Jason Dolan v. Jobu Holdings, LLC ( 2021 )

COURT OF CHANCERY
OF THE
STATE OF DELAWARE
417 S. State Street
JOSEPH R. SLIGHTS III Dover, Delaware 19901
VICE CHANCELLOR Telephone: (302) 739-4397
Facsimile: (302) 739-6179
February 17, 2021
Carl D. Neff, Esquire Lisa Zwally Brown, Esquire
FisherBroyles, LLP Greenberg Traurig, LLP
Brandywine Plaza West The Nemours Building
1521 Concord Pike, Suite 301 1007 North Orange Street, Suite 1200
Wilmington, DE 19803 Wilmington, DE 19801
Re: Jason Dolan v. Jobu Holdings, LLC, et al.
C.A. No. 2020-0961-JRS
Dear Counsel:
I have reviewed Plaintiff’s Motion to Compel (D.I. 15), Supplemental Motion
to Compel (D.I. 21), Motion to Continue Trial (D.I. 22) and Motion for Expedited
Proceedings relating to the Motion to Continue Trial (D.I. 23) (collectively,
the “Motions”). With limited exceptions explained below, the Motions are denied.
I. The Motion to Compel and Supplemental Motion to Compel
As for the two motions to compel, I begin with the premise that “[b]ooks and
records actions are not supposed to be sprawling, oxymoronic lawsuits with
extensive discovery.” KT4 Partners LLC v. Palantir Technologies, Inc., 203 A.3d
Jason Dolan v. Jobu Holdings, LLC, et al.
C.A. No. 2020-0961-JRS
February 17, 2021
Page 2
738, 754 (Del. 2019).1 Given the remarkable breadth of the discovery propounded
by Plaintiff in this summary books and records action, it is clear this premise has
been lost on Plaintiff. 2 With the limiting principle in mind, I address each of the
disputed items of discovery in turn.
A. The Factual Basis for Defendant’s Statement that Plaintiff Is Pursuing
This Inspection Demand on Behalf of Third Parties
Defendant has represented that it will not resist inspection on this ground, and
it will be held to that representation. Accordingly, this discovery seeks information
that is no longer relevant to this dispute, if it ever was. Plaintiff’s argument that the
discovery is relevant to the Defendant’s credibility is rejected. First, I do not see
how the discovery is probative of credibility. And second, in this summary
1
See also Ravenswood Inv. Co. LP v. Winmill & Co., Inc., 2013 WL 396178, at *2
(Del. Ch. Jan. 31, 2013) (reiterating that, “[a]s for the Section 220 portion of this
proceeding, the Court notes that the discovery obligation typically confronted by the
corporate defendant is relatively minimal; indeed, it has been described as ‘narrow in
purpose and scope’”) (citation omitted).
2
Plaintiff has propounded two sets of interrogatories (totaling 45), one set of requests for
production of documents and one third-party subpoena. This in a case where the purpose
of the demand for inspection is to value plaintiff’s equity ownership, not to investigate
wrongdoing, and where Defendant has acknowledged that Plaintiff’s purpose, if it actually
is as stated, is a proper purpose.
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C.A. No. 2020-0961-JRS
February 17, 2021
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proceeding, credibility is a peripheral issue in any event. The motion to compel this
information is denied.
B. The Factual Basis for Defendant’s Denial of Inspection on the Ground
that Defendant Cannot “Fathom any Legitimate Basis, Business or
Otherwise, for the Request”
Plaintiff, as unitholder, bears “the burden of proof to demonstrate a proper
purpose [for inspection] by a preponderance of the evidence.” Seinfeld v. Verizon
Communications, Inc., 909 A.2d 117, 122 (Del. 2006). Contrary to Plaintiff’s
position, lack of proper purpose is not an affirmative defense. Id. Plaintiff’s motion
to compel rests on the premise that Defendant bears some burden to prove that
Plaintiff’s purpose is improper. Since this premise misstates Delaware law, the
motion to compel this information is denied. 3
3
I note that the disputes in this case, as refined, appear to relate only to scope and
confidentiality. As to the latter point, while there is no presumption that the production of
Section 220 (or Section 18-305) documents will be subject to a confidentiality condition,
this court “has the power to impose reasonable confidentiality restrictions,” and “the targets
of [inspection] demands will often be able to demonstrate that some degree of
confidentiality is warranted when they are asked to produce nonpublic information.”
Tiger v. Boast Apparel, Inc., 214 A.3d 933, 939 (Del. 2019). With this in mind, I urge the
parties to attempt to resolve this dispute without the need for trial. While Plaintiff may
have grievances with this Defendant and its manager(s), given the proffered valuation
purpose for inspection, this action is not the vehicle by which to air those grievances.
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C.A. No. 2020-0961-JRS
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C. Information Regarding Document Collection, Search and Review Process
This request seeks standard information and Plaintiff is entitled to a formal,
verified response. The motion to compel this information is granted. With that said,
to the extent the requests for production of documents seek the same documents that
are the subject of Plaintiff’s demand for inspection, Defendant is correct that it need
not produce those documents unless and until such time it is ordered to produce them
in the Court’s final judgment.
D. The Supplemental Motion to Compel
Plaintiff seeks information relating to subsidiaries of Defendant, including
Outback Presents. It appears Defendant acknowledges that information relating to
Outback Presents would be relevant to Plaintiff’s valuation purpose if the Court
determines that is, in fact, Plaintiff’s purpose in seeking inspection. Thus, if the
Court determines that inspection is justified to allow Plaintiff to value his ownership
interest in Defendant, then Plaintiff will be entitled to inspect documents relating to
Plaintiff has asked to inspect documents. On his best day, that is all the relief he can
achieve here.
Jason Dolan v. Jobu Holdings, LLC, et al.
C.A. No. 2020-0961-JRS
February 17, 2021
Page 5
both Defendant and Defendant’s subsidiaries. There is no need for discovery of this
information until the Court determines that inspection is appropriate. The motion to
compel this information is denied.
II. The Motion to Continue Trial and Motion to Expedite
The sole ground for the Motion to Continue Trial was that the Court could not
and would not hear the motions to compel in sufficient advance of the scheduled
March 19, 2021 trial to allow Plaintiff to process the fruits of the compelled
discovery. The Court has now resolved the pending motions to compel. There is,
therefore, no need to continue the trial in this summary proceeding. 4 The Motion to
Continue Trial, and corresponding Motion to Expedite, are, therefore denied.
IT IS SO ORDERED.
Very truly yours,
/s/ Joseph R. Slights III
4
As an aside, I note that Plaintiff’s suggestion that the Court “reasonably continue the
trial date” (emphasis added) implies a mistaken assumption that the Court could reschedule
this trial in the next few months. The Court’s trial calendar is full through 2021. Absent
truly exigent circumstances, the Court currently is scheduling trials well into 2022.