U.S. District Judge Colm Connolly at the official investiture ceremony for new U.S. District judge for the District of Columbia Rudolph Contreras. June 20, 2012. Photo: Diego M. Radzinschi/National Law Journal

U.S. District Judge Colm Connolly of the District of Delaware ruled in favor of an energy software company and its executives, and granted them yet-unspecified attorney fees and expenses, in a long-running shareholder dispute.

Connolly's 51-page opinion Wednesday told the story of a company valued at as much as a half-billion dollars—C3 Inc.—a founder who was attacked by an elephant on a safari in Africa—Thomas Siebel—and a colleague who filled in during his convalescence—David Schmaier.

Along the way, around 2012, they made a deal to merge C3 with a smaller energy software company, Efficiency 2.0, known as E2. It was a stock-for-stock merger based on a calculation of the larger company's value at $500 million, and the smaller one at $50 million.

"Valuing a private company" is "a notoriously difficult thing" to do, Connolly said, quoting another businessman who was not a party to the lawsuit, which was filed by E2 and three of its investors over the valuation. They alleged securities fraud, common law fraud and breach of contract.

Eric Blattman is the lead plaintiff and the largest investor in E2. They were represented by Stephen D. Raber, Jonathan M. Landy, John McNichols, Kyle E. Thomason and Brian P. Hagerty of Williams & Connolly in Washington, D.C., and Timothy Jay Houseal and William E. Gamgort of Young Conaway Stargatt & Taylor, local counsel.

The E2 attorneys did not have a response to the ruling Thursday.

On the winning side are Siebel, Schmaier and C3. They were represented by Michael B. Carlinsky, Kevin P.B. Johnson, Edward J. Defranco, Joseph Milowic III, David Myre, John H. Chun and Jesse Bernstein from Quinn Emanuel Urquhart & Sullivan and Kenneth J. Nachbar and Lauren Neal Bennett from Morris, Nichols, Arsht & Tunnell, local counsel.

The decision is noteworthy because this was one of the very rare 10(b) cases to go to trial, Carlinsky said in an email Thursday. Section 10(b) of the Securities Exchange Act of 1934 makes it unlawful to "use or employ, in connection with the purchase or sale of any security" a "manipulative or deceptive device or contrivance in contravention of such rules and regulations as the [SEC] may prescribe."

"Plaintiffs allege that Siebel and Schmaier made false oral representations that C3 was worth $500 million and that Defendants falsely represented in the Proposed Terms and Letter of Intent and the Merger Agreement that C3 was worth $500 million," Connolly wrote. "The record evidence proves otherwise."

After finding for the defendants on all counts, the judge ordered the plaintiffs to pay "reasonable attorneys' fees, costs, and disbursements."