Opinion ID: 1921994
Heading Depth: 1
Heading Rank: 9

Heading: Discovery Properly Denied

Text: In this Court, in a footnote, the Plaintiffs assert they could not contest that a majority of both classes of GM shareholders approved the transaction because they were denied discovery regarding the vote. This Court has frequently stated that plaintiffs must use the tools at hand to develop the necessary facts for pleading purposes. [42] In this case, in a letter to the Plaintiffs' attorney, the Court of Chancery noted it had little regard for the Plaintiffs' discovery requests when they seemed either unable or simply unwilling to use even the most basic means of gathering publicly available information. We quote that letter in its entirety because it reflects the Court of Chancery's concerns about the Plaintiffs' initial efforts to enjoin a proposed transaction that had already closed: Dear [Plaintiffs' counsel]: I am concerned with the proposed amended complaint. Since the filing of the original complaint in this action, several events relating to this dispute have transpired. First, shareholders appear to have approved the deal. Second, the FCC approved the transaction subject to known conditions. Third, the transaction was consummated. Reading the amended complaint, however, gives one the clear impression that this deal has not closed. In fact, the amended complaint rather bizarrely requests this Court to enjoin the proposed transaction. While plaintiffs' reservations regarding the consent solicitation and record date are duly noted, I cannot fathom how other facts could be the subject of dispute. For example, plaintiffs feign ignorance of the FCC's approval of the Hughes transaction in their reply brief of January 28, 2004, when after only seconds of [I]nternet research I was able to ascertain those conditions. The FCC provided public notice of its conditioned approval on December 19, 2003. On the same web page where the FCC's conditions are provided, there is a notice of consummation filed by GM on December 23, 2003. You stated in a letter to opposing counsel that you were, as of December 30, 2003 (when plaintiffs moved to amend the complaint), frankly unaware that the transactions had closed. I assume, however, that plaintiffs are now aware of the salient facts. Given this newfound knowledge, is there any goodfaith basis for continuing to ignore the fact that this deal has been consummated? How is the integrity of the judicial process enhanced by proceeding with a complaint that is misleading? The Plaintiffs did not provide the Court of Chancery, and have not provided this Court, with any good faith basis for questioning the vote totals reported by GM in a Form Q-10 filed with the SEC. In Malpiede v. Townson , this Court noted that a party may be entitled to discovery when the trial court considers a matter outside of the complaint in ruling on a motion to dismiss and that motion to dismiss will be converted into a motion for summary judgment by clear force of the pleading rules. [43] However, where a plaintiff has no good faith basis for challenging the authenticity or legitimacy of an extraneous fact, that is otherwise subject to judicial notice, [44] the trial court may properly consider such fact in ruling on a motion to dismiss without affording the plaintiff an opportunity to take discovery.