COURT OF CHANCERY

OF THE

STATE OF DELAWARE

MORGAN T. ZURN

VICE CHANCELLOR

LEONARD L. WILLIAMS JUSTICE CENTER

500 N. KING STREET, SUITE 11400

WILMINGTON, DELAWARE 19801-3734

May 17, 2020

Stephen E. Jenkins, Esquire

Ashby & Geddes, P.A.

500 Delaware Avenue, 8th Floor

Wilmington, DE 19801

Kevin R. Shannon, Esquire

Potter Anderson & Corroon LLP

1313 North Market Street, 6th Floor

Wilmington, DE 19801

William B. Chandler, III, Esquire

Wilson Sonsini Goodrich & Rosati

222 Delaware Avenue, Suite 800

Wilmington, DE 19801

David E. Ross, Esquire

Ross Aronstam & Moritz LLP

100 South West Street, Suite 400

Wilmington, DE 19801

Rudolf Koch, Esquire

Richards Layton & Finger, P.A.

920 North King Street

Wilmington, DE 19801

RE: Vrajeshkumar Patel v. Timothy S. Duncan, et al.,

 Civil Action No. 2020-0418-MTZ 

 

Dear Counsel:

I have reviewed the complaint and briefs on the pending motions to dismiss 

(the “Motions”) in the above-captioned matter.1 I conclude that complete relief 

cannot be afforded among the parties currently before the Court and order that 

certain necessary parties be joined. Until they are, I will hold the Motions in 

abeyance.

1 Docket Item (“D.I.”) 24; D.I. 25; D.I. 27; D.I. 28.
Vrajeshkumar Patel v. Timothy S. Duncan, et al., 

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I. BACKGROUND

Nominal Defendant Talos Energy, Inc. (“Talos”) is an oil and gas company 

focused on offshore exploration and production in the Gulf of Mexico.2 Plaintiff

Vrajeshkumar Patel is a Talos stockholder.3 His verified complaint (the 

“Complaint”) challenges a February 2020 transaction (the “Transaction”) under 

which Talos acquired a portfolio of Gulf of Mexico producing assets, prospects, and 

acreage from affiliates of nonparties Castex Energy 2014, LLC and ILX Holdings, 

LLC (together, “Sellers”).4 Under the Transaction’s final terms, Sellers received 

$385 million in cash and 110,000 shares of Talos preferred stock, to automatically 

convert into 11 million shares of common stock twenty days after Talos distributed 

its definitive information statement to its public stockholders.5 Defendant 

Guggenheim Securities, LLC (“Guggenheim”) advised Talos on the Transaction.6

Plaintiff’s challenge to the Transaction centers on Talos’ two private equity 

sponsors, Riverstone Holdings, LLC (“Riverstone Parent”) and Apollo Global 

Management, Inc. (“Apollo Parent,” together with Riverstone Parent, the “Parents”). 

2 D.I. 1 ¶ 11 [hereinafter “Compl.”].

3

Id. ¶ 10.

4

Id. ¶¶ 1, 59, 74.

5

Id. ¶ 74.

6

Id. ¶ 34.
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Neither Parent owns any Talos stock. Instead, several affiliated funds own the 

relevant shares. Those funds are parties to a stockholder voting agreement (the 

“Stockholders’ Agreement”) and some are identified in the Complaint.

7

 Funds 

affiliated with Riverstone Parent (the “Riverstone Funds”) own approximately 

27.5% of Talos’ stock;

8

funds affiliated with Apollo Parent (the “Apollo Funds,” and 

together with the Riverstone Funds, the “Funds”) own approximately 35.4% of 

Talos’ stock.9 Plaintiff did not name the Funds as defendants in this action.

7 See D.I. 27, Ex. 6 [hereinafter “Stockholders’ Agr.”]; Compl. ¶¶ 20–21.

8 Compl. ¶¶ 14–15, 62. It is unclear how many Riverstone Funds own Talos stock. The 

Complaint only mentions one by name, while the Stockholders’ Agreement mentions three. 

Compare id. ¶ 21 (“[Riverstone Parent] controls numerous affiliates, including Riverstone 

Energy Partners V, L.P., a controller of Old Talos. As used in this Complaint, the term 

‘Riverstone’ refers to Riverstone Holdings, LLC and its affiliates.”), with Stockholders’ 

Agr. at 1 (referencing “Riverstone Talos Energy Equityco LLC, a Delaware limited 

liability company, Riverstone Talos Energy Debtco LLC, a Delaware limited liability 

company (together, the ‘Riverstone Feeders’), Riverstone V FT Corp Holdings, L.P., a 

Delaware limited partnership (the ‘Riverstone Blocker Holding Company’ and, together 

with the Riverstone Feeders and any other member of the Riverstone Group executing a 

joinder, the ‘Riverstone Parties’)”). Riverstone’s brief represents that two Riverstone 

Funds own the relevant stock. See D.I. 28 at 5 n.4 (describing the Riverstone Funds’ 

organizational structure). In any case, it is undisputed that Riverstone’s affiliated funds, 

rather than Riverstone Parent itself, own the relevant stock. As used in this letter, the term 

“Riverstone Funds” refers to the Riverstone entities that own the relevant Talos stock.

9 Compl. ¶¶ 14–15, 62. It is similarly unclear how many Apollo Funds own Talos stock. 

Compare id. ¶ 20 (“Apollo controls numerous affiliates, including Apollo Management 

VII, L.P. and Apollo Commodities Management, L.P., two controllers of Old Talos. As 

used in this Complaint, the term ‘Apollo’ refers to Apollo Global Management, Inc. and 

its affiliates.”), with Stockholders’ Agr. at 1 (referencing “AP Talos Energy LLC, a 

Delaware limited liability company, AP Talos Energy Debtco LLC, a Delaware limited 

liability company (together, the ‘Apollo Feeders’), AP Overseas Talos Holdings 
Vrajeshkumar Patel v. Timothy S. Duncan, et al., 

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Plaintiff filed his seven-count Complaint on May 29, 2020.10 Counts II and 

V allege that the “Controllers,” defined as Apollo Parent, Riverstone Parent, the 

Apollo Funds, and the Riverstone Funds, breached their fiduciary duties.11 Counts 

III and VI allege that Guggenheim aided and abetted the Controllers’ breaches.12 

Central to the Complaint is Plaintiff’s theory that the Parents and the Funds 

combined their substantial Talos holdings and formed a control group.

13

 Plaintiff 

alleges that “[a]t all relevant times, Talos has been controlled collectively by 

Riverstone and Apollo.”14 The Complaint defines “Riverstone” as including both 

Riverstone Parent and the Riverstone Funds.

15

 Similarly, the Complaint defines 

Partnership, LLC, a Delaware limited liability company, AIF VII (AIV), L.P., a Delaware 

limited partnership, ANRP DE Holdings, L.P., a Delaware limited partnership 

(collectively, the ‘Apollo Blocker Holding Companies’ and, together with the Apollo 

Feeders and any other member of the Apollo Group executing a joinder, the ‘Apollo 

Parties’)”). Again, it appears undisputed that Apollo’s affiliated funds, rather than Apollo 

Parent itself, own the relevant stock. As used in this letter, the term “Apollo Funds” refers 

to the Apollo entities that own the relevant Talos stock. The term “Funds” refers to the 

relevant Riverstone Funds and Apollo Funds.

10 See generally Compl.

11 Id. ¶¶ 20–22; 169–73; 188–92. Plaintiff also seeks relief related to these counts, in the 

form of a finding that the Controllers, as defined, breached their fiduciary duties to Talos 

and its minority stockholders. Id. ¶ F.

12 Id. ¶¶ 174–82, 193–201.

13 Id. ¶¶ 2, 22.

14 Id. ¶ 22.

15 Id. ¶ 20 (“[Apollo Parent] controls numerous affiliates, including Apollo Management 

VII, L.P. and Apollo Commodities Management, L.P., two controllers of Old Talos. As 
Vrajeshkumar Patel v. Timothy S. Duncan, et al., 

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“Apollo” as including both Apollo Parent and the Apollo Funds.16 Based on these 

defined terms, I understand Plaintiff to argue that the Parents and the Funds formed 

a control group and therefore owe fiduciary duties to Talos’ minority stockholders.17 

Plaintiff argues the control group is empowered in part by the Funds’ stock holdings, 

and that the Parents are connected in a legally significant way.

18

 

Because Sellers are affiliated with Riverstone Parent,19 a member of the 

alleged control group, Plaintiff alleges that the control group stood on both sides of 

the Transaction, subjecting it to entire fairness review.20 Plaintiff devotes substantial 

space in his Complaint to the theory that the Transaction was not entirely fair.21

Defendants filed the pending Motions on August 4.22 The Motions assert that 

Plaintiff failed to adequately plead the existence of a control group. Defendants 

used in this Complaint, the term ‘Apollo’ refers to Apollo Global Management, Inc. and 

its affiliates.”).

16 Id. ¶ 21 (“[Riverstone Parent] controls numerous affiliates, including Riverstone Energy 

Partners V, L.P., a controller of Old Talos. As used in this Complaint, the term 

‘Riverstone’ refers to Riverstone Holdings, LLC and its affiliates.”).

17 See id. ¶¶ 170, 189.

18 See D.I. 48 at 20 (citing Dubroff v. Wren Hldgs., LLC, 2009 WL 1478697, at *3 (Del. 

Ch. May 22, 2009)). This letter does not address whether those ties are sufficiently pled.

19 Compl. ¶ 59.

20 Id. ¶ 80.

21 See id. ¶¶ 81–148.

22 See D.I. 24; D.I. 25; D.I. 27; D.I. 28.
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argue, among other things, that because Plaintiff named the nonstockholder Parents

instead of the stockholder Funds as defendants in the Complaint, he sued the wrong 

entities, and his Complaint must be dismissed.23 

The parties briefed the Motions and presented oral argument on February 19, 

2021.24 As explained in more detail below, I conclude that the Parents may properly 

be before the Court, but Plaintiff’s control group is missing the Funds as necessary 

parties. Before the Court can consider the Motions’ merits, all the alleged control 

group’s members must be present to defend their interests.

II. ANALYSIS

The joinder of all necessary parties is an important gatekeeping mechanism in 

any litigation. As Vice Chancellor Slights described:

As master of his complaint, a plaintiff decides, among other things, who 

to sue, who not to sue, where to sue and what claims to bring. When a 

plaintiff elects not to sue a party who, “in equity and good conscience,” 

is deemed “indispensable” to the resolution of the pled claims, courts 

of equity have long understood that the plaintiff’s election not to sue 

that party cannot be countenanced and must be remedied.25

Rule 19(a) provides:

23 See D.I. 28 at 14–16; D.I. 26 at 20–22.

24 See D.I. 73; see also D.I. 76.

25 Germaninvestments AG v. Allomet Corp., 2020 WL 6870459, at *1 (Del. Ch. 

Nov. 20, 2020) (footnotes omitted) (citing Ct. Ch. R. 19).
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Persons to Be Joined if Feasible. A person who is subject to service 

of process and whose joinder will not deprive the Court of jurisdiction 

over the subject matter of the action shall be joined as a party in the 

action if (1) in the person’s absence complete relief cannot be accorded 

among those already parties, or (2) the person claims an interest relating 

to the subject of the action and is so situated that the disposition of the 

action in the person’s absence may (i) as a practical matter impair or 

impede the person’s ability to protect that interest or (ii) leave any of 

the persons already parties subject to a substantial risk of incurring 

double, multiple, or otherwise inconsistent obligations by reason of the 

claimed interest.26

If such a necessary person has not been joined, “the Court shall order that the person 

be made a party.”

27

 The Court may do so upon a motion28 or sua sponte.

29

 If joinder 

is not feasible, the Court must determine whether the person is indispensable such 

that the case cannot go on without her.30

The Complaint and the Motions pose the question of whether the nonparty 

Funds are members of a control group. Any decision favoring Plaintiff on Counts II 

and V would include a determination that the Funds were in a control group and 

owed fiduciary duties to Talos’ minority stockholders. The Funds therefore have 

26 Ct. Ch. R. 19(a).

27 Id. (emphasis added).

28 See Ct. Ch. R. 12(b)(7).

29 E.g., Tikiob v. Tikiob-Carlson, 2020 WL 4036789, at *4 (Del. Ch. July 16, 2020), report 

adopted by 2020 WL 4474951 (Del. Ch. Aug. 3, 2020); E.I. Dupont De Nemours & Co v. 

Shell Oil Co., 1983 WL 8942, at *1 (Del. Ch. Dec. 13, 1983).

30 See Ct. Ch. R. 19(b).
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“an interest relating to the subject of the action,”31 namely, preserving their status as 

nonfiduciaries. Allowing the litigation to commence in their absence would “impair 

or impede [the Funds’] ability to protect that interest.”32 Complete relief also could 

not be afforded without the Funds’ presence, as a judgment against “Riverstone” or 

“Apollo,” as defined in the Complaint, would also be against the relevant Funds.33

Defendants argue this deficiency means the Complaint must be dismissed. 

According to Defendants, the Parents are the wrong parties and should be dismissed 

altogether.34 Defendants’ position mischaracterizes Plaintiff’s theory. Plaintiff does 

not argue that the Parents alone formed a control group. Rather, the alleged control 

group includes both the Parents, which do not own Talos stock, and the relevant 

31 Id. 19(a)(2). 

32 Id. 19(a)(2)(i). 

33 See id. 19(a)(1); Compl. ¶ 20–21. The Funds are legally distinct entities from their 

corporate parents and Plaintiff has not advanced any argument to pierce the corporate veil 

or otherwise ignore corporate separateness.

34 See D.I. 28 at 14 (“Plaintiff has incorrectly named Riverstone as a defendant in this 

action. . . . [T]he Riverstone Funds—and not Riverstone [Parent]—owned Talos stock at 

the time of the challenged transaction.”); D.I. 26 at 20 (“[T]his Complaint should also be 

dismissed as to Apollo because Plaintiff sued the incorrect Apollo entity, namely [Apollo 

Parent]. In short, Plaintiff cannot make claims against [Apollo Parent]. [Apollo Parent] 

has affiliates that manage the Apollo-related funds that invested in Talos. Given the 

relationship of [Apollo Parent] and the relevant funds there is simply no legitimate basis 

for the Plaintiff to include [Apollo Parent] as a party here.”).
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Funds, which do.35 Delaware law may countenance including the Parents in a 

control group, even though they do not own stock.36 In In re EZCORP Inc. 

Consulting Agreement Derivative Litigation, the Court extended fiduciary duties to 

an individual defendant that was the company’s “ultimate controller,” even though 

he exercised control indirectly and did not himself own stock.

37

 EZCORP also held 

that downstream entities through which the “ultimate human controller” owned the 

relevant stock “likewise are appropriate defendants for a breach of fiduciary duty 

claim” under a controlling stockholder theory.38

Here, Plaintiff appears to advance a parallel theory, albeit through murky 

defined terms, that Riverstone Parent, Apollo Parent, the Riverstone Funds, and the 

Apollo Funds formed a control group. All these entities may be proper defendants 

to such a claim; whether Plaintiff can plead and prevail on his theory remains to be 

seen. I note that the Parents have an incentive to argue—and have argued—that the 

35 See Compl. ¶¶ 20–22.

36 See In re Pattern Energy Gp. Inc. S’holders. Litig., 2021 WL 1812674, at *39 (Del. Ch. 

May 6, 2021).

37 2016 WL 301245, at *8–10 (Del. Ch. Jan. 25, 2016) (citing S. Pac. Co. v. Bogert, 250 

U.S. 483, 491–92 (1919), also citing Eshleman v. Keenan, 187 A. 25 (Del. Ch. 1936) 

(Wolcott, C.), aff’d, 2 A.2d 904 (Del. 1938), also citing Sterling v. Mayflower Hotel Corp., 

93 A.2d 107, 109–10 (Del. 1952)); see also Pattern Energy, 2021 WL 1812674, at *38–

41.

38 EZCORP, 2016 WL 301245, at *10.
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entities did not form a control group. “While the named Defendants are incented to 

raise defenses, that does not mean the absent parties, whose rights would be directly 

affected, do not have a right to be heard.”39 In view of the Funds’ obvious interest 

in adjudicating whether they owe fiduciary duties to Talos’ minority stockholders, 

they are plainly necessary parties and ought to be joined as defendants.

Rule 19 requires joinder of a necessary party if such joinder is feasible.40 No 

party has argued that joining the Funds is not feasible for jurisdictional or other 

reasons. To the contrary, Plaintiff offered to amend the Complaint to add the Funds 

as defendants.41 I take this as a representation that joining the necessary Funds 

would be feasible under Rule 19(a). Moreover, it appears that the Funds listed in 

the shareholders’ agreement are Delaware entities.42 Because they are subject to 

service of process, I conclude that joining the Funds that own the relevant Talos 

stock is feasible and thus, they must be joined under Rule 19(a).43 To the extent 

39 Germaninvestments, 2020 WL 6870459, at *9.

40 See Ct. Ch. R. 19(a); Germaninvestments, 2020 WL 6870459, at *6 (“If a party should 

be joined under Rule 19(a), the Court’s next inquiry is whether joinder is feasible. If it is, 

then the Court will direct that joinder occur.”).

41 See D.I. 48 at 51–52. Defendants did not respond to Plaintiff’s proposed amendment in 

their reply briefs. See generally D.I. 55; D.I. 53.

42 See Stockholders’ Agr. at 1.

43 See Ct. Ch. R. 19(a).
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joining the necessary Funds is not feasible, the parties should advise the Court within 

five business days of this letter.

III. CONCLUSION

The Riverstone Funds and Apollo Funds that hold the relevant Talos stock are 

necessary parties to this action. Until they are joined, the Motions are held in 

abeyance. The parties shall confer on a stipulated order identifying and joining the 

necessary Funds and updating the case caption. If the Funds wish to join the Motions 

and present additional argument, the parties shall confer on a schedule by which 

those positions, and any response by Plaintiff, may be concisely presented to the 

Court. Once the Funds are joined and their positions, if any, are presented, the Court 

will take the Motions under advisement.

Sincerely,

 /s/ Morgan T. Zurn

 Vice Chancellor

MTZ/ms

cc: All Counsel of Record, via File & ServeXpress