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Zalvin v. Gentex Corp.

Derivative Action's Voluntary Dismissal Does Not Preclude Award of Attorney's Fees

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MEMORANDUM AND ORDER   Plaintiff Joel Zalvin voluntarily dismissed this shareholder derivative action after defendant Gentex Corporation (“Gentex”) took the action demanded in the complaint, thereby mooting Zalvin’s case. Zalvin then moved, “pursuant to Federal Rule of Civil Procedure 54(d)(2) and pursuant to the Court’s inherent power to award attorneys’ fees,” to recover the expenses of prosecuting this action, including attorney’s fees. (Notice of Plaintiff’s Motion for an Award of Attorney’s Fees (Doc. No. 15) at 2.) In a letter motion dated May 24, 2019, Gentex now moves to strike that motion, relying on two district court opinions from the Ninth Circuit which hold that fees cannot be awarded under Rule 54 absent a “judgment,” and that a notice or stipulation of dismissal does not constitute a “judgment” as defined in Rule 54(a). For the reasons set forth below, Gentex’s motion is denied and Zalvin’s motion for attorney’s fees is referred to Magistrate Judge Levy to hear and determine. BACKGROUND On April 16, 2019, Zalvin commenced this shareholder derivative action against Gentex under section 14(a) of the Securities Exchange Act of 1934, 15 U.S.C. §78n(a), alleging that a proposal in Gentex’s proxy statement which sought shareholder approval of the corporation’s “2019 Omnibus Incentive Plain” failed to comply with the disclosure requirements of Schedule 14A promulgated under the Securities Exchange Act of 1934, 17 C.F.R. §240.14A-101. Case 1:19-cv-02215-RRM-RML Document 19 Filed 05/18/20 Page 1 of 6 PageID #: 333 (Complaint (Doc. No. 1) at

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