Highlights of the Court of Chancery Rules

 

ADMISSION PRO HAC VICE.  Court of Chancery Rule 170 requires Delaware counsel to sign or receive service of all notices, orders, pleadings or other papers filed in the action, and attend all proceedings before the Court, Clerk of the Court, or other officers of the Court, unless excused by the Court. Attendance of Delaware Counsel at depositions shall not be required unless ordered by the Court. Out of state counsel who take or defend depositions or who appear in Court must be admitted pro hac vice.

 

Out of state counsel can be admitted pro hac vice on motion and order of the Court.  See Sample Pro Hac Vice Motion. The fee for the pro hac vice application is $300. 

 

Any attorney seeking admission pro hac vice shall be bound by the Delaware Lawyers Rules of Professional Conduct and must have reviewed the Statement of Principles of Lawyer Conduct.

 

COMMENCEMENT OF ACTION.  Delaware is a notice pleading jurisdiction requiring only a short and plain statement of the cause of action.  Rule 3(aa) provides that all complaints, counterclaims, cross-claims, third party complaints and any amendments must be accompanied by a notarized verification signed by the party asserting the claim.  A supplemental information form must accompany each complaint. See Supplemental information pursuant to Rule 3(a) of the Rules of the Court of Chancery. Where an affiant is located out of the United States, submit a declaration pursuant to the Delaware Uniform Unsworn Foreign Declarations Act. 10 Del. C. 95351-5359.

 

CONFIDENTIAL FILING & TREATMENT.  Generally, all documents filed with the Court of Chancery are public.  In order to file documents confidentially, a party must take certain steps.  These steps are set forth in Court of Chancery Rule 5.1.  (Click here for Rule 5.1.)  Rule 5.1, which became effective on January 1, 2013, was intended to make it clear that only limited types of information are to be treated as confidential.  A party must have good cause for filing documents confidentially.

 

To file a complaint confidentially, a party must include a cover letter with the complaint to the Register in Chancery certifying that the complaint contains confidential information. The cover letter shall summarize the nature of the claims made in a manner ouffrient to inform the public of the dispute. On that same day or contemporareously whenever reasonably practicable, the filing party must also use their best efforts to give actual notice of the filing to each person who might have an interest in designating information in the complaint confidential. A party must also provide a proposed public version of the complaint. The filing party must inform each interested person that the proposed public version of the complaint will be filed at 3 p.m. on the third day following the filing of the complaint unless interested persons request that additional information be treated confidentially.  If no public version of the complaint is filed with confidential information redacted, the Register in Chancery will automatically make the confidential filing public.  

 

To file documents confidentially in an ongoing matter, a party must first obtain a court order.  Once such an order is obtained (usually it is part of a stipulation and order negotiated by the parties), parties may file documents confidentially.  No later than 3 p.m. on the next business day following a confidential filing, the filing party must provide a proposed public version of the complaint to all parties who designated information in the confidential filing confidential and inform those parties that they have until 3 p.m. on the fifth day following the confidential filing to designate additional information confidential.  If no public version of the confidential filing is filed with confidential information redacted, the Register in Chancery will automatically make the confidential filing public.  

 

Rule 5.1 also sets forth procedures for how the public or press can challenge confidential filings.

 

DISMISSAL WITH PREJUDICE.  A party who responds to a motion to dismiss under Rules 12(b)(6), 12(c), or 23.1, other than by amending the pleading, and who then loses the motion, will have the action dismissed with prejudice.  See Rule 15(aaa).

 

EXPEDITED PROCEEDINGS.  The Court moves at the speed of business. If a party has not unduly delayed and circumstances require an expedited hearing, the Court will schedule one to meet the party's needs.  Nonetheless, expedition is ordered only upon a showing of good cause.  A motion for expedited proceedings must accompany a motion for TRO, summary proceedings or preliminary injunction. 

 

Examples of Disputes with Summary or Expedited Proceedings.  One fairly common type of expedited proceeding is an action to determine who are rightfully the officers and directors of a Delaware corporation pursuant to Section 225 of the Delaware General Corporation law (DGCL).  The Court will generally enter a standstill order to preserve the status quo pending a final hearing.  Other types of summary hearings include an action for advancement of legal fees and expenses pursuant to Section 145 of the DGCL, an action to compel inspection of a company's books and records pursuant to Section 220 of the DGCL, and an action to compel the holding of an annual meeting pursuant to Section 211 of the DGCL.

 

TROs & INJUNCTIONS.  Applications for equitable relief are heard on a paper record. A party seeking expedited equitable relief must move with dispatch in seeking the application or the Court may decline to schedule an expedited proceeding.

 

A party seeking a TRO may file a brief in support of its motion for a TRO or a speaking motion for a TRO.  In addition to the TRO papers, a party must file and serve a letter to the Chancellor requesting prompt assignment of the matter.  If the requesting party does not hear promptly from the judge assigned to the matter, they should contact the Chancellors chambers. 

 

DISCOVERY.  There are no numerical limits on written discovery. The Court will expect the parties to be reasonable in their requests and responses.  Similarly, there is no limit on the time for a deposition although a party should have a good reason for seeking to depose a witness for longer than one day.

 

PRESERVATION OF ELECTRONICALLY STORED INFORMATION.  The Court has become increasingly sensitive to issues involving electronically stored information (ESI).  On January 18, 2011, the Court issued Guidelines for the Preservation of ESI. These guidelines provide:

 

• There is a common law duty to preserve potentially relevant ESI within a party's possession, custody, or control once litigation is commenced or when litigation is "reasonably anticipated."

• Parties must take reasonable steps in good faith to meet their duty to preserve ESI.

• Parties and their counsel should confer early in the litigation regarding the preservation of ESI.

• Parties and their counsel must develop, oversee, and document a preservation process in collaboration with the appropriate client information technology personnel.

• Parties and their counsel should discuss the need to identify how custodians store their information, including document retention policies and procedures as well as the processes used to create, edit, send, receive, store, and destroy information for the custodians.

• Counsel should take reasonable steps to verify information they receive about how ESI is created, modified, stored, or destroyed.

• The preservation process should include a written litigation hold notice to individual custodians instructing them to take reasonable steps, act in good faith, and with a sense of urgency in preserving potentially relevant information.

• Parties and their counsel may face "serious consequences" for failing to take reasonable steps to preserve ESI.

• The reasonableness of a party's preservation process is judged on a case-by-case basis.

• Counsel for all parties should confer about the scope and timing of discovery of ESI and may agree to limit or forego the discovery of ESI.

 

COLLECTION, REVIEW & PRODUCTION.  The Court of Chancery Guidelines include guidelines regarding the collection and production of documents during discovery.  While the Court remains reluctant to adopt a “one size fits all” approach to document production, the Court recommends that counsel meet and confer promptly at the start of discovery to develop a discovery plan.  The Court encourages transparency between the parties with respect to custodians, date cutoffs and keywords.  Even if Delaware counsel does not directly participate in the collection, review and production process, the Court expects Delaware counsel to play an active role in the discovery process and to be able to answer questions concerning how documents were collected, reviewed and produced. The court has also provided guidelines for expedited discovery in advance of a preliminary injunction hearing. During expedited litigation, the court expects parties to work together in good faith to facilitate timely completion of discovery obligations. Written discovery is often limited to document requests and narrowly-tailored interrogatories intended to identify those persons with relevant knowledge. The court encourages parties to produce documents on a rolling basis. The court's expectation that Delaware counsel remain actively involved is not lowered during expedited discovery.

 

ASSERTION OF ATTORNEY-CLIENT PRIVILEGE. The Court of Chancery Guidelines require senior lawyers, particularly senior Delaware lawyers, to provide guidance on the assertion of privilege and the description of the basis for a privilege assertion in the privilege log.  Privilege log descriptions of withheld documents should be document specific and provide opposing counsel with sufficient information to evaluate the assertion of privilege. 

 

MOTION PRACTICE.  A party need not file a brief within a motion. Instead, the court will expect the parties to present a briefing schedule. The general practice is 30 days for the opening brief, 30 days for the answering brief, and 15 days for the reply brief. The page limitations are 50 pages for the opening and answering briefs and 30 pages for the reply briefs. Rule 171 provides additional guidance.

 

A party may respond to a brief by filing a speaking motion, but if a pleading responsive to a pending motion is not in brief format and is filed as Opposition or Reply, it should not exceed 15 pages in length or else it will be rejected. Such a pleading in excess of 15 pages should be filed as a brief and comply with Rule 171.

 

APPLICATION FOR ARGUMENT OR TRIAL; PROCEDURE.  Under Rule 173, any party may apply to the Court upon reasonable notice to all other interested parties for the fixing of a time to hear any aspect of a pending matter.

 

REQUESTS FOR JUDICIAL ACTION.  A party requesting any judicial action must file a Request for Judicial Action.

 

ELECTRONIC FILING (see eFile Administrative Procedures).  When the Chancellor of the Court of Chancery determines that it is appropriate for any civil case, or category of cases, to follow the procedures for eFiling, the Chancellor shall designate it as an eFile case or category of cases.  Rule 79.1.  Some important pointers:

 

• No Delaware lawyer shall authorize anyone to eFile on that lawyer's behalf, other than an employee of his/her law firm or service provider retained by that lawyer to assist in eFiling.

• No person shall use, or allow another person to use, the password of another in connection with any eFiling.

• The eFiling of a document by a lawyer, or by another under the authorization of a lawyer, shall constitute a signature of that lawyer under Court of Chancery Rule 11.

• All eFilings must be signed by a member of the Delaware Bar or party not represented by an attorney in accordance with the eFile Administrative Procedures.

 

SUPPORTING AUTHORITIES.  If an opinion cited in a motion or brief does not contain a sufficient statement of facts to make its relevance to the issue apparent, counsel should include a statement of facts in the papers or attached to the papers.  Rule 171(h).  A party may submit a compendium of selected key authorities that the party wants the Court to focus on.  Rule 171(i).  Selected key authorities may include prinicipal Delaware decisions, reported or unreported, and persuasive non-Delaware decisions, statutes and regulations.  Id.  A party may submit an appendix of documents or testimony from the factual record.  Rule 171(j).  Parties should not duplicate materials in a compendium or appendix that were already submitted by the other side.

 

SCHEDULING ORDERS.  The Rules generally do not fix or mandate deadlines. The Court of Chancery expects the parties to agree on a schedule for pre-trial proceedings and submit an order for approval.  For guidance, see a sample scheduling order.

 

TRIAL DATES.  Rule 173(b) permits any party may apply to the court for a trial date.

 

TRIALS.  Because trials in the Court of Chancery are before chancellors rather than juries, courtroom theatrics are disfavored.  The Court generally will require each side to submit a pre-trial brief outlining its position on what the evidence will show, and thus often will dispense with opening statements to give the parties maximum time to develop the trial record.  Nonetheless, counsel should be prepared to orient the Court to the expected presentation of witnesses and major trial themes. 

 

POST-TRIAL PROCEEDINGS.  At the end of trial, the court will generally discuss with the parties the briefing schedule for submission of post-trial briefs. In some situations, the court will require simultaneous briefing; in others the party with the burden of proof will go first, the other party will answer, and the first party will reply. Thereafter, the court generally schedules oral argument.   

 

OPINIONS.  Absent expedition, the court aspires to release decisions within 90 days from the date of the last written submission.