Court Opinion

ID: 5122142
Source: CourtListenerOpinion
Date Created: 2021-10-29 20:02:52.89412+00
Date Added: 2024-06-11T08:22:26.432595
License: Public Domain

IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE

INTEAM ASSOCIATES, LLC,                     )
                                            )
                Plaintiff,                  )
                                            )
    v.                                      ) C.A. No. 11523-VCF
                                            )
HEARTLAND PAYMENT SYSTEMS, LLC,             )
                                            )
               Defendant.                   )

                        MEMORANDUM OPINION

                        Date Submitted: July 2, 2021
                       Date Decided: October 29, 2021

Thad J. Bracegirdle, BAYARD, P.A., Wilmington, Delaware; David A. Battaglia,
GIBSON, DUNN & CRUTCHER LLP, Los Angeles, California; Attorneys for
Plaintiff inTEAM Associates, LLC.

Jeffrey L. Moyer, Travis S. Hunter, Nicole K. Pedi, RICHARDS LAYTON &
FINGER, P.A., Wilmington, Delaware; Attorneys for Defendant Heartland
Payment Systems, LLC.

FIORAVANTI, Vice Chancellor
         This opinion is the latest chapter in a multi-year dispute between plaintiff

inTEAM Associates, LLC (“inTEAM”) and defendant Heartland Payment

Systems, LLC (“Heartland”) arising from a 2011 transaction and related

agreements among the parties.        The current feud is over Heartland’s alleged

violation of non-compete provisions that were contained in one of those

agreements, which also formed the basis for an injunction issued by this court in

2016.

         In 2017, the court denied inTEAM’s first motion for rule to show cause

seeking to hold Heartland in contempt for violating the injunction.1 It did so

largely due to inTEAM’s failure to produce sufficient evidence that Heartland

violated the court’s injunction. In 2018, inTEAM filed a second rule to show

cause motion, again seeking to hold Heartland in contempt of the injunction order.

Before considering the second motion for rule to show cause, this court vacated the

injunction, thus seeming to render the second motion for rule to show cause moot.2

In a 2018 order, the Delaware Supreme Court held that this court had erroneously

1
    See Dkt. 215.
2
 inTEAM Assocs., LLC v. Heartland Payment Sys., LLC, 2018 WL 1560058, at *3 (Del.
Ch. Mar. 29, 2018).
vacated the injunction and reinstated it solely for the purpose of having this court

resolve the second motion for rule to show cause. 3

         The court held a two-day evidentiary hearing on the second motion for rule

to show cause. The parties submitted post-hearing briefs and presented argument

on the motion. For the reasons stated herein, inTEAM’s motion is denied.

I.       BACKGROUND 4

         Since the passage of the National School Lunch Act in 1946, the United

States Department of Agriculture (“USDA”) has been responsible for regulating

and distributing subsidies to state school lunch programs.5 Historically, USDA

regulations required school lunch menus to contain a balance of various food

groups, i.e., meat, vegetables/fruit, grains, and milk. 6 By the 1990s, though, the

3
  inTEAM Assocs., LLC v. Heartland Payment Sys., LLC, 200 A.3d 754 (Del. 2018)
(Order).
4
  This case has been the subject of a trial, two appeals, and several motions. Much of the
factual background is drawn from facts and rulings of this court or the Delaware Supreme
Court. Because the factual record has already been documented in detail elsewhere, the
factual recitation here is limited to those facts pertinent to the current motion. For a more
thorough background on the history of this litigation, see inTEAM Associates, LLC v.
Heartland Payment Systems, Inc. (“inTEAM I”), 2016 WL 5660282 (Del. Ch. Sept. 30,
2016), aff’d in part, rev’d in part sub nom. Heartland Payment Systems, LLC v. inTEAM
Associates, LLC, 171 A.3d 544 (Del. 2017) and Heartland Payment Systems, LLC v.
inTEAM Associates, LLC (“inTEAM II”), 171 A.3d 544 (Del. 2017).
The evidentiary hearing testimony, Dkt. 328–29, is cited as “Hrg.”; the post-hearing oral
argument, Dkt. 345, is cited as “Oral Arg.”; and exhibits from the evidentiary hearing are
cited as “HX” followed by the relevant exhibit number.
5
    inTEAM II, 171 A.3d at 547–48.
6
    Id. at 548.

                                             2
regulatory scheme had become more sophisticated so that school lunch programs

were expected to adhere to age-based nutrient targets as a precondition to receiving

federal subsidies. 7 To ensure compliance with this regulatory scheme, school

districts have since been required to collect, track, and report data associated with

their lunch programs. 8 Over time, software developers have become involved in

this regulatory ecosystem, developing programs to assist school districts in

managing and reporting their data to state agencies, which are responsible for

distributing the federal subsidies. 9

           A.    The Parties

           inTEAM is a Delaware limited liability company with its principal place of

business in Santa Monica, California.10         inTEAM offers “consulting services,

training services and technology at both the state and school district level” “in the

USDA-driven, funded state and local school district child nutrition programs,

primarily in K through 12 schools.” 11 inTEAM was a division of School Link

Technologies, Inc. (“SL-Tech”) until September 12, 2011.12

7
    Id.
8
    See id.
9
    Id.
10
     inTEAM I, 2016 WL 5660282, at *1.
11
     Id. (internal quotations omitted).
12
     Id.

                                            3
           SL-Tech “developed, manufactured, sold, serviced and maintained computer

software and POS [point of sale] terminal hardware that was designed to facilitate

(i) accounting and (ii) reporting of transactional data functions and management of

food service operations of K-12 schools (including point-of-sale operations, free

and reduced application processing, ordering and inventory, menu planning and

entry of meal and other payments by parents via the Internet or kiosk).” 13

           Heartland is a Delaware limited liability company with its principal place of

business in Princeton, New Jersey.14 Heartland processes credit card payments and

offers software that assists customers in managing U.S.-based K-12 school meal

programs.15         This software “perform[s] menu planning, create[s] recipes,

monitor[s] inventory, process[es] orders, analyze[s] nutrients, generate[s]

production records, and facilitate[s] USDA compliance.”16

           B.     Heartland’s Acquisition of SL-Tech

           Prior to September 12, 2011, SL-Tech’s software offerings included

WebSMARTT and the Decision Support Toolkit (“DST”).17 WebSMARTT was

“USDA-approved Nutrient Analysis Software” that provided schools with “end-to-

13
     Id. (internal quotations and bracketing omitted).
14
     Id. at *2.
15
     Id.
16
     Id.
17
     Id. at *3.

                                               4
end functionality” to monitor their meals’ nutrition, encompassing “point of sale,

free and reduced meal eligibility tracking, menu planning, nutrient analysis, and

production records functionalities.”18 DST was a modeling and analytics tool that

allowed schools to “make informed decisions about the operation of their school

lunch programs.” 19       At this time, inTEAM was a subsidiary of SL-Tech that

primarily served as a consulting business.20

           In 2010, Heartland began offering its nutrition and payment solutions

services to K-12 schools.21        By late 2010, in an effort to grow its business,

Heartland began looking to expand its product suite to include back-of-house

solutions in addition to its front-of-house solutions.22 Front-of-house operations

utilize point of sale (“POS”) systems and application processing solutions, while

back-of-house operations utilize purchasing, inventory, and menu planning

solutions. 23      Heartland’s goal was to become the leading K-12 POS provider

through providing a “full [POS] solution,” and it believed that adding back-of-

house solutions was necessary to achieving its objectives.24

18
     Id.
19
     inTEAM II, 171 A.3d at 549.
20
     Id. at 551.
21
     Id.
22
     Id.
23
     Id. at 549.
24
     Id. at 551.

                                           5
           To round out its back-of-house capabilities, Heartland approached SL-Tech

to inquire about a potential acquisition in early 2011.25 Heartland and SL-Tech

eventually agreed that Heartland would “purchase substantially all of SL-Tech’s

assets, excluding the inTEAM Business, among others” for $17 million.26

WebSMARTT was among the products that Heartland acquired in the transaction.

inTEAM maintained ownership over SL-Tech’s DST software, which was still in

development.27 inTEAM and DST were excluded from the acquisition because

Heartland felt that both components were outside the scope of its business

strategy. 28

           On September 12, 2011, SL-Tech and Heartland, among other parties,

executed the Asset Purchase Agreement (the “APA”). 29 Section 5(n) of the APA is

a covenant not to compete:

           For a period of five (5) years from and after the Closing Date, neither
           [SL-Tech] nor the Major Shareholder will engage directly or
           indirectly, on [SL-Tech’s] or the Major Shareholder’s own behalf or
           as a Principal or Representative of any Person, in providing any
           Competitive Services or Products or any business that School–Link
           conducts as of the Closing Date in any of the Restricted Territory . . .
           . 30

25
     inTEAM I, 2016 WL 5660282, at *4.
26
     Id. (internal quotations omitted).
27
     inTEAM II, 171 A.3d at 551.
28
     inTEAM I, 2016 WL 5660282, at *4.
29
     Id.
30
     inTEAM II, 171 A.3d at 551 (quoting the APA).

                                              6
The APA also defines the relevant defined terms from Section 5(n):

          “Competitive Services or Products” means a business that develops,
          manufactures, sells and services and maintains computer software
          and/or [point of sale] terminal hardware designed to facilitate (i)
          accounting and (ii) management and reporting of transactional data
          functions, of food services operations of K–12 schools (including
          point-of-sale operations, free and reduced application processing,
          ordering and inventory, and entry of meal and other payments by
          parents via the Internet or kiosk); provided, however, that for purposes
          of clarity, Competitive Services or Products shall not include the
          inTEAM Business as currently conducted.

          “School–Link” means the entirety of [SL-Tech’s] business, including
          the business of Seller known as “School–Link,” but excluding the
          inTEAM Business.”

          “inTEAM Business” means certain Excluded Assets consisting of [SL-
          Tech’s] consulting, elearning and DST segments of the business
          known as “inTEAM” and including those products and services
          described in Exhibit C to the Co–Marketing Agreement.31

          The parties to the acquisition also executed a Co-Marketing Agreement on

September 30, 2011 (the “CMA”). 32 inTEAM assumed and was assigned all of

SL-Tech’s rights under the CMA through a separate Assignment and Assumption

Agreement. 33       The CMA also bound the parties to certain non-competition

obligations:

31
     Id. at 551–52 (quoting the APA).
32
     inTEAM I, 2016 WL 5660282, at *4.
33
     Id. at *6.

                                             7
           Except as otherwise provided herein, . . . (A) [Heartland] shall not
           engage, directly or indirectly, on its own behalf or as a principal or
           representative of any person, in providing any services or products
           competitive with the inTEAM Business, and [Heartland] hereby
           grants to inTEAM the exclusive right and license under any
           intellectual property of [Heartland] (other than trademarks) to conduct
           the inTEAM Business and (B) inTEAM shall not engage, directly or
           indirectly, on its own behalf or as a principal or representative of any
           person, in providing any services or products competitive with the
           [Heartland] Business, and inTEAM hereby grants to [Heartland] the
           exclusive right and license under any intellectual property of inTEAM
           (other than trademarks) to conduct the [Heartland] Business.34

The CMA defines “[Heartland] Business” as:

           [T]he development, manufacture, or sale of computer software and/or
           [point of sale] terminal hardware designed to facilitate (A) accounting
           and (B) reporting of transactional data functions and management of
           [] food service operations of K–12 schools (including point-of-sale
           operations, free and reduced application processing, ordering and
           inventory, and entry of meal and other payments by parents via the
           Internet or kiosk).35

And “inTEAM Business” is defined in the CMA as:

           [C]ertain Excluded Assets consisting of inTEAM's consulting,
           eLearning and DST segments of the business known as “inTEAM”
           and including those products and services described in Exhibit A and
           those inTEAM products and services described in Exhibit C and
           Exhibit D.36

Exhibit C reads:

34
     HX 4 § 9.1.1.
35
     Id. § 1.1.2.
36
     Id.

                                              8
                                  Functional Specifications

           Functional specifications for DST Phase 1 and add-ons and DST
           Phase 2 (future release), including unique state value added
           functionality (attached)

           Student Rewards functional specifications (attached)

           Off Campus Merchants functional specifications (attached). 37

           In November 2013, Heartland informed inTEAM that it was terminating the

CMA with respect to certain products, including WebSMARTT.38 The CMA

allowed such a termination if certain sales goals were not realized, which

Heartland cited as its reasoning for the termination.39 The CMA was still in full

effect, though, for DST. 40

           C.    inTEAM Sues Heartland for Breach of the CMA.

           On May 12, 2015, the Texas Department of Agriculture issued a request for

proposals for web-based software to support the USDA’s new meal pattern

requirements. 41       After declining inTEAM’s offer to submit a joint proposal,

Heartland partnered with Colyar Technology Solutions, Inc. (“Colyar”)—a

competitor of inTEAM’s since 2014—to submit their own joint proposal on June

37
     Id., Exhibit C (formatting in original).
38
     inTEAM I, 2016 WL 5660282, at *11.
39
     Id.
40
     See id.
41
     inTEAM II, 171 A.3d at 555.

                                                9
19, 2015.42 That same day, inTEAM also submitted a proposal; however, neither

proposal was ultimately selected. 43

           On September 21, 2015, inTEAM sued Heartland in this court, claiming,

among other allegations, that Heartland’s partnership with Colyar breached the

CMA.44         Heartland denied inTEAM’s allegations and asserted counterclaims

against inTEAM for breach of the CMA and against inTEAM’s CEO, Lawrence

Goodman, for breach of the APA and a consulting agreement that he signed

alongside the APA and CMA (the “Consulting Agreement”). 45

           On September 30, 2016, this court issued a post-trial memorandum opinion

(“inTEAM I”). The court held that inTEAM did not breach its non-competition

obligations under either the APA or CMA. 46 The court also ruled that, while

Goodman did breach his non-solicitation obligations under the Consulting

Agreement, he (1) did not breach his non-competition obligations under either the

APA or the Consulting Agreement, and (2) did not breach his non-solicitation

obligations under the APA. 47

42
     Id.
43
     Id.
44
     inTEAM I, 2016 WL 5660282, at *13; Dkt. 1.
45
     inTEAM I, 2016 WL 5660282, at *13.
46
     Id. at *14–17.
47
     Id. at *23–26.

                                           10
         The court also found that Heartland breached its non-competition and

exclusivity obligations under the CMA “when Heartland collaborated with Colyar,

a direct competitor of inTEAM, to create an interface between Heartland’s Mosaic

Menu Planning product and Colyar’s administrative review software.”48

Specifically, the court described inTEAM’s allegation to be that Heartland

“enhanc[ed] the ‘state value added functionality’ of Colyar’s products through a

data exchange between Mosaic Menu Planning and Colyar’s administrative review

software.”49 This description included a citation to a portion of inTEAM’s brief

that summarized inTEAM’s relevant allegation. 50 In that same section of its brief,

on the prior page, inTEAM supported this allegation by characterizing the breach

as occurring when Heartland

         created an interface between its products and Colyar’s products for the
         express purposes of providing state auditors a consistent view of
         school district menu data so that they can perform audits in a more
         efficient manner and offering access to school district menu data in a
         hosted environment so that state auditors can manipulate the data as
         needed in performing an audit and providing recommendations. 51

48
   Id. at *17; see also id. at *27 (“Heartland’s breach began on March 17, 2014, when the
relationship with Colyar first began, and ran until September 8, 2015, when Heartland
announced Texas had not selected its proposal with Colyar.”).
49
     inTEAM I, 2016 WL 5660282, at *17.
50
     Id. at *7 n.199 (citing Dkt. 134 at 55).
51
     Dkt. 134 at 54 (internal quotations and bracketing omitted).

                                                11
           In making its determination, the court found that (1) under the CMA, both

Heartland and inTEAM could “build and maintain products with menu planning

functions”; (2) Heartland could “own products that conduct a full nutrient analysis,

as understood under the relevant regulations at the time of the transaction”; and (3)

“inTEAM’s Business includes the ability to build products that assist state agencies

in conducting their administrative review process as part of ‘unique state value

added functionality.’” 52

           Thus, the court held that “[a]lthough offering Heartland’s Mosaic Menu

Planning product on its own would not have been a breach, Heartland assisting a

direct competitor of inTEAM’s administrative review software, Colyar, indirectly

breached the non-competition obligations under the [CMA].” 53 The court similarly

held that Heartland’s conduct also breached its exclusivity obligations under the

CMA.54

           After denying motions for reargument, 55 the court issued a final order on

December 9, 2016 (the “Final Order”). 56         Among other relief consistent with

inTEAM I, the Final Order enjoined Heartland “from engaging, directly or

52
     inTEAM I, 2016 WL 5660282, at *18.
53
     Id. (footnotes omitted).
54
     Id.
55
     Dkt. 179.
56
     See Dkt. 184.

                                           12
indirectly, on Heartland’s own behalf or as a principal or representative of any

person, in providing any services or products competitive with the inTEAM

Business as defined in the Co-Marketing Agreement, Exhibit C to the Co-

Marketing Agreement, and the relevant Functional Design Documents” for a

period of 18 months from September 30, 2016 to March 21, 2018.57 Besides its

reference to the CMA, the Final Order’s operative language also closely tracks

Section 9.1.1 of the CMA i.e., the CMA’s non-competition provision.

          Heartland appealed the court’s ruling the same day that the Final Order was

issued.58 inTEAM later filed a cross-appeal.59

          D.     The Court Denies inTEAM’s First Contempt Motion.

          Less than two months after the Final Order, during the pendency of the

appeals, inTEAM moved the court to issue a Rule to Show Cause under Court of

Chancery Rule 70(b), arguing that Heartland was in contempt of the Final Order

(the “First Contempt Motion”). 60 Specifically, inTEAM alleged that Heartland’s

marketing of its Mosaic Menu Planning software (“Mosaic”) to state agencies

violated the Final Order because Mosaic contained features that were in the

exclusive domain of the inTEAM Business—i.e., “unique state value added

57
     Id. at 2.
58
     See Dkt. 185, 186.
59
     See Dkt. 193.
60
     See Dkt. 196, 197.

                                           13
functionality” (“USVAF”)—as defined in the CMA and recognized in inTEAM I.61

inTEAM further contended that Heartland had already violated the Final Order by

making proposals to four states to provide them with software features within

Mosaic that would fall within USVAF. 62               Although the court had ruled that

“offering Heartland’s Mosaic Menu Planning product on its own would not have

been a breach,” inTEAM argued that this ruling was confined to Mosaic’s “menu

planning functionality” and was silent regarding any of Mosaic’s other features.63

           On April 28, 2017, this court denied inTEAM’s First Contempt Motion via a

bench ruling (the “April 2017 Ruling”). 64 In reaching its decision, the court was

not persuaded that inTEAM’s evidence established a violation of the Final Order.

First, all of inTEAM’s evidence was dated before the court’s September 30, 2016

opinion.65       Second, inTEAM did not “adequately explain how [its evidence]

show[ed] or suggest[ed] that Heartland’s products ha[d] the unique state value

added functionality or how Colyar’s products [were] evidence of Heartland’s

violation.”66        Meanwhile, Heartland had submitted unrebutted affidavits “that

explicitly state[d] Heartland d[id] not have the unique state value added

61
     Dkt. 205 at 3–5; see Dkt. 197 at 4–6.
62
     Dkt. 205 at 6–11.
63
     Id. at 4.
64
     See Dkt. 215.
65
     Id. at 8–9 (internal quotations omitted).
66
     Id.

                                                 14
functionality reserved for inTEAM” and that Mosaic “continue[d] to have the same

functionality . . . that it had prior to September 30, 2016” but for some “routine

upgrades.”67

           These affidavits convinced the court that Mosaic “d[id] not provide state-

level auditors with direct access to districts’ data,” but rather “by submitting forms

or files containing the data generated from Mosaic to the state, districts are able to

obtain reimbursement from the federal government.”68 Furthermore, the court

accepted that “Heartland d[id] not offer administrative review software” and that

“there [was] no existing interface or data exchange between Mosaic (or any other

Heartland software) and any Colyar software.” 69

           The court also relied on inTEAM’s own representations. At the hearing on

its motion, inTEAM defined USVAF as having two components:                   (1) “the

facilitation of the stream of information” and (2) “data analytics.” 70 The court

relied on Goodman’s trial testimony that enabling states to export Mosaic’s data to

another system would not put Heartland in breach of the CMA. 71 Thus, based on

inTEAM’s representations and the available evidence, the court ruled that

67
     Id.
68
     Id. at 9 (internal quotations omitted).
69
     Id. at 10 (internal quotations omitted).
70
     Id.
71
     Id. at 10–11.

                                                15
Heartland (1) did not “do[] the necessary data analytics,” (2) did not “allow[ for]

the real-time data access and manipulation by state administrators in the menu

plans,” (3) was otherwise incapable of “directly compet[ing] with inTEAM’s

unique state value added functionality,” and (4) was also not assisting an inTEAM

competitor        “in   competing     with   inTEAM’s   unique    state   value   added

functionality.”72

          E.      The Supreme Court Affirms in Part and Reverses in Part.

          On August 17, 2017, the Supreme Court issued an opinion (“inTEAM II”)

addressing Heartland’s appeal and inTEAM’s cross-appeal. The Court affirmed

this court’s December 9, 2016 injunction against Heartland, reflected in the Final

Order. In affirming the injunction, the Supreme Court gave deference to the

credibility determinations made by the court and determined that the court’s

conclusion was “supported by the record.” 73 Specifically, the Supreme Court

acknowledged that this court credited Goodman’s testimony that “unique state

added value functionality” meant providing state auditors with “immediate access

to records” and “the ability to have school districts within that state either [] utilize

the third-party systems that they already had, or allow them to utilize our menu

72
     Id. at 11.
73
     inTEAM II, 171 A.3d at 569–70.

                                             16
compliance tool directly so that the data feed was always available at the state

level.”74

           The Supreme Court reversed the Final Order in part and determined that

Goodman had breached the non-compete provisions of the APA and the

Consulting Agreement and that inTEAM breached the non-compete provision of

the CMA as well.75 Thus, the Supreme Court remanded the case back to this court

“to fashion a remedy adequate to compensate Heartland.”76

           F.      The Court of Chancery Vacates the Injunction Against
                   Heartland.

           On March 29, 2018, this court issued an order in response to the Supreme

Court’s Opinion in inTEAM II (the “Remand Order”).77 The court determined that

in light of the Supreme Court’s partial reversal, all of the parties had breached their

non-compete obligations, and thus none of them were entitled to an injunction

under the equitable doctrine of unclean hands. 78 Therefore, the court vacated the

existing injunction against Heartland that had been part of the Final Order.79

74
     Id. at 569 (internal quotations omitted).
75
     Id. at 572.
76
     Id.
 inTEAM Assocs., LLC v. Heartland Payment Sys., LLC, 2018 WL 1560058 (Del. Ch.
77

Mar. 29, 2018), aff’d in part, rev’d in part, 200 A.3d 754 (Del. 2018).
78
     Id. at *3.
79
     Id. at *5.

                                                 17
         Between the issuance of the Supreme Court’s Opinion in inTEAM II and this

court’s Remand Order, inTEAM filed a renewed motion for Rule to Show Cause

on February 13, 2018, arguing that Heartland was in contempt of the Final Order

based on new evidence that inTEAM had obtained since the denial of First

Contempt Motion (the “Second Contempt Motion”).80 Once the Remand Order

superseded the Final Order, though, there was no longer an injunction to enforce

against Heartland, rendering inTEAM’s Second Contempt Motion moot. inTEAM

appealed the Remand Order on June 27, 2018.81

         G.      The Supreme Court Directs the Court of Chancery to Reinstate
                 the Injunction Against Heartland and Consider inTEAM’s
                 Second Contempt Motion.

         On December 18, 2018, the Supreme Court issued an order based on

inTEAM’s appeal of the Remand Order. The Supreme Court determined that the

Remand Order “exceeded the scope of [the Supreme Court’s] remand by vacating

the injunction against Heartland.” 82 Instead, the Supreme Court stated that, on

remand, the court “was limited to deciding what relief, if any, to grant for

inTEAM’s and Goodman’s violation of the non-compete.” 83               The Court

80
     Dkt. 237.
81
     See Dkt. 249.
82
  inTEAM Assocs., LLC v. Heartland Payment Sys., LLC, 200 A.3d 754, ¶ 4 (Del. 2018)
(TABLE).
83
     Id. (internal quotations and citations omitted).

                                                18
acknowledged, though, that the injunction against Heartland had expired on March

21, 2018—eight days before the Remand Order was issued—which would

normally make reinstatement of the injunction unnecessary.84        However, the

Supreme Court retroactively reinstated the injunction for those eight days due to

inTEAM’s Second Contempt Motion so that this court could consider whether

Heartland violated the Final Order on remand. 85

           On April 5, 2019, Heartland moved for a protective order seeking to

preclude discovery on inTEAM’s renewed Second Contempt Motion.86 The court

denied Heartland’s motion on June 26, 2019 and permitted “narrow discovery

limited to the issues raised by inTEAM’s Second Contempt Motion.”87 On March

5, 2021, following discovery, both parties submitted their briefs 88 and a two-day

evidentiary hearing was held via Zoom technology on March 11 and 12, 2021 (the

84
     Id. ¶ 5.
85
     Id.
86
     Dkt. 262.
87
  inTEAM Assocs., LLC v. Heartland Payment Sys., Inc., 2019 WL 2613277, at *1 (Del.
Ch. June 26, 2019).
88
     Dkt. 311, 312.

                                        19
“Evidentiary Hearing”). 89 The parties submitted post-hearing briefs 90 and the court

heard oral argument on July 2, 2021 (the “Oral Argument”). 91

           H.    inTEAM’s Contentions

           inTEAM accuses Heartland of violating the Final Order’s injunction in three

ways. First, inTEAM argues that Heartland designed and updated its software to

generate data collected at the school district level in a machine-to-machine

readable format designed to be imported into software of Colyar and other

inTEAM competitors at the state level, which was directly or indirectly

competitive with inTEAM’s software.92 Second, inTEAM contends that Heartland

submitted at least five proposals to states other than Texas, which constituted direct

competition with inTEAM. 93 Additionally, one of these proposals led to a contract

with Illinois, which inTEAM alleges is another instance of direct competition.94

Third, inTEAM asserts that Heartland developed and sold software with data

analysis functionality, which inTEAM argues was in the exclusive domain of the

89
     See Dkt. 328, 329.
90
     Dkt. 330, 334, 341.
91
     See Dkt. 345.
92
  Plaintiff’s Post-Hearing Opening Brief in Support of its Renewed Motion for Rule to
Show Cause (“Pl.’s Op. Br.”) 3–4, 16–35.
93
     Id at 4, 35–45.
94
     Id.

                                            20
inTEAM Business under the CMA and subsequently affirmed by this court and the

Supreme Court.95

II.      ANALYSIS

         Under Court of Chancery Rule 70(b), the court may find a party in contempt

“[f]or failure to obey a[n] . . . injunctive order.” Ct. Ch. R. 70(b). Civil contempt

serves a dual purpose: “to coerce compliance with the order being violated, and to

remedy injury suffered by other parties as a result of the contumacious behavior.”

Aveta Inc. v. Bengoa, 986 A.2d 1166, 1181 (Del. Ch. 2009) (citing Del. State Bar

Ass’n v. Alexander, 386 A.2d 652, 665 (Del. 1978)). The court may use its

discretion when deciding whether to hold a party in contempt. Matter of Indem.

Ins. Corp., RRG., 2014 WL 31710, at *9 (Del. Ch. Jan. 2, 2014). “To be held in

contempt, a party must be bound by an order, have notice of it, and nevertheless

violate it.” Aveta, 986 A.2d at 1181. “A cardinal requirement for any adjudication

of contempt is that the order allegedly violated give clear notice of the conduct

being proscribed.” Mother African Union First Colored Methodist Protestant

Church v. Conf. of African Union First Colored Methodist Protestant Church,

1992 WL 83518, at *9 (Del. Ch. Apr. 22, 1992) (internal quotations omitted),

aff’d, 633 A.2d 369 (Del. 1993) (TABLE).

95
     Id. at 4, 45–47.

                                         21
         This court has also noted in considering a motion for contempt that “the

Court must be satisfied that there was an ‘element of willfulness or conscious

disregard of a court order.’” Mitchell Lane Pubs., Inc. v. Rasemas, 2014 WL

4804792, at *2 (Del. Ch. Sept. 26, 2014) (quoting Gallagher v. Long, 940 A.2d

945 (Del. 2007) (TABLE)). The violation “must not be a mere technical one, but

must constitute a failure to obey the Court in a meaningful way.” Dickerson v.

Castle, 1991 WL 208467, at *4 (Del. Ch. Oct. 15, 1991) (internal quotations

omitted). Even in cases of a violation, “the Court will consider good faith efforts

to comply with the order or to remedy the consequences of non-compliance.” In re

TransPerfect Glob., Inc., 2019 WL 5260362, at *10 (Del. Ch. Oct. 17, 2019).

         A.      The Burden of Proof

         The parties sharply disagree over the governing standard of review.

inTEAM argues that it need only prove contempt by a preponderance of the

evidence.96 Heartland argues that inTEAM must establish a violation of the court’s

order by clear and convincing evidence.97 Both parties cite to compelling authority

in support of their respective positions. A review of our pertinent caselaw over the

last half century shows that both standards have been applied.

96
     Pl.’s Op. Br. 10.
97
  Heartland Payment Systems, LLC’s Post-Hearing Answering Brief in Opposition to
inTEAM Associates, LLC’s Second Motion for Rule to Show Cause (“Def.’s Ans. Br.”)
29.

                                        22
      Unlike our state court system, federal courts consistently apply the clear and

convincing evidence standard to motions for civil contempt. 98 In Commodity

Futures Trading Commission v. Wellington Precious Metals, Inc., 950 F.2d 1525

(11th Cir. 1992), the Eleventh Circuit explained that the burden of proof to

establish civil contempt of an order may be different than the burden that was

required to prove the necessity of that order, which in that case was a

preponderance of the evidence at trial. Wellington, 950 F.2d at 1528. The court

reasoned that “the different burdens, as they are used in the two proceedings, do

98
   See Hawkins v. Dep’t of Health & Hum. Servs. for New Hampshire, Com’r, 665 F.3d
25, 31 (1st Cir. 2012); CBS Broad. Inc. v. FilmOn.com, Inc., 814 F.3d 91, 98 (2d Cir.
2016); F.T.C. v. Lane Labs-USA, Inc., 624 F.3d 575, 582 (3d Cir. 2010); United v. Ali,
874 F.3d 825, 831 (4th Cir. 2017); Whitcraft v. Brown, 570 F.3d 268, 271 (5th Cir. 2009);
In re Lane, 2020 WL 9257958, at *2 (6th Cir. Dec. 22, 2020); Gascho v. Glob. Fitness
Hldgs., LLC, 875 F.3d 795, 800 (6th Cir. 2017); Ohr ex rel. Nat’l Lab. Rels. Bd. v. Latino
Exp., Inc., 776 F.3d 469, 474 (7th Cir. 2015); Acosta v. La Piedad Corp., 894 F.3d 947,
951 (8th Cir. 2018); Fed. Trade Comm’n v. Enforma Nat. Prod., Inc., 362 F.3d 1204,
1211 (9th Cir. 2004); ClearOne Commc’ns, Inc. v. Bowers, 651 F.3d 1200, 1210 (10th
Cir. 2011); In re Managed Care, 756 F.3d 1222, 1233 (11th Cir. 2014); In re Sealed
Case, 932 F.3d 915, 939 (D.C. Cir. 2019); Energy Recovery, Inc. v. Hauge, 745 F.3d
1353, 1357 (Fed. Cir. 2014); see also 17 Am. Jur. 2d Contempt § 180 (“[e]lements of
civil contempt usually must be proven by clear and convincing evidence” (citations
omitted)). But in some federal jurisdictions, movants are only required to prove the
damages stemming from civil contempt liability i.e., compensatory contempt, by a
preponderance of the evidence. Nat’l Org. for Women v. Operation Rescue, 37 F.3d 646,
662 (D.C. Cir. 1994); see, e.g., Cardionet, LLC v. Mednet Healthcare Techs., Inc., 146 F.
Supp. 3d 671, 693 (E.D. Pa. 2015) (electing to use preponderance standard due to lack of
controlling precedent in Third Circuit); F.T.C. v. Kuykendall, 371 F.3d 745, 751 (10th
Cir. 2004); McGregor v. Chierico, 206 F.3d 1378, 1387 (11th Cir. 2000); In re Gen.
Motors Corp., 110 F.3d 1003, 1018 (4th Cir. 1997).

                                           23
not measure the same issue.”99 A trial resolves issues of guilt or liability, whereas

in a contempt proceeding the court determines whether an individual violated an

outstanding court order. See id.100

      Heartland relies on a nearly unbroken line of Delaware cases from this court

dating back to 2009 that is consistent with the federal approach. In TR Investors,

LLC v. Genger, 2009 WL 4696062 (Del. Ch. Dec. 9, 2009), aff’d, 26 A.3d 180

(Del. 2011), the court applied the clear and convincing evidence standard, relying

on federal authority. See TR Investors, 2009 WL 4696062, at *15 n.53 (citing

Rolex Watch U.S.A., Inc. v. Crowley, 74 F.3d 716, 720 (6th Cir. 1996) and F.T.C.

99
  Id. In Wellington, the defendant was found liable for securities fraud in the underlying
proceeding for engaging in fraudulent activity and receiving $2.8 million. The contempt
proceeding concerned the defendant’s failure to comply with an order to disgorge the
$2.8 million. Id. In a situation as the case at hand, however, where the order
incorporates the terms of a contract, it would seem odd to require a higher evidentiary
burden than what is otherwise required to establish breach of the contract.
100
   In 2015, the Supreme Court of Connecticut adopted the clear and convincing evidence
standard for “indirect” civil contempt (i.e., contempt that occurs outside the presence of
the court). Brody v. Brody, 105 A.3d 887, 897–98 (Conn. 2015). Among the reasons for
adopting the higher standard were the recognition that civil contempt sanctions may
include incarceration and that the higher standard is consistent with the requirement that
the underlying order be “clear and unambiguous.” Id. at 899; see also In re Birchall, 913
N.E.2d 799, 852–53 (Mass. 2009) (adopting clear and convincing evidence standard for
civil contempt because the court found that the preponderance of the evidence standard
no longer “adequately characterizes the level of certainty appropriate to justify civil
contempt sanctions, especially when those sanctions may include incarceration”). In
Delaware, “[t]he sanction of imprisonment can be imposed for either civil or criminal
contempt of court.” DiSabatino v. Salicete, 671 A.2d 1344, 1350 (Del. 1996).

                                           24
v. Affordable Media, 179 F.3d 1228, 1239 (9th Cir. 1999)). 101 Since then, this

court has regularly applied the clear and convincing evidence standard, almost

invariably relying upon TR Investors. See, e.g., Mitchell Lane Publ’rs, Inc. v.

Rasemas, 2014 WL 4804792, at *1 (Del. Ch. Sept. 26, 2014); Gorman v.

Salamone, 2015 WL 4719681, at *9 (Del. Ch. July 31, 2015); In re Mobilactive

Media, LLC, 2018 WL 5046282, at *2 (Del. Ch. June 28, 2018); Trascent Mgmt.

Consulting, LLC v. Bouri, 2018 WL 6338996, at *1 (Del. Ch. Dec. 04, 2018);

Macrophage Therapeutics, Inc. v. Goldberg, 2021 WL 2585429, at *2 (Del. Ch.

June 23, 2021); Dolan v. Jobu Hldgs., LLC, 2021 WL 3930569, at *1 (Del. Ch.

Sept. 3, 2021). But see Triton Const. Co. v. E. Shore Elec. Servs., Inc., 2009 WL

1387115, at *6 (Del. Ch. May 18, 2009) (applying preponderance of the evidence

standard), aff’d, 988 A.2d 938 (Del. 2010). Heartland also relies on the Delaware

Supreme Court’s affirmance of Family Court decisions that applied the clear and

convincing evidence standard. 102

101
   Because this court determined that the higher standard had been met, there was no
occasion to raise the issue on appeal, and the Supreme Court did not address it.
102
   E.g., Layton v. Layton, 196 A.3d 413 (Del. 2018) (TABLE); Peyton v. Peyton, 152
A.3d 582 (Del. 2016) (TABLE); Sparks v. Matthews, 83 A.3d 738 (Del. 2013) (TABLE).
None of those cases discussed Howell or reversed that decision. Notably, the Family
Court relies on Dickerson for its use of the clear and convincing standard. See S.P. v.
A.P., 2021 WL 1784386, at *3 & n.2 (Del. Fam. Ct. Apr. 30, 2021); M.B. v. E.B., 28
A.3d 495, 500 & n.7 (Del. Fam. Ct. 2011); Watson v. Givens, 758 A.2d 510, 512 & n.5
(Del. Fam. Ct. 1999).

                                          25
      inTEAM, however, relies on cases predating TR Investors that did not apply

this higher standard. In City of Wilmington v. The American Federation of State,

County and Municipal Employees, A.F.L.-C.I.O., Local 320, et al. (“AFSCME”),

307 A.2d 820 (Del. Ch. 1973), the Court of Chancery, without any citation to

authority, applied the “preponderance of evidence test in a matter of what [it]

deem[ed] to be alleged civil contempt.” AFSCME, 307 A.2d at 823. Just one year

later, the Delaware Supreme Court confronted an appeal from a contempt motion

in City of Wilmington v. General Teamsters Local Union 326 (“Teamsters II”), 321

A.2d 123, 125 (Del. 1974). The case involved an appeal from a decision from this

court over contempt proceedings against unionized public employees. 103 In this

court, Chancellor Marvel characterized the application for contempt against the

union and some of its members as “a quasi-criminal proceeding which carries the

threat of a fine for the defendant union and in the case of the individual named

defendants, a fine and imprisonment.” City of Wilmington v. Gen. Teamsters Lo.

Union 326 (“Teamsters I”), 305 A.2d 338, 339 (Del. Ch. 1973), aff’d in part and

rev’d in part, 321 A.2d 123, 125 (Del. 1974). The Chancellor held that “the

103
    The case involved Teamsters union members employed at the Wilmington Marine
Terminal. In an earlier decision, Chancellor Marvel held that the union members were
public employees covered by a Delaware statute which provides that “[n]o public
employee shall strike while in the performance of official duties.” City of Wilmington v.
Gen. Teamsters Loc. Union 326, 290 A.2d 8, 13 (Del. Ch. 1972). The current version of
the statute is 19 Del. C. § 1316(a).

                                           26
evidence . . . even under the preponderance of evidence rule” did not support a

finding of contempt against the individuals. Id. On appeal, the Supreme Court

found this to be “significant because the standard of proof required in a criminal

contempt proceeding is proof beyond a reasonable doubt.” Teamsters II, 321 A.2d

at 126.   The Supreme Court affirmed as to this portion of the Chancellor’s

decision,104 but otherwise did not definitively discuss the applicable burden for

civil contempt. Since the Court was not persuaded that the Chancellor’s finding

was “clearly wrong,” under the lower standard, id. at 127, it had no occasion to

discuss whether a higher standard was applicable.

      Any uncertainty as to the applicable standard, however, appears to have been

resolved three years later in Wilmington Federation of Teachers v. Howell, 374

A.2d 832 (Del. 1977). In Howell, the Delaware Supreme Court, citing this court’s

decision in AFSCME, unequivocally held that the plaintiff “met its burden of

establishing contemptuous conduct by a preponderance of the evidence.” Howell,

374 A.2d at 838 (Del. 1977) (citing AFSCME, 307 A.2d 820). Like the AFSCME

and Teamsters decisions, Howell involved contempt emanating from a court order

restraining a strike by unionized public employees (in this case, teachers) in

violation of the same statute at issue in AFSCME and Teamsters.

104
   The Court reversed and remanded as to the Chancellor’s decision that the union itself
could not be held in contempt for the concerted activities of its members. Teamsters II,
321 A.2d at 127–28.

                                          27
      Seven years after Howell, this court in Brooks v. Ventresca, 1984 WL

21897, at *2 (Del. Ch. June 4, 1984) (Brown, C.), appeared to apply the

preponderance of the evidence standard in denying a motion for civil contempt,

though it did not cite any authority in its opinion. Id. at *2 (declining to find

defendant in contempt “based upon what I find to be a preponderance of the

evidence with which I have to work”). Brooks did not involve a public employee

labor dispute.

      In 1991, then-Vice Chancellor Chandler applied the clear and convincing

standard in a civil contempt action over the State’s compliance with a court order

addressing prison conditions. In applying the higher standard, the court relied on a

federal court decision from the District of Puerto Rico. See Dickerson, 1991 WL

208467, at *4 (citing Feliciano v. Colon, 697 F. Supp. 26 (D.P.R. 1987)). In doing

so, however, the court acknowledged that AFSCME had applied a preponderance

of the evidence standard, but did not otherwise discuss its reasoning for departing

from that case.

      Thirteen years post-Dickerson, then-Chancellor Chandler applied the

preponderance of the evidence standard to a civil contempt proceeding in Kansas

City Southern v. Grupo TMM, S.A., 2004 WL 353029, at *1 (Del. Ch. Feb. 4,

2004) (Order). The proceeding involved a violation of a preliminary injunction

order pertaining to enforcement of an acquisition agreement. The court’s order did

                                        28
not cite any authority, but stated:      “Although the standard applicable to [the

plaintiff’s] motion is preponderance of the evidence, [the plaintiff] has proven [the

defendant’s] violations by clear and convincing evidence.” Kansas City Southern,

2004 WL 353029, at *1. The court did not explain its departure from the clear and

convincing evidence standard that it applied in Dickerson, but the parties in Kansas

City Southern joined issue in their briefing.         The plaintiffs, advocating for

application of the preponderance of the evidence standard under Howell,

distinguished Dickerson and the case upon which it relied, Feliciano, as cases with

parallel fact patterns involving prison overcrowding. 105           Consequently, the

plaintiffs in Kansas City Southern argued that Dickerson was meant to be the

exception rather than the rule. 106 The defendants, on the other hand, contended

that the clear and convincing standard used in Dickerson applied to all civil

contempt cases. 107 Although it did not explicitly say so, the Kansas City Southern

105
    Feliciano, however, likely does not stand for the proposition that Dickerson used it
for—that the clear and convincing evidence standard applies to motions for contempt
related to prison conditions—because the clear and convincing evidence standard is used
consistently throughout federal caselaw in motions for civil contempt. See supra note 98
and accompanying text.
106
   See Kansas City So. v. Grupo TMM, S.A., C.A. No. 20518-CC, Dkt. 28 at 7–8. The
Kansas City Southern plaintiffs also noted that the Family Court decisions that had used
the clear and convincing standard, cited by the defendants in that case, either relied on
Dickerson or Feliciano. Id. at 8 n.1. The plaintiffs in Kansas City Southern argued that
neither case “derives ultimate support from Delaware precedents or considers the
Delaware Supreme Court’s decision in [Howell].” Id.
107
      See 20518-CC, Dkt. 22 at 6–7.

                                           29
Court appeared to accept the plaintiffs’ recounting of the caselaw’s development

over that of the defendants.

      It is seemingly difficult to reconcile the competing standards in the case law

governing civil contempt in Delaware. When presented with the issue several

years ago in RRG, Vice Chancellor Laster acknowledged “the seemingly divergent

evidentiary approaches” to the applicable standard and observed “[i]n the event of

a direct conflict, the standard identified by the Delaware Supreme Court obviously

would control.” RRG, 2014 WL 31710, at *9 n.2. The RRG Court did not need to

reach the issue because the Vice Chancellor was satisfied that the higher standard

had been met in that case.

      It is tempting to reconcile the divergent standards as grounded in public

policy. AFSCME, Howell, and Teamsters all involved contempt actions against

public employee unions and their members who had engaged in labor strikes that

violated a clear statute.      As Justice Quillen, while serving as Chancellor,

acknowledged, “the rule against strike by public employees is deeply embedded in

the common law, and Delaware is a state with a strong common law tradition.

Moreover, in Delaware, the prohibition has been confirmed by statute.” State v.

Delaware State Educ. Ass’n, 326 A.2d 868, 875 (Del. Ch. 1974). There is, indeed,

something to be said for the ability of public officials to move swiftly to enforce a

contempt order designed to prevent government from grinding to a halt over a

                                         30
labor dispute, which might counsel in favor of a lower standard of review than that

necessary in other circumstances. But that issue is not one for me to decide on this

motion.

      Earlier this year, in an appeal from a Superior Court contempt citation

against an attorney, the Delaware Supreme Court confirmed that “[t]he standard of

proof required in a civil contempt proceeding is a preponderance of the evidence.”

In re Hurley, 257 A.3d 1012, 1018 (Del. 2021). In articulating the standard, the

court relied upon its Howell and Teamsters decisions. See id. (citing Howell, 374

A.2d at 838 and Teamsters II, 321 A.2d at 125–26). Although both sides argued

over the appropriate standard governing civil contempt, the parties’ briefing on the

issue was severely truncated, the motion was decided without argument, and

neither party cited to or addressed the caselaw from this court or the federal courts

in arguing over the appropriate standard.

      Unless and until the Supreme Court declares otherwise, I am bound by its

most recent pronouncement of the controlling standard for civil contempt in

Delaware: preponderance of the evidence. Hurley, 257 A.3d at 1018.

      “Proof by a preponderance of the evidence means proof that something is

more likely than not. By implication, the preponderance of the evidence standard

also means that if the evidence is in equipoise, Plaintiffs lose.” inTEAM I, 2016

WL 5660282, at *14 (internal quotations and citations omitted). inTEAM must

                                         31
prove each element of its motion by a preponderance of the evidence. See id.

Thus, to prevail, inTEAM must prove that it is more likely than not that: (1)

Heartland was bound by the Final Order, (2) the Final Order gave clear notice of

the conduct being proscribed, (3) Heartland had notice of the Final Order, and (4)

Heartland violated the Final Order, and its conduct constituted more than a mere

technical violation. Aveta, 986 A.2d at 1181; Mother African, 1992 WL 83518, at

*9; Dickerson, 1991 WL 208467, at *4. The focus of this dispute is the last

element.

            B.   Heartland’s Software’s Mode of Communication Does Not Violate
                 the Final Order.

            inTEAM argues that it has uncovered new evidence proving that Heartland

“designed and updated its software” to meet the technical specifications of

inTEAM’s competitors, including Colyar. 108 According to inTEAM, Heartland

assisted inTEAM’s competitors by providing them with USVAF in contravention

of the CMA and Final Order.109 Specifically, inTEAM points to the export feature

of Heartland’s software. 110 Heartland’s software enables users to export their POS

data into a variety of file formats. One of those many formats can be read by

108
      Pl.’s Op. Br. 17–18.
109
      See id. at 18.
110
      Id.

                                           32
Colyar’s administrative review software, which is used by state agencies in many

states including California, West Virginia, Nebraska, and Texas. 111

         inTEAM’s allegations and supporting evidence do not establish a violation

of the Final Order. After being provided with the opportunity for discovery,

inTEAM presents this court with almost identical evidence to what it previously

brought forth in its First Contempt Motion. In the April 2017 Ruling, the court

considered that states could export the data collected by Heartland’s software “into

another system,” but determined that this was not in breach of the CMA or of the

Final Order. 112 That is the law of the case. “Once a matter has been addressed . . .

it is generally held to be the law of that case and will not be disturbed by that court

unless compelling reason to do so appears.” Sciabacucchi v. Malone, 2021 WL

3662394, at *4 (Del. Ch. Aug. 18, 2021) (quoting Guy v. State, 913 A.2d 558, 562

n.2 (Del. 2006)) (internal quotations omitted)). inTEAM has not presented a

compelling reason to disturb that ruling.

         inTEAM seeks to expand the type of conduct that encroaches upon its ability

to provide USVAF beyond what the court held in inTEAM I and that the Supreme

Court affirmed in inTEAM II. inTEAM essentially argues that the ability of any

111
      See HX 127, 128, 129, 132.
112
   See Dkt. 215 at 10:23–11:2; see also id. at 9:18–22 (“Mosaic does not provide state-
level auditors with direct access to districts’ data. Rather, by submitting forms or files
containing the data generated from Mosaic to the state, districts are able to obtain
reimbursement from the federal government.” (internal quotations omitted)).

                                            33
Heartland product to convert data at the school district level into a format readable

by a product utilized by state agencies constitutes USVAF that violates the Final

Order. 113 But that is not what persuaded the court in its earlier ruling. In finding a

breach of the CMA, as the Supreme Court explained, this court credited

Goodman’s testimony in describing USVAF to mean:

         the ability to “‘allow [ ] [state reviewers or auditors] immediate access
         to records that they needed to review electronically that were created
         and generated generally at the school district level’ . . . . The court
         also cited Goodman’s testimony that he believed the phrase meant
         “during an administrative review related to menu plans, in particular,
         the ability to have school districts within that state either to utilize the
         third-party systems that they already had, or allow them to utilize our
         menu compliance tool directly so that the data feed was always
         available at the state level.”

inTEAM II, 171 A.3d at 569 (quoting inTEAM I, 2016 WL 5660282, at *16)

(emphasis added).         This court found, and the Supreme Court affirmed, that

Heartland breached the CMA when it

         collaborated with Colyar, a direct competitor of inTEAM, to create
         an interface between Heartland’s Mosaic Menu Planning product and
         Colyar’s administrative review software for the express purposes of
         ‘provid[ing] state auditors a consistent view of school district menu
         data so that they can perform audits in a more efficient manner’ and
         offering ‘access to school district menu data as needed in performing
         an audit and providing recommendations.’

inTEAM II, 171 A.3d at 568–69 (quoting inTEAM I, 2016 WL 5660282, at *17)

(emphasis added).

113
      See Pl.’s Op. Br. 28–33.

                                             34
         Notably, the court found Heartland in breach of the CMA because it teamed

up with Colyar to submit a “joint proposal” in response to the Texas Department of

Agriculture’s request for proposals to provide “Menu Analysis & Planning System

(MAPS) Software Solutions,” after Heartland had declined inTEAM’s request to

submit a joint proposal. inTEAM I, 2016 WL 5660282, at *12.

         Furthermore, inTEAM cannot reconcile its current position with its prior

admissions.114 At the trial in 2016, Goodman stated that Heartland’s Mosaic

software “does not have a state value-added functionality.”115                   Goodman

114
    In an interrogatory during the pre-trial discovery, Heartland asked inTEAM to
“[i]dentify all products . . . You believe compete with the ‘inTEAM Business’ . . .
[including]: (1) the name of Heartland’s product and/or service; [and] (2) the date on
which You discovered Heartland’s product was a competing product and/or service . . . .”
HX 143 at 7–8. In response, inTEAM did not identify Heartland’s Lunchbox, Nutrikids,
or WebSMARTT products. With respect to Mosaic, inTEAM limited its theory to
“developing, selling and marketing [Heartland’s] Mosaic product to state governmental
agencies.” inTEAM also stated it first became aware of Heartland’s competitive
activities on or about December 6, 2014. Id. Further, Goodman testified that Nutrikids
did not contain USVAF competitive with the inTEAM Business. Goodman Dep. Feb. 5,
2016 at 555 (Dkt. 76 Tab 9); Hrg. 493 (Goodman). On the current motion, however,
inTEAM contends that all of Heartland’s products compete with inTEAM’s products by
providing USVAF, but inTEAM cannot identify when such functionality was added to
any of Heartland’s products. Hrg. 440–41, 491, 494, 509 (Goodman).
115
      Dkt. 158 at 316:4–10, 316:20–24 (Goodman):
         Q. So if Heartland sells Mosaic to the State of Texas without Colyar, that’s
         not a problem?
         A. As I understand its current form, it does not have a state value-added
         functionality, so with that restriction, if my understanding is correct, I
         would not have a problem selling Mosaic to state agencies.
         ...

                                             35
represented that what initially made Mosaic inappropriately competitive with

inTEAM’s software, DST, was a combination of features:                    “the cloud-based

architecture, the single sign-on and the ability to move seamlessly between

Colyar’s administrative functions at the state level.”116              And when asked “if

Heartland sells Mosaic to school districts, you don’t believe that violates a non-

compete,” Goodman responded, “[o]h, goodness, no.”117 In the April 2017 Ruling,

the court relied on these statements that Goodman made, effectively conceding that

Mosaic’s export functionality on its own was insufficient to be violative of the

CMA.118

         Despite this prior testimony, Goodman and inTEAM now change course.

inTEAM and Goodman admit that the WebSMARTT product that SL-Tech sold to

Heartland in 2011 had the functionality about which it now complains. 119 Yet

inTEAM did not assert such a claim at trial. In a 2021 deposition on this Motion,

Goodman stated that he believed that as soon as one day after the CMA was

         Q. So just so I’m clear, then, so the Mosaic product itself does not have a
         state value-added functionality?
         A. As I understand it to be. I have not seen it personally.
116
      Id. at 318:3–10 (Goodman).
117
      Id. at 319:13–16 (Goodman).
118
      Dkt. 215 at 11:1–2.
119
   Hrg. 483:10–12 (Goodman) (“We were very well aware and Heartland was well aware
because we had both built interfaces at that time [in 2011] to CNIPS, a Colyar product.”).

                                              36
signed, Heartland would immediately be in breach of the CMA if it sold or

marketed the software that it had just purchased from inTEAM for $17 million.120

Goodman also admitted that he purposefully sat on his hands and waited to enforce

inTEAM’s purported rights for when it would be convenient for he and inTEAM to

do so:       “strategically speaking, it would have been stupid, in a word, to

immediately enforce the rights we had.” 121            And at the Evidentiary Hearing,

Goodman continued to contradict his prior testimony, testifying that Heartland’s

software had been competitive with inTEAM’s immediately following the SL-

Tech acquisition. 122

         inTEAM has similarly attempted to recalibrate its position, in the face of this

court’s acknowledgement, based on inTEAM’s own witness testimony, that selling

Mosaic on its own would not violate the CMA, and thus the injunction. 123 At Oral

Argument, when asked if Heartland had merely sold Mosaic to the Texas

Department of Education, without any collaboration or as a joint proposal with

120
      See Goodman Dep. Feb. 15, 2021 at 69:12–71:20:
         Q. But it’s your testimony, sir, that one day after the co-marketing
         agreement was signed and the transaction took place, the WebSMARTT
         product, through the use of the customers sending data to a Colyar system,
         competed with the inTEAM business?
         A. I believe that as a technical matter, yes . . . the co-marketing agreement
         technically speaking on October 1st.
121
      Id. at 71:18–20.
122
      See Hrg. 463:13–18, 482:8–491:7 (Goodman).
123
      See Dkt. 158 at 319:13–16 (Goodman).

                                              37
Colyar, inTEAM claims it would have violated the injunction.124 inTEAM argues

this violation is due to functionality in Mosaic about which inTEAM represents not

to have known at trial. I reject inTEAM’s attempt to retry its case through a

contempt proceeding on a new theory about which it could have, but chose not to

develop five years ago when it first tried the case on the merits.

         In its April 2017 Ruling, the court distinguished the export functionality in

Heartland’s software’s from (1) “single sign-on functionality,” (2) “real-time data

access and manipulation” and (3) an “interface or data exchange” between

Heartland’s software and that of any inTEAM competitor—any of which would

place Heartland in breach of the CMA and in violation of the Final Order.125

Consequently, because export functionality on its own does not breach the CMA or

violate the Final Order, the file format in which the export occurs is immaterial.

         At the Evidentiary Hearing, Heartland provided unrebutted testimony that its

software possesses the “same core functionality” that it did on the day that inTEAM

I was issued. 126      Heartland further represented that it has not developed any

software with administrative review capabilities. 127 inTEAM has not provided any

124
      Oral Arg. 17:1–22.
125
      See Dkt. 215 at 9:23–11:12.
126
      See Hrg. 552:24–553:10 (Prescott).
127
    Id. at 259:10–13 (Loch); id. at 259:14–20 (Loch) (confirming that Heartland’s does
not allow “state agency users” to “aggregate, view, edit, or modify data within [its]
software products”).

                                           38
direct evidence that evinces collaboration between Heartland and Colyar, or any

other inTEAM competitor, that would violate the CMA or Final Order.128

Furthermore, it would be economically irrational for Heartland to enter into an

agreement to spend $17 million on software that the same agreement would render

immediately unusable. Cf. inTEAM II, 171 A.3d at 557 (“[Heartland] never would

have paid SL-Tech and Goodman $17 million for a business that inTEAM could

compete with directly right after closing.”). Therefore, nothing has changed since

the April 2017 Ruling.

      Given inTEAM’s acknowledgments at trial as to what did and did not

constitute USVAF, and that Heartland’s marketing of its Mosaic software alone

would not violate the CMA, I am not persuaded that inTEAM has established a

violation of the Final Order by a preponderance of the evidence.

128
     inTEAM points to two documents that suggest that Colyar and Heartland
communicated regarding their software and proposals to state agencies. These alone,
though, are insufficient to prove that the two companies collaborated in violation of the
CMA or Final Order. HX 21 contains Heartland’s meeting minutes from 2015—dated
before both inTEAM I and the Final Order—discussing creating single sign-on
functionality between Heartland and Colyar software. See Pl.’s Op. Br. 26 (citing HX
21). This collaboration was addressed and resolved by inTEAM I and the Final Order.
HX 39 contains messages between Heartland employees from October 2016, before the
issuance of the Final Order, suggesting that Colyar and Heartland had communicated
about proposals to state agencies, including one instance where Colyar “included
[Heartland’s] information” in a proposal. See id. at 27 (citing HX 39). But these
messages do not meet inTEAM’s evidentiary burden. While these messages may show
that Heartland was aware of pending Colyar proposals, they do not provide enough detail
to demonstrate that the two companies were collaborating. inTEAM also failed to
provide any corroborating testimony at the Evidentiary Hearing for these documents to
show that Heartland and Colyar in fact collaborated.

                                           39
      C.     Heartland’s Proposals and Contracts Did Not Violate the Final
             Order.

      inTEAM also argues that Heartland made proposals to various states that

violated the Final Order.      Specifically, inTEAM identifies four states where

Heartland submitted proposals to those states’ respective agencies:              Florida

(Florida Department of Agriculture and Consumer Services), Kentucky (Kentucky

Department of Education), Illinois (Illinois State Board of Education), and

Tennessee (Tennessee Department of Education).129 inTEAM points to language

in these proposals as evidence that Heartland was providing or offering to provide

these states with USVAF. 130 On its face, much of the proposal language that

inTEAM cites does not suggest any violation of the CMA or Final Order. 131

      For example, inTEAM asserts that Heartland and the Illinois State Board of

Education (“ISBE”) contracted for Heartland to provide the ISBE with software

129
   See Pl.’s Op. Br. 37–45. inTEAM also alleges that Heartland had proposals pending
in other states, based on two internal Heartland documents that provide little to no
information regarding the content of those alleged proposals. Id. at 35–36 (citing HX 39
and HX 7). I will not be addressing any proposals beyond the four below because those
are the only ones that inTEAM has sufficiently addressed.
130
   See, e.g., Pl.’s Op. Br. 37 (Florida proposal stating that Heartland’s software would
provide the state “with the visibility they need into district operations” and that
Heartland’s “proven integrations are used every day in our school districts for real-time
exchange of data” (citing HX 38 at 4)); id. at 38 (Kentucky proposal stating that
Heartland’s software “provides a single platform for aggregating the data from the [local
education agencies] within the state” (citing HX 36 at 10)).
131
   See, e.g., Pl.’s Op. Br. 39 (Kentucky proposal stating that Heartland’s software was
“specifically designed to provide robust functionality from frontline cashiers to state
agency administrators” (citing HX 36 at 7)).

                                           40
that would violate the Final Order. In its request for proposal, the ISBE stated that

it was looking for a contractor to “provide a web-based perpetual license software

solution” that could be used statewide. 132 First, inTEAM directs the court to the

ISBE’s statement that its “access to SFA [School Food Authorities] online files

will allow for a quicker review process.”133 Second, inTEAM points to language

scattered throughout Heartland’s proposal, which inTEAM contends is proof that

Heartland was offering USVAF that this court and the Supreme Court ruled was

off limits:

          The combined business and technical skills of Heartland and the
          seamless integration of Heartland’s Menu Planning and Nutrient
          Analysis, production records, and inventory and Ordering
          Management software product, Mosaic, will result in a robust product
          that will yield system efficiencies, reduce duplicate data entry, and
          eliminate paper submissions received by ISBE related to
          Administrative Reviews.
          ...
          State Agency Training and related Training guides and Materials to be
          completed within 30 days of the execution of the contract. State
          Agency Training will continue to be available to ISBE for the
          duration of the contact [sic] on an as needed basis
          ...
          Upon execution of the contract, [Heartland] will initiate a new
          environment to be made available to ISBE as well as SFA’s [sic] as
          they opt to come on board. 134

132
      See HX 32 at 20.
133
      See id.; Pl.’s Op. Br. 39.
134
      HX 33 at 3, 45; see Pl.’s Op. Br. 39–40.

                                                 41
Third, inTEAM identifies a goal in the contract between the ISBE and Heartland

for Heartland to provide software “for an estimated 1100 users to improve program

integrity in the administration of the National School Lunch Program and School

Breakfast Program for all [SFAs] in Illinois.”135 inTEAM argues that all of the

above is evidence that Heartland provided the ISBE with software that was in the

exclusive domain of inTEAM.136

         inTEAM has not met its evidentiary burden. inTEAM has failed to show

that the language it highlights from the ISBE’s request for proposal and

Heartland’s proposal qualify as providing USVAF.         In fact, inTEAM’s only

explanation is that “this is precisely the ‘unique state value added functionality’

that this Court and the Delaware Supreme Court held was reserved for inTEAM

and Heartland could not even propose to provide.”137 inTEAM incorrectly implies

that this court previously found Heartland’s software certifying menu compliance

would be violative of the Final Order or CMA.138 To the contrary, the Supreme

Court ruled that menu planning and nutrient analysis i.e., menu compliance, were

exclusively within Heartland’s purview. inTEAM II, 171 A.3d at 547, 557, 559–

60. As Goodman acknowledged and this court held, Heartland’s marketing of

135
      HX 37 § 1.1; see Pl.’s Op. Br. 41.
136
      See Pl.’s Op. Br. 40–41.
137
      Id. at 40 (emphasis in original).
138
      Id. at 41–42.

                                           42
Mosaic alone would not violate the CMA, which is the standard governing the

Final Order. 139

         Additionally, the Illinois proposal is dated January 26, 2016, three months

prior to the trial. 140 Jeremy Loch, a Senior Vice President and General Manager at

Heartland, testified that Heartland provided no products to state agencies in

Illinois, provided no administrative review software to the State of Illinois, and

state administrators in Illinois have no ability to input and edit menu planning data

in any of Heartland’s products. 141 He further testified that Heartland’s Mosaic

product, at the time of the Illinois proposal, had no ability to assist the Illinois State

Board of Education staff in monitoring onsite reviews, that functionality was never

developed in Mosaic, and Colyar was not involved in the Illinois proposal.142 The

proposal related to Heartland selling Mosaic on its own and the state wanted to

“basically pick up the tab and buy district licenses for their districts.” 143 Loch

testified that, under the Illinois contract, the state agency has no ability to view,

edit, or alter district data. Although the Illinois contract indicates that the services

139
   See Dkt. 215 at 10:23–11:2 (“States can export data from Mosaic into another system,
but as Goodman testified himself at trial, this on its own would not be a breach of the
[CMA].”).
140
      See HX 33.
141
      Hrg. 277:5–12 (Loch).
142
      Id. at 277:1–278:7 (Loch).
143
      Id. at 278:10–12 (Loch).

                                           43
being provided include “Data Analysis and Reporting,”144 Loch testified that the

functionality was never developed and Heartland’s Mosaic product has no ability

to “perform data analysis on data from disparate systems.”145 I found Loch’s

testimony to be credible.146

         Loch also testified that Heartland did not set up any type of special

administrative access for state agency users. 147 In a response to a public records

request, the ISBE stated that it had “administrative access” to Heartland’s software,

144
      HX 37 at 5.
145
      Hrg. 280:9–22 (Loch).
146
     At the Evidentiary Hearing I found the Heartland witnesses more credible than the
inTEAM witnesses. The examples of Goodman’s contradictory testimony cited above
rendered him least credible on this Motion. Michael Sawicky, inTEAM’s Chief
Technologist’s testimony also lacked credibility. He testified as a fact witness only. He
offered testimony about Heartland’s software, but had no first-hand knowledge of how
Heartland’s products function, never used the programs, or saw them in use. Hrg. 98:2–
99:7, 129:19–130:23 (Sawicky). Instead, he testified based on screenshots. Id. at
130:11–23 (Sawicky). He admitted to accusing Heartland of violating a court order
based on a computer program he has never seen. Id. at 120:21–121:7 (Sawicky). Yet he
could not identify when the competitive functionality in Heartland’s Mosaic software was
added or whether any functionality added between September 30, 2016 and March 21,
2018 violated the Final Order. Id. at 139:10–140:6 (Sawicky). At his deposition,
Sawicky agreed that USVAF “is the means of allowing state reviewers or auditors
realtime access to records electronically that were generated at the school district level.”
Id. at 105:7–14 (Sawicky) (emphasis added). Yet he also testified, incredibly in my view,
that a court reporter saving a hearing transcript locally to her computer and then sending
it to a lawyer two weeks later “would be realtime.” Id. at 107:6–17 (Sawicky). Kimberly
Coleman, inTEAM’s Director of K-12 Solutions was asked by Goodman in 2017 to help
to investigate his suspicions that “there was some competitive behavior going on.” Id. at
21:7–23, 52:24–53:4 (Coleman). Coleman does not have computer programing
experience and has not used Heartland’s Mosaic or Lunchbox products. Id. at 52:11–15,
59:17–22 (Coleman). Coleman never saw the CMA or received a summary of it. Id. at
68:23–69:11 (Coleman).
147
      Hrg. 281:14–16 (Loch).

                                            44
which inTEAM contends was USVAF that violated the Final Order. 148 The ISBE

was responding to the following question posed by inTEAM: “Can you confirm

that the State Agency (ISBE) continues to have access to these licenses through the

initial purchase?”149 The ISBE’s full response reads: “ISBE has administrative

access to the system through June 30, 2019.” 150 With full context, this document

shows that the ISBE was responding to whether it still had access to Heartland’s

software, not if it had access to specific functionality based on definitions in the

APA and CMA, and the courts’ reasoning in inTEAM I and inTEAM II.

            inTEAM also makes similar arguments with respect to proposals Heartland

submitted to the Florida Department of Agriculture and Consumer Services and the

Kentucky Department of Education.151 But both of those proposals were submitted

prior to the issuance of inTEAM I, and the court rejected similar arguments by

inTEAM in the April 2017 Ruling for this same reason.152 Furthermore, inTEAM

does not allege that those proposals were ever in violation of the Final Order.153

148
   See Pl.’s Op. Br. 41–42; Plaintiff’s Post-Hearing Reply Brief in Support of its
Renewed Motion for Rule to Show Cause (“Pl.’s Reply Br.”) 19–21; Hrg. 357:2–19
(Loch); HX 82.
149
      HX 82.
150
      Id.
151
      See Pl.’s Op. Br. 37–39.
152
      See Dkt. 215 at 8:12–15.
153
    inTEAM only alleges that both proposals were still in consideration following the
issuance of inTEAM I. But inTEAM acknowledges that Heartland did not ultimately win

                                           45
         Additionally, inTEAM contends that Heartland provided the Tennessee

Department of Education with software that violated the Final Order, based on a

contract that Heartland was awarded in 2015. That software did have single sign-

on capabilities, which remained operative for a short time after the issuance of the

December 9, 2016 Final Order, but Heartland disabled that feature by December

20.154     Heartland also presented evidence demonstrating that it was working

diligently to comply with the Final Order in Tennessee.                 Executives from

Heartland and its parent, Global Payments Inc., testified that, following inTEAM I,

Heartland began planning and took serious steps to comply with the court’s

decision.155     And there is documentary evidence corroborating this testimony,

evincing the urgency with which Heartland attempted to disable the competitive

features of its software in response to inTEAM I.156 The remainder of inTEAM’s

either contract. See Pl.’s Op. Br. 38–39. Thus, inTEAM has not shown that Heartland
was “defying the Court” when it did not withdraw either proposal during the brief time
period between the issuance of inTEAM I and the Final Order. See id. at 38.
154
      Hrg. 389:22–390:5 (Vickers).
155
    Hrg. 261:9–265:20 (Loch) (“[W]e sat down with Jeff Colyar and Richard Roeckner
and planned out what it was going to take to unwind that. Canceling training sessions,
turning off single sign-on.”), 555:22–559:14 (Prescott) (testifying that single sign-on was
disabled as a result of the court’s Final Order), 584:14–586:19 (Roberts) (“We notified
Colyar that we would no longer be able to work with them on a go-forward basis.”).
156
   See HX 122 (December 20, 2016 email with the subject line: “Change Title: [s]Turn
off Single Signon from outside the Mosaic BOH application. Requested is Urgent or
Emergency.” In the email’s body, under a heading titled “Business Justification and
Benefit,” the email states: “We are locking down 2 points of entry for SSO from a

                                            46
argument and evidence regarding the Tennessee contract is very similar to that

which it made for Illinois above and is thus insufficient as well.

         Much of inTEAM’s evidence of competition consists of proposals for

software—not any actual software or communications between Heartland and an

inTEAM competitor or state agency. Previously, this court heard “convincing

testimony” that inTEAM has made proposals to state agencies, which included

offerings that it was not yet capable of delivering.157 Thus, inTEAM is aware that

proposals alone do not prove that a proposal’s content actually exists or will come

to fruition. The Texas proposal in inTEAM I was violative of the CMA due to (1)

Heartland’s partnership with an inTEAM competitor, Colyar, while submitting that

proposal and (2) the proposed software containing USVAF. Here, inTEAM has

not proven that Heartland partnered with an inTEAM competitor when submitting

its proposals. And for the many reasons stated throughout this Opinion, inTEAM

has failed to show that Heartland’s software contains USVAF.

Colyar application[.] We could be sued, there is a court order to cease communication
with Colyar.”); HX 60 (December 20, 2016 email stating that “we are still working on
options for turning off single sign on” and “[h]opefully it will be done by the end of the
day”).
157
      Dkt. 214 at 21:4–16.

                                           47
         In 2017, inTEAM provided a similarly deficient argument to this court, and

the court rejected it.158 The same result is warranted here.

         D.      inTEAM has not Established That Heartland’s Software has Data
                 Analysis Functionality in Violation of the Final Order.

         inTEAM avers that Heartland added data analysis functionality to its

software as early as 2012, which would place Heartland in violation of the Final

Order. 159 First, inTEAM points to the proposal that Heartland submitted to the

ISBE in 2016.             Pl.’s Op. Br. 46–47 (citing HX 33 at 9 (“Users can create

ingredients, recipes, menus, and production records at a Manager, Administrator,

District, or State level . . . .”), 34 (describing a Microsoft product that Heartland’s

software utilizes that is an “intuitive query, reporting, and analysis tool that

empowers business users at all levels of the organization to gain access to

information from the new consolidated system database. All of the reports unique

to Illinois will be developed as SQL Server reports.”)). inTEAM asserts that this

proposal demonstrates that Heartland’s software enables users to “input and edit

menu planning data in connection with certifying menu compliance with USDA

regulations.” 160 But the Supreme Court ruled that both menu planning and nutrient

158
   See Dkt. 215 at 8:15–18 (“inTEAM does not adequately explain how these documents
show or suggest that Heartland’s products have the unique state value added
functionality”).
159
      Pl.’s Op. Br. 45–46.
160
      Pl.’s Op. Br. 46.

                                             48
analysis i.e., menu compliance, were within Heartland’s exclusive purview.

inTEAM II, 171 A.3d at 547, 557, 559–60.

         Second, inTEAM directs the court to the contract that was signed between

Heartland and the ISBE following this proposal. Id. at 47 (citing HX 37 § 1.1.2.4

(“Data Analysis and Reporting. The database can be queried on a variety of

different data sets to provide the ISBE data analysis reports. . . . Data can be

reported on the various reports and filters, and/or can be queried.”) (bolding in

original)). inTEAM, though, does not explain how Heartland’s software performs

data analysis that impedes its business or what about this contract is problematic.161

Rather, it appears that inTEAM is arguing that language in the contract such as

“data analysis” is sufficient evidence of noncompliance with the Final Order.

         Loch testified that Heartland’s software does not perform data analysis.162

Further, both Loch and Tyson Prescott, Heartland’s Vice President of Software

Development, testified that the data analysis discussed in the ISBE contract and

cited by inTEAM was never developed. 163 I find their testimony to be credible.

inTEAM has not shown that Heartland’s software was capable of performing data

analysis that would violate the Final Order. Heartland has had witnesses familiar

161
      See id. 45–47; Pl.’s Reply Br. 24–25.
162
      Hrg. 280:19–22 (Loch).
163
    Id. at 280:9–18 (Loch), 554:1–18 (Prescott); see also id. at 281:10–13 (Loch)
(testifying that Heartland’s software in Illinois had “[n]o ability for data analysis”).

                                              49
with its software testify to the software’s capabilities and limitations; inTEAM has

not. inTEAM has thus failed to demonstrate that Heartland’s software is capable

of data analysis which would violate the Final Order. 164

            E.    Heartland’s Request for Fees and Expenses

            Heartland argues that the court should compel inTEAM to pay Heartland’s

reasonable attorneys’ fees and expenses under the bad faith exception to the

American Rule. Heartland devotes a mere two paragraphs of its brief to his

argument.165 Heartland argues that fee shifting is warranted because Goodman

failed to identify WebSMARTT as a competing product even though he knew in

2011 that it had purported interfaces with Colyar software.166 Heartland also

points to Goodman’s testimony, upon which the court relied, where he said that

states could use information generated by Mosaic, noting that he has now reversed

positions. 167

            Under the American Rule, each party is normally obligated to pay only his

or her attorneys’ fees, whatever the outcome of the litigation.           RBC Capital

Markets, LLC v. Jervis, 129 A.3d 816, 877 (Del. 2015). Delaware courts recognize

164
   Because I find that inTEAM has not satisfied its evidentiary burden to establish
contempt of the Final Order, I need not address Heartland’s defenses of estoppel, waiver,
and unclean hands. See Def.’s Ans. Br. 44–45, 48–51, 55–56.
165
      Def.’s Ans. Br. 61.
166
      Id.
167
      Id.

                                            50
certain exceptions to the American Rule, including a bad faith exception. Id.

“[W]hen a litigant imposes unjustifiable costs on its adversary by bringing baseless

claims or by improperly increasing the costs of litigation through other bad faith

conduct, shifting fees helps to deter future misconduct and compensates the victim

of that misconduct.” Blue Hen Mech., Inc. v. Christian Bros. Risk Pooling Tr., 117

A.3d 549, 559–60 (Del. 2015).        “The bad faith exception applies only in

extraordinary cases, and the party seeking to invoke that exception must

demonstrate by clear evidence that the party from whom fees are sought acted in

subjective bad faith.” Lawson v. State, 91 A.3d 544, 552 (Del. 2014) (internal

quotations and citations omitted). “Although Delaware courts have described the

bad faith standard as ‘subjective,’ this court has shifted fees based on litigation

conduct without launching a fact-intensive investigation into the offending party's

state of mind.” Pettry v. Gilead Scis., Inc., 2021 WL 3087027, at *2 (Del. Ch. July

22, 2021).

      “To capture the sorts of vexatious activities that the bad-faith exception is

intended to address, this court employs the ‘glaring egregiousness’ standard.” Id.

at *1.   Delaware courts have shifted fees where parties have unnecessarily

prolonged or delayed litigation, falsified records, knowingly asserted frivolous

claims, misled the court, altered testimony, or changed position on an issue. RBC,

                                        51
129 A.3d at 877; see also Pettry, 2021 WL 3087027, at *1. Whether to shift fees is

a matter of this court’s discretion. RBC, 129 A.3d at 879.

      After careful consideration of this argument, I decline to shift fees under the

bad faith exception.   In doing so, I admit this is somewhat of a close call.

inTEAM’s shifting litigation position exemplified on this motion is troubling.

That is particularly so as to Goodman’s testimony and positions taken on this

motion that were contrary to positions taken and admissions made at trial.

Nevertheless, the arguments that inTEAM advanced concerned intricate issues

regarding the interpretation of a non-compete provision that was, at least in part,

dynamic in its operation. The language in some of the contract proposals at issue

contained language that, without further explanation, could give rise to reasonable

suspicion about a potential breach.      As noted above, having considered the

evidence and the testimony of Heartland’s witnesses, I am easily satisfied that

inTEAM has not established a violation of the Final Order. Nevertheless, that did

not make inTEAM’s entire motion utterly frivolous or fraudulent. See Ins. Co. of

the State of Pa. v. Pan Am. Energy, LLC, 2003 WL 1432419, at *7 (Del. Ch. Mar.

19, 2003) (“I am unable to say that this is the unusual case where it has been

shown the filing of the action was fraudulent, utterly frivolous or the like.”)

(internal quotations omitted). In the exercise of my discretion, I decline to shift

fees under the bad faith exception to the American Rule.

                                        52
III.   CONCLUSION

       The Delaware Supreme Court remanded this matter to this court to “resolve

inTEAM’s rule to show cause motion even though the injunction has expired. If

the court finds a violation, it should consider a remedy such as extending the

injunction to account for Heartland’s violation.” inTEAM, 200 A.3d 754, 2018

WL 6643654, at *3. Having carefully reviewed the evidence and the parties’

arguments, I am not persuaded that inTEAM has satisfied its burden by a

preponderance of the evidence. Furthermore, for the reasons stated herein, I find

that Heartland made good faith efforts to comply with the Final Order.

Accordingly, and in the exercise of my discretion, I conclude that Heartland has

not engaged in contemptuous conduct constituting a violation of the Final Order.

Heartland’s request for an award of attorneys’ fees and expenses is also denied.

       IT IS SO ORDERED.

                                        53