KBranch, Inc. v. BS13 Menu Buyer, Inc.

• Court: Superior Court of Delaware
• Decided: September 12, 2025
• Docket: N23C-10-021 PAW CCLD
• Status: Published

Opinion

IN THE SUPERIOR COURT OF THE STATE OF DELAWARE

KBRANCH, INC., LEON CHEN, and ) TINA CHEN, ) ) Plaintiffs/Counterclaim ) Defendants, ) ) v. ) C.A. No. N23C-10-021 PAW CCLD ) BSI3 MENU BUYER INC., ) ) Defendant/Counterclaim ) Plaintiff. ) )

Submitted: July 23, 2025 Decided: September 12, 2025

MEMORANDUM OPINION AND ORDER

Upon Plaintiffs’ Exceptions to the Discovery Facilitator’s Final Report and Recommendation, Plaintiffs’ Exceptions are DENIED; The Discovery Facilitator’s Final Report and Recommendation is ADOPTED, in whole.

Kurt M. Heyman, Esq.; Denise S. Kraft, Esq,; Elizabeth A. DeFelice, Esq.; and Gillian L. Andrews, Esq., of Heyman Enerio Gattuso & Hirzel, LLP; Scott Lesowitz, Esq., of Lesowitz Gebelin LLP. Attorneys for Plaintiffs/Counterclaim Defendants.

Ryan D. Stottman, Esquire, and Cassandra Baddorf, Esquire, of Morris, Nicols, Arsht, & Tunnell LLP; Jordan D. Weiss, Esq.; Samuel J. Rubin, Esq.; Lindsay Hoyle, Esq.; and Collin M. Grier, Esq., of Goodwin Procter LLP. Attorneys for Defendant/Counterclaim Plaintiff.

WINSTON, J. I. INTRODUCTION

An appointed Discovery Facilitator issued a Report and Recommendation

granting Defendants’ Motion for Sanctions. For the reasons set forth below, the

Court AGREES WITH the Discovery Facilitator, and ADOPTS the Discovery

Facilitator’s Final Report and Recommendation resolving this discovery dispute. In

turn, the Court DENIES Plaintiffs’ Exceptions to the Discovery Facilitator’s Final

Report and Recommendation.

II. FACTUAL AND PROCEDRUAL BACKGROUND A. APPOINTMENT OF THE DISCOVERY FACILITATOR

On October 18, 2024, Buyer moved to compel Sellers’ production of all

responsive, non-privileged documents from Mr. Chen’s @yahoo.com email address

(the “Yahoo Mailbox”).1 The Motion to Compel explained that, in April 2024,

Sellers produced documents, but did not produce documents from the Yahoo

Mailbox.2 From May to October 2024, Buyer requested that Sellers produce

responsive documents from the Yahoo Mailbox and ultimately moved to compel.3

On November 6, 2024, the Court ordered Sellers to produce “all responsive, non-

privileged documents from” the Yahoo Mailbox on or before November 20, 2024.4

1 Docket Item (“D.I.”) 85 (hereinafter “Mot. to Compel”). 2 Mot. to Compel ¶ 9. 3 Mot. to Compel ¶¶ 10-18. 4 D.I. 99; see also D.I. 181 (hereinafter “Mot. for Sanctions”) ¶ 9. 2 On November 19, 2024, Sellers produced 832 documents from the Yahoo

Mailbox.5 On November 22, 2024, Buyer questioned whether the production was

complete and requested Sellers confirm the search parameters and date ranges, as

well as describing any search limitations applied.6

On April 7, 2025, this Court appointed a Discovery Facilitator to oversee the

parties’ discovery obligations in this action.7

B. THE DISCOVERY FACILITATOR’S REPORT AND RECOMMENDATION

On June 4, 2025, Buyer8 filed a Motion for Contempt and Discovery

Sanctions, requesting that the Court sanction Sellers and their lead attorney (“Lead

Counsel”)9 pursuant to Superior Court Civil Rule 37(b).10

On July 8, 2025, the Discovery Facilitator issued his report and

recommendation (the “Report”).11 The Discovery Facilitator recommended that the

Court grant the Motion for Contempt and Discovery Sanctions, but not as to the full

5 Mot. for Sanctions ¶ 10. 6 Id. ¶ 11. 7 D.I. 156. 8 The term “Buyer” refers to Defendant/Counterclaim Plaintiff BSI3 Menu Buyer Inc. The term “Sellers” refers to Plaintiffs/Counterclaim Defendants KBranch, Inc., Leon Chen, and Tina Chen. Leon Chen is referred to as “Mr. Chen.” 9 Lead Counsel has been admitted pro hac vice. D.I. 6; D.I. 145. 10 See Mot. for Sanctions. 11 D.I. 187 (hereinafter “Discovery Facilitator’s Report”). 3 amount requested.12 Instead, he recommended that Sellers and Lead Counsel be

jointly and severally responsible for an award of $101,919 in reasonable expenses.13

C. PLAINTIFFS’ EXCEPTIONS Plaintiffs first assert that the recommended award is disproportionate to the

prejudice alleged. They argue that the following facts render the recommended

award of $101,919 grossly disproportionate: (1) Sellers complied with the Order,

albeit delayed;14 (2) the Motion for Sanctions was not brought as nor accompanied

by a motion to compel and sought only monetary relief;15 (3) the Motion for

Sanctions contains “no allegations of spoliation” and “no allegations that evidence

was intentionally withheld or concealed by Sellers;”16 and (4) Sellers advised Buyer

of the forthcoming production in advance, which permitted Buyer sufficient time to

review the documents.17

Plaintiffs additionally argue that the recommended award is not reasonable.

First, Plaintiffs assert that the Court should be cognizant of issuing large monetary

awards that could “roil the waters rather than calm them,” and should instead

12 Discovery Facilitator’s Report at 39-40. 13 Id. at 40. 14 D.I. 189 (“Op. Br.”) at 5. 15 Op. Br. at 5. 16 Id. at 6. 17 Id. at 6. 4 consider issuing “a small, symbolic amount” to signal the behavior was improper

without imposing the full cost of a discovery motion.18

Plaintiffs further argue that: (1) the amount of fees Buyer seeks includes time

entries from which it is impossible to discern what discovery dispute is being

referenced;19 (2) Buyer spent an unreasonable amount of fees on work related to the

Motion;20 and (2) Sellers should not be forced to shoulder the Buyer’s fees for work

that would have been required in any event, regardless of the production delay.21

They calculate a total of 14.6 hours and $14,695 in fees for work that would have

been performed regardless of the timing of Sellers’ production. Thus, they argue,

the circumstances warrant a smaller award.

Accordingly, Plaintiffs request that the Court, upon consideration of their

submitted exceptions, reduce the award set forth in the Discovery Facilitator’s

18 Op. Br. at 8 (citing J. Travis Laster and Elise Bernlohr Maizel, Discovery as a Compliance Problem, 50 J. CORP. L. 53, 85 (2024)). 19 Id. at 8-9. 20 Id. at 10. 21 Id. at 11. 5 D. BUYER’S OPPOSITION TO SELLER’S OBJECTIONS

In response to Plaintiffs’ submitted exceptions, Buyer also requests that the

Court exercise its discretion to increase the award to include Buyer’s reasonable

attorneys’ fees incurred drafting the Opposition to the Exceptions.22

III. STANDARD OF REVIEW

A Discovery Facilitator’s Report is subject to de novo review by this Court.23

IV. ANALYSIS

After careful de novo review of the Discovery Facilitator’s Report and

Recommendation, the Court adopts it in whole.

As noted in the Recommendation, issues not raised in prior briefing submitted

to the Discovery Facilitator or at oral argument concerning a discovery motion are

deemed waived.24 Accordingly, the Court does not need to consider the following

arguments raised by Plaintiffs for the first time in their submitted exceptions: (1) that

“most of the documents” Sellers produced late were already in Buyer’s possession;

and (2) that the attorneys’ fees that Buyer seeks are unreasonable due to the number

of attorneys and the amount of hours spent related to this issue.

22 D.I. 191 (hereinafter “Opposition”) at 11. 23 Ch. Ct. R. 144(b)(2); Rivest v. Hauppauge Digital, Inc., 2022 WL 3973101, at *15 (Del. Ch. Sept. 1, 2022) (citing DiGiacobbe v. Sestak, 743 A.2d 180, 184 (Del. 1999)). 24 Discovery Facilitator’s Report at 24; see also Saunders v. Preholding Hampstead, LLC, 2012 WL 1995838, at *3 (Del. Super. May 23, 2012) (“issues not addressed in briefing, and raised for the first time during oral argument, are deemed waived.”). 6 A. THE RECOMMENDED AWARD IS PROPORTIONATE TO THE PREJUDICE ALLEGED.

The Recommendation found that Buyer was prejudiced by Sellers’ late

production of the majority of the Yahoo Mailbox documents in violation of this

Court’s discovery order.25 Sellers do not dispute that they produced approximately

1,500 documents after the Court-ordered deadline.26 Further, Buyer has

demonstrated that Sellers’ withholding of the Yahoo Mailbox documents for several

months did prejudice Buyer.27 Buyer’s legal invoices submitted in connection with

the Sanctions Motion confirm that Buyer spent 88.2 hours over approximately six

months to pursue and review approximately 1,500 documents that should have been

produced months earlier as a consequence Sellers’ deficient November 2024

production.28 Thus, there is no merit to Sellers’ argument that recommended award

is not proportionate to the prejudice alleged by Buyer.

B. THE RECOMMENDED AWARD IS REASONABLE. As to Sellers’ argument concerning a lack of sufficient detail in certain time

entries regarding Buyer’s fees, Delaware law does not require a specific level of

25 Discovery Facilitator’s Report at 24-25 (“At bottom, Sellers’ exculpatory argument is ‘no harm, no foul.’. . . But there has indeed been harm.”). 26 Op. Br. at 1-2. 27 Discovery Facilitator’s Report at 25-26. 28 Id. at 34-35. 7 detail.29 Rather, “[t]he Court ‘has broad discretion in determining the amount of fees

and expenses to award.’”30 As the Court of Chancery stated in Seidman v. Blue

Foundry Bancorp:31 “‘Determining reasonableness does not require that this Court

examine individually each time entry and disbursement.’ Nor does it ‘require the

Court to assess independently whether counsel appropriately pursued and charged

for a particular motion, line of argument, area of discovery, or other litigation

tactic.’”32

The fees sought were sufficiently tied to Buyer’s efforts after and as a

consequence of Seller’s failure to meet the November 20, 2024 deadline, based on a

combination of the invoices submitted, including the time entry descriptions and

dates contained therein, and the sworn attorney declaration.33 Accordingly, the

Report’s award of $101,919 in fees is reasonable.

29 Macrophage Therapeutics, Inc. v. Goldberg, 2021 WL 5863461, at *2 (Del. Ch. Dec. 10, 2021). 30 PVH Polymath Venture Holdings Ltd. v. TAG Fintech, Inc., 2024 WL 371084, at *9 (Del. Ch. Jan. 31, 2024) (quoting Seidman v. Blue Foundry Bancorp, 2023 WL 4503948, at *8 (Del. Ch. July 7, 2023)). 31 Seidman, 2023 WL 4503948, at *8. 32 Id. (citations omitted). 33 Discovery Facilitator’s Report at 33-37. 8 C. THE COURT DENIES BUYER’S REQUEST TO AWARD THE ATTORNEYS’ FEES INCURRED DRAFTING THE OPPOSITION TO THE EXCEPTIONS.

Buyer also requests that the Court, in its discretion, increase the award to

include Buyer’s reasonable attorneys’ fees incurred drafting its Opposition to the

Exceptions.34 Buyer cites Matter of Est. of Barros,35 in which the Court of Chancery

awarded attorneys’ fees incurred in connection with responding to exceptions filed.

There, the Court of Chancery awarded attorney’s fees because the Special Master’s

Report and Recommendation concluded that “the matters [] raised [within the

exceptions] were generally not relevant to the matter at hand,”36 and, the Court of

Chancery, in turn, found that “exceptions fail[ed] to address the issue that is the

subject of the report.”37

Here, the Court finds that exceptions submitted address the issue that is the

subject of the Report. Accordingly, the Court will not exercise its discretion increase

the award to include Buyer’s reasonable attorneys’ fees incurred drafting its

Opposition.

34 Opposition at 11. 35 Matter of Est. of Barros, 1994 WL 515574, at *2 (Del. Ch. July 5, 1994). 36 Id. at *1. 37 Id. at *2. 9 V. CONCLUSION

For the reasons set forth above, the Court agrees with the Discovery

Facilitator, and ADOPTS the Discovery Facilitator’s Final Report and

Recommendation. Thus, the Court DENIES Plaintiffs’ Notice of Exceptions to the

Discovery Facilitator’s Final Report and Recommendation.

IT IS SO ORDERED.

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