Court Opinion

ID: 4318260
Source: CourtListenerOpinion
Date Created: 2018-10-04 16:09:53.870315+00
Date Added: 2024-06-11T14:45:33.074752
License: Public Domain

IN THE SUPREME COURT OF THE STATE OF DELAWARE

 NCM GROUP HOLDINGS, LLC,       §
                                §
      Defendant/Counter-        §            No. 506, 2017
      Plaintiff Below,          §
      Appellant,                §            Court Below—Court of Chancery
                                §            of the State of Delaware
      v.                        §
                                §            C.A. No. 12067
 LVI GROUP INVESTMENTS, LLC, §
                                §
      Plaintiff/Counter-        §
      Defendant Below,          §
                                §
      and                       §
                                §
 NORTHSTAR GROUP HOLDINGS, §
 LLC and SCOTT STATE,           §
                                §
      Counter-Defendants Below, §
      Appellees.                §

                          Submitted: September 26, 2018
                          Decided: October 1, 2018

Before STRINE, Chief Justice; VALIHURA, VAUGHN, SEITZ and
TRAYNOR, Justices, constituting the Court en banc.

                                      ORDER

      (1)    In the Court of Chancery, former stockholders are litigating competing

fraud claims arising out of a merger of their companies that created Northstar Group

Holdings LLC. To address confidentiality issues in document production, the parties

entered into a protective order, following the form available as part of the Guidelines

for Best Practices for Litigating Cases Before the Court of Chancery. The form and
the version approved by the Court of Chancery in this litigation contains a restriction

that discovery material “shall be used solely for purposes of this litigation and shall

not be used for any other purpose, including … any other litigation or proceedings.”

      (2)    Late in the litigation, NCM sought to modify the protective order to

allow it to use information subject to the protective order to file fraud complaints in

Illinois and New York against former LVI directors and officers who might not be

subject to personal jurisdiction in Delaware. According to NCM, without the

requested amendment, it could not bring fraud claims outside of Delaware against

the individuals because the claims might be time-barred before the Court of

Chancery completed trial and NCM’s appellate rights were exhausted.                 In a

November 1, 2017 bench ruling, the Court of Chancery denied NCM’s request,

finding that it had not shown good cause to modify the protective order.

      (3)    We granted interlocutory review of the Court of Chancery’s bench

ruling in part on the strength of NCM’s claim that it would be time-barred from

bringing its fraud claims after the regular trial and appellate process. The prejudice

claimed by NCM was the kind of prejudice that, in the interests of justice, merited

interlocutory review.

      (4)    That has turned out not to be the case. NCM has admitted that it was

able to file a fraud complaint in New York against defendants who were not at the

time parties to the Court of Chancery litigation. On top of that, it failed to notify the

                                           2
Court of Chancery before its bench ruling that it had filed the New York complaint,

which undermined a substantial basis supporting its motion to amend the protective

order. Under the circumstances, interlocutory review is no longer warranted, and

we do not express an opinion at this time on the merits of the Court of Chancery’s

bench ruling.

      NOW, THEREFORE, IT IS HEREBY ORDERED that our February 6, 2018

order accepting this interlocutory appeal is rescinded, and interlocutory review of

the Court of Chancery’s November 1, 2017 bench ruling is refused.

                                            BY THE COURT:

                                            /s/ Collins J. Seitz, Jr.
                                                   Justice

                                        3