Erin Page v. Village Practice Management Company, LLC

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
May 19, 2023
John A. Sensing, Esquire A. Thompson Bayliss, Esquire
Potter Anderson & Corroon LLP Abrams & Bayliss LLP
1313 North Market Street, 6th Floor 20 Montchanin Road, Suite 200
Wilmington, DE 19899 Wilmington, DE 19807
RE: Erin Page v. Village Practice Management Group, LLC,
Civil Action No. 2022-0581-MTZ
Dear Counsel:
On April 27, 2023, after having asked the parties to submit supplemental
briefing addressing the nonwaivable issue of subject matter jurisdiction,1 I stayed
this action pending the Delaware Supreme Court’s decision on Terrell v. Kiromic
Biopharma, Inc. (Terrell II), C.A. 299,2022 (Del.).2 On May 4, the Delaware
Supreme Court issued its decision.3 I have again reviewed the parties’
supplemental submissions and conclude that this matter should remain stayed
pending review and interpretation of the Village Practice Management Company,
LLC Management Incentive Plan (the “Plan”) under Section 4(d), by the
“Committee,” as defined in the Plan.4
The parties did not have the benefit of briefing Terrell II due to the linear
nature of time, but I believe its application is straightforward.5 The Supreme Court
1
Docket Item (“D.I.”) 27.
2
D.I. 42.
3
Terrell v. Kiromic Biopharma, Inc. (Terrell II), 2023 WL 3237142, – A.3d – (Del. May
4, 2023).
4
D.I. 6, Ex. 1 [hereinafter “Plan”] §§ 2(i), 4(d); Paolino v. Mace Sec. Int’l, Inc., 985 A.2d
392, 397 (Del. Ch. 2009) (“This Court possesses the inherent power to manage its own
docket, including the power to stay litigation on the basis of comity, efficiency, or simple
common sense.”).
5
C.A. 299, 2022 (Del.).
Erin Page v. Village Practice Management Group, LLC,
Civil Action No. 2022-0581-MTZ
May 19, 2023
Page 2 of 4
held the Court of Chancery in Terrell v. Kiromic Biopharma, Inc. (Terrell I)6
“properly stayed the action to permit the board’s committee to interpret the
agreement and notice in the first instance.”7 The Delaware Supreme Court
interpreted the relevant provision8 in Terrell I as neither an arbitration provision,
nor “squarely an expert determination” provision.9 The Supreme Court found “the
Committee must be given the first opportunity to interpret [the provision]’s
scope.”10
Here, the parties do not dispute that Section 4(d) is not an arbitration
provision.11 Accordingly, Section 4(d)’s plain text dictates who decides its
scope.12 Delaware courts interpret contract terms according to their plain, ordinary
meaning,13 and “attempt to give meaning and effect to each word in a contract,
assuming that the parties would not include superfluous verbiage in their
agreement.”14 Section 4(d) provides:
6
2022 WL 3083229 (Del. Ch. Aug. 2, 2022). I will refer to Terrell v. Kiromic
Biopharma, Inc., 2022 WL 175858 (Del. Ch. Jan. 20, 2022) and its implementing order,
Terrell v. Kiromic Biopharma, Inc., 2022 WL 3083229 (Del. Ch. Aug. 2, 2022), together
as “Terrell I.”
7
Terrell II, 2023 WL 3237142, at *1; id. at *6.
8
Id. at *4 (“Our analysis necessarily begins with the text of Section 15.1, which, in its
entirety, reads: [‘]Interpretation. Any dispute regarding the interpretation of this
Agreement shall be submitted by Optionee [Terrell] or the Company to the Committee
for review. The resolution of such a dispute by the Committee shall be final and binding
on the Company and Optionee.[’]” (emphasis omitted)).
9
Id. at *6 (internal quotation marks and footnotes omitted).
10
Id.
11
E.g., D.I. 33 at 7; D.I. 37 at 4.
12
Terrell I, 2022 WL 175858, at *5–6.
13
Alta Berkeley VI C.V. v. Omneon, Inc., 41 A.3d 381, 385 (Del. 2012).
14
Zimmerman v. Crothall, 62 A.3d 676, 691 (Del. Ch. 2013) (citing NAMA Hldgs., LLC
v. World Mkt. Ctr. Venture, LLC, 948 A.2d 411, 419 (Del. Ch. 2007)).
Erin Page v. Village Practice Management Group, LLC,
Civil Action No. 2022-0581-MTZ
May 19, 2023
Page 3 of 4
Interpretation. Except as otherwise expressly provided in the Plan, the
Committee shall have all powers with respect to the administration of
the Plan, including, without limitation, full power and authority to
interpret the provisions of the Plan and any Award Agreement, and to
resolve all questions arising under the Plan. All decisions of the
Committee shall be conclusive and binding on all persons.15
Section 2(i) defines “Committee” as “the committee appointed by the Board in
accordance with Section 4(a), or, where no such committee is appointed, the
Board.”16 Section 4(d) delegates “full power and authority” to the defined
“Committee” “to interpret the provisions of the Plan and any Award Agreement,
and to resolve all questions arising under the Plan.”17
Having come to the same conclusion in Terrell II, the Delaware Supreme
Court instructed that this Court must retain subject matter jurisdiction and stay the
matter until the Committee “interpret[s] the provisions of the Plan and any Award
Agreement, and to resolve all questions arising under the Plan” raised by the
plaintiff’s complaint.18 This Court must then afford an opportunity for review of
the Committee’s legal determinations.19
I will therefore STAY this action until the Committee interprets the Plan:
(a) to determine the Committee’s scope of authority; and (b) if the Committee
decides it has the authority, to determine (i) whether the “Detrimental Activity
Provision”20 governs the plaintiff’s employment after her employment with the
defendant is terminated (“post-employment activities”)21; (ii) whether the
plaintiff’s prospective employer, Lightbeam Health Solutions, is a “Competitor”22;
15
Plan § 4(d) (emphasis omitted).
16
Id. § 2(i) (emphasis omitted).
17
Id. § 4(d).
18
Id.
19
Terrell II, 2023 WL 3237142, at *9.
20
Plan §§ 2(n), 8(b).
21
D.I. 1 [hereinafter “Compl.”] ¶ 57(a).
22
Plan § 2(l).
Erin Page v. Village Practice Management Group, LLC,
Civil Action No. 2022-0581-MTZ
May 19, 2023
Page 4 of 4
(iii) whether the plaintiff remains the holder of her “Class B Units”23; and (iv)
whether the defendant has any basis under the Plan to cancel any of the plaintiff’s
Class B Units.24
The parties should inform the Court when the Committee makes its decision
by a joint letter. At that time, the parties should confer on a scheduling order for
this Court’s subsequent review in accordance with Terrell II. It is the Court’s
preference that the parties attach to the joint letter a stipulated proposed scheduling
order. If the parties cannot agree on a schedule, they should each attach a proposed
scheduling order and I will select one. IT IS SO ORDERED.
Sincerely,
/s/ Morgan T. Zurn
Vice Chancellor
MTZ/ms
cc: All Counsel of Record, via File & ServeXpress
23
Id. § 2(g).
24
Compl. ¶ 57.