Court Opinion

ID: 4638586
Source: CourtListenerOpinion
Date Created: 2020-12-01 20:02:37.481866+00
Date Added: 2024-06-11T07:58:49.859049
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: October 12, 2020
                        Date Supplemented: November 18, 2020
                           Date Decided: December 1, 2020

    Blake A. Bennett, Esq.                          Raymond J. DiCamillo, Esq.
    COOCH AND TAYLOR, P.A.                          Srinivas M. Raju, Esq.
    The Nemours Building                            Robert L. Burns, Esq.
    1007 N. Orange St., Suite 1120                  Matthew D. Perri, Esq.
    Wilmington, Delaware 19899                      Angela Lam, Esq.
                                                    RICHARDS, LAYTON & FINGER, P.A.
                                                    One Rodney Square
                                                    920 North King Street
                                                    Wilmington, Delaware 19801

                 RE: In re USG Corporation Stockholder Litigation,
                     C.A. No. 2018-0602-SG

Dear Counsel:

         This Letter Opinion considers, and rejects, the Plaintiffs’ Motion for

Reargument of my August 31, 2020 Memorandum Opinion 1 (the “Opinion”)

dismissing this matter against all Defendants. Under Chancery Rule 59(f), the road

to reargement is straitened; a successful movant must demonstrate that the court

overlooked a controlling precedent or principle of law, or misapprehended the facts,

1
 In re USG Corp. S’holder Litig., 2020 WL 5126671 (Del. Ch. Aug. 31, 2020) [hereinafter, the
“Opinion”].
and that such error resulted in the outcome for which reargument is sought.2 Where

a court has considered the law and the facts, but applied them in a way with which

the movant disagrees—that is, where the movant simply disagrees with the court’s

decision—relief must be through appeal, not reargument. 3

       Here, the Plaintiffs seek reargument on two grounds: first, that I overlooked

the fact that one Defendant, Jennifer Scanlon, was an officer as well as a director of

USG, and that, in her officer role, she was not exculpated from damages for a

violation of a duty of care in relation to a disclosure to stockholders; and second,

that I misapprehended the law on the meaning of bad-faith breach of the duty of

loyalty in way of a transaction implicating Revlon.

       With respect to Ms. Scanlon, the Plaintiffs argue that I overlooked that their

Complaint adequately alleged that she breached the duty of care in her role as an

officer facilitating distribution of proxy materials, and that my rationale that the

Plaintiffs had not pled a non-exculpated claims thus must be reconsidered. I have

reviewed the Complaint, the briefing on the Defendants’ Motion to Dismiss, and the

oral argument on that Motion. It does not appear that the Complaint alleges Ms.

Scanlon, as a corporate officer, was grossly negligent in the dissemination of

2
 In re Hawk Sys., Inc., 2019 WL 5681447, at *2 (Del. Ch. Nov. 1, 2019).
3
 Manti Holdings, LLC v. Authentix Acquisition Co., Inc., 2019 WL 3814453, at *1 (Del. Ch.
Aug. 14, 2019) (“A motion for reargument, as this Court has pointed out on numerous occasions,
does not provide a forum to relitigate issues decided by the trial judge, and if the trial court is in
error on those issues, vindication is available on appeal, not via reargument.”).
                                                  2
disclosures. To the extent that, given the Plaintiff-friendly pleading standard on this

Motion to Dismiss, it may be so read, the Plaintiffs failed to brief the issue in

response to the Motion sufficiently to consider it raised, and failed to raise it at oral

argument as well. The claim, accordingly, was waived. 4 Thus, reargument is

inappropriate on this ground.

       The second ground alleged to support reargument is that I misapprehended

the meaning of bad faith in the context of a change-in-control transaction, and

accordingly reached an unsupportable legal conclusion. However, this argument too

is misplaced; I considered the Plaintiffs’ contentions and rejected them in the

Opinion. 5 Therefore, reconsideration is inappropriate; relief, if any, must be via

appeal.

       Finally, the parties provided memoranda on the Chancellor’s recent opinion

in Baker Hughes,6 a case decided after the Opinion issued. That case involved a

pleading, found to be sufficient to sustain a claim, that an action in signing an

inaccurate disclosure by a corporate officer implicated the duty of care. While Baker

Hughes is well reasoned, it did not change substantive law. And while the parties’

memoranda were thoughtful, the case is inapplicable here, where I have found that

4
  See Thor Merritt Square, LLC v. Bayview Malls LLC, 2010 WL 972776, at *5 (Del. Ch. Mar. 5,
2010) (failure to brief an issue may result in waiver).
5
  The Opinion, at *29–*31.
6
  In re Baker Hughes Inc. Merger Litig., 2020 WL 6281427 (Del. Ch. Oct. 27, 2020).
                                             3
the issue of Scanlon’s exercise of the duty of care in disseminating disclosures to

stockholders was not adequately before me. Thus, reconsideration is not required.

      For the forgoing reasons, the Plaintiffs’ Motion for Reargument is DENIED.

      IT IS SO ORERED.

                                            Sincerely,

                                            /s/ Sam Glasscock III

                                            Sam Glasscock III

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

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