Case 1:10-cv JOF Document 20 Filed 06/16/11 Page 1 of 29 UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF GEORGIA

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1 Case 1:10-cv JOF Document 20 Filed 06/16/11 Page 1 of 29 UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF GEORGIA AJAY KAJARIA, Individually and On Behalf of All Others Similarly Situated, Case No. 1:10-cv JOF Plaintiff, V. HOWARD S. COHEN, RICHARD S. GRANT, GEORGE R. JUDD, CHARLES H. McELREA, RICHARD B. MARCHESE, STEVEN F. MAYER, ALAN H. SCHUMACHER, MARK A. SUWYN, ROBERT G. WARDEN, M. RICHARD WARNER, BLUELINX HOLDINGS INC., CERBERUS ABP INVESTOR LLC and CERBERUS CAPITAL MANAGEMENT, L.P., Defendants. PLAINTIFF'S MOTION FOR AN AWARD OF ATTORNEYS' FEES AND EXPENSES FOR BENEFIT CONFERRED AND MOTION FOR DISMISSAL OF ACTION AS MOOT WITH MEMORANDUM OF LAW IN SUPPORT

2 Case 1:10-cv JOF Document 20 Filed 06/16/11 Page 2 of 29 TABLE OF CONTENTS TABLE OF AUTHORITIES ii I. INTRODUCTION 1 II. BACKGROUND 2 III. ARGUMENT 6 A. The Amendment No. 3 Produced A "Substantial Benefit" to BlueLinx Shareholders 6 B Plaintiffs Counsel are Entitled to an Award of Attorneys' Fees and Expenses 8 1. The Amount Involved and the Results Obtained 11 2 The Time and Labor Required 13 3 The Novelty and Difficulty of the Questions Involved 14 4 The Skill Requisite to Perform the Legal Service Properly 15 5 Whether the Fee Is Fixed or Contingent 15 6 Time Limitations Imposed by the Client or the Circumstances 16 7 The Experience, Reputation, and Ability of the Attorneys Awards in Similar Cases 17 C. BlueLinx is Responsible for the Fee Award 20 IV. CONCLUSION 22

3 Case 1:10-cv JOF Document 20 Filed 06/16/11 Page 3 of 29 TABLE OF AUTHORITIES Cases Page(s) Allied Artists Pictures Corp. v. Baron, 413 A.2d 876 (Del. 1980) 9 Averett v. Permanent General Assurance Corp., No cv-50728, 2003 WL (Super. Ct. Sept. 26, 2003) (Order) 10 Camden I Condominium Association, Inc. v. Dunkle, 946 F.2d 768 (11th Cir. 1991) 8, 9-10, 15 In re Charter Communications, Inc., Sec. Litig., MDL No. 1506, 2005 U.S. Dist. LEXIS (E.D. Mo. June 30, 2005) 19 Cosgrove v. Sullivan, 759 F. Supp. 166 (S.D.N.Y. 1991) 20 In re Countrywide Corporation Shareholders Litigation, C.A. No VCN (Del. Ch. Aug. 28, 2009) 17 Electronics Capital Corp. v. Sheperd, 439 F.2d 692 (5th Cir. 1971) 13 In re First Interstate Bancorp Consol. S 'holder Litig., 756 A.2d 353 (Del. Ch. 1999) 15, 20, 21 Fletcher v. A.J. Indus., Inc., 266 Cal. App. 2d 313 (1968) 21 In re FLS Holdings, Inc. S 'holders Litig., C.A. No , 1993 Del. Ch. LEXIS 57 (Del. Ch. April 2, 1993) 12 Friedrich v. Fidelity Nat'l Bank, 545 S.E.2d 107 (App. Ct. 2001) 9

4 Case 1:10-cv JOF Document 20 Filed 06/16/11 Page 4 of 29 Georgia Veneer & Package Co. v. Florida Nat Bank, 32 S.E.2d 465 (1944) 8 Gilmartin v. Adobe Resources Corp., C.A. No (Del. Ch. June 29, 1992) 18 Globis Capital Partners, LP v. SafeNet, Inc., C.A. No VCS (Del. Ch. Dec. 20, 2007) 17 In re Golden State Bancorp, Inc. S 'holders Litig., C.A. No , 2000 Del. Ch. LEXIS 8 (Del. Ch. Jan. 7, 2000) 17 Gottlieb v. Heyden Chem. Corp., 105 A.2d 461 (Del. 1954) 9 In re Jacuzzi Brands, Inc. S'holder Litig., C.A.No 2477 (Del. Ch. June 26, 2007) 17 Johnson v. Georgia Highway Express, Inc., 488 F.2d 714 (5th Cir. 1974) 10, 13, 16 Kenny A. v. Perdue, 454 F. Supp. 2d 1260 (N.D. Ga. 2006) 9 Lewis v. Anderson, 692 F.2d 1267 (9 th Cir. 1982) 21 Maley v. Del Global Techs. Corp., 186 F. Supp. 2d 358 (S.D.N.Y. 2002) 20 In re Maxus Energy Corp. S 'holders Litig., C.A. No (Del. Ch. Sept. 12, 1995) 18 Mills v. Electric Auto-Lite Co., 396 U.S. 375 (1970) 9,20, 21 In re Plains Resources, Inc. S 'holders Litig., C.A. No. 071-N, 2005 Del. Ch. LEXIS 12 (Del. Ch. Feb. 4, 2005) 17 In re Pure Resources, Inc. S 'holders Litig., 808 A.2d 421 (Del. Ch. 2002) 11, 16

5 Case 1:10-cv JOF Document 20 Filed 06/16/11 Page 5 of 29 In re Rite Aid Corp. Sec. Litig., 146 F. Supp. 2d 706 (ED. Pa. 2001) 19 In re RJR Nabisco, Inc. Sec. Litig., MDL No. 818, 1992 U.S. Dist. LEXIS (S.D.N.Y. Aug. 24, 1992) 20 In re Staples, Inc. S 'holders Litig., 792 A.2d 934 (Del. Ch. 2001) 7 Sauer Danffoss Inc. Shareholder Litigation, Consl C.A.No 5162 VCL (DE. Ch. Ct. April 29, 2011) 18 State of California v. Meyer, 174 Cal. App. 3d 1061 (1985) 20 Stop & Shop Supermarket Co. v. Smithkline Beecham Corp., No , 2005 U.S. Dist. LEXIS 9705 (E.D. Pa. May 19, 2005) 19 In re Talley Indus., Inc. S'holders Litig., C.A. No , 1998 Del. Ch. LEXIS 53 (Del. Ch. April 9, 1998) 12, Tandycrafts, Inc. v. Initio Partners, 562 A.2d 1162 (Del. 1989) 7 United Vanguard Fund, Inc. v Takecare, Inc., 727 A.2d 844 (Del. Ch. 1998) 14 Virgin Islands Gov't Employees ' Ret. Sys. v. Alvarez, C.A. No VCS (Del. Ch. Dec. 2, 2008) 17 Weiss v. Mercedes-Benz of N. Am., Inc., 899 F. Supp (D.N.J. 1995) 20 Wis. Inv. Bd. v. Bartlett, No , 2002 Del. Ch. LEXIS 42 (Del. Ch. Apr. 9, 2002), aff'd, 808 A.2d 1205 (Del. 2002) 7 Woosley v. State of California, 6 Cal. App. 4th 343 (1990) 19 iv

6 Case 1:10-cv JOF Document 20 Filed 06/16/11 Page 6 of 29 OTHER AUTHORITIES H. Newberg, Attorney Fee Awards 2.01 at 28(1986) 9 Rule 1.5 of the Georgia Rules of Professional Conduct 10

7 Case 1:10-cv JOF Document 20 Filed 06/16/11 Page 7 of 29 I. INTRODUCTION Having succeeded in the goals of the litigation by ensuring that BlueLinx Holdings Inc. ("BlueLinx" or the "Company") shareholders had the material information necessary to make a fully informed decision in connection with the proposed acquisition of the Company by means of tender offer and rejecting the same Plaintiff Ajay Kajaria ("Plaintiff') now seeks an award of attorneys' fees commensurate with the benefits provided to the shareholder class. As set forth herein, Plaintiffs action produced a substantial benefit to BlueLinx's shareholders in the form of the disclosure of supplemental material information related to the Tender Offer (defined below). Specifically, Plaintiff caused BlueLinx to issue "Amendment No. 3" to the Amended Recommendation Statement (defined below). The disclosures in Amendment No. 3 provided material information to BlueLinx shareholders which was necessary for them to make an informed decision as to whether to tender their shares. In addition, given the substantial benefit already achieved, Plaintiff and his counsel respectfully request that the Court dismiss this action as moot. In this action, Plaintiffs counsel achieved a substantial benefit for BlueLinx's public shareholders, and did so skillfully, under urgent time demands, on a contingency basis. For these reasons, Plaintiff respectfully requests an award 1

8 Case 1:10-cv JOF Document 20 Filed 06/16/11 Page 8 of 29 of attorneys' fees and expenses in the amount of $175, for Faruqi & Faruqi, LLP and Holzer, Holzer & Fistel, LLC, the law firms that prosecuted this action on a contingent fee basis. II. BACKGROUND On July 21, 2010, defendant Steven F. Mayer ("Mayer"), himself a member of BlueLinx's Board of Directors ("Board"), wrote on behalf of Cerberus ABP Investor LLC ("CAI") to declare its intention to launch a tender offer for the outstanding BlueLinx shares that it did not own for $3.40 per share. Thereafter, on August 2, 2010, CAI commenced the tender offer at an offer price of $3.40 per share and filed a Schedule TO and Schedule 13E-3 with the SEC (the "Tender Offer"). As a result, on July 22, 2010, the Board formed a Special Committee of defendants Marchese, Schumacher, and Grant. Thereafter, BlueLinx and CAI engaged in certain discussions and negotiations culminating in the Special Committee unanimously voting on behalf of the Board and the Company to recommend that BlueLinx shareholders accept the Tender Offer at a higher price of $4.00 per share (the "Proposed Transaction"). On September 27, 2010, BlueLinx filed a Schedule 14D-9 Amended Recommendation Statement (the "Amended Recommendation Statement") with 2

9 Case 1:10-cv JOF Document 20 Filed 06/16/11 Page 9 of 29 the Securities & Exchange Commission ("SEC"), disclosing the Special Committee's recommendation. The Amended Recommendation Statement failed to provide the Company's shareholders with material information and/or provided them with materially misleading information thereby rendering the shareholders unable to make an informed decision regarding the tender of their shares. Following the announcement of the Proposed Transaction and the filing of the Amended Recommendation Statement, on September 30, 2010, Plaintiff filed his class action complaint ("Complaint") on behalf of himself and all holders of BlueLinx stock against BlueLinx, the members of its Board; CAI and Cerberus Capital Management, L.P. 2 ("Cerberus", collectively with BlueLinx, the Individual Defendants and CAI, are the "Defendants") alleging among other things, that the members of the Individual Defendants breached their fiduciary duties to BlueLinx shareholders by agreeing to sell the Company at an unfair price on unfair terms and without adequate disclosure of material information. Leventhal Aft'. at 7; See Complaint attached to Leventhal Aft'. as Exhibit A,!IT 1, 6-16, The 1 The Board is comprised of the following individuals: Bruce L.A. Carter, James A. Harper, David L. Hirsh, Lars Fruergaard Jorgensen, Jonathon S. Leff, David H. MacCallum, A Bruce Montgomery, Kurt Anker, Nielsen, Edward E. Penhoet, and Douglas E. Williams (collectively, the "Individual Defendants"). 2 Cerberus controls CAI. 3

10 Case 1:10-cv JOF Document 20 Filed 06/16/11 Page 10 of 29 Complaint alleged with particularity disclosure violations under state law as well as claims under Section 14(d)(4) and 14(e) of the Exchange Act. Plaintiff alleged the Amended Recommendation Statement failed to provide the Company's shareholders with material information and/or provided them with materially misleading information in violation of the Individual Defendants' duty of disclosure thereby rendering the shareholders unable to make an informed decision on whether to tender their shares in support of the Proposed Transaction. See Leventhal Aft'. at 7; Complaint at 1-4, 24-26, The Complaint also alleged that the Individual Defendants' breaches of their fiduciary duties were aided and abetted by BlueLinx and CAI. See Leventhal Aft'. at 7; Complaint at 1, 21-26, On October 1, 2010, Plaintiff filed a Motion to Expedite Proceedings, seeking the commencement of discovery on an expedited basis and the setting of a schedule for briefing of a preliminary injunction motion. See Leventhal Aft'. at 8. On October 5, 2010, this Court held a hearing on Plaintiffs Motion to Expedite Proceedings and denied Plaintiffs Motion to Expedite Proceedings (Docket 13) on the condition that BlueLinx amend its Amended Recommendation Statement to notify shareholders regarding the existence and location of written 4

11 Case 1:10-cv JOF Document 20 Filed 06/16/11 Page 11 of 29 materials prepared by BlueLinx's financial advisor in connection with the Tender Offer. Leventhal Alt at 9. As a result, on October 6, 2010, BlueLinx filed an Amendment No. 3 to the Amended Recommendation Statement ("Amendment No. 3") providing shareholders with the information ordered by the Court and thus conferring a substantial benefit to BlueLinx shareholders. On October 18, 2010, with all material information now available and a substantial benefit conferred upon BlueLinx shareholders by the information in Amendment No. 3, the Tender Offer failed and expired with an insufficient number of BlueLinx shareholders tendering their shares thus preventing the consummation the Proposed Transaction. Leventhal Aft'. at 11. On November 23, 2010, the parties reached agreement regarding a prospective schedule for the case requiring no answer or response by Defendants to Plaintiffs Complaint, and providing that Plaintiff would be able to file an application for fees and Defendants would reserve the right to oppose same. Leventhal Aft'. at 12. Plaintiffs counsel has attempted unsuccessfully to meet and confer with Defendants' counsel regarding a fee award for Plaintiffs counsel for the benefit 5

12 Case 1:10 -cv JOF Document 20 Filed 06/16/11 Page 12 of 29 conferred by Amendment No. 3. The parties have not been able to reach any agreement and the instant motion is therefore necessary. Leventhal Alt at 13. III ARGUMENT A. The Amendment No. 3 Produced A "Substantial Benefit" to BlueLinx Shareholders In filing this action, Plaintiff sought to ensure that BlueLinx' s public shareholders were provided with all of the material information necessary to make an informed decision as to the tender of their shares in the Tender Offer. On September 30, 2010, Plaintiff filed his Complaint that identified with particularity disclosure deficiencies contained in the Amended Recommendation Statement. On October 1, 2010, Plaintiff also filed a Motion to Expedite Proceedings Thereafter, on October 5, 2010, this Court held a hearing on Plaintiffs Motion for Expedited Proceedings and denied Plaintiffs Motion to Expedite Proceedings on the condition that BlueLinx amend its Amended Recommendation Statement to notify shareholders regarding the existence and location of written materials prepared by BlueLinx's financial advisor in connection with the Tender Offer that addressed the disclosure deficiencies highlighted in Plaintiffs Complaint. As a result, on October 6, 2010, BlueLinx filed an Amendment No. 3 to the Amended 6

13 Case 1:10-cv JOF Document 20 Filed 06/16/11 Page 13 of 29 Recommendation Statement providing shareholders with the information ordered by the Court and addressing Plaintiffs Complaint. See Leventhal Alt Exhibit B. It is indisputable that the Individual Defendants and BlueLinx issued the Amendment No. 3 solely as a result of this action. The dissemination of the curative disclosures vindicated a fundamental right of BlueLinx shareholders, namely, "the right to receive fair disclosure of the material facts necessary to cast a fully informed vote." In re Staples, Inc. S 'holders Litig., 792 A.2d 934, 960 (Del. Ch. 2001). 3 Importantly, courts have recognized the significance of this right and the efforts of plaintiffs to vindicate it by regularly compensating plaintiffs' counsel for obtaining these non-economic benefits in connection with a merger. See Tandycrafts, Inc. v. Inifio Partners, 562 A.2d 1162, 1165 (Del. 1989) ("[Al heightened level of corporate disclosure, if attributable to the filing of a meritorious suit, may justify an award of counsel fees."); Wis. Inv. Bd. v. Bartlett, No , 2002 Del. Ch. LEXIS 42, at *17 (Del. Ch. Apr. 9, 2002) ("Although no monetary benefit was created, I do agree that a therapeutic benefit was created by the supplemental disclosures."), aff 'd, 808 A.2d 1205 (Del. 2002). 3 Plaintiffs research has produced no Georgia precedent directly addressing the issue of the award of attorneys' fees under the corporate context presented here. Plaintiff urges the Court to be guided instead by the relevant and well established precedent of the Delaware Court on this issue. 7

14 Case 1:10-cv JOF Document 20 Filed 06/16/11 Page 14 of 29 The curative disclosures in Amendment No. 3 included critical information about the underlying methodologies, key inputs and multiples relied upon and observed by BlueLinx's financial advisor, Citadel Securities LLC, so that shareholders could properly evaluate the Proposed Transaction and assess the credibility of the various analyses performed by Citadel Securities LLC and relied upon by the Board in recommending that shareholders tender their shares in favor of the Proposed Transaction. The curative disclosures added to the total mix of information available to BlueLinx shareholder who ultimately decided not to tender their shares in sufficient numbers to allow the Tender Offer and the Proposed Transaction to go forward. B. Plaintiffs Counsel are Entitled to an Award of Attorneys' Fees and Expenses A plaintiff who has successfully prosecuted actions on behalf of groups of persons should recover litigation fees and expenses. See, e.g., Georgia Veneer & Package Co. v. Florida Nat Bank, 32 S.E.2d 465 (Ga. 1944) (awarding fees where the plaintiffs prevented or stopped corporate fraud). Courts have provided for the award of attorneys' fees based upon "the equitable power of the courts under the doctrines of quantum meruit, unjust enrichment, and... what has become known as the 'substantial' or 'common benefit' doctrine." Camden I Condominium Association, Inc. v. Dunkle, 946 F.2d 768, 771 (11th Cir. 1991) (internal citations 8

15 Case 1:10-cv JOF Document 20 Filed 06/16/11 Page 15 of 29 omitted) (followed by Friedrich v. Fidelity Nat'l Bank, 545 S.E.2d 107 (Ga. App. Ct. 2001). Under the substantial or common benefit doctrine, fee reimbursement is permitted: (1) when litigation indirectly confers substantial monetary or nonmonetary benefits on members of an ascertainable class, and (2) when the court's jurisdiction over the subject matter of the suit, and over a named defendant who is a collective representative of the class, makes possible an award that will operate to spread the costs proportionately among class members. Camden I, 946 F.2d at 771 (quoting H Newberg, Attorney Fee Awards 2.01 at (1986)); see also Mills v. Electric Auto-Lite Co., 396 U.S. 375 (1970) 4 ; Kenny A. v. Perdue, 454 F. Supp. 2d 1260, (N.D. Ga. 2006) (noting that common benefit "recovery has generally been permitted in only two types of cases: suits by shareholders against their corporations and suits by union members against their union.") (reversed on other grounds). The determination of whether to award attorneys' fees is vested in the Court's sound discretion. See id. Courts consider the following twelve factors in determining fee awards in shareholder actions: 4 Delaware courts also strongly favor the allowance of attorneys' fees and expenses when, as here, the plaintiff's counsel has produced a substantial benefit for the class of shareholders. In class actions, plaintiffs counsel is entitled to an award of attorneys' fees and expenses when their litigation efforts achieve a benefit that inures to all members of the class. Gottlieb v. Heyden Chem. Corp., 105 A.2d 461 (Del. 1954); Allied Artists Pictures Corp. v. Baron, 413 A.2d 876 (Del. 1980). 9

16 Case 1:10-cv JOF Document 20 Filed 06/16/11 Page 16 of 29 (1) the time and labor required; (2) the novelty and difficulty of the questions involved; (3) the skill requisite to perform the legal service properly; (4) the preclusion of other employment by the attorney due to acceptance of the case; (5) the customary fee; (6) whether the fee is fixed or contingent; (7) time limitations imposed by the client or the circumstances; (8) the amount involved and the results obtained; (9) the experience, reputation, and ability of the attorneys; (10) the "undesirability" of the case; (11) the nature and the length of the professional relationship with the client; and (12) awards in similar cases. Camden I, 946 F.2d at 772 (citing Johnson v. Georgia Highway Express, Inc., 488 F.2d 714, (5th Cir. 1974)); see also Averett v. Permanent General Assurance Corp., No cv-50728, 2003 WL (Super. Ct. Sept. 26, 2003) (Order) (applying the Johnson factors). 5 Based upon a consideration of all of the aforementioned factors, the fee sought by Plaintiffs counsel in this case is reasonable and should be approved. Here, Plaintiff filed a meritorious suit that challenged the Proposed Transaction and prosecuted the litigation zealously, which was the direct cause in Defendants' providing the curative disclosures in Amendment No. 3 after obtaining the Court order on October 5, 2010, thereby conferring a "substantial benefit" on the class of shareholders. Accordingly, Plaintiffs counsel is entitled to 5 These factors are reflected in Rule 1.5 of the Georgia Rules of Professional Conduct and Rule 1.5 of the American Bar Association's Model Rules of Professional Conduct. 10

17 Case 1:10-cv JOF Document 20 Filed 06/16/11 Page 17 of 29 an award of attorneys' fees under the "common fund" doctrine expanded to the "substantial benefit" doctrine. 1. The Amount Involved and the Results Obtained The benefit achieved by the litigation is the factor accorded the greatest weight in determining the fee award. Here, Plaintiff's counsel's efforts produced material benefits for the BlueLinx shareholders, namely, the disclosure of supplemental material information that aided BlueLinx shareholders in making an informed decision regarding the Proposed Transaction. Full and accurate disclosure was very valuable in this case, as BlueLinx's public shareholders declined to approve the Proposed Transaction. See, e.g., In re Pure Resources, Inc. S'holders Litig., 808 A.2d 421, 450 (Del. Ch. 2002). As a consequence of Plaintiffs counsel's efforts, the public shareholders were provided with information material to the important decision confronting them. As part of the additional information set forth in the Amendment No. 3, BlueLinx's shareholders received information concerning the valuation and analyses performed by Citadel Securities LLC. In short, Plaintiffs counsel's efforts litigating the claims on behalf of BlueLinx's public shareholders resulted in a significant measure of protection and benefit to the Class. 11

18 Case 1:10-cv JOF Document 20 Filed 06/16/11 Page 18 of 29 Courts recognize that curative disclosures confer a compensable benefit on the class such that Plaintiff's counsel can successfully make a claim for fees and expenses. See, e.g., In re FLS Holdings, Inc. S'holders Litig., C.A. No , 1993 Del. Ch. LEXIS 57, at *16 (Del. Ch. April 2, 1993) (explaining that "[i]mproved disclosures may certainly prove beneficial to class members and may constitute consideration of a type which will support a settlement of claims."). The value of timely, meaningful disclosure cannot be overstated. Indeed, the timely disclosure of the information in the supplement was presumably of greater value to the class than any potential award of damages based on the failure to disclose the same information, as such information is of the greatest utility when it is available in a timely manner to inform the stockholders' decision making process. Considering all the circumstances presented, I have no difficulty concluding that the disclosures made here constitute adequate consideration for the settlement of the claims asserted and adequately support the fee requested. In re Talley Indus., Inc. S'holders Litig., C.A. No , 1998 Del. Ch. LEXIS 53, at *46 (Del. Ch. April 9, 1998). As noted above, full and accurate disclosure was particularly significant in this case because BlueLinx's shareholders faced an important decision as to whether to tender their shares as part of the Tender Offer. Thus, Plaintiffs counsels' services in providing the shareholders with information about key facts were of material value to the shareholders. 12

19 Case 1:10-cv JOF Document 20 Filed 06/16/11 Page 19 of 29 Plaintiff submits that the benefits conferred on BlueLinx's shareholders fully warrant an award of attorneys' fees and expenses in the amount requested. 2. The Time and Labor Required Plaintiffs application for fees is also supported by the substantial amount of time and effort required to secure substantial relief for BlueLinx shareholders. "Although hours claimed or spent on a case should not be the sole basis for determining a fee, they are a necessary ingredient to be considered." Johnson v. Georgia Highway Exp., Inc., 488 F.2d 714, 717 (5th Cir. 1974) (citing Electronics Capital Corp. v. Sheperd, 439 F.2d 692 (5th Cir. 1971)). Plaintiff's counsel's services to obtain the benefits achieved through the litigation required a high level of experience and expertise in shareholder litigation and the ability to provide expert services against defendants represented by highly regarded defense firms. These efforts included pre-suit investigation of the facts and careful analyses of the complex and detailed Proposed Transaction; drafting of the Complaint; reviewing public documents; preparing a motion for expedited proceedings; preparing for oral argument regarding the motion for expedited discovery; and conducting thorough legal research concerning the principal issues in the case. Leventhal Aft'. at

20 Case 1:10-cv JOF Document 20 Filed 06/16/11 Page 20 of 29 Plaintiffs counsel have collectively spent over one hundred fifty hours litigating this action, and incurred $ in expenses in prosecuting this action on behalf of BlueLinx's shareholders. Leventhal Aft'.!IT 16-18, Exhibits E-G. The subject matter of the case was complex and required an extensive effort by Plaintiffs counsel to master the complex financial information and facts. The Amendment No. 3 was obtained only because of Plaintiffs counsel's successful effort to develop and master the facts in an expeditious manner and successfully litigate the issues before this Court. 3. The Novelty and Difficulty of the Questions Involved Shareholder litigation challenging corporate mergers is extremely difficult and complex. United Vanguard Fund, Inc. v Takecare, Inc., 727 A.2d 844, 855 (Del. Ch. 1998). Moreover, each litigation is unique with the terms of the merger agreements, the substance of the financial advisors' analysis, and the prevailing market conditions giving rise to the actual transaction differing case to case. Accordingly, such litigation must be fought by experienced and informed attorneys who are capable of obtaining relief for shareholders on a compressed schedule. Here, Plaintiffs counsel had to digest and analyze complex financial analyses over a short time frame in order to both identify the shareholders' claims and effectively 14

21 Case 1:10-cv JOF Document 20 Filed 06/16/11 Page 21 of 29 prosecute them. This factor, therefore, also weighs in favor of approving the fee application. 4. The Skill Requisite to Perform the Legal Service Properly As set forth above, litigation challenging issues arising out of mergers and acquisitions transactions is highly complex and requires a substantial amount of skill to both identify and prosecute potential claims. In order to provide adequate representation to Plaintiff and the rest of the BlueLinx shareholders, Plaintiffs counsel must be able to read, absorb, and understand a vast amount of financial and technical data to be able to ascertain the adequacy of consideration being offered by the purchaser (here, CAI) as well as the sufficiency of disclosures made by the target company (here, BlueLinx) to its shareholders. Moreover, in light of the compressed time frame due to the impending Tender Offer expiration, it was necessary to act with swift precision to be able to obtain meaningful and timely relief for the shareholders. This factor, therefore, weighs in favor of approving Plaintiffs fee application. 5. Whether the Fee Is Fixed or Contingent The contingent nature of the fee also must be taken into account in awarding attorneys' fees. See Camden I, 946 F.2d at 772; see also In re First Interstate Bancorp Consol. S'holder Litig., 756 A.2d 353 (Del. Ch. 1999). When Plaintiffs 15

22 Case 1:10-cv JOF Document 20 Filed 06/16/11 Page 22 of 29 counsel undertook representation in this case, it was with the expectation that they would devote many hours of hard work to the prosecution of a difficult case, without any assurance of receiving fees or even reimbursement for their out-ofpocket expenses unless they could prevail in this action. Leventhal Aft'. at 14. Plaintiffs counsel assumed a considerable risk that they might not prevail after having spent a considerable amount of time, effort, and resources. This factor strongly supports approving a request for fees. 6. Time Limitations Imposed by the Client or the Circumstances "Priority work that delays the lawyer's other legal work is entitled to some premium." Johnson, 488 F.2d at 718. In litigation arising out of mergers and acquisitions, Plaintiffs counsel are forced to work to identify shareholders' potential claims and take action to remedy Defendants' alleged violations as quickly as possible so as to afford meaningful relief prior to the fast-approaching Tender Offer expiration. Plaintiffs counsel is, therefore, faced with extreme time limitations, which further supports the application. 7. The Experience, Reputation, and Ability of the Attorneys Another factor the Court should consider on an application for counsel fees is the standing and ability of counsel. Plaintiffs counsel are some of the most experienced attorneys in the field of shareholder class and derivative litigation, and 16

23 Case 1:10-cv JOF Document 20 Filed 06/16/11 Page 23 of 29 their reputations have been the subject of favorable comments by the courts of this state and other state and federal courts. 6 The standing of opposing counsel may also be considered in determining an allowance of counsel fees. Defendants are represented by experienced, skillful and well-respected law firms who vigorously defended their clients' interests. The ability of opposing counsel enhances the significance of the result Plaintiffs counsel was able to achieve. 8. Awards in Similar Cases Plaintiff seeks a fee in the amount of $175,000, which is modest and well below the range of fees recently awarded by courts in similar cases. See, e.g., In re Plains Resources, Inc. S 'holders Litig., C.A. No. 071-N, 2005 Del. Ch. LEXIS 12 (Del. Ch. Feb. 4, 2005) ($1,100,000.00); In re Golden State Bancorp, Inc. S 'holders Litig., C.A. No , 2000 Del. Ch. LEXIS 8 (Del. Ch. Jan. 7, 2000) ($500,000.00); In re Countrywide Corporation Shareholders Litigation, C.A. No VCN (Del. Ch. Aug. 28, 2009) (Letter Opinion) ($750,000), Virgin Islands Gov't Employees' Ret. Sys. v. Alvarez, C.A. No VCS (Del. Ch. Dec. 2, 2008) (Order) ($1,250,000); Globis Capital Partners, LP v. SafeNet, Inc., C.A. No VCS (Del. Ch. Dec. 20, 2007) (Order) ($1,200,000); In re Jacuzzi Brands, Inc. S 'holder Litig., C.A. No (Del. Ch. June 26, 2007) (Order) ($725,000), In 6 A copy of Plaintiffs counsel's resumes are annexed to the Leventhal Aft'. as Exhibits C-D. 17

24 Case 1:10-cv JOF Document 20 Filed 06/16/11 Page 24 of 29 re Maxus Energy Corp. S 'holders Litig., C.A. No (Del. Ch. Sept. 12, 1995) (Order) ($800,000), Gilmartin v. Adobe Resources Corp., C.A. No (Del. Ch. June 29, 1992) (Order) ($740,393). If anything, the requested fee is, in fact, less than what numerous other courts have awarded. In fact, recently a Delaware Court awarded plaintiffs' counsel a fee in the amount of $75,000 for one simple disclosure added to the recommendation statement schedule 14D-9 in a merger transaction as a result of the merger litigation. See Sauer Danffoss Inc. Shareholder Litigation, Consl C.A. No 5162 VCL (DE. Ch. Ct. April 29, 2011) (granting a $75,000 fee award for one disclosure correcting an errant description of the 52-week high and related measuring period for the trading price of the Company's common stock). The value of timely, meaningful disclosures cannot be overstated. As the Delaware Chancery Court has stated: Indeed, the timely disclosure of the information in the supplement was presumably of greater value to the class than any potential award of damages based on the failure to disclose the same information, as such information is of the greatest utility when it is available in a timely manner to inform the stockholders' decision making process. Considering all the circumstances presented, I have no difficulty concluding that the disclosures made here constitute adequate consideration for the settlement of the claims asserted and adequately support the fee requested. 18

25 Case 1:10-cv JOF Document 20 Filed 06/16/11 Page 25 of 29 In re Talley, 1998 Del. Ch. LEXIS 53, at *46. As noted above, full and accurate disclosure was particularly significant in this case because BlueLinx shareholders faced an important decision as to whether to tender their shares in the Tender Offer. Thus, Plaintiffs counsel's services in providing the shareholders with information about key facts were of material value. Moreover, Plaintiffs counsel has expended $103, in attorney time, and incurred $ in unreimbursed expenses in connection with this litigation through October 6, 2010, the day the substantial benefit was achieved for BlueLinx shareholders. Leventhal Aft'. at!it 16-18; see time and expense reports for Faruqi and for Holzer at Leventhal Aft'. Exhibits E-G. The requested fee award of $175,000 is approximately a 1.69 times multiple of Plaintiffs counsel's lodestar of $103, which is well within the range of multiples generally awarded in class actions throughout the country. See Stop & Shop Supermarket Co. v. Smithkline Beecham Corp., No , 2005 U.S. Dist. LEXIS 9705, at *60 (E.D. Pa. May 19, 2005) (finding 15.6 multiplier reasonable); Woosley v. State of California, 6 Cal. App. 4th 343, 348, (1990) (awarding a 13 multiplier); In re Rite Aid Corp. Sec. Litig., 146 F. Supp. 2d 706, (E.D. Pa. 2001) (25% fee representing multiplier); In re Charter Communications, Inc., Sec. Litig., 19

26 Case 1:10-cv JOF Document 20 Filed 06/16/11 Page 26 of 29 MDL No. 1506, 2005 U.S. Dist. LEXIS 14772, at *21 (E.D. Mo. June 30, 2005) (utilizing 5 5 multiplier); Maley v. Del Global Techs. Corp., 186 F. Supp. 2d 358, 371 (S.D.N.Y. 2002) (awarding a "modest" multiplier of 4.65); In re RJR Nabisco, Inc. Sec. Litig., MDL No. 818, 1992 U.S. Dist. LEXIS 12702, at *1516 (S.D.N.Y. Aug. 24, 1992) (awarding fee of $17.7 million, a multiplier of 6); Weiss v. Mercedes-Benz of N. Am., Inc., 899 F. Supp. 1297, 1304 (D.N.J. 1995) (awarding fee resulting in 9.3 multiplier); Cosgrove v. Sullivan, 759 F. Supp. 166, 167 n.1 (S.D.N.Y. 1991) (multiplier of 8.74); State of California v. Meyer, 174 Cal. App. 3d 1061, 1073 (1985) ("Federal cases disclose the use of multipliers of from one to five times the hourly rate. Here, landowners' counsel used four."). Thus, Plaintiff submits that a multiplier of 1.69 to counsel's lodestar, and a corresponding fee award of $175,000 including expenses is reasonable. Further, Plaintiff submits that the benefits conferred on BlueLinx's shareholders fully warrant an award of attorneys' fees and expenses in the amount requested. C. BlueLinx is Responsible for the Fee Award Throughout the country and in Delaware, courts have consistently recognized that in cases such as this where no common fund is created the defendant corporation or its successor should be responsible for plaintiffs attorneys' fees. First Interstate, 756 A.2d at ; Mills, 396 U.S. 375; 20

27 Case 1:10-cv JOF Document 20 Filed 06/16/11 Page 27 of 29 Fletcher v. A.J. Indus., Inc., 266 Cal. App. 2d 313 (1968); Lewis v. Anderson, 692 F.2d 1267 (9th Cir. 1982). In First Interstate, the court explained: [T]hat First Interstate, or its successor by merger, should be held responsible for the payment of fees to plaintiffs' counsel.... [F]ee shifting is an equitable device and, as the circumstances presented here demonstrate, is not properly or easily confined to rigid, predictable circumstances. Here, it is more fair to require First Interstate to pay a fee to plaintiffs' counsel than to deny them any fee at all. Because no other source of payment is available, this court will regard the assets of First Interstate as "being a fund belonging to the stockholders in common" from which it is appropriate to pay plaintiffs' counsel a fee. 756 A.2d at 362. The U.S. Supreme Court, in fact, has similarly held that attorneys' fees and expenses should be borne by corporate defendants in situations such as this Mills, 396 U.S. at The Court in Mills stated: Id. We agree with the position taken by petitioners,... that petitioners, who have established a violation of the securities laws by their corporation and its officials, should be reimbursed by the corporation or its survivor for the costs of establishing the violation. Here, Plaintiff initiated an action and the end result was a substantial benefit for BlueLinx shareholders in the form of the additional disclosures contained in the Amendments No. 3 to the Amended Recommendation Statement, which enabled BlueLinx shareholders to make fully-informed decisions regarding the tender of 21

28 Case 1:10-cv JOF Document 20 Filed 06/16/11 Page 28 of 29 their shares in the Tender Offer. Accordingly, BlueLinx bears the responsibility for the fee award to Plaintiffs counsel. IV. CONCLUSION For the foregoing reasons, Plaintiff respectfully requests that an award of $175,000 for fees and expenses be granted and the action be dismissed as moot. A proposed Order granting Plaintiff's requested relief is attached hereto as Exhibit A. Dated: June 16, 2011 OF COUNSEL: HOLZER HOLZER & FISTEL, LLC Is! Marshall P. Dees Corey D. Holzer Georgia Bar Number: Michael I. Fistel, Jr. Georgia Bar Number: Marshall P. Dees Georgia Bar Number: William W. Stone Georgia Bar Number: Ashford Center North, Suite 300 Atlanta, Georgia Telephone: Facsimile FARUQI & FARUQI, LLP David H. Leventhal* Juan E. Monteverde 369 Lexington Ave., 10th Floor New York, NY Tel: Fax: * admitted pro hac vice 22

29 Case 1:10-cv JOF Document 20 Filed 06/16/11 Page 29 of 29 CERTIFICATE OF SERVICE AND TYPE Pursuant to Local Rule 7.1D, the undersigned counsel for Plaintiff hereby certifies that the forgoing has been prepared with a font size and point selection (Times New Roman, 14 pt.) which was approved by the Court, and that on this 16 th day of June, 2011, the forgoing was electronically filed with the Clerk of Court using the CM/ECF system. Is/Marshal/P. Dees Marshall P. Dees Georgia Bar Number:

30 Case 1:10-cv JOF Document 20-1 Filed 06/16/11 Page 1 of 4 UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF GEORGIA AJAY KAJARIA, Individually and On Behalf of All Others Similarly Situated, Case No. 1:10-cv JOF Plaintiff, v. HOWARD S. COHEN, RICHARD S. GRANT, GEORGE R. JUDD, CHARLES H. McELREA, RICHARD B. MARCHESE, STEVEN F. MAYER, ALAN H. SCHUMACHER, MARK A. SUWYN, ROBERT G. WARDEN, M. RICHARD WARNER, BLUELINX HOLDINGS INC., CERBERUS ABP INVESTOR LLC and CERBERUS CAPITAL MANAGEMENT, L.P., Defendants. [PROPOSED] ORDER WHEREAS, this Action was brought as a stockholder class action by plaintiff Ajay Kararia ( Plaintiff ) on behalf of the holders of BlueLinx Holdings Inc. ( BlueLinx or the Company ) common stock against the Company, its Board of Directors ( Board ), and others arising out of alleged breaches of fiduciary duties and disclosure violations in connection with the sale of BlueLinx

31 Case 1:10-cv JOF Document 20-1 Filed 06/16/11 Page 2 of 4 to Cerberus ABP Investor LLC ( CAI ) by means of a tender offer (the Tender Offer ). WHEREAS, on September 30, 2010, Plaintiff filed his complaint alleging, among other things, that the Board members had breached their fiduciary duties to BlueLinx shareholders by agreeing to sell the Company at an unfair price on unfair terms and issuing a Schedule 14D-9 Recommendation Statement (the Amended Recommendation Statement ) with the Securities and Exchange Commission ( SEC ) on September 27, 2010 that omitted material information BlueLinx was required to disclose to its shareholders in order for them to make a fully-informed decision whether to accept, or reject, the consideration offered in the Tender Offer. WHEREAS, on October 1, 2010, Plaintiff filed a Motion to Expedite Proceedings, seeking the commencement of discovery on an expedited basis and the setting of a schedule for briefing of a preliminary injunction motion. WHEREAS, on October 5, 2010, this Court held a hearing on Plaintiff s Motion to Expedited Proceedings and denied the motion on the condition that BlueLinx amend its Amended Recommendation Statement to notify shareholders regarding the existence and location of written materials prepared by BlueLinx s financial advisor in connection with the Tender Offer. 2

32 Case 1:10-cv JOF Document 20-1 Filed 06/16/11 Page 3 of 4 WHEREAS, on October 6, 2010, BlueLinx filed an Amendment No. 3 to the Amended Recommendation Statement providing shareholders with the information ordered by the Court and thus conferring a substantial benefit to BlueLinx shareholders. WHERAS, on October 18, 2010 the Tender Offer failed and expired with an insufficient number of BlueLinx shareholders tendering their shares preventing the consummation the Proposed Transaction. NOW, upon Plaintiff s Motion for an Award of Attorneys Fees and Expenses for Benefit Conferred and Motion for Dismissal of Action as Moot (the Motion ), and after review and consideration of the Motion and the exhibits in support thereof, including attorney time and expense reports, firm resumes for Plaintiff s counsel, and all prior pleadings, argument and proceedings, and after due deliberation: 1. Counsel for Plaintiff are awarded attorneys fees (inclusive of all expenses and disbursements) in the amount of $, which sum the Court finds to be reasonable and appropriate pursuant to the substantial benefit rule, and that Defendants and/or their insurer shall cause such amounts to be paid to Faruqi & Faruqi, LLP, within thirty days of the entry of this Order. 3

33 Case 1:10-cv JOF Document 20-1 Filed 06/16/11 Page 4 of 4 2. The Action is dismissed as moot. IT IS SO ORDERED. Dated this day of, 2011 PRESENTED BY: HONORBLE J. OWEN FORRESTER, U.S.D.J. HOLZER HOLZER & FISTEL, LLC Corey D. Holzer Georgia Bar Number: Michael I. Fistel, Jr. Georgia Bar Number: Marshall P. Dees Georgia Bar Number: William W. Stone Georgia Bar Number: Ashford Center North, Suite 300 Atlanta, Georgia Telephone: Facsimile: and- FARUQI & FARUQI, LLP David H. Leventhal* 369 Lexington Avenue, 10th Floor New York, New York Tel: Fax: dleventhal@faruqilaw.com Attorneys for Plaintiff *admitted pro hac vice 4