Delaware Business Litigation Report

Delaware Superior Court Ruling Provides Guidance for Pre-Trial Motion Practice and Trial Preparation

In re Bracket Holding Corp. Litig., Consol. C.A. No. N15C-02-233 WCC CCLD.

In this decision arising out of the Defendants’ Motions in Limine, the Superior Court’s Complex Commercial Litigation Division provides useful insight regarding pre-trial motion practice and trial preparation.  By way of brief background, in 2013, plaintiff purchased a pharmaceutical services provider from defendants.  The securities purchase agreement (SPA) included express representations and warranties related to financial statements.  Over the course of several months after purchase, plaintiff discovered what it alleges were improper accounting practices that constituted fraud and that had caused it to overpay for the provider to the tune of $50 million.

The Court granted in part and denied in part several motions limine, and denied in whole motions for summary judgment.  Among other holdings:

• the Court determined that the term “secret” has “a particularly sinister connotation and should not be used at trial” to describe financial files that plaintiff alleges had not been provided as part of the financial disclosures.
• the Court excluded certain emails relating to broader financial practices as irrelevant to the transaction at issue but noted the emails might be admissible for impeachment purposes on cross-examination.
• the Court excluded an arbitration decision that showed plaintiff’s success in recovering from its insurer for purported breaches of the SPA, noting that defendants had not participated in those proceedings and that plaintiff would have to establish the relevance of the arbitration decision at trial.
• the use of terms such as “fake,” “false,” and “phantom” are subject to objections at trial, and the Court will “not hesitate to admonish counsel and/or the witness in front of the jury” if the use of those terms is intended to prejudice the jury.
• liability waiver provisions in a non-disclosure agreement signed prior to due diligence cannot preclude a fraud claim. First, “one may not contractually remove liability for fraudulent conduct” and in any event, the later-signed SPA excluded fraudulent conduct from indemnification.
• post-transaction evidence might be admissible. The Court excluded evidence from 2015 onward as too diminished to frame a 2013 acquisition, but the Court did permit the use of some financials from soon after the 2013 acquisition so that the experts witnesses can fairly set forth their opinions.

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