Court Opinion

ID: 4404863
Source: CourtListenerOpinion
Date Created: 2019-06-07 20:02:38.040684+00
Date Added: 2024-06-11T14:52:31.678232
License: Public Domain

COURT OF CHANCERY
                                  OF THE
 SAM GLASSCOCK III          STATE OF DELAWARE                  COURT OF CHANCERY COURTHOUSE
  VICE CHANCELLOR                                                       34 THE CIRCLE
                                                                 GEORGETOWN, DELAWARE 19947

                            Date Submitted: June 7, 2019
                             Date Decided: June 7, 2019

Joel Friedlander, Esquire                      Robert S. Saunders, Esquire
Jeffrey Gorris, Esquire                        Jennifer C. Voss, Esquire
Cristopher Foulds, Esquire                     Arthur R. Bookout, Esquire
Cristopher P. Quinn, Esquire                   Jessica R. Kunz, Esquire
Friedlander & Gorris P.A.                      Skadden, Arps, Slate, Meagher & Flom LLP
1201 N. Market Street, Suite 2200              One Rodney Square
Wilmington, Delaware 19801                     P.O. Box 636
                                               Wilmington, Delaware 19899

              Re:    The Chemours Co. v. DowDuPont Inc., et al.,
                     C.A. No. 2019-0351-SG

Dear Counsel:

      Court of Chancery Rule 5.1(e) permits parties to protect confidential

information contained in a complaint, through compliance with Rule 5.1’s terms. In

this case, I found that the parties failed to comply with Rule 5.1(e), as explained in

my Bench Ruling of May 23, 2019. In that Bench Ruling, I informed the parties that

I would direct the Office of the Register in Chancery to unseal the Complaint filed

as confidential, but deferred such action pending the opportunity for the parties to

seek an interlocutory appeal. The Defendants have taken such an appeal and seek

interlocutory certification under Supreme Court Rule 42. I have reviewed the
Defendants’ brief in support of certification, as well as the Plaintiff’s response. I

determine that certification is not appropriate.

       Supreme Court Rule 42 governs interlocutory appeals. It serves to protect the

appellate system from inefficient and potentially overwhelming piecemeal review,

while protecting the right of litigants to review of decisions that would, if they prove

improvident, substantially damage those litigants’ interests, to an extent inimical to

the interests of justice. In pursuit of that difficult balance, Rule 42 requires a strict

analysis by the trial court. It provides that an interlocutory appeal shall not be

certified by the trial court “unless the order of the trial court decides a substantial

issue of material importance that merits appellate review before a final judgment.” 1

       In making a decision on certification, the trial court must balance “the likely

benefits of interlocutory review” with “the probable costs,” and “[i]f the balance is

uncertain, the trial court should refuse to certify the interlocutory appeal.” 2 Rule 42

further provides eight factors for the trial court to consider when conducting the

balancing test.3 Here, the Defendants argue that three of those factors support

certification. Specifically, the Defendants contend that the Bench Ruling involves a

question of law resolved for the first time in this state, that the decisions of the trial

1
  Supr. Ct. R. 42(b)(i).
2
  Supr. Ct. R. 42(b)(iii).
3
  Supr. Ct. R. 42(b)(iii)(A)–(H).
                                            2
courts are conflicting upon the question of law, and that review would serve

considerations of justice.4

       This matter came before me sua sponte, upon review of the “public version”

of the Complaint purportedly filed in compliance with Court of Chancery Rule 5.1(e)

and currently on the docket as such.5 The so-called “public version” was not merely

heavily redacted; it was, in substance, entirely blacked out. After conducting a

telephonic hearing, I found that the unredacted Complaint should be released as the

public version, consistent with Rule 5.1(d). The Defendants seek interlocutory

appeal of that decision. 6

       The Defendants have framed the question of law for interlocutory appeal thus:

“whether an agreement that mandates confidential arbitration (and delegates the

issue of arbitrability to an arbitrator) constitutes good cause for Confidential

Treatment of a complaint pending resolution of a motion to dismiss for lack of

subject matter jurisdiction?”7 That, however, is not a question I resolved in the

4
  See Supr. Ct. R. 42(b)(iii)(A), (B), (H).
5
  As explained below, a public version was filed with the Court within the time mandated by Court
of Chancery Rule 5.1(e), but it was rejected by the Office of the Register in Chancery because it
was completely redacted, and thus not in compliance with the Rule. A second public version was
then filed after the time mandated by Rule 5.1(e) had expired, but it was conditionally approved
by the Register and persists on the docket as the public version of the confidential filing. My
reference here is to the second, untimely public version.
6
  The Plaintiff, Chemours, took no position on the merits at the Oral Argument preceding the ruling
at issue, and takes no substantive position on the interlocutory appeal, which it “does not oppose.”
Pl.’s Resp. to Defs.’ Application for Certification of Interlocutory Appeal, at 1.
7
  Defs.’ Appl. for Certification of Interlocutory Appeal, at 7.
                                                 3
Bench Ruling from which appeal is sought. That Bench Ruling denied confidential

treatment because I found that the parties had not complied with Court of Chancery

Rule 5.1. Specifically, I found failure to comply with Rule 5.1(e)(1)(ii), which

requires a plaintiff seeking confidentiality to file with the complaint a “covering

sheet” that “shall summarize the claims asserted in the complaint in sufficient detail

to inform the public of the nature of the dispute,”8 and Rule 5.1(e)(3), which requires

that a redacted “public version” be filed within three days of the confidential filing.9

Rule 5.1(e) requires that a plaintiff give notice to interested parties of a proposed

public version, and puts the onus on all parties to create and timely file a public

complaint with redactions appropriate to Rule 5.1.10

       On review, and after argument, I found that the covering sheet here was

inadequate under the Rule, and that no “public version” of the Complaint had been

timely filed. A purported public version of the Complaint (the “Timely Public

Version”) had been filed within the three days provided by Rule 5.1(e)(3), but it was

entirely blacked out, and, as a result, I found that it was not in compliance with Rule

8
  See Ct. Ch. R. 5.1(e)(1) (“When filing a complaint as a Confidential Filing in accordance with
this Rule, the plaintiff (i) shall file publicly the covering sheet referenced in Rule 3(a)(2) and (ii)
the covering sheet shall summarize the claims asserted in the complaint in sufficient detail to
inform the public of the nature of the dispute.”); D.I. 1, “Supplemental Information Sheet” (“Short
statement and nature of claim asserted: Action for declaratory judgment and other relief relating
to a spin-off transaction.”).
9
  See Ct. Ch. R. 5.1(e)(3) (mandating that a plaintiff file a public version of a confidentially filed
complaint, after following the process laid out in Court of Chancery Rule 5.1).
10
   See Ct. Ch. R. 5.1(e)(2)–(3).
                                                  4
5.1, which limits redactions to those matters consistent with the Rule. The Office of

the Register in Chancery had, in fact, rejected the Timely Public Version for the

same reason. Because the Timely Public Version was rejected, a second public

version of the Complaint (the “Untimely Public Version”) was then filed after the

three days allotted by Rule 5.1(e)(3). I found that the Untimely Public Version—

itself nearly completely obscured—was inadequate under the rule as well. In the

Bench Ruling, I rejected the Defendants’ argument that the matter was, by

contractual agreement, subject to confidential arbitration, thus—per the

Defendants—justifying a complete withholding of the Complaint from the public,

pending resolution of a motion to dismiss (and, if the motion were granted,

presumably forever). Instead, I found that the burden was on the parties to file a

public version that redacted only those matters for which confidentiality could be

certified by the parties as in good faith compliance with Rule 5.1—a burden which

they did not meet. 11 Accordingly, I found that the unredacted Complaint should be

filed as the public version.

       However, I indicated that I would defer any directive to the Office of the

Register in Chancery to accomplish the release of the confidentially-filed Complaint,

pending any interlocutory appeal. The Defendants then offered to file a proposed

11
   See Rule 5.1(b)(3) (“The designation of material as Confidential Information constitutes a
certification that the designating lawyer, party, or person has reviewed the Document and believes
that good cause exists for Confidential Treatment.”).
                                                5
public version of the Complaint, redacting only those matters properly confidential

under Rule 5.1. 12 I indicated that if the Defendants moved for reargument under

Rule 59(f), they should attach such a proposed redacted Complaint, and that I would

consider it in that context. 13 Such a review, presumably, would have presented a

version of the question that the Defendants (erroneously, in my view) attempt to

characterize as the question they seek to appeal: can the existence of a confidential

arbitration provision in a contract justify, as confidential, redactions under Rule 5.1,

presuming such a redacted public version otherwise complies with Rule 5.1? The

Defendants eschewed reargument, and filed this request for certification of an

interlocutory appeal instead.

          I now turn to the mandatory factors that Supreme Court Rule 42(b)(iii) directs

the trial court to address, limiting my review principally to those the Defendants

identify as pertinent:

1) Does the appeal involve a question of law resolved for the first time in Delaware?

      The question of whether the existence of a contractual confidentiality provision

      between parties to a lawsuit justifies complete secrecy for a complaint,

      notwithstanding non-compliance with Rule 5.1’s directives to file an informative

12
     May 23, 2019 Tel. Conf. Tr., at 20:7–24.
13
     Id. at 21:1–4.
                                                6
     covering sheet and public version of the complaint, appears to be a question of

     first impression. This factor supports interlocutory appeal.

2) Are the decisions of the trial courts conflicting? The Defendants, after averring

     that this is a matter of first impression, answer this factor in the affirmative as

     well. They cite to an order of this Court in Early v. Trend Capital Management

     LP, 14 which continues confidential treatment pending determination of

     arbitrability. Early, however, as a simple review of the public version of the

     complaint in that case indicates, 15 did not involve a complaint entirely sealed

     from public view; it involved a redacted complaint that I assume was filed in

     compliance with Rule 5.1. Thus, the question here, whether a confidentiality

     provision in a contract excuses compliance with Rule 5.1 and allows an entire

     complaint to be withheld from the public, does not appear to have been addressed

     in Early. This factor does not support interlocutory appeal.

3) Will interlocutory review serve the interests of justice?             It is true, as the

     Defendants point out, that to the extent they have legitimate confidentiality rights,

     created via contract, over matters disclosed in the Plaintiff’s Complaint, those

     rights will be lost once the Complaint is made public. 16 If the Defendants are

14
   See C.A. No. 2019-0064-KSJM, at 1–2 (Del. Ch. Mar. 22, 2019) (Order).
15
   See C.A. No. 2019-0064-KSJM (Del. Ch. Feb. 1, 2019) (Public Version of Verified Complaint).
16
    Of course, the underlying issue, balancing rights of public access against contractual
confidentiality rights, itself involves application of the interests of justice.
                                              7
   correct that the Plaintiff has breached the contract simply by filing the Complaint,

   presumably the Defendants will have a legal remedy for that breach, although

   defenses may limit that redress as well. Thus the matter for which interlocutory

   appeal is sought does implicate an important interest of the Defendants. The

   matter for which the Defendants seek review, on the other hand, involves

   interpretation of Court of Chancery Rule 5.1, which makes it clear that all matters

   in this Court are presumed public, unless the parties, following Rule 5.1’s

   strictures, establish that the public interest is outweighed by a discrete

   confidentiality interest. Specifically, the Defendants seek review of a finding that

   the parties, having failed to comply with the Rule, must litigate in public,

   consistent with the “[g]eneral principal of public access” provided in Rule 5.1(a).

   I do not find on balance that the interests of justice weigh in favor of interlocutory

   appeal.

4) The other factors in Supreme Court Rule 42(b)(iii) do not support interlocutory

   appeal.

      In sum, while the challenged ruling of this Court decided a substantial

question of material importance to the parties, review of the factors in Rule

(42)(b)(iii) leads me to conclude that, on balance, the matter does not merit

interlocutory appellate review.

                                           8
      For the foregoing reasons, the Defendants’ application for certification of

interlocutory appeal is denied. An appropriate form of order is attached.

                                             Sincerely,

                                             /s/ Sam Glasscock III

                                             Sam Glasscock III

                                         9
   IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
                IN AND FOR SUSSEX COUNTY

THE CHEMOURS COMPANY,          )
                               )
              Plaintiff,       )
                               )
    v.                         ) C.A. No. 2019-0351-SG
                               )
DOWDUPONT INC.; CORTEVA, INC.; )
AND E. I. DU PONT DE NEMOURS )
AND COMPANY,                   )
                               )
              Defendants.      )

   ORDER DENYING LEAVE TO APPEAL FROM INTERLOCUTORY

                                     ORDER

         This 7th day of June, 2019, the Defendants having made application under

Rule 42 of the Supreme Court for an order certifying an appeal from the interlocutory

order of this Court, dated May 23, 2019; and the Court having found that such order

lacks a substantial issue of material importance that merits appellate review before

a final judgment and that only one of the criteria of Supreme Court Rule 42(b)(iii)

apply;

         IT IS ORDERED that the Court’s order of May 23, 2019, is hereby not

certified to the Supreme Court of the State of Delaware for disposition in accordance

with Rule 42 of that Court.

                                             /s/ Sam Glasscock III

                                             Vice Chancellor