Jason Dolan v. Jobu Holdings, LLC, Jobu Presents LLC, and Jobu Partner Holdings, LLC

• Court: Court of Chancery of Delaware
• Decided: September 2, 2021
• Docket: C.A. No. 2020-0962-JRS
• Status: Published

Opinion

COURT OF CHANCERY OF THE STATE OF DELAWARE

417 S. State Street JOSEPH R. SLIGHTS III Dover, Delaware 19901 VICE CHANCELLOR Telephone: (302) 739-4397 Facsimile: (302) 739-6179

Date Submitted: August 18, 2021 Date Decided: September 3, 2021

Carl D. Neff, Esquire Lisa Zwally Brown, Esquire FisherBroyles, LLP Greenberg Traurig, LLP Brandywine Plaza West The Nemours Building 1521 Concord Pike, Suite 301 1007 North Orange Street, Suite 1200 Wilmington, DE 19803 Wilmington, DE 19801

Re: Jason Dolan v. Jobu Holdings, LLC, Jobu Presents LLC, and Jobu Partner Holdings LLC C.A. No. 2020-0961-JRS

Dear Counsel:

On July 16, 2021, Plaintiff, Jason Dolan, filed a motion requesting that the

Court issue an Order to Show Cause as to why Defendants, Jobu Holdings, LLC,

Jobu Presents LLC, and Jobu Partner Holdings LLC (together, “Defendants”),

should not be held in contempt for violating the Stipulation and Consent Order Jason Dolan v. Jobu Holdings, LLC, Jobu Presents LLC, and Jobu Partner Holdings LLC C.A. No. 2020-0961-JRS September 3, 2021 Page 2

entered on March 16, 2021 (the “Motion”). For the reasons explained below, the

Motion is DENIED.1

I. BACKGROUND

This is a Delaware LLC “books and records” action filed under 6 Del. C.

§ 18-305.2 On March 16, 2021, the parties submitted a Stipulation and Consent

Order (“Order”) to the Court, which the Court entered the same day.3 As part of

the Order, Defendants were required to file their 2020 federal, state and local tax

returns, as well as 2020 financial statements prepared by an accredited accounting

firm, by June 14, 2021. They were also to provide those completed documents to

Plaintiff.

Defendants did not prepare and file the relevant documents by June 14, 2021.

Before that date, however, counsel for Defendants informed Plaintiff’s counsel that

1 Defendants’ requests for a hearing on the Motion or leave to file a sur-reply are denied as moot. (D.I. 46). 2 Pl.’s Verified Compl. (D.I. 1), at ¶¶ 1, 6. 3 Pl.’s Mot. for Order to Show Cause as to Why Defendants Should Not be Held in Contempt (D.I. 40) (“Pl.’s Mot.”), at ¶ 2; Stipulation and Consent Order (D.I. 39). Jason Dolan v. Jobu Holdings, LLC, Jobu Presents LLC, and Jobu Partner Holdings LLC C.A. No. 2020-0961-JRS September 3, 2021 Page 3

the documents were not yet complete and would be provided as soon as they were

available.4 On June 30, 2021, Defendants provided Plaintiff a letter from the

accounting firm charged with preparing the tax returns, which verified the firm’s

engagement to perform services for Defendants and briefly explained the cause for

the delay.5 In addition to the reasons explained in the accountant’s letter,

Defendants have described, in detail, numerous causes for the delay in meeting the

stipulated deadline in correspondence and in their brief opposing the Motion.6

II. ANALYSIS

The standard for citing a party with civil contempt is well-settled.

“To establish civil contempt, [the petitioning party] must demonstrate that the

[contemnors] violated an order of this Court of which they had notice and by which

they were bound.”7 The petitioning party bears the burden of showing contempt by

4 Pl.’s Mot., Ex. B; Defs.’ Response to Pl.’s Mot. for Order to Show Cause (D.I. 42) (“DRB”), at ¶ 5. 5 Pl.’s Mot., Ex. C; DRB, at ¶ 6. 6 DRB, at ¶¶ 8–18. 7 TR Invs., LLC v. Genger, 2009 WL 4696062, at *15 (Del. Ch. Dec. 9, 2009), aff’d, 26 A.3d 180 (Del. 2011) (alterations in original) (citation omitted). Jason Dolan v. Jobu Holdings, LLC, Jobu Presents LLC, and Jobu Partner Holdings LLC C.A. No. 2020-0961-JRS September 3, 2021 Page 4

clear and convincing evidence; only upon carrying that burden will “the burden . . .

shift[] to the contemnors to show why they were unable to comply with the order.” 8

Importantly, to justify a citation for contempt, the violation “must not be a mere

technical one, but must constitute a failure to obey the Court in a meaningful way.” 9

Further, “[e]ven where there has been a violation, the Court will consider good faith

efforts to comply with the order or to remedy the consequences of non-

compliance.” 10 Resolution of a motion to show cause why a party should not be

held in contempt is “addressed to the discretion of this Court.” 11

In my view, Defendants’ conduct does not rise to the level of contempt

because Defendants’ actions do not constitute a failure to obey the Court in a

meaningful way. To be sure, a technical violation has occurred. But this Court

8 Id. 9 Dickerson v. Castle, 1991 WL 208467, at *4 (Del. Ch. Oct. 15, 1991) (citing Palmigiano v. DiPrete, 700 F. Supp. 1180, 1191 (D.R.I. 1988)). 10 Aveta Inc. v. Bengoa, 986 A.2d 1166, 1181 (Del. Ch. 2009) (citing Dickerson, 1991 WL 208467, at *4). 11 Dickerson, 1991 WL 208467, at *3. Jason Dolan v. Jobu Holdings, LLC, Jobu Presents LLC, and Jobu Partner Holdings LLC C.A. No. 2020-0961-JRS September 3, 2021 Page 5

cannot conclude based on the facts before it that Defendants have acted in willful

disregard of the Order or have refused to make good faith efforts to comply.

It should be emphasized, however, that Defendants must adhere to this

Court’s ordered deadlines or face the Court’s “inherent authority to impose

contempt sanctions” for meaningful violations of the Court’s order.12 The deadline

by which Defendants must comply with their obligations under the Stipulation and

Consent Order, to the extent not already complied with, is extended to

September 30, 2021. No further extensions will be granted absent good cause

shown.

For the foregoing reasons, the Motion must be DENIED.

IT IS SO ORDERED.

Very truly yours,

/s/ Joseph R. Slights III

12 Deutsch v. ZST Digit. Networks, Inc., 2018 WL 3005822, at *9 (Del. Ch. June 14, 2018).