IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
DALE RIKER, )
)
Plaintiff, )
)
v. ) C.A. No. 2019-0314-AGB
)
TEUCRIUM TRADING, LLC, )
)
Defendants. )
ORDER DENYING DEFENDANT'S
RULE 60(b) MOTION
WHEREAS:
A. On April 26, 2019, Dale Riker filed a verified complaint against
Teucrium Trading, LLC ("Teucrium" or the "Company") seeking, among other
things, to obtain certain books and records under 6 Del. C. § 18-305 (the "18-305
Action"). 1
B. On May 12, 2020, after holding a one-day trial in the 18-305 Action,
the court issued a post-trial memorandum opinion (the "Opinion") in which the court
found that Riker "testified credibly that he was looking to value his interest in
Teucrium to determine whether to sell or hold his shares" and thus had
"demonstrated a proper purpose for requesting documents pertaining to his
I Dkt. 1.
Valuation Purpose." 2 As a result, the court ordered Teucrium to produce a limited
number of documents to Riker relevant to this purpose. 3 On May 19, 2020, the court
entered a Final Order and Judgment (the "Final Judgment"). 4
C. On November 24, 2020, Riker's counsel sent Teucrium a draft
complaint to be filed in New York state court, which alleged that, before the filing
of the 18-305 Action, "[Riker] and [Sal] Gilbertie reached a purportedly binding
agreement by which Gilbertie committed in an oral agreement to purchase Dale
Riker's equity in Teucrium for $5 million." 5
D. On November 30, 2020, Teucrium, Gilbertie, Cory Mullen-Rusin,
Steve Kahler, and Carl Miller III filed a verified complaint in this court (C.A. No.
2020-1018-AGB) seeking, among other relief, a declaration that Riker never
"reached a binding agreement to sell to Gilbertie his equity in Teucrium for $5
million" (the "Second Delaware Action"). 6
2
Riker v. Teucrium Trading, LLC, 2020 WL 2393340, at *4 (Del. Ch. May 12, 2020)
(citing Trial Tr. at 22-23 (Nov. 19, 2019) (Dkt. 123)). The court also found that Riker had
abandoned a second purpose (i.e., his "Financial Performance Purpose") and failed to
demonstrate a basis to receive any documents concerning a third purpose (i.e., his
"Governance Purpose"). See id. at *2, *3, *8-11.
3
!d. at *8.
4 Dkt. 141.
5
Mot. for Post-J. ReliefUnder Rule 60 ("Mot.") Ex. B ~~ 40-41 (Dkt. 144).
6
!d. ~~ 66-68.
2
E. On December 7, 2020, Riker filed a verified shareholder derivative
complaint in New York state court (the "New York Action") against Gilbertie,
Miller, Mullen-Rusin, and Kahler, which alleges in relevant part, that:
85. On September 11, 2018, with Vedder Price, as Teucrium
Trading's outside corporate counsel, acting as intermediary, Mr.
Gilbertie and Mr. Riker reached an agreement pursuant to which Mr.
Riker would sell his Class A Member units to Mr. Gilbertie for $5
million. Mr. Gilbertie represented that "he could get the money by the
end ofthe week," i.e. September 14, 2018. Mr. Gilbertie and Mr. Riker
agreed that the $5 million would be placed in escrow.
86. Mr. Riker was ready, willing, and able to perform his obligations
under the parties [sic] agreement and was ready to tender his units in
Teucrium Trading upon payment by Mr. Gil bertie of $5 million.
87. At no time did Mr. Gilbertie or Mr. Riker express that the sale
was contingent upon the execution of definitive documents.
* * * *
280. Plaintiff requests that this Court specifically enforce his contract
with Mr. Gilbertie for the sale of Plaintiffs units in Teucrium Trading.
281. Plaintiff and Mr. Gilbertie reached agreement on all essential
terms of the sale of Mr. Riker's Class A Member units to Mr. Gilbertie
and therefore an enforceable agreement exists.
282. Namely, that Mr. Gilbertie would pay Mr. Riker $5 million
dollars to acquire all of Mr. Riker's Class A Member units.
283. Mr. Riker was ready, willing and able to perform.
284. Mr. Gilbertie failed to perform without excuse.
285. At no time did either Mr. Riker or Mr. Gilbertie express that the
sale of Mr. Riker's units was contingent on definitive documentation.
3
286. As a result, Mr. Riker was deprived of an opportunity to sell his
Teucrium Class A Member units, which are otherwise highly illiquid. 7
F. On January 12, 2021, Teucrium moved for post-judgment relief under
Court of Chancery Rules 60(b) (the "Motion") seeking the following relief:
(a) A finding that nothing in the Opinion or the Final Judgment
"forecloses a finding that Riker litigated the books and records
action in bad faith, particularly in light of his under-oath
statement since then that he believed he had reached a binding
agreement to sell his shares in 20 18. " 8
(b) A finding "that Riker litigated the books and records action in
bad faith. " 9
(c) "Establishing a briefing schedule for the quantification of an
award of attorneys' fees in favor of Defendant Teucrium." 10
(d) "In the alternative to (b) and (c), the Court should reopen the
record, schedule a hearing on the bad faith issue, and allow a
prompt deposition ofRiker." 11
G. On April 22, 2021, theN ew York court dismissed the New York Action
in "the interests of comity" and for "the avoidance of inconsistent judgments,"
reasoning as follows:
7
Mot. Ex. A~~ 85-87, 280-86.
8
Mot. at 3-4.
9
!d. at 4.
10 !d.
II fd.
4
The record in this case indicates there is testimony in the adjudicated
[18-305 Action] that is inconsistent with claims asserted in this case.
And the record further establishes a significant overlap between the
issues in this case and the [Second Delaware Action] that is still
pending. Given that the plaintiff in this case initiated litigation in
Delaware, notwithstanding that the controlling documents contemplate
proceedings in New York, the Court is dismissing this action pursuant
to CPLR 3211(a)(4) without prejudice to the case being refiled after the
conclusion of the second Delaware action. 12
NOW THEREFORE, the court having considered the Motion, IT IS
HEREBY ORDERED, this 3rd day ofMay, 2021, as follows:
1. Court of Chancery Rule 60(b) provides, in relevant part, that "[o]n
motion and upon such terms as are just, the Court may relieve a party ... from a
final judgment, order, or proceeding for the following reasons ... (2) newly
discovered evidence; [or] (3) fraud (whether heretofore denominated intrinsic or
extrinsic), misrepresentation or other misconduct of an adverse party." 13
2. Teucrium' s primary argument is made under Court of Chancery Rule
60(b )(2). To obtain relief from a final judgment under Rule 60(b )(2) motion, a
movant must demonstrate that:
12
Dkt. 151 Ex. A at 2.
13
Ch. Ct. R. 60(b). Paragraph 25 ofthe Motion also quotes subparts (5) and (6) of Rule
60(b) but Teucrium makes no argument under either provision, thus waiving those grounds
for relief. Nor does Teucrium argue that either subpart (1) or (4) of Rule 60(b) provides
grounds for relief.
5
[1] the newly discovered evidence has come to [movant's] knowledge
since the trial; [2] that it could not, in the exercise of reasonable
diligence, have been discovered for use at the trial; [3] that it is so
material and relevant that it will probably change the result ... ; [4] that
it is not merely cumulative or impeaching in character .. .; and [5] that
it is reasonably possible that the evidence will be produced at the trial. 14
"Delaware law is clear that reopening a judgment based on new evidence 1s
disfavored." 15 The decision whether to grant relief under Rule 60(b)(2) is committed
to the sound discretion of the Court. 16
3. According to Teucrium, the newly discovery evidence that has recently
come to its attention "is comprised of an under-oath admission by Riker, which he
filed in his New York action on December 7, 2020." 17 That admission is reflected
in the sworn allegations from the complaint in the New York Action quoted in
Recital E above. Further refining its position, Teucrium explains in its reply that
"while the form of the new evidence, the under-oath statement by Riker, did not exist
at the time of trial, the facts about whether he believed he had sold his equity in a
binding agreement did exist at the time oftrial." 18
14
Levine v. Smith, 591 A.2d 194, 202 (Del. 1991) (citation omitted), overruled on other
grounds by Brehm v. Eisner, 746 A.2d 244 (Del. 2000).
15
Keen-WikAss'n v. Campisi, 2020 WL 6162957, at *2 (Del. Ch. Oct. 19, 2020).
16
Vianix Del. LLC v. Nuance Commc'ns, Inc., 2011 WL 487588, at *4 (Del. Ch. Feb. 9,
2011 ).
17
Mot.~ 27.
18
Dkt. 150 ~ 12.
6
4. The premise of the Motion is that the facts from the New York
complaint quoted above-i.e., that Riker believed in September 2018 that he and
Gilbertie had reached an agreement pursuant to which Gilbertie would acquire
Riker's shares of Teucrium for $5 million-directly contradict the following
testimony Riker provided during his direct examination at trial in the 18-305 Action
in December 2019:
Q. Let's start with the first purpose. Why were you seeking to value
your shares?
A. Well, I'm trying to decide if I want to hold my shares or if I want to
sell my shares.
Q. And in January of 2019, were you contemplating selling your
shares?
A. Yes.
*****
Q. And so, sir, do you currently have a buyer for your shares?
A. No, I do not. 19
5. Riker responds that there is no contradiction because, although Riker
believed he and Gilbertie "had reached an agreement for Mr. Gilbertie to buy" his
shares, Gilbertie reneged on the agreement and thus Riker did not "have a willing
19
Trial Tr. at 22-23 (Nov. 19, 2019) (Dkt. 123).
7
buyer lined up to purchase his interest" and only had "a cause of action against an
entirely unwilling buyer" when he testified in the Section 18-305 Action. 20
6. In my opinion, Teucrium has failed to satisfY the requirements for
obtaining relief under Rule 60(b )(2) because it has not demonstrated that the
allegedly newly discovered evidence "could not, in the exercise of reasonable
diligence, have been discovered for use at the trial. " 21
7. Significantly, Teucrium cross-examined Riker at trial on the subject of
Gilbertie purchasing his shares:
Q. [D]o you recall asking or demanding of Mr. Gilbertie $5 million in
exchange for the sale of your shares?
A. I did not demand $5 million, but I do recall that discussion about $5
million, yes, absolutely.
Q. Do you recall you ever stating that as a price for the shares in some
way?
A. Yes. 22
8. Despite eliciting this testimony, Teucrium did not follow up to probe
the full extent of Riker's communications with Gilbertie concerning a potential $5
million transaction. Teucrium did not follow up to ask Riker basic questions
20
Dkt. 147 ~~ 4, 7.
21
Levine, 591 A.2d at 202.
22
Trial Tr. at 96.
8
concerning, for example, what Riker said to Gilbertie and vice versa during these
communications. Nor did Teucrium ask more specifically whether Riker believed
Gilbertie had agreed to purchase his shares-a question that logically would have
followed after establishing who said what to whom about a potential $5 million
transaction. Notably, it is not as if that subject never came up in the Section 18-305
Action. To the contrary, Riker's counsel questioned Gilbertie on this very subject
during discovery:
Q: Had you reached any understanding as to whether one ofyou was
going to sell or buy the shares of the other?
A. We attempted but did not resolve and reach an understanding. We
did not reach one. 23
9. Given these circumstances, the court is not satisfied-as it must be to
grant relief under Rule 60(b )(2)-that Riker's putative belief that Gil bertie agreed
in 2018 to purchase Riker's shares for $5 million could not have been discovered in
connection with the trial of the Section 18-305 Action had Teucrium exercised
reasonable diligence.
10. Turning to its second ground for the Motion, Teucrium argues in
conclusory fashion in a single sentence that "Riker's conduct also constitutes a fraud
on the Court, or at least evidences his bad faith conduct in this litigation." 24
23
Dkt. 118 Ex. Bat 75.
24
Mot.~ 32.
9
11. "A party seeking to vacate an order on the ground that his or her
opponent effectuated a fraud on the court bears a heavy burden . .. [which] requires
a showing of 'the most egregious conduct involving a corruption of the judicial
process itself. "'25 "To succeed on a claim under Rule 60(b )(3) that an 'opponent
used fraud [or misconduct] ... inobtainingajudgment, [the movant] must ordinarily
do so by proof of clear and convincing evidence and within a reasonable period of
time after the final judgment has been entered. "' 26
12. Irrespective ofthe evidentiary standard, Teucrium's cursory argument
does not come close to showing the type of"egregious conduct" necessary to reopen
a final judgment under Rule 60(b )(3). 27
25
MCA, Inc. v. Matsushita Elec. Indus. Co., Ltd., 785 A.2d 625, 639 (Del. 2001) (quoting
Wright & Miller, 11 Fed. Prac. & Proc. Civ. § 2870 (3d. ed.)).
26
In reUS. Robotics Corp. S'holders Litig., 1999 WL 160154, at *12 (Del. Ch. Mar. 15,
1999) (alterations in original) (Strine, V.C.) (quoting Glinert v. Wickes Cos., Inc., 1992
WL 165153, at *3 (Del. Ch. July 14, 1992) (Allen, C.), a.ff'd, 620 A.2d 857 (Del. 1993)).
27
See Bailey v. Bailey, 89 A.2d 476, 2014 WL 1004033, at *2 (Del. Mar. 14, 2014)
(TABLE) (Strine, C.J.) ("That a witness's testimony is arguably inconsistent in some
respects with evidence that another party belatedly discovered does not satisfY the stringent
standard to reopen a case for misrepresentation or fraud.").
10
*****
13. For the reasons explained above, the court declines to exercise its
discretion to reopen the final judgment in this action. Accordingly, the Motion is
DENIED.
11