Posts tagged Discovery

Court Of Chancery Orders Discovery On Notarization

Bessenyei v. Vermillion Inc., C.A. 7572-VCN (July 19, 2012)

All Court of Chancery complaints must be verified by each plaintiff.  Most of us take it for granted when the client returns a notarized verification.  But should we?  In this case the transcript includes an order granting discovery of a notary to see if the plaintiff actually appeared before that notary to sign his verification.  The Court suggests that if he did not do so then he has committed a fraud on the Court.  That is perhaps not the best way to start litigation.

Court Of Chancery Repeats What Interrogatory Answer Must State

Grunstein v. Silva, C.A. 3932-VCN (January 26, 2012)

When answering an interrogatory asking about the documents a litigant relies upon, it is not enough to just refer to the documents produced.  Instead, the specific documents must be identified, such as by bates numbers.

Delaware Federal District Court Adopts ESI Discovery Guidelines

Delaware's Complex Civil Litigation Court: One Year Later

Edward M. McNally
This article was originally published in the Delaware Business Court Insider | May 18, 2011

On May 1, 2010, the Delaware Superior Court established a specialized "division" within that court to handle business disputes, known as the "Complex Civil Litigation Division" (or "CCLD"). The CCLD complements the Court of Chancery by offering a specialized business court to handle cases for monetary damages where jurisdiction would not exist in the Court of Chancery. Three specially assigned judges handle the cases assigned to the CCLD. Now that a year has passed, it is time to review the work of the CCLD and to assess its future. The CCLD is off to a good start, but remains an underutilized resource for businesses faced with civil litigation.

For a number of years, civil litigation involving business disputes has been plagued by inefficiency, escalating costs and delay. Three areas in particular caused much of the trouble with business litigation. First, discovery of electronically stored information caused litigation costs to escalate even beyond the amounts in dispute. Second, delays from crowded court dockets frustrated businesses with a problem to resolve. Third, discovery disputes over privileged communications and the testimony of expert witnesses that are often involved in business disputes also increased litigation costs and delays.

The CCLD addresses each of these areas of concern. It utilizes judges experienced in business disputes who, by a Case Management Order ("CMO") entered at the outset of litigation, keep the litigation on track to a fixed trial date. The CMO also controls the discovery process and the collateral disputes that otherwise often derail a case. Discovery of electronically stored information ("e-discovery") is subject to a set of guidelines that require litigants to cooperate in e-discovery and to reduce its costs. Other protocols are imposed to limit disputes over the discovery of privileged communications and expert witnesses, with the goal of further reducing litigation costs.

None of these special aspects of the CCLD are groundbreaking innovations. The Federal Rules of Civil Procedure, for example, require case management conferences and court orders establishing pretrial and trial schedules. Those rules also were recently amended to better control e-discovery and expert witness discovery. Federal Rule of Evidence 502 also was added to better control attorney-client privilege disputes. The CCLD has freely borrowed from these innovations of the federal courts.

Moreover, the CCLD for the most part has chosen to characterize its special procedures as guidelines for litigants to adopt or modify as they choose by their own agreements. Thus, the parties may opt out of the expert witness, e-discovery and privileged communication guidelines of the CCLD if they wish. The court has made it clear that it will accept any reasonable proposal the parties choose.

Now that the CCLD has been in place for one year, it makes sense to see if its new procedures for Delaware’s Superior Court have succeeded in resolving the problems confronting business litigation.

As the awareness of the CCLD has grown, business for the CCLD has picked up speed. To date, 49 substantial business disputes have been assigned to the CCLD and its three judges. Our review of the dockets of those 49 cases (together with our direct participation in 25 percent of these cases) leads us to conclude the CCLD is making progress, but is still an underutilized resource.

The 49 cases fall into four categories: (1) those matters diverted from the CCLD by voluntary settlement, bankruptcy stays or removal to federal court; (2) those matters just recently filed whose history is too short to be analyzed; (3) those matters subject to motions to dismiss; and (4) those matters being actually litigated. In our experience this breakdown is typical of business litigation. For example, the CCLD attracts many insurance coverage disputes that are usually resolved by determinations of the scope of an insurance policy, often in the context of a motion to dismiss. Full litigation including discovery is not common in those cases.

Of the cases actually going forward in the full litigation process, the large majority are subject to some form of CMO, including protocols on expert and privileged document discovery. Delays caused by discovery disputes seem to have been avoided, with savings in time and expense. Thus, as to those cases, the CCLD is working out as planned. Of course, a more complete review of how CCLD is working must await a significant number of CCLD cases going to trial or at least going through the full litigation process.

The mere existence of the CCLD protocols as guidelines also may be having a positive effect even if the parties to the litigation do not choose to explicitly adopt them. E-discovery is an example. The CCLD has a detailed set of "E-Discovery Plan Guidelines." Those guidelines require that the parties submit an "e-discovery" plan to the court, unless "the parties otherwise agree." The parties are reaching agreements on e-discovery and thus the guidelines are having their intended effect of reducing e-discovery costs.

Of course, as with anything new, there are some problems that the CCLD is working to address. Motions to dismiss a complaint sometimes delay assignment of a matter to the CCLD. If it was a defendant who requested assignment to the CCLD, that assignment was planned to occur after an answer to a complaint was filed. If there was no answer but instead a motion to dismiss, assignment was delayed in these cases. Motions to dismiss have also delayed entry of a CMO. That is understandable given that granting such a motion will save the court from entering a useless CMO. Such a delay in ultimate case disposition when a motion to dismiss is eventually denied is a problem in all civil litigation. The CCLD is expected to address these issues shortly.

Finally, the CCLD appears to be an underutilized resource as it passes its first-year anniversary. We are told that the CCLD judges are able to go to trial on almost any schedule the parties choose. While that capacity may not last forever, it is a big advantage to litigants. Given Delaware’s predominance as a corporate domicile where jurisdiction over Delaware entities is established, companies interested in efficient resolution of business disputes before specially-focused judges should more frequently file their claims in the CCLD. If businesses are serious about improving the efficiency and predictability of business litigation, they will choose the Delaware Superior Court’s CCLD more frequently. We are confident that as the CCLD’s reputation grows, its docket will grow as well.

Edward M. McNally (emcnally@morrisjames.com) is a partner at Morris James in Wilmington and a member of its corporate and fiduciary litigation group. He practices primarily in the Delaware Superior Court and Court of Chancery handling disputes involving contracts, business torts and managers and stakeholders of Delaware business organizations. The views expressed herein are his alone and not those of his firm or any of the firm’s clients.
 

Court Of Chancery Enforces Scheduling Order

Encite LLC v Soni, C.A. 2476-CC (April 15, 2011)

When the Court of Chancery establishes discovery deadlines, it is not kidding.  The Court is consistently generous with lawyers who need more time and ask for it for a good reason and ahead of deadlines.  But when the lawyer fails to ask until the deadline has passed, the Court is not so kind and, as here, may deny the request.

Court Of Chancery Explains Confidentiality Limits

Espinoza v. Hewlett-Packard Company, C.A. 6000-VCP (March 17, 2011)

Occasionally a complaint or other document is filed under seal in the Court of Chancery.  This decision explains how to do that and the limits on confidentiality you can expect.  As the courts are public institutions with a need to have their proceedings out in the open, the short answer is that do not expect much to remain confidential no matter how embarrassing it may be to you or your client.

Court Of Chancery Imposes Fees For Late Discovery

Mickman v. American International Processing LLC, C.A. 4368-VCP (February 23, 2011)

This decision reaffirms the settled rule that if you fail to obey a court order to provide discovery, the Court will assess fees for a motion to compel and few excuses will change that result.

Court Of Chancery Sanctions Bad Privilege Log

This post was written by Edward M. McNally and Katherine J. Neikirk.

Klig v. Deloitte LLP, C.A. 4993-VCL (September 7, 2010)

This is the latest in a series of Court of Chancery decisions enforcing the discovery rules.  In this case, plaintiff challenged his disassociation from the defendant.  The defendant's privilege log used five vague descriptions for 97% of the withheld documents.  In all of these descriptions, defendant simply referred to plaintiff's matter with no additional detail, such as whether the description related to plaintiff's resignation, his compensation or a partnership vote.  The defendant also failed to identify any of the attorneys on the privilege log, despite plaintiff's requests, until briefing before the Court.  Vice Chancellor Laster held these deficiencies were an improper assertion of privilege that resulted in waiver of the privilege.  Accordingly, the Court ordered production of the documents withheld for privilege and inadequately described on the privilege log.  The Court denied defendant's request for certification of an interlocutory appeal, but granted a limited stay of production of the documents while defendant sought certification of an interlocutory appeal with the Supreme Court.

The opinion clearly sets out what must be on the privilege log.  Failure to comply is now certain to bring a similar sanction.

Delaware Superior Court Awards Large Fee For Discovery Abuse

M&G Polymers USA LLC v. Carestream Health Inc., C.A. 07C-11-242 PLA (Del. Super.,  April 21, 2010)

In this 193 page opinion, the Court imposed a large fee award for the failure to disclose important documents during discovery.  The decision is a useful collection of authority on the parties' discovery obligations and the Court's powers to penalize offenders.

Court Of Chancery Limits Confidentiality Agreements

New Radio Group LLC v. NRG Media LLC, C.A. 4951-VCL (January 27, 2010)

Litigants frequently seek to keep their dirty linen secret in litigation by asking the court to seal the court's files to public inspection. Chancery Rule 5(g) deals with the limits on that confidentality order and this decision shows that litigants cannot ask the Court for more than 5(g) permits. The better practice is to make the provisions of any order specifically subject to the rule.

Court of Chancery Summarizes Privilege Law

Cephalon Inc. v. John Hopkins University, C.A. 3505-VCP (December 4, 2009)

This is a short, but excellent summary of the law of attorney/client privilege. It also is an example of how the Court conducts an in camera review of documents to decide privilege questions.

Expert Preparation Fees Permitted

Reid v. Johnston, C.A. 08C-01-025-JRS (December 3, 2009)

In this case of first impression, the Court held that a party seeking to depose an opponent’s expert must pay for the expert's preparation time. However, to prevent abuse, the Court limited the fees to a time period equal to the length of the actual deposition. Talk fast to save money.

Court of Chancery Demonstrates its Understanding of Modern Discovery

eBay Domestic Holdings, Inc. v. Newmark, C.A. 3705-CC (October 29, 2009)

Modern discovery is often subject to problems, particularly with electronic "documents." As a result, some courts have imposed harsh sanctions for a party's failures to follow all the requirements. While not in any way excusing those failures, this decision shows that the Court of Chancery is aware of the difficulties involved. The Court held that only deliberate failures to follow the rules will be sanctioned by a fee award.

The opinion is also noteworthy for the discussion of a party’s offer to help the Court do an in camera document review. That offer took a lot of nerve to make and, characteristically, the Court politely declined the offer to do its job for it.

Court of Chancery Upholds Claw Back Agreement

eBay Domestic Inc. v. Holdings Inc., C.A. 7705-CC (September 16, 2009).

This decision upholds the right to claw back privileged documents inadvertently produced in discovery, at least when there is an agreement permitting claw back rights.

District Court Awards Punitive Damages Based in Part on Discovery Abuse, Denies Attorneys' Fees for Inadequate Proof

Christ v. Cormick, 2008 WL 4889127 (D. Del. Nov. 10, 2008)

In this opinion the Court sanctioned the defendant’s conduct, including discovery abuse, by awarding punitive damages. The Court first entered default judgment against the defendant after his “repeated dilatory discovery conduct and his refusal to appear for deposition.” The plaintiff sought punitive damages in addition to compensatory damages, and the Court found that the entry of default did not preclude awarding punitive damages. The failure to appear for deposition was “but one example of the kind of willful conduct that requires an award of punitive damages.” The plaintiff also sought attorneys’ fees and expenses both for the Delaware action and proceedings in South Africa. The Court, however, denied this claim, finding that an award for fees in the South African litigation was unsupported by law, and the summary information submitted for fees for the Delaware proceeding was inadequate as a matter of law because it did not allow the Court to make a thorough analysis of the time records.