Smollar v. Potarazu

• Court: Court of Chancery of Delaware
• Decided: June 29, 2016
• Docket: CA E10287-VCS
• Status: Published

Opinion

EFiled: Jun 29 2016 01:47PM EDT Transaction ID 59209624 Case No. 10287-VCS 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

June 29, 2016

Sidney S. Liebesman, Esquire David L. Finger, Esquire Montgomery, McCracken, Walker Finger & Slanina, LLC & Rhoads, LLP One Commerce Center 1105 North Market Street, Suite 1500 1201 N. Orange Street, 7th Fl. Wilmington, DE 19801 Wilmington, DE 19801

Robert D. Goldberg, Esquire Kathleen M. Miller, Esquire Biggs and Battaglia Smith, Katzenstein & Jenkins LLP 921 North Orange Street 1000 West Street, Suite 1501 Wilmington, DE 19801 Wilmington, DE 19801

Re: Smollar v. Potarazu C.A. No. 10287-VCS Date Submitted: May 23, 2016

Dear Counsel:

VitalSpring Technologies, Inc. (“VitalSpring”) stockholders, Britt Family

Investments LLC, Jeff Waters, and the Kenneth F. Logue Revocable Declaration

of Trust DTD (“Movants”) have brought a Motion to Intervene as representative Smollar v. Potarazu C.A. No. 10287-VCS June 29, 2016 Page 2

plaintiffs in this derivative action pursuant to Court of Chancery Rule 24 (the

“Motion”). The Motion currently stands unopposed.1

Intervention as of right is appropriate, pursuant to Court of Chancery

Rule 24, “when the applicant claims an interest relating to the . . . transaction

which is the subject of the action and . . . the disposition of the action may . . .

impede the applicant’s ability to protect that interest, unless the applicant’s interest

is adequately represented by existing parties.”2 As VitalSpring stockholders,

Movants have an “interest” in pursuing VitalSpring’s claims of wrongdoing

(including breach of fiduciary duty, misappropriation of assets and waste) against

the defendant, Sreedhar Potarazu, as initially asserted in a complaint filed by

Marvin Smollar in October 2014.3

1 Tr. of Oral Arg. on Pl.’s Mot. for an Interim Award of Att’ys’ Fees and Expenses; Britt Family Investors LLC, Jeff Waters, and the Kenneth F. Logue Revocable Decl. of Trust DTD’s Am. Mot. to Intervene, at 65. 2 Ct. Ch. R. 24. 3 See United Rentals, Inc. v. RAM Hldgs., Inc., 2007 WL 4327770, at *1 (Del. Ch. Nov. 29, 2007) (“Consideration of an intervener’s standing is implicit in the court’s analysis of the elements of Rule 24.”). Smollar v. Potarazu C.A. No. 10287-VCS June 29, 2016 Page 3

By opinion and order of today’s date, the Court has granted a motion to

disqualify Mr. Smollar and his counsel from further participation in this litigation.

Consequently, Movants’ interests are no longer “adequately represented by

existing parties.”4 Their ability to protect their interests, as well as the interests of

all similarly situated VitalSpring stockholders, in pursuing a final resolution of this

action will be impaired unless and until another representative plaintiff intervenes.

Accordingly, Movants are entitled to intervene as a matter of right, and the Motion

must be granted.5

IT IS SO ORDERED.

Very truly yours,

/s/ Joseph R. Slights III

4 Ct. Ch. R. 24. 5 Michelson v. Duncan, 1980 WL 273542, at *2 (Del. Ch. Apr. 1, 1980) (allowing the movant to intervene as a matter of right following former plaintiff’s disqualification, and holding that because he has the right to intervene, “he should not be compelled to undergo discovery, at this time, as to issues other than the issue of whether he is in fact now a stockholder of [the company] and was such at the time of the transactions which are the subject of this suit”).