Zilberstein v. Frankenstein

IN THE SUPERIOR COURT OF THE STATE OF DELAWARE
FELIX ZILBERSTEIN, )
)
Plaintiff, ) C.A. No. N21C-01-112 MAA
)
v. )
)
DANIEL H. FRANKENSTEIN, )
JANVEST CAPITAL PARTNERS, LLC, )
JANVEST CAPITAL PARTNERS II, )
LLC, JANVEST TECHNOLOGIES, LP, )
)
Defendants. )
Submitted: October 29, 2021
Decided: November 12, 2021
Upon Defendants’ Motion to Dismiss the Complaint
or in the Alternative to Stay
GRANTED in part.
MEMORANDUM OPINION
Antranig N. Garibian, Esquire, (Argued), of GARIBIAN LAW OFFICES PC,
Wilmington, Delaware, Attorney for Plaintiff.
Matthew P. Denn, Esquire (Argued), and Peter H. Kyle, Esquire of DLA PIPER
LLP, Wilmington, Delaware, Attorneys for Defendant.
Adams, J.
I. Introduction
Felix Zilberstein (“Zilberstein” or “Plaintiff”) is a citizen of Israel and former
member of Janvest Capital Partners, LLC (“Janvest I”) and Janvest Capital Partners
II, LLC (“Janvest II”), two private equity firms in Israel organized under Delaware
law.1 Daniel Frankenstein (“Frankenstein”) was a manager of Janvest I and currently
serves as a manager to its successor, Janvest II. Janvest I served, and Janvest II
currently serves, as the general partner to Janvest Technologies, L.P. (“Janvest LP”)
(collectively, “Janvest entities”). Zilberstein filed this lawsuit against Frankenstein
and the Janvest entities (collectively, “Defendants”). Defendants moved to dismiss
or stay this action pursuant to Superior Court Civil Rule 12(b)(3) in favor of pending
litigation in Israel. Frankenstein, a California resident, has separately moved to
dismiss for lack of personal jurisdiction under Superior Court Civil Rule 12(b)(2).
This decision grants Defendants’ motion to stay based on the doctrine of forum non
conveniens. Given the decision to stay, the Court will not address Frankenstein’s
motion to dismiss under 12(b)(2) at this time.
1
Filings in Zilberstein’s action in Court of Chancery indicate that Janvest I
dissolved as of July 30, 2018, shortly before Janvest II was formed. See Def.’s Op.
Br. in Support of Mot. to Dismiss at 1, Zilberstein v. Janvest Capital Partners LLC,
C.A. No. 2021-0074 (Del. Ch. May 11, 2021).
2
II. Factual Background
The facts for purposes of Defendants’ motion to dismiss pursuant to Rule
12(b)(3) are drawn from the Complaint, the documents it incorporates by reference,
and other filings on the docket. When considering such a motion, the court is not
“shackled to the plaintiff’s complaint” and may consider extrinsic evidence.2 At this
stage of the case, the Court views the record in the light most favorable to the
Plaintiff.
A. Janvest Entities
Janvest I and Janvest II are private equity firms that invest in early-stage
Israeli-based companies. Both are organized as Delaware limited liability
companies with operations and members in Israel. In June 2018, Frankenstein
formed Janvest II to succeed Janvest I as the general partner of Janvest LP, a
Delaware limited partnership. Janvest I and Janvest II made investments through
Janvest LP. One company Janvest LP invested in was an Israeli technology
company, Electronic Vision Systems Ltd. (“eVision”).
2
Simon v. Navellier Series Fund, 2000 WL 1597890, at *5 (Del. Ch. Oct. 19,
2000).
3
B. Janvest LP’s Investment in eVision and Zilberstein’s Exit
In exchange for Janvest LP’s investment in eVision, Janvest LP became an
eVision shareholder with the right to appoint a director to eVision’s Board of
Directors. Janvest LP appointed Zilberstein to serve in this role.
In November 2017, Zilberstein decided to retire. Zilberstein approached
Frankenstein and Brian Rosenzweig (“Rosenzweig”), a fellow member of Janvest I
and Janvest II, about the transition of his duties. It was around this time that
Frankenstein began to suspect that Zilberstein was misappropriating funds properly
owed to Janvest LP. Thus, following Zilberstein’s decision to retire and upon
Frankenstein’s suspicions of Zilberstein’s alleged misappropriation, Janvest LP
informed eVision of its intent to replace Zilberstein’s position on the board with
Frankenstein. eVision denied Janvest LP’s request and informed Janvest LP that
Zilberstein served as eVision’s CEO for several years. This, coupled with suspicions
of Zilberstein’s alleged misdeeds, prompted Janvest LP to sue Zilberstein and
eVision, along with other eVision directors and officers, in Israel.
C. Emails and Lawsuits
On April 15, 2019, Frankenstein emailed other Janvest I and Janvest II
members alleging Zilberstein had improperly served as eVision’s CEO and used his
position as a conduit for pocketing funds properly owed to Janvest LP (“Defamatory
Email 1”). On July 30, 2020, Frankenstein sent a follow up email with the subject
4
“Pending Litigation Notification” (“Defamatory Email 2”). The email informed the
recipients of Janvest LP’s intent to pursue legal action based on Zilberstein’s and
eVision’s alleged unlawful transfer of funds.
Janvest LP then filed suit in Israel against Zilberstein, eVision, and other
eVision directors and officers (“Janvest Israeli Litigation I”) ordering eVision to
disclose financial statements and allow Janvest LP to appoint a director of their
choosing. The suit settled on October 20, 2020. As a result, eVision replaced
Zilberstein with Frankenstein on the board and turned over the requested financial
records. The disclosure and review of the relevant financial records, Defendants
contend, revealed Zilberstein’s alleged misappropriation.3
Following Janvest Israeli Litigation I, Janvest LP sent a letter to eVision,
Zilberstein, and others attempting to recover the funds properly owed to Janvest LP
(“Demand Letter”). The Demand Letter, sent on December 9, 2020, stated that if
the funds were not received within 21 days, Janvest LP intended to take legal action.
Frankenstein then emailed Janvest I and Janvest II members with the subject line
“Additional Pending Litigation.” In the email, Frankenstein reported the outcome
of Janvest Israeli Litigation I, and Janvest LP’s intent to recoup its losses
(“Defamatory Email 3”). On January 7, 2021, Janvest LP’s counsel sent a final
3
Defs.’ Opening Brief (“Def.’s Op.”) at 1.
5
warning to eVision affirming Janvest LP’s intent to pursue legal action against
Zilberstein and eVision if they could not reach an agreement outside of court.4
About a week later, on January 15, 2021, Zilberstein filed his Complaint
against Defendants in this Court for defamation.5 The basis for Zilberstein’s
defamation action is Defamatory Email 1, Defamatory Email 2, and Defamatory
Email 3. Thirteen days later, on January 28, 2021, Janvest LP filed another action
in Israel (“Janvest Israeli Litigation II”) against Zilberstein, eVision, and other
Israeli individuals and entities to recover its losses from Zilberstein’s alleged
misappropriation. That same day, Zilberstein also filed two separate books and
records actions in the Court of Chancery against Janvest I and Janvest II.6
D. Procedural History
In Janvest Israeli Litigation II, Zilberstein filed a Statement of Defense and a
motion to stay in deference to his actions in this Court and the Court of Chancery.7
A hearing in Janvest Israeli Litigation II occurred on October 25, 2021.8 As a result,
the court in Israel ordered the parties to complete document production within seven
days and engage in pre-mediation.9
4
Def.’s Ex. 3.
5
See Dkt. 1.
6
2021-0074-KSJM and 2021-0075- KSJM.
7
Defs.’ Reply Br. 7.
8
See Dkt. 24.
9
Id.6
In response to Zilberstein’s Complaint in this Court, Defendants filed a
Motion to Dismiss or Stay on April 14, 2021 based on the doctrine of forum non
conveniens and the pendency of Janvest Israeli Litigation II.
III. Standard of Review
The Defendants move to dismiss or stay this action based on the doctrine of
forum non conveniens.10 A motion invoking this doctrine proceeds pursuant to Rule
12(b)(3) for improper venue.11 Where an action involving the same or similar parties
and the same or similar issues is filed in another jurisdiction contemporaneously
with or after the Delaware action, the forum non conveniens analysis applies.12
The doctrine of forum non conveniens grants the court discretionary authority
to decline jurisdiction where “considerations of convenience, expense, and the
interests of justice” show that the plaintiff’s chosen forum would be “unduly
inconvenient, expensive, and otherwise inappropriate.”13 While ordinarily a
plaintiff’s choice of forum should rarely be disturbed, such choice is not immune
10
Frankenstein filed a 12(b)(2) motion to dismiss for lack of personal
jurisdiction. Def.’s Op. at 15. Given the Court’s decision to stay the action, the
Court will not address Frankenstein’s 12(b)(2) motion.
11
See Lefkowitz v. HWF Hldgs., LLC, 2009 WL 3806299, at *3 (Del. Ch. Nov.
13, 2009).
12
See Martinez v. E.I. DuPont de NeMours and Co., Inc., 86 A.3d 1102, 1104
(Del. 2014).
13
Monsanto Co. v. Aetna Casualty and Surety Co., 559 A.2d 1301, 1304 (Del.
Super. 1988).
7
from scrutiny.14 A plaintiff may not “vex, harass, or oppress the defendant” by
imposing unnecessary expense or trouble through an inconvenient forum.15
Delaware courts have articulated five factors to consider in a forum non
conveniens analysis, collectively referred to as the “Cryo-Maid factors.”16 The
factors are:
(1) the existence of other litigation involving substantially similar parties or
subject matter;
(2) whether the controversy is dependent upon Delaware law;
(3) the relative ease of access to proof;
(4) the availability of compulsory process for witnesses; and
(5) all other practical problems that would make the trial easy, expeditious,
and inexpensive.17
14
Nat’l Union Fire Ins. Co. of Pittsburgh, PA v. Turner Constr. Co., 2014 WL
703808, at *2 (Del. Super. Feb. 17, 2014).
15
Gulf Oil Corp. v. Gilbert, 330 U.S. 501, 508 (1947).
16
Martinez, 86 A.3d at 1104.
17
GXP Cap., LLC v. Argonaut Mfg. Servs., Inc., 253 A.3d 93, 101 (Del. 2021)
(citing Aranda v. Philip Morris USA Inc., 183 A.3d 1245, 1250 (Del. 2018)). The
Cryo-Maid factors are presented in the relative order of importance for corporate
and commercial disputes as indicated by the Court of Chancery in Focus Financial
Partners, LLC v. Holsopple, 250 A.3d 939, 952 (Del. Ch. 2020). The list omits a
Cryo-Maid factor – “the possibility of the view of the premises” – because it is
irrelevant to this case and not discussed in this decision. See Holsopple, 250 A.3d
at 952 n.3 (finding that the view of the premises is not relevant to the case and thus
not discussed and noting that the factor is frequently irrelevant in corporate and
commercial disputes).
8
The precise burden on a movant seeking a stay depends on the timing of the
Delaware action in relation to any competing actions. If the Delaware action is first-
filed, the court, in considering the Cryo-Maid factors, gives deference to the
plaintiff’s choice of forum.18 To prevail, a defendant seeking to stay a first-filed
Delaware action pending the outcome of a subsequent suit must show sufficient
“inconvenience and hardship.”19 This standard is notably less demanding than the
“overwhelming hardship” standard applicable when a defendant seeks dismissal of
a first-filed Delaware action.20
To justify a stay where competing actions are viewed as contemporaneously
filed, the movant must show that overall, the Cryo-Maid factors “tips in favor of
litigating the dispute in the non-Delaware forum.”21 Where actions are considered
18
See Chrysler First Bus. Credit Corp. v. 1500 Locust Ltd. P’ship, 669 A.2d
104, 107-08 (Del. 1995).
19
GTE Mobilnet Inc. v. Nehalem Cellular, Inc., 1994 WL 116194, at *1 (Del.
Ch. Mar. 17, 1994) (citing ANR Pipeline Co. v. Shell Oil Co., 525 A.2d 991, 992
(Del. 1987).
20
HFTP Invs., L.L.C. v. ARIAD Pharms., Inc., 752 A.2d 115, 121 (Del. Ch.
1999) (“[W]here (as here) the moving party seeks a stay rather than a dismissal, the
‘burden on the moving party is a lesser one.’”) (quoting Life Assurance Co. v.
Associated Invs. Int’l Corp., 312 A.2d 337, 340 (Del. Ch. 1973); see also Azurix
Corp. v. Synagro Technologies, Inc., 2000 WL 193117, at *4-5 (Del. Ch. Feb. 3,
2000) (“For this claim to be dismissed, Synagro would have to demonstrate that it
would suffer undue…hardship if it is required to litigate in Delaware…Synagro
bears a much lighter burden, however, in order to justify a stay”); see also Moore
Golf, Inc. v. Ewing, 269 A.2d 51 (Del. 1970) (“[T]he burden on the moving party is
a lesser one where a stay rather than a dismissal is sought”).
21
Turner Constr. Co., 2014 WL 703808, at *2.
9
simultaneously filed, the court does not give deference to either forum.22 Instead,
the Court, in weighing the relevant factors, must determine which of the competing
fora would be the more “easy, expeditious, and inexpensive” for litigation.23
IV. Analysis
Before turning to the Cryo-Maid analysis, the Court will determine whether
the Delaware action was first-filed or contemporaneously filed with the competing
action, as the timing determines the appropriate deference afforded to the plaintiff’s
chosen forum.
A. The Delaware Action and Janvest Israeli Litigation II were Filed
Contemporaneously
When two cases are filed at approximately the same time, the court compares
the fora without preference for one action over the other to avoid rewarding the
victor in a “race to the courthouse.”24 To determine whether an action filed first in
time but in close temporal proximity to another action should be treated as
contemporaneously filed, the court should consider the circumstances surrounding
22
See Holsopple, 250 A.3d at 953-54 (“Where the competing actions were filed
virtually simultaneously, warranting less deference to the winner of a race to the
courthouse…the court may place less emphasis on filing priority and determine by
a preponderance of the evidence whether litigating in one forum or the other would
be easier, more expeditious, and less expensive”).
23
Royal Indem. Co. v. Gen. Motors Corp., 2005 WL 1952933, at *7 (Del. Super.
2005) (citing HFTP Invs., 752 A.2d at 122).
24
GXP Cap., LLC v. Argonaut Mfg. Servs., Inc., 234 A.3d 1186, 1195 (Del.
Super. 2020) (quoting In re Citigroup Inc. Shareholder Derivative Litigation, 964
A.2d 106, 116 (Del. Ch. 2009)) (internal quotations omitted).
10
the filings.25 “Ultimately, the exercise of the court’s discretion will depend upon
review of the relevant practical considerations keeping in mind the broader policies
of comity between the states and their courts and the orderly and efficient
administration of justice.”26
Delaware courts have found actions filed in different jurisdictions to be
contemporaneous despite a plaintiff technically filing first where there is no
significant time difference, and the nature of the actions are similar suggesting that
the plaintiff filed in an anticipatory nature. 27 This Court specifically has previously
found actions filed two weeks apart as contemporaneously filed.28 Here, Janvest
Israeli Litigation II was filed less than two weeks after the Delaware litigation.
Plaintiff filed his Complaint in Delaware on January 15, 2021. In the weeks leading
up to that date, there were at least three communications on behalf of Janvest LP
indicating Janvest LP’s intent to initiate legal proceedings if Plaintiff and eVision
25
AG Res. Hldgs., LLC v. Terral, 2021 WL 486831, at *3 (Del. Ch. Feb. 10,
2021).
26
Id. (citing Adirondack GP, Inc. v. Am. Power Corp., 1996 WL 684376, at *6
(Del. Ch. Nov. 13, 1996)).
27
See AG Res. Hldgs., 2021 WL 486831, at *3 (finding actions filed four days
apart to be simultaneously filed); see Turner Construction Co., 2014 WL 703808, at
*3 (treating actions filed eight days apart as contemporaneously filed because
plaintiff filed “in anticipation of litigation”); see also Holsopple, 250 A.3d at 954
(stating that while the Delaware action was technically filed first, the California
action, filed five days after, was “roughly contemporaneous”).
28
See Williams Gas Supply Co. v. Apache Corp., 1991 WL 18091, at *1-3 (Del.
Super. Feb. 12, 1991) (treating actions filed two weeks apart as contemporaneously
filed because plaintiff filed in anticipation of another suit).
11
did not cooperate.29 About a week following Janvest LP’s last letter threatening
litigation, Plaintiff filed his Complaint in Delaware alleging defamation. Plaintiff
beat Defendants to the courthouse by thirteen days.
The temporal proximity of the filing, the known imminence of Janvest Israeli
Litigation II, and the similarity in substance between Plaintiff’s action and Janvest
Israeli Litigation II suggests that Plaintiff engaged in a race to the courthouse. To
avoid rewarding the winner of such a race, the Court considers the actions
contemporaneously filed. As such, the Court affords neither party first-filer
preference and will analyze the Cryo-Maid factors without deference to either forum.
B. The Cryo-Maid Factors Weigh in Favor of a Stay
Having established that neither forum is afforded deference, the Court now
turns to an analysis of the Cryo-Maid factors. The Court finds that each factor
29
The first communication was the Demand Letter sent to Zilberstein on
December 9, 2020 where Janvest LP’s counsel threatened litigation if Zilberstein
and eVision did not repay Janvest LP for the misappropriated funds. The second
communication was Defamatory Email 3, cited in Zilbertstein’s Complaint and sent
on December 15, 2020, where Frankenstein announced his intent to pursue litigation
seeking monetary compensation from Zilberstein. The third communication was on
January 7, 2021 from Janvest LP’s counsel indicating that further warning will not
be sent. The Court recognizes that Zilberstein was not a direct recipient of the
second and third communications. The Court infers, however, that Zilberstein was
aware of the second communication as it is attached to his Complaint in this action.
The Court also infers Zilberstein’s awareness of the third communication as it was
sent to his co-defendant’s counsel in Janvest Israeli Litigation I. Even if Zilberstein
was unaware of the second and third communications, he received the December 9,
2020 Demand Letter putting him on notice of impending litigation.
12
weighs in favor of staying Plaintiff’s action in Delaware pending resolution of
Janvest Israeli Litigation II.
1. Existence of Similar Litigation
The first Cryo-Maid factor addresses the existence of litigation involving
substantially similar parties or subject matter, and the pendency of the competing
litigation.30 In evaluating existing similar litigation, the court must consider issues
of “comity and the necessities of an orderly and efficient administration of justice”
such as whether the actions are duplicative.31 Another consideration is the amount
of judicial resources expended in the other matter. “If a judge in one forum has
invested actual, substantive effort in a case, a competing forum should consider
carefully whether one of its judges should make a similar case-specific
investment.”32
Here, this factor weighs in favor of allowing the Israeli litigation to proceed.
In Janvest Israeli Litigation II, the court in Israel held a hearing on October 25, 2021
where the court ordered the parties to complete document production and engage in
pre-mediation meetings to try to settle the claim.33
30
Gramercy Emerging Mkts. Fund v. Allied Irish Banks, P.L.C., 173 A.3d 1033,
1037 (Del. 2017).
31
McWane Cast Iron Pipe Corp. v. McDowell-Wellman Eng’g Co., 263 A.2d
281, 283 (Del. 1970).
32
Hamilton P’rs v. Englard, 11 A.3d 1180, 1217 (Del. Ch. 2010).
33
See Dkt. 24.
13
This Court has yet to address the pleading-stage viability of Plaintiff’s claims,
let alone whether the Court has personal jurisdiction over Frankenstein, and no
discovery has taken place. Although the causes of action are not identical, the core
of both actions revolve around the same nexus of facts. Janvest Israeli Litigation II
involves the truth or falsity of the allegedly defamatory statements at the crux of
Plaintiff’s Complaint. Thus, it is in the interest of the efficient administration of
justice to allow Janvest Israeli Litigation II to proceed and stay Plaintiff’s action
pending resolution in Israel. As such, this factor weighs heavily in favor of the
Defendants.
2. Applicability of Delaware Law
The second factor— “whether or not the controversy is dependent upon the
application of Delaware law ...”34—relates to whether Delaware law governs the
dispute. This factor does not merely involve an “academic inquiry into what law to
apply.”35 The fact that Delaware law may govern is not conclusive.36 Rather, the
factor focuses on Delaware’s degree of interest in the dispute.37 Absent a central
novel and substantial issue of Delaware law, this factor is typically accorded less
34
Gen. Foods Corp. v. Cryo-Maid, Inc., 198 A.2d 681, 684 (Del. 1964).
35
Holsopple, 250 A.3d at 956.
36
In re Chambers Dev. Co., Inc. Shareholders Litig., 1993 WL 179335, at *3
(Del. Ch. 1993) (citing Jim Walter Corp. v. Allen, 1990 WL 3899, at *5 (Del. Ch.
Jan. 12, 1990)).
37
Holsopple, 250 A.3d at 956.
14
weight than other significant factors.38 In evaluating this factor, the court should
consider the “nature and novelty of questions of law to be answered, the desirability
of providing a Delaware forum, and the importance of overseeing the conduct of
particular classes of actors and policing against particular types of wrongdoing.”39
Though Plaintiff contends that Delaware law governs his defamation action,
it is not clear whether Delaware substantive law applies. Defendants argue that in a
defamation action, the local law where the publication occurs determines the
applicable substantive law.40 The Court has not conducted a conflict of laws analysis
determining what law governs. Thus, it is not certain that Plaintiff’s claims require
application of Delaware law.
Even if Delaware law applies, Plaintiff’s defamation claim does not raise any
novel or substantial issues of Delaware law. The mere fact that a defendant is a
Delaware entity is not sufficient to avoid a stay or dismissal. As the Supreme Court
of Delaware explained, “even Delaware corporations can avoid facing suit in
Delaware, where the connection between the claims at issue and Delaware are
attenuated and the defendant corporation faces an undue burden.”41 The Supreme
Court has applied this same rationale to nonresident officers and directors.42 Here,
38
See Hoover Indus. v. Chase, 1988 WL 73758, at *4 (Del. Ch. July 13, 1988).
39
Hamilton P’rs, 11 A.3d at 1213.
40
Def.’s Op. at 12.
41
Hazout v. Ting, 134 A.3d 274, 279 (Del. 2016).
42
Id.15
the only connection between Plaintiff’s claim and Delaware is that the Janvest
entities are registered in Delaware. Accordingly, this factor weighs in favor of the
Defendants.
3. Ease of Access to Proof
The third factor—the ease of access to proof—requires the Court to evaluate
the evidence’s proximity to the competing fora.43 Though “[w]ith current
technology, the importance of this factor has faded for corporate and commercial
disputes.”44
Here, most of the potential witnesses, documents, and other evidence are in
Israel. Plaintiff acknowledged at the hearing on the Motion to Dismiss that the
evidence and witnesses are not in Delaware but located in another country.45
Plaintiff resides in Israel. The recipients of the allegedly defamatory emails at issue
reside in Israel. eVision is based in Israel. The Janvest entities operate in Israel.
Janvest Israeli Litigation I, which sheds light on the truth or falsity of the allegedly
defamatory emails, occurred in Israel. Janvest Israeli Litigation II is pending in
Israel. Again, the Defendants’ lone connection to Delaware is the entities’ place of
43
Turner Construction Co., 2014 WL 703808, at *5 (quoting In re Asbestos
Litig., 929 A.2d 373, 383 (Del. Super. 2006)).
44
Id. at 973.
45
See Oral Arg.Tr. 17:16-17, 18:5-7.
16
registration. The Court also notes that some of the evidence could be in another
language, namely Hebrew. Thus, this factor weighs in favor of the Defendants.
4. Availability of Compulsory Process
The fourth factor—the availability of compulsory process for witnesses—asks
whether the court can compel the relevant witnesses to appear. 46 This Court has
identified this factor as an “important consideration in assessing the appropriateness
of a forum.”47 It requires the Court to evaluate whether “another forum would
provide a substantial improvement as to the number of witnesses who would be
subject to compulsory process.”48 The Court may also take into consideration the
importance of the inconvenienced witnesses.49 When there is a similar action
pending in a forum where a compulsory process is available for the witnesses, this
factor favors a stay.50
Here, Defendants assert that necessary and relevant witnesses reside in Israel.
The recipients of the allegedly defamatory statements are Israeli citizens, the
misconduct alleged in the defamatory statements occurred in Israel, and the alleged
damages to Plaintiff’s reputation in the community is in Israel, where Plaintiff
46
Cryo-Maid, 198 A.2d at 685.
47
Monsanto, 559 A.2d at 1307.
48
Mt. Hawley Ins. Co. v. Jenny Craig, Inc., 668 A.2d 763, 769 (Del. Super.
1995).
49
Monsanto, 559 A.2d at 1308.
50
See Chambers Dev. Co., 1993 WL 179335, at *6.
17
resides. Plaintiff conceded during the hearing on the Motion to Dismiss that “there
[i]s a witness who is unwilling to appear in a Delaware court.”51
To obtain testimony from witnesses in Israel unwilling to appear in Delaware,
the parties would need to rely on the Hague Convention on the Taking of Evidence
Abroad in Civil or Commercial Matters (“Hague Convention on Evidence”).52
Under the Hague Convention on Evidence, a signatory to the Convention may
request evidence from another signatory for use in judicial proceedings.53 The
United States and Israel are signatories to the Hague Convention on Evidence. Thus,
the parties may obtain testimony from unwilling witnesses through letters of
request.54
This process, however, presents several challenges. For one, letters of request
are just that – requests – and thus, may be rejected.55 A letter of request also does
not compel live testimony at trial.56 Rather, the parties would have to rely on
51
Oral Arg. Tr. 18:22-23, 19:1.
52
See, e.g., Ingenico Inc. v. Ioengine LLC, 2021 WL 765757 (D. Del. Feb. 26,
2021).
53
Hague Evidence Convention on the Taking of Evidence Abroad in Civil or
Commercial Matters (“Hague Convention on Evidence”) art. 1, Mar. 18, 1970, 23
U.S.T. 2555.
54
Id.; 28 U.S.C. § 1781.
55
Hague Convention on Evidence art. 11-12.
56
In re Air Crash at Madrid, Spain on August 20, 2008, 893 F.Supp.2d 1020,
1032 (C.D. Cal. 2011); Mastafa v. Australian Wheat Bd. Ltd., 2008 WL 4378443, at
*8 (S.D.N.Y. Sept. 25, 2008).
18
deposition transcripts,57 a condition that the United States Supreme Court has noted
is “not satisfactory to court, jury or most litigants.”58 Lastly, other courts have noted
the procedures’ shortcomings, describing it as “a difficult and time-consuming – if
not altogether futile – endeavor”59 and “notoriously inefficient.”60
Here, a party seeking to obtain testimony from a witness in Israel must first
file with this Court a motion for issuance of letters of request.61 If approved, the
request is forwarded to the Central Authority for Israel.62 Once received, Israel has
the discretion, albeit limited, to reject the request under certain circumstances.63
Only upon approval from Israel can counsel begin scheduling deposition
proceedings. Even still, the witness may oppose the discovery sought if such
discovery is impermissible pursuant to Israeli law.64 This is but a rudimentary
summary of an arduous process that does not yield live testimony, but rather a
transcript, and the potential challenges that accompany it.
57
In re Air Crash at Madrid, 893 F.Supp.2d at 1032.
58
Gulf Oil Corp. v. Gilbert, 330 U.S. 501, 511 (1947).
59
Melgares v. Sikorsky Aircraft Corp., 613 F.Supp.2d 231, 243 n.8 (D. Conn.
2009).
60
Da Rocha v. Bell Helicopter Textron, Inc., 451 F.Supp.2d 1318, 1325 (S.D.
Fla. 2006).
61
Super. Ct. Civ. R. 28.
62
Hague Convention on Evidence art. 2.
63
Hague Convention on Evidence art. 5, 6, 11, 12.
64
Hague Convention on Evidence art. 9, 11.
19
The difficulties facing a party seeking compulsory process from an Israeli
witness hinder this Court from being an ideal forum. In contrast, there is a similar
action pending in Israel that avoids these challenges. In Janvest Israeli Litigation II,
witness availability is greater and simpler as Israel is where most of the witnesses
are located, where the conduct at issue occurred and where Janvest Israeli Litigation
II is pending. Thus, given this Court’s limited ability to issue the necessary
compulsory process and the action pending in an alternative forum that avoids these
confines, this factor weighs heavily in favor of the Defendants.
5. Other Practical Considerations
The final Cryo-Maid factor requires the court to consider any other practical
considerations that would make litigation easy, expeditious, and inexpensive.65 This
factor “is neither hollow in meaning nor rigid in its application.”66 In evaluating this
factor, Delaware courts have considered the state and public interest in adjudication,
judicial economy, plaintiff’s motives, and language barriers for foreign witnesses.
The potential boundaries of what a court may consider are “limited only by the
imagination of creative counsel.”67
65
Cryo-Maid, 198 A.2d at 684.
66
Martinez, 86 A.3d at 1112.
67
DONALD J. WOLFE, JR. & MICHAEL A. PITTENGER, CORPORATE AND
COMMERCIAL PRACTICE IN THE DELAWARE COURT OF CHANCERY, SECOND EDITION
§ 5.02[g] 5-52 (Matthew Bender & Co., 2d ed. 2018).
20
This Court has found in favor of a stay where the only connection between
the parties and Delaware is the place of incorporation.68 That is the case here.
Plaintiff is not a resident of Delaware. Frankenstein is not a resident of Delaware.
The only connection this case has to Delaware is the Janvest entities’ place of
registration. Thus, considerations of the state and public interest weigh in favor of
Defendants.
Given the procedural posture of the competing action, its relevance to the
competing forum, and its duplicative nature to the case at hand, considerations of
judicial economy weigh in favor of Defendants.
Considering the circumstances surrounding Plaintiff’s filing, it appears that
Plaintiff filed his Complaint in Delaware in anticipation of Janvest Israeli Litigation
II. While Defendants’ communications prior to Plaintiff’s filing showed an intent
to pursue litigation if necessary, they also indicated a desire to negotiate a resolution
outside of the courthouse if possible. Plaintiff ignored Defendants’ requests and
commenced a defamation action in Delaware. Thus, Plaintiff’s motives indicate an
attempt to preempt Defendants’ suit in Israel.
The potential language barrier that may arise if this case proceeds in Delaware
also weighs in favor of Defendants. Delaware courts have noted that language
68
Royal Indem., 2005 WL 1952933, at *11.
21
barriers can present a problem under the practical considerations factor.69 When
language barriers require translation for evidence or witnesses and an alternative
appropriate forum is available, Delaware courts have found this factor to weigh in
favor of a stay.70 Here, most of the potential witnesses are in Israel and the evidence
in Hebrew, thus requiring translation. Considering the potential language barrier,
Israel is the more appropriate forum.
The practical considerations all point to Israel, where Janvest Israeli Litigation
II is pending, as the appropriate forum for this dispute. Thus, this factor weighs
overwhelmingly in favor of the Defendants.
V. Conclusion
The Plaintiff is in Israel, not Delaware. The entities involved are in Israel, not
Delaware. The evidence is in Israel, not Delaware. The potential witnesses are in
Israel, not Delaware. The alleged misconduct at the core of both actions occurred in
Israel, not Delaware. It is not clear whether Delaware law even applies. The lone
connection Plaintiff’s action has to Delaware is that the Janvest entities are registered
in Delaware. There is an action involving the same facts pending in Israel. The
69
Aveta, Inc. v. Colon, 942 A.2d 603, 614 (Del. Ch. 2008) (“This Court has
previously considered language barriers when applying the forum non conveniens
doctrine”).
70
Aveta, 942 A.2d at 614 (granting a stay where a language barrier existed thus
requiring a translator for evidence and witnesses, and the Cryo-Maid factors weighed
in favor of the defendant); see also Eurofins Pharma US Hldgs., Inc. v. Bioalliance
Pharma SA, 2009 WL 2992552, at *7 (D. Del. Sept. 18, 2009).
22
Court finds that the application of the Cryo–Maid factors weigh in favor of staying
this case pending the current Israeli litigation. Because the Court has decided to stay
the action in deference to Janvest Israeli Litigation II, it will not decide whether
jurisdictional discovery is appropriate at this time.
Accordingly, Defendants’ Motion to Dismiss or Stay Plaintiff’s Complaint is
GRANTED in part. This action is stayed pending the outcome of Janvest Israeli
Litigation II. IT IS SO ORDERED.
23