Kinexus Representative LLC v. Advent Software, Inc.

Annotate this Case
Download PDF
EFiled: Jul 13 2012 12:49PM EDT Transaction ID 45322509 Case No. 1161-VCN COURT OF CHANCERY OF THE STATE OF DELAWARE JOHN W. NOBLE VICE CHANCELLOR 417 SOUTH STATE STREET DOVER, DELAWARE 19901 TELEPHONE: (302) 739-4397 FACSIMILE: (302) 739-6179 July 13, 2012 David L. Finger, Esquire Finger & Slanina, LLC One Commerce Center 1201 N. Orange Street, 7th Floor Wilmington, DE 19801 Re: Stephen C. Norman, Esquire Potter Anderson & Corroon LLP Hercules Plaza, 6th Floor 1313 North Market Street Wilmington, DE 19801 Kinexus Representative LLC v. Advent Software, Inc. C.A. No. 1161-VCN Date Submitted: July 5, 2012 Dear Counsel: dismissal of this action in which the Plaintiffs seek an earn out payment related to roughly ten years ago. Plaintiffs dilatory conduct has again motivated Advent to seek an end to this litigation which was filed approximately seven years ago. Kinexus Representative LLC v. Advent Software, Inc. C.A. No. 1161-VCN July 13, 2012 Page 2 In the spring of 2011, Advent pursued a motion to dismiss under Court of Chancery Rules 41(b) and rosecute. The Court denied that motion,1 2 With this backdrop, the Court anticipated that would have induced the Plaintiffs to abandon their slacker ways and to move forward with dispatch. The Court was wrong. une 30, 2011, counsel discussed how to proceed with this case. Eventually, they agreed to meet at the end of September, a meeting that was not successful in finding a way to bring this litigation to a close. Protracted negotiations, first started by Plaintiffs in early September, resulted in an agreement by the parties, through their counsel, to a case scheduling order that was 1 Kinexus Representative LLC v. Advent Software, Inc., 2011 WL 3273253, at *2 (Del. Ch. June 2 Id. document Kinexus Representative LLC v. Advent Software, Inc., 2008 WL 4379607, at *3 (Del. Ch. Sept. 22, 2008). Kinexus Representative LLC v. Advent Software, Inc. C.A. No. 1161-VCN July 13, 2012 Page 3 approved by the Court on November 9, 2011.3 The milestones in the scheduling order, which were selected by the parties, seemed aggressive to the Court and included the following: Identify trial witnesses: Fact discovery: Plaintiffs serve expert report(s): Expert depositions: Trial: no later than March 15, 2012 completed by May 1, 2012 on or before April 16, 2012 completed by June 15, 2012 November 13, 2012 It should, unfortunately, come as no surprise that the dates prescribed in the order, except for the trial date, have come and gone without compliance. The Plaintiffs have offered a number of excuses. First, B. Douglas Morriss, the person most responsible for the activities of Kinexus, the primary plaintiff, filed for bankruptcy. proceeding was the Second, Mr. Morriss for reasons unrelated to this lead trial lawyer decided to leave the firm in which he practiced. The firm was uncertain as determined that it was unwilling to perform that role. Moreover, the lead trial counsel decided that he would be unable to represent the Plaintiffs any longer. These events 3 Transaction ID 40808459. none Kinexus Representative LLC v. Advent Software, Inc. C.A. No. 1161-VCN July 13, 2012 Page 4 of which can be attributed to Advent distracted litigation efforts and impeded progress. as counsel demurred. Plaintiffs noticed two depositions in early February, one of Mr. Price, an Advent employee, and one for an Advent Rule 30(b)(6) witness. Advent, after some insignificant initial quibbling, promptly the end of February.4 Advent, because of the scope of the Rule 30(b)(6) deposition notice and the extensive turnover among its employees in the years since the Kinexus transaction, reasonably needed more time to identify the appropriate witnesses. For reasons that are not clear, the Plaintiffs never bothered to depose Mr. Price.5 4 ssues involving Mr. Morriss, but, a day later, those conditions had disappeared and Advent was prepared to go See Aff. of Mark Jacobs, Esq. (May 9, 2012) Ex. F-1 (Email chain); Aff. of Steven M. Schatz, Esq. (May 18, 2012) Ex. 2. 5 The Plaintiffs, without any detail, have invoked notions of efficiency. Kinexus Representative LLC v. Advent Software, Inc. C.A. No. 1161-VCN July 13, 2012 Page 5 Court. A teleconference, held on February 27, 2012, seems to have motivated all (or were able) to represent the Plaintiffs, and they moved to withdraw on March 9, 2012. For months, the Court has been led to believe that replacement counsel would surface shortly, but, as late as July 5, agreement with potential substitute couns 6 scheduling order, there can be no doubt that the dates would not have been met, regardless of whether the motions to withdraw had been filed.7 In an effort to deflect responsibility for the scheduling problems, Plaintiffs, unavailingly, attempt to transfer the blame to Advent and its counsel. Perhaps their created problems 6 The motions to withdraw have not yet been addressed. Without replacement counsel, the entity Plaintiffs would not be able to move the litigation forward. See Parfi Hldg. AB v. Mirror Image Internet, Inc. 7 The motions to withdraw were filed six days before the first milestone. Kinexus Representative LLC v. Advent Software, Inc. C.A. No. 1161-VCN July 13, 2012 Page 6 were being encountered. Under Court of Chancery Rule 41(b), the Court may, on motion of the defendant, dismis 8 Between the end of June 2011, when the 41(e), until early March, rosecute this matter, while not non-existent, were marginal and certainly were not consistent with the new enthusiasm to move the asserted was motivating them and which persuaded the Court to deny the motion under Rule 41(e). The Plaintiffs negotiated and submitted a scheduling order; they noticed two depositions and, despite the availability of one of the deponents, they never took any deposition. 8 See, e.g., Stearns v. Div. of Family Servs. Yancey Ltd., 633 A.2d 372, 1993 WL 370844, at *3 (Del. 1993) (ORDER)); Paron Capital Mgmt., LLC v. Crombie Rule 41(b) may apply where there has been a failure to prosecute, a party has violated court rules or orders, Kinexus Representative LLC v. Advent Software, Inc. C.A. No. 1161-VCN July 13, 2012 Page 7 forward with this matter. In addition, although the milestones established in the sel sought to withdraw, it is clear at least that those milestones associated with witness identification and discovery would not have been satisfied by Plaintiffs even if their counsel had not sought to withdraw.9 s scheduling order by the Plaintiffs became inevitable. Perhaps Advent should have waited until the deadlines had been missed in order to file its motion, but, as a practical matter, there seems to be no good reason for the Court to insist upon such technical compliance. In short, dismissal of this action is warranted under Rule 41(b) both because the Plaintiffs have not prosecuted it and because their failure to comply with the scheduling order pressure from the Court 9 one to which they agreed without any was inevitable. Although various deadlines were approaching, there is no reason to believe that the decision of impending deadlines. Kinexus Representative LLC v. Advent Software, Inc. C.A. No. 1161-VCN July 13, 2012 Page 8 A word about prejudice is also necessary. In the June 30 Decision, the Court acknowledged that the Plaintiffs a result of d may bear some prejudice because the events giving rise to this action primarily occurred nearly a decade ago. 10 The prejudice suffered by Advent, as of June 2011, was real, but when balanced apparent 11 the prejudice suffered by Advent did not tip the balance in June 2011 in favor of dismissal. The Court does not doubt that, in the spring of 2011, the Plaintiffs anticipated pursuing this matter with some vigor. For whatever reason, that expectation was not met. Instead, the prejudice to Advent inability to proceed with this action in a diligent manner has continued to mount. That prejudice appears in many forms, including: additional costs; extensive turnover in personnel, which makes finding the appropriate witnesses more difficult; and the simple fact that the passage of a decade from the events in question will dim memories. Prejudice suffered by a party at the hands of a non10 11 June 30 Decision, 2011 WL 3273253, at *2. Id. Kinexus Representative LLC v. Advent Software, Inc. C.A. No. 1161-VCN July 13, 2012 Page 9 diligent adversary has a cumulative aspect but is inevitable when litigation drags on as this proceeding has for some seven years. 12 The Court resolving cases Plaintiffs in the interim and their failure to take the steps necessary to comply with the scheduling order to which they agreed, coupled with the ongoing and mounting prejudice to Advent, the balance has tipped. Dismissal is now warranted and, indeed, necessary for the orderly administration of the judicial process. Accordingly, for the foregoing reasons, pursuant to Court of Chancery Rule 41(b), this action is dismissed.13 12 Tooley v. AXA Fin., Inc., 2009 WL 1220624, at *2 (Del. Ch. Apr. 29, 2009); see also Solow v. Aspect Resources, LLC, 2012 WL 904683, at *2 (Del. Mar. 19, 2012). 13 Advent has also argued that dismissal under Rule 41(e) is appropriate. That is a question that the Court need not resolve. Because the Plaintiffs took some action within the last year, strictly satisfied. In addition, the Court does not address whether the denial of a motion under Rule 41(e) automatically even if undesirably conferred upon Plaintiffs another year to fritter away. Kinexus Representative LLC v. Advent Software, Inc. C.A. No. 1161-VCN July 13, 2012 Page 10 IT IS SO ORDERED. Very truly yours, /s/ John W. Noble JWN/cap cc: Register in Chancery-K