In the recent decision of Louisiana Municipal Employees’ Retirement System v. Black, C.A. No. 9410-VCN (Del. Ch. Feb. 19, 2016), the Delaware Court of Chancery awarded a mootness fee for disclosures and changes to deal protection measures in a failed merger.
By way of background, Plaintiff Louisiana Municipal Police Employees’ Retirement System (“Plaintiff” or “LAMPERS”) moved for an award of fees and expenses to its attorneys for their efforts in challenging Defendant Comcast Corp.’s attempt to acquire Defendant Time Warner Cable Inc. (“TWC”). LAMPERS accused TWC’s board of directors (the “Board”) of breaches of fiduciary duty based on the potential merger between Comcast and TWC that ultimately failed (the “Comcast Deal”); other defendants were sued for aiding and abetting those breaches.
Before the Comcast deal fell through, the parties had negotiated a settlement agreement, conditioned on the deal’s consummation, that purported to resolve among other things the issue of attorney’s fees.
Because the Comcast Deal never happened and the settlement does not control, LAMPERS requested a “mootness” fee award to its attorneys for securing some benefits of disputed value for the putative class of TWC shareholders before the deal collapsed under the weight of regulatory concerns.
The Court found that in light of the “small tweaking of the deal protection measures and the providing of some additional disclosures, which the Court accepts as material, even if not much more than material, the Court is persuaded that a fair and reasonable fee for this kind of effort to moot the litigation would be, especially at the time the mootness was achieved, a comprehensive fee in the range of $325,000 to $500,000.”
The opinion is useful precedent post-Trulia (discussed here), demonstrating the Court’s willingness to approve mootness fee applications for adjudicating disclosure claims. In granting fees to Plaintiff’s counsel, the Court found that the benefits counsel achieved for the putative class justified a fee award. However, Vice Chancellor Noble diminished the fees to an amount commensurate with the benefits achieved.