Murphy Marine Services of Delaware, Inc. v. GT USA Wilmington, LLC ( 2022 )

IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
MURPHY MARINE SERVICES OF )
DELAWARE, INC., THE THOMAS )
M. BROWN, SR. 2006 TRUST FBO )
JOHN M. BROWN, JR., THE )
THOMAS M. BROWN, SR. 2006 )
TRUST FBO TERENCE M. BROWN )
JR., THE THOMAS M. BROWN, SR. )
2006 TRUST FBO TIMOTHY M. )
BROWN, THE THOMAS M. )
BROWN, SR. 2006 TRUST FBO, )
THOMAS M. BROWN, JR., )
)
Plaintiffs, )
)
v. ) C.A. No. 2018-0664-LWW
)
GT USA WILMINGTON, LLC, )
)
Defendant. )
MEMORANDUM OPINION
Date Submitted: May 26, 2022
Date Decided: September 19, 2022
Daniel M. Silver & Travis J. Ferguson, MCCARTER & ENGLISH, LLP,
Wilmington, Delaware; Counsel for Plaintiffs Murphy Marine Services of Delaware,
Inc., The Thomas M. Brown, Sr. 2006 Trust FBO John M. Brown, Jr., The Thomas
M. Brown, Sr. 2006 Trust FBO Terrance M. Brown Jr., The Thomas M. Brown, Sr.,
2006 Trust FBO Timothy M. Brown, and The Thomas M. Brown, Sr. 2006 Trust FBO
Thomas M. Brown, Jr.
David A. Dorey, BLANK ROME LLP, Wilmington, Delaware; Counsel for
Defendant GT USA Wilmington, LLC
WILL, Vice Chancellor
Murphy Marine Services of Delaware, Inc. and its stockholders bring this
action against GT USA Wilmington, LLC, an affiliate of Gulftainer Company Ltd.
For decades, Murphy Marine provided stevedoring services at the Port of
Wilmington, a deep-water maritime facility located at the confluence of the Christina
and Delaware Rivers in Wilmington, Delaware. The State of Delaware solicited bids
to privatize the port in 2017 and selected GT.
Under pressure from the State, the parties negotiated a binding letter
agreement for the sale of Murphy Marine to GT. Murphy Marine’s stockholders
agreed to sell their shares to GT in exchange for the going concern value of Murphy
Marine, as determined by a fair market valuation analysis by KPMG LLP. The
parties agreed that the valuation would not consider GT’s imminent privatization of
the port, which would have caused KPMG’s analysis to reflect Murphy Marine’s
liquidation value. The binding letter agreement also required GT and Murphy
Marine to subsequently negotiate a definitive purchase agreement.
KPMG prepared and shared with the parties a preliminary pricing assessment
of a 100% equity interest in Murphy Marine. GT found the indicated ranges of value
untenable. Despite the terms of the binding letter agreement, GT insisted that
KPMG not finalize its valuation unless it addressed the risks Murphy Marine faced
from port privatization. A heated dispute between GT and Murphy Marine ensued
that KPMG wanted no part of.
1
KPMG terminated the engagement before a final valuation was reached, to
GT’s relief and Murphy Marine’s distress. GT felt that it could restart its discussions
with Murphy Marine to reach a deal GT found more palatable. Murphy Marine,
however, sent GT a draft definitive contract as contemplated by the parties’ binding
letter agreement. GT rebuffed Murphy Marine, asserting that the binding letter
agreement was terminated. Murphy Marine sought recourse from this court.
In Phase One of this bifurcated matter, Vice Chancellor Glasscock determined
three issues of contract interpretation. First, the binding letter agreement between
Murphy Marine’s stockholders and GT represents the entire agreement for the sale
of Murphy Marine’s stock. Second, the binding letter agreement unambiguously
prevented KPMG from valuing Murphy Marine assuming port privatization. Third,
the midpoint of KPMG’s value range was the parties’ agreed-upon method to select
a price point.
With those findings as the backdrop, the Phase Two trial was held before me.
Left to be decided is whether GT breached the binding letter agreement and if
damages should be awarded. Although I conclude that GT did not breach the binding
letter agreement by refusing to accept KPMG’s pricing analysis as a final valuation,
I find that GT breached the binding letter agreement by refusing to negotiate a
definitive purchase agreement and repudiated the parties’ contract. To the extent
that KPMG finalizing its work was a condition precedent to GT’s performance, its
2
failure is excused under the prevention doctrine. Murphy Marine is therefore
entitled to damages.
During trial, Murphy Marine also presented evidence regarding a motion for
contempt it filed against GT. GT used discovery produced by Murphy Marine to
compete against Murphy Marine in negotiations with one of Murphy Marine’s
largest customers. This violated the court’s confidentiality order, entitling Murphy
Marine to a finding of contempt.
I. FACTUAL BACKGROUND
Certain background facts of this case are set out in this court’s May 28, 2021
opinion following the first trial in this bifurcated proceeding.1 Unless otherwise
noted, the following facts were found by the court in that opinion, stipulated to by
the parties, or proven by a preponderance of the evidence at the second trial in this
action.2 The Phase Two trial occurred on January 6, 7, and 11, 2022, during which
two fact witnesses and two expert witnesses testified. Four other fact witnesses
testified during the Phase One trial. The parties introduced 424 exhibits, including
25 deposition transcripts, between the two trials.3
1
Dkt. 256 (“Phase 1 Mem. Op.”).
2
Dkt. 221 (“Phase 1 PTO”); Dkt. 352 (“Phase 2 PTO”). Where facts are drawn from
exhibits jointly submitted by the parties at trial, they are referred to according to the
numbers provided on the parties’ joint exhibit list (cited as “JX__”). Deposition transcripts
are cited as “Phase [] [Name] Dep.” Trial testimony is cited as “[Name] Phase [] Tr.”
3
Dkts. 216-17, 346.
3
A. Murphy Marine
The Port of Wilmington (the “Port”), a deep-water port on the Delaware River,
is the top North American port for imports of fresh fruit into the United States and
has the country’s largest dockside cold storage facility.4 Plaintiff Murphy Marine
Services of Delaware, Inc. (“Murphy Marine” or “MMS”), a Delaware corporation,
engaged in stevedoring at the Port for more than forty years.5 It is a family-owned
business purchased in 2006 by John Brown, Jr., a former longshoreman, and three
of his cousins through trusts.6 Those “Trusts” are Murphy Marine’s stockholders.7
“Murphy Marine no longer actively operates in the Port.”8
B. GT and Murphy Marine Sign a Binding Letter Agreement.
In 2017, the Diamond State Port Corporation (the “DSPC”), a corporate entity
of the State of Delaware and then-operator of the Port, solicited bids for a
public/private partnership to develop and operate the Port.9 Gulftainer Company
4
See Gulftainer, USA – Port of Wilmington, http://www.gulftainer.com/terminals/usa/
port-of-wilmington/ (last visited Aug. 22, 2022).
5
Phase 2 PTO ¶¶ 1, 2.
6
Brown Phase 2 Tr. 9-10.
7
The “Trusts” are The Thomas M. Brown, Sr. 2006 Trust FBO John M. Brown, Jr., Trustee
of The Thomas M. Brown, Sr. 2006 Trust FBO Terrance M. Brown, Jr., The Thomas M.
Brown, Sr. 2006 Trust FBO Timothy M. Brown, and The Thomas M. Brown, Sr., 2006
Trust FBO Thomas M. Brown, Jr. Phase 2 PTO ¶ 4; Phase 1 Mem. Op. at 1.
8
Phase 1 Mem. Op. at 2.
9
Dkt. 231 (“Joint Stmt. of Stip. Facts”) ¶ 8; Phase 1 Mem. Op. at 3.
4
Ltd., a global entity headquartered in the United Arab Emirates and the world’s
largest privately-owned port operator, formed defendant GT USA Wilmington, LLC
(“GT”) to submit a bid to the DSPC.10 By the end of 2017, the DSPC identified GT
as its preferred bidder and GT began to explore an acquisition of Murphy Marine.11
On July 6, 2018, GT and the Trusts executed a binding letter agreement (the
“BLA”) for the sale of Murphy Marine to GT.12 GT’s then-Chief Executive Officer
Peter Richards and Murphy Marine’s Chairman John Brown, Jr. (acting on behalf of
the Trusts) executed the BLA. “Murphy Marine is not, itself, a party to the BLA.”13
Relevant provisions of the BLA provide:
1. The [Trusts] hereby agree to sell, and GT hereby agrees
to buy or pay . . . an amount equal to a fair market
valuation of purchase, 100% of the shares “Shares” of
Murphy Marine . . . at the closing.
2. The price for the Shares shall be their fair market value,
which shall be determined by an independent valuation
conducted by KPMG who was selected by the mutual
agreement of the parties. KPMG has been mutually
retained by the parties . . . .
3. KPMG shall be advised to assume the transaction is
between a willing buyer and a willing seller, with neither
under any compulsion to buy or sell, but shall be otherwise
free to determine the fair market value of the [Murphy
10
Joint Stmt. of Stip. Facts ¶¶ 6-7, 9.
Id. ¶¶ 10-11. The parties’ negotiations are described in greater detail in the Phase One
11
Memorandum Opinion. See Phase 1 Mem. Op. at 4.
12
Phase 1 PTO ¶¶ 36-45.
13
Phase 1 Mem. Op. at 5.
5
Marine] Shares at its sole discretion and through whatever
valuation method or methods it deems most appropriate.
KPMG’s decision shall be final and binding upon the
parties.
4. KPMG shall be instructed to prepare two (2) valuations:
one (1) that considers the impact, if any, on the value of
[Murphy Marine] by the presence of that certain unfunded
pension liability of [Murphy Marine] . . . (the “Pension
Liability Price”) and a second valuation that does not
consider any such impact (the “Guarantee Price”). The
Shareholders shall have the option, in their sole discretion,
to receive the Guarantee Price if, and only if, the
Shareholders guarantee to indemnify and pay on GT’s
behalf any actual pension liability that GT may incur after
the execution of this Agreement . . . .
6. After executing this Agreement, the parties will work
cooperatively to draft and sign a definitive purchase or
settlement agreement with customary provisions. If the
parties fail to execute such an agreement within 120 days
of the date of closure of the Concession Agreement and
GT is in receipt of the Approvals, then this Agreement
shall be legally binding upon the parties . . . .14
C. GT and Murphy Marine Engage KPMG.
Also on July 6, GT and Murphy Marine executed an engagement letter hiring
KPMG to conduct a valuation of Murphy Marine (the “Engagement Letter”).15
Richards, Brown, and KPMG’s Brian Bouchard signed the Engagement Letter on
behalf of GT, Murphy Marine, and KPMG, respectively.16 The Engagement Letter
14
JX 102 (“BLA”) at 1-2; see also Phase 1 Mem. Op. at 8.
15
JX 100 at 1; see also Phase 1 Mem. Op. at 9.
16
JX 100 at 3.
6
explained that KPMG “would not provide a specific price point in its valuations of
Murphy Marine, but rather would provide a valuation range.”17 KPMG’s
willingness to only provide a range of value was inconsistent with the BLA, which
assumed a price point.18
The Engagement Letter provided:
[KPMG] understand[s] that [GT and Murphy Marine]
would like us to assist you with a pricing analysis of a 100
percent equity interest . . . in [Murphy Marine] as of April
30, 2018 or other recent pricing date (Pricing Date)
established by the [parties] strictly for the [parties’]
internal planning purposes related to a potential sale of
[Murphy Marine] to GT. No other use is intended or
implied.
It is also our understanding that you will consider our
findings as one of many factors in determining a range of
potential offer/bid prices for [Murphy Marine,] and the
transaction price will be determined solely by negotiation
between the [parties]. The pricing analysis cannot be used
to determine the purchase price. Our analysis is intended
to provide a range of the prices of [Murphy Marine,] which
is supportable in terms of relevant pricing approaches such
as comparisons to sales of other companies, discounted
cash flow analyses, or other earnings-based analyses.19
The Engagement Letter stated that KPMG’s work plan would include
examining Murphy Marine’s historical operating results, business plans and future
17
Phase 1 Mem. Op. at 4-5 (describing the negotiating history of the BLA and the
Engagement Letter); see JX 100.
18
Phase 1 Mem. Op. at 23.
19
JX 100 at 1.
7
performance estimates, the underlying assumptions of its business plans, and risk
factors that could affect Murphy Marine’s future performance.20 To render a pricing
analysis, KPMG would principally analyze the information provided by GT and
Murphy Marine.21 KPMG’s deliverables were to include a “draft narrative written
report with supporting financial schedules detailing [its] pricing analysis
conclusion.”22 After the parties reviewed those initial drafts, KPMG would provide
a “finalized narrative report.”23
D. Relevant Phase One Findings
In his Phase One decision, Vice Chancellor Glasscock reached three
conclusions about the BLA and Engagement Letter that provide important context
for the remaining factual findings I make below.
First, the court concluded that the BLA “represents the whole agreement
between GT and the owners of Murphy Marine regarding the purchase and sale of
100% of the equity interest in Murphy Marine.”24 The Engagement Letter was not
incorporated into the BLA. It supported the BLA but did not alter its terms.25
20
Id. at 6.
21
Id.
22
Id. at 8.
23
Id.
24
Phase 1 Mem. Op. at 27.
25
Id. at 18.
8
Second, the court held that “the BLA unambiguously prohibited KPMG from
valuing Murphy Marine assuming privatization of the Port of Wilmington.”26
“Privatization would allow GT to replace Murphy Marine with its own stevedoring
operation, ending Murphy Marine’s going-concern value as a stevedore service for
the Port of Wilmington.”27 Had KPMG’s valuation considered the effect of GT’s
imminent privatization of the Port, Murphy Marine’s value would have represented
its liquidation value rather than its value as a going concern.28
Finally, the court found that “extrinsic evidence supports the midpoint method
as the agreed-upon method to select a price point from the range of value KPMG
agreed to produce.”29
E. KPMG’s Valuation Efforts Begin.
KPMG issued data requests to Murphy Marine immediately after the July 6
meeting where the Engagement Letter was signed.30 It requested, among other
things, Murphy Marine’s historical and projected financial information and a
26
Id. at 27.
27
Id. at 21.
28
JX 145 ¶ 2; Phase 1 Mem. Op. at 6.
29
Phase 1 Mem. Op. at 27.
30
JX 113 at 1.
9
description of “any meaningful risks that could potentially impair [Murphy
Marine’s] ability to grow sales and maintain margins on a go-forward basis.”31
Murphy Marine responded by letter on July 17, answering KPMG’s questions
and providing the requested financial information along with supporting
documentation.32 Per the terms of the BLA, Murphy Marine did not list port
privatization as a risk. It explained that it faced “[n]o meaningful risk for
consideration except normal business risk.”33
On July 18, Murphy Marine provided KPMG with additional information,
including Murphy Marine’s actual financial performance for the first half of 2018.
Murphy Marine explained that it was outperforming its revenue and EBITDA
forecasts for the year.34
Murphy Marine also provided KPMG with a withdrawal liability estimate
prepared by Segal, a benefits and human resources consulting firm, concerning
Murphy Marine’s share of an unfunded pension liability for the Philadelphia Marine
Trade International Longshoremen’s Association Pension Fund (the “Pension
Fund”). The current market value of the Pension Fund’s assets is less than the
31
Id. at 2.
32
JX 124.
33
See id.; Warner Phase 1 Tr. 234-36.
34
See JX 213; Cianciotto Phase 2 Dep. 111-14.
10
actuarial value of the Pension Fund’s liabilities (the “Unfunded Liability”).35 Under
an agreement with the Philadelphia Marine Trade International Longshoremen’s
Association, Murphy Marine and its affiliate JH Stevedoring Co. are required to pay
their attributed share of the Unfunded Liability if, for three consecutive years, their
combined annual hours worked is less than 70% of the preceding five-year average
(the “Partial Withdrawal Liability”).36
F. GT Raises Privatization with KPMG.
On July 25, 2018, Gulftainer’s then-Chief Investment Officer Jesper Boll sent
a letter to KPMG and Murphy Marine about Murphy Marine’s responses to KPMG’s
data requests.37 GT said that it wished to bring certain “matters into consideration
for KPMG’s ongoing valuation.”38 Those “matters” included “a risk exist[ing] in
excess of normal business risk” because Murphy Marine “solely derived” its revenue
from operations at the Port.39 “[A]n exclusive privatisation of the port,” wrote Boll,
“may materially negatively impact [Murphy Marine’s] ability to generate future cash
flows.”40
35
Cook Phase 2 Dep. 57-59.
36
Id. at 64; D’Angelo Phase 2 Dep. 19-23, 49.
37
JX 128 at 1-2.
38
Id.
39
Id.
40
Id.
11
Before sending the letter to KPMG and Murphy Marine, Boll circulated it
internally at Gulftainer. He described the draft letter as “aim[ed] to regain control
of the MMS valuation process.”41
G. The August 13 Call
KPMG issued a second set of data requests on July 30, asking Murphy Marine
to provide information regarding its 2018 financial performance, forecasting
assumptions, and the various risks that could affect Murphy Marine’s future cash
flows.42 Murphy Marine provided the requested information on August 3.43
KPMG scheduled a conference call with Murphy Marine and GT for August
13 “to gain a better understanding of the risk profile of [Murphy Marine’s] projected
cash flows.”44 Specifically, KPMG wished to discuss “the risks resulting from the
privatization of the Port of Wilmington to the future cash flow generation of”
Murphy Marine, the status of negotiations with the union, and Murphy Marine’s
EBITDA margin forecasts.45
In preparation for the call, Boll told Richards that he expected Murphy Marine
to argue the effect of port privatization should not “be considered in [KPMG’s]
41
JX 126 at 1.
42
JX 131 at 5.
43
JX 133 at 1.
44
JX 137 at 2.
45
JX 139 at 1.
12
valuation which should assume a going concern concept.”46 Boll asked whether GT
“should . . . still accept” the exclusion of port privatization, noting that it brought
“the risk of a higher price but on the other hand the value of [Murphy Marine] would
be very little if privatization is fully included.”47 Richards responded: “As per our
conversation this morning play the card of the port privatisation but be reasonable.
If we want to finish this we should be looking at accepting a value of less than $8M,
without screwing them completely.”48
The August 13 conference call took place later that day.49 During the call,
KPMG asked Brown if privatization might “affect future cash flow generation” of
Murphy Marine and whether those risks were “embedded in [Murphy Marine’s]
forecasts.”50 Brown responded that there “should be more efficiency with
privatization.”51 Boll interjected that port privatization should “be considered in
relevance to cash flows after year 2” of the valuation.52
46
JX 142 at 1.
47
Id. at 1-2.
48
Id. at 1.
49
See JX 141; JX 217.
50
JX 141 at 2.
51
Id.
52
Id. at 1.
13
In an email to Richards after the call, Boll reported that Murphy Marine’s
“lawyer stated that I crossed a line and violated our agreement which was not to
consider privatization. Fair point, but tough luck. I had to protect our position. You
can then be the one to save their valuation later if needed by giving something
back.”53
H. KPMG Issues Its Draft Pricing Analysis, to GT’s Chagrin.
KPMG issued a draft pricing analysis of Murphy Marine on August 20 (the
“Pricing Analysis”).54 Relying on discounted cash flow and guideline public
company methods, KPMG calculated Murphy Marine’s enterprise value to be
between $23,801,700 and $28,448,100 and its equity value to be between
$21,486,400 and $26,132,800.55 After sending the Pricing Analysis, KPMG began
preparing a draft narrative report for the parties.56
Upon receiving the Pricing Analysis, Boll shared it with Richards, writing
“[t]his is not a good report” as it indicated GT would “pay $21-26m for [Murphy
Marine]!”57 Boll recommended that GT “fight” KPMG’s valuation and “claim that
KPMG ha[d] misrepresented the mandate” by failing to consider “port privatization
53
Id.
54
JX 144 at 1.
55
Id. at 5.
56
JX 219.
57
JX 146 at 2-3.
14
as [GT] had requested” or “at least get the report updated with a privatization
scenario.”58 He cautioned that doing so would “get ugly and the MMS lawyer
w[ould] be all over that” so GT needed “to tread carefully.”59 Alternatively, Boll
suggested that GT offer to pay Brown “$10m and take on the pension liability
without further recourse,” threatening that GT would “fight this and insist on port
privatization being fully incorporated which will get ugly and [Brown] will
eventually be paid less.”60
Richards agreed with Boll, exclaiming: “This is not a good report – is a bit of
an understatement!!”61 Richards instructed Boll to “go back” to KPMG that day and
explain why the Pricing Analysis needed to be revised, advising Boll to “phrase it in
such [a way] that you are questioning why these things have not been taken into
account and request clarification.”62 He said that going back to Brown should be “a
last resort.”63
Several hours later, Boll emailed KPMG a series of questions about the
Pricing Analysis. He asked, for example, why KPMG did not consider the
58
Id. at 3.
59
Id.
60
Id.
61
Id. at 2.
62
Id.
63
Id.
15
“remaining tenor of commercial contracts and apply appropriate discounts for risk
of renewal and in general to apply risk factors implying future cash flows.”64
KPMG’s response confirmed that “the risk of renewal and achieving the margins
that were provided given the historical performance of the company” had been
considered and were “embedded in the company specific premium of our discount
rate as well as the multiple selection in the market approach.”65
Boll also asked KPMG why “the decided privatization of Wilmington port to
an exclusive operator” had been “disregarded in the valuation?” 66 In an internal
redline draft of KPMG’s responses to GT’s questions, Bouchard noted “I don’t
understand what [GT’s] point is on this. . . . What does the privatization of the Port
have to do with what we are doing?”67 KPMG subsequently responded to GT that
it had taken “a market participant view of the business in that it will operate as a
going concern” and under that assumption, “privatization of the port . . . should not
affect the outcome of certain contracts or the generation of the future cash flows.”68
64
JX 154 at 1.
65
Id. at 4.
66
Id. at 2.
67
JX 145 at 1; see also Phase 1 Mem. Op. at 6-7; Bouchard Phase 1 Dep. 161.
68
JX 154 at 4.
16
I. GT Demands that KPMG Consider Privatization.
On August 28, GT sent a letter to KPMG’s Steven Cianciotto (copying
Brown) stating that, after reviewing the Pricing Analysis, GT “concluded that”
KPMG had “not fulfilled [its] mandate.69 GT emphasized that KPMG had not
accounted for port privatization as a risk factor that could affect Murphy Marine’s
planned performance, which GT described as “a fundamental mistake in
approach.”70 GT asked that the “mistake” be “rectified” and that “a new draft report
[be] issued after which [they could] discuss the various elements of the valuation
with all the parties and [KPMG] c[ould] issue [its] final report.”71
That afternoon, Cianciotto contacted KPMG’s risk management partner for
advice: “Gulftainer is questioning our approach because we did not consider that
Gulftainer by privatizing the port will have the option to shut down [Murphy
Marine]. We valued [Murphy Marine] as a going concern.”72
Murphy Marine’s counsel sent a letter to KPMG later that night, objecting “in
the strongest possible terms” to GT’s “attempt . . . to change the rules of the parties’
69
JX 152 at 5.
70
Id. at 5-6.
71
Id. at 6.
72
JX 156; see also Bouchard Phase 1 Dep. 168 (testifying that KPMG was not “considering
a potential failure of Murphy Marine, because [KPMG] w[as] doing this under a going-
concern analysis”); Bouchard Phase 2 Dep. 262-64.
17
agreement, and thereby bully KPMG into changing its approach to th[e] valuation.”73
The letter explained that the BLA excluded port privatization from consideration in
the valuation and indicated that KPMG had fulfilled its mandate.74 It quoted the
relevant paragraphs of the BLA.75
On August 29, Boll sent another letter to Cianciotto, reiterating GT’s position
that “port privatization” was not to be “disregarded” in KPMG’s valuation.76 He
closed by saying that GT “c[ould not] permit KPMG to issue its final report until it
is fully aligned with the mandate” as described in the Engagement Letter.77 KPMG
understood Boll’s statement to mean that it should not perform further work or issue
its final report until the parties’ disconnect about KPMG’s mandate was resolved.78
KPMG ceased any substantive valuation work on the underlying engagement at that
point.79
73
JX 155 at 3.
74
Id. at 4. Murphy Marine’s accountant separately sent a letter to Cianciotto commenting
that the long-term growth estimates in the Pricing Analysis and certain EBITA multiples
selected should be increased. JX 150.
75
JX 155 at 3-4.
76
JX 159 at 4.
77
Id. at 5.
78
Bouchard Phase 2 Dep. 315; see also id. at 188-89; Cianciotto Phase 2 Dep. 144-46, 156.
79
See Bouchard Phase 2 Dep. 313-14.
18
Several more letters were exchanged.80 In one letter on August 30, Boll asked
KPMG to revise its engagement to offer two valuation scenarios: one where port
privatization was considered and another where it was not.81 KPMG prepared an
“addendum” to the Engagement Letter to address that request.82
Later on August 30, Murphy Marine’s counsel sent a letter to KPMG stating
that GT had breached the BLA, “under which GT agreed that KPMG would be free
to exercise its discretion in setting the Price for [Murphy Marine’s] shares, and that
[KPMG’s] decision would be final and binding on both parties.” 83 Murphy Marine
asked KPMG to “suspend all work on this project and issue no further reports” until
Murphy Marine concluded seeking legal recourse or KPMG was told otherwise “by
both parties.”84
J. KPMG Withdraws from the Engagement.
KPMG consulted with its Office of General Counsel about the dispute.85
Bouchard was “advised” to withdraw and given “guidance” on “how to craft” the
80
See JX 160; JX 164; JX 165; JX 167.
81
JX 164.
82
JX 222; Bouchard Phase 2 Dep. 314-15.
83
JX 165 at 2.
84
Id. at 2.
85
JX 143 at 1.
19
withdrawal letter.86
On August 31, KPMG sent a letter to GT and Murphy Marine withdrawing
from the engagement.87 KPMG’s letter stated that: “[W]e have learned that Murphy
Marine . . . and perhaps Gulftainer intend[] to use the results of our [analysis] to set
a purchase price for the shares of [Murphy Marine] that is binding on both parties.”88
The letter explained that KPMG had been unaware of the BLA or the parties’
agreement to use its valuation to set a purchase price in the BLA until receiving
Murphy Marine’s August 30 letter. It said because Murphy Marine (and “perhaps
Gulftainer”) “had entered into [the engagement with KPMG] under false pretenses,”
KPMG considered the engagement “to be void” and terminated.89
A few days later, Boll updated his colleagues at Gulftainer and expressed his
view that GT was “in a good position right now as KPMG pulled out of the conflict,”
meaning that GT could “start over with John Brown.”90 He said that GT’s “party
line” would be that “KPMG pulled out as a direct consequence of [Murphy Marine’s]
lawyers[’] threats” and that GT “ha[d] always been willing to pay a fair market price
86
Bouchard Phase 2 Dep. 210, 224.
87
JX 143 at 3.
88
Id.
89
Id.
90
JX 170.
20
and the intention [wa]s to agree [on] an amount with [Murphy Marine] when they
are ready to be realistic.”91
K. GT Rejects a Draft Stock Purchase Agreement.
On September 2, 2018, the Trusts provided GT with a draft stock purchase
agreement, in accordance with Paragraph 6 of the BLA.92 The draft included a “Base
Price” of $26,124,900, representing the midpoint of Murphy Marine’s enterprise
value range in KPMG’s Pricing Analysis.93 It contemplated several post-closing
adjustments to derive a “Transaction Price,” including subtracting the amount of
Murphy Marine’s outstanding debts as of the closing date.94
GT rejected the draft purchase agreement. Boll told Murphy Marine’s
counsel:
In the joint Engagement Letter both parties defined the Price and
Scope of Work Plan precisely so the method of establishing a fair
market valuation was clear and defined in the Scope. It is the
position of GT that the DRAFT report from KPMG did not fulfill
the terms of engagement or the Scope as defined and this was
communicated to KPMG and yourselves on several occasions.
The fair market valuation of the price in the DRAFT report was
inconsistent with GT’s interpretation of the Scope and GT
explained the inconsistencies to KPMG as an aid to permitting
them to correct the DRAFT fair market valuation in a reasonable
91
Id.
92
See JX 226.
93
Id. at 12.
94
Id.
21
manner and so KPMG could consider GT's comments on the
DRAFT report for inclusion in its FINAL report. The FINAL
report was never completed.95
Boll further stated that “GT consider[ed] the BLA to be substantially frustrated and
therefore terminated.”96 As a result, he explained, “the draft SPA is irrelevant.”97
L. Murphy Marine Ceases Operations and Stops Making Pension
Fund Payments.
On January 25, 2019, Chiquita Fresh North America LLC (one of Murphy
Marine’s largest customers) notified Murphy Marine that it was terminating their
relationship and entering into a stevedoring contract with GT.98 On September 4,
Dole Fresh Fruit Company did the same.99 Murphy Marine could no longer continue
to operate profitably after losing its two largest customers and ceased its operations
the next month.100
Murphy Marine last contributed to the Pension Fund in 2019.101 The owners
of the Trusts estimate that Murphy Marine will become liable for its share of the
Unfunded Liability at the end of 2022 and will be required to pay the Partial
95
JX 227 at 2.
96
Id. at 3.
97
Id.
98
See JX 288; JX 291.
99
JX 330.
100
Phase 2 PTO ¶ 30; see JX 323; JX 324.
101
See JX 391.
22
Withdrawal Liability. They anticipate that the combined hours worked of Murphy
Marine and JH Stevedoring as a control group will be less than 70% of the preceding
five-year average for the third straight year.102
M. This Litigation
Murphy Marine filed this action against GT on September 7, 2018. The
complaint alleges that GT breached the BLA (and the implied covenant of good faith
and fair dealing) by interfering with KPMG’s valuation of Murphy Marine, declining
to accept the deal price indicated by the Pricing Analysis, and refusing to proceed in
negotiations to finalize a purchase agreement as required by the BLA, thereby
repudiating the contract.103 An amended complaint adding the Trusts as plaintiffs
was filed on January 8, 2019.104
The trial in this litigation was bifurcated into two phases. The Phase One trial
before Vice Chancellor Glasscock addressed and decided “certain discrete predicate
issues of contract interpretation only.”105 As described above, the court’s May 28,
2021 Phase One post-trial decision resolved three questions of contract
interpretation.106
102
Cook Phase 2 Dep. 37-38, 64; D’Angelo Dep. 20, 22, 49.
103
Dkt. 1.
104
Dkt. 67.
105
Phase 1 Mem. Op. at 2.
106
Id. at 27 (concluding that (1) the BLA represents the whole agreement between GT and
the owners of Murphy Marine, (2) the BLA unambiguously prohibited KPMG from
23
The Phase Two trial before me addressed whether GT breached the terms of
the BLA (or, in the alternative, the implied covenant of good faith and fair dealing)
and, if so, whether the plaintiffs are entitled to damages. The Phase Two trial was
held on January 6, 7, and 11, 2022. At trial, the parties also presented evidence in
connection with a November 24, 2021 motion for contempt the plaintiffs filed
against GT.
II. LEGAL ANALYSIS
I begin my analysis by considering whether GT breached the BLA. I conclude
that the plaintiffs proved that GT breached the BLA when it refused to negotiate a
stock purchase agreement with the Trusts and repudiated its obligation to buy
Murphy Marine’s stock. Even if KPMG reaching a final valuation decision for
Murphy Marine was a condition precedent to GT’s performance, GT remains liable
under the prevention doctrine. GT, by interfering with KPMG’s work and injecting
privatization into its analysis, materially contributed to the lack of a final valuation.
I next assess the plaintiffs’ damages. The Trusts are entitled to an award of
$21,464,605 in compensatory damages. They are not, however, presently entitled
to damages concerning Murphy Marine’s share of the Partial Withdrawal Liability.
considering Port Privatization, and (3) that extrinsic evidence supports the midpoint
method to select a price point from KPMG’s range of values). See supra notes 24-29 and
accompanying text.
24
A. Breach of Contract
The plaintiffs’ principal claim is that GT breached the BLA.107 The elements
for a breach of contract claim are: (1) “the existence of a contract”; (2) “the breach
of an obligation imposed by that contract”; and (3) “damage to the plaintiff” caused
by the breach.108 The plaintiffs bear the burden of proving their breach of contract
claims by a preponderance of the evidence.109 “Proof by a preponderance of the
evidence means proof that something is more likely than not.”110
The Phase One opinion resolved the first element for a breach of contract
claim. Vice Chancellor Glasscock found that the BLA was the sole agreement
concerning the sale and purchase of Murphy Marine’s equity.111 The remaining two
elements—breach and damages—are addressed below.
107
I analyze this claim under Delaware contract law, consistent with the parties’ briefing.
See, e.g., Pls.’ Post-trial Opening Br. 46 (arguing breach of contract under Delaware law);
Def.’s Post-trial Answering Br. 12 (arguing no breach of contract due to condition
precedent under Delaware law).
108
Kuroda v. SPJS Hldgs., L.L.C., 971 A.2d 872, 883 (Del. Ch. 2009).
109
See Dieckman v. Regency GP LP, 2021 WL 537325, at *18 (Del. Ch. Feb. 15, 2021),
aff’d, 264 A.3d 641 (Del. 2021) (TABLE).
110
Trascent Mgmt. Consulting, LLC v. Bouri, 2018 WL 4293359, at *12 (Del. Ch. Sept.
10, 2018).
111
See Phase 1 Mem. Op. at 11-12.
25
1. GT Did Not Breach the BLA by Refusing to Accept the
Pricing Analysis.
The plaintiffs did not prove that GT breached the BLA by refusing to accept
the Pricing Analysis as KPMG’s “decision” on the fair market value of Murphy
Marine’s shares. Paragraphs 2 and 3 of the BLA provide that the “fair market value”
of Murphy Marine’s shares “shall be determined by an independent valuation
conducted by KPMG” and that “KPMG’s decision shall be final and binding upon
the parties.”112 That language is clear and unambiguous.113 It contemplates that
KPMG will reach a single “decision,” which means “a determination arrived at after
consideration.”114
The Pricing Analysis was a draft—and labeled as such—that KPMG planned
to update into a “draft narrative report” and then a “finalized narrative report”
112
BLA ¶¶ 2-3 (emphasis added).
113
See Osborn ex rel. Osborn v. Kemp, 991 A.2d 1153, 1159-60 (Del. 2010) (“When the
contract is clear and unambiguous, we will give effect to the plain-meaning of the
contract’s terms and provisions.”); GMG Cap. Invs., LLC v. Athenian Venture P’rs I, L.P.,
36 A.3d 776, 780 (Del. 2012) (“Contract terms themselves will be controlling when they
establish the parties’ common meaning so that a reasonable person in the position of either
party would have no expectations inconsistent with the contract language.” (quoting Eagle
Indus., Inc. v. DeVilbiss Health Care, Inc., 702 A.2d 1228, 1232 (Del. 1997))). A party’s
subjective interpretation is irrelevant. See, e.g., Lorillard Tobacco Co. v. Am. Legacy
Found., 903 A.2d 728, 740 (Del. 2006) (explaining that the “true test” of contract
interpretation “is not what the parties to the contract intended it to mean, but what a
reasonable person in the position of the parties would have thought it meant.” (quoting
Rhone-Poulenc Basic Chems. Co. v. Am. Motorists Ins. Co., 616 A.2d 1192, 1196 (Del.
1992))).
114
Decision, Merriam-Webster, https://www.merriam-webster.com/dictionary/decision
(last visited Sept. 14, 2022).
26
following an iterative process.115 KPMG, which was given the “sole discretion” to
determine the fair market value of the shares under the BLA, did not believe that the
Pricing Analysis was final. Bouchard testified that KPMG “did not complete [its]
valuation analysis” and that KPMG’s numbers could change.116
That is not to say that KPMG failed to analyze the value of Murphy Marine’s
shares.117 I have no grounds to conclude that the Pricing Analysis was unreasonable
or that the values it indicated were subject to substantial modification with Murphy
Marine considered as a going concern.118 KPMG did, however, intend to issue
further written deliverables that could differ from its initial Pricing Analysis. If I
considered the Pricing Analysis to be KPMG’s “decision” for purposes of the BLA,
it is not apparent what the other deliverables would have been. The BLA does not
contemplate multiple “decisions.”
115
JX 100 at 8; see also JX 144 at 1 (“Attached is our draft estimated price range for
Murphy Marine Services along with the draft supporting financial schedules.”), 3
(“DRAFT – For Discussion Purposes Only.”); Bouchard Phase 2 Dep. 287-88; Seitz Phase
2 Tr. 381 (Q: “And would you agree that the pricing analysis constitutes a valuation?” A:
“You know, it constitutes a number that can be considered for valuation purposes. It’s not
– you know, the standard is maybe a complete valuation.”).
116
Bouchard Phase 2 Dep. 222, 226.
117
See Seitz Phase 2 Tr. 379; Waddington Phase 2 Tr. 755-56.
118
See, e.g., Seitz Phase 2 Dep. 36-37; Waddington Phase 2 Tr. 768 (“I don’t have any
evidence in this case where KPMG determined whether they were reasonable or
unreasonable”).
27
The Pricing Analysis was simply not KPMG’s final work product. It was a
draft subject to change.119 KPMG had work left to do before its “decision” would
be reached. The Pricing Analysis therefore did not satisfy the terms of the BLA and
is not “final and binding” on the parties. GT is not in breach of the BLA for refusing
to accept the Pricing Analysis to set a price point for Murphy Marine’s stock.
2. GT Breached the BLA by Refusing to Negotiate a
Stock Purchase.
The plaintiffs proved that GT breached the BLA by failing to negotiate a stock
purchase agreement with the Trusts.120 The BLA provides that, after executing the
BLA, “the parties will work cooperatively to draft and sign a definitive purchase or
settlement agreement.”121 If the Trusts and GT could not agree on a definitive
purchase agreement, the BLA would become the operative agreement between the
parties, with any additional “standard and customary terms” either party submitted
to be arbitrated.122 The Trusts presented GT with a draft stock purchase agreement
119
Bouchard Phase 2 Dep. 222.
120
Because the conduct at issue was governed by the BLA and the conduct Murphy Marine
alleges harmed it breached the terms of that agreement, I do not reach Murphy Marine’s
alternative claim for breach of the implied covenant of good faith and fair dealing. See
WaveDivision Hldgs., LLC v. Millennium Digit. Media Sys., L.L.C., 2010 WL 3706624, at
*19 (Del. Ch. Sept. 17, 2010).
121
BLA ¶ 6.
122
Id.28
and requested that GT submit to arbitration.123 GT refused, stating that a “draft SPA
[wa]s irrelevant.”124
GT’s refusal repudiated the BLA and its obligation to purchase Murphy
Marine’s stock.125 GT told Murphy Marine in its September 3, 2018 letter that GT
“consider[ed] the BLA to be substantially frustrated and therefore terminated.”126
Murphy Marine relied on the repudiation, filing this action four days later.127
3. A Failed Condition Precedent Did Not Excuse Performance.
GT argues that the BLA was voided, excusing its obligation to buy Murphy
Marine’s stock, because the condition precedent of KPMG completing a valuation
of Murphy Marine to determine a final price never occurred.128 “The existence of
conditions precedent ‘are ultimately a question of contract interpretation.’”129
123
JX 226.
124
See JX 227 at 3.
125
W. Willow-Bay Court, LLC v. Robino-Bay Court Plaza, LLC, 2009 WL 458779, at *5
(Del. Ch. Feb. 23, 2009) (“A repudiation of a contract is an outright refusal by a party to
perform a contract or its conditions.” (quoting PAMI–LEMB I Inc. v. EMB–NHC, L.L.C.,
857 A.2d 998, 1014 (Del. Ch. 2004))); see also CitiSteel USA, Inc. v. Connell Ltd. P’ship,
758 A.2d 928, 930 (Del. 2000).
126
JX 227 at 3.
127
W. Willow-Bay, 2009 WL 458779, at *5 (explaining that “repudiation amounts to a
present breach . . . [o]nce the promisee relies on the repudiation . . . by filing suit for
damages”).
128
Def.’s Post-trial Answering Br. 1-2, 13-17.
129
Thomas v. Headlands Tech Principal Hldgs., L.P., 2020 WL 5946962, at *5 (Del.
Super. Sept. 22, 2020) (quoting Casey Empl. Servs., Inc. v. Dali, 1993 WL 478088, at *4
(Del. Nov. 18, 1993)).
29
Conditions differ from promises. The latter give rise to a duty to perform.
The former are “act[s] or event[s], other than a lapse of time, that must exist or occur
before a duty to perform something promised arises.”130
Although “[t]here are no particular words that must be used to create a
condition precedent, a condition precedent must be expressed clearly and
unambiguously.”131 Parties’ intent to set a condition precedent to performance may
be evidenced by “such terms as ‘if,’ ‘provided that,’ ‘on condition that,’ or some
other phrase that conditions performance” connotating “an intent for a condition
rather than a promise.”132 The absence of such conditioning language “is probative
of the parties’ intention that a promise be made rather than a condition be imposed,
so that the terms will be construed as a covenant.”133
GT’s obligation to negotiate a definitive agreement for the purpose of Murphy
Marine’s stock was not expressly conditioned upon KPMG first reaching a final
valuation decision. Paragraph 6 of the BLA lacks conditioning language. It states
130
Id.; see also Restatement (Second) of Contracts § 224 (1981) (“A condition is an event,
not certain to occur, which must occur, unless its non-occurrence is excused, before
performance under a contract becomes due.”); TravelCenters of Am. LLC v. Brog, 2008
WL 5272861, at *3 (Del. Ch. Dec. 5, 2008).
131
Aveanna Healthcare, LLC v. Epic/Freedom, LLC, 2021 WL 3235739, at *25 (Del.
Super. July 29, 2021) (citations omitted).
132
13 Williston on Contracts § 38.16, Westlaw (database updated May 2022) (citations
omitted).
133
B&C Hldgs., Inc. v. Temperatsure Hldgs., LLC, 2020 WL 1972855, at *10 (Del. Super.
Apr. 22, 2020).
30
that the parties would begin to negotiate a stock purchase agreement upon the
execution of the BLA.134 Reviewing the agreement as a whole, however, it is evident
that the parties chose to include conditioning language elsewhere. Paragraph 5 of
the BLA states that “GT’s duty to buy” was “conditioned upon” enumerated
governmental approvals.135
a. The Prevention Doctrine
Even if KPMG reaching a final valuation decision was a condition precedent
to GT’s performance, the failure of such a condition is excused under the prevention
doctrine. “It is an established principle of contract law that ‘[w]here a party’s breach
by nonperformance contributes materially to the non-occurrence of a condition of
one of his duties, the non-occurrence is excused.’”136 It is not necessary for the
plaintiffs to show that KPMG would have issued a valuation decision “but for” GT’s
conduct. “It is only required that the breach have contributed materially to the non-
134
BLA ¶ 6.
135
Id. ¶ 5.
136
WaveDivision, 2010 WL 3706624, at *14 (quoting Restatement (Second) of Contracts
§ 245 (1981)); see also Mobile Commc’ns Corp. of Am. v. Mci Commc’ns Corp, 1985 WL
11574, at *4 (Del. Ch. Aug. 27, 1985) (“[A] party may not escape contractual liability by
reliance upon the failure of a condition precedent where the party wrongfully prevented
performance of that condition precedent.”); 13 Williston on Contracts § 39:3 (4th ed. 1990)
(“When a promisor prevents, hinders, or renders impossible the occurrence of a condition
precedent to its promise to perform, or to the performance of a return promise, the promisor
is not relieved of the obligation to perform, and may not legally terminate the contract for
nonperformance.”).
31
occurrence. A breach ‘contributed materially’ to the non-occurrence of a condition
if the conduct made satisfaction of the condition less likely.”137
GT materially contributed to KPMG not reaching a final valuation decision
when it instructed KPMG to stop work and insisted that any further work product
address privatization.138 If GT’s performance was conditioned upon KPMG issuing
a formal valuation, GT was obliged not to interfere with the exercise of KPMG’s
discretion in reaching that valuation—particularly by injecting port privatization into
the analysis, which the BLA forbade.139 The record demonstrates that GT repeatedly
137
Snow Phipps Grp., LLC v. KCAKE Acq., Inc., 2021 WL 1714202, at *52 (Del. Ch. Apr.
30, 2021) (quoting In re Anthem-Cigna Merger Litig., 2020 WL 5106556, at *90 (Del. Ch.
Aug. 31, 2020)); see also WaveDivision, 2010 WL 3706624, at *14 (explaining that the
prevention doctrine does not require proving that the condition would have occurred “but
for” the breaching party’s conduct, only that such conduct “contributed materially” to the
non-existence of the condition).
138
See 13 Williston on Contracts § 39.13, Westlaw (database updated May 2022)
(“Refusing to permit one party to perform or ordering it to stop performance may constitute
prevention excusing performance.”).
139
See BLA ¶¶ 2-3; Phase 1 Mem. Op. at 19-22. At the very least, the BLA includes an
implied term requiring the parties to act in good faith and not deliberately or unreasonably
prevent KPMG from formalizing its valuation. See Dieckman v. Regency GP LP, 155 A.3d
358, 367 (Del. 2017) (explaining that the implied covenant is “inherent in all contracts and
is used to infer contract terms to handle developments or contractual gaps that the asserting
party pleads neither party anticipate”); Dunlap v. State Farm Fire and Cas. Co., 878 A.2d
434, 442 (Del. 2005) (explaining that the parties breached the implied covenant where their
“conduct frustrates the ‘overarching purpose’ of the contract by taking advantage of their
position to control implementation of the agreement’s terms”). GT’s conduct would also
breach such an implied term.
32
interfered anyway—despite knowing that its insistence for KPMG to address
privatization “crossed a line”—in order to “protect [GT’s] position.”140
GT insisted that “[a] new draft report [be] issued” that corrected what it called
KPMG’s “fundamental mistake” in excluding privatization as a risk factor that could
affect Murphy Marine’s performance.141 GT also demanded that KPMG change the
scope of the engagement to consider a scenario inconsistent with the BLA where
Murphy Marine went out of business due to port privatization. 142 After Murphy
140
JX 142 at 1 (“[Murphy Marine’s] lawyer stated that I had crossed a line and violated
our agreement which was to not consider privatization. Fair point, but tough luck, I need
to protect our position. You can then be the one to save their valuation later if needed by
giving something back.”); see also id. (instructing CIO Boll to “play the card of the port
privatisation . . . without screwing them completely”); JX 146 at 3 (“No discount for or
consideration of port privatization as we had requested. . . . We would need to fight this
and claim that KPMG has misrepresented the mandate and not considered above factors as
demanded. Or at least get the report updated with a privatization scenario.”); JX 148 at 2
(“It seems the decided privatization of Wilmington port to an exclusive operator is not
considered despite being requested and despite it being officially approved by the Delaware
assembly and publicly announced. Why is this matter of fact disregarded in the
valuation?”); JX 159 at 4 (explaining that GT had “repeatedly” told KPMG privatization
was “not to be ignored”).
141
JX 152 at 6 (“This is a fundamental mistake in approach which we kindly request to be
rectified and a new draft report issued after which we can discuss the various elements of
the valuation with all parties and you can issue your final report.”); JX 159 at 5 (“[W]e
cannot permit KPMG to issue its final report until it is fully aligned with the mandate as
signed on 6th of July.”).
142
See JX 222.
33
Marine raised the impropriety of GT’s request,143 Boll told KPMG that GT would
not “permit KPMG to issue its final report.”144
GT’s actions were the catalyst for KPMG’s ultimate withdrawal. Bouchard
testified that GT’s correspondence indicated the engagement was “getting
contentious” and “derailed,” leading him to seek risk management advice.145 KPMG
withdrew from the engagement soon after. GT viewed KPMG’s withdrawal as a
positive development that would allow it to start negotiations over.146
Although KPMG’s termination letter states that it ended the engagement after
learning its valuation would be used to set the transaction price, GT failed to prove
that KPMG would not have issued a final valuation decision irrespective of GT’s
actions.147 KPMG wished to remove itself from the parties’ “contentious” dispute.148
Bouchard was “advised” to withdraw by legal counsel in a risk management decision
and could not say “conclusively” that GT’s letters did not contribute to KPMG’s
143
See JX 155 at 3-5.
144
JX 159 at 6.
145
Bouchard Phase 2 Dep. 188-89; see also id. 314-23.
JX 170 (“We are in a good position right now as KPMG pulled out of the conflict which
146
means we can start over with John Brown.”).
147
See Snow Phipps, 2021 WL 1714202, at *52-53 (explaining that the “party in breach”
may prove the prevention doctrine does not apply if “the condition would not have occurred
regardless of the lack of cooperation”).
148
Bouchard Phase 2 Dep. 82, 197.
34
withdrawal.149 At the very least, GT made it less likely that KPMG would finalize
the valuation, in satisfaction of the BLA’s terms, and more likely that KPMG would
withdraw. GT cannot profit from its misconduct.150
b. Assumption of Risk
The parties did not assume the risk of KPMG’s withdrawal in the BLA.
“[T]here is no prevention claim where the contract, in effect, authorizes prevention”
by allocating the risk of the condition’s nonoccurrence.151 This assumption of risk
exception to the prevention doctrine generally applies in two situations. The first is
when a contract “uses explicit language to authorize prevention.”152 Courts have
recognized explicit authorizing language including “‘for any reasons whatsoever,’
‘regardless of the circumstances giving rise to such condition,” or ‘nothing [therein]
requires’ the agreed-upon condition precedent be consummated.”153 The second is
“when contract terms condition the consummation of a transaction upon the approval
149
Id. at 196-97.
150
T.B. Cartmell Paint & Glass Co. v. Cartmell, 186 A. 897, 903 (Del. Super. 1936) (“It is
a sound principle that he who prevents a thing being done shall not avail himself of the
non-performance he has occasioned.”).
151
Bobcat N. Am., LLC v. Inland Waste Hldgs., LLC, 2019 WL 1877400, at *6 (Del. Super.
Apr. 26, 2019) (citing Shear v. Nat’l Rifle Ass’n of Am., 606 F.2d 1251, 1256 (D.C. Cir.
1979)).
152
Humanigen, Inc. v. Savant Neglected Diseases, LLC, 2021 WL 4344172, at *12 (Del.
Super. Sept. 23, 2021).
153
Bobcat N. Am., 2019 WL 1877400, at *6 (quoting various federal court decisions).
35
of the other party, or subject one party to the discretion, satisfaction, or decision of
the other party or a third-party.”154
Neither is found here. The BLA lacks any explicit language whereby the
parties assumed the risk of KPMG failing to complete its valuation.155 The parties
intended to use KPMG’s range to set a price for Murphy Marine’s shares, but the
record does not suggest that either party believed doing so violated the Engagement
Letter.156 And although the BLA gave KPMG the discretion to arrive at a price
range, the contract did not explicitly or impliedly assign the risk of KPMG failing to
complete its work.157
154
Humanigen, 2021 WL 4344172, at *12.
155
See Bobcat N. Am., 2019 WL 1877400, at *8 (“[O]nly a specific risk clearly assumed
by a party will preclude that party’s defensive claim of prevention.”); W & G Seaford
Assocs., L.P. v. E. Shore Mkts., Inc., 714 F. Supp. 1336, 1341-42 (D. Del. 1989) (finding
assumption of risk inapplicable to the prevention argument because nothing in the
agreement “states that either party assumed the risk that the conditions would not occur”
and such a term could not be implied). GT acknowledges that “neither Plaintiffs not GT
made any effort to address, mitigate, contract out or allocate this risk in any way in the
BLA.” Def.’s Post-trial Answering Br. 46.
156
See Brown Phase 2 Tr. 30; GT 30(b)(6) Dep. 72.
157
Compare Cont’l Advisors S.A. v. GSV Asset Mgmt., LLC, 2015 WL 7720752, at *3, *5
(N.D. Cal. Nov. 30, 2015) (applying Delaware law and determining that the
plaintiff “assumed the risk that the condition precedent would not occur for any number of
reasons outside of their control” where the contract stated the defendant broker “[wa]s not
obligated to compensate” the plaintiff advisor if the transaction was not consummated or
if defendant unilaterally rejected the offer); Humanigen, 2021 WL 4344172, at *12-13
(holding that the assumption of risk exception to the prevention doctrine applied where the
contract expressly conditioned milestone payments upon FDA approval); see also W & G
Seaford Assocs., 714 F. Supp. at 1342 (“The agreement did not authorize a party to prevent
36
The contract was silent as to what would happen if KPMG withdrew from
the engagement before completing its work; it did not contemplate that eventuality.
Nor did the BLA condition the parties’ rights and obligations to perform on GT
approving KPMG’s valuation approach.158 Because there was no explicit
assignment of risk or authorization of prevention in the BLA, and because both
parties were subject to the decision of a third party (that withdrew, in part, because
of a party’s actions), the assumption of risk exception is not applicable.
4. GT Is Not Protected by an Impracticability Defense.
An impossibility or impracticability defense also does not excuse GT’s
performance.159 That defense may be available under Delaware law where a party
demonstrates: “(1) the occurrence of an event, the nonoccurrence of which was a
basic assumption of the contract; (2) the continued performance is not commercially
practicable; and (3) the party claiming impracticability did not expressly or
the conditions from occurring and did not allocate the risk of non-occurrence. Thus, neither
party had the right to hinder the happening of the conditions.”).
158
Compare Robert Wood Johnson Univ. Hosp. at Hamilton, Inc. v. SMX Cap., Inc., 2013
WL 4510005, at *4-5 (D.N.J. Aug. 26, 2013) (holding that a claimant “assumed the risk
that the conditions precedent will be prevented” where the parties’ performance was
conditioned on the defendant receiving confirmations or agreements “satisfactory to” or
“reasonably acceptable to” the defendant).
159
See generally 13 Williston on Contracts § 77:1, Westlaw (database updated May 2022)
(“The law of impracticability was historically known as the law of impossibility. The term
‘impossibility,’ as used in previous editions of Williston on Contracts and as used in the
original Restatement First, Contracts has been replaced with the term ‘impracticability’ as
used in Restatement Second, Contracts, except where the case clearly implicates
impossibility.”).
37
impliedly agree to performance in spite of impracticability that would otherwise
justify nonperformance.”160
GT cannot avail itself of this defense. “In all the cases holding that the
promisor was discharged from duty by impossibility of performance or frustration
of purpose, it has been assumed that the promisor was not himself the responsible
cause of the impossibility or frustration.”161 KPMG was unable to complete its work
as a result of GT’s actions. GT insisted that KPMG not complete its report without
considering the effect of port privatization on Murphy Marine’s value. Doing so put
in motion a series of events that led to KPMG withdrawing from the engagement.
Furthermore, the three-pronged test is not met at the second step. It remained
commercially practicable to perform the contract, but GT sought to use KPMG’s
withdrawal to begin negotiations anew.162 The doctrine is therefore inapplicable.
5. Murphy Marine Did Not Materially Breach the BLA.
Murphy Marine’s mention of port privatization to KMPG does not constitute
a material breach of the BLA that could excuse GT’s performance. “A party is
160
Obsidian Fin. Grp., LLC v. Identity Theft Guard Sols., Inc., 2021 WL 1578201, at *6
(Del. Ch. Apr. 22, 2021) (quoting Bobcat N. Am., 2019 WL 1877400, at *9).
161
Martin v. Star Publishing Co., 126 A.2d 238, 242-43 (Del. Oct. 1956) (quoting 6 Corbin
on Contracts § 1329); see Penn Mart Supermarkets, Inc. v. New Castle Shopping LLC,
2005 WL 3502054, at *10 (Del. Ch. Dec. 15, 2005) (“A party who contributed to the
impracticability of performance is not entitled to use impracticability as a defense.”).
162
JX 170.
38
excused from performance under a contract if the other party is in material breach
thereof.”163 “The converse of this principle is that a slight breach by one party, while
giving rise to an action for damages, will not necessarily terminate the obligations
of the injured party to perform under the contract.”164
To find Murphy Marine even in “slight breach” of the BLA would go too far.
GT repeatedly and willfully insisted that privatization be considered despite the
BLA’s terms. Its intention was to drive down Murphy Marine’s value.165 Murphy
Marine, by contrast, appears to have raised privatization once—during the August
13 call in response to a question from KPMG about whether risks of privatization
were embedded in Murphy Marine’s forecasts.166
The evidence does not support a conclusion that Brown’s statement breached
the BLA—much less constitutes a material breach. Brown did not need to justify
his projections to KPMG with potential positive effects from privatization. In fact,
Murphy Marine’s forecasted information did not include port privatization in the
163
In re Mobilactive Media, LLC, 2013 WL 297950, at *13 (Del. Ch. Jan. 25, 2013).
164
Level 4 Yoga, LLC v. CorePower Yoga, LLC, 2022 WL 601862, at *27 (Del. Ch. Mar. 1,
2022) (quoting Brasby v. Morris, 2007 WL 949485, at *4 (Del. Super. March 29, 2007)).
165
See, e.g., JX 142.
166
JX 141 at 2.
39
first place.167 Brown’s actions are far from consequential enough to excuse GT’s
performance.168
B. Damages
Because I have found that GT breached and repudiated the BLA, I next
consider the plaintiffs’ entitlement to damages. “[T]he standard damages remedy
for breach of contract is based upon the reasonable expectations of the parties ex
ante.”169 “[E]xpectation damages can be established as long as the plaintiff can
167
See Brown Phase 2 Tr. 362.
168
GT set forth little legal support for its argument that Murphy Marine’s purported
material breach justified its own non-performance. See Level 4 Yoga, 2022 WL 601862,
at *27 (remarking that a party’s failure to address the five factors set forth in Section 241
of the Restatement (Second) of Contracts, which are useful in determining whether a
breach is material, indicated the weakness of its material breach argument). GT’s
contention that it “causally linked” the “August 13 breach” to the numbers in KPMG’s
Pricing Analysis because “KPMG’s draft ranges jibe with Plaintiff’s Haas valuation and
GT’s alleged internal numbers (without negative privatization impacts)” does not bolster
its position. Def.’s Post-trial Answering Br. 40. The Haas valuation refers to a December
23, 2017 valuation of Murphy Marine performed by Haas Business Valuation Services. JX
23. Neither the Haas valuation nor GT’s internal calculations accounted for port
privatization.
169
Duncan v. Theratx, Inc., 775 A.2d 1019, 1022 (Del. 2001); see also W. Willow-Bay,
2009 WL 458779, at *4 (Del. Ch. Feb. 23, 2009); Frontier Oil v. Holly Corp., 2005 WL
1039027, at *32 (Del. Ch. Apr. 29, 2005) (“A party who is the victim of a wrongful
repudiation is ordinarily entitled to damages for breach of contract because, in the absence
of repudiation, the party would have performed under the contract and would have received
the benefits of its bargain.”); 24 Williston on Contracts § 64:2, Westlaw (database updated
May 2022) (“[C]ontract damages are ordinarily calculated based on protection of the
disappointed promisee’s expectation interest . . . to secure . . . the benefit of the bargain
that he or she made by awarding a sum of money that will place the promisee in as good a
position as he or she would have occupied had the contract been performed.”).
40
prove the fact of damages with reasonable certainty.”170 Such damages “are
calculated as the amount of money that would put the non-breaching party in the
same position that the party would have been in had the breach never occurred.”171
“Damages are to be measured as of the time of the breach.”172
The plaintiffs seek two forms of direct damages: (1) the fair value of Murphy
Marine’s stock; and (2) losses related to the Partial Withdrawal Liability. “Direct
damages are those which follow immediately from the breach or occurrence.”173
They are the “immediate, direct, and proximate result” from the “wrong complained
of” and “necessarily result from the injury.”174
In the alternative, the plaintiffs assert that they have suffered consequential
and special damages relating to the Unfunded Liability. “Consequential damages
are those which are reasonably foreseeable, but which do not result directly from the
act of a party; rather from the consequences of the act.”175 They “do ‘not flow
directly and immediately from the act of the [breaching] party, but only from some
170
SIGA Techs. Inc. v. PharmAthene, Inc., 132 A.3d 1108, 1111 (Del. 2015).
171
Cobalt Operating, LLC v. James Crystal Enters., LLC, 2007 WL 2142926, at *29 (Del.
Ch. July 20, 2007) (citations omitted), aff’d, 945 A.2d 594 (Del. 2008).
172
Comrie v. Enterasys Networks, Inc., 837 A.2d 1, 17 (Del. Ch. 2003).
173
Mass. Mut. Life Ins. Co. v. Certain Underwriters at Lloyd's of London, 2010 WL
2929552, at *21 (Del. Ch. July 23, 2010).
174
Pharm. Prod. Dev., Inc. v. TVM Life Sci. Ventures VI, L.P., 2011 WL 549163, at *6
(Del. Ch. Feb. 16, 2011).
175
Mass. Mut. Life Ins., 2010 WL 2929552, at *21.
41
of the consequences or results of such act.’”176 Special damages are, in large part,
synonymous with consequential damages. “[S]pecial damages are those ‘which are
the actual, but not the necessary, result of the injury complained of and which in fact
follow it as a natural and proximate consequence in the particular case, that is, by
reason of special circumstances or conditions.’”177
1. Fair Value of Murphy Marine’s Stock
The most obvious example of direct damages is the Trusts’ loss of the fair
value that GT agreed to pay in exchange for Murphy Marine’s stock. The plaintiffs
proved that GT breached the BLA by refusing to negotiate a definitive agreement
for the sale of Murphy Marine’s stock and repudiated the BLA. The Trusts’ losses
flow immediately from GT’s actions.
a. Enterprise Value or Equity Value
Although the Pricing Analysis did not satisfy the terms of the BLA, it is
sufficiently definite to serve as a measure of the plaintiffs’ damages. “The quantum
of proof required to establish the amount of damages is not as great as that required
to establish the fact of damage.”178 “Responsible estimates of damages that lack
176
Pharm. Prod. Dev., 2011 WL 549163, at *6 (quoting Black’s Law Dictionary 352 (5th
ed. 1979)).
177
Id., at *6 (quoting Black’s Law Dictionary 354 (5th ed. 1979)).
178
Beard Research, Inc. v. Kates, 8 A.3d 573, 613 (Del. Ch. 2010), aff’d sub nom., ASDI,
Inc. v. Beard Research, Inc., 11 A.3d 749 (Del. 2010).
42
mathematical certainty are permissible so long as the court has a basis to make such
a responsible estimate.”179
The evidence demonstrates that KPMG’s Pricing Analysis is a reasonable
estimate of the value of Murphy Marine’s stock. The Pricing Analysis contains
KPMG’s preliminary valuation “numbers” and “conclusions.”180 It was prepared
following KPMG’s review of Murphy Marine’s financial data, internal economic
and industry research, model preparation, and value analysis.181 It relied equally on
discounted cash flow and guideline public company analyses—both recognized and
accepted valuation methods.182 It was reviewed for mathematical correctness and to
ensure the valuation ranges were supportable and complete before it was shared with
the parties.183
The issue debated between the parties is whether the enterprise value or equity
value ranges KPMG provided in the Pricing Analysis are the proper measure of the
Trusts’ damages (if any). KPMG calculated Murphy Marine’s enterprise value
between $23,801,700 and $28,448,100 and its equity value (before the Unfunded
179
Id.; see also SIGA Techs., 132 A.3d at 1131 (discussing the “established presumption
that doubts about the extent of damages are generally resolved against the breaching
party”).
180
Bouchard Phase 1 Dep. 46; see also Seitz Phase 2 Tr. 376, 396.
181
Cianciotto Phase 2 Dep. 127.
182
See Waddington Phase 2 Tr. 756-58.
183
See Cianciotto Phase 2 Dep. 129, 131-33; Bouchard Phase 2 Dep. 268; JX 218.
43
Liability) between $21,486,400 and $26,132,800.184 The plaintiffs contend that the
enterprise value midpoint of $26,124,900 is the relevant figure.185 GT disagrees,
arguing that equity value with a midpoint of $23,809,600 is the correct value.186
Generally speaking, enterprise value represents the total invested capital of a
business. It includes Murphy Marine’s equity value plus its net debt. 187 Murphy
Marine’s equity value represents the value to stockholders after subtracting any
interest-bearing debt that existed at the time of valuation.188 KPMG offset $2.3
million of Murphy Marine’s interest-bearing debt in its Pricing Analysis schedules
to reach its equity value.189
184
JX 144 at 5. The equity value range is called “Equity Price Before Unfunded Pension
Liability.” Id.
185
See Pls.’ Post-trial Opening Br. 66-67. The Phase 1 Opinion found that extrinsic
evidence supported a finding that the parties intended to use the midpoint of KPMG’s
Pricing Analysis estimates to select a price point from the range of value that KPMG agreed
to produce. See supra note 29 and accompanying text.
186
See Def.’s Post-trial Answering Br. 68-69.
187
See Waddington Phase 2 Tr. 718 (“Enterprise value is essentially the entire value of the
business. And it represents the total invested capital of a business. The invested capital
can . . . be comprised of debt and/or equity.”); see also Shannon P. Pratt, Valuing a
Business: The Analysis and Appraisal of Closely Held Companies 24 (6th ed. 2022)
(describing enterprise value as a term often “ambiguously” or “carelessly” used; explaining
that “[o]ne commonly used definition is the total value of the equity in a business (on a
market as opposed to book basis) plus the value of its debt or debt-related liabilities, minus
any cash or cash equivalents available to meet those liabilities, plus/minus any
nonoperating assets/liabilities of the business”).
188
Seitz Phase 2 Tr. 444-48 (discussing equity value as enterprise value minus debt);
Waddington Phase 2 Tr. 718 (“The equity value would be the value to the shareholders
after subtracting any interest-bearing debt.”).
189
See Seitz Phase 2 Tr. 408, 447-48; Waddington Phase 2 Tr. 718-19.
44
Equity value is the relevant measure by which to assess the Trusts’ damages.
The Trusts reasonably expected to sell their shares in Murphy Marine to GT in
exchange for their fair value.190 The BLA focused on determining equity—not
enterprise—value.191 KPMG was to set the equity value of the Trusts’ shares.192 I
therefore begin my damages analysis with a base of $23,809,600—the midpoint of
the equity value reflected in KPMG’s Pricing Analysis.193
b. Adjustments
GT argues that because Murphy Marine’s assets as of June 30, 2018 were
retained and used for the benefit of the Trusts, certain economic benefits from that
retained ownership cannot properly be included in a damages award. It asserts that
any damages awarded to the plaintiffs must be reduced by more than $6 million to
ensure the plaintiffs do not receive a “windfall” from GT’s breach.194 GT’s expert,
190
See Brown Phase 2 Tr. 251; see also JX 100 (“We understand that you would like us to
assist you with a pricing analysis of a 100 percent equity interest (the Subject Interest) in
[Murphy Marine] as of April 30, 2018.”); Phase 1 Mem. Op. at 11 (concluding that “the
BLA constituted the entire agreement between the parties with regards to the purchase of
Murphy Marine’s equity”).
BLA ¶ 1 (describing that GT agreed to buy 100% of Murphy Marine’s shares in “an
191
amount equal to a fair market valuation of purchase”).
192
See Waddington Phase 2 Tr. 718-19; Seitz Phase 2 Tr. 450.
193
The plaintiffs maintain that GT waived its ability to argue that enterprise value is an
inapt measure of the value of Murphy Marine’s shares. See Pls.’ Post-trial Opening Br. 66.
But because the evidence demonstrates that equity value is the proper measure of damages,
the plaintiffs’ waiver argument is irrelevant.
194
Def.’s Post-trial Answering Br. 70-76. GT describes the $6 million in reductions it
seeks as a “setoff.” Id. But a “set-off” is a “counterdemand which the defendant holds
45
Waddington’s use of KPMG’s July 30, 2018 valuation date as the economic closing
date is not. The only relevant evidence cited is Murphy Marine’s draft stock
purchase agreement, which provided for a future closing date.200 The $818,824 of
distributions Murphy Marine made before October 1, 2018 will not be subtracted
from the plaintiffs’ damages because those distributions occurred before any
conceivable transaction would have closed.
Seitz excluded $293,213 from the total distributions to address the tax
consequences that Murphy Marine’s post-October 1, 2018 income created for the
Trusts.201 Waddington refutes this approach because the Trusts would face tax
consequences whether a sale of their stock occurred or Murphy Marine’s operations
continued.202 But as Seitz articulated in his rebuttal report, a stock sale as
contemplated by the BLA would have allowed the Trusts to be taxed at the capital
200
Id. at 18. The draft contemplated that Murphy Marine had not paid “any dividends or
distributions” before closing but contained a carve-out for distributions “expressly
contemplated by the Agreement or as set forth on Section 3.08 of the Disclosure
Schedules.” Id. § 3.08.
201
See Seitz Rebuttal Rep. at 3; Seitz Phase 2 Tr. 403.
202
Waddington Phase 2 Tr. 727 (“The income that the company generated subsequent to
June 30th of ‘18 does have tax consequences, no different than the proceeds of the sale that
would go to the shareholders have tax consequences. So in that basis, they shouldn’t be
tax-effected in the first place.”); see Seitz Phase 2 Tr. 403. GT also asserts that Murphy
Marine experienced an aggregate loss between June 30, 2018 and “late 2021” such that “no
taxes over that period would accrue to the Plaintiffs at all.” Def.’s Post-trial Answering
Br. 73-74. That statement is unsupported by the record.
48
gains rate (20%) rather than ordinary income tax rates (a maximum of 37%).203
Given this significant tax rate differential and that GT offered no alternative
calculation to address it, I decline to deduct the $293,213 in actual tax the Trusts
paid in 2018 and 2019 from the damages award.204
Seitz discounted the distributions back to 2018 dollars using the 15.5%
weighted average cost of capital KPMG computed in the Pricing Analysis.
Waddington acknowledged that time value needs to be considered for stockholder
distributions taken after September 30, 2018 but did not provide his own
calculation.205 Seitz’s approach is appropriate given that it allows for an “apples to
apples” comparison to the Pricing Analysis itself, from which the midpoint equity
value is drawn.206
Accordingly, $2,344,995 will be subtracted from the midpoint equity value.
203
Seitz Rebuttal Rep. at 5; Phase 2 Tr. 409-10 (Seitz).
204
Any potential uncertainty about whether these taxes should bear on the Trusts’ damages
is properly resolved against GT as the breaching party. SIGA Techs., 132 A.3d at 1131.
The willfulness of GT’s breach provides further grounds to resolve any uncertainty against
it. Id. (explaining that the court may “take into account the willfulness of the breach in
deciding whether to require a lesser degree of certainty”).
205
Waddington Phase 2 Tr. 728, 780. Instead, GT advocates for the application of the
prejudgment interest rate but provides no reasoned grounds, evidence, or calculation in
support. See Def.’s Post-trial Answering Br. 74.
206
Seitz Rebuttal Rep. at 3; Seitz Phase 2 Tr. 404.
49
ii. Legal Fees
GT next avers that the legal fees Murphy Marine incurred in this litigation
must be subtracted from the equity value midpoint.207 According to Waddington,
the $1.995 million in legal fees incurred and paid by Murphy Marine are a personal
benefit to the Trusts.208
The plaintiffs’ legal fees would not, however, have been incurred but for GT’s
wrongful actions.209 These legal fees are unlike the stockholder distributions, which
naturally flowed from Murphy Marine’s continued operations as a matter of course.
The fees were a result of GT’s breach and repudiation of the BLA, which forced the
plaintiffs to seek legal redress.
GT’s response to that distinction concerns Murphy Marine’s standing. It
argues that because Murphy Marine is not a party to the BLA, the legal fees were
entirely for the benefit of the Trusts.210 That is an oversimplification. Murphy
Marine’s initial request when it filed this litigation in 2018 was for specific
performance of the sale contemplated by the BLA, to which Murphy Marine was a
207
The plaintiffs have reserved their right to seek legal fees under the bad faith exception
to the American Rule. See Pls.’ Post-trial Reply Br. n.12.
208
Waddington Phase 2 Tr. 783-85; Waddington Rebuttal Rep. at 3.
209
See Seitz Phase 2 Tr. 406-07.
210
Def.’s Post-trial Answering Br. 74; Waddington Phase 2 Tr. 732-33.
50
necessary party.211 Murphy Marine subsequently ceased operations and the Trusts
continued to seek damages to remedy their loss. Murphy Marine’s use of corporate
funds in furtherance of that outcome does not necessitate an adjustment to the
midpoint equity value as the measure of the plaintiffs’ damages.212
iii. Retained Earnings
The final adjustment sought by GT concerns $546,726 in retained earnings
that remained on Murphy Marine’s balance sheet as of December 31, 2021.213 The
parties’ experts agree that those retained earnings have not been distributed and may
ultimately be used to wind down Murphy Marine, including to pay remaining salary
expenses and advances to JH Stevedoring.214 Thus, Murphy Marine’s current
retained earnings will not be subtracted from the midpoint equity value.
* * *
211
GT conflates the lack of a reduction from the midpoint equity value and fee shifting
under the American Rule, arguing that if legal fees are not deducted, it would “reward
Plaintiffs for their counsel fees in an action where fee shifting is not going to happen.”
Def.’s Post-trial Answering Br. 74-75. GT cites no case law in support of that assertion.
By declining to reduce the midpoint equity value by the amount of legal fees incurred to
vindicate the plaintiffs’ losses, I am not affirmatively awarding fees. The damages award
is fixed by and reflects the midpoint equity value from KPMG’s Pricing Analysis—a value
calculated without regard to any litigation that would follow.
212
Again, any uncertainty on this issue is fairly construed against GT as the breaching
party. See supra note 204.
213
See Def.’s Post-trial Answering Br. 75-76; see also Waddington Rebuttal Rep. at 2.
214
See Seitz Phase 2 Tr. 405-406; Waddington Phase 2 Tr. 731, 780-82.
51
The Trusts are awarded $21,464,605 as direct damages for the loss of fair
market value that GT agreed to pay in exchange for Murphy Marine’s stock. That
figure reflects the $23,809,600 equity value midpoint as calculated in the Pricing
Analysis less $2,344,995 for distributions Murphy Marine made to the Trusts.
2. The Unfunded Liability
The plaintiffs also seek damages related to the Unfunded Liability. Murphy
Marine and JH Stevedoring expect to experience a third consecutive year where their
combined hours worked falls below 70% of the preceding five-year average.215 If
that occurs, the plaintiffs maintain that the Pension Fund will impose and pursue the
Partial Withdrawal Liability.216
At trial, Brown testified that his “level of confidence” that a partial withdrawal
liability will be assessed is “100 percent.”217 The evidence supports his belief,
indicating that the Partial Withdraw Liability is reasonably certain to occur as to
Murphy Marine.218 Murphy Marine stopped contributing to the Pension Fund and
215
See Cook Phase 2 Dep. 64; D’Angelo Phase 2 Dep. 20-23, 49. Murphy Marine made
its final contribution to the Pension Fund in 2019 as it no longer hired union labor after
ceasing operations. See JX 391.
216
Cook Phase 2 Dep. 57-59; D’Angelo Phase 2 Dep. 82-83.
217
Brown Phase 2 Tr. 114.
218
PharmAthene, 2010 WL 4813553, at *11 (“Under Delaware law, a plaintiff can only
recover those damages which may be proven with reasonable certainty.”).
52
JH Stevedoring has never provided union hours worked that would cover Murphy
Marine’s portion.219
The plaintiffs are not entitled to an award of direct damages to address the
Partial Withdrawal Liability (and related Unfunded Liability).220 The plaintiffs
submitted evidence intended to demonstrate that GT sought to drive Murphy Marine
out of business, thereby causing its hours worked to fall below 70% of the preceding
five-year average.221 But the conduct that Murphy Marine complains of occurred
219
See JX 386 at 9-10 (concluding that “a partial withdrawal liability will be triggered as
of December 31, 2022” based on reduced total work hours).
220
GT asserts that to award damages concerning the Partial Withdrawal Liability in
addition to damages based on Murphy Marine’s equity value would lead to “double
counting.” Def’s. Post-trial Answering Br. 62. The plaintiffs disagree, arguing that the
equity value range used to calculate damages does not include any portion of the Unfunded
Liability. See JX 144 at 5. If I were to award damages for the Partial Withdrawal Liability,
further briefing would be warranted given that the parties gave short shrift to this issue in
their post-trial briefs. I am not, however, awarding separate damages for the Partial
Withdrawal Liability in this decision.
221
JX 386 at 9; Seitz Phase 2 Tr. 410-14. In support of this argument, the plaintiffs
introduced testimony by Seitz regarding his calculation that the hours worked by Murphy
Marine or JH Stevedoring combined will fall below 70% of the preceding five-year
average, thereby triggering the pension withdrawal liability. GT moved to exclude Seitz’s
testimony on this issue under Delaware Rule of Evidence 702 on the grounds that Seitz is
unqualified to testify on a multi-employer pension fund liability. See Def.’s Mot. in Limine
(Dkt. 355). I decline to exclude the testimony but instead give it the appropriate weight.
See Beard Rsch., 2009 WL 7409282, at *6 (“[A]lthough it is critical in a jury trial for a
court to exercise its gatekeeper function in advance of allowing an expert to testify, the
importance of addressing issues raised under Daubert and Rule 702 before an expert
testifies is more attenuated in a bench trial.”); see also Strategic Inv. Opps. LLC v. Lee
Enters., Inc., 2022 WL 453607, at *12 n.131 (Del. Ch. Feb. 14, 2022) (declining to exclude
evidence under Rule 702 but instead giving the evidence “the weight deemed appropriate”
by the court). Waddington testified that he was competent to perform the same statutory
calculation Seitz undertook. Waddington Phase 2 Tr. 787. I believe that Seitz, as an
accountant and business valuator, can capably calculate the numbers of hours worked. I
53
after the BLA was breached. Murphy Marine’s cessation of operations, its control
group membership with JH Stevedoring, their reduction of annual hours worked, and
the resulting risk of the Partial Withdraw Liability being imposed are not “necessary
and usual” results of GT’s breach that could give rise to direct damages.222
Whether the plaintiffs have proven consequential (or special) damages
relating to the Unfunded Liability is more complicated. Consequential damages are
those “reasonably foreseeable or contemplated by the parties at the time the contract
was entered into as a probable result of a breach.”223 A loss “may be foreseeable as
a probable result of the breach because it follows from the breach (a) in the ordinary
course of events, or (b) as a result of special circumstances, beyond the ordinary
do not consider his testimony as that of an expert on pension withdrawal liability, which
he admits he is not. See Seitz Phase 2 Dep. 30; Seitz Phase 2 Tr. 415-18, 427.
222
Mass. Mut. Life Ins., 2010 WL 2929552, at *21; Henkel Corp., 2013 WL 396245, at *5
(citations omitted) (“Direct damages are damages ‘inherent in the breach,’ the ‘necessary
and usual result’ of the breach, and ‘flow naturally and necessarily’ from the breach.”).
223
TVM Life Scis. Ventures VI, L.P., 2011 WL 549163, at *6 (quoting Williston on
Contracts § 64:16, Westlaw (database updated May 2022)). As discussed above, I consider
the plaintiffs’ arguments about consequential damages and special damages to be one in
the same given that courts generally treat them synonymously. See WSFS Fin. Corp. v.
Great Am. Ins. Co., 2019 WL 2323839, at *5 (Del. Super. May 31, 2019) (citations
omitted) (“Consequential damages, also known as special damages, are those that result
naturally but not necessarily from the wrongful act, because they require the existence of
some other contract or relationship. Consequential damages are not recoverable unless
they are foreseeable and are traceable to the wrongful act and result from it. The distinction
between direct and consequential damages is the degree to which the damages are a
foreseeable and highly probable consequence of a breach.”).
54
course of events, that the party in breach had reason to know.”224 “A plaintiff may
recover consequential damages by showing that ‘at the time of the contract the
parties could reasonably have anticipated that these damages would be a probable
result of a breach.’”225
The parties to the BLA were aware at the time of contracting that if GT did
not purchase Murphy Marine’s shares, Murphy Marine would face the Partial
Withdrawal Liability. The evidence demonstrates that it was reasonably foreseeable
that the Partial Withdrawal Liability could result from GT failing to complete its
purchase of Murphy Marine’s shares:226
• Before the BLA was executed, GT met with Murphy Marine and
Fred D’Angelo, counsel for Murphy Marine and the Pension
224
24 Williston on Contracts § 64:17, Westlaw (database updated May 2022) (quoting
Restatement (Second) of Contracts § 330).
225
Frank Invs. Ranson, LLC v. Ranson Gateway, LLC, 2016 WL 769996 (Del. Ch. Feb.
26, 2016) (quoting Desco Corp. v. Harry W. Trushel Constr. Co., 413 S.E.2d 85, 89 (W.Va.
1991)).
226
GT appears to raise a mitigation defense, arguing that it was “certainly feasible for
[Murphy Marine] to do something more than simply refuse to continue on its business.”
See Def.’s Pre-trial Br. 59; Def.’s Post-trial Answering Br. 62. But mitigation is not “a
basis for hypercritical examination of the conduct of the injured party, or merely for the
purpose of showing that the injured person might have taken steps which seem wiser or
would have been more advantageous to the defaulter.” W. Willow-Bay, 2009 WL 4588779,
at *8 (quoting In re Kellet Aircraft Corp., 186 F.2d 197, 199-200 (3d Cir. 1950)). Rather,
“[m]itigation is subject to a rule of reasonableness and whether a loss is mitigable turns on
the circumstances.” Id. Given the size difference between Murphy Marine and JH
Stevedoring, I cannot conclude that the Partial Withdraw Liability was avoidable if Murphy
Marine ceased operating. See Brown Phase 2 Tr. 115. Nor do I have evidence in the record
to support a finding that Murphy Marine did not operate reasonably after GT’s breach until
it could no longer do so profitably.
55
Fund, who explained the estimated $9.1 million Partial
Withdrawal Liability to GT. Brown noted that without a stock
sale, “his family would not be able to absorb this payout.”227
• The parties thus negotiated the BLA to contemplate a share sale
(rather than an asset sale) to avoid leaving Murphy Marine with
a substantial Unfunded Liability that “could be avoided by all
parties by a stock sale that l[eft] MMS intact and operational.”228
• The terms of the BLA discusses the need to assess “the impact,
if any, on the value of MMS by the presence of that certain
unfunded pension liability of MMS to the [] Pension Fund.”229
• In August 2018 after receiving the Pricing Analysis, Boll
described the BLA as “the pension liability letter we signed.”230
GT’s outrage at the ranges in the Pricing Analysis caused it to
consider whether to offer to Brown that GT “pay him $10m and
take on the pension liability without further recourse to him.”231
• GT’s Rule 30(b)(6) representative confirmed that GT understood
in 2018 that Murphy Marine ceasing operations could result in
withdrawal liability.232
• GT sought legal advice regarding “the “potential triggering of
unfunded pension liability in anticipation of litigation.”233
It is reasonably certain that Murphy Marine will have to answer for at least a
portion the Partial Withdrawal Liability. The problem for the plaintiffs is that
227
JX 69.
228
JX 43; see also JX 42.
229
BLA ¶ 4.
230
JX 146 at 3.
231
Id.232
GT 30(b)(6) Phase 2 Dep. 87.
233
JX 385 at Entry 61.
56
Murphy Marine cannot recover consequential damages for GT’s breach. Murphy
Marine is not a party to the BLA; it was the subject of that agreement. The plaintiffs
do not argue that Murphy Marine was a third-party beneficiary to the BLA. Nor do
they provide a legal basis for Murphy Marine to pursue a claim for consequential
damages resulting from GT’s breach. That leaves the matter of whether the Trusts
can recover consequential damages.
At present, the Partial Withdraw Liability has not been assessed. The record
suggests that the Trusts might not have personal or individual responsibility for that
liability in the future. The demand letter for payment sent to Murphy Marine by the
Pension Fund states that the “liability and demand extends to the firm(s) which made
contributions to the Fund and all trades or businesses under common control as
provided in 29 U.S.C. § 1301(b).”234 That would include members of a control group
(i.e., Murphy Marine and JH Stevedoring) but not necessarily individual investors.235
234
JX 375 at 2; see Cent. States, Se. & Sw. Areas Pension Fund v. Slotky, 956 F.2d 1369,
1374 (7th Cir. 1992) (explaining that such control group membership is limited to “persons
engaged in trades or businesses” to “protect the owners of the corporation from having to
dig into their pockets to make good the withdrawal liability of their corporations”). The
plaintiffs contend that Slotky supports the possibility of a pension fund recovering against
an individual stockholder. But the case discusses a pension fund seeking recovery from an
individual who could be considered a member of a control group under the relevant federal
statute. Id. at 1373-74; see also D’Angelo Phase 2 Dep. 28-29 (discussing liability in the
case of a control group).
235
D’Angelo Phase 2 Dep. 27-28 (testifying that if company were in a control group, “the
liability would exist within the control group, but it would not flow up to the individual
stockholders”).
57
D’Angelo testified that he was aware of no circumstances “in the normal course of
business” where a company’s pension withdrawal liability would “run . . . up to the
owners of the entity.”236
Yet I cannot conclude with any certainty that the Trusts will not ultimately be
made to answer for the Partial Withdrawal Liability.237 How the Pension Fund will
proceed is unknown. Recovery is not available where a party’s alleged damages are
“uncertain, contingent, conjectural, or speculative.”238 It would therefore be
premature to grant a damages award to the Trusts or order that GT fund an escrow
account.239 It would also be premature to conclude that the Trusts will never suffer
consequential damages relating to the Partial Withdrawal Liability.240
236
Id. at 27.
237
The plaintiffs cite to federal precedent indicating the possibility of a “federal interest in
disregard of the corporate form to impose liability” for claims involving pension benefits
protected by ERISA. Bd. of Trs. of Teamsters Local 863 Pension Fund v. Foodtown, Inc.,
296 F.3d 164, 169 (3d Cir. 2002); accord Lumpkin v. Envirodyne Indus., Inc., 933 F.2d
449, 460-61 (7th Cir. 1991); Kock Refining v. Farmers Union Cent. Exchange, Inc., 831
F.2d 1339, 1344 (7th Cir. 1987).
238
Callahan v. Rafail, 2001 WL 283012, at *1 (Del. Super. Mar. 16, 2001).
239
The plaintiffs ask that GT be ordered to fund an escrow to cover any future liabilities.
See Pls.’ Post-trial Opening Br. 72-73. Certain of the plaintiffs’ arguments in support
concern whether GT would be able to fund a future damages award. GT has moved to
exclude evidence regarding its financial condition, arguing that such information is
“confidential” and “private.” See Def.’s Mot. in Limine ¶ 1. It cites to precedent
concerning whether that information might affect a jury’s determination of liability—but
this is a bench trial. See supra note 221. I see no grounds to exclude that evidence and
therefore deny the motion. In any event, I have not relied upon or discussed GT’s financial
condition in this decision.
240
This decision should not be read to preclude the Trusts from later seeking consequential
58
3. Pre-judgment and Post-judgment Interest
“In Delaware, prejudgment interest is awarded as a matter of right.”241 Pre-
judgment interest is awarded to “compensate plaintiffs for losses suffered from the
inability to use the money awarded during the time it was not available.”242
Generally, pre-judgment interest “accumulates from the date payment was due.”243
Here, pre-judgment interest on the Trusts’ damages began to accrue as of September
2, 2018 when GT refused to negotiate the stock purchase agreement and repudiated
the BLA.244
The Court of Chancery generally looks to the legal rate of interest, as set forth
in 6 Del. C. § 2301, as the “benchmark” for the appropriate rate of pre- and post-
judgment interest.245 That legal rate of interest—5% over the Federal Discount
Rate—“is a mere guide, not an inflexible rule.”246
damages if they become liable for all or some of the Partial Withdrawal Liability.
241
Citadel Hldg Corp. v. Roven, 603 A.2d 818, 826 (Del. 1992).
242
Underbrink v. Warrior Energy Servs. Corp., 2008 WL 2262316, at *19 (Del. Ch. May
30, 2008) (quoting Trans World Airlines, Inc. v. Summa Corp., 1987 WL 5778, at *1 (Del.
Ch. Jan 21, 1987)).
243
See Brandywine Smyrna, Inc. v. Millennium Builders, LLC, 34 A.3d 482, 486 (Del.
2011).
244
JX 227.
245
Summa Corp. v. Trans World Airlines, Inc., 540 A.2d 403, 409 (Del. 1988); see Taylor
v. Am. Specialty Retailing Gp., Inc., 2003 WL 21753752, at *12 (Del. Ch. July 25, 2003);
6 Del C. § 2301 (providing the legal rate of interest is 5% over the Federal Discount Rate).
246
Id.
59
The Federal Discount Rate as of September 2, 2018 was 2.5%, making the
legal rate of interest 7.5% at the time of GT’s breach. When the court “award[s] the
legal rate of interest, the appropriate compounding rate is quarterly.”247
Compounding interest better reflects the financial realities of conducting business
and serves the interest of putting injured parties back into the position they were
before the breach.248 The plaintiffs are therefore entitled to pre- and post-judgment
interest at a rate of 7.5%, compounded quarterly, from September 2, 2018 to the date
of payment.
III. MOTION FOR CONTEMPT
At trial, the plaintiffs presented evidence regarding their Motion for
Contempt.249 They ask that GT be held in civil contempt for violating the Order
Governing the Production and Use of Confidential and Highly Confidential
Information entered by this court on October 16, 2018 (the “Confidentiality
Order”).250
247
Doft & Co. v. Travelocity.com Inc., 2004 WL 1152338, at *12 (Del. Ch. May 20, 2004).
248
See Brandin v. Gottlieb, 2000 WL 1005954, at *28-29 (Del. Ch. July 13, 2000); Onti,
Inc. v. Integra Bank, 751 A.2d 904, 926-29 (Del. Ch. 1999) (discussing factors to consider
when contemplating interest awards such as “the indisputable realities of the financial
market,” the “relative financial sophistication of the parties” and “common sense”).
249
See Dkt. 316.
250
Dkt. 35.
60
“The remedy of civil contempt serves two purposes: to coerce compliance
with the order being violated, and to remedy injury suffered by other parties as a
result of the contumacious behavior.”251 Court of Chancery Rule 70(b) authorizes
the court to find a party in contempt for the failure “to obey or to perform any
order.”252 “A cardinal requirement for any adjudication of contempt is that the order
allegedly violated give clear notice of the conduct being proscribed.”253
A. Whether GT Violated a Court Order
“When an asserted violation of a court order is the basis for contempt, the
party to be sanctioned must be bound by the order, have clear notice of it, and
nevertheless violate it in a meaningful way.”254 “A party petitioning for a finding of
contempt ‘must establish the contemptuous conduct by a preponderance of the
evidence.’ If that burden is carried, ‘the burden then shifts to the [purported]
contemnors to show why they were unable to comply with the order.’”255
251
Aveta Inc. v. Bengoa, 986 A.2d 1166, 1181 (Del. Ch. 2009).
252
Ct. Ch. R. 70(b).
253
Mother Afr. Union First Colored Methodist Protestant Church v. Conf. of Afr. Union
First Colored Methodist Protestant Church, 1992 WL 83518, at *9 (Del. Ch. Apr. 22,
1992).
254
TransPerfect Glob., Inc. v. Pincus, 278 A.3d 640, 644 (Del. 2022).
255
In re Aerojet Rocketdyne Hldgs., Inc., 2022 WL 2180240, at *22 (Del. Ch. June 16,
2022) (quoting TransPerfect Glob., Inc. v. Pincus, 2022 WL 1763204, at *8 (Del. June 1,
2022)).
61
1. The Confidentiality Order
The plaintiffs produced documents to GT over the course of this litigation,
including information reflecting Murphy Marine’s revenue and financial
information for various customers. The plaintiffs designated certain of that
discovery “Highly Confidential” pursuant to the Confidentiality Order when
producing it to GT.256 Given the terms of the Confidentiality Order, Murphy Marine
had reason to expect that GT would use the information solely for purposes of this
litigation.
The Confidentiality Order provides:
Discovery Material shall be used solely for purposes of
this Litigation and shall not be used for any other purpose,
including, without limitation, any business or commercial
purpose, or any other litigation or proceeding; provided,
however, that the foregoing shall not apply to Discovery
Material that is or becomes part of the public record.
GT was bound by and had clear notice of the Confidentiality Order. The Order had
been stipulated to and proposed by the parties to this litigation, including GT, whose
counsel executed it.257
256
Dkt. 316 Exs. 2-4.
257
Dkts. 33, 35.
62
2. GT’s Actions
Throughout 2019, Murphy Marine and GT competed for business in the
Port.258 By June 2019, Dole and GT were discussing stevedoring rates.259 On June
10, 2019, GT’s then-Chief Executive Officer Eric Casey wrote to Richards and GT’s
in-house counsel Greg Iannarelli about discussions with Dole, noting that GT would
need to review “the actual delta between what we are asking and what we think
MMS was charging.”260
Iannarelli and GT’s Director of Finance Tony Casadei worked to
“deconstruct[]” the costs Dole had previously provided to GT.261 By June 26,
Iannarelli told his colleagues that he believed the “best deal” GT could achieve with
Dole was $271.29 per box.262 That figure reflected stevedoring costs of
$16,279,327.263 But on June 28, Casadei reported that Dole’s cost structure had been
“validated” to include stevedoring costs of $18 million flat.264
258
See Casey Phase 2 Dep. 32, 101-02.
259
JX 408 at 1-2.
260
Id. at 1.
261
JX 410.
262
JX 413.
263
Id.
264
JX 415 at 2.
63
On July 1, Iannarelli sent a representative of Dole a marketing piece with a
three-column chart purporting to reflect potential cost savings if Dole contracted
with GT for stevedoring and terminal services.265 The first two columns set Dole’s
stevedoring costs at $13 million—the amount that Dole had reported to GT.266 The
third column set Dole’s costs at $18 million (i.e., Casadei’s “validated” figure),
which GT described as “another variation of estimated costs.”267
On August 1, Casey emailed Richards and Iannarelli in preparation for a
meeting with Dole, including the same three-column chart Iannarelli had sent to
Dole the prior month.268 Casey explained that the $18 million figure reflected in the
third column of the chart had been created by combining GT’s $16.3 million estimate
for stevedoring and maintenance and repair costs with “under $2M in markup”
intended to “simulate [MMS’s] $18M in revenue scenario.”269 Casey emphasized,
“NOTE: Our $18,000,000 [estimate] was based upon reviewing the rent to DSPC
and [Iannarelli] seeing a balance sheet from discovery placing Murphy [Marine’s]
revenue at $9,000,000 for half the year.”270
265
JX 399 at 2-3.
266
Id.
267
Id.
268
JX 326 at 1-2; see also JX 417.
269
JX 326 at 2.
270
Id. (emphasis in original).
64
Iannarelli acknowledged that the $18 million estimate was “[p]artly” from a
balance sheet Murphy Marine produced in discovery that put its half year revenue at
$9 million.271 While testifying as GT’s Rule 30(b)(6) deponent, Iannarelli said that
he had given Casey “an approximation number” to avoid Casey having “direct
visibility from any of the discovery documents.”272 At trial, Iannarelli insisted that
he told Casey and Richards after the August 1 email was sent that Murphy Marine’s
discovery was not used to arrive at the $18 million scenario.273
Nevertheless, the weight of the evidence supports a finding that GT violated
the Confidentiality Order and is in civil contempt. GT used information that Murphy
Marine produced pursuant to the Confidentiality Order for a business purpose. That
violation was not a technical one. Rather, it is more likely than not that GT used a
competitor’s obviously confidential information to negotiate with a then-current
Murphy Marine customer against Murphy Marine.274
271
GT 30(b)(6) Phase 2 Dep. 261-63; see Iannarelli Phase 2 Tr. 563-65.
272
GT 30(b)(6) Phase 2 Dep. 261-63.
273
Iannarelli Phase 2 Tr. 569-72.
274
Cf. Fitzgerald v. Cantor, 1999 WL 66525, at *5 (Del. Ch. Jan. 13, 1999) (noting the
concerns at play “when a competitor is seeking information by discovery”). None of the
arguments GT raises to the contrary are persuasive. For example, GT points to Iannarelli’s
testimony that the $18 million figure was estimated internally by GT rather than based on
Murphy Marine’s discovery. See Def’s. Opp. to Mot. to Contempt ¶¶ 24-25. That
testimony is uncorroborated. Both Richards and Casey were deposed after Iannarelli, yet
GT did not elicit testimony related to Casey’s August 1 email. Neither Casey nor Richards
appeared at the Phase Two trial. Moreover, GT’s internal model building is not necessarily
exclusive of its use of data derived from Murphy Marine’s discovery. I also do not credit
65
B. The Appropriate Sanction
“A trial judge has broad discretion to impose sanctions for failure to abide by
its orders.”275 “[S]anctions for civil contempt should be directed towards coercing
compliance with the order being violated and remedying the injury suffered by other
parties as a result of the contumacious behavior.”276 “In selecting contempt
sanctions, the court is “obligated to use the least possible power adequate to the end
proposed.”277
Murphy Marine was injured by GT’s violation of the Confidentiality Order
and sought vindication through the Motion for Contempt. There is no obvious
remedy that the court can grant to fully redress that harm. The plaintiffs have asked
that GT be ordered to pay the fees and expenses they incurred in connection with the
Motion for Contempt. I believe that sanction is measured, appropriate, and not
GT’s argument that Casadei (who did not testify or submit an affidavit or declaration)
rounded up from $16.3 million to reach a flat $18 million—which just happened to be
identical to the amount provided in Murphy Marine’s discovery. See Def’s. Opp. to Mot.
for Contempt ¶ 21. It is more likely that the $18 million estimate was reached by doubling
the $9 million half-year figure Iannarelli saw during discovery, consistent with Casey’s
August 1 email. JX 326.
275
Gallagher v. Long, 940 A.2d 945, 2007 WL 3262150, at *2 (Del. Nov. 6, 2007)
(TABLE).
276
Aveta Inc., 986 A.2d at 1188.
277
In re TransPerfect Glob., Inc., 2019 WL 5260362, at *13 (Del. Ch. Oct. 17, 2019), aff’d
in part, rev’d in part sub nom. TransPerfect Glob., Inc. v. Pincus, 278 A.3d 630 (Del.
2022).
66
punitive under the circumstances.278 The plaintiffs’ counsel shall submit an affidavit
outlining their fees and expenses in connection with the Motion for Contempt within
14 days of this decision.
IV. CONCLUSION
For the reasons stated in this post-trial opinion, I find that GT breached the
BLA. The Trusts were harmed as a result and are entitled to an award $21,464,605
in damages, plus pre- and post-judgment interest as set forth above. The Trusts are
not presently entitled to relief in connection with the Unfunded Liability. Finally, I
find that GT is in civil contempt and must pay the plaintiffs’ fees and expenses
incurred in bringing their Motion for Contempt.
The parties are directed to incorporate the court’s rulings into a stipulated form
of final judgment within 30 days. If the parties disagree on a form of order, they
shall submit competing orders along with letters identifying their disagreements.
278
See, e.g., Smash Franchise P’rs, LLC v. Kanda Hldgs., Inc., 2021 WL 4264046 (Del.
Ch. Sept. 17, 2021) (ORDER) (holding counsel in contempt for violation of a
confidentiality order and ordering the payment of reasonable fees and expenses); see also
McDonald v. Cooper Tire & Rubber Co., 186 F. App’x 930, 932 (11th Cir. 2006)
(affirming the district court’s order imposing sanctions on an attorney who disclosed
deposition testimony to unauthorized persons in violation of a protective order); Lunareye,
Inc. v. Gordon Howard Assocs., Inc., 78 F. Supp. 3d 671, 676 (E.D. Tex. 2015)
(sanctioning the plaintiff for disclosure of information in violation of a protective order);
see also In re TransPerfect Glob., 2019 WL 5260362, at *15 (granting a sanction that
included all legal fees “in connection with the prosecution of the contempt motion”).
67