96% of mergers result in litigation alleging breach of fiduciary duty. This isn't because there are widespread breaches of fiduciary duty; it's because strike suits threatening to generate litigation expenses relating to the merger are highly profitable. The case settles with a tweak to the disclosures, and the attorneys walk away with over $1000/hour for agreeing to stop trying to hold up the merger. Courts are beginning to see through this.
Today, the Center for Class Action Fairness won a victory in the Texas Court of Appeals: the appellate court zeroed out attorneys' fees in a shareholder derivative suit settlement that added largely meaningless disclosures to the proxy statement in Kazman v. Frontier Oil. I argued the case, but D. Wade Carvell, our pro bono local counsel, really deserves the credit as the principal author of the briefs and the man who came up with the winning argument. We discussed the case on January 18 and October 10. It's CCAF's sixth appellate victory. (CCAF is not affiliated with the Manhattan Institute.)
(Update: Reuters press coverage.)
And earlier this week, the Ninth Circuit affirmed an award of sanctions against Joseph Alioto for violating 28 U.S.C. § 1927 in challenging a merger of Southwest Airlines. Alioto is unrepentant. [Reuters] Little wonder: the $67 thousand sanction isn't even 1% of the $308 million requested in the pending LCD settlement, two to three times the normal rate for settlements of that size. Sadly, the attorneys general participating in the litigation are failing to protect their citizens and have not objected to the outsized fee.