ow OMEN EY □□□□□□□□□□□□□□□□□□□□□ pctareentuene □□□□ □□□□□□□ | i ! USDC SDNY □ UNITED STATES DISTRICT COURT DOCUMENT □ SOUTHERN DISTRICT OF i YORK A ELECTRORE ARTY FILED} FESGH CHEN, nal adn Bel Oe ore » Individually and on Beha : EDATE rie 9/7 9 of All Others Similarly Stuated, . eis etee rieennas han □□□□ Plaintiff, ; | v. | MEMORANDUM AND ORDER SELECT INCOME REIT, DAVID M. BLACKMAN, ADAM D. PORTNOY, : 18-CV-10418 (GBD) (KNF) DONNA D. FRAICHE, WILLIAM A. □ LAMKIN and JEFFREY P.SOMERS, Defendants. : KEVIN NATHANIEL FOX UNITED STATES MAGISTRATE JUDGE Before the Court is the plaintiff's motion, “pursuant to Local Civil Rule 6.3, for reconsideration of the June 25, 2019 order denying Plaintiff's motion for attorneys’ fees,” opposed by the defendnats. Plaintiffs Contentions : The plaintiff contends that: (1) “the Court overlooked or misconstrued an important factual matter—that this action has been rendered moot as a result of the Supplemental Disclosures, which provided Plaintiff with the relief he sought”; and (2) “to the extent the Court also denied Plaintiff's motion for attorneys’ fees on the basis that it believed Mills v. Elec. Auto- Lite Co., 396 U.S. 375 (1970) and its progeny limit the common benefit doctrine’s applicability to shareholder derivative actions as opposed to class actions, see June 25" Order at 14, 17, the Court erred.” With respect to the argument that “the Court overlooked or misconstrued an important factual matter—that this action has been rendered moot as a result of the Supplemental Disclosures, which provided Plaintiff with the relief he sought,” the plaintiff asserts, inter alia:
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The primary relief sought by Plaintiff was an order enjoining the Defendants from consummating the Merger “unless and until Defendants disclose[d] the material information identified” in the Complaint which had been omitted from the Proxy. Complaint at Prayer for Relief B, § 6. As an alternative, Plaintiff also included a prayer for rescission and, damages, but such relief would only be available in the event the Defendant failed to disclose the material information identified in the Complaint prior to the shareholder vote on the Merger. If, as turned out to be the case, the Defendants remedied the Proxy disclosure deficiencies prior to the shareholder vote, there would no longer be a viable Section 14(a) disclosure violation for SIR shareholders to seek rescission or damages. ... Here, Defendants indisputably elected to!moot Plaintiff's claims by making the Supplemental Disclosures after Plaintiff moved for a preliminary injunction. With respect to the argument that the Court made a clear legal error, “to the extent the Court also denied Plaintiff's motion for attorneys’ fees on the basis that it believed Mills v. Elec, Auto-Lite Co., 396 U.S. 375 (1970) and itd progeny limit the common benefit doctrine’s applicability to shareholder derivative actions a$ opposed to class actions,” the plaintiff asserts that Mills “makes clear that the common benefit doctrine applies in all cases — regardless of the form — ‘where the } litigation has conferred a substahtial benefit on the members of an ascertainable class.’” Furthermore, “to the extent the June 25" Order denying attorneys’ fees was premised upon the fact that this action did not veel a further stage like summary judgment, that Plaintiff obtained the relief he sought at an early sage of the litigation has no bearing on whether an award of attorneys’ fees is warranted.” Defendants’ Contentions The defendants oppose the plaintiff's motion for reconsideration, contending that: (i) the plaintiff does not identify any controlling authority that the Court overlooked and his “disagreement with the Court’s analysis and decision is not a valid basis for reconsideration”, (ii) the mootness of the plaintiff's claims does not compel a different result; and (iii) even if the Court were to reconsider its order, “the Court should reach the same result.” The defendants contend that the plaintiff “argues that the Court misapplied the purportedly controlling decisions
{ Plaintiff cited in support of his Fee petition,” criticizing “the Court’s analysis of Christensen v. Kiewit-Murdock Investment Corp, 815 F.2d 206 (2d Cir. 1987), claiming that the Court incorrectly listed the grounds ae attorneys’ fees under the ‘common benefit doctrine’ as an ‘all-inclusive list’ rather than ‘merely selected examples.’” According to the defendants, “nothing in Christensen supports this claim.” The defendants assert that they agree that Plaintiff's claims are moot and that no further relief is obtainable by Plaintiff. (See ECF No. 41). Although Plaintiff has yet to voluntarily dismiss his claims, this litigation remains ongoing solely for Plaintiff to attempt to obtain an award of attorneys’ fees. |... Plaintiff concedes that his claims were mooted before motions for lead plaintiff and lead counsel were due to be filed pursuant to the Private Securities Litigation Reform Act of 1998 (the “PSLRA”), 15 U.S.C. § 78u- 4(a)(3)(B). (See ECF Nos, 21, 32, 41). Indeed, he acknowledges that he did not even move to represent the putative class that he purports to have benefited. (See ECF No. 41.) ... Plaintiff provides no basis in his Motion for the Court to conclude that a fee □□□ is warranted on the grounds that Plaintiff no longer has any pending claims. In short, even assuming arguendo that the “common benefit doctrine” could support an award of attorneys’ fees for claims subject to the PSLRA in circumstances where 4 plaintiffs disclosure-only claims have become moot, this certainly is not one of those cases, and mootness in and of itself is insufficient to justify an award of attorneys’ fees. The defendants contend that, even if the Court were to reconsider its order, the Court should reach the same result because plaintiff failed to show that the common benefit doctrine justified a fee award in this case, since: (1) “Plaintiff's litigation efforts conferred no benefit on the alleged putative class because the Supplemental Disclosure contained immaterial information”; (2) “Plaintiff has not (and cannot) ‘establish{] a violation of the securities laws,’ as
is required to recover attorneys! fees under Mills”; (3) “Plaintiff was not the ‘proximate cause’ of the Supplemental Disclosures” because “Plaintiff refused to join in the settlement agreement that resulted in the Supplemental Disclosures”; and (4) “[rJeconsideration likely would resolve any uncertainty concerning the applicability of the PSLRA’s prohibition on awards of attorneys’ fees where counsel’s efforts have ndt resulted in an award of monetary relief for the plaintiff class.”
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ow OMEN EY □□□□□□□□□□□□□□□□□□□□□ pctareentuene □□□□ □□□□□□□ | i ! USDC SDNY □ UNITED STATES DISTRICT COURT DOCUMENT □ SOUTHERN DISTRICT OF i YORK A ELECTRORE ARTY FILED} FESGH CHEN, nal adn Bel Oe ore » Individually and on Beha : EDATE rie 9/7 9 of All Others Similarly Stuated, . eis etee rieennas han □□□□ Plaintiff, ; | v. | MEMORANDUM AND ORDER SELECT INCOME REIT, DAVID M. BLACKMAN, ADAM D. PORTNOY, : 18-CV-10418 (GBD) (KNF) DONNA D. FRAICHE, WILLIAM A. □ LAMKIN and JEFFREY P.SOMERS, Defendants. : KEVIN NATHANIEL FOX UNITED STATES MAGISTRATE JUDGE Before the Court is the plaintiff's motion, “pursuant to Local Civil Rule 6.3, for reconsideration of the June 25, 2019 order denying Plaintiff's motion for attorneys’ fees,” opposed by the defendnats. Plaintiffs Contentions : The plaintiff contends that: (1) “the Court overlooked or misconstrued an important factual matter—that this action has been rendered moot as a result of the Supplemental Disclosures, which provided Plaintiff with the relief he sought”; and (2) “to the extent the Court also denied Plaintiff's motion for attorneys’ fees on the basis that it believed Mills v. Elec. Auto- Lite Co., 396 U.S. 375 (1970) and its progeny limit the common benefit doctrine’s applicability to shareholder derivative actions as opposed to class actions, see June 25" Order at 14, 17, the Court erred.” With respect to the argument that “the Court overlooked or misconstrued an important factual matter—that this action has been rendered moot as a result of the Supplemental Disclosures, which provided Plaintiff with the relief he sought,” the plaintiff asserts, inter alia:
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The primary relief sought by Plaintiff was an order enjoining the Defendants from consummating the Merger “unless and until Defendants disclose[d] the material information identified” in the Complaint which had been omitted from the Proxy. Complaint at Prayer for Relief B, § 6. As an alternative, Plaintiff also included a prayer for rescission and, damages, but such relief would only be available in the event the Defendant failed to disclose the material information identified in the Complaint prior to the shareholder vote on the Merger. If, as turned out to be the case, the Defendants remedied the Proxy disclosure deficiencies prior to the shareholder vote, there would no longer be a viable Section 14(a) disclosure violation for SIR shareholders to seek rescission or damages. ... Here, Defendants indisputably elected to!moot Plaintiff's claims by making the Supplemental Disclosures after Plaintiff moved for a preliminary injunction. With respect to the argument that the Court made a clear legal error, “to the extent the Court also denied Plaintiff's motion for attorneys’ fees on the basis that it believed Mills v. Elec, Auto-Lite Co., 396 U.S. 375 (1970) and itd progeny limit the common benefit doctrine’s applicability to shareholder derivative actions a$ opposed to class actions,” the plaintiff asserts that Mills “makes clear that the common benefit doctrine applies in all cases — regardless of the form — ‘where the } litigation has conferred a substahtial benefit on the members of an ascertainable class.’” Furthermore, “to the extent the June 25" Order denying attorneys’ fees was premised upon the fact that this action did not veel a further stage like summary judgment, that Plaintiff obtained the relief he sought at an early sage of the litigation has no bearing on whether an award of attorneys’ fees is warranted.” Defendants’ Contentions The defendants oppose the plaintiff's motion for reconsideration, contending that: (i) the plaintiff does not identify any controlling authority that the Court overlooked and his “disagreement with the Court’s analysis and decision is not a valid basis for reconsideration”, (ii) the mootness of the plaintiff's claims does not compel a different result; and (iii) even if the Court were to reconsider its order, “the Court should reach the same result.” The defendants contend that the plaintiff “argues that the Court misapplied the purportedly controlling decisions
{ Plaintiff cited in support of his Fee petition,” criticizing “the Court’s analysis of Christensen v. Kiewit-Murdock Investment Corp, 815 F.2d 206 (2d Cir. 1987), claiming that the Court incorrectly listed the grounds ae attorneys’ fees under the ‘common benefit doctrine’ as an ‘all-inclusive list’ rather than ‘merely selected examples.’” According to the defendants, “nothing in Christensen supports this claim.” The defendants assert that they agree that Plaintiff's claims are moot and that no further relief is obtainable by Plaintiff. (See ECF No. 41). Although Plaintiff has yet to voluntarily dismiss his claims, this litigation remains ongoing solely for Plaintiff to attempt to obtain an award of attorneys’ fees. |... Plaintiff concedes that his claims were mooted before motions for lead plaintiff and lead counsel were due to be filed pursuant to the Private Securities Litigation Reform Act of 1998 (the “PSLRA”), 15 U.S.C. § 78u- 4(a)(3)(B). (See ECF Nos, 21, 32, 41). Indeed, he acknowledges that he did not even move to represent the putative class that he purports to have benefited. (See ECF No. 41.) ... Plaintiff provides no basis in his Motion for the Court to conclude that a fee □□□ is warranted on the grounds that Plaintiff no longer has any pending claims. In short, even assuming arguendo that the “common benefit doctrine” could support an award of attorneys’ fees for claims subject to the PSLRA in circumstances where 4 plaintiffs disclosure-only claims have become moot, this certainly is not one of those cases, and mootness in and of itself is insufficient to justify an award of attorneys’ fees. The defendants contend that, even if the Court were to reconsider its order, the Court should reach the same result because plaintiff failed to show that the common benefit doctrine justified a fee award in this case, since: (1) “Plaintiff's litigation efforts conferred no benefit on the alleged putative class because the Supplemental Disclosure contained immaterial information”; (2) “Plaintiff has not (and cannot) ‘establish{] a violation of the securities laws,’ as
is required to recover attorneys! fees under Mills”; (3) “Plaintiff was not the ‘proximate cause’ of the Supplemental Disclosures” because “Plaintiff refused to join in the settlement agreement that resulted in the Supplemental Disclosures”; and (4) “[rJeconsideration likely would resolve any uncertainty concerning the applicability of the PSLRA’s prohibition on awards of attorneys’ fees where counsel’s efforts have ndt resulted in an award of monetary relief for the plaintiff class.”
Plaintiff’s Reply The plaintiff asserts that, to the extent that the Court’s denial of his motion for attorneys’ fees was predicated on the ee belief that Plaintiffs claims were not actually moot and that a claim for damages was still viable, reconsideration is warranted, since the defendants agree that “Plaintiff's claims are moot and that no further relief is obtainable by Plaintiff.” The plaintiff maintains that the defendants “db not dispute the fundamental legal point Plaintiffs motion for reconsideration is predicated on that the common benefit doctrine is not limited to shareholder derivative actions,” and, to the pen that the Court’s decision “was predicated on the belief that Mills and its progeny limited td common benefit doctrine’s applicability solely to shareholder derivative actions,” the motion for reconsideration should be granted “to correct this clear error of law.” Legal Standard To obtain relief on a motion for reconsideration in this court, the movant must identify “the matters or controlling oe which counsel believes the Court has overlooked.” Local Civil Rule 6.3. “This rule has shen interpreted as precluding arguments raised for the first time on a motion for reconsideration” Caribbean Trading & Fidelity Corp. v. Nigerian Nat’] Petroleum Corp., 948 F.2d 11 Lj 115 (2d Cir. 1991). On a motion for reconsideration under Local Civil Rule 6.3, the movant may not “advance new facts, issues or arguments not previously presented to the Court.” Id. (lation omitted). Application of Legal Standard Matters Overlooked | The Court finds that it oe the fact that the plaintiff stipulated that his “claims in this Action [are] mooted and i only outstanding issue is Plaintiff's Motion for Attorney Fees | 4
and Expenses,” as the record in this action demonstrates. See Docket Entry No. 41. Accordingly, reconsideration of the Court’s June 25, 2019 denial of the plaintiff’s motion for attorney’s fees is warranted on te basis of the overlooked factual matter. Controlling Decisions Ovérlooked The plaintiff failed to saekity any controlling decisions the Court overlooked in its June 25, 2019 decision; rather, the stat argues that the Court misinterpreted “Mills and its progeny.” Accordingly, of the Court’s June 25, 2019 denial of the plaintiff's motion for attorney’s fees is not Warranted on the basis of the assertion that the Court overlooked controlling decisions. Conclusion For the foregoing reason , the plaintiffs motion for reconsideration of the June 25, 2019 order denying the plaintiffs □□ for attorney’s fees, Docket Entry No. 46, is granted, and the Court’s June 25, 2019 order, Dope Entry No. 44, is vacated. In light of the factual matter previously overlooked, the Court will reconsider the plaintiff's motion for attorney’s fees. The Clerk of Court is directed to remove the gavel at Docket Entry No. 47, which is the plaintiff's memorandum of law ae designated as a motion. Dated: New York, New York SO ORDERED: August 13, 2019 : letvin—cotoarn LAL | KEVIN NATHANIEL FOX UNITED STATES MAGISTRATE JUDGE | 5