Kratos Defense & Security Solutions, Inc. v. Securitas Electronic Security, Inc. ( 2020 )

COURT OF CHANCERY
OF THE
STATE OF DELAWARE
MORGAN T. ZURN LEONARD L. WILLIAMS JUSTICE CENTER
VICE CHANCELLOR 500 N. KING STREET, SUITE 11400
WILMINGTON, DELAWARE 19801-3734
April 20, 2020
Thomas W. Briggs, Esquire Steven L. Caponi, Esquire
Barnaby Grzaslewicz, Esquire Matthew B. Goeller, Esquire
Morris Nichols Arsht & Tunnell LLP K&L Gates, LLP
1201 North Market Street, Suite 1800 600 North King Street, Suite 901
Wilmington, DE 19801 Wilmington, DE 19801
RE: Kratos Defense & Security Solutions, Inc., v. Securitas Electronic Security, Inc.,
Civil Action No. 2018-0910-MTZ
Dear Counsel,
I write to address the motion for reargument filed by plaintiff Kratos
Defense & Security Solutions, Inc. (“Kratos”). You will recall that the motion is in
response to my order granting Kratos leave to amend its complaint, conditioned on
paying the reasonable fees and costs that defendant Securitas Electronic Security,
Inc. (“Securitas”) incurred in its reply brief and at argument on Securitas’ motion
under Court of Chancery Rule 12(c).1 Under Rule 59(f), reargument will be
granted only where the Court “overlooked a decision or principle of law that would
have controlling effect or ... misapprehended the facts or the law so the outcome of
1
Docket Item (“D.I.”) 56 (citing Lillis v. AT&T Corp., 896 A.2d 871, 879 (Del. Ch.
2005)).
Kratos Defense & Security Solutions, Inc., v. Securitas Electronic Security, Inc.,
Civil Action No. 2018-0910-MTZ
April 20, 2020
Page 2 of 4
the decision would be different.”2 A motion for reargument is not a mechanism “to
relitigate claims already considered by the Court.”3
Kratos presented its reargument assertions in connection with its motion to
amend. I remain convinced that Kratos had notice of Securitas’ theory that
occasioned Kratos’ amendment before oral argument, and sought leave to amend
only upon discussing that theory with the Court.4 Kratos also addressed
conditional allowance under Lillis v. AT&T Corp.5 Kratos’ relitigation of these
issues fails to support reargument.
Nor did I overlook a controlling principle of law. I agree with Kratos that its
actions are distinguishable from the plaintiff’s “volte-face” in Lillis.6 But at
bottom, Lillis points out that leave to amend and a conditional allowance are both
discretionary.
2
Pontone v. Milso Indus. Corp., 2014 WL 4352341, at *1 (Del. Ch. Sept. 13, 2014).
3
In re ML/EQ Real Estate P’ship Litig., 2000 WL 364188, at *1 (Del. Ch. Mar. 22,
2000).
4
D.I. 56 (“The Court’s concern at the hearing (‘that Kratos did not explain why it could
not understand the specific adjustments to the closing statement’) was simply a more
focused version of Securitas’ concern in its motion (‘that Kratos’s complaint failed to
include the basic allegation that it could not understand that closing statement’). Reply at
4.”).
5
896 A.2d at 879.
6
Id.
Kratos Defense & Security Solutions, Inc., v. Securitas Electronic Security, Inc.,
Civil Action No. 2018-0910-MTZ
April 20, 2020
Page 3 of 4
“A conditional allowance is within the court’s discretion under Rule
15” for a reason. That option permits the court to balance the interest
in deciding a case on its merits with the costs incurred when parties do
not timely comply with pleading requirements.7
Under that balancing, this Court has declined to condition amendment on fees
when “the plaintiffs’ amendments represent good faith attempts to cure alleged
pleading defects the defendants identified,” as distinguished from Lillis, “in which
the plaintiffs sought leave to amend only after defending their pleading with full
briefing and oral argument.”8 The Court has awarded a defendant’s fees upon
amendment where the plaintiffs were “glib” and their actions “resulted in at least
some unnecessary briefing and argument by Defendants, to say nothing of the toll
on the Court’s time and resources.”9 And it has awarded fees where, upon
receiving the adversary’s argument for judgment on the pleadings, the party with
the pleading burden “chose not to seek leave to amend … and instead stood on its
defective pleading, making a series of meritless arguments, only to beg for leave to
7
Cypress Assocs., LLC v. Sunnyside Cogeneration Assocs. Project, 2007 WL 148754, at
*19 (Del. Ch. Jan 17, 2007) (quoting Lillis, 896 A.2d at 879).
8
NACCO Indus., Inc. v. Applica Inc., 2008 WL 2082145, at *2-3 (Del. Ch. May 7, 2008).
9
Franklin Balance Sheet Inv. Fund v. Crowley, 2006 WL 3095952, at *6 (Del. Ch. Oct.
19, 2006).
Kratos Defense & Security Solutions, Inc., v. Securitas Electronic Security, Inc.,
Civil Action No. 2018-0910-MTZ
April 20, 2020
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amend at oral argument. As a result, [the adversary] incurred substantial expense in
briefing and arguing its motion. That expense is wasted by my decision granting
. . . belated leave to amend.”10
Here, the procedural posture, and balance between a decision on the merits
and costs, more resembles Lillis, Franklin Balance Sheet, and Cypress Associates
than NACCO. I conclude I did not overlook any controlling principle of law in
exercising my discretion to grant a conditional allowance of leave to amend.
Kratos’ motion for reargument is DENIED.
Sincerely,
/s/ Morgan T. Zurn
Vice Chancellor
MTZ/ms
Cc: All Counsel of Record, via File & ServeXpress
10
Cypress Assocs., 2007 WL 148754, at *19.