Benchmark Investments LLC v. Pacer Advisors, Inc.

CourtSupreme Court of Delaware
DecidedApril 30, 2026
Docket378, 2025
StatusPublished

This text of Benchmark Investments LLC v. Pacer Advisors, Inc. (Benchmark Investments LLC v. Pacer Advisors, Inc.) is published on Counsel Stack Legal Research, covering Supreme Court of Delaware primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Benchmark Investments LLC v. Pacer Advisors, Inc., (Del. 2026).

Opinion

IN THE SUPREME COURT OF THE STATE OF DELAWARE

BENCHMARK INVESTMENTS § LLC (d/b/a KELLY BENCHMARK § INDEXES), § No. 378, 2025 § Plaintiff Below, § Court Below: Superior Court Appellant, § of the State of Delaware § v. § C.A. No. N23C-03-171 § PACER ADVISORS, INC., § § Defendant Below, § Appellee. §

Submitted: February 4, 2026 Decided: April 30, 2026

Before SEITZ, Chief Justice; VALIHURA, TRAYNOR, LEGROW, and GRIFFITHS, Justices, constituting the Court en Banc.

Upon appeal from the Superior Court. REVERSED AND REMANDED.

Elizabeth A. Sloan, Esquire, Emily C. Friedman, Esquire, BALLARD SPAHR LLP, Wilmington, Delaware; Gregory M. Williams, Esquire, (argued), Jacquelyn E. Fradette, Esquire, SIDLEY AUSTIN LLP, Washington, D.C., for Plaintiff Below, Appellant Benchmark Investments LLC.

Michael W. McDermott, Esquire, (argued), David B. Anthony, Esquire, Zachary J. Schnapp, Esquire, BERGER MCDERMOTT LLP, Wilmington, Delaware, for Defendant Below, Appellee Pacer Advisors, Inc. SEITZ, Chief Justice:

Benchmark Investments, LLC hired Pacer Advisors, Inc. to serve as an

investment advisor and servicer for Benchmark’s exchange-traded funds. Section

6(c)(i) of their agreement gave Benchmark a without-cause termination right at the

end of the term after written notice to Pacer. Also, under Section 6(c)(ii), Benchmark

could notify Pacer of “its intent to terminate the Agreement in accordance with sub-

section 6(c)(i)” and propose a reorganization of the funds.

Benchmark notified Pacer of its “intent to terminate” their agreement and

proposed a reorganization plan. After the reorganization plan was not approved,

Pacer informed Benchmark that it “accepted” Benchmark’s termination of their

agreement. Benchmark disagreed that it had terminated the agreement. It responded

that Benchmark’s notice of intent to terminate under Section 6(c)(ii) was not the

same as a notice of actual termination under Section 6(c)(i). In other words, it was

only an intent to terminate, not an actual termination.

The Superior Court held that Benchmark’s notice of intent to terminate caused

an actual termination of the parties’ agreement when the reorganization plan was not

approved. On appeal, Benchmark argues that a notice of intent to terminate is not

the same as an actual termination. We agree. The court should have granted

Benchmark’s motion for summary judgment.

2 I.

A.

Benchmark Investments, LLC, operating as Kelly Benchmark Indexes, is a

sponsor and index provider for exchange traded funds (“ETFs” or “funds”). An ETF

is an investment fund traded on stock exchanges. It allows investors to buy a basket

of assets like stocks, bonds, or commodities without purchasing each asset

individually. Businesses like Benchmark design indexes and offer ETFs to invest in

those indexes. The Benchmark funds correlate to real estate indexes.1

In November 2017, Benchmark signed an ETF services agreement with Pacer

Advisors, Inc. (“ETF Services Agreement” or “Agreement”).2 The Agreement

followed what is known as a “white label” model.3 Under a white label model, a

sponsor (like Benchmark) pays a service provider and advisor (like Pacer) to host

the sponsor’s indexes in its own funds.4 Typically, the service provider receives all

1 App. to Opening Br. at A073 [hereinafter A_] (Am. Compl., dated June 14, 2023, at 1–2 [hereinafter Compl.]). 2 A084 (Id. at 13). See generally A037–52 (Agreement). 3 Nasdaq, Inc. v. Exch. Traded Managers Grp., LLC, 431 F. Supp. 3d 176, 189 (S.D.N.Y. 2019). 4 A037–54 (Agreement). Sponsors choose this route to avoid building a costly ETF infrastructure. Nasdaq, Inc., 431 F. Supp. 3d at 189.

3 revenue from the funds as a fee until those revenues exceed the service provider’s

expenses.5 Once the funds break even, the parties split the profits.6

A white label model also involves an independent trust and fiduciary for the

funds’ stockholders – in this case, Pacer Funds Trust.7 The Trust is separate from

Pacer Advisors. The Trust’s board oversees the funds and its advisor. It also plays

a role if the sponsor decides to reorganize the funds.

B.

Section 6 of the ETF Services Agreement addresses term and termination.

The Agreement had an initial two-year term that automatically renewed in one-year

increments unless terminated for material breach or without cause. The term

provision provides:

(a) Initial Term; Renewal.

This Agreement will remain in effect for a period of two years from the commencement of operations of the first Fund to be organized and operated under this Agreement (“Initial Term”) and will automatically renew for successive periods of one year (each a “Renewal Term” and together with the Initial Term, the “Term”) unless and until terminated hereunder.

The termination for cause provision provides:

5 A040 (Agreement § 2(d)). 6 The Agreement provided a 50/50 profit split. Id. 7 A041–42 (Id. § 6(c)(ii)); see also 15 U.S.C. § 80a–15(a) (governing “[w]ritten contract[s] to serve or act as investment adviser” to “registered investment company[ies]”).

4 (b) Termination for a Material Breach.

Either party may terminate this Agreement for a material breach by the other party of this Agreement that is not cured within thirty (30) days’ notice thereof. Termination of this Agreement will not affect the rights and obligations of the parties arising prior to such termination, and such rights and obligations will survive to the extent necessary to effectuate this Agreement for periods prior to such termination.

The without cause termination provision provides:

(c) Termination Without Cause.

(i) This Agreement may be terminated without Cause by Benchmark upon written notice to PACER Advisors, provided that Benchmark shall not have the termination date of the License occur before the end of the Initial Term of the Agreement unless a change of control of PACER Advisors which terminates the investment advisory agreement between the Trust and PACER Advisors is contemplated.

(ii) In the event that Benchmark gives notice of its intent to terminate this Agreement in accordance with sub-section 6(c)(i), Benchmark shall have the right but not the obligation to propose a reorganization of the Fund or Funds formed and operating hereunder with and into another registered investment company or series thereof. Any such proposal shall be subject to acceptance by the Trust in the sole discretion of the Trust’s Board. PACER Advisors agrees that, solely for purposes of this sub-section (c)(ii), it will support any such reorganization proposal that appears to PACER Advisors to be in the best interest of the Fund’s (or Funds’) shareholders, provided, however, that in the event that the Fund or Funds are reorganized into another registered investment company or series thereof, Benchmark shall pay for all reasonable costs associated with obtaining Board and shareholder approval (if any), associated with such reorganization, and shall pay to PACER Advisors an amount determined according to the formula outlined in Exhibit “C”.

5 (iii) This Agreement shall terminate as to a Fund if the Trust’s Board approves the termination of a Fund’s use of a Benchmark Custom Index without Cause and the Fund is liquidated.8

To summarize, for a termination without cause, Section 6(c)(i) permits

Benchmark to terminate the Agreement “upon written notice to” Pacer, but not

“before the end of the Initial Term” or any renewal term. Under Section 6(c)(ii), if

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Benchmark Investments LLC v. Pacer Advisors, Inc., Counsel Stack Legal Research, https://law.counselstack.com/opinion/benchmark-investments-llc-v-pacer-advisors-inc-del-2026.