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Effective August 1, 2017, an amendment to Court of Chancery Rule 171(f) will go effective, setting forth word limitations for non-dispositive motions, and letters to the Court.  Under the amendment, motions filed with the Court–excluding those filed under Rules 12, 23, 23.1, 56 and 65, along with pre-trial and post-trial briefs–are subject to a more restrictive word count.  Motions impacted by this rule are to be filed without an opening brief, and may not exceed 3,000 words.  Oppositions likewise may not exceed 3,000 words, and replies shall not exceed 2,000 words.  The word limitation for motions filed under Rules 12, 23, 23.1, 56 and 65, along with pre- and post-trial briefs, remain the same (14,000 for opening and answering briefs, 8,000 for reply briefs).

In addition, the amendment changes the manner in which an attorney certifies compliance with the word count.  The word count must be stated in the signature block of the filed document governed by Rule 171(f), as opposed to filing a separate certification.

Finally, letters to the Court may not exceed 1,000 words. The amendment states that such letters should be used for “logistical and scheduling issues” and not for substantive relief.

Carl D. Neff is a partner with the law firm of Fox Rothschild LLP.  Carl is admitted in the State of Delaware and regularly practices before the Delaware Court of Chancery, with an emphasis on shareholder disputes. You can reach Carl at (302) 622-4272 or at cneff@foxrothschild.com.

In a prior post, we discussed the implementation of the Delaware Rapid Arbitration Act, along with the concurrent amendment of Delaware Supreme Court Rules 6, 7, 9 and 32, and Delaware Court of Chancery Rules 96 through 98.

The Court has published an Order Amending Rules 6, 7, 9 and 32 of the Rules of the Supreme Court of Delaware, which explains the amendments to these various Supreme Court Rules.

In addition, the Delaware Court of Chancery Rule Amendments for Rules 96-98 reflects the revisions made to these various rules of the Delaware Court of Chancery.  Links to these amendments and the Joint press release issued by the Courts can be found on the Delaware Court of Chancery’s website.

Carl D. Neff is a partner with the law firm of Fox Rothschild LLP.  Carl is admitted in the State of Delaware and regularly practices before the Delaware Court of Chancery, with an emphasis on shareholder disputes. You can reach Carl at (302) 622-4272 or at cneff@foxrothschild.com.

The Delaware Supreme Court and the Court of Chancery have each amended their Rules to implement the Delaware Rapid Arbitration Act.  The announcement of these amendments provides,

Amendments to the Delaware Supreme Court Rules and the Court of Chancery Rules Related to the Delaware Rapid Arbitration Act

To implement aspects of the recently-enacted Delaware Rapid Arbitration Act, 10 Del. C. § 5801 et seq. (“DRAA”), the Delaware Supreme Court and the Court of Chancery have amended their rules. These amendments are effective June 1, 2015.

The Supreme Court has amended Supreme Court Rules 6, 7, 9, and 32. Rule 6 has been amended to include the time for an appeal or cross-appeal of a final award under the DRAA. Rule 7 has been amended to include the procedures for an appeal of a final award under the DRAA. Rule 9 has been amended to clarify the record on appeal of a final award under the DRAA. Rule 32 has been amended to include the procedure for a stay or injunction pending appeal of a final award under the DRAA.

Court of Chancery Rules 96-98 also have been amended. Rule 96 establishes the process for commencing a summary proceeding to appoint an arbitrator under the DRAA in certain circumstances, such as when the parties cannot agree on an arbitrator. Rule 97 governs proceedings under the DRAA to enforce subpoenas, determine an arbitrator’s fees and enter judgment after arbitration. Rule 98 was removed in its entirety and is reserved for future use.

The Supreme Court and Court of Chancery amendments are available on the  Rules of the Delaware State Courts website.

 

On January 16, 2015, the Court of Chancery adopted an amendment to Rule 170, which governs pro hac vice motions.  Effective February 2, 2015, the amended Rule 170 has increased the cost of filing a pro hac vice motion in the 2015 calendar year form $300 to $375.  The motion will cost $400 in the calendar year of 2016, and will thereafter increase in cost annually by the rate of inflation as determined by the Delaware Supreme Court.

Carl D. Neff is a lawyer with the law firm of Fox Rothschild LLP.  Carl is admitted in the State of Delaware and regularly practices before the Delaware Court of Chancery, with an emphasis on shareholder disputes.  You can reach Carl at (302) 622-4272 or at cneff@foxrothschild.com.

On April 1, 2014, new provisions of the Delaware General Corporation Law (the DGCL) went into effect, Sections 204 and 205 of the DGCL.

Section 204 of the DGCL provides corporations with the ability to ratify certain corporate actions that would otherwise have been void or voidable because of their failure to comply with statutory law or the corporation’s organizational documents. Prior to the adoption of Section 204, Delaware case law had held that such corporate actions could not be subsequently ratified. The new statute provides instructions regarding the following: (i) the content of the initial board resolution; (ii) whether stockholder approval is necessary; (iii) which stockholders must be notified of the action; (iv) the form and content of stockholder notice; and (v) the form and content of public filings necessary after the resolution has been approved.

Section 205 of the DGCL vests the Court of Chancery with exclusive jurisdiction over any action brought in respect of such defective corporate acts.  Section 205 provides the Court of Chancery with broad powers to fashion declaratory and other appropriate remedies, and specifies considerations to be weighed by the Court of Chancery in fashioning these remedies.

Carl D. Neff is a lawyer with the law firm of Fox Rothschild LLP.  Carl is admitted in the State of Delaware and regularly practices before the Delaware Court of Chancery, with an emphasis on shareholder disputes. You can reach Carl at (302) 622-4272 or at cneff@foxrothschild.com.

The Court of Chancery has approved the amendment of Rule 6(e).  The amendment provides as follows:

(e) Additional time after service by mail or by e File.  Whenever a party has the right or is required to do some act or take some proceedings within a prescribed period after being served and service is made by mail or by e Filing, 3 days shall be added after the prescribed period would otherwise expire under subdivision (a).  The additional 3-day period applies only to acts taken by parties and does not apply to actions taken by the Court.

The amendment becomes effective on February 1, 2014.

 

Earlier this year, the Court of Chancery enacted Rule 5.1, which raised the bar in terms of what information could remain confidential before the Court.  Pursuant to sub-section (b) of the rule, “good cause” is required for information to remain confidential.  According to the rule, “good cause … shall exist only if the public interest in access to Court proceedings is outweighed by the harm that public disclosure of sensitive, non-public information would cause.”  Court of Chancery Rule 5.1(b)(2).  To view a previous post summarizing Rule 5.1, click here.

Through Rule 5.1, the Court has provided examples of categories that may qualify as confidential information, such as “trade secrets, sensitive proprietary information; sensitive financial, business, or personnel information; sensitive personal information such as medical records; and personally indentifying information such as social security numbers, financial account numbers, and the names of minor children.”  Court of Chancery Rule 5.1(b)(2).

Recent Interpretation of “Good Cause” Under Rule 5.1

Recently, the Court adjudicated a dispute between two litigants which impacts upon this very rule: whether certain information contained in pleadings met the heightened standard under Rule 5.1 which would warrant designating such information as confidential.  This issue was squarely addressed by Vice Chancellor Laster in the case of Horres v. Chick-fil-A, C.A. No. 5530-VCL (Del. Ch. Mar. 27, 2013). 

In this case, Chick-fil-A terminated its franchise agreement with an individual named Joseph A. Horres, Jr., who was an operator of a franchise in Camden, Delaware, as a result of allegations of misconduct.  Horres responded by filing suit alleging bad faith and failure to provide adequate notice of the termination, along with filing a temporary restraining order against the injunction.

Chick-fil-A opposed the temporary retaining order and filed an affidavit and exhibits in support of its position. The Affidavit described allegations of sexual harassment that certain employees had made against Horres. The exhibits consisted of (i) the franchise agreement and related documentation and (ii) the letter terminating the franchise agreement.  Chick-fil-A then moved to maintain the confidentiality of the affidavit and exhibits thereto.

Chick-fil-A argued that that the affidavit contains confidential information that, if disclosed, will cause harm to alleged victims and witnesses, and Chick-fil-A itself. The Affidavit describes allegations of sexual harassment that were made against Horres and Chick-fil-A’s response to the allegations, along with the names of individuals making such allegations, and witnesses.

The Court denied Chick-fil-A’s motion to maintain the confidentiality of the affidavit and exhibits, with the exception that the names of the victims and witnesses could remain confidential.  The Court found that other than the names, nothing else rose to the level of sensitive information warranting continued confidential treatment of the pleadings.  The Court further noted that while it may be “embarrassing” for Chick-fil-A to have one of its franchises identified as the location of misconduct, “that type of embarrassment will not suffice for continued Confidential Treatment.”  

Moreover, the Court rejected Chick-fil-A’s request to maintain the confidentiality of the exhibits to the affidavit.  The exhibits consisted of a franchise agreement and termination letter.  Chick-fil-A argued that they contained “proprietary information that is not readily available to the general public.”  The Court disagreed that they should remain confidential, stating: “[t]hat information is nonpublic does not automatically make it sensitive or entitle it to Confidential Treatment.”

Conclusion

This case is noteworthy in that it constitutes one of the earliest decisions to analyze the heightened “good cause” requirement set forth in Rule 5.1 for the designation of confidential information. As a result of this decision, parties appearing before the Court should not automatically assume that pleadings will remain confidential simply because they contain “embarrassing” or “nonpublic” information, and should proceed cautiously in terms of filing pleadings and exhibits with the Court that they would prefer not to be exposed to public scrutiny.

Under the recently enacted Court of Chancery Rule 5.1, the Court of Chancery has set forth a new procedure for the filing of complaints under seal.  For a previous post concerning Rule 5.1, click here.  Under the previous rule, a party seeking to file a complaint under seal was required to contemporaneously file a motion to seal to accompany such pleading.  

Now, under Rule 5.1(e), such a motion is no longer required.  Instead, the filing party can file the complaint under seal, provided that a confidential cover page is included, along with a confidential footer.  Moreover, the filing party is required to provide a notice to “each person who could have a legitimate interest in designating information” as confidential information on the same day as the filing of the complaint.  Such notice must also include a proposed redacted version of the complaint, a copy of Rule 5.1, and a statement that if no redactions are provided by 3:00 p.m. on the third day after the filing, plaintiff’s proposed redacted version of the complaint will be filed with the Court.  See Court of Chancery Rule 5.1(e)(2).  This notice should not be filed with the Court.  

In addition to providing notice to any interested parties, plaintiff must file a cover letter with the Court certifying compliance with Rule 5.1.  See Court of Chancery Rule 5.1(e)(1).  In addition, when filing the complaint, plaintiff must publicly file the supplemental information sheet referenced in Rule 3(a)(2), and such cover sheet “shall summarize the claims asserted in the complaint in sufficient detail to inform the public of the nature of the dispute.”  See Court of Chancery Rule 5.1(e)(1).

If no party designates redactions by 3:00 p.m. on the third day after notice has been given, then the public version filed will be plaintiff’s proposed redacted version of the complaint.  Plaintiff must file a redacted version of the complaint within three days after initially filing the complaint under seal.

The Court of Chancery has recently expanded its Guidelines for Practitioners, to incorporate guidelines regarding discovery.  On January 13, 2012, this blog provided a summary review of the original Guidelines, which were originally issued in January 2012.  The new guidelines, issued by the Court on December 4, 2012, include (i) Court of Chancery Guidelines for the Collection and Review of Documents in Discovery; and (ii) Court of Chancery Guidelines for Expedited Discovery in Advance of a Preliminary Injunction Hearing.  These guidelines are a “must read” for any attorney practicing before the Court of Chancery.

According to the Court’s press release issued on December 4, 2012:

These guidelines explain the Court’s expectations regarding parties’ responsibility to confer early and often regarding discovery, including about electronic discovery procedures, the overall scope of discovery, preferred procedures for collection and review of discoverable material, including ESI, the privilege assertion process, and the role of Delaware counsel in the discovery process.  The Court also developed guidelines for expedited discovery in advance of a preliminary injunction hearing.  These new guidelines encourage communication among counsel and are intended to assist the Bar in developing reliable and transparent procedures for electronic discovery.  The Court and its Rules Committee are hopeful that use of these guidelines will help avoid unnecessary and expensive disputes regarding the discovery process.

Several highlights of these newly issued guidelines are as follows:

Court of Chancery Guidelines for the Collection and Review of Documents in Discovery

  • Encouragement of a “meet and confer” after the start of discovery to develop a discovery plan that includes electronic discovery.
  • Experienced outside counsel should be actively involved in establishing and monitoring the procedures used to collect and review documents to determine that reasonable, good faith efforts are undertaken to ensure that responsive, non-privileged documents are timely produced.
  • Counsel should be mindful of the obligation to take reasonable steps to preserve information, including electronically stored information, which is potentially relevant to the litigation. 
  • With respect to privilege logs, parties are not expected to log post-litigation communications, parties should attempt to agree on procedures that both sides will use with respect to email chains, and the parties are free to log documents by category instead of on a document by document basis.

Court of Chancery Guidelines for Expedited Discovery in Advance of a Preliminary Injunction Hearing

  • Written discovery typically is limited to document requests, as well as narrowly-tailored interrogatories intended primarily to identify persons with relevant knowledge.
  • The parties should agree upon a schedule so that initial written discovery and document production is completed before the start of depositions.
  • When responding to written discovery requests, the parties are obligated to conduct a reasonable search for relevant and responsive documents. 
  • After a request for a preliminary injunction is filed, the parties should collect and produce the “core documents” associated with that application promptly.
  • The parties should identify the key custodians and focus their document collection efforts on those custodians. 
  • Documents need not be produced in a particular format.  The parties are expected to cooperate to produce documents in a format that is usable to the parties. 
  • Parties are encouraged to make agreements that reduce the time, expense and burden associated with conducting a document-by-document privilege review and preparing privilege and redaction logs so that the merits of the application may be developed in the limited time available and fairly presented to the Court.

Notably, through these newly issued Guidelines, the Court of Chancery again stresses the importance of the role of Delaware counsel in all cases before the Court, even when non-Delaware counsel has significant involvement in the case.