COURT OF CHANCERY OF THE S AM G LASS C OCK III

V ICE C HANCELLOR STATE OF DELAWARE C OURT OF C HANCERY C OURTHOUSE 34 T HE C IRCLE G EORGETOWN , D ELAWARE 19947 Date Submitted: November 20, 2023

Date Decided: December 8, 2023 Francis Pileggi, Esquire Sean Brennecke, Esquire Aimee Czachorowski, Esquire LEWIS BRISBOI S BISGAARD & SMITH LLP 500 Delaware Avenue, Suite 700 Wilmington, DE 19801 Andre Dupre, Esquire Steven Wood, Esquire Johanna Peuscher

- Funk, Esquire Kendeil A. Dorvilier, Esquire M C CARTER & ENGLISH LLP Renaissance Centre 405 N. King Street, 8th Floor Wilmington, DE 19801
Re: Barry Leistner v. Red Mud Enterprises LLC , C.A. No. 2023

- 0503

- SEM
Dear Counsel: Before me are Plaintiff’s Exceptions to the Magistrate’s Final Report of September 7, 2023 (the “Report”), denying a books and records request. 1 Plaintiff , Barry Leistner, is a member and investor of Red Mud Enterprises LLC (the “Company”)

. 2 In an unre lated New York action, in 2010, Plaintiff obtained a default judgment against the principals of Red Mud

. Despite obtaining the judgment, Plaintiff continued to do business with the principals. But distrust and contentious

1 Bench Ruling before Magistrate in Chancery, Dkt. No. 78; Tr. Tel

. Post

- Trial Rulings of Magistrate’s Final Report, Dkt. No. 83 (“Report”)

. 2 According to the parties , the C ompany business involves a process to remediate the industrial waste “red mud,” a byproduct of aluminum production. See Pl.’s Mem. i n Supp

. of Exceptions to Magistrate’s Report 13

– 14 , Dkt. No. 86 (“Pl.’s Exceptions”)

.2 discussions among the parties pe rsisted over several years

. Thereafter , Plaintiff
became a member of Red Mud and made a books and record demand , which was divided into four categories and subdivided into 42 sub

- categories (the “Demand”)

. T he C ompany deemed the Demand unreasonable , characterizing the Demand as a

“ fishing expedition ” and beyond the scope required by the LLC agreement

. The Magistrate found that the Company had met its burden to show that its decision was

proper , since Plaintiff’s purposes in seeking book s and records were to pursue his interests as a judgment creditor of Red Mud’s principals , and also to become involved in the day

- to

- day management of the Company, which was a role not guaranteed by the LLC agreement

. 3
I have reviewed the record and arguments , together with the Magistrate’s thoughtful decision

. Plaintiff sought records purportedly to value his interest in Red
Mud. That is undoubtedly a proper purpose. The evidence presented to the Magistrate, however, indicates that , as the Magistrate found, the primary purpose of
Plaintiff was not a stockholder interest. 4 This is strongly supported by the breadth and nature of the documents sought, which go far beyond those needed for a stockholder purpose. Upon de novo review, 5 I adopt t he Magistrate’s Report

. Specifically, Plaintiff’s document request is overbroad , to the extent it is not

3 Report 33

– 39. 4 Id. 5 See DiGiacobbe v. Sestak , 743 A.2d 180, 184 (Del. 1999).3 sustainable under the rationale expressed in Highland Select Equity Fund, L.P. v. Motient Corp oration

. 6 Plaintiff in exceptions asks me to , “at a mi nimum , ” tailor his request to provide valuation materials. 7 That I decline to do on exceptions. To the extent Plaintiff requires documents to value his interests, or for some other stockholder purpose, t his decision of course is without prejudice to Pla intiff’s right to seek books and records going forward upon a reasonable demand. To the extent Plaintiff cites “late discovered evidence,” that evidence may be relevant to any litigation over a subsequent demand, if any.
In addition to the records demand based on the LLC agreement and the statute , the litigation also sought documents as a matter of separate contract. I adopt the Magistrate’s finding that specific performance of these obligations is unnecessary , since t he records have been produced. 8 For the foregoing reasons, and for the reasons explained in the Magistrate’s
well

- reasoned bench ruling of September 7, 2023, Plaintiff’s Exceptions are
DENIED. To the extent the foregoing requires an Order to take effect , IT IS SO
ORDERED.

6 906 A.2d 156, 157 (Del. Ch. 2006), aff'd sub nom. Highland Equity Fund, L.P. v. Motient Corp. , 922 A.2d 415 (Del. 2007). 7 Pl.’s Exception s 4. 8 Report 26.4 Sincerely , /s/ Sam Glasscock III Vice Chancellor