TRENDS IN PUBLIC REIT M&A: 2012-2017 24 disclosures of information and pay plaintiffs’ attorneys a modest fee, though in some cases the settlement fee amount was significant. In the cases we surveyed, most of the fees were under $1 million, but two were much greater — $7 million and $9.4 million, respectively. In all but two of the cases, all settlement amounts were paid to plaintiffs’ counsel rather than to shareholders. In the exceptions (the same two cases with the outlier attorneys’ fees) an additional $22.6 million and $7 million, respectively, were paid to shareholders as additional consideration. While plaintiffs generally seek to enjoin the transaction early on, when corrective disclosures can still be made, in only 25% of all cases during the survey period did plaintiffs move for a preliminary injunction and no court enjoined any of the surveyed transactions. We note that there is a newly developing trend of cases being filed post-closing, in which the plaintiffs seek damages instead of an injunction for the same disclosure-based claims under the federal securities laws. An important development in REIT M&A litigation that has emerged over the past five years is the shift away from state courts and state law claims to federal courts and federal securities law claims. In addition, in early 2016, Maryland, where a majority of public REITs are organized, along with some other states, began to disfavor disclosure-based settlements pursuant to which plaintiffs’ attorneys were paid fees but shareholders did not receive any additional consideration. At least partially as a result, a large majority (85%) of REIT merger-related lawsuits filed since early 2016 have been brought in federal court and allege federal claims — usually violations of Section 14(a) of the Securities Exchange Act of 1934 and rules promulgated thereunder — rather than more traditional state-law based claims of breach of director duties and against buyers for aiding and abetting those breaches. Prior to 2016, only a small minority (18%) of REIT M&A lawsuits were brought in federal court. This shift to federal courts has coincided with the growing trend of plaintiffs to seek “mooting” fees rather than disclosure-based settlements. In mootness cases, if the defendants amend their transaction disclosures to add information that would render the plaintiffs’ claims moot, plaintiffs claim that they caused defendants to provide the additional disclosures that rendered the lawsuit moot. In these cases, defendants do not obtain releases and the mootness fees are generally meaningfully lower than the prior settlement fees. Settlement Fees Lowest Fee $175,000 Highest Fee $9.4 million Average Fee $455,731* Median Fee $500,000 * Exclusive of two outlier fees of $7 million and $9.4 million, respectively. Inclusive of these outliers, the average settlement fee was $1.5 million.