WILLIAM B. CHANDLER III
COURT OF CHANCERY
STATE OF DELAWARE
COURT OF CHANCERY COURTHOUSE
34 THE CIRCLE
GEORGETOWN, DELAWARE 19947
Submitted: January 17, 2007
Decided: January 22, 2007
Elizabeth M. McGeever
Prickett, Jones & Elliott, P.A.
1310 North King Street
P.O. Box 1328
Wilmington, DE 19899
R. Bruce McNew
Taylor & McNew LLP
2710 Centerville Road
Wilmington, DE 19808
Donald J. Wolfe
Potter Anderson & Corroon LLP
Hercules Plaza, 6th Floor
1313 North Market Street
P.O. Box 951
Wilmington, DE 19899
Dolphin Ltd. P’ship I, L.P. v. Gupta, et al.
Civil Action No. 2486-N
Cardinal Value Equity Partners, LP v. Gupta, et al.
Civil Action No. 1956-N
Having considered the briefs submitted by all parties, I am granting the
defendants’ Motion to Consolidate. The Court may order consolidation when
separate actions present common questions of fact or law,1 and neither party
disputes that such questions are present here. Consolidation represents the most
efficient method of proceeding in this matter.
Common questions of fact and law pervade both actions. Both complaints
allege that defendants have used corporate assets and decision-making power to
Ct. Ch. R. 42(a).
further the interests of various directors, principally Vinod Gupta. Both complaints
rely upon similar allegations to suggest that plaintiffs need not seek demand from
the board. Whether these allegations are sufficient to meet the pleading
requirements of Court of Chancery Rule 23.1 will require substantially the same
analysis during a motion to dismiss. If these cases proceed to trial, the Court will
have to make largely similar determinations of fact concerning such issues as the
credibility of the Raval report, the value of office space and other perquisites
allegedly provided to various directors, and the appropriateness of alleged related
However this matter is ultimately decided, all parties (and infoUSA
shareholders in general) are best served by the most expeditious conclusion of
litigation consistent with justice. The cost of litigating two separate derivative
actions will ultimately be borne by shareholders of the company, both in payment
of legal fees and the distraction of company management. The action should be
consolidated unless plaintiffs demonstrate some prejudice that would result.
No such showing has been made here. To the extent that plaintiffs have
sued different defendants, a consolidated complaint may specifically set forth the
targeted directors by each count. Although plaintiffs present different legal
theories to justify relief, these theories largely rely upon the same set of
allegations, particularly concerning the propriety of related-party transactions. It
would waste the resources of litigants and the Court to consider these allegations
Consolidating the entire action, rather than simply ordering a joint hearing of
defendants’ motions to dismiss, also eliminates the possibility of a peculiar
injustice. The Court considers only allegations put forth in the complaints, not
subsequent briefs, when it evaluates a motion to dismiss.2 Plaintiffs may only rely
upon their own allegations, and at present these allegations differ slightly between
complaints. A joint hearing thus presents the strange prospect of the Court being
forced to dismiss both complaints under Rule 12(b)(6) or Rule 23.1, even though
the allegations before me, taken as a whole, would survive a motion to dismiss.
For these reasons, defendants’ Motion to Consolidate is granted. Ms.
McGeever and Mr. McNew are hereby appointed co-lead counsel for plaintiffs.
Given the time and resources already expended in this matter, I do not believe that
the mechanics of consolidation require considerable delay. Counsel for plaintiffs
Orman v. Cullman, 794 A.2d 5, 28 n.59 (Del. Ch. 2002).
shall submit a consolidated complaint no later than February 5, 2007. Counsel for
all parties shall confer upon a form of order implementing this decision. Plaintiffs
and defendants shall confer and provide the Court with a stipulated schedule
regarding briefing on defendants’ subsequent motion to dismiss, if any.
IT IS SO ORDERED.
Very truly yours,
William B. Chandler III