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Former stockholders of Golden Nugget Online Gaming Inc. received approval Tuesday to settle their Delaware Chancery Court class action for $22 million in cash. This settlement follows the May 2022 $1.56 billion all-stock sale of Golden Nugget to DraftKings Inc. Of the settlement, $4 million will go to class attorneys.

Legal Team Fees and Adjustments

Nearly 20 attorneys from several firms, including Block & Leviton LLP, Friedman Oster & Tejtel PLLC, Labaton Keller Sucharow LLP, Grant & Eisenhofer PA, Andrews & Springer LLC, Kaskela Law LLC, and Julie & Holleman LLP, will split the attorney fee and expense award. This award includes a $5,000 incentive fee for lead shareholder Steven Eschbach.

Vice Chancellor J. Travis Laster reduced the attorney fee award slightly from the initial $4.62 million requested. "I ultimately can't get comfortable with the $4.62 million given what was done," said Laster, who opted for a $4 million flat fee instead.

Chancery OKs $22M Golden Nugget Deal : Litigation Background

Under Delaware law, settlements at an "early stage" of litigation typically result in lower attorney fee awards. This lawsuit, consolidated in October 2022 and certified as a class action in October 2023, survived a motion to dismiss but settled well before trial.

Shareholders of Golden Nugget Online Gaming Inc. first filed lawsuits in September 2022 against controlling stockholder Tilman J. Fertitta and others, alleging that various side deals related to the $1.56 billion merger benefited Fertitta at the expense of the company and other shareholders. These shareholders also argued that the sale price was too low, prompting litigation in multiple jurisdictions, including New York and Nevada.

Settlement Terms and Attorney Remarks

The $22 million settlement — a 3% premium to the transaction price — will be paid in cash without insurance money. Kimberly A. Evans of Block & Leviton described the settlement as a "strong risk-adjusted outcome" for a "very challenging case."

Winning the case "would not have been simple," Evans noted, explaining that details of the side agreements were often unclear and, after extensive analysis, were sometimes found to be neutral rather than beneficial to Fertitta.

"We had to hunt to find out how those side agreements were arranged," Evans said.

Counsel spent over 6,914 hours and incurred $164,485 in expenses from the time the action was filed until the settlement agreement was reached in January.

Chancery OKs $22M Golden Nugget Deal : Mediation and Court Hearing

Settlement terms were reached after a full day of mediation before Greg Danilow of Phillips ADR Enterprises. No objections to the settlement have been raised, including from shareholders involved in the Nevada litigation.

"You're not cutting them in, in any way?" Vice Chancellor Laster asked.

"No, your honor," Evans replied.

The defendants did not oppose the settlement or make any comments at the hearing.

Legal Representation

The shareholders were represented by Jason Leviton, Kimberly A. Evans, Lindsay K. Faccenda, and Robert Erikson of Block & Leviton LLP; Jeremy Friedman, David Tejtel, Sarah Kleinman, and Lindsay La Marca of Friedman Oster & Tejtel PLLC; Douglas E. Julie and W. Scott Holleman of Julie & Holleman LLP; D. Seamus Kaskela of Kaskela Law LLC; Ned Weinberger and Brendan Sullivan of Labaton Keller Sucharow LLP; Christine M. Mackintosh of Grant & Eisenhofer PA; and Peter B. Andrews, Craig J. Springer, David M. Sborz, Andrew J. Peach, and Jackson E. Warren of Andrews & Springer LLC.

DraftKings Inc. and Golden Nugget Online Gaming Inc. were represented by Raymond J. DiCamillo and Kevin M. Gallagher of Richards Layton & Finger PA, and Brian T. Frawley and Charles H. Sullivan of Sullivan & Cromwell LLP.

Tilman Fertitta and non-party Fertitta Entertainment Inc. were represented by Martin S. Lessner, C. Barr Flinn, Paul J. Loughman, and Daniel M. Kirshenbaum of Young Conaway Stargatt & Taylor LLP.