Delaware Business Litigation Report

Chancery Dismisses Defendants From Action Against Their Own Wishes, Describing the Matter as an “Erewhon-like” Inversion of the Parties’ Typical Positions

Stimwave Technologies Inc. v. Laura Tyler Perryman, C.A. No. 2019-1003-SG (Del. Ch. Nov. 17, 2020)

Under Court of Chancery Rule 41(a), a Delaware plaintiff may voluntarily dismiss its own complaint without prejudice, provided that (i) the defendant has not yet filed an answer; (ii) the defendant has not yet filed a motion for summary judgment; and (iii) the defendant has not filed a motion to dismiss which has been answered by the plaintiff. In accordance with the abovementioned standards, where a defendant (1) files a motion to dismiss, and (2) the plaintiff thereafter submits an answering brief in opposition to that motion, the plaintiff may no longer voluntarily dismiss the action while that motion is pending.

In Stimwave Technologies, the plaintiff Delaware corporation (“Plaintiff” or “the Company”), asserted aiding and abetting breach of fiduciary duty claims against several former employees (the “Pro Se Defendants”). Among other things, Plaintiff alleged that the former employees aided the Company’s former CEO in using corporate assets for her personal benefit. The Pro Se Defendants moved to dismiss themselves from the action, and Plaintiff responded by filing an Omnibus Answering Brief in opposition to those motions to dismiss. Sometime after the parties adopted these positions, Plaintiff apparently regretted its decision to bring the Pro Se Defendants into the dispute. Presumably for related reasons, the Pro Se Defendants, likewise, regretted filing their motions to dismiss themselves from the action. On November 6, 2020, the Pro Se Defendants therefore filed letters with the Court, stating that they “would prefer to have [the Court] hear this matter… [and] would like to withdraw [their] motion[s] to dismiss." Several hours later, Plaintiff submitted a motion for Voluntary Dismissal of the claims against the Pro Se Defendants. On November 9, 2020, the Pro Se Defendants attempted to file answers and counterclaims to the complaint.

The Pro Se Defendants’ letters proved essential for Plaintiff in securing a voluntary dismissal: once the Pro Se Defendants withdrew their motions to dismiss, nothing in Rule 41(a) prevented Plaintiff from voluntarily dismissing the claims against the Pro Se Defendants from the action. The Court described the issue as something that “may strike the reader as an Erewhon-like inversion of this Court’s typical consideration of motions to dismiss.” Although the Court noted that pro se litigants may be afforded leniency in litigation, the Court held that “’self-representation is not a blank check for defect’ and does not permit the Court to ignore its own Rules.” Accordingly, the Court held that Plaintiff had effectively withdrawn its claims against the Pro Se Defendants in accordance with Rule 41(a). The Court noted that, although they were dismissed from the action without prejudice, “nothing prevent[ed] the [Pro Se] Defendants from recasting their defunct Answer and Counterclaim as a new action or including these issues in a motion to intervene, however.”

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