18-2225, 18-3307, 19-2401 v. Akorn, Inc.

In the
United States Court of Appeals
For the Seventh Circuit
____________________
Nos. 18-2220, 18-2221, 18-2225, 18-3307, 19-2401, and 19-2408
JORGE ALCAREZ, et al., as representatives of a class,
Plaintiffs-Appellees,
v.
AKORN, INC., et al.,
Defendants-Appellees.
Appeals of THEODORE H. FRANK, SHAUN A. HOUSE, and
DEMETRIOS PULLOS
____________________
Appeals from the United States District Court for the
Northern District of Illinois, Eastern Division.
Nos. 17 C 5016, 5017, 5018, 5021 & 5026 — Thomas M. Durkin, Judge.
____________________
ARGUED NOVEMBER 6, 2018, and APRIL 14, 2020
— DECIDED APRIL 15, 2024
____________________
Before EASTERBROOK and WOOD, Circuit Judges.*
* Circuit Judge Kanne, a member of the panel, died after the appeals
were argued. They are being decided by a quorum. 28 U.S.C. §46(d).

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2 Nos. 18-2220 et al.
EASTERBROOK, Circuit Judge. Six suits, filed under the fed-
eral securities laws, present questions about “mootness fees”
in federal litigation. Akorn, Inc., asked its investors to ap-
prove a merger (valued at more than $4 billion) with Frese-
nius Kabi AG. Plaintiffs assert that the proxy statement (82
pages long, with 144 pages of exhibits) should have contained
additional details, whose absence violated §14(a) of the Secu-
rities Exchange Act of 1934, 15 U.S.C. §78n(a). Within weeks
Akorn amended its proxy statement to add some disclosures,
though it insisted that none of these additions was required
by law.
All six plaintiffs then moved to dismiss their suits, assert-
ing that the additional disclosures mooted their complaints.
They did not notify the proposed classes (five of the six suits
had been filed as class actions) or seek judicial approval under
Fed. R. Civ. P. 23(e). Different district judges entered orders
of dismissal between July 17 and July 25, 2017.
Akorn’s shareholders overwhelmingly approved the mer-
ger, with only 0.1% of all votes cast against. Many of the prox-
ies had been voted before Akorn’s supplemental disclosures;
plaintiffs did not protest. On September 15 all six plaintiffs
told the district court that any claim to aiorneys’ fees and
costs had been resolved by a payment of $322,500, which
counsel would divide. Those are the mootness fees. The pro-
posed merger was abandoned for reasons unrelated to these
suits, but that does not affect the dispute about what to do
with this money.
Theodore Frank, one of Akorn’s shareholders, learned
through the press that Akorn had paid mootness fees and on
September 18, 2017, filed a motion to intervene. He asked the
court to require counsel to disgorge the money as unjust

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Nos. 18-2220 et al. 3
enrichment (since they had not achieved any benefit for the
investors). He also asked the court to enjoin the lawyers who
represented the six plaintiffs to stop filing what Frank calls
strike suits, whose only goal is to extract money for counsel.
Frank contends that the suits amount to abuse of the legal pro-
cess. Indeed, this court has remarked that litigation “that
yields fees for class counsel and nothing for the class is no bet-
ter than a racket. It must end.” In re Walgreen Co. Stockholder
Litigation, 832 F.3d 718, 724 (7th Cir. 2016) (cleaned up). But
litigation of this kind has not ended since Walgreen.
Delaware, where most suits seeking extra disclosure had
been filed, decided that they would be subject to “disfavor in
the future unless the supplemental disclosures address a
plainly material misrepresentation or omission”. In re Trulia,
Inc. Stockholder Litigation, 129 A.3d 884, 898 (Del. Ch. 2016).
Delaware already had limited the payment of mootness fees
unless the suit was meritorious. In re Sauer-Danfoss Inc. Share-
holders Litigation, 65 A.3d 1116, 1123 (Del. Ch. 2011). The com-
bination of Sauer-Danfoss with Trulia initially led to a decline
in suits seeking more disclosure for mergers. In 2012 90% of
deals worth more than $100 million were challenged in litiga-
tion. In 2013 that proportion rose to 96%. Trulia knocked it
down to 74% in 2016. By 2017 and 2018 the proportion was
back to 83%. And the location of the suits changed radically.
In 2012 56% of these suits were in Delaware and 34% in fed-
eral court. By 2018 only 5% were in Delaware and 92% in fed-
eral court. These figures come from Maihew D. Cain, Jill E.
Fisch, Steven Davidoff Solomon & Randall S. Thomas, Moot-
ness Fees, 72 Vand. L. Rev. 1777, 1787 (2019). By filing in federal
court plaintiffs avoid Trulia—for federal courts use their own
procedures, whether the claim arises under state or federal
law. See, e.g., Shady Grove Orthopedic Associates, P.A. v. Allstate

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4 Nos. 18-2220 et al.
Insurance Co., 559 U.S. 393 (2010); Gasperini v. Center for Hu-
manities, Inc., 518 U.S. 415 (1996); Mayer v. Gary Partners & Co.,
29 F.3d 330 (7th Cir. 1994).
These six cases illustrate the federal practice. Suits are filed
as class actions seeking more disclosure but not contending
that any of the existing disclosures is false or materially mis-
leading. Such a claim is problematic under federal securities
law. See, e.g., Macquarie Infrastructure Corp. v. Moab Partners,
L.P., No. 22–1165 (U.S. Apr. 12, 2024) (nondisclosure does not
violate Rule 10b–5). Counsel for the plaintiffs and counsel for
the firms involved agree on additional disclosures. The suits
are then dismissed and mootness fees paid. Plaintiffs do not
move for class certification, and Rule 23(e), which requires ju-
dicial approval only when a certified class action is seiled or
dismissed, does not come into play. The class is not notified.
Because plaintiffs and defendants agree on the fees, the
judge is not asked to award anything. A statute providing that
“[t]otal aiorneys’ fees and expenses awarded by the court to
counsel for the plaintiff class shall not exceed a reasonable
percentage of the amount of any damages and prejudgment
interest actually paid to the class”, 15 U.S.C. §78u–4(a)(6) (part
of the Private Securities Litigation Reform Act or PSLRA),
does not apply, because the judge does not “award” fees. And
if a class member finds out and objects, as Frank did, he is met
with the response that the suit is moot and there is nothing to
object to. The upshot: money moves from corporate treasuries
to plaintiffs’ lawyers; the investors get nothing, yet the pay-
ment diminishes (though only a liile) the market price of each
share. That’s why Walgreen called this “no beier than a
racket.” But with the judiciary and investors cut out of the

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Nos. 18-2220 et al. 5
process, they cannot do anything about it. Or so class counsel
insists.
Frank asked the judge to do something, such as ordering
counsel to disgorge unearned money or issuing an injunction
blocking mootness fees in future cases. Before the district
judge could rule, counsel for three of the six plaintiffs dis-
claimed their portions of the $322,500. The district judge then
denied Frank’s motion to intervene in those cases, stating that,
because he did not anticipate awarding any of the remedies
Frank requested, intervention would be “moot.” Frank’s ap-
peals were orally argued in November 2018.
We put those appeals on hold pending the disposition of
the three remaining cases, in which the lawyers wanted some
share of the fund (which one of them was holding for the
group’s benefit). In these three cases, the district judge again
denied Frank’s motion to intervene but permiied him to par-
ticipate as amicus curiae. The judge took to heart the admoni-
tion in Walgreen that suits seeking extra disclosure should be
reviewed immediately after being filed. Acknowledging that
he had not done that, he reopened the suits, concluded that
the complaints were frivolous, and found that the extra dis-
closures were worthless to investors. In light of that finding
the judge ordered counsel to return Akorn’s money. House v.
Akorn, Inc., 385 F. Supp. 3d 616 (N.D. Ill. 2019). One of the
three lawyers accepted that outcome. Two did not and have
appealed. (Technically, the would-be representative plaintiffs
have appealed, seeking an order that will let their lawyers
divvy up the $322,500 pot.) Frank also has appealed, because
he is still not a party and wants additional relief. These three
final appeals were argued in April 2020, and all six appeals
are now ready for decision.

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6 Nos. 18-2220 et al.
Shaun House and Demetrios Pullos, the two plaintiffs who
have appealed, contend that the district court lacked jurisdic-
tion to reopen a dismissed case. The complaints had been dis-
missed, none of the litigants was unhappy, and there was
nothing more for the court to do, they maintain. Although
Fed. R. Civ. P. 60(b) allows judges to reopen cases, that must
be done “on motion”, according to the Rule, and none of the
litigants had filed a motion. But this does not take Frank into
account. If he should have been allowed to intervene, he will
become a party and may file motions.
Plaintiffs insist that Frank lacks standing—and if Frank
lacks standing, then House and Pullos also lack standing, for
they will not recover a penny or obtain any other relief
whether or not the aiorneys collect fees. Their lack of interest
in the outcome is so clear that we dismiss their appeals.
Frank’s standing remains to be decided.
Frank suffers some loss from diversion of corporate
money, which affects the value of his shares. The diminution
is minimal—$322,500 is small beer in a $4 billion transaction,
something like 0.008% of the value of Frank’s shares. Still, that
is a few cents. The Supreme Court tells us that an “identifiable
trifle” suffices for standing. United States v. SCRAP, 412 U.S.
669, 688–90 & n.14 (1973).
A concrete loss, caused by the complained-of conduct and
remediable by the judiciary, supplies standing. See, e.g.,
Spokeo, Inc. v. Robins, 578 U.S. 330 (2016); Lujan v. Defenders of
Wildlife, 504 U.S. 555, 560–61 (1992). So we have held that a
small loss caused by a brief inability to use a credit card after
a data breach confers standing. See, e.g., Dieffenbach v. Barnes
& Noble, Inc., 887 F.3d 826 (7th Cir. 2018); Lewert v. P.F. Chang’s
China Bistro, Inc., 819 F.3d 963 (7th Cir. 2016); Remijas v.

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Nos. 18-2220 et al. 7
Neiman Marcus Group, LLC, 794 F.3d 688 (7th Cir. 2015). We
have held that even a few pennies’ loss of potential interest
(on a small non-interest-bearing deposit), see Goldberg v. Fre-
richs, 912 F.3d 1009 (7th Cir. 2019), or a brief delay in receiving
income, Brown v. CACH, LLC, 94 F.4th 665 (7th Cir. 2024),
amounts to a concrete injury. Only a “de minimis loss” thresh-
old for standing would throw out Frank’s contention, and the
Supreme Court has not announced such a threshold.
Plaintiffs are mistaken to think that Frank needs to make a
demand on the board of directors, and pursue a derivative ac-
tion, rather than intervene personally. True, the $322,500 is a
loss to the corporate treasury, but Frank does not contend that
Akorn’s directors violated their fiduciary duties. The moot-
ness fees may well have cost Akorn less than what its own
lawyers would have billed to defend the suits. This means
that the directors did not violate either the duty of care or the
duty of loyalty when paying to buy peace. Frank contends
that class counsel violated their duties to him when they used
the class allegations as leverage to obtain private benefits. The
existence of duties to class members is clear after a judge cer-
tifies a class. See In re Bluetooth Headset Products Liability Liti-
gation, 654 F.3d 935, 946–47 (9th Cir. 2011); Back Doctors Ltd. v.
Metropolitan Property & Casualty Insurance Co., 637 F.3d 827,
830–31 (7th Cir. 2011); Martens v. Thomann, 273 F.3d 159, 173
n.10 (2d Cir. 2001) (Sotomayor, J.) (citing Deposit Guaranty Na-
tional Bank v. Roper, 445 U.S. 326, 331 (1980)). There is no such
duty if the judge has definitively ruled against certification.
How things stand while certification is an open question is it-
self an open question. No maier how that question is re-
solved, however, Frank’s contention that the representative
plaintiffs and their lawyers owed duties to him, personally,

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8 Nos. 18-2220 et al.
need not be processed through the mechanism for derivative
litigation.
So was the district judge right to deny Frank’s motion to
intervene? Certainly not for the reason he gave. “I’m planning
to reject your proposed remedies, so your request is moot” is
not a recognized legal doctrine. A case becomes moot only
when it is impossible to grant effective relief. See, e.g., Mission
Product Holdings, Inc. v. Tempnology, LLC, 139 S. Ct. 1652, 1660
(2019). It was possible to grant the sort of relief Frank re-
quested. A decision not to do so is one on the merits, not a
conclusion that the case does not present a case or controversy
under Article III (which is what it means to call it moot). If
“you are going to lose, so your claim is moot” were a proper
approach, unsuccessful suits would be dismissed as moot ra-
ther than on the merits. That’s not how things are supposed
to work. See, e.g., Bell v. Hood, 327 U.S. 678 (1946).
When the representative plaintiffs and the defendants
strike a deal, intervention by a member of the class may be
essential to protect the class’s interests. We have told judges
to grant intervention freely when a class member contends
that the representatives (or, more realistically, their lawyers)
are misbehaving. See, e.g., Crawford v. Equifax Payment Ser-
vices, Inc., 201 F.3d 877 (7th Cir. 2000); Robert F. Booth Trust v.
Crowley, 687 F.3d 314, 318–19 (7th Cir. 2012). Indeed, under
some circumstances, class members are entitled to appellate
review without intervention. See Devlin v. ScardelleUi, 536 U.S.
1 (2002). Just being in the class entitles a dissatisfied member
to appellate review of a contention that the putative repre-
sentative has acted against the class’s interests.
Frank sought to intervene both as of right under Fed. R.
Civ. P. 24(a) and permissively under Rule 24(b). The motion

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Nos. 18-2220 et al. 9
is timely; Frank acted soon after learning of the mootness fees.
See Cameron v. EMW Women’s Surgical Center, P.S.C., 595 U.S.
267, 279–81 (2022). The district court addressed only his pro-
posal to intervene as of right—and then only in three of the
six cases. If the district judge had concluded that Frank lacks
“a claim or defense that shares with the main action a com-
mon question of law or fact” (Rule 24(b)(1)(B)), appellate re-
view would be deferential. But the district judge did not make
any findings on this subject. 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? After all, Frank is a
member of the proposed classes. And since class counsel and
Akorn are looking out for their own interests rather than
those of the class, intervention is appropriate. We hold that
Frank is entitled to participate as a party. And that could solve
any problem with reopening the judgments, because as a
party Frank would be entitled to make the motion required
for relief under Rule 60(b). He will have that opportunity on
remand.
But the remedies that Frank initially proposed, such as dis-
gorgement or an injunction, are not satisfactory. Disgorge-
ment would be appropriate only if the mootness fees had been
retained by counsel, yet the district judge has ordered the
money returned. An injunction against repetition might be
appropriate with respect to the individual plaintiffs, but
Frank wants relief against the lawyers, who are repeat play-
ers—and the lawyers are not parties, so they would not be
proper objects of injunctive relief unless they were added as
parties. And Frank recognizes that Rule 23(e) deals only with
cases certified as class actions, which these were not. Perhaps
the rules commiiees of the Judicial Conference should take a

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10 Nos. 18-2220 et al.
look at the question whether judicial approval should be re-
quired to seile or dismiss cases brought as class actions, yet
not so certified, but we must enforce the rule as it stands.
As this case proceeded, however, Frank turned his aien-
tion to the Private Securities Litigation Reform Act. Two of its
provisions may affect the proper treatment of suits filed in
quest of mootness fees. We have mentioned one—15 U.S.C.
§78u–4(a)(6), which says that aiorneys’ fees “awarded” by a
court “shall not exceed a reasonable percentage of the amount
of any damages and prejudgment interest actually paid to the
class.” This rule applies to all securities suits “brought” as
class actions, whether or not they are so certified. See §78u–
4(a)(1) (“The provisions of this subsection shall apply in each
private action arising under this chapter that is brought as a
plaintiff class action pursuant to the Federal Rules of Civil
Procedure.”). See also Higginbotham v. Baxter International Inc.,
495 F.3d 753, 756 (7th Cir. 2007). Yet §78u–4(a)(6) does not do
any work when the defendant pays fees voluntarily rather
than insisting on a judicial award.
The other statute, 15 U.S.C. §78u–4(c)(1), tells us:
Mandatory review by court[.] In any private action arising under
this chapter, upon final adjudication of the action, the court shall
include in the record specific findings regarding compliance by
each party and each aVorney representing any party with each re-
quirement of Rule 11(b) of the Federal Rules of Civil Procedure as
to any complaint, responsive pleading, or dispositive motion.
“This chapter” means the whole Securities Exchange Act of
1934 (which is Chapter 2B of Title 15), and the six suits in-
voked that statute. The caption calls this review “mandatory,”
and the word “shall” tells us that the caption is accurate. The
district court must make the required findings whether or not

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Nos. 18-2220 et al. 11
a litigant asks. City of Livonia Employees’ Retirement System v.
Boeing Co., 711 F.3d 754, 757, 761 (7th Cir. 2013). Accord, ATSI
Communications, Inc. v. Shaar Fund, Ltd., 579 F.3d 143, 152 (2d
Cir. 2009); Morris v. Wachovia Securities, Inc., 448 F.3d 268, 283–
84 (4th Cir. 2006).
The dismissal of each suit was a “final adjudication of the
action”; seilements were the reasons for the dismissals, but
the statute applies to the judicial action, not to the reason for
it. It obliges the judge to determine whether each suit was
proper at the moment it was filed. The statute directs the court
to the criteria of Fed. R. Civ. P. 11, which entails notice and
an opportunity to be heard. Those steps have not been put in
motion, given the denial of Frank’s motion to intervene, but
they should occur on remand.
Rule 11(b) provides:
By presenting to the court a pleading, wriVen motion, or other pa-
per—whether by signing, filing, submiVing, or later advocating
it—an aVorney or unrepresented party certifies that to the best of
the person’s knowledge, information, and belief, formed after an
inquiry reasonable under the circumstances:
(1) it is not being presented for any improper purpose, such
as to harass, cause unnecessary delay, or needlessly increase
the cost of litigation;
(2) the claims, defenses, and other legal contentions are war-
ranted by existing law or by a nonfrivolous argument for ex-
tending, modifying, or reversing existing law or for establish-
ing new law;
(3) the factual contentions have evidentiary support or, if spe-
cifically so identified, will likely have evidentiary support af-
ter a reasonable opportunity for further investigation or dis-
covery; and

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12 Nos. 18-2220 et al.
(4) the denials of factual contentions are warranted on the ev-
idence or, if specifically so identified, are reasonably based on
belief or a lack of information.
From Frank’s perspective, the very purpose of these suits was
“needlessly [to] increase the cost of litigation” (Rule 11(b)(1))
in order to induce Akorn to pay the lawyers to go away. He
contends that the suits violate the other three paragraphs as
well. And that is essentially what the district judge found
when he finally looked at the complaints.
On the current record we are inclined to agree with the
district judge’s analysis. He wrapped up:
[T]he Court finds that the disclosures sought in the three com-
plaints at issue [the three for which counsel declined to waive
their share of the mootness fees] were not “plainly material” and
were worthless to the shareholders. Yet, Plaintiffs’ aVorneys were
rewarded for suggesting immaterial changes to the proxy state-
ment. Akorn paid Plaintiffs’ aVorney’s fees to avoid the nuisance
of ultimately frivolous lawsuits disrupting the transaction with
[Fresenius]. The seVlements provided Akorn’s shareholders noth-
ing of value, and instead caused the company in which they hold
an interest to lose money. The quick seVlements obviously took
place in an effort to avoid the judicial review this decision im-
poses. This is the “racket” described in Walgreen, which stands the
purpose of Rule 23’s class mechanism on its head; this sharp prac-
tice “must end.” 832 F.3d at 724.
Plaintiffs’ cases should have been “dismissed out of hand.” See id.
at 724. Since the Court failed to take that action, the Court exer-
cises its inherent authority to rectify the injustice that occurred as
a result. The seVlement agreements are abrogated and the Court
orders Plaintiffs’ counsel to return to Akorn the aVorney’s fees
provided by the seVlement agreements. Plaintiffs’ counsel should
file a status report by July 8, 2019 certifying that the fees have been
returned.

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Nos. 18-2220 et al. 13
385 F. Supp. 3d at 622–23 (one citation omiied). The district
court’s reference to “inherent authority” should have been to
§78u–4(c)(1) and Rule 11, but with that change the analysis
holds. Still, our reference to “the current record” is important;
a formal motion under Rule 60(b) is necessary, and counsel
are entitled to be heard.
Because Rule 11(c)(4) gives the district judge discretion
over the choice of sanction, the court would be entitled to di-
rect counsel who should not have sued at all to surrender the
money they extracted from Akorn. But selecting an appropri-
ate remedy (if any) should await resolution of the proceedings
under §78u–4(c)(1) and, derivatively, Rule 11.
The orders of the district court denying Frank’s motion to
intervene are vacated, and the cases are remanded with in-
structions to treat him as an intervenor, permit him to make a
motion under Rule 60(b), and decide what relief, if any, is ap-
propriate in light of that motion should one be made. The ap-
peals by House and Pullos are dismissed for lack of jurisdic-
tion because they have not explained how, if at all, the district
court’s orders adversely affect them, as opposed to counsel.

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