BAE Sys. Info. and Electonic Sys. Integration Inc. v. Lockheed Martin Corp.
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Defendant Lockheed Martin Corporation d/b/a Lockheed Martin STS-Orlando (LMSTS) moved to bifurcate this action into a "Contract Interpretation Phase" and a "Damages Phase," and both LMSTS and plaintiff BAE Systems Information and Electronic System Integration Inc. (BAE) filed motions to compel. The court endorsed bifurcation where the litigation was indisputably complex and where both parties agreed, in principle, that bifurcation would be appropriate and have reached a substantial agreement regarding the issues to be determined during each phase of the action. Accordingly, the action was bifurcated into a "Contract Interpretation Phase" and a "Damages Phase." The court noted that bifurcation of the action effectively postponed the parties' need for much of the discovery they have requested. Accordingly, the court granted in part and denied in part BAE's and LMSTS' motions to compel. Finally, the court denied each party's request for attorneys fees because both BAE and LMST had good faith grounds for the positions taken.
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EFiled: Jun 30 2011 12:46PM EDT Transaction ID 38444560 Case No. 3099-VCN COURT OF CHANCERY OF THE STATE OF DELAWARE JOHN W. NOBLE VICE CHANCELLOR 417 S. STATE STREET DOVER, DELAWARE 19901 TELEPHONE: (302) 739-4397 FACSIMILE: (302) 739-6179 June 30, 2011 Kevin R. Shannon, Esquire Potter Anderson & Corroon LLC 1313 North Market Street Wilmington, DE 19801 Re: Samuel A. Nolen, Esquire Richards, Layton & Finger, P.A. One Rodney Square Wilmington, DE 19801 BAE Systems Information and Electronic Systems Integration Inc. v. Lockheed Martin Corporation C.A. No. 3099-VCN Date Submitted: June 1, 2011 Dear Counsel: I address three pending motions: Defendant Lockheed Martin Corporation, d/b/a Lockheed Martin STS- has moved to bifurcate this action Contract Interpretation both LMSTS and Plaintiff BAE Systems Information and Electronic System Integration Inc. 1 1 BAE Systems Information and Electronic Systems Integration Inc. v. Lockheed Martin Corporation C.A. No. 3099-VCN June 30, 2011 Page 2 regard to bifurcation will necessarily affect the scope of the discovery in which the parties must immediately participate, I will address that motion first. *** The Court considers the following factors in determining whether bifurcating an action is appropriate: (1) the complexity of the litigation and the need for different proof; (2) whether discovery on certain claims would delay a single trial; (3) whether different counsel would probably try the various claims; and (4) whether prejudice would result from separate trials.2 This litigation is indisputably complex. Determining the scope and enforceability of the would either allow the deferred issues to be considered within a more focused context or, in the case that the New MOA is found to be unenforceable, avoid the expenditure of resources on issues that need not be decided at all. That establishing damages under the MOA would require proof different from that needed to establish its scope 2 Quereguan v. New Castle County, 2006 WL 2522214, at *6 (Del. Ch. Aug. 18, 2006). See Ct. Ch. R. 42(b). BAE Systems Information and Electronic Systems Integration Inc. v. Lockheed Martin Corporation C.A. No. 3099-VCN June 30, 2011 Page 3 and enforceability also counsels for bifurcating this action. Further, both parties agree, in principle, that bifurcation would be appropriate, and they have also reached substantial agreement regarding the issues to be determined during each phase of the action. The Court , and thus the motion to bifurcate is granted as follows. The first phase of the will and obligations under the New MOA, including obligations, if any, arising under the implied covenant of good faith and fair dealing, and will address affirmative defenses (except that defense will be addressed during the second phase). It will also assertion that BAE is not entitled to participate in Joint Strike Fighter-related support equipment work because, it contends, Sanders and/or BAE failed to support or partici JSF contract. claims of breach of the New MOA or the implied covenant of good faith and fair dealing that are not specifically addressed in the Contract Interpretation Phase, BAE Systems Information and Electronic Systems Integration Inc. v. Lockheed Martin Corporation C.A. No. 3099-VCN June 30, 2011 Page 4 determine whether the New MOA violates antitrust laws, and determine the appropriate remedy for any breach, including the calculation of damages. *** Bifurcation of this action effectively p the discovery they have requested; however, disputes remain with regard to whether certain discovery requests are (1) proper at all or (2) related to the Contract Interpretation Phase. The Court now addresses the competing Motions to Compel in this context. Motion to Compel addresses four general categories of documents, although several aspects of the motion have been resolved since it was filed. First, BAE has requested that Lockheed produce additional documents from business units other than LMSTS, such as LM Aero. Specifically, BAE seeks documents, held to LM whether to outsource work to either LMSTS or BAE, and how it determined that LMSTS was a single source of contact for work that would later be given to BAE. Lockheed contends that it has already done a reasonable search of LM Aero BAE Systems Information and Electronic Systems Integration Inc. v. Lockheed Martin Corporation C.A. No. 3099-VCN June 30, 2011 Page 5 records and produced the appropriate documents in its possession. Counsel for BAE has indicated a willingness to accept a good faith representation to this effect.3 motion to compel is therefore denied with regard to this category of documents. Second, BAE seeks documents created after the Complaint was filed in 2007; specifically, it asks the Court to compel production of any documents relevant to the Lockheed has since produced certain relevant documents that are dated through 2009, and it argues both that discovery must be cut off at a reasonable date and that documents generated after the Complaint was BAE argues that documents produced after 2007 may be relevant to, for example, the ourt is satisfied that December 31, 2009, will serve as a reasonable discovery cutoff date, and grants the motion to compel with 3 BAE Systems Information and Electronic Systems Integration Inc. v. Lockheed Martin Corporation C.A. No. 3099-VCN June 30, 2011 Page 6 respect to documents, created through that date, that are pertinent to the Contract Interpretation Phase. as it pertained to the third category of documents, which involved ATS work performed by LMSTS that related to the JSF program. Lastly, BAE asks the Court to compel responses to its Document Requests 8, 11, and 17. Requests 8 and 11 seek Performance LMSTS. Request 17 i Financial respectively, that Lockheed developed with regard to [a]ll documents that refer or relate to any agreement or understanding between LM Aero and LMSTS . . . that refer or relate in any way to ATS. Projections regarding the amount of ATS work Lockheed expected to perform in the years following the execution of the New MOA may have some relevance to the Contract Interpretation Phase, because they could show whether, and to what extent, Lockheed believed the New MOA would affect its ATS business. Documents relating to agreements or understandings between LM Aero and LMSTS BAE Systems Information and Electronic Systems Integration Inc. v. Lockheed Martin Corporation C.A. No. 3099-VCN June 30, 2011 Page 7 could also be relevant.4 Nonetheless, the requests themselves are very broad, and in as to breadth, BAE has indicated its willingness to narrow the scope of these document requests. Assuming that BAE does so, Lockheed must reasonably respond to Document Reques motion is denied with regard to Document Request 11 because the financial data it concerns is relevant only to the Damages Phase. *** identifies four categories of discovery. First, Lockheed asks the Court to require BAE to supplement its responses to Interrogatories 9, 11, 13, and 14, all of which ask BAE to identify the factual bases for its contentions. BAE contends that it has adequately responded by referencing its detailed complaint. BAE is free to rely on the responses it has already made to these interrogatories if it wishes to be constrained to the factual universe identified 4 For example, documents that were created while negotiating an agreement between business units that LMSTS would perform all ATS work going forward would be relevant if they included references to the way the agreement would affect BAE and how it was affected by the New MOA. See Tr. 42-43. Indeed, Lockheed has already produced the agreements themselves; it has not produced documents relating to those agreements. BAE Systems Information and Electronic Systems Integration Inc. v. Lockheed Martin Corporation C.A. No. 3099-VCN June 30, 2011 Page 8 by those responses when it presents its case. In the alternative, it must supplement its responses by identifying the additional facts upon which it intends to rely. Second, Lockheed contends that BAE should supplement its responses to Interrogatories 30scope of its claims under that agreement. Whether parties may defer providing 5 detailed answers to contention interrogatories is a matter for and the time has come for BAE to explain, precisely, the scope of the rights and obligations it asserts are create is granted in this regard. Third, Lockheed seeks documents that are relevant to its antitrust defense. Because that affirmative defense will be resolved as part of the Damages Phase, the Court will not compel discovery responses regarding it now. Fourth, Lockheed has asked the Court to compel BAE to identify specific documents upon which it is relying in its responses to Interrogatories 1-20 and 2940. 5 roduced in See In re Walt Disney Co. Deriv. Litig., 2003 WL 22682621, at *1 (Del. Ch. Oct. 30, 2003). BAE Systems Information and Electronic Systems Integration Inc. v. Lockheed Martin Corporation C.A. No. 3099-VCN June 30, 2011 Page 9 or to be produced in this case. Although Court of Chancery Rule 33(d) allows parties respond to interrogatories by reference to the business records of the other party where the burden of ascertaining the answer from the records would be the same for either the records where the answer may be obtained.6 Therefore, the Court will compel BAE to supplement its responses to Interrogatories 1-20 and 29-40 by identifying the documents that are responsive to each interrogatory, respectively. *** Finally, each party requests that it be awarded attorneys fees. Those requests are denied, because both BAE and Lockheed had good faith grounds for the positions taken. *** Accordingly, the Motion to Bifurcate is granted, as set forth above. Both also as set forth above. 6 See also Grunstein v. Silva, 2009 WL 4698541, at *20 n.137 (Del. Ch. Dec. 8, 2009) BAE Systems Information and Electronic Systems Integration Inc. v. Lockheed Martin Corporation C.A. No. 3099-VCN June 30, 2011 Page 10 IT IS SO ORDERED. Very truly yours, /s/ John W. Noble JWN/cap cc: Register in Chancery-K
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