Case Title: Mentor Graphics Corp. et al v. Shapiro and Antle et al and v. Quickturn Design Systems, Inc. et al

Citation: 

Docket Number: 492, 2002, 497, 2002

State: delaware

Court: Delaware Supreme Court

Date: 2003-03-25T00:00:00Z

Document:
IN THE SUPREME COURT OF THE STATE OF DELAWARE
MENTOR GRAPHICS 
§
CORPORATION, et al.,
§
§
Objectors Below,
§ No. 492, 2002
Appellants,
§
§ Court Below: Court of Chancery
v.
§ of the State of Delaware in and
§ for New Castle County 
HOWARD SHAPIRO,
§ C.A. No.16850
§
Plaintiff Below,
§
Appellee,
§
and
§
§
GLEN M. ANTLE, et al.,
§
§
Defendants Below,
§
Appellees.
§
MENTOR GRAPHICS,
§
CORPORATION, et al.,
§
§
Plaintiffs Below,
§ No. 497, 2002
Appellants,
§
§ Court Below: Court of Chancery
v.
§ of the State of Delaware in and
§ for New Castle County
QUICKTURN DESIGN SYSTEMS, § C.A. No. 16584
INC., et al.,
§
§
Defendants Below,
§
Appellees.
§    CONSOLIDATED
Submitted: March 4, 2003
Decided:
March 25, 2003
2
Before VEASEY, Chief Justice, WALSH, HOLLAND, BERGER, and STEELE,
Justices, constituting the Court En Banc.
Appeal from Court of Chancery.  AFFIRMED.
Kevin G. Abrams, Esquire, J. Travis Laster, Esquire (argued), Peter B. Ladig,
Esquire, and Kelly C. Ashby, Esquire, Richards, Layton & Finger, Wilmington,
Delaware and Marc W. Rappel, Esquire, Latham & Watkins, Los Angeles, California,
for Appellants Mentor Graphics Corporation and MGZ Corporation.
David C. McBride, Esquire (argued) and Danielle Gibbs, Esquire, Young,
Conaway, Stargatt & Taylor, Wilmington, Delaware, for Appellees Cadence Design
Systems, CDSI Acquisition, Inc., and Quickturn Design Systems, Inc.
Kenneth J. Nachbar, Esquire, Morris, Nichols, Arsht & Tunnell, Wilmington,
Delaware, for Appellees Former Directors.
Norman M. Monhait, Esquire, Rosenthal Monhait Gross & Goddess, P.A.
Wilmington, Delaware and Stanley D. Bernstein, Esquire (argued) and Abraham I.
Katsman, Esquire, Bernstein Liebhard & Lifshitz LLP, New York, New York, for
Appellee Howard Shapiro.
PER   CURIAM:
3
 
This is an appeal by an unsuccessful party to an acquisition contest from a
decision of the Court of Chancery rejecting that party’s attempt to secure an award of
counsel fees incident to the settlement of a related class action suit attacking the
original merger effort.  The Court of Chancery denied the appellants’ effort as
untimely.  We agree and affirm.
I
This is the latest chapter in Mentor Graphics Corporation’s (“Mentor”) failed
attempt to acquire Quickturn Design Systems, Inc. (“Quickturn”).  The extensive
background of the dispute is set forth in a previous decision of this Court in which we
held that a delayed redemption provision (“DRP”) in the Quickturn shareholder rights
plan was invalid.  See Quickturn Design Sys. v. Shapiro, 721 A.2d 1281 (Del. 1998).
We recount here only those facts necessary to an understanding of the  present posture
of this matter.
In January 1999, it was apparent that Cadence Design Systems, Inc.
(“Cadence”) would prevail in the auction battle for Quickturn.  On January 7, 1999,
the Court of Chancery denied Mentor’s last ditch effort to scuttle the Cadence-
Quickturn merger.  The next day Mentor withdrew its tender offer and abandoned all
1  Shapiro represented the class of stockholder plaintiffs who challenged both the DRP
(“Shapiro I”) and the auction process through which Cadence made the prevailing bid for Quickturn
(“Shapiro II”).  Shapiro filed a parallel fee application in Shapiro I seeking an award of $2,044,800,
representing a percentage of what he believed to be the $51,000,000 value his litigation produced,
as well as for the 1,500 hours Class counsel apparently logged in the matter.  
4
further attempts to acquire Quickturn.  The Cadence-Quickturn merger was scheduled
for submission to a stockholder vote on May 21, 1999.
On May 10, 1999, Quickturn stockholder Howard Shapiro (“Shapiro”), who
was the lead plaintiff in the stockholder class litigation (the “Class”), sought a
temporary restraining order (“TRO”), in a separate action (“Shapiro III”), enjoining
consummation of the merger until a “fund” could be created from which Class counsel
fees could be paid.1  Six days later, the parties to the class action entered into an
agreement to settle the matter in a form that permitted the full merger consideration
to be paid to the Quickturn stockholders, and also avoided the TRO hearing in Shapiro
III.  In particular, Cadence and Quickturn agreed that Quickturn would pay Class
counsel’s fees and expenses up to $825,000 in exchange for a broad release of all
2  The release provides in relevant part that:
all claims, rights and causes of action (including any claims for costs, attorneys’ fees
or expenses...), known or unknown, which Shapiro or any member of the Class ever
had, now have or hereafter can, shall or may have whether directly, 
derivatively, representatively or in any other capacity against [Cadence and
Quickturn]...by reason of or arising out of or relating to or in connection with any of
the following...(iv) the facts, matters, transactions, actions or conduct, 
actual,
alleged or which could have been alleged in Shapiro I, Shapiro II, Shapiro III,
Mentor Federal, Mentor Chancery I [the Mentor DRP Litigation] or Mentor
Chancery II [the Mentor Auction Litigation].  
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claims pertaining to the litigation.2  The merger was approved by the stockholders, and
the deal closed on May 25, 1999.
In July of 2000, after a period of relative tranquility, Mentor filed fee
applications in both the DRP Litigation (“Mentor I”), and the Auction Litigation
(“Mentor II”).  The Court of Chancery denied Mentor’s applications.  Mentor
Graphics Corporation v. Quickturn Design Systems, Inc., 789 A.2d 1216 (Del. Ch.
2001) (the “Fee Opinion”).  On February 13, 2002, the Court of Chancery dismissed
Mentor II with prejudice, and on March 22, 2002, Mentor appealed the denial of fees
in Mentor II.  On April 17, 2002, Mentor sought a stay of that appeal pending
consolidation of that appeal with the appeal it intended to file in the Mentor I.  On the
same day, Mentor filed a motion in the Court of Chancery seeking a final order in
Mentor I.  On April 29, 2002, this Court granted a stay in the Mentor II appeal without
deciding whether the time to appeal Mentor I had expired.     
6
On July 25, 2002 the Court of Chancery held a hearing on the settlement of the
Shapiro II litigation.  Although Mentor objected, the Court of Chancery approved the
settlement at the end of oral argument.  Five days later, the Court of Chancery heard
oral argument on Mentor’s motion for a final order in Mentor I.  The Court of
Chancery denied the motion, holding that  the Fee Opinion constituted the final order
in Mentor I.  Mentor appeals both the denial of the “final order” motion, as well as the
approval of the settlement of Shapiro II.  
II
We review de novo the Court of Chancery’s denial of Mentor’s motion for a
“final order” in Mentor I.  See, e.g., Tyson Foods, Inc. v. Aetos Corp., 809 A.2d 575,
580 (Del. 2002) (“[W]e are [] required to examine...whether, as a matter of law, the
post-trial decision and the earlier subsidiary rulings became final through the August
3, 2001 order, thereby precluding review of all post-trial findings and conclusions.”).
Mentor argues that the Court of Chancery erred as a matter of law by failing to follow
controlling precedent when deciding whether to grant Mentor’s request for a “final
order” in Mentor I.  In particular, Mentor argues that a judgment is final only when
the trial court “clearly declares” that it is making a final ruling in the case.
Quickturn/Cadence and Shapiro argue that a judgment is final when the trial court, by
7
its order, leaves nothing further to be resolved, and thus effectively ends the litigation
on the merits.
“[A] final judgment is one that determines all the claims as to all the parties.”
Tyson Foods, 809 A.2d at 579.  While the primary inquiry is “whether the trial court
[] clearly declared its intention that the order be [its] ‘final act’ in the case[,]” the
“mere use of the term ‘final judgment’ may not be determinative[.]” Id. at 579-580.
Rather, essential to the analysis is whether the order “ends the litigation on the merits
and leaves nothing for the trial court to do but execute the judgment.”  See Lipson v.
Lipson, 799 A.2d 345, 347 (Del. 2001) (quoting Catlin v. United States, 324 U.S. 229
(1945)).
We conclude that the Court of Chancery properly denied Mentor’s belated
request for a more formal “final judgment” in Mentor I.  On December 3, 1998, the
Court of Chancery entered a “Final Order and Judgment Pursuant to Rule 54(b)” on
the claims litigated at trial in Mentor I.  The only matter left unresolved after that
order was Mentor’s request for attorneys’ fees and expenses.  Therefore, when the
Court of Chancery issued its final decision on the merits of Mentor’s fee application
on August 14, 2001, 789 A.2d 1216, there was nothing left for the court to resolve in
Mentor I.   Notwithstanding Mentor’s concern for judicial economy, the appropriate,
and practical, inquiry is whether anything is left unresolved after the order is issued.
3  Mentor argues that additional claims regarding, inter alia, Section 203 of the DGCL were
unresolved by the trial court, and that despite the fact that these claims were moot, a separate final
order was necessary to resolve these claims.  By acknowledging that these claims were moot,
however, Mentor implicitly concedes that no justiciable claims were left unresolved after the Court
of Chancery issued the Fee Opinion.
8
Here, there can be no doubt that the Fee Opinion disposed of “all the claims as to all
the parties[,]” Tyson Foods, 809 A.2d at 579, in Mentor I.3
III
Next, we review for an abuse of discretion the Court of Chancery’s approval
of the settlement of Shapiro II.  See, e.g., Polk v. Good, 507 A.2d 531, 536 (Del. 1986)
(“When a settlement has been approved as fair and reasonable we must find the
evidence so strongly to the contrary as to amount to an abuse of discretion.”) (citing
Rome v. Archer, 197 A.2d 49 (Del. 1964)).  So long as the trial court’s conclusions in
that regard “are supported by the record and are the product of an orderly and logical
deductive process, they will be accepted.”  Id. (citing Levitt v. Bouvier, 287 A.2d 671,
673 (Del. 1972)).
Mentor argues that the Court of Chancery abused its discretion by blithely
approving the settlement of Shapiro II despite the fact that the purported claims
released in exchange for the payment of attorneys’ fees and expenses were moot.
Shapiro and the Quickturn/Cadence Appellees argue that while the claims released by
9
the class were “exceedingly weak” and “impractical” factually they were not moot as
a matter of law.
Mootness arises when controversy between the parties no longer exists such
that a court can no longer grant relief in the matter.  See First Allied Connecticut
Corp. v. Leeds, 520 A.2d 1044 (Del. 1987) (ORDER); Family Court v. Alexander, 522
A.2d 1265, 1267 (Del. 1987); Sannini v. Casscells, 401 A.2d 927, 929-930 (Del.
1979).  A matter may become moot “if the legal issue in dispute is no longer amenable
to a judicial resolution; or, if a party has been divested of standing.”  General Motors
Corporation v. New Castle County, 701 A.2d 819, 821 (Del. 1997).
The Court of Chancery properly approved the settlement between the parties.
The legal issues left unresolved in Shapiro II, while indeed eroded by the subsequent
business events surrounding the Cadence/Quickturn merger, were not moot as a matter
of law.  In particular, despite the fact that Mentor eventually withdrew from the
contest for Quickturn, Shapiro could have continued to press his claim that Quickturn
did not properly conduct the auction for the company once a change of control became
inevitable.  While Quickturn/Cadence had no obligation to pay Class counsel’s fees,
they secured a broad release - in order to end all litigation in the matter - in exchange
for payment of the fees.  Because the claims were not moot, the Court of Chancery did
not abuse its discretion in approving the settlement.
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NOW, THEREFORE, IT IS ORDERED that the judgments of the Court of
Chancery be, and the same hereby are, AFFIRMED.