COURT OF CHANCERY OF THE STATE OF DELAWARE L ORI W. W ILL V ICE C HANCELLOR L EONARD L. W ILLIAMS J USTICE C ENTER 500 N. K ING S TREET , S UITE 11400 W ILMINGTON , D ELAWARE 19801

- 3734 D ate Submitte d: June 30, 2023 Date Decided: July 18 , 2023 William M. Alleman, Jr., Esquire Sean A. Meluney, E squire Matthew D. Be ebe, Esquire Meluney Alleman & Spence, LLC 1143 Savannah Road, Suite 3

- A Lewes, Delaware 19958 Catherine A . Gaul, Esquire Randall J. Teti, Esquire Ashby & Geddes, P.A. 500 Delaware Avenue , 8th Floor Wilmi ngton, Delaware 19801

R. Bru ce McNew, Esquire Cooch and Ta ylor, P.A. 100 0 North West Street, Suite 1500 W i lmington, Delaware 19801 Ronald N. Brown, III , Esquir e Kelly L. Freund, Esquire DLA Piper LLP (US ) 1201 North Market St reet , Suite 2100 Wilming t on, Delaware 19801
RE: Uvaydov v. F enwick

- Smith et al. , C.A. No. 2023

- 0137

- LW W
Dear Counsel: I write regarding the Lightning Defendants ’ Motion for C o ntinued
Confidential Treatment (the “ M o tion ” )

. 1 The movants seek an order under Court of Chancery Rule 5.1(b) to continue the confidentia l treatment of information
redacted from the public version of the complaint

. Three non
- party petitioners , who are plainti ffs in related federal securities litigation, oppose the Motion

.

1 Lightning Defs. ’ M ot. for C o ntinued Confidential Treatment (Dkt. 1 5) ( “ Mot

. ” )

. The

“ Lightning Defendants ” are listed in the Motion. See i d. at 1.C.A. No. 20 23

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July 18, 2023 P age 2 of 11
Af t er weighing the public rig ht o f access against the interests of nominal defendant Lightning eMotors, Inc. ( “ Lightning ” ), I conclude that the M otion should be granted with limited exceptions

. I. BA CKGROUND
Th is is one of several pending matters con cerning the de

- SPAC business
combi n ati on of Gig Capital3, Inc

. and Li ghtning ’ s predecessor , Lightning Systems,
Inc

. In the pre sent matter, plaintiff Zalmon U vaydov is pursuing derivative claims
for bre ach of fiduciary dut y against the pre
- and post

- de

- SPAC B oar d of D i rectors , and for fraud and aiding and abetting breaches of fiduciary duty against Lightning Sys tems ’ directors . H e contends that Gig Capital3 overpaid for the target and tha t Lightning ’ s Board “ tout [ ed ] sales prospect s that it knew were un a chievable. ” 2 Uvaydov’ s Verified Sharehol der Derivative Complaint (the “ Complaint ” )

wa s filed on February 6 , 202 3 , with a redacted public version filed three days
later. 3 The Co mplaint in cludes material that Uvaydov obtained from Lightn ing through a books and records demand pu rsua nt to 8 Del. C. § 220

. More tha n a year before th e Complaint was filed , David P. Sarro, Kevin L. Ty e, and Jess Q. Williams ( to gether, the “ Federal Plaintiffs ” or the “ Petitioners ” )
file d a putative class actio n in the United States District Court for the District of

2 Veri fied S ’ ho lder D eriv ative C o mpl. (Dkt. 1) ( “ Compl. ” ) ¶ 2.C.A. No. 20 23

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July 18, 2023 P age 3 of 11
Co lorado (the “ Federal Acti on ” ) against Ligh tning and certain of the individual
defendants here

. 4 The claims in the Federal Action are broug ht under the
Securities Act of 1933 an d the Securities Ex change Act of 1934. The Federal
Action is su bject to a disc overy s tay under the Private Securities Litigation Re form Act of 1995 ( “ P SLRA ” ). 5
On Mar ch 28, 2023, the p arties to this lawsuit, the Federal Action, a nd
another related case e ngaged in an unsuccessful mediation session

. 6 According to the Lightning Defen dants, the Federal Plaint iffs subs equently announced an
intention to amend their pleading and requested that Lightning prov i de them with
the same books and records given to Uvay dov . Lightning declined because it
believes that pro ducing the documents to th e Federal Plaintiffs woul d contr aven e the PSLRA discovery stay. 7

3 Public Version of Verified S ’ ho lder Deriv ative Compl. (Dk t. 2)

. 4 Shafer v. Li ghtning eMotors, Inc. , et al. , No. 1 :21

- cv
- 02774

- RM R

- K LM (D. Colo

. ).
5 In ad di tion, a p u tative class a ction wa s filed in this court on August 4, 2021

. Delman v. GigAcquisitions3, LLC , C .A. No . 2021

- 0679

- LWW (Del. C h

. ). Ano ther derivative complaint was filed in the United States District Court for the District of Colorado in Fe brua ry 20 2 3. Lanham v. Fenwick

- Smith, et al. , No. 1:23

- cv
- 00507

- NYW

- NRN (D. Colo

. ).
6 The Federal Plaintiffs received a copy of the unredacted Comp laint during mediation. See Suppl. Decl. of Boris Feldman (Dkt. 22) ¶ 2

. 7 See Mot

. at 5

.C.A. No. 20 23

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- LW W

July 18, 2023 P age 4 of 11 On June 8, the Petitioners filed a Notice of Cha llenge to C o nfidential
T reatment in this court. 8 On J une 15 , the Lightn ing Defendants filed t he Motion

. On Jun e 22, the Peti tioners filed an opposition to the M ot ion. 9 On June 23, the Lightn ing Defendants moved for leave to file two declaration s in reply , which I granted

. 10 On June 26, t he Lightning Defendants filed two supplemental
declar ations in further support of th e Motion. 11 On June 28, the Pet itioners moved
for lea ve to fil e a sur
- reply , which I granted as unopposed

. 12 After t he Petitioners
filed their sur
- rep ly on June 30 , 13 I took the Moti on under advisement

. II. ANALYSIS
Court of Chance ry Rul e 5.1 “was created to accommodate a minor ex ception to a truism, that in a free and democratic society courts must conduct their business in the open, s ubject always to scrutiny by the public tha t these courts serve. ” 14 The party seeking to m aintain c onfid ential treatment “bears the bur den of es ta bl ishing

8 Dkt. 14.
9 Opp ’ n to Defs. ’ Mot. for Continued Confidential Tr eatment ( Dkt. 17 ) ( “ Opp ’ n ” )

. 10 D kt s . 1 8 , 19

. 11 Dkt s. 21

- 22.
12 Dkt. 24.
13 Dkt

. 2 7

. 14 G KC Strat eg ic V

a lue Master F und

, LP v. Baker Hughes In c. , 2019 WL 259 257 4 , at *2 (Del. Ch. June 25, 2019)

.C.A. No. 20 23

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July 18, 2023 P age 5 of 11 good cause ” f

or c ontinued confidentiality. 15 G o od cause may exist where “t he public interest in acc es s to Court proceedings is ou tweighed by the harm that public disc lo s ure of sensitive, non

- public informa tion would cause. ” 16 When
confidential tre at ment is challenged, “ the court balances the public and private
interests , ‘ with a tie going to disclosure. ’ ” 17 Rule 5.1(f) permits “ [a]ny perso n ” to challenge the co ntinued confidential
treatment of filings in this court

. 18 A challenge r ’ s purpose does no t affect a party ’ s enduring “ duty to designate confidential information under Rule 5.1 [a nd] e n sure that the redacted pu blic document re flects only [the party ’ s] conf identiality
interests. ” 19 Still, “ t he court is [not] blind to the challenger ’ s identity o r motiv ations in conduc ting a Rule 5.1 analysis. It is a factor that the court can appropriately weigh in its balancing of the public and privat e interests

. ” 20

15 C t. Ch. R

. 5.1(b)( 3 ).
16 Ct. Ch. R. 5.1 (b)(2).
17 In re Lordsto wn Motors C o rp. S ’ hold er s Litig. , 2022 WL 601120, at *1 (Del. Ch. Feb. 2 8, 2022 ) (quoting G KC S trat egic , 2019 WL 259 257 4 , at *2 ).
18 Ct. Ch. R. 5.1(f

) ; see Cormier v. Burns , C.A. No. 2021

- 1049

- MTZ , at 3 (Del. Ch . Jan. 24, 2022) ( ORDER) ( “ [T]he mere fac t tha t the movant i s a plaintiff subjec t t o a P SLRA s tay doe s not invalidate his Rule 5.1 request. ” )

. 19 See G KC Stra tegic , 2019 W L 2592574, at * 6 (explaining that a challenger ’ s motivations are “ i mmater ial ” to a party ’ s obligations under Rule 5.1 )

. 20 Lordstown , 2022 WL 601120, at * 7

.C.A. No. 20 23

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- LW W

July 18, 2023 P age 6 of 11 Although I review the Motion with the public ’ s access right f ront of mind, I
do so with some ske pticism

. The Pe t itioners are challenging con f idential treatment

to generate fo dder for an amended co mp la int in the Federal Action. This is no t a public interest. 21 It is creative litigation gamesmanship

. 22

L ightning, for its part, asserts th at the r edacti ons do not impai r the pub lic ’ s understanding of the claims in this matte r. The Complaint contains 3 1 par tial

re dactions out of 222 paragraphs. Acco rd ing to Lightning, continued confidential

treatment fo r these redactions is warranted to protect it from c ompetitive harm that
could result from disclosing its sensitive proprietary or financial material.
The challenged redactions fall into three categories: forward

- looking projections, cus tomer identitie s and orders, and Board recommendations and

a nalys e s. I take e ach in turn.

21 Cf. Al Jaz eera Am

. , LLC v. AT&T Servs. , Inc. , 2013 WL 5614284, at *5 (Del. C h. Oct. 14, 20 13) ( ob serv ing that challenges “ filed by not able news org anizatio n s and reporters d emonstr a te the public ’ s interest in th [e] litigation ” ); see also In re Boeing Co. Deriv

. Litig. , 2021 WL 392851 , at *3 (Del. Ch. Feb. 1, 2021) ( s a m e ) ; Sequoia Presidential Yacht Grp. L

LC. v. FE P ’ rs LLC , 2013 WL 3724946, at * 3 (Del. Ch. July 15, 2013 ) ( same ).
22 See G KC Strate gic , 2019 W L 2592574 , at * 2 ( noting that “ gam esmanship ” c an be tak en i nto account in a Rule 5.1 analysis).C.A. No. 20 23

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July 18, 2023 P age 7 of 11
A. Forward
- Looking Projections
The bulk of the redact ions concern revenue and product ion projections , forecast to 2025

. 23 T h e P etitioners ar gue t hat the information is “ stale ” because it

“ consists of assessments of projection capabi liti e s a nd customer orders for vehicles already in the market ” and “ out

- of

- date financial proj ections. ” 24 But a ccording to a
dec laration filed by Light n ing ’ s Chief Legal Off icer and Corporate Secretary Steve
Mason , it is not that simple

. 25
Mason ’ s sw orn declar ati on states that the “ projections redacted in the Complaint are not stale and their disclosure would cause the Company competitive
harm. ” 26 “ [P] r ojections dating f rom 2020 continue to be s ensitive competitive
informatio n ” since Lightning ’ s “ industry is ch ara cterized by long sale cycles ” wi th
customer orders that take months or years to complete

. 27 Even though Lightning ’ s vehicles are in the market, a competitor coul d us e the redacted information to

23 See Compl. ¶¶ 99

- 100, 102

- 11 , 113

- 14, 116, 12 0

- 21 , 12 3, 128 . Paragraphs 1 46 to 148 of the Complaint reflect discussions of these projec tions by the Board and Audit Committee. See infra note 39 and accompanying text.
24 Opp ’ n at 6.
25 Suppl. De cl. of Steve Mason ( Dkt. 21) ( “ Mason D ecl. ” ).
26 Id. ¶ 4.
27 Id. ¶¶ 4

- 5.C.A. No. 20 23

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July 18, 2023 P age 8 of 11

“ discern Lightning ’ s over all producti on p rojections for a giv en custo mer ” or “ how

muc h previo usly projecte d revenue and production remain outstanding. ” 28
Given this context , revealing the information c ou ld cause c ompetiti ve i njury to Lightning

. Conversely, the public inte rest is slight

. Li gh tning did not
white was h the Complaint. R edaction s per taining to projections are

— with one exception addressed below 29

— appropriately limited to “precise sales and revenue goals ” and Lightning ’ s “anticipated pro duction timeline. ” 30 A n interested reader

can readily disc ern t he n ature of this a ction and th e pu rported harms at issue
without the disclosure of Light ning ’ s sensitive forward

- looking projections

. B. Non
- Public Customer Identitie s and Orde rs
T he seco nd cate gory of inform ati on conce r ns n on
- pub lic customer identitie s
and o rders

. 31 The Petitioners argue that there i s no basis to conclude Lightni ng ’ s customer relationships would be impaired if revealed

. 32 But, as Mason explains , disclosure of confide ntial custom er identities could provide competitors with opportunities to “ un de rcut Lightning ’ s relationships ” given the nature of the

28 Id. ¶ 5.
29 See infra Order ¶ 2 .a (d eta iling redactions to remain in paragraph 121 of the Complaint ).
30 Lordstown , 2022 WL 601120, at *4.
31 Comp l. ¶¶ 103

- 06, 111, 113

- 16, 118

- 20, 128 , 158

. The C omp laint doe s not redac t the na m es of customer s that have been publicly discl osed. E.g. , id. ¶¶ 106

- 10

.C.A. No. 20 23

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July 18, 2023 P age 9 of 11
nascent electric vehicle industry

. 33 T he risk of such har m is uncertain , yet

mea ningful if realized. It outweighs the minor p ublic interest in k now ing Lightning ’ s customer identities

. 34
The Complai nt a lso narrowly redact s info rmation about non

- public customer
orders ( actual and projected) and price terms

. 35 Good cause exists to maintain the confidentiality of this material since d isclosure c ou ld provide an unfair adv antage to third parties in future dealings with Lightning. 36 “ [T] he po tenti al economic
harm caus e d by d isclosure ” of a price term “ outweigh s the public interest in accessing that informatio n, largely because knowledge about price te rms does n ot impinge o n the public ’s understanding of the disputes before this Court

. ” 37 That is

32 Opp ’ n at 7.
33 Mason Decl. ¶ 6.
34 See Lordstown , 2022 WL 601120, at *6 ( explaining, in the context of an early

- stage electric vehicle company, that “ g o od cause ex ist [ed] to mai ntain th e confidential treatment o f customers ’ i dentities that ar e not already in the public mix ” ).
35 See Compl. ¶¶ 103

- 11, 113, 1 20, 123, 128.
36 Mason Decl. ¶ 9.
37 Al Jaz eera Am

. , 2013 W L 5614284, at * 5 ; see also In re Oxbow Carb on LLC , 2 016 WL 7323 443, at * 4 (D el. Ch. Dec . 15, 2016) ( f i n d i ng good cause to maintain confidentiality of prices offered by bidders and their id entities ) ; Mits ubishi Po wer Sys. Am s
. , Inc. v. Babcock & Bro wn Infra structure G r p. U.S., LLC , 2013 WL 10215 618 , at * 2 ( De l. Ch. Mar. 15, 20 13) ( ORDER) (hol ding that pric ing and prof it

- related informatio n qualified for continued c onfiden tial treatment under Rule 5.1)

.C.A. No. 20 23

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July 18, 2023 P age 10 of 11
al so true for the speci fics of customer orders, which are not needed for the pu blic

to understand the claims in the Complaint

. 38
C. Board Recommendations and A n aly s e s
The final cate gor y of information concerns Bo ard

- lev el analyses and
discussions

. 39 The public interest in this category is generally stronger than in the
other two. The Com p l aint alleges that the Board m embers breached their f id uciary
duties and defrau ded Lightning by, for example, making public misstateme nts about Lightning ’ s financial projections, order backlog, and producti on capabilities

. The Board ’ s k nowledge of suc h topics is at the c ore of t his matter. By and l a rge, though, the allegations ab out the Board ’s analys e s and
deliberations are disclose d in the public version of the Complaint

. 40 The redacted
material concer ns strategic discu ssions abou t revenue and product projections, key
customer relat ionships, and organizational planning

. Disclos ure could allow Lightning ’ s c ompetitors to identify Lig htning ’ s business develo pment strategies
and impair Lightning ’ s market c ompetitiveness

. 41 Narr ow redactions o f this

38 See Lordstown , 2022 WL 601120, at *6.
39 Compl . ¶¶ 12 1, 146

- 51, 157.
40 See Lordstown , 2022 WL 60 1120, at * 4 ( cautioni ng that “ general descri ptions of boar d

- level summaries ” are ine ligible for confidential treatment) ; Corm ier , C.A. No. 2021

- 1049

- MTZ , at 3 (same)

. 41 Mason Decl. ¶

¶ 4

- 7

.C.A. No. 20 23

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July 18, 2023 P age 11 of 11 specific i nformation do not impede the public ’ s understanding of Uvaydov ’ s

conte n tion that Lightning overst ated its sales prospects. 42
A han dful of the redactions go f a rther and s weep in vagu e generalities
discuss ed by the Board . In my view, these redactions a re unnecessary and do little to protect Lightning ’ s legitima te interests in mai ntaining the confidentiality of its
sensitive business i nformation. The redactions that should be li ft ed i n a revised public ver sion of the Complaint are detailed i n an Orde r below.
III. C ON C LUSION The Motion is granted in part and denied in part

. Lightni ng ha s shown good

cause for continued confid ential treatment for most of the ch allenged
informat ion

. 43 Several redactions go too far and must be lifted

. Lightning is
di recte d to prepare a revised version of the Complaint for public filing consis tent
with t he Order accomp anying this decision

. Sincere l y yo urs , /s/ Lori W. Will Lori W . Will Vice Chancel lor

42 See G KC Strategic Valu e Master Fund , L P v
. B a k e r H

u g h e s Inc. , C.A

. No. 2017

- 0769

- SG , a t 22

- 23 (Del. Ch. Feb. 28, 2019) (TRANSCRIPT) ( disc ussin g the “ pinpoint co nfidentiality ” designations that Ru le 5. 1 “ goes toward ” ).
43 Having found good cause for continued confidential trea tment , I decline to take up the Lightning De fendants ’ arguments that the Petitioner s ’ challenge violates th e PSLRA, intrudes on mediation confidentiality, or runs contrary to 8 Del. C. § 220.IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE

ZALMON UVAYDOV ,

Plaintiff,

v.
R OBERT FENWICK

- SMITH, TIM RE ES ER, ANDREW COORS, CRAIG HUTH, HEATH MORRISON, GLEN PERLMAN, TRENT YANG, AVI KA TZ, RALUCA DINU, N EIL MIOTTO, JOHN MIKULSKY, ANDREA BETTI

BERUTTO, PETER WANG, BRUCE COVENTRY, THADDEUS SENKO, and DIANA TREMBLAY,

Def endants,
and
LIGHTNIN G EMOTORS, INC.,

Nominal Def

endants. )

) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) C.A. No. 2023

- 0137

- LWW

ORDER
W HEREAS, on February 6, 202 3, plaintiff Zalmon Uvaydov fi led a Verified
Shareholder Derivati ve Co mplaint (the “ Complai nt ” ) in this action ; WHEREAS, on June 8, 2023, peti tioners David P. S arro, Kevin L. Ty e , and Jess Q

. Williams filed a notice chal leng in g the conf idential treatment of the Complaint ;2

WHEREAS, on Ju ne 15, 2023, certain of the defend ants filed a mo tio n for

cont inued confidential treatment (the “ M o tion ” ) ;
WHE R EAS, the Motion wa s fully briefed an d submitted for decision as o f June 30, 2023; an d WHEREAS, on July 18 , 2023, the court issued a letter o pi nion granting the Motion in part and denyi ng it in part ;
IT IS HE REBY ORDERED this 18 th day of July, 2023, that, f or the reasons

set forth in the court ’ s July 18 , 2023 letter opinion :
1. The Motion is granted insofar as the redact ed information in

paragrap hs 99

- 100, 1 02

- 11 , 113

- 20, 1 23 , 128, and 158 of the Compla int is ent itled
to continued confidential treatment.
2. The Mo tion is denied ins o far as some of the redactions in paragr aphs
1 21, 146

- 51 , and 157 of the Complaint are overbroad and include general descriptions or would seem unlikely to cause com p etitive harm to Lightni ng if
disclosed . T he following informa tion only is entitled to con tinued confidential

treatment and ma y remain redacted :

a. Paragraph 121: T ext in the fourth line after “ [that] ” through and including the remainde r of the paragraph

. b. Par agraph 146: The dollar figure in the secon d line

.3 c. Paragraph 147: T e xt in the second line after “ by ” through but not including “ but ” in the third line; text in the fourth line after “ from ” through but not including “ p urportedly ” ; and quoted t e xt i n the fifth line

.

d. Par ag raph 149: Q uoted text in the third line and the image on
pa ge 38

.

e. Paragraph 150: T ext in the fourth line after “ revised ” through
the end of that sentence ending on th e fourth line.

f. Paragraph 157: The image s on pages 40 a nd 41.
3. For the avoidance of doubt, e xcept as set forth in paragrap hs 2(a) to
2 (f) ab ove, the redactions in para graphs 121, 1 46

- 1 51 , and 157 must be lifted.
4. A revised p ublic version of the C omplaint consistent with this Order
shall be filed within five business days.
/s/ Lori W. Will Lori W. W i ll Vice Chancellor