Court Opinion

ID: 5129756
Source: CourtListenerOpinion
Date Created: 2021-11-29 14:03:07.077835+00
Date Added: 2024-06-11T08:23:13.703282
License: Public Domain

COURT OF CHANCERY
                                    OF THE
                              STATE OF DELAWARE
 LORI W. WILL                                                LEONARD L. WILLIAMS JUSTICE CENTER
VICE CHANCELLOR                                                    500 N. KING STREET, SUITE 11400
                                                                  WILMINGTON, DELAWARE 19801-3734

                          Date Submitted: November 24, 2021
                           Date Decided: November 26, 2021

C. Barr Flinn, Esquire                       Gregory V. Varallo, Esquire
Paul J. Loughman, Esquire                    Andrew E. Blumberg, Esquire
Alberto E. Chavez, Esquire                   Bernstein Litowitz Berger &
Young Conaway Stargatt &                      Grossman LLP
 Taylor, LLP                                 500 Delaware Avenue, Suite 901
100 North King Street                        Wilmington, Delaware 19801
Wilmington, Delaware 19801

Raymond J. DiCamillo, Esquire                Christine M. Mackintosh, Esquire
Kevin M. Gallagher, Esquire                  Kimberly A. Evans, Esquire
Alberto E. Chavez, Esquire                   Michael D. Bell, Esquire
Richards, Layton & Finger P.A.               Vivek Upadhya, Esquire
920 North King Street                        Grant & Eisenhofer P.A.
Wilmington, Delaware 19801                   123 Justison Street
                                             Wilmington, Delaware 19801

       RE:      In re BGC Partners, Inc. Derivative Litigation,
                C.A. No. 2018-0722-LWW

Dear Counsel:

       This letter decision addresses the defendants’ Motion to Supplement the

Record (the “Motion”).1 The Motion asks that the court reopen the trial record to

include documents about a purportedly comparable—but unrelated—transaction.

After reviewing the parties’ submissions regarding the Motion, I have determined

that the Motion should be denied. The limited probative value of the proffered
C.A. No. 2018-0722-LWW
November 26, 2021
Page 2 of 8

evidence is outweighed by the prejudice the plaintiffs would face if the record were

supplemented.

I.       BACKGROUND

         In 2017, BGC Partners, Inc. purchased Berkeley Point Financial LLC from

Cantor Commercial Real Estate Company, L.P. for $875 million. Stockholders of

BGC brought suit in this court, claiming that the controlling stockholder of BGC

caused BGC to overpay for Berkeley Point because his economic interest in

Berkeley Point exceeded his interest in BGC. The claims survived a motion to

dismiss and a motion for summary judgment.2

         On October 7, 2021, the court entered a Pre-Trial Order that addressed

evidentiary issues, including the scope of the trial record.3 Trial was held from

October 11 to October 15, 2021. The parties relied on 1,260 joint exhibits at trial.

On October 19, 2021, the parties filed a final joint exhibit list.4

         On November 5, 2021, the defendants provided the plaintiffs with an

updated joint exhibit list that included four new exhibits. Those documents—one

press release and three equity analyst reports—relate to an October 20, 2021

1
    Dkt. 260.
2
    Dkts. 70, 216.
3
    Dkt. 251.
4
    Dkt. 251.
C.A. No. 2018-0722-LWW
November 26, 2021
Page 3 of 8

announcement that real estate brokerage firm Cushman & Wakefield plc (“CWK”)

was acquiring an interest in multifamily lender Greystone Investment.              The

plaintiffs did not consent to the additions, citing the Pre-Trial Order. The Motion

was subsequently filed on November 22, 2021.

          In their Motion, the defendants assert that the proposed additional exhibits

support trial testimony that CWK might have been interested in purchasing

Berkeley Point for more than $1 billion.5 They contend that the documents also

support testimony that BGC’s purchase of 100% of Berkeley Point “was superior

to a transaction that involved a partnership with Cantor.”6         The plaintiffs, in

response, maintain that the documents are irrelevant because they concern a

transaction unrelated to BGC’s acquisition of Berkeley Point involving entities the

defendants have never asserted are comparable.7

II.       ANALYSIS

          A motion to reopen and supplement the trial record is addressed to the sound

discretion of this court.8 The court’s consideration of a motion to supplement

5
    Defs.’ Mot. ¶ 2.
6
    Id.
7
    Pls.’ Opp. ¶ 17 (Dkt. 261).
8
 See Fitzgerald v. Cantor, 2000 WL 128851, at *1 (Del. Ch. Jan. 10, 2000); El Paso Nat.
Gas Co. v. Amoco Prod. Co., 1992 WL 43925, at *10 n.15 (Del. Ch. Mar. 4, 1992) (“The
decision to reopen the record is within the trial court’s discretion.”).
C.A. No. 2018-0722-LWW
November 26, 2021
Page 4 of 8

“turns on the interests of fairness and justice.”9 “[T]he admission of late-submitted

evidence is not favored.”10

         “There is no express rule governing motions to reopen the evidentiary record

after the close of evidence, but before entry of a final judgment.”11 This court has,

however, considered several factors when exercising its discretion:

         1) whether the evidence has come to the moving party’s knowledge
         since the trial, 2) whether the exercise of reasonable diligence would
         have caused the moving party to discover the evidence for use at trial,
         3) whether the evidence is so material and relevant that it will likely
         change the outcome, 4) whether the evidence is material and not
         merely cumulative, 5) whether the moving party has made a timely
         motion, 6) whether undue prejudice will inure to the nonmoving party
         and 7) considerations of judicial economy.12

         The first, second, and fifth Pope factors are not in dispute.13 The first and

second factors consider when the evidence sought to be added to the record

became available. The CWK/Greystone joint venture was not announced until five

9
 Carlson v. Hallinan, 925 A.2d 506, 520 (Del. Ch. 2006), clarified by 2006 WL 1510759
(Del. Ch. May 22, 2006); see also Lola Cars Int’l Ltd. v. Krohn Racing, LLC, 2010 WL
1818907, at *1 (Del. Ch. Apr. 23, 2010) (explaining that the court may grant such a
motion where “doing so will serve the interests of fairness and substantial justice”).
10
  TR Invs., LLC v. Genger, 2009 WL 4696062, at *12 n.36 (Del. Ch. Dec. 9, 2009); see
also Pope Invs. LLC v. Benda Pharm., Inc., 2010 WL 3075296, at *1 (Del. Ch. July 26,
2010).
11
     Whittington v. Dragon Gp., LLC, 2012 WL 3089861, at *3 (Del. Ch. July 20, 2012).
12
     Pope Invs., 2010 WL 3075296, at *1 (quoting Carlson, 925 A.2d at 519-20).
13
   See Pls.’ Opp. at 7 n.5 (stating that the “factors relating to Defendants’ ability to
discover the evidence before trial and the timeliness of the Motion are not in dispute”).
C.A. No. 2018-0722-LWW
November 26, 2021
Page 5 of 8

days after trial concluded.14 And although the defendants waited 13 days after the

plaintiffs declined (for a second time) to consent to supplementing the record

before filing the Motion, it is not untimely given that post-trial briefs have not been

submitted.

         The third and fourth Pope factors consider whether the evidence is material

and not cumulative, such that it could be outcome determinative.15 The defendants

acknowledge that they “do not believe that the documents should change the

outcome of the case.”16        That statement alone weighs against granting the

Motion.17

14
     Defs.’ Mot. ¶ 8.
15
   See Akorn, Inc. v. Fresenius Kabi AG, 2018 WL 5044375, at *2 (Del. Ch. Oct. 17,
2018) (ORDER) (declining to separately list the fourth Pope factor because “whether the
evidence is material and not merely cumulative” is “subsumed by whether the evidence
‘is so material and relevant that it will likely change the outcome’” (quoting Pope Invs.,
2010 WL 3075296, at *1)).
16
     Defs.’ Mot. ¶ 9.
17
   See Pope Invs., 2010 WL 3075296, at *3 (finding that factor weighed against granting
a motion to supplement where the information “while potentially probative, seems largely
cumulative of information already in the record” and “unlikely to be so material and
relevant as to change the outcome”); Akorn, 2018 WL 5044375, at *3 (explaining that the
third Pope factor “counsel[ed] against granting the motion” where the information was
not so material and relevant that it would “likely change the outcome of the trial”);
Sutherland v. Sutherland, 2008 WL 571253, at *2 (Del. Ch. Feb. 14, 2008) (denying
motion to supplement because, among other reasons, the evidence would not “materially
affect resolution” of a pending dispositive motion).
C.A. No. 2018-0722-LWW
November 26, 2021
Page 6 of 8

         Beyond that, the materiality and relevance of the evidence appears limited.

The press release and analyst reports pertain to a transaction unrelated to the

Berkeley Point acquisition. The Motion represents the first time the defendants

have indicated that CWK may be comparable to BGC and that Greystone may be

comparable to Berkeley Point.18 The comparability of the recent CWK/Greystone

transaction to BGC’s acquisition of Berkeley Point in 2017 would be difficult to

fairly assess without further evidence.

         That reality leads to the sixth and seventh Pope factors, which concern

prejudice to the plaintiffs and considerations of judicial economy. The plaintiffs

were unable to examine the relevance of the CWK/Greystone joint venture at trial

given the timing of that transaction.         Extensive evidence, including expert

testimony, was presented at trial about valuation issues regarding comparable

transactions and companies. It would be unjust to—as the defendants suggest—

require the plaintiffs to “argue the merits” of the new documents in post-trial

briefing without further examination of that evidence.19

18
     See Defs.’ Mot. ¶ 11; Pls.’ Opp. ¶ 17.
19
   Defs.’ Reply ¶ 6. The defendants suggest that the four documents they seek to add to
the record are no different from documents added to the joint exhibit list but not
introduced at trial. Id. ¶ 16. But the plaintiffs at least had the opportunity to elicit
testimony on the joint exhibits. They would have no ability to inquire into the newly
presented evidence concerning the CWK/Greystone joint venture.
C.A. No. 2018-0722-LWW
November 26, 2021
Page 7 of 8

       If the court were to grant the Motion, additional discovery and an

evidentiary hearing would be necessary to put the new evidence in context.

Holding an evidentiary hearing—likely including fact and expert testimony—after

the close of trial would burden the parties and the court.20 And if another unrelated

transaction with some arguable probative value was subsequently announced, the

court could be faced with a motion to reopen the trial record yet again.21

III.   CONCLUSION

       On balance, the Pope factors weigh against permitting the defendants to

supplement the trial record. Considerations of justice and fairness require that the

record remain closed. The Motion is therefore denied.

20
   See Akorn, 2018 WL 5044375, at *3 (noting that before new evidence “could be
considered fairly by the court,” the non-movant “would have to be allowed to conduct
discovery, then the court would have to hold a further hearing” with fact and expert
testimony, which would burden the court); Carlson, 925 A.2d at 521-22 (explaining that
a supplemental evidentiary hearing about an affidavit submitted after the close of
evidence “would waste judicial resources”); Fitzgerald, 2000 WL 128851, at *2 (stating
that forcing the non-moving to “galvanize yet another major effort to gather evidence”
would be “unfairly prejudicial” and would place a burden “on the parties and the Court”
in the form of a “‘mini-trial’ to reconcile disputed evidence”).
21
   The parties raise extensive arguments about whether the Pre-Trial Order permits
supplementation of the record. See, e.g., Pls.’ Opp. ¶¶ 9-12; Defs.’ Reply ¶¶ 1-4.
Although the parties’ negotiating history and ultimate agreement on the terms of the Pre-
Trial Order were considered in assessing the Motion, I find the Pope factors conclusive.
C.A. No. 2018-0722-LWW
November 26, 2021
Page 8 of 8

                                      Sincerely yours,

                                      /s/ Lori W. Will

                                      Lori W. Will
                                      Vice Chancellor

cc: All counsel of record (by File & ServeXpress)