Wilmington, DE— In a recent decision, the Delaware Chancery Court denied a $5 million attorney fees request, known as a “mootness fee,” from Oracle Corp.’s shareholders’ attorneys following their unsuccessful challenge to Oracle’s acquisition of NetSuite Inc.
Despite the shareholders losing the derivative suit in August 2022 after a 10-day trial, they argued for the fees on the basis that Oracle’s decision to appoint two new independent board directors after the litigation commenced represented a corporate benefit resulting from the lawsuit.
Chancery Court’s Rejection of Mootness Fee
The court disagreed with the shareholders’ attorneys, concluding that the appointment of the new directors was a collateral effect of the litigation and did not provide a direct corporate benefit. As such, the Chancery Court denied the fee request, continuing the trend of imposing higher standards on such requests.
Mootness fee requests typically arise when a stockholder claims a company’s disclosures or decisions were inadequate or improper, leading to the company issuing supplemental disclosures or performing other actions to moot the stockholder’s claim.
