Paragon Technologies, Inc. v. Ocean Power Technologies, Inc.

COURT OF CHANCERY
OF THE
STATE OF DELAWARE
LORI W. WILL LEONARD L. WILLIAMS JUSTICE CENTER
VICE CHANCELLOR 500 N. KING STREET, SUITE 11400
WILMINGTON, DELAWARE 19801-3734
September 19, 2024
Evan O. Williford, Esquire Tyler J. Leavengood, Esquire
The Williford Firm LLC Christopher N. Kelly, Esquire
1007 North Orange Street, Suite 235 Callen R. Jackson, Esquire
Wilmington, Delaware 19801 Christopher D. Renaud, Esquire
Ryan M. Ellingson, Esquire
Potter Anderson & Corroon LLP
1313 North Market Street
Wilmington, Delaware 19801
RE: Paragon Technologies, Inc. v. Ocean Power Technologies, Inc., et al.
C.A. No. 2024-0386-LWW
Dear Counsel,
Petitioner Paragon Technologies, Inc. moves to dismiss this action without
prejudice under Court of Chancery Rule 41.1 The respondents oppose the motion,
arguing that this action should be dismissed with prejudice or, alternatively, that
dismissal without prejudice be conditioned on Paragon’s payment of their attorneys’
fees and costs.2
Whether to permit voluntary dismissal under Rule 41(a)(2) is a discretionary
matter for this court. In exercising its discretion, the court considers whether
1
Dkt. 24.
2
Dkt. 27.
C.A. No. 2024-0386-LWW
September 19, 2024
Page 2 of 5
dismissal would cause the defendants to suffer “plain legal prejudice.” 3 Relevant
factors in evaluating such prejudice include: “(1) the defendants’ effort and expense
in preparation for trial; (2) excessive delay and lack of diligence on the part of the
plaintiff in prosecuting the action; (3) insufficient explanation for the need to take a
dismissal; and (4) if a motion for summary judgment has been filed by the
defendant.”4
Factors one, two, and four counsel in favor of granting Paragon’s motion.
Regarding the first and fourth factors, this case is in an early stage and limited
time and effort have been expended. Discovery has been light, with the parties
exchanging written responses to discovery requests but little else.5 No dispositive
motion practice has occurred.6
3
Draper v. Paul N. Gardner Defined Plan Tr., 625 A.2d 859, 863 (Del. 1993).
4
Id. at 864.
5
See ASX Inv. Corp. v. Newton, 1994 WL 240697, at *2 & n.3 (Del. Ch. May 18, 1994)
(granting voluntary dismissal without prejudice where documents had been produced and
defendants sat for depositions).
6
See In re Marriott Hotel Props. II Ltd. P’ship Unitholders Litig., 1997 WL 589028, at *7
(Del. Ch. Sept. 17, 1997) (granting voluntary dismissal without prejudice despite the
defendant’s substantial efforts litigating preliminary injunction and Rule 12(b)(6)
motions).
C.A. No. 2024-0386-LWW
September 19, 2024
Page 3 of 5
Regarding the second factor, there is no excessive delay or lack of diligence
by Paragon. This case was filed on April 11.7 In May and early June, Paragon
served discovery requests and written responses.8 On June 9, Paragon indicated its
intent to seek dismissal and on June 20, it filed this motion.9 The respondents
complain that Paragon was slow to negotiate and slightly late in meeting deadlines
agreed on by the parties, but any delay is far from excessive.10
How the third factor cuts is less clear. Paragon did not provide an explicit
reason for seeking dismissal. It says only that the dismissal should be without
prejudice because the issues raised in this case are “pertinent to all Ocean Power
[Technologies, Inc.] stockholders, not just Paragon.”11 Often, the court will consider
whether a plaintiff is seeking voluntary dismissal to avoid an adverse trial result or
7
Dkt. 1.
8
See Dkts. 15-16, 19, 22.
9
Dkts. 24, 27.
10
Cf. Ratkovich v. Smith Kline, 951 F.2d 155 (7th Cir. 1991) (denying dismissal without
prejudice where two years of discovery had passed, and the plaintiff repeatedly failed to
timely answer interrogatories and could not produce documents supporting the core facts
of his claim); Zagano v. Fordham Univ., 900 F.2d 12 (2d Cir.1990) cert. denied, 498 U.S.
899 (1990) (denying dismissal without prejudice when the case had been pending for four
years, extensive discovery had been taken, and the dismissal motion was filed a week
before trial).
11
Dkts. 24, 31.
C.A. No. 2024-0386-LWW
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to tactically pursue litigation elsewhere.12 I see nothing prompting such concerns
here. Nor do I see grounds to conclude that the litigation was filed to harass Paragon.
Overall, the Draper factors support a dismissal without prejudice.
The respondents’ request that I condition dismissal on Paragon paying their
attorneys’ fees and costs is denied. “The requirement that plaintiff pay defendant’s
attorneys’ fees is a commonly applied condition” where a defendant is forced to bear
the costs of duplicative work in a related proceeding filed elsewhere.13 Even in that
scenario, though, fee shifting may be unwarranted. In ASX, which the respondents
rely on in seeking fees, the court granted an unconditional dismissal without
prejudice despite the pendency of a related federal action.14 Here, the risk of
duplicative efforts by the respondents is even lower since no other suit is filed in
another court. Nevertheless, if the respondents believe that they have grounds to
seek fees and expenses from Paragon, I will retain jurisdiction to resolve that motion.
12
See Ramirez v. Cooper Tire & Rubber Co., 2020 WL 7587698, at *3 (Del. Super. Dec.
22, 2020); In re Walt Disney Co. Deriv. Litig., 1997 WL 118402, at *4 (Del. Ch. Mar. 13,
1997); AT&T Wireless Servs., Inc. v. Fed. Ins. Co., 2005 WL 2155695, at *4 (Del. Super.
Aug. 18, 2005).
13
ASX, 1994 WL 240697 at *3.
14
Id. at *4.
C.A. No. 2024-0386-LWW
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Paragon’s motion to dismiss is therefore granted. This action is dismissed
without prejudice, subject to the court’s retention of jurisdiction to hear any fee
request made by the respondents.
Sincerely yours,
/s/ Lori W. Will
Lori W. Will
Vice Chancellor