Soligenix, Inc. v. Emergent Product Development Gaithersburg, Inc.

CourtCourt of Chancery of Delaware
DecidedFebruary 22, 2023
DocketC.A. No. 2022-0880-PAF
StatusPublished

This text of Soligenix, Inc. v. Emergent Product Development Gaithersburg, Inc. (Soligenix, Inc. v. Emergent Product Development Gaithersburg, Inc.) is published on Counsel Stack Legal Research, covering Court of Chancery of Delaware primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Soligenix, Inc. v. Emergent Product Development Gaithersburg, Inc., (Del. Ct. App. 2023).

Opinion

IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE

SOLIGENIX, INC., ) ) Petitioner, ) ) v. ) C.A. No. 2022-0880-PAF ) EMERGENT PRODUCT DEVELOPMENT ) GAITHERSBURG, INC., and EMERGENT ) MANUFACTURING OPERATIONS ) BALTIMORE LLC, ) ) Respondents. )

OPINION

Date Submitted: November 29, 2022 Date Decided: February 21, 2023

Richard L. Renck, Mackenzie M. Wrobel, Coleen W. Hill, DUANE MORRIS LLP, Wilmington, Delaware; Frederick R. Ball, DUANE MORRIS LLP, Boston, Massachusetts; Patrick C. Gallagher, DUANE MORRIS LLP, Boca Raton, Florida, Attorneys for Petitioner.

Jon E. Abramczyk, Ryan D. Stottman, Grant Michl, MORRIS, NICHOLS, ARSHT & TUNNELL LLP, Wilmington, Delaware; Jake Goodelman, John Dougherty, Thomas Wintner, Katherine Galle, MINTZ, LEVIN, COHN, FERRIS, GLOVSKY, AND POMPEO, P.C., Boston, Massachusetts, Attorneys for Respondents.

FIORAVANTI, Vice Chancellor This opinion resolves the respondents’ motion under Court of Chancery Rule

5.1 for continued confidential treatment (the “Motion”). The Motion seeks

confidential treatment of portions of the petitioner’s Verified Petition to Vacate

Arbitration Award (the “Petition”) and certain exhibits attached thereto (the

“Exhibits” and each an “Exhibit”).

I. BACKGROUND

This action arises out of an arbitration proceeding between petitioner

Soligenix, Inc. (“Soligenix”) and respondents Emergent Product Development

Gaithersburg, Inc. (“EPDG”) and Emergent Manufacturing Operations Baltimore

LLC (“EMOB,” and collectively with EPDG, “Emergent”). Soligenix initiated the

arbitration to resolve its claims against Emergent for breach of contract and

fraudulent inducement, which arose from a subcontract between Soligenix and

Emergent. The parties conducted the arbitration before the American Arbitration

Association. During the arbitration, the parties stipulated to a protective order

governing the proceeding, including the production of documents.1

On July 6, 2022, a panel of arbitrators (the “Panel”) issued its award (the

“Award”) in favor of Emergent. On September 30, 2022, Soligenix filed its Petition

1 The Stipulated Protective Order is attached as Exhibit C to the Motion.

2 and 11 Exhibits as confidential filings pursuant to Court of Chancery Rule 5.1.2

Thereafter, Soligenix filed a public version of the Petition, which contained

redactions proposed by Emergent. The redactions were substantial. None of the

Exhibits were filed publicly, even though they included an article from The New

York Times3 and a publicly available transcript of a Congressional Subcommittee

hearing.4

Soligenix sent a letter to Emergent objecting to the redactions and maintaining

that the Exhibits should have been filed publicly. Emergent then agreed to narrow

its redactions to the Petition and to make several of the Exhibits available on the

public docket. Soligenix was not satisfied with Emergent’s revised public filings

and filed a Notice of Challenge to the continued confidential treatment of the

redacted portions of the Petition and Exhibits A through E.5 Emergent responded

with this Motion.6

2 The Federal Arbitration Act and the Court of Chancery Rules govern this proceeding by default because the parties did not provide for the Delaware Uniform Arbitration Act (“DUAA”) to apply. See 10 Del. C. § 5702(c). (“Unless an arbitration agreement complies with the standard [providing] . . . for the applicability of the [DUAA], any application . . . to vacate or enforce an arbitrator’s award shall be decided . . . in conformity with the Federal Arbitration Act . . . . [S]uch cases . . . shall be adjudicated in accordance with the Court of Chancery’s Rules of Procedure.”). 3 Dkt. 1 Ex. F. 4 Id. Ex. G. 5 Dkt. 13. 6 Dkt. 21.

3 Exhibit A is the subcontract between Soligenix and Emergent that was the

subject of the arbitration. Exhibits B and C are Quality Agreements between

Soligenix and Emergent, which were exhibits in the arbitration. Exhibit D is the

Award, and Exhibit E is a report reflecting Emergent’s responses to a Soligenix audit

of Emergent’s quality systems. Exhibits A, B, C, and E were designated as

confidential in the arbitration pursuant to the Stipulated Protective Order. 7 Emergent

notes that Soligenix itself, despite its objections in this action, designated Exhibits

A and E as confidential in the arbitration. Except for the Award, Emergent possessed

all of these five challenged documents prior to the commencement of the arbitration.

Emergent’s Motion rests on three propositions: (1) arbitration is inherently

confidential; (2) the Stipulated Protective Order governing the arbitration

proceeding requires confidential treatment of the information that Emergent seeks

to shield from public view; and (3) the information qualifies as confidential

information under the Court of Chancery Rules.

7 With one small exception, none of the terms of Exhibits A through E indicate that they are confidential or contain confidential information. That exception is found in Exhibit A, which consists of several documents. One of them—Emergent’s 2015 response to a Soligenix request for proposal—contains a legend at the bottom of each page indicating that it is confidential. Soligenix, not Emergent, designated this information as confidential in the arbitration.

4 II. ANALYSIS

This dispute highlights the tension between the public policy that judicial

proceedings are open to the public and the general expectation of privacy between

litigants that chose alternative dispute resolution. The former is not open to debate.

The Delaware Constitution of 1897 provides that “all courts shall be open.” Del.

Const. Art. I, § 9. “Open litigation is the default in the Court of Chancery.

Confidentiality is the exception, and not the rule.” GKC Strategic Value Master

Fund, LP v. Baker Hughes Inc., 2019 WL 2592574, at *5 (Del. Ch. June 25, 2019)

(citations omitted). The extent of the expectation of confidentiality in arbitral

proceedings, however, is not so clear.

A. Arbitration Is Not Inherently Confidential.

Arbitration is inherently a private process of adjudicating disputes outside the

public setting of a courtroom. But “private” does not equate with “confidential.”

See Laudig v. Int’l Bus. Machs. Corp., 2022 WL 18232706, at *5 n.5 (N.D. Ga. Dec.

16, 2022) (“[C]onfidentiality is not an inherent aspect of arbitration . . . .”); Amy J.

Schmitz, Untangling the Privacy Paradox in Arbitration, 54 U. Kan. L. Rev. 1211,

1211 (2006) (hereinafter “Schmitz, Untangling”) (“Arbitration is private but not

confidential.”); Mitch Zamoff, Safeguarding Confidential Arbitration Awards in

Uncontested Confirmation Actions, 59 Am. Bus. L.J. 505, 514–15 (2022)

(hereinafter “Zamoff, Safeguarding”) (“Contrary to the mistaken assumptions of

5 many (even lawyers) that arbitrations are confidential by their very nature, the reality

is that absent an agreement among the parties, there are no laws (at least in the United

States) that require the parties to keep arbitration decisions confidential.”) (footnote

omitted); Bert K. Robinson, Arbitration: The Quest for Confidentiality, 58 La. B.J.

180, 181 (2010) (dispelling the mistaken assumption of “most legal professionals”

that “arbitration, ipso facto, has some confidentiality attached to it”). 8

Nothing in the FAA requires confidentiality. See 9 U.S.C. §§ 1–16; Laudig,

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