Icahn Partners, LCP v. DeSouza

• Court: Supreme Court of Delaware
• Decided: April 11, 2024
• Docket: 107, 2024
• Status: Published

Opinion

IN THE SUPREME COURT OF THE STATE OF DELAWARE

ICAHN PARTNERS LP, ICAHN § PARTNERS MASTER FUND LP, § MATSUMURA FISHWORKS LLC, § No. 107, 2024 derivatively on behalf of § ILLUMINA, INC., and individually § Court Below—Court of Chancery on behalf of themselves and all other § of the State of Delaware similarly-situated stockholders of § ILLUMINA, INC., § C.A. No. 2023-1045 § Plaintiffs Below, § Appellants, § § v. § § FRANCIS DESOUZA, JOHN W. § THOMPSON, FRANCIS ARNOLD, § CAROLINE DORSA, ROBERT § EPSTEIN, SCOTT GOTTLIEB, § GARY GUTHART, PHILIP § SCHILLER, and SUSAN SIEGEL, § § Defendants Below, § Appellees § § and § § ILLUMINA, INC., § Nominal Defendant Below, § Appellee. §

Submitted: March 28, 2024 Decided: April 11, 2024

Before SEITZ, Chief Justice; VALIHURA and TRAYNOR, Justices.

ORDER After consideration of the notice and supplemental notice of interlocutory

appeal and the exhibits, it appears to the Court that:

(1) This interlocutory appeal arises from Icahn Partners LP, Icahn Partners

Master Fund LP, and Matsumura Fishworks LLC’s (“Icahn Parties”) filing of a class

and derivative complaint against current and former directors of nominal defendant

Illumina, Inc. Illumina moved to strike portions of the complaint, contending that

those portions contained confidential and privileged information that an Illumina

director, who was nominated to the board by the Icahn Parties and employed by an

Icahn-affiliated entity, had improperly shared with the Icahn Parties. The individual

defendants joined in the motion to strike. The Icahn Parties opposed the motion,

arguing that it was permissible for the Icahn-affiliated director to share Illumina’s

confidential and privileged information with the Icahn Parties.

(2) In a letter opinion dated January 16, 2024, the Court of Chancery

granted the motion to strike.1 The court held that the Icahn-affiliated director did

not have the right to share Illumina’s confidential or privileged information with the

Icahn Parties.2 As explained by the court, the Icahn-affiliated director’s lack of

fiduciary role with the Icahn Parties and the Icahn Parties’ lack of contractual rights

to designate directors to the Illumina board and limited voting power made the case

1 Icahn Parties LP v. Souza, 2024 WL 180952 (Del. Ch. Jan. 16, 2024). 2 Id. at *4-9. 2 distinguishable from cases holding a director may share confidential or privileged

information with a stockholder.3 The court also emphasized that the Icahn-affiliated

director had not abided by his agreement to comply with Illumina’s Code of

Conduct, which prohibited the sharing of Illumina’s confidential information with

others.4 On February 19, 2024, the court denied the Icahn Parties’ motion for

reargument.

(3) The Icahn Parties filed an application for certification of an

interlocutory appeal from the January 16, 2024 letter opinion and the February 19,

2024 order denying reargument (“Interlocutory Rulings”). Illumina and the

individual defendants opposed the application. On March 20, 2024, the Court of

Chancery refused the application for certification.

(4) In refusing certification, the Court of Chancery first found that striking

allegations from a pleading did not decide a substantial issue of material importance

meriting appellate review before final judgment. The court next considered the Rule

42(b)(iii) criteria that the Icahn Parties identified as supporting interlocutory review.

As to Rule 42(b)(iii)(A) (question of law resolved for the first time), the court held

that the Interlocutory Rulings did not resolve a question of law for the first time, but

simply applied existing legal precedent to the facts of the case. The court next found

3 Id. at *7. 4 Id. at *9. 3 that Rule 42(b)(iii)(B) (conflicting trial court decisions on the question of law) did

not support certification because the Icahn Parties had not identified any cases with

similar facts that conflicted with the Interlocutory Rulings.

(5) Turning to Rule 42(b)(iii)(G) (interlocutory review may terminate the

litigation), the court recognized that the striking of allegations in the complaint

would not terminate the litigation. The court rejected the Icahn Parties’ contention

that interlocutory review was appropriate because their complaint might not survive

a motion to dismiss in the absence of the stricken information and that their

possession of unique information could disqualify them from acting derivatively.

The court found these claims speculative, noting that the complaint might survive a

motion to dismiss and, if it did not, there would be a final judgment to appeal. As

to Rule 42(B)(iii)(H) (review of the interlocutory order may serve of considerations

of justice), the court found that the Icahn Parties had simply rehashed arguments

already found not to weigh in favor of certification. Finally, the court balanced its

consideration of the Rule 42(b)(iii) factors with its assessment that the most efficient

and just way to resolve the case was to proceed in the ordinary course.

(6) Applications for interlocutory review are addressed to the sound

discretion of the Court.5 In the exercise of its discretion and giving due weight to

Court of Chancery’s analysis, this Court has concluded that the application for

5 Supr. Ct. R. 42(d)(v). 4 interlocutory review does not meet the strict standards for certification under Rule

42(b). We agree with the Court of Chancery that the Rule 42(b)(iii) criteria do not

weigh in favor of interlocutory review. Exceptional circumstances that would merit

interlocutory review of the Interlocutory Rulings do not exist in this case,6 and the

potential benefits of interlocutory review do not outweigh the inefficiency,

disruption, and probable costs caused by an interlocutory appeal.7

NOW, THEREFORE, IT IS ORDERED that the interlocutory appeal is

REFUSED.

BY THE COURT: /s/ Karen L. Valihura Justice

6 Id. R. 42(b)(ii). 7 Id. R. 42(b)(iii). 5