Remember when Chancellor Leo Strine of Delaware Chancery Court ruled last year that shareholders could not enjoin Alpha NaturalResources' $7 billion acquisition of Massey Energy? After a full-blown preliminary injunction hearing, Strine concluded that plaintiffs' lawyers at Grant & Eisenhofer, Bernstein Litowitz Berger & Grossmann and Milberg hadn't shown that their $1 billion derivative claim against Massey's board was a good enough reason to block the deal. That ruling, which came after G&E and its co-counsel sank thousands of hours into investigation, litigation and trial over the course of 18 months, was an enormous blow to shareholders and a boon to Massey.

But shareholders could take solace from the simultaneous efforts of Johnson & Weaver, The Briscoe Law Firm, Powers Taylor and Finkelstein Thompson in a class action in federal court in Richmond, Virginia, that also sought to enjoin the Massey merger. Or, I should say, at least that's what those four firms think. In a request this summer for $900,000 in fees and expenses (plus $2,000 each for two name plaintiffs) lawyers in the Virginia case conceded that they hadn't actually managed to stop the merger via the amended complaint they filed in April 2011. But thanks to their "vigorous and skillful prosecution," they asserted, Massey "voluntarily" made nine "crucial" changes to its disclosure materials, "without the need for judicial intervention."

You can guess where this is going, right? But play along. "Having succeeded in the goals of the litigation -- ensuring that Massey's shareholders were able to make a fully informed decision in connection with the merger -- plaintiff now seeks an award to compensate his counsel for the time and expense incurred in connection with achieving these significant benefits for the shareholder class," the fee request said. Delaware law and precedent, the firms argued, compels a fee award for the beefed-up disclosures that followed their amended complaint unless the defendants meet the heavy burden of showing the plaintiffs' firms don't deserve credit for the changes. "Indeed, once a plaintiff shows that he brought a meritorious suit and that the benefits he sought chronologically followed, the burden shifts to defendants to prove that plaintiffs' actions in no way caused the benefits at issue," the brief said.

Sigh. Will plaintiffs' firms never learn? Alpha, which had by then completed its acquisition of Massey, responded rather incredulously to the fee request on July 27. "One is tempted to use blunt language when considering how to characterize an application for fees and expenses approaching $1 million in a case in which plaintiff not only achieved no judicial victory, but did not even attempt to achieve one," wrote lawyers at Hunton & Williams and Cleary Gottlieb Steen & Hamilton in Alpha's response brief. Whatever work was done for shareholders, Alpha argued, was done by the plaintiffs' lawyers in Delaware, who "actually litigated the claims made in this case." (Alpha mocked the Virginia lawyers for billing the hours they spent watching their Delaware counterparts try the preliminary injunction case before Strine.)

The only documents the Virginia lawyers ever saw, according to Alpha, were those the defendants voluntarily turned over after they were produced in the Delaware litigation. And the Virginia lawyers only reviewed them after shareholders filed their amended complaint, which was the last substantive action taken by the plaintiffs' lawyers in the Virginia case. According to Alpha, all the changes made in various drafts of Massey proxy materials were due not to the Virginia litigation but rather to Securities and Exchange Commission requests.

In a 26-page ruling Monday, U.S. District Judge John Gibney gave the plaintiffs' firms the benefit of a close reading of the supposed disclosure benefits they brought to the class. (Hat tip to Courthouse News for first reporting on the ruling.) But that hardly helped their cause. The judge concluded that many of the alleged new disclosures were actually old ones, including a supposedly critical report from Massey's financial adviser that was actually attached in full to the original draft proxy. Most of the other changes, Gibney said, were in response to the SEC. Whatever few additional disclosures Massey might have made through the Virginia plaintiffs' efforts, the judge wrote, were so piddling that they didn't meet the standard of materiality.

And besides, he said, the plaintiffs' lawyers didn't really do anything to bring about any changes -- and certainly didn't do anything to justify a $900,000 fee award. "The amount of money requested is simply shocking," he wrote. "This case had a very short life. Plaintiffs filed suit, filed an amended complaint, and reviewed documents voluntarily provided by the defendants. At an early stage the plaintiffs announced that they would dismiss the case. In essence, they came to the battlefield, pitched their tents and then retreated to safety. For these efforts, they seek nearly one million dollars in fees. While the court encourages creative advocacy, the plaintiffs' request for fees is outlandish, excessive and inequitable."

You don't get much pithier than that: outlandish, excessive and inequitable. I called lawyers at all four of the plaintiffs' firms in the Virginia case. Robert Wilson of Finkelstein Thompson told me he was just local counsel and referred me to Shawn Fields of Johnson & Weaver. Fields did not return my call, nor did Willie Briscoe of The Briscoe Law Firm, nor Patrick Powers of Powers Taylor.

(Reporting by Alison Frankel)

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