Judge Posner Called It A "Racket"

In a recent decision from the United States District Court for the Southern District of New York, a federal Judge pushed back against the common but abusive practice of "mootness fee" payoffs in public M&A deals. In the February 2022 opinion, Judge Oetken denied a $250,000 attorneys' fee demand by plaintiff's counsel in an investor challenge to Microsoft's $19.7 billion acquisition of Nuance Communications. The decision is by latest court to have the opportunity to both consider and reject what some call a meritless shakedown or transaction tax on public M&A deals. This decision is significant in that it is increasingly rare for mootness fee payments to be subject to court scrutiny given the increasing trend of voluntary dismissals by plaintiffs in this type of case. For more information about the history of mootness fee payments and the need for reform click here.