Fee Dispute Hotline
(312) 907-7275

Assisting with High-Stakes Attorney Fee Disputes

The NALFA

News Blog

Court Tosses Mootness Fee Request in Microsoft Merger Case

February 8, 2022 | Posted in : Billing Record / Entries, Fee Award Factors, Fee Denial, Fee Doctrine / Fee Theory, Fee Entitlement / Recoverability, Fee Request, Hourly Rates, Hours Billled, Mootness Fees

A recent Law 360 story by Dean Seal, “Court Boots Mootness Fee Bid in Microsoft Merger Challenge,” reports that a New York federal judge denied Monteverde & Associates PC's $250,000 fee request for representing an investor whose challenge to Nuance Communications Inc.'s $19.7 billion acquisition by Microsoft wasn't found to have benefited other Nuance shareholders.  U.S. District Judge J. Paul Oetken issued a brief order rejecting the firm's motion for what is commonly referred to as a "mootness fee," siding with Nuance's argument that investor Albert Serion hadn't met his burden of showing that his suit, one of several challenging disclosures in the proxy statement for Nuance's merger, "conferred a substantial benefit on Nuance shareholders."

Monteverde had argued that its suit prompted Nuance to disclose certain previously withheld metrics used by financial adviser Evercore Group LLC when doing a comparative analysis of Nuance and its peer companies, but the judge said the Nuance proxy statement already provided investors with a detailed summary of that analysis.  "Numerous courts have concluded that prompting disclosure of underlying valuation metrics does not confer a substantial benefit on shareholders and that their disclosure is not required by law," the order said.

The law firm had also claimed that it spurred Nuance to disclose price targets from research analysts that were previously withheld, but Judge Oetken said the range of price targets that were already included in the proxy statement "provides a fair summary of Evercore's work and '[q]uibbles with a financial advisor's work simply cannot be the basis of a disclosure claim.'"

The order will be warmly welcomed by opponents of mootness fees, a controversial merger litigation practice in which plaintiff firms file objections to mergers and other large-scale transactions, many on the premise of seeking additional disclosures, and then request fee awards after defendant companies "moot" the investors' allegations by providing those additional disclosures.  Nuance, which specializes in tools that enable speech recognition and transcription services for doctor's offices, slammed the law firm's fee request last fall as a "demand to be compensated lavishly for filing a meritless copy-cat lawsuit."

In its opposition to the fee bid, Nuance said the firm didn't submit billing records but had conceded that it put in less than 100 hours of work on the case, meaning its $250,000 request would come out to a minimum $2,500 hourly rate.

The firm represents investors who appealed the decision to the Seventh Circuit and argued in April 2020 that the district court has no jurisdiction to rescind attorney fees for claims that have been voluntarily dismissed.  The federal appellate court has not yet rendered a ruling in the case, according to court records.