Opinion ID: 4537784
Heading Depth: 2
Heading Rank: 1

Heading: Elkin’s Appeal

Text: Elkin’s primary contention on appeal is that the District Court erred in concluding that the §220 Action tolled the 5 This case was removed from the Delaware Court of Chancery to the District Court under 28 U.S.C. § 1441, on the basis of diversity jurisdiction, 28 U.S.C. § 1332(a). We have jurisdiction pursuant to 28 U.S.C. § 1291. “We exercise plenary review of an order granting or denying a motion for judgment as a matter of law and apply the same standard as the district court.” Lightning Lube, Inc. v. Witco Corp., 4 F.3d 1153,1166 (3d Cir. 1993) (citation omitted); cf. Lake v. Arnold, 232 F.3d 360, 365 (3d Cir. 2000) (“[P]lenary review extends to the District Court’s choice and interpretation of applicable tolling principles and its conclusion that the facts prevented a tolling of the statute of limitations.”). “[A]lthough the court draws all reasonable and logical inferences in the nonmovant’s favor, we must affirm an order granting judgment as a matter of law if, upon review of the record, it is apparent that the verdict is not supported by legally sufficient evidence.” Lightning Lube, Inc., 4 F.3d at 1166. As to Elkin’s sufficiency of the evidence arguments, we likewise “view[ ] the evidence in the light most favorable to [Norman]” and will affirm the District Court only if there “is insufficient evidence from which a jury reasonably could find liability [against 10 statute of limitations for Norman’s claims. In support of that position, he advances several arguments, each of which fails. First, he makes an “order of operations” argument – that the District Court improperly decided the issue of §220-based tolling before determining if, and when, Norman had inquiry notice of each of his claims. But the order in which the District Court chose to address those discrete issues is irrelevant.6 It is neither incorrect nor inherently inconsistent for a court to first determine that the statute of limitations for a claim should be tolled based on a successful §220 action but that the claim nevertheless is untimely because the plaintiff had actual or inquiry notice of his injury sufficiently in advance of that §220 action. To the extent the District Court utilized that approach on remand, it did not err in doing so, even if it took what might be a more circuitous route to resolution. Second, Elkin says that Norman is not entitled to §220based tolling because of Norman’s “complete lack of inquiry” Elkin].” Id. Finally, “[w]e review admissibility determinations, and exclusion of evidence for an abuse of discretion.” Quinn v. Consol. Freightways Corp. of Del., 283 F.3d 572, 576 (3d Cir. 2002). 6 In that regard, Elkin appears to have misunderstood our instruction in Norman V for the District Court to determine “in the first instance” when Norman had inquiry notice of his claims. Norman V, 860 F.3d 127. The purpose of that instruction was not to dictate the structure of the District Court’s opinion on remand, but rather, as the Court properly recognized, was to ensure that the District Court would be the first tribunal to decide that fact-intensive issue. 11 into his potential claims before initiating the §220 Action. (Elkin Opening Br. at 27.) Not only is this argument flatly inconsistent with the record, including evidence of Norman’s efforts to obtain information from Elkin following the Summer 2002 Call, but it is legally meritless. Elkin fails to cite a single case, and we are aware of none, involving a successful §220 action in which a Delaware court has declined to grant tolling because of a “lack of inquiry.” Nor are we aware of a case in which a Delaware court has even so much as suggested that such a concern is a relevant consideration in the §220-based tolling analysis.7 That is hardly surprising, given that “pursuit of an action under § 220 is regarded as strong evidence that [a] plaintiff was aggressively asserting its claims at that time[.]” Norman V, 860 F.3d at 124 (quotations omitted and first alteration in original). The proper focus of a §220-based tolling analysis is the nature of the underlying §220 action and the results of it. While a plaintiff’s conduct before filing a §220 action may be significant for other purposes, such as determining inquiry notice or laches, there is no support for 7 To the contrary, all of the cases to which Elkin directs us discuss a plaintiff’s level of inquiry in distinct contexts, such as determining whether they had inquiry notice of their claims or if their claims were barred by laches. See, e.g., Technicorp Int’l II, Inc. v. Johnston, No. CIV.A. 15084, 2000 WL 713750, at  (Del. Ch. May 31, 2000) (holding plaintiff was not on inquiry notice of claims because it was unable to discover wrongdoing despite diligent investigation); Fike v. Ruger, 754 A.2d 254, 262 (Del. Ch. 1999), aff’d, 752 A.2d 112 (Del. 2000) (claims barred by laches because plaintiff’s “lack of knowledge was due to his failure to exercise his right to obtain information,” including his right to inspect the company’s books and records). 12 Elkin’s assertion that it has any direct bearing on a §220-based tolling analysis itself. Elkin’s third contention is that the District Court erred by failing to determine on a claim-by-claim basis whether §220-based tolling should apply. Although the District Court did not specifically discuss each of Norman’s claims individually, for all intents and purposes its analysis achieved the same purpose. The Court correctly recognized that there was a clear nexus between the §220 Action and each of Norman’s claims in this case, which Elkin does not, and cannot, credibly refute. The Court similarly was right to note that Norman succeeded in the §220 Action. According to the Stipulated Order and Final Judgment that resolved the §220 Action, Norman secured, inter alia, access to 14 distinct categories of documents, each of which directly relates to at least one of his claims in this case. Moreover, we have already recognized that what Norman obtained in the §220 Action was “valuable information” with respect to this litigation. Norman V, 860 F.3d at 126. Thus, given Norman’s broad success in the §220 Action and the obvious relationship between the §220 Action and all of the claims asserted here, there was no need for the District Court to specifically address the factors favoring tolling on a claim-by-claim basis. The same is true regarding any discussion of the factors weighing against tolling, such as whether the §220 Action was prosecuted in bad faith or for some other improper purpose, such as stalling to lengthen the limitations period. Those inquiries, which look at the underlying §220 action as a whole, did not warrant a claim- 13 by-claim analysis. We therefore discern no error in the District Court’s approach.8 Fourth, Elkin contends that §220-based tolling was inappropriate for Norman’s claims because, several years before Norman initiated the §220 Action, there had been widely available public information regarding the license transfers around which his claims revolve. To the extent that Elkin is arguing that inquiry notice forecloses §220-based tolling, we already rejected that argument in Norman V. As we explained, the relevant issue is not whether Norman was on inquiry notice at all, but whether, if he was on such notice, that notice preceded his commencement of the §220 Action by more than the applicable limitations period. To the extent that Elkin is arguing that Norman was not entitled to §220-based tolling because the §220 Action was not strictly necessary to bring his claims in light of the public information available to 8 Elkin’s reliance on Orloff v. Shulman, No. CIV.A. 852-N, 2005 WL 3272355, at  (Del. Ch. Nov. 23, 2005) is unavailing. In Orloff, the court declined to toll the limitations period for certain claims, despite the fact that the plaintiffs had partially succeeded in a related §220 action, because the plaintiffs had at least inquiry notice of those claims for approximately 20 years before initiating their §220 action. Far from holding that a successful §220 action does not support tolling the limitations period for all related claims, Orloff merely stands for the proposition that §220-based tolling cannot revive claims that already were untimely when the underlying §220 action was commenced. That is in accord with, and in no way contrary to, our holding in Norman V and the District Court’s analysis on remand. 14 him, we largely rejected that argument too in Norman V. Not only did we recognize that the inability to file suit without the benefit of a §220 action is not a “prerequisite[]” to §220-based tolling, we also noted that the §220 Action, at a minimum, actually enhanced Norman’s claims through the “valuable information” he secured. Norman V, 860 F.3d at 125–26. The District Court properly followed our guidance in Norman V by not treating Norman’s ability to bring suit absent the §220 Action as a condition precedent to §220-based tolling and instead treating it as a factor to be balanced against other relevant considerations.9 See id. (“Delaware law preserves a court’s discretion to toll or not toll the limitations period on claims that may be informed by the results of a § 220 action…. Courts in our Circuit should proceed with due regard for the positive role that § 220 actions are meant to play under Delaware law. That is especially true when, as in this case, a Delaware court has exercised its judgment and concluded that a § 220 action has merit.”). We are also unpersuaded by Elkin’s final argument on this issue, that both we, in Norman V, and the District Court, in Norman VI, based our respective §220-based tolling 9 For the same reasons, we reject Elkin’s argument that the District Court erred by not denying §220-based tolling given the absence of bad faith conduct or fraudulent concealment on his part. Again, while such considerations may be relevant to the analysis, they are not prerequisites to §220-based tolling. The District Court gave appropriate weight to the absence of bad faith by Elkin and acted well within its discretion in concluding that this absence did not outweigh the considerations strongly supporting §220-based tolling. 15 discussions on a misapprehension of the extent to which Norman succeeded in the §220 Action. More specifically, Elkin argues that (1) our statements that the Court of Chancery “granted” Norman broad relief are not accurate, (2) that our reliance on the Vice Chancellor’s comments made at the end of the §220 Action were misplaced because they do not reflect his more recent view on the merits of that proceeding, and (3) that our decisions overstated the connection between the §220 Action and this litigation. Elkin’s first contention in this regard rests on hypertechnical and ultimately incorrect semantics. At the end of the §220 Action, the Vice Chancellor stated that he was “inclined to … grant[] the 220 relief in pretty broad form[,]” Norman v. US MobilComm, Inc., No. CIV.A. 849-N, 2006 WL 1229115, at  (Del. Ch. Apr. 28, 2006) (“US MobilComm”), but he gave the parties the opportunity to reach their own agreement based on that guidance before formally ruling on the matter. The parties did reach such an agreement, in the form of a Stipulated Order and Final Judgment, which provided Norman with broad relief. More significantly, the Stipulated Order and Final Judgment, as the name suggests, was the Court of Chancery’s judgment resolving the §220 Action and was formally approved and entered by the Vice Chancellor. Accordingly, and contrary to Elkin’s assertion otherwise, it is evident that the Court of Chancery did, in fact, “grant” Norman broad relief in connection with the §220 Action. It is of no moment that what Norman received in the §220 Action was negotiated by the parties based on the Vice Chancellor’s clear guidance that Norman should obtain broad relief and was not unilaterally imposed by the Vice Chancellor. 16 Likewise meritless is Elkin’s assertion that the view the Vice Chancellor expressed about the merits of Norman’s claims at the conclusion of the trial in the §220 Action was later undermined or superseded. In support of his position, Elkin relies on cherry-picked statements from an April 2006 decision by the Vice Chancellor addressing the entirely distinct question of whether Norman was entitled to an award of attorneys’ fees for successfully prosecuting the §220 Action. The answer to that question turned on whether Norman had a “clear right” to the documents he sought in the §220 Action or whether USM had acted in bad faith in opposing Norman in that proceeding. Id. at -5. Neither of those issues has anything to do with the Vice Chancellor’s post-trial view that the §220 Action was meritorious. Yet, insofar as the Vice Chancellor discussed that view in the April 2006 opinion, he unambiguously reiterated it. See id. at  (“At the end of a one-day trial, I stated that I was inclined to rule in Norman’s favor and grant broad relief[.]”); id. at  (“At the end of trial I did not issue a ruling, but advised the parties that ‘I’m very much inclined to be granting the 220 relief in pretty broad form.’”); id. (“[T]he parties do not dispute that Norman prevailed in the litigation[.]”); id. at  (“Although I ultimately concluded Norman had a proper purpose, I did not reach a firm decision on that issue until after I heard the evidence at trial.”). Finally, the connection between the §220 Action and this litigation has not been overstated. Elkin’s assertion that there are “blatantly false allegations in the Amended 220 Complaint that bear no connection to the allegations in this litigation” is both conclusory and irrelevant. (Elkin Opening Br. at 45.) Even assuming that some allegations in the §220 Action do not bear a relationship to this litigation, it is beyond dispute that a great many of them are directly related. 17 Moreover, the categories of information Norman secured access to through the §220 Action have an obvious and strong nexus to Norman’s claims here. Elkin has failed to argue or explain how any, let alone a meaningful percentage, of the relief that Norman obtained in the §220 Action is unrelated to at least one of Norman’s various causes of action. In short, Elkin’s various attempts to blunt the impact of the §220 Action on the tolling analysis fail in their entirety.
faith in the §220 Action Similarly unavailing is Elkin’s assertion that, on remand from Norman V, the District Court wrongfully refused to allow him to present evidence that Norman pursued the §220 Action in bad faith. That argument rests of the incorrect premise that “[t]he issue of Norman’s bad faith in pursuing the 220 Action was never an issue in this litigation until this Court made it part of the tolling calculus in Norman V.” (Elkin Opening Br. at 47.) We did not create new law in Norman V merely by acknowledging that Delaware courts have recognized that “deceitful, bad faith conduct[]” is relevant to determining whether fact-gathering litigation, such as the §220 Action, can provide a basis for tolling. Norman V, 860 F.3d at 125 (quoting Technicorp Int’l II, Inc. v. Johnston, No. CIV.A. 15084, 2000 WL 713750, at  (Del. Ch. May 31, 2000)).10 That long10 Although Technicorp discussed “bad faith” conduct by the defendant corporation resisting a fact-gathering proceeding, rather than by the stockholder plaintiff, nothing in Technicorp suggests that bad faith conduct is significant only when it proceeds from the defendant. 18 standing principle was available to Elkin throughout this litigation, including when the District Court first addressed Norman’s argument that the §220 Action tolled the statute of limitations for his claims. See Norman II, 726 F. Supp. 2d at 472 (citing Technicorp). Elkin could have and should have raised the issue long before we decided Norman V, if he thought it had any merit. The District Court did not abuse its discretion in refusing to allow Elkin to further prolong an already protracted litigation by belatedly raising a new issue and offering new evidence in support of it, despite having had ample prior opportunity to do so.11 Elkin’s arguments on appeal are all unpersuasive. 11 Assuming Norman V did create new law, which it did not, the District Court still did not abuse its discretion in excluding Elkin’s late-offered evidence. That is because Elkin only presented that evidence to the Court for the first time at a hearing on the parties’ motions for reargument. At a minimum, if Elkin wished to pursue the argument that Norman undertook the §220 Action in bad faith, it was incumbent on him to raise that argument and provide supporting evidence from the outset of the remand proceedings. Having made the strategic choice only to raise the bad faith argument for the first time in connection with a motion for reargument, Elkin cannot complain that the District Court acted outside of its discretion in refusing to allow him to surprise the Court (and Norman) with new evidence produced at the last minute. 19