Follett Content Solutions, LLC v. Literati, Inc.

• Court: Superior Court of Delaware
• Decided: June 18, 2026
• Docket: N25C-09-070 PAW CCLD
• Status: Published

Opinion

IN THE SUPERIOR COURT OF THE STATE OF DELAWARE

FOLLETT CONTENT SOLUTIONS, ) LLC, ) Plaintiff, ) ) ) v. ) C.A. No. N25C-09-070 PAW CCLD ) ) LITERATI, INC., ) ) Defendant. )

Submitted: May 13, 2026 Decided: June 18, 2026

MEMORANDUM OPINION

Upon Defendant’s Motion to Dismiss or Stay; GRANTED.

Alessandra Glorioso, Esq.; and Case Collard, Esq., of Dorsey & Whitney LLP; Paige Arnette Amstutz, Esq., of Scott Douglass & McConnico LLP, Attorneys for Plaintiff Follett Content Solutions, LLC.

Katharine L. Mowery, Esq., of Richards, Layton, & Finger, P.A.; Katherine P. Chiarello, Esq., of Botkin Chiarello Calaf, Attorneys for Defendant Literati, Inc.

WINSTON, J. I. INTRODUCTION

This case involves a dispute between the buyer and seller of a book fair

business. As part of the sale, the buyer agreed to maintain the seller’s popular loyalty

rewards program through a separate agreement. Shortly after executing the

agreement, the buyer fell behind on its financial obligations under the rewards

program, leading to a dispute over whether the seller’s invoicing method complied

with the agreement’s terms.

The buyer filed a lawsuit in a Texas state court, initially seeking information

under an audit rights provision to determine if the seller was entitled to invoice the

buyer for the claimed amounts. Three weeks later, the buyer amended its complaint,

seeking a declaration that the seller was not entitled to invoice those amounts.

Subsequently, the seller initiated this action in Delaware. The Texas complaint was

amended once more, after the instant motion was filed. The buyer’s motion to

dismiss asks the Court to dismiss or stay the Delaware action in favor of the Texas

action, arguing that the Texas action was first-filed and should be given deference

under the McWane doctrine. For the reasons outlined below, this action is stayed in

favor of the first-filed Texas action.

2 II. FACTUAL AND PROCEDURAL BACKGROUND

In January of 2022, Plaintiff Follett Content Solutions, LLC sold its book fair

business to Defendant Literati, Inc.1 A month later, in an agreement titled the

“Titlewave Rewards Program Service Agreement” (the “Agreement”) dated

February 28, 2022, Follett agreed to provide certain fulfillment services related to

Literati’s book fairs.2 Specifically, Follett agreed to provide services related to its

reward program (the “Program”), in which customers earn rewards which allow

them to purchase more books and resources through Follett’s e-commerce site,

Titlewave.3 Follett agreed to organize the Program for Literati’s book fairs, prepare

the Program’s gift certificates, and manage the logistics of shipping books and

merchandise to customers redeeming them through the Program.4 In exchange,

Literati agreed to exclusively promote the Program at its book fairs.5

When a customer opted into the Program, Literati was to assign the customer

a unique code, provide the code along with customer information to Follett, and

notify the customer of its Titlewave reward gift certificate amount.6 When Follett

1 D.I. 1 (hereinafter “Compl.”) ¶ 23. 2 Compl. ¶ 25; See Compl. Ex. 1 (hereinafter the “Agreement”). 3 Compl. ¶ 27. 4 Id. 5 Id. ¶ 28. 6 Id. ¶ 29. 3 created the gift certificate and made it available to the customer for redemption, it

was to send Literati an invoice.7 Within five business days after Follett sent the

invoice, Literati was to pay two-thirds of the printed value of each gift certificate

issued by Follett to a customer as part of the Program.8 The Agreement also provided

that either party could terminate if the other party materially breached and failed to

cure within 30 days of receiving notice of its breach, or 10 days if the breach was

due to non-payment.9

After the Agreement went into effect, Literati frequently made late payments,

and eventually fell behind on its obligations, which it acknowledged.10 The parties

discussed Literati’s default, and Literati assured Follett it would pay its outstanding

balance.11 However, on August 7, 2025, Follett provided Literati a notice of default

(the “Notice of Default”), informing Literati that it owed $2,872,634.25 to Follett

for Certificates that Follett provided to Literati’s customers.12 Literati responded to

the Notice of Default, stating it was “working through the issues [Follett] raised and

7 Id. ¶ 31. 8 Id. ¶ 32. 9 Compl. ¶ 35; Agreement § 5(b). 10 Compl. ¶¶ 37-41. 11 Id. ¶¶ 42-45. 12 Id. ¶ 46. 4 wanted to provide a ‘thoughtful response,’ and that it planned to do so ‘early [in the

week of August 18th].’”13

On August 19, Literati sent a letter purporting to exercise certain audit rights

it was entitled to under the Agreement, and filed a complaint against Follett in the

Travis County District Court in the State of Texas (the “Initial Petition” in the “Texas

Action”) alleging that Follett breached the Agreement’s audit rights provisions.14

However, Literati did not notify Follett of its breach as required by the Agreement’s

notice provision before filing suit.15 Follett demanded Literati withdraw its suit, but

Literati refused.16 Literati amended its complaint in Texas on September 8, 2025

(the “Amended Petition”), seeking a declaratory judgment that Follett was not

entitled to invoice Literati for Literati’s two-thirds share of the value of the rewards

received by a school under the Program until after the school had redeemed its gift

certificates (as opposed to when the gift certificates were issued).17 It amended its

complaint once more on January 9, 2026—after briefing on this motion had closed—

adding two claims: one for improper termination of the Agreement, and another for

13 Pl.’s Opp’n 15-16 (quoting Pl.’s Opp’n Ex. E). 14 Compl. ¶¶ 50-51. See D.I. 10 (hereinafter “Mot. Dismiss”) Ex. 2 (hereinafter “Initial Petition”). 15 Compl. ¶¶ 53-54. 16 Id. ¶¶ 58-59. 17 See Mot. Dismiss Ex. 3 (hereinafter “Amended Petition”). 5 breach of the implied covenant (the “Second Amended Petition”).18 Follett sought

dismissal of the Texas Action, contending the Texas court lacks jurisdiction over

Follett.19 However, the Texas court denied Follett’s motion, meaning the Texas

Action will proceed.20

The day after Literati filed its Amended Petition, on September 9, 2025,

Follett brought suit in Delaware (the “Delaware Action”), bringing two counts of

breach of contract.21 Count I alleges breach of contract for Literati’s failure to pay

its outstanding balance in a timely manner.22 Count II alleges breach of contract for

Literati’s failure to follow the Agreement’s notice and cure provision before filing

suit in Texas.23 On November 5, Literati moved to dismiss or stay the complaint

under Rule 12(b)(3), contending this action should be dismissed or stayed in favor

of the Texas Action.24 Follett submitted its brief in opposition,25 to which Literati

replied. This Court heard oral argument and took the matter under advisement.

18 See D.I. 59 Ex. 1 (hereinafter “Second Amended Petition”). 19 Mot. Dismiss Ex. K. 20 See D.I. 72. 21 See generally Compl. 22 Id. ¶¶ 60-66. 23 Id. ¶¶ 67-72. 24 See generally Mot. Dismiss. 25 See generally D.I. 31 (hereinafter “Pl.’s Opp’n”). 6 III. STANDARD OF REVIEW

On a motion to dismiss under Rule 12(b)(3), based on forum non conveniens,

“‘this Court exercises its sound discretion when making findings of fact and drawing

conclusions therefrom’ by using ‘an orderly and logical deductive process.’”26 “A

motion raising forum non conveniens is a request that a court possessing both

personal and subject matter jurisdiction over an action nevertheless decline to hear

it.”27 In deciding these motions, the principal issue before the Court is whether a

“prior pending” action exists between the parties. The answer will determine the

applicable standard the Court applies to the motions.28

The Supreme Court’s decision in McWane Cast Iron Pipe Corp. v. McDowell-

Wellman Eng’g Co.29 provides the framework for this Court’s analysis in the context

of a first-filed action in another forum. A McWane analysis asks “(1) is there a prior

action pending elsewhere; (2) in a court capable of doing prompt and complete

justice; (3) involving the same parties and the same issues? If all three criteria are

26 Arrowood Indemnity Co. v. AmerisourceBergen Corp., 2023 WL 2726924, at *8 (Del. Ch. Mar. 30, 2023) (quoting In re CVS Opioid Ins. Litig., 2022 WL 3330427, at *3 (Del. Super. Aug. 12, 2022)). 27 Id. (quoting GXP Cap., LLC v. Argonaut Mfg. Servs., Inc., 234 A.3d 1186, 1193 (Del. Super. 2020)). 28 See id. (explaining different standards apply to a forum non conveniens motion depending on the parties’ litigation history). 29 263 A.2d 281 (Del. 1970). 7 met, ‘McWane and its progeny establish a strong preference for the litigation of a

dispute in the forum in which the first action’ was filed.”30 Finally, “[i]n addition to

the comity considerations articulated in McWane, [Delaware Courts], in assessing

motions to stay Delaware litigation under the first-filed rule, frequently analyze[] the

same ‘practicality’ factors traditionally applied under the forum non conveniens

doctrine.”31

IV. ANALYSIS

Defendant raises two primary arguments. First, the Texas Action was the first

filed action in this matter, involving the same parties and issues. Second, the Cryo-

Maid factors weigh in favor of dismissal. Because the Court agrees that the Texas

Action was first filed and is entitled to greater deference under McWane, the Court

grants Defendant’s motion to stay.

A. THE TEXAS ACTION CONSTITUTES A FIRST-FILED ACTION.

A threshold question when applying the McWane doctrine is whether there is

a prior pending action elsewhere.

30 LG Elecs., Inc. v. InterDigital Commc’ns, Inc., 114 A.3d 1246, 1252 (Del. 2015) (quoting DONALD J. WOLFE, JR. & MICHAEL A. PITTENGER, CORPORATE AND COMMERCIAL PRACTICE IN THE DELAWARE COURT OF CHANCERY § 5.01, at 5-3 (2013)). 31 Gramercy Emerging Markets Fund v. Allied Irish Banks, P.L.C., 173 A.3d 1033, 1038 (Del. 2017) (quoting WOLFE & PITTENGER, § 5.01 (2017)). 8 1. THE TEXAS ACTION IS A PRIOR PENDING ACTION.

Literati notes that it commenced the Texas Action by filing the Initial Petition

on August 19, 2025, three weeks before Follett initiated the Delaware Action on

September 9, 2025.32 Accordingly, it contends “there is no reasonable basis to

dispute that the Texas Action warrants first filed status.”33 Follett responds that the

actions were filed contemporaneously, noting that Literati’s Amended Petition was

filed in the Texas Action on September 8, just one day before Follett initiated the

Delaware Action.34 Follett insists that the Amended Petition does not relate back to

the Initial Petition, because the Initial Petition concerned Literati’s audit rights under

the Agreement, while the Amended Petition seeks a declaratory judgment

concerning its payment obligations under the Agreement.35 It contends that the

Delaware Action only shares a significant nucleus of facts with the Amended

Petition, not the Initial Petition.36

When two actions are filed contemporaneously, McWane does not apply,

because in that instance, there is no “first-filed” action as a matter of law.37 Courts

32 Mot. Dismiss 13-14. 33 Id. 14. 34 Pl.’s Opp’n 11-12. 35 Id. 12-14. 36 Id. 14. See AR Capital, LLC v. XL Specialty Ins. Co., 2019 WL 1932061, at *3 (Del. Super. 37

Apr. 25, 2019). 9 have evaluated contemporaneousness broadly, noting that “the difference of a few

hours or even a few weeks may turn a second-filed action into a contemporaneously

filed action for the purposes of McWane.”38 In cases such as this, where an otherwise

first-filed case has been amended or altered, Delaware courts will compare the

original case to the later-filed case. “When the modified action bears little or no

resemblance to the original, it may be treated as a new action, thus eliminating claims

to first-filed status based on the filing date of the original action.” 39 But where the

substance of the original case is unchanged in the later-filed case, the court will treat

the later-filed action as if it was filed on the original date.40

In comparing the Initial Petition to the Amended Petition, the Court finds that

the Amended Petition bears sufficient resemblance to the Initial Petition, preserving

the first-filed status of the Texas Action. Literati expressly set out in the Initial

Petition that the reason it filed the Initial Petition was to enforce its audit rights under

the Agreement to determine whether Follett was demanding more money than it was

entitled to under the Agreement. Literati specifically alleged in the Initial Petition

that “Literati has paid Follett for reward merchandise that Follett has never actually

38 Jardine on behalf of HealthBookPlus Holdings, Inc. v. Turner, 2024 WL 1826613, at *2 (Del. Ch. Apr. 25, 2024). Choice Hotels Int’l, Inc. v. Columbus-Hunt Park DR. BNK Inv’rs, L.L.C., 2009 39

WL 3335332, at *6 (Del. Ch. Oct. 15, 2009) (internal quotations omitted). 40 Id. 10 provided to Literati’s book fair customers.”41 This is fundamentally what is at issue

in its Amended Petition, in which Literati seeks—among other relief—a declaratory

judgment that it is not obligated “to pay Follett two-thirds [] of the value of any

Titlewave Reward Gift Certificates for which Follett has not actually provided

reward merchandise to Literati’s book fair customers.”42 While the relief sought

differs and additional claims are added, the substance of the Initial Petition remains

unchanged in the Amended Petition. Accordingly, the Amended Petition relates back

to the Initial Petition for McWane purposes.43

2. THERE IS NO APPLICABLE EXCEPTION THAT WOULD ALLOW THE COURT TO DISREGARD THE TEXAS ACTION’S CHRONOLOGICAL PRIORITY.

Follett contends that McWane is nevertheless inapplicable because Literati

acted in bad faith by misleading Literati about its litigation plans. Follett points to

correspondence it had with Literati concerning its notice of default, in which Literati

41 Initial Petition ¶ 10. 42 Amended Petition ¶ 19. 43 The Court’s analysis mentions only the Amended Petition rather than the Second Amended Petition—the operative pleading in the Texas Action—because the Second Amended Petition was filed after briefing closed in this motion. The parties did not present arguments about the Second Amended Petition. However, the Amended Petition and the Second Amended Petition substantially overlap, with the Second Amended Petition adding two additional claims rooted in substantively identical facts. For the sake of clarity and the avoidance of doubt, because the Second Amended Petition and the Amended Petition are substantively similar, the Second Amended Petition also bears sufficient resemblance to the Initial Petition. 11 wrote that it was “working through the issues [Follett] raised and wanted to provide

a ‘thoughtful response,’ and that Literati planned to do so ‘early [in the week of

August 18th].’”44 Follett contends that, in fact, Literati was working on its lawsuit,

rather than a response to Follett’s concerns.45

Follett also contends that Literati’s declaratory judgment is an attempt to usurp

Follett from proceeding with its claim in its choice of forum, because Literati is the

natural defendant.46 It argues that Literati’s Amended Petition was anticipatory, and

that it should not be entitled to first-filed status accordingly.

Follett’s arguments fail for two reasons. First, Literati’s communication that

it was preparing a thoughtful response to Follett’s notice—which it provided—

cannot reasonably be construed as an indication that Literati was not going to file a

lawsuit. Literati had several options available to it to protect its own rights, and

choosing one—providing a thoughtful response to Follett’s concerns—does not

preclude it from exercising others.

Second, because the Amended Petition relates back to the Initial Petition—

filed three weeks before Follett initiated the Delaware Action—the declaratory

judgment claim does not merit enhanced scrutiny. Courts will often look at McWane

44 Pl.’s Opp’n 15-16 (quoting Pl.’s Opp’n Ex. E). 45 Id. 16. 46 Id. 17-19. 12 arguments concerning anticipatory declaratory judgment claims with greater

scrutiny in “rush to the courthouse” scenarios where a party files a lawsuit in

anticipation of litigation from the opposing party.47 Here, however, Literati initiated

litigation in the Texas Action three weeks before Follett filed the Delaware Action.

As previously discussed, the claims in the Amended Petition relate back to the Initial

Petition. Therefore, the concerns present in typical “rush to the courthouse”

situations are not present here. The Texas Action was first-filed.

B. THE TEXAS ACTION IS ENTITLED TO GREATER DEFERENCE UNDER MCWANE.

Having established that the Texas Action was first-filed, the Court must now

determine whether the Texas Action is entitled to McWane deference. Here, both

actions involve nearly identical issues and identical parties. Further, the Texas state

court is capable of doing prompt and complete justice. Finally, all other

discretionary factors favor a stay. Because allowing both actions to proceed would

be needlessly duplicative, the Texas Action is entitled to McWane deference.

1. THE TEXAS ACTION AND THE DELAWARE ACTION INVOLVE IDENTICAL PARTIES AND NEARLY IDENTICAL ISSUES.

McWane favors a stay either “where the parties and issues are identical, [or]

where there exists ‘substantial or functional identity’ between the two such that they

47 See Lincoln Benefit Life Co. v. Wilmington Tr., N.A., 2018 WL 3640898, at *4 (Del. Super. July 31, 2018). 13 ‘arise out of a common nucleus of operative fact.’”48 In other words, the claims

themselves do not have to be literally identical in each action. The analysis of

whether the parties and claims are the same “focuses on substance over form.”49 The

actions must share a substantial or functional identity arising from a common

nucleus of fact.

Literati argues that they do. Literati contends that the issue in both actions is

whether Follett properly invoiced Literati for the Program’s gift certificates under

the Agreement.50 The Court agrees. Follett’s complaint in the Delaware Action

seeks damages for breach of contract, claiming that Literati failed to pay for the gift

certificate invoices as required by the Agreement.51 Literati’s complaint in the Texas

Action seeks a declaratory judgment that under the Agreement, Follett is not entitled

to invoice Literati for the gift certificate invoices for gift certificates that have gone

unredeemed by customers.52 Fundamentally, both complaints address the same

dispute over the same set of fees that Literati may or may not owe under the

48 Tulum Mgmt. USA LLC v. Casten, 2015 WL 7456003, at *2 (Del. Ch. Nov. 20, 2015) (citing Davis Int’l, LLC v. New Start Grp. Corp., 2005 WL 2899683, at *2 (Del. Ch. Oct. 27, 2005)). 49 Kurtin v. KRE, LLC, 2005 WL 1200188, at *4 (Del. Ch. May 16, 2005). 50 Mot. Dismiss 15. 51 See generally Compl. 52 See generally Amended Petition. 14 Agreement. These issues are functionally identical. Further, it cannot be disputed

that the parties in both actions are identical.

2. THE DISTRICT COURT IN THE 126TH JUDICIAL DISTRICT OF TRAVIS COUNTY IS CAPABLE OF DOING PROMPT AND COMPLETE JUSTICE.

The final McWane factor is whether the court in the Texas Action can afford

the parties prompt and complete justice. “Rendering justice entails accurately

applying controlling law as well as ensuring that all parties necessary to a complete

resolution are joined (or can be joined by service of process) in a competing

action.”53 As a court of general jurisdiction,54 the District Court is more than capable

of affording the parties prompt and complete justice.55 Delaware courts have

previously recognized this to be true of Texas state courts.56

3. ALL OTHER PRACTICAL CONSIDERATIONS FAVOR A STAY.

As noted, in conducting a McWane analysis the Court will consider “other

practical considerations relevant to promoting the efficient administration of justice

53 Brookstone Partners Acquisition XVI, LLC v. Tanus, 2012 WL 5868902, at *6 (Del. Ch. Nov. 20, 2012). 54 Tex. Const. art. V, § 8. 55 See Ritchie v. Huizenga Managers Fund, LLC, 2017 WL 7803924, at *2 (Del. Super. Dec. 21, 2017) (noting the same as to the Circuit Court of Cook County, Illinois). See Brookstone Partners Acquisition XVI, LLC, 2012 WL 5868902 at *6; Citrin 56

Holdings LLC v. Cullen 130 LLC, 2008 WL 241615, at *4 (Del. Ch. Jan. 17, 2008). 15 based on the Delaware Supreme Court’s holding in” Cryo-Maid.57 In doing so,

“[t]he Court, [] must weigh the efficient administration of justice and analogous

considerations to determine whether it would be ‘extraordinarily expensive and

cumbersome for a defendant to litigate a case in Delaware.’”58

The Texas court has already denied Follett’s motion to dismiss in the Texas

Action. Because the Court has already found that the Texas Action was first-filed

and the Texas court is capable of doing prompt and complete justice, it makes little

sense to force Defendant to litigate in both forums at the same time. Requiring the

parties to do so would also create a risk that the courts in the Texas Action and the

Delaware Action create findings inconsistent with one another.

Bright Data, Inc. v. Meta Platforms, Inc., 2023 WL 5322293, at *6 (Del. Super. 57

Aug. 18, 2023) (internal quotations omitted). 58 Id. (quoting Martinez v. E.I. DuPont de Nemours and Co., Inc., 86 A.3d 1102, 1113 (Del. 2014)). 16 V. CONCLUSION

For the foregoing reasons, Defendant’s motion to dismiss or stay under Rule

12(b)(3) is GRANTED and the matter is STAYED without prejudice to Follett’s

right to prosecute the Delaware Action depending on the outcome of the Texas

Action.

IT IS SO ORDERED.

/s/ Patricia A. Winston Patricia A. Winston, Judge