On Monday, the U.S. Court of Appeals for the Seventh Circuit issued a ruling stating that a shareholder should have been permitted to intervene in a class action lawsuit for the purpose of providing perspective on a mootness fee dispute. The controversy behind mootness fees arises from payments made to plaintiff attorneys.
In the case in question, shareholders of pharmaceutical company Akorn Inc. had filed several lawsuits against the company, alleging that it failed to disclose necessary details as required under federal securities law in its proxy statement. This document sought investors’ approval for a proposed merger. However, the lawsuits were dismissed as moot after Akorn supplemented their proxy statement with additional disclosure.
Judge Frank Easterbrook, who wrote for the court, opined, “It seems to us that, as an investor in Akorn whose shares’ value was affected by the merger and the mootness fees, Frank has a claim in common with the main action; how could it be otherwise?” Alluding to the importance and validity of investor involvement in such scenarios.
For a detailed account of the legal proceedings, you can visit the National Law Journal’s report on this matter.