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Feb. 22 — Attorneys representing a pension fund challenging Comcast Corp.'s attempt to acquire Time Warner Cable Inc. are entitled to a $144,375 “mootness” fee award for their efforts in obtaining additional disclosures and a change to a deal protection measure, the Delaware Chancery Court ruled Feb. 19.
In a letter opinion, Vice Chancellor John W. Noble rejected the investor's argument that the efforts of its primary counsel, Block & Leviton LLP, justified an award of $647,500—35 percent of a $1.85 million overall fee award.
The court found that “in light of the small tweaking of deal protection measures” and the provision of additional disclosures, the overall fair and reasonable fee should be between $325,000 and $500,000. The court reached its ultimate award by multiplying the midway point of the two amounts—$412,500—by the 35 percent share.
In Delaware, plaintiffs' attorneys may seek an award of fees and costs where the claims asserted by their clients are effectively mooted by the entity against whom the claims are alleged. Observers have suggested that such “mootness” fees may be a recourse for plaintiffs' attorneys in the wake of In re Trulia Inc. Stockholder Litig., a case in which the Delaware Chancery Court said it would more closely scrutinize disclosure-only settlements of deal litigation (.
In the Feb. 19 ruling, the court observed that mootness dismissals don't pose “the same sort of systemic concerns as court-approved disclosure settlements.”
In the underlying lawsuit, the Louisiana Municipal Police Employees' Retirement System alleged that Time Warner Cable directors breached their fiduciary duties in their attempt to sell the company and that Comcast aided and abetted those breaches.
Before the companies' merger fell apart amid regulatory opposition , the plaintiff and the defendants agreed to a proposed settlement that was conditioned upon the deal completion. In connection with the settlement negotiations, the defendants agreed to file an amended proxy statement with additional disclosures and reduce from five to three days Comcast's time in which to match competitive bids.
In reaching his decision, Noble also determined that the parties hadn't reached an oral agreement entitling Block & Leviton to a fee award of $475,000, an amount the plaintiff said the parties had agreed upon.
Noble reasoned that this argument failed not only because there was no mutual assent by the parties, but also on the grounds that even if there was a meeting of the minds, the agreed-upon terms would violate Delaware public policy.
Assuming that there was an agreement, the court found that the pact hinged upon Block & Leviton's representation that it wouldn't sue over Charter Communications Inc.'s subsequent acquisition of Time Warner Cable. Nobel said that would violate Delaware Rule of Professional Conduct 5.6(b), which states that lawyers can't restrict their own right to practice as part of a settlement.
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The opinion is available at http://www.bloomberglaw.com/public/document/CONF_ORD_Louisiana_Municipal_Police_Employees_Retirement_System_v.
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