Friday, October 11, 2024
Discovery Of Litigation Funding Agreement Denied
A letter opinion of the Delaware Court of Chancery in a proceeding involving records inspection
I presided over trial on a paper record on September 12, 2024, and issued my post-trial ruling telephonically on September 24, 2024. Therein, I found largely in the Plaintiffs’ favor; recommending that the Defendants be required to produce records in response to what I defined therein as “Request 2, subject to the existing confidentiality agreement[.]” I rejected, however, the Plaintiffs’ request to shift fees under the bad faith exception to the American Rule.
After my ruling, the Plaintiffs inquired about whether I would be “specifically addressing the parties’ arguments concerning attorney retainer agreements and litigation funding arrangements[.]” I responded that it was my understanding the Plaintiffs proceeded to trial solely on Request 2, but I invited the Parties to submit written submissions to address any loose ends.
Loose end tied up
The Plaintiffs are not entitled to documents or information concerning the Defendants’ (i) arrangements with litigation funders, and (ii) retainer agreements with their counsel.
Reasons
In the Plaintiffs’ presentation at trial, counsel focused on the Defendants’ objections to production (confidentiality and privilege). The Plaintiffs failed, however, to make any showing as to the basis for a court-ordered production (e.g., that the requested documents were within the remaining scope of the demand and necessary and essential to the Plaintiffs’ proper purposes for inspection). Thus, it is not clear in my mind that these issues were adequately preserved for a post-trial ruling.
But, secondly, and most importantly, these requests fail on their merits. Even if preserved, the Plaintiffs have failed to demonstrate that arrangements with litigation funders and retainer agreements are within the scope of necessary and essential records responsive to Request 2.15 “As a general rule, . . . inspection rights are limited by the scope of the demand letter, and a . . . plaintiff will be foreclosed from recasting the scope of its demand at the eleventh hour.” That is precisely what the Plaintiffs aim to do. The Plaintiffs implicitly admit that these records are outside the scope of their demand and hint at their request as some sort of enforcement mechanism for promises made during the Parties’ meet and confer. But the Plaintiffs did not seek leave to amend their demand nor have they pled a claim to enforce the purported agreement; the only claim pled, preserved, and presented for my consideration was for inspection under Request 2, of records necessary and essential to the Plaintiffs’ proper purposes for inspection. These records are outside of that scope and should not be included in the court-ordered production.
The Plaintiffs’ request for arrangements with litigation funders and retainer agreements with their counsel should be denied.
(Mike Frisch)
https://lawprofessors.typepad.com/legal_profession/2024/10/discovery-of-litigation-funding-agreement-denied.html