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