A recent NLJ story “Staples, Office Depot Lawyers Resist Demands for Fees in Merger Case,” reports that consumer protection lawyers for Pennsylvania and the District of Columbia were mere spectators as federal regulators challenged Staples’ proposed $6.3 billion purchase of Office Depot and should not be entitled to tens of thousands of dollars in legal fees, the companies told a federal judge in Washington.
Lawyers for the companies said a combined award of $175,000 for Pennsylvania and D.C. would deliver an “unprecedented windfall” for two offices that took a backseat role in the Federal Trade Commission’s case to block the tie-up of the nation’s two largest office supply chains.
Office Depot, represented by Simpson, Thacher & Barlett, and Staples, represented by Weil, Gotshal & Manges, argued that Pennsylvania and D.C.’s work was duplicative, poorly documented and “largely spent on non-determinative issues.” They also said it was unclear “what they worked on” with any specificity.
“To our knowledge, the award moving plaintiffs now seek is unprecedented: no plaintiff has ever even sought, much less been granted, such an award in any preliminary injunction action under” the FTC Act, lawyers for Staples and Office Depot wrote in a court filing on June 10.
Pennsylvania and D.C. requested reimbursement for their legal expenses on May 24, two weeks after U.S. District Judge Emmet Sullivan granted a preliminary injunction that blocked the proposed merger. Staples and Office Depot abandoned the $6.3 billion deal after the ruling.
Sullivan sided with the FTC on every key point of the case, agreeing that the combination of the two office supply chains would hurt competition in the market for sales to large corporate customers.
The Pennsylvania attorney general’s office requested $142,548, the District of Columbia $33,547—totals that amounted to a small fraction of the $250 million breakup fee that Staples paid Office Depot. Both offices had participated in the FTC’s challenge of Sysco Corp.’s proposed acquisition of U.S. Foods, which was scuttled last year. In that case, however, Pennsylvania and D.C. did not request attorney’s fees.
“Tellingly, moving plaintiffs cite no case where a state co-plaintiff was awarded attorneys’ fees in a Section 13(b) case,” lawyers for Office Depot and Staples said.
A spokesman for the D.C. attorney general’s office did not immediately respond on Monday to a request for comment. Jeffrey Johnson, a spokesman for the Pennsylvania attorney general’s office, said, “We obviously disagree with that viewpoint. We expect to elaborate on our position in our reply brief.”
Last month, Johnson said the office did not seek fees in the Sysco antitrust case because several other attorneys general were involved and Pennsylvania’s office played a less prominent role.
A spokesman for the D.C. attorney general told The National Law Journal recently that the request for nearly $35,000 amounted to “small potatoes here for what was a significant amount of work.”