912 at *8. Counsel here did just that. They held these Defendants accountable

for their fiduciary breaches and vigorously negotiated a significant price bump to

compensate stockholders for the consideration they should have received in the

Merger.

The traditional rubric of granting a higher fee when the case nears closer to

trial was established to “offset representative counsel’s natural incentive to shirk.”

In re Emerson Radio S’holder Derivative Litig., No. 3392-VCL, 2011 WL 1135006,

at *4 (Del. Ch. Mar. 28, 2011). However, in a case like this, where counsel has

achieved a 30% price bump for stockholders there has been no “shirk” and “counsel
27
PUBLIC VERSION
should not be penalized for achieving complete victory quickly.” See Olson v. ev3,

Inc., No. 5583-VCL, 2011 WL 704409, at *15 (Del. Ch. Feb. 21, 2011). Counsel

here was not assisted by any “tailwind” such as appraisal action or special

committee, nor were there the usual analyst and media reports that often provide

insight into deal shortcomings. This Action and the resulting settlement was solely

the product of hard work by Plaintiff’s counsel.

Plaintiff’s counsel submit that their efforts here compare favorably to actions

settled at a similar procedural posture 9 and support an all-in fee and expense award

equating to 19.5% of the Settlement Amount, especially when considered in light of

the significant price bump obtained. While the Action settled early, it settled because

of Plaintiff’s hard work. Plaintiff pursued enforcement of the 220 Demand and

9
The Court of Chancery has often approved fee requests of over 20% benefits where
the settlement benefits are attributable solely to the litigation. See e.g. In re China
Integrated Energy, Inc. S’holders Litig., No. 6625-VCL (Del. Ch. Dec. 2, 2015)
(granting 26% of a $1 million settlement with no motion practice and only document
discovery.); Weinstein v. RMG Networks Holdings Corp., No. 2018-0210-AGB
(Del. Ch. July 10, 2020) (granting 25% of a $1.5 million settlement where complaint
was filed with 220 documents, no depositions and motion to dismiss briefed but not
decided); Asbestos Workers Phila. Pension Fund v. Avril, No. 2019-0633-SG (Del.
Ch. Apr. 16, 2021) (granting 24.4% of $5.6 million settlement after complaint filed
and amicably resolved discovery motion); In re Homefed, Corp. S’holders Litig.,
2022 WL 489484, (granting 20% of $15 million settlement after 220 action and
motion to dismiss); In re Josephson Int’l, Inc., No. 9546, 1988 WL 112909, at *4
(Del. Ch. Oct. 19, 1988)(granting all-in fee and expense award of 20% after less than
two weeks of litigation including expedited discovery resulting in a 3.5% price bump
with the assistance of a Special Committee).
28
PUBLIC VERSION
obtained thousands of documents, including

¶19. This allowed Plaintiff to file a strong

Complaint that Defendants chose to not to challenge on a motion to dismiss. ¶32.

Plaintiff’s counsel should not be penalized for an efficient litigation plan where that

plan succeeded in obtaining an outsized result for the Class through a 30%+ price

bump. This price increase compares favorably to many large settlements that

amount to only a modest increase to the overall transaction consideration.

The Fee and Expense Award is also supported by the result in the

Nutraceutical case, where the Court awarded a 19.5.% fee award for a settlement

achieved after a complaint had been filed and answered with no motion to dismiss

and before any depositions. Nutraceutical at 36 (“no depositions were taken; there

was no motion practice. No expert discovery, although the plaintiffs did retain an

expert; and the defendants did answer the complaint rather than move to dismiss.”).

Here, Plaintiff was at a similar litigation posture, having pursued the 220

Action that yielded a substantial document production that permitted Plaintiff to

Plaintiff also hired and worked with an expert to develop valuation models to make

an appropriate settlement demand and negotiate for a substantial price bump.

Importantly, Plaintiff here did not have the “significant running start” available to

the stockholder plaintiffs in Nutraceutical through an earlier filed appraisal action

29
PUBLIC VERSION
with a fully developed record on which those plaintiffs could rely in prosecuting

their claims. Id. Additionally, the price bump obtained here far outpaced the price

bump in Nutraceutical (the price bump here is over 30% per share; it was 5.6% in

Nutraceutical). Compare ¶4 with Nutraceutical at 8. Despite these differences,

Plaintiff seeks to follow the guide set by this Court in Nutraceutical and similarly

seeks an all-in fee and expense award of 19.5%. 10 The price bump is a substantial

benefit to the Class that is being provided in an efficient manner through the plan of

allocation described above. Nevertheless, while Plaintiff argues this Settlement is

stronger than the Nutraceutical settlement, counsel has chosen to follow the Court’s

precedent for early-stage settlements and seek the same fee and expense percentage

awarded in that action.

10
This Court’s decision awarding an 18.7% fee in Twitter is also informative.
Verma v. Costolo, et. al., No. 2018-0509-PAF (Del. Ch. Aug. 6, 2021)
(TRANSCRIPT) at 48. There, the plaintiffs filed complaints after certain plaintiffs
obtained books and records and a motion to dismiss was briefed but not decided.
The case then settled. However, unlike Twitter, the strength of Plaintiff’s claims
here after having pursued and incorporated documents received in the 220 process
led Defendants to choose to answer the complaint rather than move to dismiss. Also
unlike Twitter, this is a straight all-cash settlement without the overhang of ongoing
securities fraud litigation against Twitter.
30
PUBLIC VERSION
 C. The Secondary Sugarland Factors Also Support the Fee and
Expense Award

1. The Contingent Nature of the Litigation Supports the

Requested Fee and Expense Award

The contingent nature of the litigation is the “second most important factor

considered by this Court” in awarding attorneys’ fees. Dow Jones & Co. v. Shields,

No. 184,1991, 1992 WL 44907, at *2 (Del. Ch. Mar. 4, 1992). “It is consistent with

the public policy of Delaware to reward this risk-taking in the interests of

shareholders.” In re Plains Res. Inc. S’holders Litig., No. 071-N, 2005 WL 332811,

at *6 (Del. Ch. Feb. 4, 2005). “This Court has recognized that an attorney may be

entitled to a much larger fee when the compensation is contingent than when it is

fixed on an hourly or contractual basis.” Ryan, 2009 WL 18143, at *13.

That is all the more true in cases like this, where, in light of the relatively

small deal value, the potential recovery was small and counsel still needed to

dedicate considerable time to developing the case. The resources devoted here could

have been devoted elsewhere through the acceptance of other engagements.

Accordingly, the contingent nature of this case and the preclusion of other work

support the full award of attorneys’ fees and expenses.

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PUBLIC VERSION
 2. Counsel Expended Significant Time and Resources to
Secure the Settlement

The requested fee and expense award is also consistent the amount of time

and effort expended by Plaintiff’s Counsel on this case. “More important than hours

is ‘effort, as in what Plaintiffs’ counsel actually did[,]’” Ams. Mining, 51 A.3d at

1258 (citation omitted).

While this action settled early in the litigation, counsel undertook significant

efforts in the 220 process to undercover important documents and reveal the

appropriate valuation for CMC. Additionally, these efforts took place during the

Covid-19 pandemic which “presented unprecedented challenges” especially in

discovery negotiations. Forescout Techs., Inc. v. Ferrari Grp. Hldgs., L.P., No.

2020-0385-SG, 2020 WL 3971012, at *2 (Del. Ch. July 14, 2020) (“The COVID-19

pandemic has presented unprecedented challenges for our State and Nation, and our

Court has not escaped such difficulties.”).

In sum, Plaintiff’s Counsel devoted in excess of 573 hours to litigating the

Action and incurred $8,707.45 in out-of-pocket expenses. ¶¶56-57. After

subtracting expenses, the net requested fee award represents a blended rate of

approximately $564 per hour, which is a discount to a lodestar calculation using

counsel’s normal hourly rates. ¶59.

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PUBLIC VERSION
 These metrics are comparable to – and, indeed, well below – those awarded

in other cases and are thus fair and reasonable, especially given the substantial

benefit conferred and the complexity of the issues presented. See, e.g., Franklin

Balance Sheet Inv. Fund v. Crowley, No. 888-VCP, 2007 WL 2495018, at *14 (Del.

Ch. Aug. 30, 2007) (fee award represented an hourly rate of $4,023 per hour); In re

NCS Healthcare, Inc. S’holder Litig., No. 19786, 2003 WL 21384633, at *3 (Del.

Ch. May 28, 2003) (fee award represented an hourly rate of approximately $3,030

per hour).

3. This Litigation Implicates Complex Issues

“All else equal, litigation that is challenging and complex supports a higher

fee award.” Activision Blizzard, 124 A.3d at 1072; see also Del Monte, 2011 WL

2535256, at *13 (“The relative complexity of the litigation supports an award at the

higher end of the range.”). While when viewed as a straight entire fairness valuation

case, the Action was no more or less complicated than similar cases, though the small

deal size for a Company with no media or analyst coverage meant that Plaintiff was

unassisted by some of the typical public reporting information that often assists

stockholders in other cases. ¶31.

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PUBLIC VERSION
 4. Counsel’s Standing and Ability Supports the Fee and
Expense Award

Under Sugarland, the Court should also consider the “standing and ability of

plaintiffs’ counsel.” In re Sauer-Danfoss S’holders Litig., 65 A.3d 1116, 1140 (Del.

Ch. 2011). Plaintiff’s counsel are experienced law firms in the area of stockholder

litigation, with extensive experience in this Court. Plaintiff’s counsel have a track

record of filing strong claims and litigating those claims to achieve financial results

for stockholders. “This factor reinforces [the] decision not to reduce the fee award

for an early victory.” Olson, 2011 WL 704409, at *15.

The standing of opposing counsel may also be considered in determining an

award of attorneys’ fees. Hollywood Firefighters’ Pension Fund v. Malone, No.

2020-0880-SG, 2021 WL 5179219, at *11 (Del. Ch. Nov. 8, 2021) (noting, in

evaluating the Sugarland factors, that the “standing and ability of both the Plaintiffs’

and the Defendants’ counsel are well known to this Court to be exemplary”).

Defendants in the Action are represented by lawyers from highly experienced and

effective law firms – Willkie Farr & Gallagher LLP and Morris, Nichols, Arsht &

Tunnell, LLP.

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PUBLIC VERSION
 CONCLUSION

Plaintiff respectfully requests the Court approve the Settlement, certify the

Class, and award the Fee and Expense Award of $332,000.

COOCH AND TAYLOR, P.A.

OF COUNSEL:
/s/ Carmella P. Keener
GARDY & NOTIS, LLP Carmella P. Keener (Bar No. 2810)
James S. Notis The Nemours Building
Jennifer Sarnelli 1007 North Orange Street, Suite 1120
126 East 56th Street, 8th Floor P.O. Box 1680
New York, NY 10022 Wilmington, DE 19899-1680
(212) 905-0509 (302) 984-3816

HAROLD B. OBSTFELD, P.C. Words: 7,855

Harold B. Obstfeld
140 East 45th Street, 44th Floor Counsel for Plaintiff
New York, NY 10017
(212) 696-1212

May 13, 2022

PUBLIC VERSION
FILED: MAY 18, 2022

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PUBLIC VERSION