COURT OF CHANCERY
OF THE
STATE OF DELAWARE
MORGAN T. ZURN LEONARD L. WILLIAMS JUSTICE CENTER
VICE CHANCELLOR 500 N. KING STREET, SUITE 11400
WILMINGTON, DELAWARE 19801-3734
May 24, 2023
Michael J. Barry, Esquire Raymond J. DiCamillo, Esquire
Grant & Eisenhofer P.A. Richards, Layton & Finger, P.A.
123 Justison Street, 7th Floor 920 North King Street
Wilmington, DE 19801 Wilmington, DE 19801
Thomas Curry, Esquire Gregory V. Varallo, Esquire
Saxena White P.A. Bernstein Litowitz Berger & Grossman LLP
824 North Market Street, Suite 1003 500 Delaware Avenue, Suite 901
Wilmington, DE 19801 Wilmington, DE 19801
Theodore A. Kittila, Esquire Anthony A. Rickey, Esquire
Halloran Farkas + Kittila LLP Margrave Law LLC
5801 Kennett Pike, Suite C/D 3411 Silverside Road, Suite 104
Wilmington, DE 19807 Wilmington, DE 19810
Via Electronic Mail
Jordan Affholter
1501 Hatcher Crescent
Ann Arbor, MI 48103
jordanaffholter@gmail.com
RE: In re AMC Entertainment Holdings, Inc. Stockholder Litigation,
Consol. Civil Action No. 2023-0215-MTZ
Dear Counsel and Mr. Affholter:
On May 20, I issued a letter opinion adopting the May 19 Report and
Recommendation of Special Master Regarding Class Member Access to the
Discovery Record (the (“May 20 Opinion” and the “May 19 Report,”
respectively).1 In relevant part, the May 20 Opinion overruled an objection to a
proposed confidentiality agreement that objectors must sign to access the discovery
1
Docket Item (“D.I.”) 312; D.I. 307.
In re AMC Entertainment Holdings, Inc. Stockholder Litigation,
Consol. Civil Action No. 2023-0215-MTZ
May 24, 2023
Page 2 of 6
record in this case, specifically its enumerated consequences for trading AMC
stock after accessing the discovery record but before this case is over.2
Later on May 20, Mr. Affholter received an email from
AMC.Settlement@blbglaw.com stating, “This email is in response to your request
to access the discovery record in In re AMC Entertainment Holdings, Inc.
Stockholder Litigation.”3 The email asked Mr. Affholter to sign the agreement
attached to the stipulation approved by the May 20 Opinion. It does not appear
that he has done so. On May 22, Mr. Affholter filed a letter titled “Letter to Vice
Chancellor and Special Master Corinne Elise Amato, Esq. from Jordan Affholter[:]
Motion for Enlargement of Time and Objection to the Discovery Process” (the
“Motion”).4 He is not a party to this action.5 Part of his Motion takes issue with
the confidentiality agreement and requirement to supply proof of beneficial
ownership adopted in the May 20 Opinion.6 Last night, the parties responded to
Mr. Affholter’s Motion.7 As I have already ruled on the confidentiality agreement,
and in the interest of time, I have taken up these aspects of Mr. Affholter’s Motion
rather than refer them to the Special Master.
First, I address Mr. Affholter’s objections to the Court’s adoption of the
Special Master’s recommendation that “objectors submit proof of beneficial
ownership as a condition of accessing the discovery record.”8 One has standing to
2
D.I. 312 at 3 n.7 (citing Steinhardt v. Howard-Anderson, 2012 WL 29340, at *8–11
(Del. Ch. Jan. 6, 2012)).
3
D.I. 320 at 8. Mr. Affholter did not paginate his filing, so I have counted the pdf pages
and reference those.
4
Id. at 2.
5
D.I. 302 (denying Mr. Affholter’s motion to intervene). Mr. Affholter did not file
exceptions to the Special Master’s report denying his intervention. Ct. Ch. R. 144(d)(2).
6
D.I. 312 at 3; D.I. 307 at 9 n.28; D.I. 294, Ex. A at Ex. B [hereinafter “Objector Agr.”];
D.I. 184, Ex. B ¶ 65; D.I. 185 ¶ 19; D.I. 190, Ex. 1 at 2.
7
D.I. 327; D.I. 328.
8
D.I. 312 at 2–3; D.I. 307 at 8 (“To access the discovery record, an individual must have
standing to object to the settlement. To have standing to object, an individual must be a
member of the settlement class, as defined by the Stipulation of Settlement.”).
In re AMC Entertainment Holdings, Inc. Stockholder Litigation,
Consol. Civil Action No. 2023-0215-MTZ
May 24, 2023
Page 3 of 6
object to a settlement if they are a member of the putative settlement class.9 Status
as a putative class member with standing to object begets the right to the discovery
record.10 “The party invoking the jurisdiction of a court bears the burden of
establishing the elements of standing.”11 Accordingly, objectors—not the litigation
parties—have the burden to prove they are members of the class with standing to
object and therefore the right to access the discovery record.
Second, I address Mr. Affolter’s objection to paragraphs 4, 5, and 8 of the
Objector Agreement to Be Bound by Stipulation and Order for the Production of
Confidential and Highly Confidential Information (the “Objector Agreement”).12
Those paragraphs provide:
4. I agree not to disclose any Confidential or Highly Confidential
Discovery Material on any social media platform, including but not
limited to, Facebook, Twitter, YouTube, LinkedIn, TikTok, or
Reddit, on any website, or on any blog.13
9
See Devlin v. Scardelletti, 536 U.S. 1, 6–7 (2002) (noting that as long as an individual is
a member of the class, that individual “has an interest in the settlement that creates a
‘case or controversy’ sufficient to satisfy the constitutional requirements of injury,
causation, and redressability” (citations omitted)).
10
See, e.g., Ginsburg v. Phila. Stock Exch., Inc., 2007 WL 2982238, at *1 (Del. Ch. Oct.
9, 2007) (“Delaware law requires that these objectors have some opportunity to review
the discovery obtained by the class counsel during the course of the litigation.”); In re
Amsted Indus., Inc. Litig., 521 A.2d 1104, 1108 (Del. Ch. 1986) (“Review of such
materials should place an objector in the same position as the class representative who
has proceeded in good faith when that representative elected to recommend the settlement
to the Court.”).
11
Dover Hist. Soc. v. City of Dover Plan. Comm’n, 838 A.2d 1103, 1109 (Del. 2003)
(citing Lujan v. Defenders of Wildlife, 504 U.S. 555, 561 (1992)).
12
D.I. 320 at 9; Objector Agr. ¶¶ 4–5, 8.
13
See also D.I. 314 at 3 n.7 (“To be clear: stockholders may not take pictures,
screenshots, or screen recordings of the documents, and may not post or share them
online or in messaging apps in any format including but not limited to, social media,
online drives or drop boxes, Discord, Telegram, or YouTube.”).
In re AMC Entertainment Holdings, Inc. Stockholder Litigation,
Consol. Civil Action No. 2023-0215-MTZ
May 24, 2023
Page 4 of 6
5. I agree that any filing I make with the Court that contains any
Confidential or Highly Confidential Discovery Material must be
made as a Confidential Filing, consistent with Paragraph 12 of the
Stipulation.
...
8. I agree that I will not buy or sell any AMC Entertainment
Holdings, Inc. (“AMC”) securities until the final resolution of the
Action, which means either that the Court has issued a Final
Judgment and the time to appeal that Final Judgment has lapsed or
any appeal of the Final Judgment has been finally resolved.14
Mr. Affholter interprets paragraphs 4 and 5 of the Objector Agreement to
“imply that objectors and supporters who have signed the agreement[] cannot
discuss the findings of discovery with other approved and signed objectors and
supporters,” and objects to this prohibition.15 He does not rely on any law in
support of his objections.
Mr. Affholter’s objections to paragraphs 4 and 5 of the Objector Agreement
are denied. AMC’s confidentiality concerns are legitimate. And as set forth in the
Objector Agreement itself, access to the Confidential and Highly Confidential
discovery record was granted to permit the signatories to inform their personal
objections.16 Stockholders seeking advice on whether or how they should object
are encouraged to seek legal counsel, not the advice of other stockholders or the
online community at large.
14
Objector Agr. ¶¶ 4–5, 8.
15
D.I. 320 at 10.
16
Objector Agr. ¶ 3 (“I agree not to disclose any Confidential or Highly Confidential
Discovery Material (as defined in the Stipulation) to any other person, under any
circumstances, apart from in filings with the Court.”); id. ¶ 11 (“I understand that the only
purposes for which I can use Confidential or Highly Confidential Discovery Material are
to determine whether to object, or to present an objection, to the proposed settlement of
the Action.”); Amsted, 521 A.2d at 1107.
In re AMC Entertainment Holdings, Inc. Stockholder Litigation,
Consol. Civil Action No. 2023-0215-MTZ
May 24, 2023
Page 5 of 6
Mr. Affholter also objects to paragraph 8.17 The Motion does not cite any
law in support of this objection. Instead, Mr. Affholter contends that “paragraph 8
essentially locks the objectors and supporters into not being able to buy or sell their
legally owned AMC stock until a final judgement has been rendered either in the
Trial Court or the Appellant [sic] Court. That time frame could potentially take
months or years.”18 He speculates that AMC’s stock price might “run[] up again
(like it did historically)” or “an objector [or] supporter [might] have an issue of
financial hardship” at some point between signing the Objector Agreement and the
resolution of this matter, which would prevent “objectors and supporters who
execute this confidentiality agreement” from being able to trade at those opportune
times.19
These arguments do not dissuade me from my conclusion in the May 20
Opinion that more stringent protections are warranted to ensure the access afforded
numerous unrepresented objectors does not lead to securities violations or misuse
of confidential information.20 “[C]ourts faced with discovery requests at the
settlement stage must balance carefully the needs and burdens involved, as well as
the potential for abuse.”21 I subscribe to then-Vice Chancellor Strine’s statements
in In re Netsmart Technologies, Inc. Shareholders Litigation and Berger v. Icahn
Enterprises L.P., that access to confidential discovery information and
participation in representative litigation can properly cost the ability to trade.22 A
stockholder with access to material nonpublic information will be hard pressed to
17
D.I. 320 at 9–11.
18
Id. at 9.
19
Id.
20
D.I. 312 at 3 (citing Steinhardt, 2012 WL 29340, at *8–11, and In re Netsmart Techs.,
Inc. S’holders Litig., Consol. C.A. No. 2563–VCS (Del. Ch. July 16, 2007) (ORDER),
and Sample v. Morgan, C.A. No. 1214–VCS, at 8 (Del. Ch. May 14, 2008)
(TRANSCRIPT)).
21
7B Alan Wright, Arthur Miller & Mary Kay Kane, Federal Practice and Procedure
§ 1796.1 (3d ed.).
22
In re Netsmart Techs., Inc. S’holders Litig., Consol. C.A. No. 2563–VCS (Del. Ch.
April 11, 2007) (TRANSCRIPT) (docketed at C.A. No. 2597-VCS, D.I. 33); Berger v.
Icahn Enters. L.P., C.A. No. 3522-VCS, at 55–56, 59 (Del. Ch. Oct. 23, 2009)
(TRANSCRIPT).
In re AMC Entertainment Holdings, Inc. Stockholder Litigation,
Consol. Civil Action No. 2023-0215-MTZ
May 24, 2023
Page 6 of 6
establish a trade was not based on that information. Restrictions on trading are an
appropriate precaution imposed on access to AMC’s confidential information.
Each stockholder can make his or her own determination as to whether they wish
to commit to those restrictions to view the discovery record.
The Special Master will address the other points in Mr. Affholter’s Motion
in due course.
Sincerely,
/s/ Morgan T. Zurn
Vice Chancellor
MTZ/ms
cc: All Counsel of Record, via File & ServeXpress