Title: In Re: Shorenstein Hays-Nederlander Theatres LLC Appeals
Citation: N/A
Docket Number: 596, 2018 & 620, 2018
State: Delaware
Issuer: Delaware Supreme Court
Date: June 20, 2019

IN THE SUPREME COURT OF THE STATE OF DELAWARE 
 
IN RE: SHORENSTEIN HAYS-  
§ 
NEDERLANDER THEATRES 
 
§ 
LLC APPEALS 
 
 
 
§ 
Nos. 596, 2018 and 620, 2018 
 
 
 
 
 
 
§ 
 
 
 
 
 
 
 
§ 
CONSOLIDATED 
 
 
 
 
 
 
§ 
 
 
 
 
 
 
§ 
Court Below: 
 
 
 
 
 
 
§ 
Court of Chancery 
 
 
 
 
 
 
§ 
of the State of Delaware 
 
 
 
 
 
 
§ 
 
 
 
 
 
 
§ 
C.A. Nos. 9380-VCMR and 
 
 
 
 
 
 
§ 
 
      2018-0701-TMR 
 
Submitted: 
May 8, 2019 
Decided: 
June 20, 2019 
 
Before VALIHURA, SEITZ, and TRAYNOR, Justices. 
 
Upon appeal from the Court of Chancery.  AFFIRMED in part, REVERSED in part, and 
REMANDED. 
 
Tammy L. Mercer, Esquire, Jack B. Jacobs, Esquire, Martin S. Lessner, Esquire, and M. 
Paige Valeski, Esquire, Young Conaway Stargatt & Taylor, LLP, Wilmington, Delaware.  
Of Counsel:  Matthew L. Larrabee, Esquire (argued), Benjamin M. Rose, Esquire, Dechert 
LLP, New York, New York; Michael S. Doluisio, Esquire, Dechert LLP, Philadelphia, 
Pennsylvania for Appellant/Cross-Appellee Nederlander of San Francisco Associates.   
Raymond J. DiCamillo, Esquire, Susan M. Hannigan, Esquire, and Sarah T. Andrade, 
Esquire, Richards, Layton & Finger, P.A., Wilmington, Delaware.  Of Counsel:  David B. 
Tulchin, Esquire (argued), Brian T. Frawley, Esquire, and Andrew J. Finn, Esquire, 
Sullivan & Cromwell LLP, New York, New York for Appellees/Cross-Appellants CSH 
Theatres LLC, CSH Curran LLC, CSH Productions, Curran Live, LLC, Carole Shorenstein 
Hays, Dr. Jeffrey Hays and Thomas Hart. 
 
 
 
 
2 
 
VALIHURA, Justice: 
This is a consolidated appeal of two separate actions, both of which arise from a 
dispute involving a theater partnership.1  Robert E. Nederlander, Sr. (“Robert”)2 controls 
Nederlander of San Francisco Associates (“Nederlander”), a California general 
partnership.  Carole Shorenstein Hays (“Carole”) and her family control CSH Theatres 
L.L.C. (“CSH”), a Delaware LLC.3  Nederlander and CSH each own a fifty-percent 
membership interest in Shorenstein Hays-Nederlander Theatres LLC (“SHN”), a Delaware 
LLC that operates theaters in San Francisco under SHN’s Plan of Conversion and 
Operating Agreement of the Company (the “LLC Agreement”). 
 
In 2010, CSH Curran LLC (“CSH Curran”), an entity that Carole co-manages,4  
purchased the Curran Theatre in San Francisco (the “Curran”).  SHN had been operating 
under a lease from the Curran’s then-owners, the Lurie Company (“Lurie”), since the 
beginning of the partnership.  Carole and her husband, Dr. Jeffrey Hays (“Jeff”) 
(collectively, the “Hayses”), did not extend that lease with SHN when it expired in 2014.  
                                                          
 
1 In re Shorenstein Hays-Nederlander Theatres LLC Appeals, Consol. Nos. 596, 2018 and 620, 
2018 (Del. Jan. 9, 2019) (ORDER) (consolidating the separate appeals from C.A. No. 9380 and 
C.A. No. 2018-0701). 
2 To avoid confusion, this Opinion refers to certain individuals by their first names.  We intend no 
disrespect or familiarity. 
3 The Shorenstein-Hays family controls CSH through CJS Trust-A, which is one of two trusts 
relevant to this dispute that Carole’s father, and the patriarch of the Shorenstein family, Walter 
Shorenstein, set up for Carole’s benefit.  The other trust is CSH Doule Trust.  Carole, her husband, 
their two children, and Thomas Hart manage those trusts. 
4 Carole purchased the Curran indirectly through CSH Doule Trust.  CSH Doule Trust owns CSH 
Curran LLC, which Carole and Hart manage through CSH Doule LLC, the sole member of CSH 
Curran.   
3 
 
Thereafter, the Hayses began staging productions at the Curran.  In February 2014, CSH 
sued Nederlander in the Court of Chancery for a declaratory judgment that it had no legal 
obligation to renew the Curran lease (the “Declaratory Judgment Action”).5  Nederlander 
asserted counterclaims against CSH and third-party claims against the Hayses for breaches 
of their fiduciary and contractual obligations, among other claims.6  The court held in a 
thorough July 31, 2018 opinion that there was no enforceable promise to renew the lease 
of the Curran to SHN, that CSH did not breach the LLC Agreement, and that the Hayses 
breached their common law fiduciary duties of loyalty (the “Declaratory Judgment 
Opinion”).7   
In September 2018, Nederlander sought a preliminary injunction in the Court of 
Chancery against CSH and the Hayes to prevent them from staging Dear Evan Hansen and 
Harry Potter and the Cursed Child (“Harry Potter”) at the Curran (the “PI Action”).  In 
the PI Action, Nederlander asserted four counts, but focused its injunction efforts on Count 
I, which asserted breach of contract claims (based upon  the “provisions of Section 7.02 of 
the LLC Agreement or the contractual fiduciary duties owed to SHN and its members under 
                                                          
 
5 The demand for a declaratory judgment pursuant to 10 Del. C. § 6501 was the sole count in 
CSH’s complaint.  See App. to Opening Br. at A364–68 (CSH Complaint). 
6 Nederlander’s counterclaims and third party claims included counts of breach of fiduciary duty 
against the Hayses (Count I), breach of the LLC Agreement against CSH (Count II), fraudulent 
inducement against CSH and Carole (Count III), breach of contract against CSH and Carole (Count 
IV), promissory estoppel against CSH, CSH Curran LLC, and the Hayses (Count V), and 
declaratory judgment with respect to the LLC Agreement pursuant to 10 Del. C. § 6501 (Count 
VI).  Id. at A422–27 (Nederlander Counterclaims and Third Party Complaint). 
7 CSH Theatres, L.L.C. v. Nederlander of San Francisco Assocs., 2018 WL 3646817, at *37 (Del. 
Ch. July 31, 2018) [hereinafter Declaratory Judgment Opinion].   
4 
 
the LLC Agreement”)8 against all defendants in that action.9  The trial court denied that 
motion in a November 30, 2018 opinion (the “PI Decision”).10  On December 21, 2018, the 
trial court entered a partial final judgment as to Count I of Nederlander’s Complaint, 
pursuant to Court of Chancery Rule 54(b), to allow for an immediate appeal of the PI 
Decision. 
Nederlander argues on appeal that the trial court erred in the Declaratory Judgment 
Action by refusing to enforce Section 7.02(a) of the LLC Agreement against the Hayses.  
Specifically, Nederlander contends that the Hayses engaged in competitive conduct at the 
Curran that violated their contractual duty under Section 7.02(a) to maximize SHN’s 
economic success.  Alternatively, Nederlander argues that the trial court erred in the PI 
Decision by holding that the Hayses did not “control” Dear Evan Hansen and Harry Potter, 
and that the Hayses violated Section 7.02(b) of the LLC Agreement as a result.  On cross-
appeal, CSH contends that Nederlander’s arguments are irrelevant because the trial court 
incorrectly held in the Declaratory Judgment Action that CSH’s Affiliates, including the 
Hayses, are bound by Section 7.02. 
                                                          
 
8 App. to CSH Answering Br. at B494 (Mot. for Preliminary Injunction). 
9 The defendants included CSH, CSH Curran LLC, Curran Live, LLC, CSH Productions, LLC, 
the Hayses, and Thomas Hart.  In addition to Count I, Nederlander also alleged a breach of 
contractual fiduciary duties against CSH (Count II), aiding and abetting a breach of contractual 
fiduciary duties against all defendants but CSH (Count III), and breach of common law fiduciary 
duties against CSH, the Hayses, and Thomas Hart (Count IV). 
10 Nederlander of San Francisco Assocs. v. CSH Theatres LLC, 2018 WL 6271655, at *11 (Del. 
Ch. Nov. 30, 2018) [hereinafter PI Decision]. 
5 
 
For the reasons explained below, we agree with Nederlander that the Court of 
Chancery misinterpreted Section 7.02(a) and that the Hayses cannot stage competitive 
productions (not falling within Section 7.02(b)’s exceptions) at the Curran that violate its 
contractual duty to maximize SHN’s economic success.  Accordingly, we reverse that 
aspect of the trial court’s decision.  Because Nederlander has not challenged the court’s 
rulings in the Declaratory Judgment Action as to damages and other forms of relief, we 
decline to remand that action.11   Further, in view of our reversal of the trial court’s 
interpretation of Section 7.02(a) in the Declaratory Judgment Action, we order remand of 
the PI Action for further proceedings consistent with this Opinion.  We find no error with 
any other aspect of the trial court’s decisions.   
I. 
Background12  
SHN began in 1977 as Shorenstein-Nederlander Productions of San Francisco, a 
partnership formed between Walter Shorenstein, Carole’s father, and James M. 
Nederlander, Robert’s brother.  Since then, SHN has staged productions at several San 
Francisco theaters.  On January 1, 1980, the partnership entered into a ten-year, written 
lease of the Curran with Lurie.13  The partners extended the lease in 1989, 1990, and 1997.   
                                                          
 
11 Nederlander also has not challenged the trial court’s finding in the PI Action that Nederlander 
abandoned its claims that are not within the scope of the partial final judgment. 
12 The Court of Chancery’s factual findings are largely unchallenged on appeal, so we rely on them 
in this Opinion.  
13 A 1978 letter of understanding signed by James Nederlander and Walter Shorenstein states that 
their “initial purpose [was] solely the operation of the Curran.”  App. to Opening Br. at A184 (1978 
Letter of Understanding). 
6 
 
In 1990, Walter Shorenstein sued Nederlander, claiming that it was “[b]ooking 
productions to play in competing geographic locations” and “[s]cheduling productions to 
play in nonpartnership theaters on the most advantageous and profitable dates.”14  The 
partners settled that litigation and supplemented the partnership agreement in 1992.  Out 
of concern for Nederlander competition with the partnership, that supplement included a 
new provision in the partnership agreement, Section 4, which provided that: 
Both partners will devote their efforts to maximize the economic success of 
the Partnership and avoid conflicts of interest.  Neither party will stage any 
production within 100 miles of San Francisco unless (i) it has first played in 
a Partnership theatre, or (ii) it has been rejected for booking by the other 
party, or (iii) the Partnership shares in the profits and/or losses of such 
booking pursuant to an agreement.15 
 
This trial court found that this provision was “substantially similar” to Section 7.02 of the 
LLC Agreement, a key provision on appeal.16  The trial court stated that limiting 
competition by the Nederlanders was “‘the most important thing’ the agreement was meant 
to do.”17   
                                                          
 
14 Id. at A250 (First Amended Complaint dated October 29, 1990). 
15 Declaratory Judgment Opinion, 2018 WL 3646817, at *3. 
16 Id. at *26. 
17 Id. (quoting Robert’s trial testimony).  Testimony from some of the key witnesses in this 
litigation is consistent with the court’s finding that the Shorensteins were concerned about 
competition from the Nederlanders.  Robert testified that “Walter [Shorenstein] was adamant that 
this be included.”  App. to Nederlander Reply Br. at AR239, p. 834 (Robert’s Oct. 25, 2017 
Testimony).  Raymond Harris, a Nederlander-appointed director of SHN and Nederlander’s Chief 
Financial Officer, submitted an affidavit stating that “a provision limiting such competition was 
injected into the LLC Agreement at the request of Mr. Shorenstein due to his concerns that another 
Nederlander entity might compete by presenting productions within a 100-mile radius of San 
Francisco.”  App. to Opening Br. at A649 (Harris Affidavit).  Likewise, when Carole was asked 
as a witness at trial whether she “insist[ed] that a clause be put in the operating agreement to 
7 
 
  
On November 6, 2000, the partnership was converted into a Delaware LLC, and 
Nederlander and CSH entered into the LLC Agreement as members with a fifty-percent 
ownership stake each.  The LLC Agreement provides for a four-member board of directors, 
to which both members have the right to appoint two directors.  Carole served as co-
president of SHN between 2000 and June 2, 2014 (except from January 15, 2013 to March 
16, 2013, when she served as SHN’s sole president), and as one of the CSH-appointed 
directors of SHN from 2000 until June 2, 2014.  Jeff also served as a CSH-appointed 
director from 2010 until October 27, 2014.  Robert has been a Nederlander-appointed 
director of SHN since 2000 and its co-president since 2009.18  Raymond Harris has served 
as the other Nederlander-appointed director since 2012.  
 
As of 2010, SHN was operating three theaters in San Francisco: the Golden Gate 
Theatre, the Orpheum Theatre, and the Curran.  SHN owned, and still owns, the Golden 
Gate and Orpheum, but, at that time, it leased the Curran.  Producers prefer the Curran for 
“sit-down” productions—those that play for an extended time, sometimes for multiple 
years—because it most closely resembles a traditional Broadway theater.  In 2009, Lurie 
had offered to sell the Curran to SHN for $30 million.  After negotiations with Robert, 
Lurie lowered the price to $17.5 million in January 2010.  Robert refused to purchase the 
Curran because he believed the price was still too high.  Carole, however, viewed the 
                                                          
 
prevent competition by the Nederlanders,” Carole replied, “[w]e were very concerned about it, so 
yes.”  App. to Nederlander Reply Br. at AR234, p. 263 (Carole’s Oct. 23, 2017 Testimony).  
18 Robert had also served previously as president and CEO of the Nederlander Organization, which 
owns and operates nine Broadway theaters in New York City and at least fifteen others around the 
United States, including Broadway San Jose in San Jose, California.   
8 
 
Curran “as a special place” and decided to purchase it herself.  The parties agreed that 
Carole had asked for Robert’s permission to purchase the Curran, and that he gave his 
approval.  But the parties disputed whether that approval was contingent on leasing the 
Curran back to SHN following the expiration of the Lurie lease on December 31, 2014.  
On December 15, 2010, Carole purchased the Curran through CSH Curran for $16.6 
million, which she then rebranded as “SHN Curran Theatre.”19   
After Walter Shorenstein died in 2010, Carole began to feel that Robert was not 
interested in building a relationship with her.  She was also worried about succession plans 
for SHN, and she “felt maligned, and, indeed, somewhat bullied that [she] was the one who 
bought” the Curran.20  Accordingly, Carole “began to focus on obtaining sole control of 
the Company.”21 
In 2010 or 2011, Carole began instructing Greg Holland, who had been hired as 
SHN’s CEO in 2001, not to communicate with Robert or Harris unless she and Jeff were 
present or part of the conversation.  Yet, during that time, Carole and Holland were meeting 
together three or four times per week outside the presence of any Nederlander 
representatives.  Concerned with Carole’s instructions, Holland hired a personal attorney 
to advise him on the direction Carole had been giving him.  At trial, he testified that Carole 
                                                          
 
19 Declaratory Judgment Opinion, 2018 WL 3646817, at *6.   
20 Id. at *7. 
21 Id. 
9 
 
would often say that she viewed SHN as her company.22  Carole also felt that she was doing 
most of the SHN-related work, and she thought the LLC Agreement should better reflect 
her work on SHN’s behalf. 
In January 2012, Carole emailed Thomas Hart, one of her business associates and 
managers of her trusts, saying: 
[I]t just seems that the partnership has grown and evolved since it was 
originally drawn up . . . and goodness, within me, dare I say, the 
Organization would be quite different, we should perhaps look at the whole 
document . . . it’s important that I maintain CONTROL . . . so I might 
suggest this is the IDEAL time to completely restructure the Partnership 
Agreement . . . .23 
 
Carole also emailed Jeff and Hart in October 2012, stating that the new Curran lease 
“should lead to [a] new management agreement.”24  And in January 2013, Carole emailed 
Hart, saying: “I think it is time together [sic] a new management agreement in place, Tom.  
Succession and fees are key.  This is the appropriate time to involve [our lawyer] and get 
clarity.  I firmly believe that to start with the [C]urran lease is foolish.  We are in the prime 
spot.”25  In addition to tying the Curran lease to a new LLC agreement, Carole sent several 
emails in January 2013 proposing the idea of blocking SHN’s ability to make distributions 
until a new LLC agreement was in place.  The trial court, citing testimony from Holland 
                                                          
 
22 Id. (“Greg testified that Carole would often express the opinion that, ‘she had created the 
company, that it was her company, that it was all her money that had created the company, and 
that . . . it was really majority her company.’”). 
23 Id. 
24 Id.  Carole testified at trial that she considered it “silly business to agree to a lease without a new 
management agreement.”  Id. 
25 Id. 
10 
 
about Carole physically blocking an exit to a January 14, 2013 SHN board meeting, found 
that Carole “acted on her desire for more control.”26 
As Carole contemplated methods to leverage a new LLC agreement, Hart and Harris 
had been negotiating a new lease of the Curran to SHN.  But in an executive session of 
SHN’s January 28, 2014 board meeting, the Hayses told Robert that they would not 
continue negotiating a lease on the Curran until a new LLC agreement was contemplated.  
Carole demanded a new LLC agreement “to be more reflective of the time in which [they] 
lived, in that [Robert] was never in San Francisco, in that [she] could never get [Robert] on 
the phone, in that it became apparent that [Robert and Holland] were in constant 
communication and aligning.”27  Carole even admitted at trial that had Robert offered to 
give her control through a new LLC agreement, she would have approved the Curran lease 
“in a heartbeat.”28 
After several follow-up emails between Robert and the Hayses in February 2014, 
including a threat of legal action against CSH, the Hayses filed suit in the Court of 
                                                          
 
26 Id. at *8.  According to Holland’s testimony: 
Carole stood in front of the door and told us that no one was leaving until she got 
what she want[ed].  And then she just started saying that she wanted to control the 
company.  No one had thanked her for buying the Curran Theater for the company, 
and she didn’t feel she deserved to be treated that way.  [Robert] thanked her several 
times.  She kept pressing that she -- you know, she deserved to have control of the 
company, that I wasn’t providing her information.  And after what felt like a long, 
long period of time, [Robert] agreed that she would be the sole president of SHN 
for a 60-day period, and that he wanted -- part of that job for her would be that she 
would increase sponsorships and lower costs. 
Id.  
27 Id. at *9. 
28 Id. 
11 
 
Chancery on February 24, 2014.  In its Complaint, CSH sought a declaratory judgment that 
it would not be in breach of the LLC Agreement or Delaware law if it did not renew the 
Curran lease with SHN.  Carole resigned as co-president and a director of SHN on June 2, 
2014, as the relationship between the Nederlander and Shorenstein-Hays factions 
continued to deteriorate.29  Jeff remained a director of SHN for several more months, 
where, after at least one board meeting, he communicated SHN information to Carole.  He 
did not resign as a director of SHN until October 27, 2014.  
During that time, the Hayses were also planning new ventures at the Curran.  On 
August 1, 2014, Carole invested $1 million in the musical production Fun Home.  In return, 
she gained an obligation on the part of Fun Home to “endeavor to present the opening 
engagement at the Curran in San Francisco, taking into consideration the schedule and 
availability of the Curran,” and a promise that it would not present the production in any 
other San Francisco area theater without Carole’s approval.30  After SHN’s lease of the 
Curran expired on December 31, 2014, the Hayses embarked on a multi-million-dollar 
renovation of the Curran.  The Curran reopened in 2017, after which it staged award-
winning Broadway shows like Bright Star, Fun Home, and Eclipsed.   
As the litigation in the Declaratory Judgment Action continued in 2017, the Hayses 
booked two more Broadway hits.  First, on December 11, 2017, Carole and the producers 
of Dear Evan Hansen entered into a production agreement to play at the Curran from 
                                                          
 
29 See id. at *11 (quoting an email from Carole to Jeff on August 2, 2014, saying that they should 
go at Robert and Holland “with ‘guns ablaze’”).  
30 Id. at *12. 
12 
 
December 5 to December 30, 2018.  In that agreement, Carole guaranteed the producers at 
least $1.3 million per week in revenue.31  Carole also promised the producers “financial 
protection in the event that [the Court of Chancery] enjoined the show from playing at the 
Curran.”32  Second, the Hayses booked Harry Potter for a “sit-down” production scheduled 
to play from the fall of 2019 through December 31, 2022.  The agreement with Ambassador 
Theater Group (“Ambassador”), an international theater owner and operator, included:  
(1) only allowing the presentation of “an extended sit-down production of 
Harry Potter” unless a replacement production is “approved in writing in 
advance by [Carole],” (2) guaranteeing revenue for [Carole], (3) Ambassador 
agreeing to hire current Curran personnel, and (4) [Carole] maintaining 
control over physical alterations to the theater necessary for Harry Potter.33 
 
Ambassador entered into a separate show license with Harry Potter’s producers, which it 
signed simultaneously with its deal with CSH Curran on April 20, 2018.  The producers of 
both Dear Evan Hansen and Harry Potter openly negotiated with multiple venues, 
including SHN theaters, that were competing against each other to stage the productions.34 
On September 25, 2018, Nederlander brought the PI Action in the Court of 
Chancery.  Nederlander argued that the defendants breached their contractual and fiduciary 
duties by entering into contracts to stage Dear Evan Hansen and Harry Potter in violation 
of the LLC Agreement.  Nederlander sought to enjoin the defendants from presenting those 
plays at the Curran. 
                                                          
 
31 PI Decision, 2018 WL 6271655, at *3. 
32 Id. 
33 Id. at *4. 
34 Id. at *11. 
13 
 
II. 
Key Terms of the LLC Agreement 
At the center of this dispute on appeal is Section 7.02 of the LLC Agreement, which 
provides: 
SECTION 7.02.  Cooperation and Non-Competition. 
 
(a) 
The Shorenstein Entity and the Nederlander Entity hereby agree to 
devote their efforts to maximize the economic success of the Company and 
to avoid any conflicts of interests between the Members.  All actions of the 
Members and their representatives with regard to the Company and theater 
matters will be carried out in good faith and in a prompt and expeditious 
manner. 
 
(b) 
Until the termination of the Company pursuant to this Agreement, 
neither the Shorenstein Entity nor the Nederlander Entity will stage any 
Production that it controls (as defined in Section 7.03) within 100 miles of 
San Francisco unless (i) such Production has first played in one of the 
Theatres; or (ii) such Production has been rejected for booking at one of the 
Theatres by the other Member’s representative on the Board of Directors; or 
(iii) the Company shares in the profits and/or losses of any booking pursuant 
to an agreement mutually acceptable to the Members.35 
 
The “Shorenstein Entity” and “Nederlander Entity” are defined through a series of 
definitions, beginning with the preamble to the LLC Agreement: 
This Plan of Conversion and Operating Agreement (the “Agreement”) of 
Shorenstein Hays-Nederlander Theatres LLC (the “Company”) is entered 
into as of November 6, 2000 by and between CSH Theatres LLC, a Delaware 
limited liability company (together with any Permitted Tranferees, as 
hereinafter defined, the “Shorenstein Entity”), and Nederlander of San 
Francisco Associates, a California general partnership (together with any 
Permitted Transferees, the “Nederlander Entity”), as members.36 
 
                                                          
 
35 App. to Opening Br. at A304–05 (LLC Agreement § 7.02). 
36 Id. at A285 (LLC Agreement Preamble) (emphasis added). 
14 
 
“Permitted Transferee” “means (a) an Affiliate of any Member or (b) in the case of 
a Nederlander Entity, a Nederlander Controlled Entity or any member of the Nederlander 
family.”37  An “Affiliate” is “a Person that, directly or indirectly through one or more 
intermediaries, Controls, is Controlled by or is under common Control with the subject 
Person.”38  “Control,” “Controls,” and “Controlled” are defined as “the possession, direct 
or indirect, of the power to direct or cause the direction of the management and policies of 
a Person, whether through the ownership of voting securities, through contract, or 
otherwise.”39  Further, a “Person” is defined as “an individual or a corporation, all types of 
partnership, trust, unincorporated organization, association, limited liability company or 
other entity.”40  “Members” means “the Shorenstein Entity and the Nederlander Entity and 
any additional Person who is admitted to the Company as a Member in accordance with 
this Agreement and is listed from time to time on the books and records of the Company.”41 
Finally, two other provisions in Section 7 are relevant to this appeal.  Section 7.03 
defines “control over the production” as used in Section 7.02(b): 
SECTION 7.03.  Most Favored Nation Treatment for Shorenstein and 
Nederlander Productions.  If either the Shorenstein Entity or the Nederlander 
Entity or any Affiliate thereof has control over a Production, that Production 
and the relevant Theatre will be accorded “most favored nation” treatment 
by the other in theater licensing arrangements.  For purposes of this Section 
7.03, “control over production” means the Person having the ability to 
                                                          
 
37 Id. at A288 (LLC Agreement § 1.01). 
38 Id. at A286 (LLC Agreement § 1.01). 
39 Id. at A287 (LLC Agreement § 1.01). 
40 Id. at A288 (LLC Agreement § 1.01).  
41 Id. at A287 (LLC Agreement § 1.01). 
15 
 
determine where the Production plays and the terms and conditions of said 
engagement.42 
 
Section 7.06 sets forth the parties’ general ability to engage in non-SHN business: 
SECTION 7.06.  Outside Activities.  Subject to the other provisions of this 
ARTICLE VII, including Section 7.02, any Member, any Affiliate of any 
Member or any officer or director of the Company shall be entitled to and 
may have business interests and engage in business activities in addition to 
those relating to the Company, and may engage in the ownership, operation 
and management of businesses and activities, for its own account and for the 
account of others, and may (independently or with others, whether presently 
existing or hereafter created) own interests in the same properties as those in 
which the Company or the other Members own an interest, without having 
or incurring any obligation to offer any interest in such properties, businesses 
or activities to the Company or any other Member, and no other provision of 
this Agreement shall be deemed to prohibit any such Person from conducting 
such other businesses and activities.  Neither the Company nor any Member 
shall have any rights in or to any independent ventures of any Member or the 
income or profits derived therefrom.43 
 
III. 
The Court of Chancery Proceedings 
A. 
The Declaratory Judgment Action 
 
CSH sued Nederlander in the Court of Chancery on February 24, 2014, seeking a 
declaratory judgment that CSH would not be in violation of the LLC Agreement if it did 
not renew the Curran lease.  Nederlander counterclaimed against CSH and asserted third-
party claims against CSH Curran, Carole, and Jeff, including breaches of the LLC 
Agreement and breaches of the Hayses’ fiduciary duties, among other claims.  As to the 
breach of the LLC Agreement, Nederlander asserted “that the Hayses were competing 
directly with SHN, misappropriated SHN’s confidential information, and used the Curran 
                                                          
 
42 Id. at A305 (emphasis added) (LLC Agreement § 7.03). 
43 Id. (LLC Agreement § 7.06). 
16 
 
as a means of attempting to seize control of the Company.”44  The related common law 
fiduciary claims45 focused on “(1) the competing shows; (2) the withholding of the Curran 
lease, (3) alleged misuse of confidential information; and (4) waste of assets.”46  
Nederlander sought relief in the form of damages, a permanent injunction, a declaratory 
judgment, and specific performance of renewal of the Curran lease. 
CSH moved to dismiss Nederlander’s claims.  In its April 21, 2015, Motion to 
Dismiss Opinion, the Court of Chancery granted in part and denied in part CSH’s motion 
to dismiss.47  In that opinion, the court evaluated some of the contractual issues now 
relevant on appeal, and it held that the LLC Agreement was unclear in two respects.  First, 
the court held that the definition of “Shorenstein Entity” was ambiguous.  The court noted 
that a literal reading of the LLC Agreement’s definitions includes “Affiliates” in the 
definition of “Shorenstein Entity.”48  As CSH pointed out, however, other provisions such 
                                                          
 
44 CSH Theatres, LLC v. Nederlander of San Francisco Assocs., 2015 WL 1839684, at *8 (Del. 
Ch. Apr. 21, 2015) [hereinafter Motion to Dismiss Opinion]. 
45 The common law fiduciary claims and allegations of a breach of the LLC Agreement overlapped 
below.  See id. at *8 n.37 (“Indeed, the parties’ briefing sometimes conflated the analysis of the 
breach of the LLC Agreement Count with the breach of fiduciary duty Count, making it difficult 
to disentangle these distinct theories of alleged wrongdoing.”). 
46 Id. at *11. 
47  The Court of Chancery dismissed Count I (breach of fiduciary duty against the Hayses) to the 
extent Nederlander alleged waste, dismissed Count III (fraudulent inducement) entirely, and 
dismissed Count V (promissory estoppel) as to Jeff.  Id. at *23.  The court denied CSH’s motion 
to dismiss as to the remaining Counts. 
48 Id. at *10 (“The definitions [in the LLC Agreement] reveal the problem: the family entities (the 
Members) are defined to include Permitted Transferees, which itself is defined to include 
Affiliates.  Thus, according to Nederlander, any time the family entities are referred to in a 
provision of the LLC Agreement, Affiliates definitionally are included. . . .  [CSH] contend[s] that 
the reference in the definition of the Shorenstein Entity to the term Permitted Transferee 
contemplates some form of future transfer from CSH to, for example, a successor entity within the 
defined set of Permitted Transferees.  That successor entity would assume the Shorenstein Entity’s 
17 
 
as Section 7.03 refer to “the Shorenstein Entity . . . or any Affiliate thereof,” indicating that 
the parties may not have intended to bind Affiliates.  Because the court held that CSH’s 
interpretation was not the only plausible one, it declined to dismiss Nederlander’s 
allegations of breach of the LLC Agreement.49  
Second, the court held that the definition of “control” in Section 7.03 could have 
two potentially reasonable interpretations.  CSH essentially argued that, because neither a 
producer nor theater owner could unilaterally set the terms of staging any play, “control” 
only encompasses actions in which the producer also owned the theater—although the 
court noted that “[i]t is questionable whether this extremely narrow interpretation is 
reasonable.”50  The court found Nederlander’s interpretation to be reasonable in that, 
“[b]ecause the family entities appear to be in the business of running theaters, rather than 
producing plays, the language and structure of Sections 7.02 and 7.03 seemingly 
contemplate shows being under one of the entities’ ‘control’ even though the entity controls 
                                                          
 
interest in SHN.  In other words, at any given point in time, the ‘Member’ of SHN on the CSH 
side would be either the initial Shorenstein Entity or a Permitted Transferee, but not both. . . .  The 
LLC Agreement, read literally, defines the Shorenstein Entity to include Affiliates.  Thus, even if 
[CSH’s] interpretation is plausible, I cannot say that it is the only reasonable one.”). 
49 Id. (“Resolving all ambiguities in favor of Nederlander as the nonmoving party, I must recognize 
that the LLC Agreement could be construed to impose restrictions on Affiliates of CSH, including 
Mrs. Hays.  It is reasonably conceivable, therefore, that, when CSH’s Affiliates’ behavior is 
included in the analysis, Nederlander could prove a breach of the LLC Agreement, such as a 
violation of the duty imposed in Section 7.02(a) requiring the Shorenstein Entity to work toward 
maximizing SHN’s economic success.”). 
50 Id. at *13. 
18 
 
only the venue.”51  Regardless, because the definition of “control” was possibly ambiguous, 
the court refused to dismiss that aspect of Nederlander’s claims.   
The parties proceeded to trial in late 2017, and the Court of Chancery issued its 
Declaratory Judgment Opinion on July 31, 2018.  The Court of Chancery first held that 
Nederlander failed to meet its burden of showing that Carole promised to renew the lease 
of the Curran to SHN52 or that the promise was otherwise enforceable.53  The Court of 
Chancery also held that there were no contractual breaches, but that the Hayses breached 
their common law fiduciary duties while serving as directors and managers of SHN.  The 
court first addressed the contractual claims.  Looking to the plain text of the LLC 
Agreement, the court analyzed the definition of “Shorenstein Entity”: 
The LLC Agreement defines the “Shorenstein Entity” as CSH Theatres 
“together with any Permitted Transferees.”  For the Shorenstein Entity, a 
Permitted Transferee is “an Affiliate.”  An Affiliate is “a Person that, directly 
or indirectly through one or more intermediaries, Controls, is Controlled by 
or is under common Control with the subject Person.”  Under the LLC 
Agreement, a Person is “an individual or a corporation, all types of 
partnership, trust, unincorporated organization, association, limited liability 
company or other entity.”  Control, Controls, or Controlled “means the 
possession, direct or indirect, of the power to direct or cause the direction of 
the management and polices of a Person, whether through the ownership of 
voting securities, through contract, or otherwise.” 
 
                                                          
 
51 Id. 
52 Declaratory Judgment Opinion, 2018 WL 3646817, at *15 (“Based on the testimony and all the 
other evidence presented at trial, I find that [Nederlander] has not shown by a preponderance of 
the evidence that Carole promised to rent the Curran to the Company after the expiration of the 
Lurie Lease.”). 
53 Id. at *15–19. 
19 
 
Under these definitions in the LLC Agreement, the Hayses and any entities 
they control are Affiliates and part of the Shorenstein Entity and, therefore, 
are bound by Section 7.02(a).54 
 
CSH objected to the court’s interpretation of “Shorenstein Entity” because of the 
LLC Agreement’s definition of “Members,” which is defined as “the Shorenstein Entity 
and the Nederlander Entity,” along with subsequently admitted members.  If CSH is not 
synonymous with “Shorenstein Entity” and Nederlander is not synonymous with 
“Nederlander Entity,” CSH argued, it would lead to absurd results in other provisions.  The 
trial court recognized that it “may well be the case” that its interpretation could lead to 
absurd results, but it noted that if it were to adopt CSH’s interpretation, the string of 
definitions stemming from “Shorenstein Entity” would “become mere surplusage.”55  The 
court also reasoned that the drafters of the LLC Agreement used “Members” in certain 
provisions and “the Shorenstein Entity and the Nederlander Entity” in others, “which 
suggests the terms mean different things.”56  The court held that CSH’s argument raised an 
ambiguity at the most. 
Because of that possible ambiguity, the trial court considered extrinsic evidence.  
Looking at the supplement to the partnership agreement executed in 1992 that was meant 
to guard against competition by the Nederlanders, the court concluded that “[t]he only way 
Walter and Carole’s fears of competition by the Nederlanders are assuaged is if 
Nederlander Entity means more than just NSF Associates, which is consistent with the 
                                                          
 
54 Id. at *23. 
55 Id. at *25. 
56 Id. 
20 
 
definition in the LLC Agreement.”57  That is, if the partnership agreement or LLC 
Agreement applied only to Nederlander and CSH, it would do nothing to limit Nederlander 
competition—“‘the most important thing’ the agreement was meant to do.”58  Additionally, 
the court found that Nederlander’s course of conduct favored the court’s interpretation.  
For example, Nederlander Affiliates in the San Francisco area made offers to SHN to 
participate in some, but not all, shows.  The court reasoned that those offers would only be 
necessary if Affiliates believed they were bound by Section 7.02.59   
Despite holding that the Hayses and their affiliated entities are part of the 
“Shorenstein Entity” bound by Section 7.02(a), the court held that “[w]hile Section 7.02(a) 
requires the ‘Shorenstein Entity’ to ‘devote their efforts to maximize the economic success 
of the Company and avoid any conflicts of interest between the Members,’ Section 7.06 
contains an exception to this broad provision.”60  The trial court further held that “[t]his 
exception is itself limited by Section 7.02(b).”61  In other words, the Shorenstein and 
Nederlander Entities may compete with SHN unless that competition violates Section 
7.02(b)—that is, if it occurs in the form of staging a controlled production within one-
hundred miles of San Francisco, assuming none of the exceptions in Section 7.02(b) 
applies. 
                                                          
 
57 Id. at *26. 
58 Id. (quoting Robert’s trial testimony). 
59 Id. at *27. 
60 Id. at *24 (footnotes omitted). 
61 Id.  
21 
 
The court held that, by staging Fun Home, Carole appeared to have violated the 
general prohibition in Section 7.02(b) on staging controlled productions within one-
hundred miles of San Francisco because she had invested $1 million in the venture and 
received the right of first refusal to stage the production in the Bay Area.62  Thus, Carole 
had “control” of Fun Home as defined in Section 7.03.  Although Fun Home had not played 
at either of SHN’s theaters, the court noted that there was no evidence in the record 
regarding whether the other exceptions to the one-hundred-mile prohibition applied, e.g., 
whether the Nederlanders had rejected Fun Home or entered a profit-sharing agreement 
with CSH’s presentation at the Curran.  Because of those failures of proof, along with 
Nederlander’s failure to prove damages related to the staging of Fun Home, the court held 
that Nederlander had not satisfied the final element in its breach of contract claim.63 
                                                          
 
62 Id. at *25 (“[Carole] entered into an investment agreement with the production Fun Home on 
behalf of her entity CSH Productions, LLC.  As part of that agreement, Fun Home agreed that if 
the production went on tour it would not perform at any other Bay Area theater but the Curran as 
it was understood that an important inducement for [Carole’s] significant investment in the 
Broadway Production is to obtain the first right to present the first commercial production of the 
Play in the Bay Area, preferably to launch the national tour.  This concession constitutes control 
over the production as defined in Section 7.03 because it allows Carole the ability to determine 
where the Production plays and the terms and conditions of said engagement.  Fun Home played 
at the Curran in 2017.  This means Carole staged a production that she controlled within 100 miles 
of San Francisco.” (citations and quotations omitted)). 
63 Id. (“Fun Home did not play at either of the Company’s theaters, but the post-trial briefs do not 
point to any evidence regarding whether the Nederlanders rejected Fun Home for the Company or 
if the Company shared in the profits and losses of Fun Home.  [Nederlander] has the burden to 
prove its case by a preponderance of the evidence.  Even if there is evidence in the record that 
shows Carole did not adhere to Section 7.02(b), [Nederlander] has not offered any evidence 
regarding its damages relating to Fun Home and, thus, has not satisfied the final element for its 
breach of contract claim.” (citations omitted)). 
22 
 
As to the common law fiduciary claims, the court held that Carole breached her duty 
of loyalty as a director and co-president of SHN by (1) threatening fellow board members 
with refusing to approve the subscription series64 unless Robert agreed to give her more 
control of SHN, (2) using her fiduciary position to prevent SHN from pursuing shows she 
wanted for her competing business, and (3) instructing Holland not to communicate with 
her co-president and fellow SHN directors.65  Likewise, the court held that Jeff breached 
his common law fiduciary duties as a director of SHN by sharing confidential information 
with a director of a competitor company and attempting to secure confidential information 
to hire away SHN’s employees.  “These actions were not in the best interest of the 
Company; instead the Hayses took these actions, while acting in their capacities as 
fiduciaries of the Company, to advance their own interest at the expense of the 
Company.”66   
As to damages, Nederlander presented “one unified remedy theory” in which it 
alleged that the Hayses’ conduct was part of a larger scheme to take control of SHN, or, if 
that failed, to sabotage and improperly compete with SHN.67  The court held that it was 
unable to award damages for the parts of Nederlander’s case that it was able to prove 
                                                          
 
64 The subscription series is a significant income-generator for SHN.  “‘A subscription, really 
everywhere in the country for Broadway, is five to seven shows that are put in a package that you 
buy at once, similar to a sports season ticket.  Subscribers get special benefits, typically discounts, 
opportunity to get gifts, better seats than everywhere else.’”  Id. at *9 n.123 (quoting Holland’s 
trial testimony). 
65 Id. at *27.  The common law fiduciary duty breaches are not at issue in this appeal. 
66 Id.  
67 Id. at *29.  This theory alleged “breaches of both contractual and fiduciary duties.”  Id. 
23 
 
because “it has given me no way to separate the actual harm to the Company from the 
consequences of allowed behavior by the Hayses.”68  Specifically, the court observed that: 
[Nederlander] has not provided the Court with any information about the 
harm caused to the Company by (1) the Company’s reliance on the purported 
promise to lease the Curran to the Company—e.g., the rebranding of the 
Curran and the booking of shows into the Curran after December 31, 2014; 
(2) the Hayses attempting to steal shows from the Company; (3) the Hayses 
presenting shows that violate Section 7.02(b); (4) Carole's threats and actions 
that violated her fiduciary duties while she was a manager of the Company; 
or (5) Jeff's disclosure of confidential information to Carole while he was a 
manager of the Company.  Any attempt by the Court to determine the harm 
caused by these actions would be entirely speculative conjecture, and thus, I 
award only nominal damages for the breaches of fiduciary duty.69 
 
On September 20, 2018, the Court of Chancery entered its final order and judgment 
in the Declaratory Judgment Action.70  The court ruled in favor of CSH on its sole count 
of declaratory judgment, holding that it did not breach the LLC Agreement or any other 
duty by not renewing the Curran lease with SHN.  As to Nederlander’s Counterclaims, the 
court entered judgment on Count I (breach of common law fiduciary duties) in 
Nederlander’s favor and awarded nominal damages.  The court also enjoined the Hayses 
from using confidential SHN information to compete with SHN.  Further, the court granted 
partial relief as to Count VI (declaratory judgment), in which the court declared that Section 
7.02(b) applies to CSH and its Affiliates as a part of the Shorenstein Entity and that the 
                                                          
 
68 Id.  
69 Id. at *30 (emphasis added).  Further, Nederlander’s expert witness, Dr. John Hekman, did not 
calculate damages for “poaching” individual shows.  See App. to CSH Answering Br. at B337 (Dr. 
John Hekman Testimony). 
70 See CSH Theatres, LLC v. Nederlander of San Francisco Assocs., 2018 WL 4522728 (Del. Ch. 
Sept. 20, 2018). 
24 
 
Hayses breached their fiduciary duties as directors and managers of SHN.  However, the 
court declared that CSH may operate the Curran in competition with SHN as long as it 
complies with Section 7.02(b).  The trial court denied all other claims asserted under Count 
VI (declaratory judgment), and it dismissed all remaining counts in Nederlander’s 
Counterclaims.71  Finally, the court awarded attorney’ fees and costs of $32,219.94 to 
Nederlander for Carole’s bad faith deposition conduct.72 
Following issuance of the post-trial decision and final judgment in the Declaratory 
Judgment Action, on August 6, 2018, Nederlander and SHN filed a Motion for 
Clarification.  They argued that “the Opinion should be clarified to state that the 
Shorenstein Entity must comply with Section 7.02(b) with respect to Dear Evan Hansen 
and Harry Potter.”73  The trial court denied the motion, holding that “the existence of Dear 
Evan Hansen and Harry Potter is not new evidence about the definition of control under 
Sections 7.02(b) and 7.03 of the LLC Agreement,” and that, “[i]nstead, these productions 
at the Curran are new potential breaches, and Counterclaim Plaintiff will have to litigate 
them as such.”74 
B. 
The PI Action 
Accordingly, and on September 25, 2018, Nederlander filed the PI Action in the 
Court of Chancery to prevent the Hayses from staging Dear Evan Hansen and Harry Potter 
                                                          
 
71 Following the Motion to Dismiss Opinion, the remaining claims consisted of Counts II (breach 
of the LLC Agreement), IV (breach of contract), and V (promissory estoppel). 
72 See Addendum; Ex. C to Opening Br. (Nov. 1, 2018 Order). 
73 App. to CSH Answering Br. at B446 (Order Denying Mot. for Clarification). 
74 Id. at B446–47. 
25 
 
at the Curran, arguing that they controlled both productions and had breached Section 
7.02(b).75  In part of its analysis in the PI Decision, the court interpreted Nederlander’s 
argument to mean that staging virtually any production at the Curran amounts to control 
as defined in Section 7.03.  The court rejected that argument for several reasons.    
First, the court held that Nederlander’s interpretation would turn “large parts of 
Section 7 of the LLC Agreement into ‘mere surplusage.’”76  Second, although the court 
considered Section 7.02 unambiguous, it looked to extrinsic evidence for additional 
support.  It noted that Section 4 of the partnership agreement barred staging any production, 
while Section 7.02(b) of the LLC Agreement narrowed the provision to controlled 
productions.  The trial court concluded from that change “that ‘stage’ and ‘control’ do not 
have the same meaning.”77  Third, the court distinguished Dear Evan Hansen and Harry 
Potter from Fun Home—which the court held in the Declaratory Judgment Action was a 
Hays-controlled production—based on several important facts that Nederlander had 
acknowledged.  Thus, because “[s]taging does not mean control under the LLC 
Agreement,” the court held that Nederlander “failed to show a likelihood of success on the 
                                                          
 
75 Nederlander moved for expedited proceedings, which the trial court granted on October 5, 2018 
in a telephonic hearing. 
76 PI Action, 2018 WL 6271655, at *11; see also id. at *10 (“If, as Plaintiff contends, to stage a 
production is to control it, Section 7.02’s limits on a member or affiliate’s ability to ‘stage a 
Production that it controls (as defined in Section 7.03)’ is repetitive, because ‘that it controls (as 
defined in Section 7.03)’ adds nothing to the sentence.  This interpretation creates surplusage.” 
(citations omitted)); id. (“[Nederlander’s] interpretation would reduce Section 7.06 to only 
allowing competition when the member or affiliate is a passive, uninvolved investor.  This 
interpretation would make large parts of Section 7.06—for example, the language regarding the 
ability to operate and manage a business for its own account and others’ accounts—unnecessary 
surplusage.”). 
77 Id. at *10. 
26 
 
merits” necessary to win a preliminary injunction.78  The court then entered final judgment 
as to Nederlander’s alleged breach of Section 7.02(b) pursuant to Court of Chancery Rule 
54(b). 
IV. 
Claims on Appeal 
Nederlander raises two arguments on appeal.  First, as to the Declaratory Judgment 
Action, it argues that the Hayses breached their duty under Section 7.02(a) to maximize 
SHN’s economic success by staging competing productions at the Curran.79  Nederlander 
claims that the Court of Chancery erred by subjecting Section 7.02(a) to Section 7.06, 
which the court held allowed competition unless that competition violated Section 7.02(b).  
Nederlander did not appeal (and did not discuss in its opening brief) any of the trial court’s 
rulings denying relief in the form of damages, declaratory relief (as to renewal of the lease), 
permanent injunctive relief, or disgorgement.  Second, Nederlander argues, in the 
alternative,80 that the court erred in the PI Action by holding that the Hayses did not 
                                                          
 
78 Id. at *11. 
79 The issues concerning the renewal of the Curran lease and the staging of Fun Home are not at 
issue on appeal.  Further, Nederlander does not assert common law fiduciary claims on appeal.  
Rather, Nederlander frames its argument concerning improper competitive conduct as a violation 
of a contractual duty of loyalty under Section 7.02(a).  See Opening Br. at 24 (“That language [in 
Section 7.02(a)] expressly imposes upon the parties a contractual and fiduciary duty of loyalty to 
SHN.” 
(citations 
omitted)); 
Oral 
Argument 
Video 
at 
15:20–15:44, 
https://livestream.com/DelawareSupremeCourt/events/8670837/videos/191018409 (Q: “And as I 
read your brief, your fiduciary duty argument is, on appeal, limited to the contractual fiduciary 
duties as opposed to the common law fiduciary duties?”  A: “Right.  We are arguing that the 
contractual fiduciary duty of loyalty that’s in the contract comports with and is coterminous with 
duty of loyalty under common law.  But the source of that duty on what we’re appealing is the 
contractual duty.”). 
80 See Opening Br. at 4–5 (“If this Court credits [the Section 7.02(a)] Argument and reverses on 
that basis, that would dispose of both appeals.  Argument II is made on the alternative assumption 
27 
 
“control” Dear Evan Hansen and Harry Potter, and that the trial court “mischaracterized” 
and “misunderstood” its arguments.  Nederlander does not challenge any of the factual 
findings relating to that decision.81   
On cross-appeal, CSH contends that Nederlander’s arguments are irrelevant because 
the trial court incorrectly held in the Declaratory Judgment Action that CSH’s Affiliates, 
including the Hayses, are bound by Section 7.02.  CSH also contends that Nederlander 
waived any claim under Section 7.02(a) because it abandoned that theory in the Declaratory 
Judgment Action. 
V. 
Standard of Review 
“This Court ‘will uphold the trial court’s factual findings unless they are clearly 
erroneous.’  We review questions of law and contractual interpretation, including the 
interpretation of LLC agreements, de novo.”82 
 
                                                          
 
that, even if this Court were to reject Argument I, the court nonetheless reversibly erred in denying 
the injunctive relief sought in the [PI Action].”). 
81 See Nederlander Reply Br. at 35 n.92 (“NSF does not dispute any of the trial court’s factual 
findings.  NSF’s procedural decision to seek a final judgment on those facts does not, as Appellees 
suggest, waive its right to argue that the court misinterpreted NSF’s legal theory based on those 
facts.”); 
Oral 
Argument 
Video 
at 
14:31–15:20, 
https://livestream.com/ 
DelawareSupremeCourt/events/8670837/videos/191018409 (Q: “In the PI Action, you’re not 
challenging the court’s actual factual findings, are you?  Rather, you’re saying she misconstrued 
your position in your argument?”  A: “The principal error by the trial court in the PI finding was 
to misconstrue the term ‘control,’ that’s essentially a legal interpretation question.  What does the 
contract mean?  We respectfully believe she got it wrong.  Against the right standard, our facts 
speak for themselves.  She didn’t dispute the individual factual findings . . . she just said this body 
of evidence didn’t meet a test that, with all respect, the court came up with on its own—pre-existing 
contractual right, which isn’t in the agreement, wasn’t argued by either side.”). 
82 CompoSecure, L.L.C. v. CardUX, LLC, 206 A.3d 807, 816 (Del. 2018) (quoting Gatz Props., 
LLC v. Auriga Capital Corp., 59 A.3d 1206, 1212 (Del. 2012)). 
28 
 
VI. 
Analysis 
We first address the threshold question on cross-appeal, in which CSH argues that 
the Court of Chancery erred by holding that CSH Affiliates are included in the definition 
of “Shorenstein Entity.”  Next, we consider Nederlander’s primary argument on appeal: 
that the Court of Chancery erred in its interpretation of Section 7.02(a) in the Declaratory 
Judgment Action.  We conclude by addressing Nederlander’s alternative argument that the 
court erred in the PI Action by holding that CSH does not “control” Dear Evan Hansen 
and Harry Potter. 
We agree with Nederlander that the Court of Chancery misinterpreted Section 
7.02(a), and we reverse that aspect of that decision.  But we decline to order a remand in 
the Declaratory Judgment Action because Nederlander has not challenged the trial court’s 
ruling in that action that it failed to prove damages relating to its contractual or fiduciary 
claims.  Nor does it address on appeal in any way the denial of other possible forms of 
relief.  However, reversal of the trial court’s interpretation of Section 7.02(a) in the 
Declaratory Judgment Action impacts the decision in the PI Action.  Although we are 
reluctant to remand the PI Action for the reasons stated below, we reverse and remand for 
further proceedings consistent with this Opinion.   
A. 
We Affirm the Court of Chancery’s Interpretation of “Shorenstein Entity” in the 
Declaratory Judgment Action 
 
On cross-appeal, CSH argues that the Court of Chancery erred in the Declaratory 
Judgment Action by holding that “Shorenstein Entity” includes CSH Affiliates, including 
the Hayses, and therefore Section 7.02 does not bind Affiliates of CSH.  It relies on both 
29 
 
the plain language of the LLC Agreement and extrinsic evidence.  If CSH is correct that 
Section 7.02 binds only Nederlander and CSH, then Nederlander’s arguments on appeal 
must fail.   
We interpret contracts “as a whole and we will give each provision and term effect, 
so as not to render any part of the contract mere surplusage,” and “will not read a contract 
to render a provision or term meaningless or illusory.”83  “When the contract is clear and 
unambiguous, we will give effect to the plain-meaning of the contract’s terms and 
provisions.”84  “When a contract’s plain meaning, in the context of the overall structure of 
the contract, is susceptible to more than one reasonable interpretation, courts may consider 
extrinsic evidence to resolve the ambiguity.”85  Applying those principles, we affirm the 
Court of Chancery’s interpretation of “Shorenstein Entity.” 
CSH advances two primary arguments in support of its position that “Shorenstein 
Entity” means only CSH.  First, it argues that as a general principle, only formal parties—
CSH and Nederlander—are bound by the terms of the LLC Agreement.  As such, 
“Permitted Transferees” refers only to parties that may one day become “Members” and 
thereafter part of the Shorenstein Entity.  Second, CSH argues that the trial court’s 
interpretation creates absurdities and surplusage.  For example, because the term 
“Members” in the LLC Agreement is defined as the Shorenstein and Nederlander Entities, 
                                                          
 
83 Osborn ex rel. Osborn v. Kemp, 991 A.2d 1153, 1159 (Del. 2010) (internal quotations omitted). 
84 Id. at 1159–60. 
85 Salamone v. Gorman, 106 A.3d 354, 374 (Del. 2014) (citing In re IBP, Inc. S’holders Litig., 789 
A.2d 14, 55 (Del. Ch. 2001)). 
30 
 
the trial court’s interpretation would grant Affiliates the same distribution and voting rights 
as Nederlander and CSH.  Additionally, CSH argues that other sections of the LLC 
Agreement, such as Section 7.03, include terms like “the Shorenstein Entity or the 
Nederlander Entity or any Affiliate thereof,” which would be superfluous if the entities 
include Affiliates by definition.   
We reject both of CSH’s arguments.  Plainly read, “Permitted Transferees” is 
defined as “an Affiliate of any Member”—not an Affiliate of any Member who has 
received or will receive transferred membership interests.  Contracts may impose 
obligations on affiliates in this context.86  Additionally, the LLC Agreement contains some 
inconsistencies and contractual surplusage regardless of whose interpretation is applied.  
For example, CSH’s interpretation renders the definition of “Shorenstein Entity” and 
“Nederlander Entity” in the preamble to the LLC Agreement mere surplusage, and the trial 
court’s interpretation renders some of the language in provisions like Section 7.03 
unnecessary.  Further, as the trial court noted, the LLC Agreement uses both “Members” 
and “Nederlander Entity” or “Shorenstein Entity,” which suggests that they have different 
meanings.  
                                                          
 
86 See Medicalgorithmics S.A. v. AMI Monitoring, Inc., 2016 WL 4401038, at *18 (Del. Ch. Aug. 
18, 2016) (holding that where an agreement included “Affiliates” within the definition of “Parties,” 
the agreement imposed obligations on a contractually-defined affiliate that was under the control 
of a party to the agreement); MicroStrategy Inc. v. Acacia Research Corp., 2010 WL 5550455, at 
*12 (Del. Ch. Dec. 30, 2010) (where an agreement defined the term “affiliate” to include “any 
entity which either party now or hereafter, directly or indirectly, owns or controls,” the court held 
that the phrase “now or hereafter” unambiguously contemplated that the agreement would apply 
to later-acquired or formal entities owned or controlled by the parties to the agreement). 
31 
 
We agree with the Court of Chancery’s initial determination in the Motion to 
Dismiss Opinion that those inconsistencies render the meaning of “Shorenstein Entity” and 
“Nederlander Entity” ambiguous.87  Nonetheless, CSH argues that the extrinsic evidence 
supports its interpretation.88  We disagree and instead find no fault with, and defer to, the 
trial court’s evaluation of the extrinsic evidence.89   
In light of the previous litigation between the Nederlander and Shorenstein partners, 
the trial court noted that limiting competition from the Nederlanders was “‘the most 
important thing’ the agreement was meant to do.”90  The court also reasoned that limiting 
the partnership and LLC Agreements to only the partner or member entities “would do 
nothing to limit competition” from the Nederlanders.91  Indeed, under CSH’s interpretation, 
it could set up a shell entity next door to the other theaters and compete directly with SHN’s 
core business.  Further, the trial court found that Nederlander Affiliates in or near San 
Francisco had made offers to SHN to participate in certain shows.92  That is, the conduct 
of Nederlander Affiliates indicates that they considered themselves to be bound by Section 
                                                          
 
87 See Motion to Dismiss Opinion, 2015 WL 1839684, at *9–*10. 
88 Specifically, CSH points to Robert’s trial testimony, Section 4 of the partnership agreement 
(which CSH argues applied only to the partners), and the conduct of Nederlander’s alleged 
Affiliates, such as Broadway San Jose. 
89 See Declaratory Judgment Opinion, 2018 WL 3646817, at *25 (“[A]t most, Counterclaim 
Defendants have raised an ambiguity in the contract that allows me to look at extrinsic evidence, 
and the extrinsic evidence supports [Nederlander]’s interpretation of Section 7.02.”).  
90 Id. at *26 (quoting Robert’s trial testimony). 
91 Id. 
92 Id. at *27. 
32 
 
7.02.  We agree with the Court of Chancery that Affiliates are bound by Section 7.02, and 
we affirm that aspect of the Declaratory Judgment Opinion. 
B. 
The Court of Chancery Erred in Interpreting Sections 7.02(a) and 7.06 
 
Nederlander argues on appeal that the Court of Chancery misinterpreted Section 
7.02(a) of the LLC Agreement in the Declaratory Judgment Opinion by subjecting it to 
Section 7.06, which, the court held, allows competition between CSH and SHN subject to 
the limitations in Section 7.02(b).  CSH argues that the court’s determination was correct, 
but that we need not reach the merits of that argument because Nederlander abandoned its 
Section 7.02(a) claim below.  We first address the threshold issues of abandonment and 
waiver in the Declaratory Judgment Action, followed by the merits of Nederlander’s 
Section 7.02(a) argument.  We conclude that Nederlander fairly raised its Section 7.02(a) 
argument in the Declaratory Judgment Action, but that the Court of Chancery erred in its 
interpretation of that provision.   
1. 
Nederlander Fairly Presented its Section 7.02(a) Claim in the Declaratory 
Judgment Action 
 
CSH’s contention that Nederlander did not fairly present its Section 7.02(a) 
argument in the Declaratory Judgment Action largely focuses on two points.  First, CSH 
claims that Nederlander abandoned its Section 7.02(a) argument in its briefing.  A review 
of the briefing below reveals that this argument is incorrect.  In Count II of its 
counterclaims, Nederlander alleged that: 
Section 7.02(a) of the LLC Agreement requires members and their affiliates 
to devote their efforts to maximize SHN’s economic success, avoid conflicts 
of interests between members, and act in regard to the Company and theatre 
matters in a good faith and prompt and expeditious manner. . . .  By failing 
33 
 
to act in good faith by withholding use of the Curran Theatre, lying in regard 
to the purchase-lease agreement, stalling lease renewal efforts, blocking 
theatre sponsorships and advertisements, wasting corporate assets, 
promoting their own interests to the detriment of SHN, directly competing 
with SHN, using SHN’s confidential and proprietary information to further 
this competition, and attempting to seize control of the Company and 
unilaterally rewrite the terms of the LLC Agreement, CSH, through Mr. and 
Mrs. Hays, has breached the LLC Agreement.93 
 
Nederlander likewise consistently advanced Section 7.02(a) in its pretrial briefing, either 
expressly or by referencing language found only in Section 7.02(a): 
 “The LLC Agreement obligates the Shorenstein Entity (CSH) and its 
Affiliates (the Hayses and CSH Curran) to devote their efforts to maximize 
the economic success of SHN and to avoid any conflicts of interest between 
the Members.  JX 10, LLC Agreement §7.02(a).  It provides further that all 
actions of CSH, its Affiliates, and their representatives must be carried out 
in good faith and in a prompt and expeditious manner.”94 
 “The Hays Group has breached the fiduciary and contractual duties owed to 
SHN and NSF. . . .  [T]he Hays Group and CSH refused to act in the best 
interest of SHN and to maximize SHN’s business.  Most significantly, the 
Hays Group refused to lease the Curran Theater to SHN and, over the 
recommendation of their attorneys, established a competing business at the 
Curran.”95 
 “The fiduciary duties CSH and the Hayses owed to [Nederlander] and SHN 
are mirrored in the LLC Agreement, which obligates the Shorenstein Entity 
to devote its efforts to maximize the economic success of SHN and to avoid 
any conflicts of interest between the Members. . . .   The Hays Group 
willfully and in bad faith breached these obligations.”96 
 
 
                                                          
 
93 App. to Opening Br. at A423 (Nederlander’s Counterclaims and Third Party Complaint). 
94 Id. at A569 (Nederlander Pretrial Opening Br.). 
95 Id. at A570–71 (citing Section 7.02(a)) (internal citations omitted). 
96 Id. at A615 (citing Section 7.02(a)) (Nederlander Pretrial Answering Br.). 
34 
 
Finally, Nederlander preserved its Section 7.02(a) arguments in its post-trial 
briefing: 
 “Perhaps most egregious, the Hayses’ position, if accepted, would 
permanently harm SHN, leaving the Company to face a lifetime of improper 
competition from a 50% owner, which started this unlawful competition 
while its principals were SHN officers or directors, with duties of loyalty and 
duties to maximize SHN’s economic success.”97 
 “Section 7.02 of the LLC Agreement imposes duties on the Hays Group, 
including duties to ‘maximize the economic success of [SHN]’; ‘avoid any 
conflicts of interest between the Members’; act ‘in good faith’; and avoid 
competition within 100 miles of San Francisco unless certain conditions (not 
met here) have been satisfied.  Mr. Nederlander and Mr. Harris have always 
understood that Section 7.02 binds both the Nederlander and Shorenstein 
affiliates.  Prior to trial, the Hayses admitted that, as directors, officers, or 
owners, they had duties to act in SHN’s best interests, maximize the 
company’s success, act in good faith, maintain SHN’s confidential 
information, avoid conflicts between the Members, and not compete with 
SHN within 100 miles.”98 
 “These [fiduciary] duties are mirrored in the LLC Agreement.  
See . . . §7.02(a) (imposing duties to maximize SHN’s economic success; 
avoid Member conflicts; and carry out actions in good faith) . . . .  The 
evidence establishes conclusively that the Hays Group knowingly acted in 
bad faith, breached the duty of loyalty, and caused CSH to breach the 
contractual duties in the LLC Agreement by: Competing against SHN, and 
not acting in SHN’s best interests, by presenting Broadway shows at the 
Curran that SHN sought to present . . . [f]ailing to otherwise act in the best 
interests of SHN, and to maximize SHN’s business, by refusing to renew the 
Curran lease; attempting to bar SHN’s CEO from meeting with agents and 
producers . . . .  None of these actions was in SHN’s best interest.  Rather, 
they were taken solely to benefit the Hayses and their competing business at 
the Curran.  By putting their own interests ahead of SHN’s interests, the Hays 
Group breached the LLC Agreement and the duty of loyalty (including the 
duty to act in good faith).”99 
 “The Hayses were warned by counsel that operating the Curran outside of 
SHN would expose them to litigation risk, and the Hayses acknowledged that 
                                                          
 
97 Id. at A762–63 (Nederlander Post-Trial Opening Br.). 
98 Id. at A785 (internal citations omitted). 
99 Id. at A810–12 (internal citations omitted). 
35 
 
they had duties not to compete, to maximize SHN’s economic interests, and 
to maintain SHN’s information in confidence.  They knowingly violated each 
of these duties.”100 
 
Although Nederlander’s post-trial briefs clearly focused much more on Section 7.02(b) 
than Section 7.02(a), Nederlander fairly raised and preserved its Section 7.02(a) argument 
in its briefing in the Declaratory Judgment Action. 
 
Second, CSH argues that Nederlander waived its Section 7.02(a) claim because 
Robert “unequivocally testified that Section 7.02(a) applies to ‘just NSF’ ‘on the 
Nederlander side, and that NSF’s Permitted Transferees ‘didn’t have to’ ‘devote[] their 
efforts to maximizing the success of SHN.’”101  The Court of Chancery made no findings 
concerning the credibility or meaning of Robert’s testimony on this point, and it declined 
to afford any weight to the “inordinate emphasis” the parties placed on fact witnesses’ 
testimony on legal questions.102  Further, read in its full context, Robert’s testimony appears 
                                                          
 
100 Id. at A840 (internal citations omitted). 
101 CSH Answering Br. at 39 (internal citations omitted). 
102 Declaratory Judgment Opinion, 2018 WL 3646817, at *22 n.248 (“Both parties put an 
inordinate emphasis on the witnesses’ opinions about various legal questions.  None of the 
witnesses are experts on Delaware law, and even if they were, questions of legal interpretation are 
reserved for the Court.  Thus, I do not allocate weight to the legal opinions of fact witnesses.”).  
We agree with the trial court’s observation on that point.  Additionally, CSH’s reliance on Oxbow 
Carbon & Minerals Holdings v. Crestview-Oxbow Acquisition, LLC, 202 A.3d 482 (Del. 2019) is 
misplaced.  In Oxbow, we quoted a principal’s testimony concerning his understanding of an LLC 
agreement that was consistent with, and an example of, a position that a party and its counsel 
actually took in the Court of Chancery.  That position was directly inconsistent with a new 
argument that party raised on appeal.  Id. at 508–09.  Here, Robert’s testimony was vacillating and 
inconsistent.  To the extent his testimony suggests that Affiliates are not bound by Section 7.02(a), 
that testimony was inconsistent with the position that Nederlander argued below and which it has 
consistently maintained on appeal.  See App. to CSH Answering Br. at B431 (Nederlander’s Post-
Trial Oral Argument) (acknowledging Robert’s testimony in a slide deck but clarifying that it did 
“Not Comport with Plain Language” and does not change the “Plain Language of the LLC 
36 
 
to be inconsistent on its face.103  Based upon the record before us, we decline to conclude 
that Robert’s inconsistent trial testimony effected a waiver of Nederlander’s Section 
7.02(a) argument.  
2. 
The Court of Chancery Misinterpreted Section 7.02(a) 
 
Nederlander contends that the Court of Chancery erred because finding that 
“Section 7.06 allows competition, without regard to the obligations expressed in Section 
7.02(a), contravenes the plain language of the LLC Agreement and deprives Section 
                                                          
 
Agreement”); id. at B438 (stating that Robert’s testimony was “inconsistent with [its] 
interpretation”).   
103 See, e.g., App. to CSH Answering Br. at B267–75 (Robert’s Oct. 25, 2017 Testimony) (Q: 
“There was no obligation that was imposed here on other members of the Nederlander family; 
right?”  A: “We took care of that.  It was an obligation, basically, in the Nederlander family and 
the Shorenstein family.”  Q: “Well, let me just be clear about something.  When this deal was 
signed in 1992 . . . May 22, 1992, you personally, Robert E. Nederlander, Sr., you didn’t think you 
were required to devote your efforts to maximizing the economic success of the partnership, did 
you?”  A: “Robert Nederlander personally?  No.  I didn’t think so.” . . .  Q: “You didn’t yourself 
get involved in the day-to-day negotiations of [the LLC Agreement], did you?”  A: “I was 
concerned that we carry forward some of those documents - - I haven’t looked at this in some time 
- - which basically says, in effect, that everybody is bound by this, relatives and otherwise.  That’s 
why the Shorenstein entity and the Nederlander entity are bound by this.  This is not something 
that - - I have to look at it, but ‘Permitted Transferees’ in the case of - - are any member of the 
Nederlander family.  Nederlander family, I think, is - - I haven’t looked at it - - is the descendants 
of David Nederlander.  And that includes all the Nederlanders.  So Walter [Shorenstein] was 
protected, that any Nederlander entity is bound by this.  Any Nederlander descendent is bound by 
this.  Just like any Shorenstein entity is bound by this, including family members.”); id. at B293–
94 (Robert’s Nov. 28, 2017 Testimony) (Q: “You said [in the October 25, 2017 cross-examination] 
that your brother, Jimmy Nederlander, and your nephew, Jimmy, Jr., were not required by Section 
7.02(a) to devote their efforts to maximizing the success of SHN.  Correct?”  A: “Yes.”  Q: “Is it 
also correct that your two sons, Robert, Jr. and Eric, were not required by this contract, Section 
7.02(a), to devote their efforts to maximizing the economic success of SHN?”  A: “They’re not 
involved in it.”  Q: “So they’re not required.  Correct?”  A: “They’re not - - I don’t know where 
you’re going with this.  You’re trying to confuse me with taking sentences out of context.” . . .  Q: 
“Is it correct, Mr. Nederlander, that neither of your two sons, Bob, Jr. and Eric, were ever required 
by Section 7.02(a) to devote their efforts to maximize the economic success of SHN?”  A: “They 
weren’t required to do that.”). 
37 
 
7.02(a) of meaningful effect.”104  The court held that “[w]hile Section 7.02(a) requires the 
‘Shorenstein Entity’ to ‘devote their efforts to maximize the economic success of the 
Company and avoid any conflicts of interest between the Members,’ Section 7.06 contains 
an exception to this broad provision.”105  The court then held that Section 7.02(b) limited 
Section 7.06.106 
We see two problems with the court’s interpretation.  First, Section 7.06 does not 
discuss competition.  Rather, Section 7.06 provides that:  
SECTION 7.06.  Outside Activities.  Subject to the other provisions of this 
ARTICLE VII, including Section 7.02, any Member, any Affiliate of any 
Member or any officer or director of the Company shall be entitled to and 
may have business interests and engage in business activities in addition to 
those relating to the Company, and may engage in the ownership, operation 
and management of businesses and activities, for its own account and for the 
account of others, and may (independently or with others, whether presently 
existing or hereafter created) own interests in the same properties as those in 
which the Company or the other Members own an interest, without having 
or incurring any obligation to offer any interest in such properties, businesses 
or activities to the Company or any other Member, and no other provision of 
this Agreement shall be deemed to prohibit any such Person from conducting 
such other businesses and activities. Neither the Company nor any Member 
shall have any rights in or to any independent ventures of any Member or the 
income or profits derived therefrom.107 
 
This provision speaks to the parties’ rights to engage in outside business activities—it says 
nothing about the right to compete against SHN.108  
                                                          
 
104 Opening Br. at 32. 
105 Declaratory Judgment Opinion, 2018 WL 3646817, at *24 (footnotes omitted). 
106 Id. (“This plain language of the contract, when read through the lens of generalia specialibus 
non derogant, creates a detailed scheme governing competition.” (footnotes omitted)).   
107 App. to Opening Br. at A305 (LLC Agreement § 7.06) (emphasis added). 
108 See Concord Steel, Inc. v. Wilmington Steel Processing Co., 2008 WL 902406, at *8 (Del. Ch. 
Apr. 3, 2008) (“One plausible definition is that ‘competitive’ refers to a situation where ‘two or 
38 
 
 
Second, and even more problematic, the trial court held that Section 7.02(b), but 
not Section 7.02(a), limited Section 7.06.  In doing so, the court ignored the language 
stating that Section 7.06 is subject to Section 7.02 in its entirety.  Section 7.06’s “subject 
to” provision does not exclude Subsection 7.02(a).  The plain language reading of Section 
7.06 is that individuals and entities bound by the LLC Agreement may engage in business 
unless that business interferes with the obligations in Section 7.02, including the 
obligation in Section 7.02(a) to maximize the economic success of SHN and avoid 
conflicts of interest.   
Even so, Section 7.02(a) must still be interpreted in light of Section 7.02(b), which 
is a more narrowly drafted provision.  Usually, “[s]pecific language in a contract controls 
over general language, and where specific and general provisions conflict, the specific 
provision ordinarily qualifies the meaning of the general one.”109  We must therefore 
consider how those provisions interact and the extent to which Section 7.02(a) is qualified 
by Section 7.02(b).   
One possible reading of Section 7.02(b) is that it qualifies Section 7.02(a) entirely 
as to competing productions.  Under that reading, because Section 7.02(b) only limits 
controlled productions, it implicitly allows competing productions near San Francisco so 
long as they are not under the “control” of either entity.  If so, the key question in 
                                                          
 
more commercial interests [try] to obtain the same business from third parties.’” (quoting BLACK'S 
LAW DICTIONARY 302 (8th ed. 2004))); id. at *8 n.66 (recognizing another plausible definition of 
“competitive” “as a ‘[r]ivalry between two or more businesses striving for the same customer or 
market’” (quoting THE AMERICAN HERITAGE DICTIONARY OF THE ENGLISH LANGUAGE 376 (4th 
ed. 2000))). 
109 DCV Holdings, Inc. v. ConAgra, Inc., 889 A.2d 954, 961 (Del. 2005). 
39 
 
Nederlander’s Section 7.02(a) breach allegation is whether CSH “controls” the productions 
it stages at the Curran.  Nederlander, however, advocates for another reading of Section 
7.02(a)—one in which Section 7.02(a) is in harmony with Section 7.02(b), rather than 
entirely qualified by it.110  Under that reading, either entity can stage a production it does 
not control only if staging that production would also not undermine the duty to maximize 
SHN’s success.  In other words, there is some competition not within Section 7.02(b)’s 
exceptions that is prohibited by Section 7.02(a).   
  
Section 7.02 is at least arguably ambiguous.  The Court of Chancery did not discuss 
the direct interaction between Sections 7.02(a) and (b), but it did make findings based on 
the extrinsic evidence that are relevant to the interpretation of Sections 7.02(a) and (b).111  
The trial court found that Walter Shorenstein initiated litigation in the early 1990s because 
James Nederlander was allegedly competing with their partnership in the areas surrounding 
San Francisco.  The two partners settled that litigation in 1992.  As a part of that settlement 
they included Section 4 of the partnership agreement, which the court found was 
                                                          
 
110 
Oral 
Argument 
Video 
at 
5:02–6:18, 
https://livestream.com/DelawareSupremeCourt/events/8670837/videos/191018409 (Q: “Is there 
competitive conduct that does not fall within [Section7.02(b)] that is still prohibited by [Section 
7.02(a)]?”  A: “Yes.  Exactly at the heart of this issue. . . .  [T]he meaning of that [Section 7.02(a)], 
you cannot engage in activity that harms SHN.  You must avoid conflicts of interest.  That means 
you can’t compete against the business.  Competition against the business is antithetical to a duty 
to maximize.   [Section 7.02(b)], therefore—we get to the question of the real heart of it—what 
does 7.02(b) mean in that construct?  The way we look at it, [Section 7.02(b)] is a specific 
application of the parties’ agreement not to compete applying to specific facts that the parties 
anticipated.  Because they had experience with those facts.  If you had a controlled production, the 
parties’ agreement was very simple.  You cannot put a controlled production within one-hundred 
miles of San Francisco unless you comply with one of three exceptions.”).  
111 See supra p. 19–20. 
40 
 
“substantially similar” to Section 7.02 and included the duty to “devote their efforts to 
maximize the economic success of the Partnership and avoid conflicts of interest.”112  The 
trial court found that limiting competition was “‘the most important thing’ the agreement 
was meant to do.”113  Additionally, the historic Curran Theatre was one of three theaters 
controlled by SHN in San Francisco.  These three theaters were close in proximity and 
were part of the entity’s core business.114   
Those findings, combined with Section 7.02(a)’s plain language that the Shorenstein 
and Nederlander Entities must devote their efforts to maximizing SHN’s economic success, 
are fundamentally inconsistent with the trial court’s conclusion that Sections 7.02(b) and 
7.06 generally allow competition that could undermine the economic success of SHN.  
Although the outer contours of Section 7.02(a)’s requirement that the Shorenstein and 
Nederlander Entities “devote their efforts to maximize the economic success” of SHN may 
be unclear, at its essence, Section 7.02(a) establishes a contractual duty to SHN to not 
engage in competitive activities that would undermine the economic success of SHN, or 
that would create conflicts of interest between the Members.  Thus, CSH cannot itself or 
through its Affiliates use the Curran to compete with the core business of SHN if such 
                                                          
 
112 Declaratory Judgment Opinion, 2018 WL 3646817, at *26.   
113 Id. (quoting Robert’s trial testimony). 
114 See App. to Opening Br. at A184 (1978 Letter of Understanding) (stating that the “initial 
purpose” of the partnership was “solely the operation of the Curran.”). 
41 
 
competition would not maximize the economic success of SHN, unless the competition 
involves “controlled productions” falling within one of Section 7.02(b)’s exceptions.115 
Although we hold that the trial court erred in its interpretation of Section 7.02(a), 
we decline to order a remand in the Declaratory Judgment Action.  Nederlander has not 
challenged on appeal the trial court’s award of nominal damages based on Nederlander’s 
“unified remedy theory.”116  Nederlander does not attempt to explain how damages from a 
breach of Section 7.02(a), which it interprets to be a contractual duty of loyalty, would 
differ from the nominal damages the trial court found for the Hayses’ breach of the 
common law fiduciary duty of loyalty.  Further, Nederlander has not challenged any other 
aspect of the court’s damages analysis.117  Nor has it appealed the denial of any other forms 
of relief.   
                                                          
 
115 See Thorpe v. CERBCO, Inc., 676 A.2d 436, 442 (Del. 1996) (stating that it is a “fundamental 
proposition that directors may not compete with the corporation” and that doing so violates the 
duty of loyalty); Cantor Fitzgerald, L.P. v. Cantor, 2000 WL 307370, at *22 (Del. Ch. Mar. 13, 
2000) (holding that a contractual duty of loyalty was necessary to prevent partners from competing 
in the “very business that is central to [the partnership’s] success”), overruled on other grounds, 
Scion Breckenridge Managing Member, LLC v. ASB Allegiance Real Estate Fund, 68 A.3d 665, 
686 (Del. 2013).  The trial court expressly found that the “Counterclaim defendants admit they are 
Affiliates of the Shorenstein Entity.”  Declaratory Judgment Opinion, 2018 WL 3646817, at *23 
n.263. 
116 See supra p.22–23. 
117 Nederlander requested disgorgement of CSH’s profits from SHN and mitigation costs.  See 
App. to Opening Br. at A830–32 (Nederlander Opening Post-Trial Br.).  The trial court noted that 
those remedies were related to the Curran lease claims, on which the court ruled in favor of CSH 
and which are not at issue on appeal.  Declaratory Judgment Opinion, 2018 WL 3646817, at *28, 
*29 n.320 (“I do not address [Nederlander’s] request for disgorgement of corporate distributions, 
mitigation costs, and specific performance of the Promise or oral lease renewal because I find that 
no contract or lease renewal exists.”).  Nederlander has not challenged that finding. 
42 
 
 
As for the PI Action, it is a much closer question as to whether Nederlander fairly 
presented and preserved its Section 7.02(a) argument.  Nederlander quoted Section 7.02(a) 
in its PI complaint and stated that “the Shorenstein Entity is bound by the provisions of the 
LLC Agreement,” including Section 7.02(a).118  The complaint further alleges that the 
Shorenstein Entity breached “the contractual anti-competition” provisions set forth in the 
LLC Agreement, including Section 7.02(a).119  The subsequent briefing, however, is 
largely silent on Section 7.02(a).120  In addition, Nederlander never directly referenced 
Section 7.02(a) during oral argument in the PI Action.   
Nederlander raises a practical point: Nederlander stated in oral argument on appeal 
that it did not “focus on” its Section 7.02(a) claim in the PI Action because it would “not 
[be] very persuasive to say we’re going to succeed on the merits on a claim [where the Vice 
Chancellor] already entered judgment against us” in the Declaratory Judgment Action.121  
Counsel’s hesitation to press its Section 7.02(a) argument in the PI Action is perhaps 
                                                          
 
118 App. to CSH Answering Br. at B467–68, B471 (PI Complaint). 
119 Id. at B484 (“By permitting, authorizing, working in furtherance of and/or contracting to stage 
productions at the Curran over which they exercise control – including without limitation Dear 
Evan Hansen and Harry Potter – without first satisfying one of the three exceptions set forth in 
Section 7.02(b), CSH, CSH Curran, CSH Productions, Curran Live, Carole Shorenstein Hays, Jeff 
Hays, and Thomas Hart breached the contractual anti-competition provisions set forth in Sections 
7.02(a), 7.02(b), and 7.06 of the LLC Agreement and the related, implied covenant of good faith 
and fair dealing.”). 
120 See App. to Opening Br. at A1094 (Nederlander Opening PI Br.) (stating that Sections 7.02(b) 
and 7.03 “are consistent with Section 7.02(a), which requires the Shorenstein Entity to ‘devote 
their efforts to maximize the economic success’ of SHN, avoid conflicts, and act in good faith”); 
id. at A1222 (Nederlander Reply PI Br.) (stating, in a footnote, that “SHN and NSF reserve their 
rights to enforce Defendants’ conduct that violates Section 7.02(a) of the LLC Agreement”). 
121 Oral Argument Video at 6:50–7:25, https://livestream.com/DelawareSupremeCourt/events/ 
8670837/videos/191018409. 
43 
 
understandable.  But Nederlander’s delay in challenging that ruling is less understandable 
if it intended to press its Section 7.02(a) theory in the PI Action.  For example, Nederlander 
chose not to move for re-argument of its Section 7.02(a) argument in the Declaratory 
Judgment Action—even though it sought clarification of other issues in that action.  And 
it did not promptly appeal the Declaratory Judgment Opinion to seek a review of its Section 
7.02(a) claim of error.  Instead, Nederlander took the full thirty days to file an appeal.  
Further, Nederlander filed a new action challenging Dear Evan Hansen and Harry Potter 
that focused on Section 7.02(b), and only stated in a footnote to its reply brief in the PI 
Action that “SHN and NSF reserve their rights to enforce Defendants’ conduct that violates 
Section 7.02(a).”122   
Given those facts and Nederlander’s request (made only in the PI Action) that this 
Court issue an expedited decision before July 1, 2019, we are tempted to deny Nederlander 
an opportunity to press its Section 7.02(a) theory on remand in the PI Action as to Dear 
Evan Hansen and Harry Potter.123  However, given the complicated procedural posture 
and timing of events in the two related cases, and the fact that the trial court entered partial 
final judgment only upon Count I of Nederlander’s complaint in the PI Action,124 we reject 
the Hayses’ claim that Nederlander has completely waived Section 7.02(a), and we order 
                                                          
 
122 App. to Opening Br. at A1222 (Nederlander Reply PI Br.). 
123 Mot. to Expedite at 6.  Nederlander explained that the showing of Harry Potter also requires 
that the Curran undergo extensive modifications to alter the appearance and structure of the theater, 
which are set to begin as early as July 1, 2019.  Id. 
124 Nederlander of San Francisco Assocs. v. CSH Theatres LLC, 2018 WL 6790280, at *1 (Del. 
Ch. Dec. 21, 2018) [hereinafter PI Action Rule 54(b) Order]. 
44 
 
a remand in the PI Action so that the impact of this court’s reversal of the Section 7.02(a) 
ruling in the Declaratory Judgment Action may be considered.  As to its other claims in the 
PI Action, Nederlander only tangentially mentioned them in a footnote of its opening brief 
in that action,125 and, thus, the trial court declined to rule on them.126  Although it appears 
to us that the trial court concluded that those claims had been abandoned for all purposes, 
because we remand the PI Action, we ask the trial court to determine whether any of those 
claims, and which remedies, if pressed by Nederlander, remain viable. 
We remind the parties that the trial court has wide discretion to appropriately narrow 
proceedings on remand, particularly given the extensive proceedings that have already 
taken place.  And more specifically, given Nederlander’s apparent choice to defer any 
                                                          
 
125 App. to Opening Br. at A1100 (Nederlander Opening PI Br.) (“NSF has also brought claims 
for breach of fiduciary duty and aiding and abetting breaches of fiduciary duty.  There is also a 
reasonable probability of success on those two claims.  CSH is a member and 50% owner of SHN.  
Given its significant control over SHN and various terms in the LLC Agreement, CSH owes 
common law and contractual fiduciary duties.  As such, the individual defendants who ultimately 
control CSH likewise owe fiduciary duties.  Moreover, Delaware law recognizes a claim for aiding 
and abetting breach of fiduciary duty, including contractually created fiduciary duties.  Here, CSH 
owed and breached contractual and common law fiduciary duties.  Even if the other Defendants 
did not breach duties they owed directly, they knowingly participated in CSH’s breaches by 
causing or participating in the transactions that violated those duties.  Accordingly, they are liable 
as aiders and abetters.” (internal citations omitted)). 
126 PI Decision, 2018 WL 6271655, at *11 (“Nederlander raises in a footnote [of its opening brief 
in the PI Action] that it has brought claims for breach of fiduciary duty and aiding and abetting 
and that these have a ‘reasonable probability of success’ because CSH is a member and fifty 
percent 
owner 
of 
SHN, 
leading 
to 
‘common 
law 
and 
contractual 
fiduciary 
duties.’ . . .  [Nederlander] addresses the issue so summarily in its footnote that it lends no 
assistance to its argument about reasonable probability of success on the merits.  [Nederlander] 
does not mention the issue at all in its sections on Irreparable Harm or Balance of the Equities.  
Finally, because [CSH and its Affiliates] objected to the issue as not properly raised, and because 
[Nederlander] did not respond to that objection either in its Reply Brief or at Oral Argument, it 
appears that [Nederlander] has abandoned this argument.  Thus, I decline to rule on the fiduciary 
duty claim.”).  Nederlander has not challenged this holding on appeal. 
45 
 
challenge to the Section 7.02(a) ruling until after obtaining the ruling in the PI Action, we 
think, absent new and compelling factual developments, that the trial court would be well 
within its discretion to deny any renewed request for expedited preliminary injunction 
proceedings as to the two productions at issue in the PI Action.127   
C. 
We Find No Error in the Court of Chancery’s Interpretation and Application of 
Section 7.03 in the PI Action 
 
 
Nederlander contends on appeal that the Court of Chancery erred in its interpretation 
and application of “control,” as defined in Section 7.03, as to Dear Evan Hansen and Harry 
Potter in the PI Action.128  Specifically, Nederlander claims that the trial court 
“misunderstood” and “consequently mischaracterized” its argument to mean that the 
Hayses control any production that they stage at the Curran, and that it therefore “never 
considered the facts supporting [its] claim or the merits of the claim.”129  We reject 
Nederlander’s claim of error for two reasons.  First, the trial court did not “misunderstand” 
or “mischaracterize” Nederlander’s arguments.  Rather, it addressed the very arguments 
                                                          
 
127 Nederlander’s decision to not seek immediate re-argument or immediate appellate review of 
the trial court’s interpretation of Section 7.02(a) in the Declaratory Judgment Action likely 
provides a sufficient basis to reject any request by Nederlander for a second bite at expedited 
preliminary injunction proceedings in the PI Action as to the two challenged productions.  
Additionally, we note that the Hayses opposed Nederlander’s request for expedition of the PI 
Appeal, pointing out that CSH was “set to turn over the Curran to a third-party tenant pursuant to 
a lease beginning on July 1, 2019, and the producers of Harry Potter have announced that the show 
will not open until sometime in the fall of 2019.”  Opposition to Mot. to Expedite ¶ 7.   
128 Section 7.03 defines “control” as “having the ability to determine where the Production plays 
and the terms and conditions of said engagement.”  App. to Opening Br. at A305 (LLC Agreement 
§ 7.03). 
129 Opening Br. at 37, 40. 
46 
 
that Nederlander presented.  Second, the trial court actually did consider the relevant facts 
and the merits of Nederlander’s control arguments.   
 
As to the first issue, Nederlander argues that the trial court erred by interpreting its 
argument to mean that the Hayses “control every play that is staged (i.e. presented) at the 
Curran if they engage in the ‘making of the agreement’ or if they retain any influence over 
programming,” and thus, “in essence, [Nederlander] argues that [the Hayses] control any 
production that they stage.”130  Instead, Nederlander claims to have argued that, between 
the two extremes of passive ownership of a theater and total control of both the production 
and theater,131 there “lies a broad middle space where the issue of control over production 
becomes highly fact-dependent,” and that “the specific rights the Hayses had obtained for 
                                                          
 
130 PI Decision, 2018 WL 6271655, at *8. 
131 Nederlander describes that spectrum of control as follows:  
On one end of the spectrum, the theater owner may contract away all control over 
the operations of the theater, giving a third party complete freedom to operate and 
stage productions with no involvement from the theater owner.  This paradigm 
includes the “long-term, passive lease” that described the terms of SHN’s lease of 
the Curran from the Lurie family.  On the opposite end of the spectrum, the theater 
owner maintains complete control over all theater operations, including the right to 
operate the theater to stage all productions that the owner itself produces.  Under 
the former paradigm arrangement, the owner has no control over any production 
staged at the theater, because the owner has contracted away any right to determine 
where that production plays or any terms and conditions of the production.  Under 
the latter paradigm arrangement, the theater owner has complete control over every 
production staged at the theater.  That is because the owner, as the theater owner, 
wearing its hat as the proprietor, operator and producer, would incontestably have 
the ability to determine where each production plays and its terms and conditions 
Opening Br. at 38–39. 
47 
 
themselves in connection with staging DEH and Harry Potter were sufficient to give the 
Hayses joint control over those productions.”132   
 
But on the question of what constitutes “joint control,” Nederlander argued below 
that “[p]roducers and theater operators jointly determine the location and terms” and that 
it is merely “the making of an agreement between a theater operator and producer that 
provides them both with control over the engagement.”133  Nederlander also argued: “It is 
undisputed that theater operators and producers jointly control the terms of the engagement.  
Even where a producer has substantial leverage, the theater operator remains free to accept, 
reject, or attempt to negotiate the terms of the engagement.”134  As to what kind of staging 
at the Curran would not result in joint control, Nederlander offered the long-term Lurie 
lease as an example: 
[The Hayses] argue that NSF’s interpretation makes the phrase “control over 
production” meaningless because NSF’s interpretation encompasses every 
show that will play at the Curran.  [The Hayses] are wrong.  As the Court is 
aware, the Curran was leased for decades by the Luries to SHN.  The Luries 
owned the [Curran], but they did not control any production that played at 
the theater because they (unlike [the Hayses]) agreed to a lease that ceded 
control over particular shows and their terms to SHN.135   
 
 
From those statements, the trial court interpreted Nederlander’s argument to mean 
that control “exist[s] under the LLC Agreement anytime Defendants ‘stage’ (i.e., present) 
a show directly (rather than through a passive lease with another party controlling all 
                                                          
 
132 Id. at 39, 41 (emphasis added).  
133 App. to Opening Br. at A1224 (Nederlander PI Reply Br.) (emphasis added). 
134 Id. at A1225 (citations omitted). 
135 Id. (citations omitted). 
48 
 
programming such as the choice of production, pricing, marketing, etc.).”136  We hold that 
this was a reasonable interpretation of Nederlander’s position, and we find no error with 
the trial court’s analysis of those arguments. 
 
As to the second issue, the Court of Chancery fully considered the merits of 
Nederlander’s argument.  In doing so, it cited the relevant facts and distinguished them 
from its interpretation and application of Section 7.03 to Fun Home in the Declaratory 
Judgment Action—a ruling and analysis that Nederlander has not contested.137   In fact, 
Nederlander, in its opening brief on appeal, affirmatively states that it “agrees with the trial 
court’s interpretation of ‘control over the production’ in the” Declaratory Judgment Action, 
and that “the court properly concluded that the Hayses had ‘control’ over Fun Home.”138  
Regarding Dear Evan Hansen, the court recognized Nederlander’s argument that the 
Hayses controlled “[t]he financial terms, the number of performances, the dates, the 
duration of the show,” “[t]icketing fees, for example, facility fees,” “[s]eat sales, sale dates, 
                                                          
 
136 PI Decision, 2018 WL 6271655, at *10; see also id. (“[Nederlander] argues that this control 
can occur at any time prior to the staging of the show, whether two years before staging the show 
(based on something like the right of first refusal in Fun Home) or two days before the staging of 
the show (based on a contract allowing the production to play).  Therefore, [Nederlander] argues, 
the control over the productions of DEH and Harry Potter that Defendants gained through the 
contracts they signed booking those productions to play at the Curran is sufficient to make the 
productions subject to Defendants’ ‘control’ as defined in Section 7.03.  This, [Nederlander] 
explains, is because Defendants were involved in negotiating the terms and could have rejected 
them at any time, preventing DEH and Harry Potter from playing at the Curran.” (emphasis added) 
(citations omitted)). 
137 Id. at *9 (“I must now evaluate [Nederlander’s] contention that the circumstances surrounding 
the production of DEH and Harry Potter evidence control—the ability to determine where to 
produce the plays and the terms and conditions of said engagement.”). 
138 Opening Br. at 37. 
49 
 
[and] the dynamic pricing arrangement.”139  Similarly, as to Harry Potter, the court cited 
Nederlander’s arguments that the Hayses had “control over terms and conditions,” 
including “that [Carole] had to approve the manager of [the] operation . . . [and got] 
priority seating requirements for subscribers,” and that she “had final say over physical 
renovations to the [Curran].”140 
 
But the trial court noted that, unlike in Fun Home, “the Defendants had no 
independent right or authority to cause DEH or Harry Potter to play at the Curran or to set 
the terms for either play,” and that “DEH or Harry Potter could have chosen to play at an 
SHN theater without breaching any obligation to any of the Defendants.”141  The terms that 
the Hayses and the producers did agree upon were the “product of negotiations that 
occurred simply because Hays’s affiliate owns the Curran and she had the ability to say no 
to a request to use the Curran on terms that she did not find agreeable.”142  Additionally, 
the trial court expressly found that the producers of Dear Evan Hansen and Harry Potter 
“openly negotiated with multiple venues” in San Francisco, and that “the parties engaged 
in an open competition to show both DEH and Harry Potter.”143  Thus, the court concluded, 
“the facts of Fun Home do not apply.”144   
                                                          
 
139 PI Decision, 2018 WL 6271655, at *9 (internal quotations omitted). 
140 Id. (internal quotations omitted). 
141 Id. at *9, *11. 
142 Id. at *9. 
143 Id. at *11. 
144 Id. 
50 
 
 
Based on those factual findings—which Nederlander did not challenge below and 
has not challenged on appeal—the court held that Nederlander had “failed to show a 
likelihood of success on the merits”145 and entered final judgment as to Nederlander’s 
alleged breach of Section 7.02(b) pursuant to Court of Chancery Rule 54(b).146  We agree 
with the Court of Chancery’s analysis and affirm that aspect of the PI Decision. 
VII. 
Conclusion 
 
For the foregoing reasons, we AFFIRM in part, and REVERSE in part, the Court of 
Chancery’s July 31, 2018 opinion, and we AFFIRM in part, REVERSE in part, and 
REMAND the Court of Chancery’s November 30, 2018 opinion for further proceedings 
consistent with this Opinion.  This Court expects the parties to work together in a 
cooperative manner in the proceedings on remand so that any remaining issues can be 
appropriately narrowed and resolved by the trial court in an efficient manner. 
 
 
 
 
 
 
                                                          
 
145 Id. 
146 PI Action Rule 54(b) Order, 2018 WL 6790280, at *1. 
51 
 
 
Addendum 
 
 
Finally, we comment on one last point that was addressed by the trial court, but is 
not an issue raised by the parties on appeal, namely, the deposition misconduct by Carole 
Shorenstein Hays.147  In Paramount Communications Inc. v. QVC Network Inc.,148 this 
Court addressed, in an Addendum, deposition misconduct by a lawyer at a deposition.  This 
Addendum addresses a less frequently discussed corollary concerning the duty of counsel 
who is faced with a deponent’s inappropriate conduct at a deposition.   
 
In Paramount, the Supreme Court, sua sponte, addressed misconduct by out-of-state 
counsel who was representing a director of Paramount Communications in a deposition.  
That attorney was barred in Texas, was not admitted pro hac vice, and did not otherwise 
appear in the Delaware proceeding representing any party.  No member of the Delaware 
bar was present at the deposition representing any of the defendants or the stockholder 
plaintiffs. 
 
After examining the deposition transcript, the Supreme Court held that the attorney 
had abused the privilege of representing a witness in a Delaware proceeding by: (a) 
improperly directing the witness not to answer certain questions; (b) being extraordinarily 
                                                          
 
147 We comment on this matter “under our ‘exclusive supervisory responsibility to regulate and 
enforce appropriate conduct of . . . all lawyers, litigants, witnesses, and others’ participating in a 
Delaware proceeding.”  Kaung v. Cole Nat’l Corp., 884 A.2d 500, 507 (Del. 2005) (quoting 
Paramount Commc’ns Inc. v. QVC Network Inc., 637 A.2d 34 (Del. 1994)). 
148 637 A.2d 34 (Del. 1994). 
52 
 
rude, uncivil, and vulgar; and (c) obstructing the ability of the questioner to elicit testimony 
to assist the court in the pending matter.149 
 
The Supreme Court found the unprofessional behavior to be “outrageous and 
unacceptable.”150  After quoting portions of the deposition transcript, we stated: 
As noted, this was a deposition of Paramount through one of its directors.  
Mr. Liedtke was a Paramount witness in every respect.  He was not there 
either as an individual defendant or as a third party witness.  Pursuant to Ch. 
Ct. R. 170(d), the Paramount defendants should have been represented at the 
deposition by a Delaware lawyer or a lawyer admitted pro hac vice.  A 
Delaware lawyer who moves the admission pro hac vice of an out-of-state 
lawyer is not relieved of responsibility, is required to appear at all court 
proceedings (except depositions when a lawyer admitted pro hac vice is 
present), shall certify that the lawyer appearing pro hac vice is reputable and 
competent, and that the Delaware lawyer is in a position to recommend the 
out-of-state lawyer.  Thus, one of the principal purposes of the pro hac vice 
rules is to assure that, if a Delaware lawyer is not to be present at a deposition, 
the lawyer admitted pro hac vice will be there.  As such, he is an officer of 
the Delaware Court, subject to control of the Court to ensure the integrity of 
the proceeding.151  
 
 
This Court stated that counsel attending the deposition on behalf of the Paramount 
defendants had an obligation to ensure the integrity of the proceeding.  We stated further 
that a Delaware lawyer, or a lawyer admitted pro hac vice, would have been expected to 
put an end to the misconduct in the deposition.152  As in Paramount, although this 
Addendum has no bearing on the outcome of the case, we are compelled to address Hays’s 
misconduct and the role of her counsel when faced with such a situation.   
                                                          
 
149 Id. at 53. 
150 Id. at 55. 
151 Id. at 55–56. 
152 Id. at 56. 
53 
 
 
The following are excerpts of her deposition testimony.  Most of these excerpts were 
reprinted at the end of the Court of Chancery’s Declaratory Judgment Opinion and formed 
the basis for the trial court’s award attorneys’ fees and costs:153 
Q.  Have you ever been deposed before? 
A.  Yes. 
Q.  How many times? 
A.  Once. 
Q.  When? 
A.  I believe it was a while ago. 
Q.  What was the matter about? 
A.  It was a difference of opinions. 
Q.  I’m sorry, go ahead.  Were you done with your answer? 
A.  Yes. 
Q.   A difference of opinion about what? 
A.  How best to proceed in one’s lives. 
Q.  Was it involving a lawsuit? 
A.  Oh, definitely.154 
. . . . 
Q.  Did you ever meet with your counsel in advance of this deposition? 
A.  Oh, absolutely. 
                                                          
 
153 The citations within the excerpts quoted above are to the pages of Hays’s deposition transcript 
[hereinafter “Hays Dep.”]. 
154 Hays Dep. 6:23–7:16. 
54 
 
Q.  How much time did you spend with your counsel to prepare for the 
deposition? 
A.  Sufficient. 
Q.  How much is sufficient? 
A.  The appropriate amount needed. 
Q.   Can you give me an estimate of the amount of time? 
A.  It was completely enjoyable. 
Q.  How many times did you meet with your counsel to prepare for the 
deposition? 
A.  Preparation is always a good thing. 
Q.  That wasn’t my question. How many times did you meet with your 
counsel to prepare for the deposition? 
A.  I met with them – I’m not understanding the question. 
Q.  You told me you met with your counsel to prepare for the deposition. 
A.  Sure. 
Q.  How many times? 
A.  Well, see, I think of time as a continuum.  So I think I met with them from 
the beginning to the end.  And the beginning was the start, and then there 
was the rehearsal, and then there was the preview, and now it’s what I think 
of as the performance.  So, in my mind, I’m answering what you’re asking.  
If you could be more specific.  Do you want hours? 
Q.  Yes. 
A.  Oh, I don’t wear a watch.  So I know the sun coming up in the morning 
and the moon coming up at night. 
Q.  Can you tell me the number of times that you met with your counsel to 
prepare for the deposition?  I’m looking for a number. 
A.  Well, I gave you that. 
Q.  What was the number? 
55 
 
A.  The number was the beginning to the end. 
Q.  How many times? 
A.  You know, I think – I don’t recall. 
Q:  Did you review any documents to prepare for the deposition? 
A. Oh, certainly. 
Q.  What documents did you review? 
 
A.  The ones that were put in front of me. 
 
Q.  What were they? 
A. Documents. 
 
Q.  Can you recall any of them? 
 
A.  Yes. 
 
Q.  Tell me which ones.  
 
A.  Many. 
 
Q.  Great.  Tell me.  
 
A. Many, many, many. 
 
Q.  Tell me about them. 
 
A.  Well, they were full of words and communications and – 
 
Q.  Can you identify any of them by date or what type of document it is, or 
who the sender or recipient was? 
 
A.  No.155 
 
. . . . 
                                                          
 
155 Id. at 11:19–14:16. 
56 
 
Q.  Did you go to college? 
A.  Well, yes. 
Q.  Where? 
A.  I mean tuition was paid. 
Q.  Where did you go? 
A.  Oh, I had books from a lot of different places. 
Q.  Did you enroll at any of those places? 
A.  Oh, sure. 
Q.  Where did you enroll? 
A.  Many, many universities – not that many – a few. 
Q.  So you enrolled in a few universities? 
A.  Throughout my years, sure. 
Q.  Which universities? 
A.  Well, one was here, NYU. 
Q.  Any others? 
A.  Stanford. I don’t recall. 
Q.  Did you graduate from NYU? 
A.  No. 
Q.  Did you – 
A.  Well, maybe. It’s unclear. 
Q.  You’re not sure? 
A.  You mean do I have a diploma?  No.  Did I receive enough credits to 
graduate, is that your question? 
Q.  That’s a question, that’s fine. 
57 
 
A.  Is that your question? 
Q.  Sure. 
A.  You know, it’s been said that I have – 
Q.  It’s been said that you have what?  That you have graduated? 
A.  It’s been said that. 
Q.  Do you have a degree from NYU? 
A.  Do I have something like a piece of parchment? 
Q.  No.  Did you finish the requirements – 
A.  Did I receive – 
Q.  If you could wait until I finish my question. 
A.  Sorry. 
Q.  Did you complete the coursework and earn enough degrees [sic] to earn 
a degree?  I don’t care if you have a piece of paper on your wall.  I want to 
know, did you earn a degree? 
A.  I don’t recall. 
Q.  You don’t recall whether you have a degree from NYU? 
A.  Correct.156 
. . . . 
Q.  When did you attend NYU? 
A.  Oh, goodness.  You see, definitely, definitely in my youth. 
Q.  Can you be more specific? 
A.  No. 
Q.  For how many years did you attend NYU? 
                                                          
 
156 Id. at 15:21–18:2. 
58 
 
A.  Again, time is a compendium. So I was there a while. 
Q.  Can you be more specific? 
A.  No. 
Q.  Since you completed your studies at NYU, have you had employment 
anywhere? 
A.  How do you define “employment”? 
Q.  You’ve never used the word employment in your life? 
A.  I’m just wondering how you define it. 
Q.  Have you used the word employment in your life, ever? 
A.  I’m asking you. 
Q.  You don’t get to ask the questions.  I get to ask the questions. 
A.  Oh, sorry. 
Q.  Have you ever used the word employment in your life? 
A.   I’ve used many words. 
Q.  Have you used the word employment in your life? 
A.  It’s a word I’m familiar with. 
Q.  What is your understanding of the word employment? 
A.   Well, I think it has to do with – I’m not sure. 
Q.  You’re not sure what the word employment means? 
A.   Yeah. 
Q.  Have you ever worked for any kind of company or somebody who might 
be referred to as an employer? 
A.  Possibly. 
Q.  You’re not sure? 
A.  I would say sure. 
59 
 
Q.  Who have you worked for? And if you could give this to me in 
chronological order. 
A.  Oh, that’s – I could give it to you as best I could. 
Q.  Sure. 
A.  Okay.  So I’ve worked – just in terms of work or in terms of remuneration? 
Q.  Work. 
A.  So you – well, I’ve worked on political campaigns. 
Q.  And you consider those political campaigns to be your employer? 
A.  Well, I – I considered it to be work. That to me was the question posed to 
me. 
Q.  Let’s see if we can start again. 
A.  Okay. 
Q.  I’m looking for your employment history.  This isn’t a trick question.  
Are you able to give me your employment history? 
A.  I don’t know. 
Q.  Have you ever worked at SHN? 
A.  I have a deep association with it, yes. 
Q.  When you say “a deep association,” have you ever worked at SHN? 
A.  That’s my answer. 
Q.  Yes or no, have you worked at SHN?  I don’t understand your answer. 
A.  I answered the question. 
Q.  I don’t understand your answer. Can you please answer it again? 
A.  I’m comfortable with my answer. 
Q.  Okay. So you’re unwilling to tell me whether you’ve ever worked at 
SHN? 
A.  My answer reflects the question posed to me. 
60 
 
Q.  I don’t even know what that means.  My question is, have you ever 
worked at SHN, yes or no? 
A.  I find my answer to be most inclusive. 
Q.  I don’t understand what that -- 
A.  And embracing.157 
. . . . 
Q.  Have you ever been arrested? 
A.  I don’t recall. 
Q.  You might have been arrested and you just don’t remember? 
A.  I’ve led a long life, very colored. 
Q.  Sitting here today, can you tell me whether any of that color involved 
being arrested? 
A.  I don’t recall. 
Q.  Do you know what SHN is? 
A.  They’re letters in the alphabet. 
Q.  Do you know of a company that goes by SHN? 
A.  I certainly have a deep, deep association with it. 
Q.  What is SHN, beyond letters in the alphabet? I’m referring to the 
company. 
A.  It’s a company – it’s a company. 
Q.  Is it in the theatre business? 
A.  It’s a company that has people associated with it. 
Q.  Is it in the theatre business? 
A.  How do you define “theatre”? 
                                                          
 
157 Id. at 18:9–22:3. 
61 
 
Q.  I just want to make clear, I’m asking you if SHN is in the theatre business, 
and you can’t answer that question without further explanation? 
A.  Can you ask the question again? 
Q.  Sure.  Is SHN in the theatre business? 
A.  There’s many different types of theatres.  Are we today in the theatre 
business?  This is perhaps a piece of theatre that’s being recorded.  So I 
think, again, I need more context.158 
. . . . 
Q.  When was SHN founded? 
A.  At the beginning. 
Q.  In what year? 
A.  The year it was founded. 
Q.  Can you give me a year? 
A.  No. 
Q.  Who founded it? 
A.  I was there. 
Q.  What do you mean when you say you were there? 
A.  I was there at the very beginning when it was – at the very day one. 
Q.  Does that make you a founder? 
A.  Does giving birth to a child make you a mother? 
Q.  Yes, but that wasn’t my question.  My question was, the fact that you 
were there, does that make you a founder? 
A.  I believe it’s semantics. 
Q.  Yeah, well, we’re here today about semantics and words matter. 
                                                          
 
158 Id. at 23:7–24:19. 
62 
 
A.  Sure. 
Q.  So my question is, was your father a founder of SHN? 
A.  My – I am the daughter of my father. 
Q.  By definition, you are the daughter of your father.  My question was, is 
your father a founder of SHN? 
A.  My father and my mother raised me in an environment to have a great 
love and appreciation of the arts and introduced me to many, many people. 
Q.  My question was, is your father a founder of SHN? 
A.  That wasn’t close, that wasn’t close, the answer? 
Q.  No. 
A.  No? 
Q.  No. 
A.  Tell me again, was my father – 
Q.  Was your father, Walter Shorenstein, a founder of SHN? 
A.  He certainly cleared a path for me, and I can’t – I don’t know what that 
word means. 
Q.  You don’t know what the word founder means? 
A.  No.159 
. . . . 
Q.  No, my question is specific to this meeting.  Did you say during this 
meeting that you were unappreciated? 
A.  Well, I think when you ask for a thank you and you don’t get a thank you 
– so under-appreciated is so . . . 
Q.  Mrs. Hays, my question isn’t about what the word means.  My question 
is, at this meeting, did you – 
                                                          
 
159 Id. at 24:24–27:2. 
63 
 
A.  You’re getting yourself agitated. 
Q.  Did you say the words – and please stop commenting on me – did you 
say the words I’m unappreciated or underappreciated?  That’s my question.  
Did you say I’m unappreciated, I’m not getting enough appreciation?  Did 
you say something like that? 
A.  You’re smiling, so I’ll answer it.  Sure, I did.160 
. . . . 
Q.  Then you write: “Feeling duped by the Stuart Thompsons.”  Who is Stuart 
Thompson? 
A.  A person who works in the business. 
Q.  What does he do? 
A.  He’s a general manager and producer. 
Q.  Of what shows? 
A.  Many shows. 
Q.  Can you give me his most successful shows? 
A.  No. 
Q.  Can you give me any of the shows? 
A.  I don’t recall. 
Q.  You don't recall any shows that Mr. Thompson has produced?  Is that a 
no?  You were shaking your head. 
A.  I don’t recall. 
Q.  Okay. Had you been duped by Stuart Thompson? 
A.  I don’t recall. 
Q.  It refers to Oskars, O-S-K-A-R-S. What is that a reference to? 
A.  I don’t recall. 
                                                          
 
160 Id. at 157:20–158:14. 
64 
 
Q.  And feeling I was just a slob with Felix.  Who is Felix? 
A.  I don’t recall. 
Q.  You understand you’re under oath, right? 
A.  I recall. 
Q.  You recall that you’re under oath? 
A.  I recall. 
Q.  And you’re going to tell me you don’t know – you can’t tell me a single 
show that Stuart Thompson has produced? 
A.  Something I’m sure would be in the deep recesses of my mind.  Should 
we sit and tell – would that be a value to why we’re here?  Would you like 
me to do that?  Because I can.161 
. . . . 
Q.  Why did you write “Yipppppe de da”? 
A.  I like using that word. 
Q.  What meaning were you trying to convey? 
A.  Yipppppe de da, doo da, you know, a jazz term. 
Q.  And what does that mean when it’s used in an e-mail like this? 
A.  Different beats along the way. 
Q.  That’s what you meant to convey – 
A.  Trumpets, yeah. 
Q.  You meant to convey to your husband trumpets? 
A.  Sure. 
Q.  And what was the significance of trumpets? 
A.  Good tone. 
                                                          
 
161 Id. at 282:21–284:16. 
65 
 
Q.  What does it have to do with Bullets over Broadway? 
A.  Bullets over Broadway is very, very interesting, because you know what, 
I was wrong.  So when I said more often than not I’m right, here is an 
example where I’m wrong.  It closed on Broadway and lost its 12 to $15 
million investment.  So I think the Nederlanders should be more than elated 
that I’m not part of their esteemed venerable organization of picking hits, 
because had I done it, whoa, Yipppppe de da.162 
. . . . 
Q.  And is it right that the plan is for the season to include Broadway-style 
shows? 
A.  Those were her words. This was a proposal. 
Q.  Was that – I’m sorry? 
A.  This was a proposal. 
Q.  Was that your plan, to show Broadway-style shows? 
A.  I’m always open to ideas. 
Q.  Is Fun Home a Broadway-style show? 
A.  I’m always open to ideas, and I’m always open to great art, and I’m 
always open to great artists, and I always work in a way when the art is first 
– when it’s not evident.  So I maintain that what I personally do or what one 
does in life is with the artist, and whether it’s within 10 blocks in New York 
City, or downtown, or in Berlin, or London, as long as what I, Carole 
Shorenstein Hays, do, is immaterial to any of this.163 
. . . . 
Q.  After that conversation before it opened, have you ever discussed with 
anyone the idea of bringing Hamilton to the Curran Theatre? 
A.  You know, I would love everything that I love to be at the Curran.  So 
would I have loved Hamilton to be at the Curran, you betcha. 
                                                          
 
162 Id. at 310:13–311:21. 
163 Id. at 328:2–25. 
66 
 
Q.  Did you talk to anyone about it? 
A.  I talked to the butcher, the baker, the candlestick maker. 
Q.  But did you talk to the people who have any connection with Hamilton? 
A.  I talk.  I talk.  You know, I talk.  Hamilton went where it went.  So I think 
that I am doing right by me and SHN is doing right by them.  And this idea 
of scorched earth and I’m not allowed to talk to certain people is really kind 
of un-American.164 
. . . . 
Q.  What other plays that we haven’t discussed have you tried to bring to the 
Curran? 
A.  I’m always in conversation and none – and I stand by what I say, that I 
wish everyone, everyone well and my success is no reflection on SHN’s 
[success or] failure.  They truly maintain that I had nothing whatsoever to 
do with this business.  So why are you so focused on who I am?  I just find it 
really fascinating that on the one hand I know nothing, but on the other hand 
everything I know is stolen, perched, poached.  So I think you better really 
think about the questions in a crisper way.165 
. . . . 
Q.  And tell me about the shows that, are there any shows that you're in 
discussions with now that have not yet been announced? 
A.  For? 
Q.  The Curran.  And again, we can limit this to Broadway. 
A. That will be announced at –you know, it’s all subjection, isn’t it?  Because 
these are shows, and this is what I do and have always done with my own 
personal money, I invest in artists, I nurture them.  They come to Broadway, 
they work, they go over places.  It’s interesting how you just said Broadway.  
See, it’s such a Nederlander thing, because I am like in Brooklyn, downtown, 
and you don’t ask me about that.  You wouldn’t ask me about Hamilton if 
when I had the conversation with Oskar Eustis – so it’s a very Nederlander 
                                                          
 
164 Id. at 357:15–358:10. 
165 Id. at 360:9–25. 
67 
 
mindset that suddenly what is on Broadway is their fiefdom – and I say, whoa, 
wait a second, bring it on then, you guys tell me because, you know what – 
 
Q.  Mrs. Hays, I’m just trying to get a list. I started with Broadway because 
you told me earlier my question was too broad.  I know that Fun Home is 
playing.  I know Eclipsed is playing.  We’ve talked about a number of other 
shows.  Are there other Broadway-style shows that you have had 
conversations with people about bringing them to the Curran? 
 
A.  I always have conversations – 
Q.  What shows? 
A.  – with people.  There are numerous shows. 
Q.  Tell me. 
A.  I don’t want to.  I don’t think it’s any of your business whatsoever.  I am 
pleased to answer the question.  I am not hiding information.  But it’s my 
own money.  I’m like free and clear.  Why do I have to keep answering when 
I’ve just simply tried to get from Bob Nederlander who is behind him, who 
the successors are, and suddenly you have the right, the glee, the kaboom to 
ask me to go is that your personal e-mail – yes, we’re going to emotionally 
water board you, we’re going to keep you down as far as you can go, as 
though that’s like what we do under the name of the law that’s what you went 
to law school for and that you will go home and tell your wife you had a great 
day – that’s what we’re doing? 
I’m just simply trying to do my life at the Curran, and to do community 
programs.  Let’s talk about that.  Let’s talk about things that I wanted to do 
at SHN that I couldn’t, because they weren’t interested in. 
I will be having – the reason I’m doing Eclipsed is because it has, it is about 
the Liberian kidnapped girls.  Do you know about that?  I’m sure you’ve 
heard about that.  This is a show that no one would bring to Broadway except 
someone like me who believed in it, and it’s a show that my son has really 
picked up, and it’s about art and activism, and we at the Curran, we at the 
Curran are going to open our doors to bring in school kids to see shows 
maybe for the first time, to see, to do that. 
That’s what I want to do, and that’s what I want to talk about.  And you want 
to just take my, me and my and just keep bashing it against the wall, and I’m 
happy to stay until the lights come up and the lights go down.  Don’t bother 
me at all.  Because I’ve been doing this 30 years.  And you know what, I’m 
68 
 
like Judy Garland, I can keep, keep, keep, – I got another song in me, and I 
know when I walk throughout the community, they’re thrilled of what I’m 
doing. 
It’s – they don’t look at me as being combative.  They’re thrilled I have a 
love of the Curran.  I’ve never – I’ve never and I’ve always said to Bob 
Nederlander and to Greg Holland and to everyone else, this is a wonderful, 
wonderful, wonderful, business.166 
This is a representative but incomplete identification of Hays’s ridiculous and problematic 
responses to questions.  It appears from the cover page of the deposition transcript that the 
only Delaware lawyer present was an attorney representing the nominal defendant, SHN.167  
Two attorneys appeared at the deposition on behalf of Hays, including Brian T. Frawley, a 
partner with Sullivan & Cromwell LLP, and an associate from that firm.168  They were both 
admitted pro hac vice in the Court of Chancery proceedings.  Frawley took the lead in 
defending Hays’s deposition.  From our reading of the record (the transcript), it appears 
that Frawley made no attempt to put an end to Hays’s flagrantly evasive, nonresponsive, 
and flippant answers.  In fact, at one point, the examiner implored Frawley to control his 
own client but was rebuffed: 
MR. DOLUISIO:  I just want to know for the record, Mr. Frawley, I don’t 
want this deposition to go multiple days.  It will.  I’m getting non-responsive 
answers and now I’m getting speeches.  I’m trying not to be rude.  I think 
you recognize what I’m going through here. 
 
MR. FRAWLEY:  I think you frankly deserve that one, but we’ll go on. 
  
MR. DOLUISIO:  I asked her where she was employed. 
 
                                                          
 
166 Id. at 364:8–368:6. 
167 App. to Nederlander Reply Br. at AR002 (Hays Dep. Tr.). 
168 Id. 
69 
 
MR. FRAWLEY:  That’s not really what you asked her.  But are you done, 
Carole. 
 
THE WITNESS:  Uh-huh.169 
 
 
The trial court appropriately awarded attorneys’ fees and costs for Hays’s willful 
bad faith litigation tactics.  The deposition appears to have been a colossal waste of time 
and resources due to her behavior, which made a mockery of the entire deposition 
proceeding.  Although this award of fees and costs is not challenged on appeal, we write 
to remind counsel that they have a responsibility to intercede and not sit idly by as their 
client engages in abusive deposition misconduct.170   
 
Depositions are court proceedings, and counsel defending the deposition have an 
obligation to prevent their deponent from impeding or frustrating a fair examination.  
Although counsel can be caught off guard by a client’s unexpected, sanctionable outburst, 
that is not what happened here.  Rather, Hays’s flippant, evasive, ridiculous answers and 
                                                          
 
169 Hays Dep. 57:12–58:3.  Hays’s appellate counsel did not help matters during oral argument 
before this Court when he was questioned about his client’s deposition behavior.  Aside from 
repeatedly interrupting the Court and talking over the Court when the Court was raising the matter 
near the end of counsel’s allotted time for oral argument, counsel for Hays failed to acknowledge 
the inappropriateness of Hays’s conduct and then even tried to make an excuse for her by simply—
and incorrectly—telling the Court that this was Hays’s first deposition.  See Oral Argument at 
38:06–39:40, 
https://livestream.com/accounts/5969852/events/8670837/videos/191018409 
/player 39:30; see also Hays Dep. 6:23–25 (Q.  “Have you ever been deposed before?”  A.  “Yes.”).  
170 See Kaung, 884 A.2d at 508 (holding that deposition misconduct can be “just as outrageous and 
unacceptable when accomplished by a non-lawyer consultant or a witness at a deposition,” and 
stating that “[f]or future guidance and deterrence, we emphasize that sanctions may be imposed 
upon anyone participating in a Delaware proceeding who engages in abusive litigation tactics”); 
see also GMAC Bank v. HTFC Corp., 248 F.R.D. 182, 194–95 (E.D. Pa. 2008) (sanctioning both 
the deponent and counsel for extremely abusive, obstructive and vulgar deposition conduct of the 
client, and where client’s counsel “persistently failed to intercede” and “sat idly by as a mere 
spectator to [the client’s] abusive, obstructive, and evasive behavior”).   
70 
 
speech-making continued throughout the entirety of the deposition, which began at 9:38 
a.m. and concluded at 7:13 p.m.  An attorney representing a client who engages in such 
behavior during the course of a deposition cannot simply be a spectator and do nothing.171  
Here, Hays’s counsel made no apparent effort to curb her misconduct.   
 
Delaware counsel moving the admission of out of state counsel pro hac vice also 
bear responsibility in such a situation.  They must ensure that the attorney being admitted 
reviews the Principles of Professionalism for Delaware Lawyers, but they must also ensure 
that the out-of-state counsel understands what is expected of them in managing deposition 
proceedings outside the courthouse so that the litigation process is not abused.172  Such 
                                                          
 
171 We recognize that conferences between the attorney and deponent during the deposition should 
not occur except to “assert a privilege against testifying or on how to comply with a court order.”  
Ct. Ch. R. 30(d)(1).  Parties may also make a motion “upon a showing that the examination is 
being conducted or defended in bad faith or in such manner as unreasonably to annoy, embarrass 
or oppress the deponent or party.”  Ct. Ch. R. 30(d)(3); see also Hall v. Clifton Precision, 150 
F.R.D. 525, 531–32 (E.D. Pa. 1993) (ruling that “[c]ounsel and their witness-clients shall not 
engage in private, off-the-record conferences during depositions or during breaks or recesses, 
except for the purpose of deciding whether to assert a privilege”). 
172 See Ct. Ch. R. 170(b) (“The admission of an attorney pro hac vice shall not relieve the moving 
attorney from responsibility to comply with any Rule or order of the Court.”); Ct. Ch. R. 170(c)(ii) 
(“Any attorney seeking admission pro hac vice shall certify the following . . . [t]hat the attorney 
shall be bound by the Delaware Lawyers’ Rules of Professional Conduct and has reviewed the 
Principles of Professionalism for Delaware Lawyers, as effective on November 1, 2003, and as 
amended.”); Del. Principles Professionalism for Lawyers A(4) (“A lawyer should represent a client 
with vigor, dedication and commitment.  Such representation, however, does not justify conduct 
that unnecessarily delays matters, or is abusive, rude or disrespectful.  A lawyer should recognize 
that such conduct may be detrimental to a client’s interests and contrary to the administration of 
justice.”).  These obligations apply with equal force to lawyers who are permitted to practice in 
this state under a pro hac vice admission.  See Ct. Ch. R. 170 (c)(ii); Lendus, LLC v. Goede, 2018 
WL 6498674, at *8 (Del. Ch., Dec. 10, 2018) (holding that revocation of pro hac vice admission 
is an appropriate sanction for “conduct that is repugnant to this Court’s ideals of civility and 
candor”); State v. Mumford, 731 A.2d 831, 835–36 (Del. Super. 1999) (holding that an attorney’s 
failure to control witness’s offensive behavior during deposition warranted revocation of pro hac 
vice admission). 
71 
 
abusive tactics do a disservice to our busy trial courts, to all involved in the litigation 
process, and ultimately they impair the truth-seeking function of the discovery process.  It 
is hard to imagine that any reliable factual information could be mined from the Hays 
deposition fiasco. 
 
Perhaps this episode can be used positively as a lesson to those training new lawyers 
on deposition skills.  Lawyers have an obligation to ensure that their clients do not 
undermine the integrity of the deposition proceedings by engaging in bad faith litigation 
tactics; they cannot simply sit and passively observe as their client persists in such conduct.  
Given the restrictions on conferring with a client during deposition proceedings, these 
points obviously should be addressed beforehand in the deposition preparation.