Sperling & Slater v. SilkRoad, Inc.

Superior Court of Delaware·Decided November 14, 2022·No. N21C-11-152 PRW CCLD·Published

Opinion

SUPERIOR COURT

OF THE

STATE OF DELAWARE

PAUL R. WALLACE LEONARD L. WILLIAMS JUSTICE CENTER JUDGE 500 N. KING STREET, SUITE 10400 WILMINGTON, DELAWARE 19801 (302) 255-0660

Date Submitted: September 1, 2022 Date Decided: November 14, 2022

Kenneth J. Nachbar, Esq. J. Matthew Belger, Esq. Elizabeth A. Mullin, Esq. Clarissa R. Chenoweth-Shook, Esq. MORRIS, NICHOLS, ARSHT & TUNNELL LLP Charles R. Hallinan, Esq. 1201 North Market Street POTTER ANDERSON & CORROON LLP Suite 1200 Hercules Plaza, Sixth Floor Wilmington, Delaware 19801 Wilmington, Delaware 19801 `

Greg Shinall, Esq. Maria Aprile Sawczuk, Esq. SPERLING & SLATER, P.C. GOLDSTEIN & MCCLINTOCK, LLLP 55 West Monroe Street, Suite 3200 501 Silverside Road, Suite 65 Chicago, Illinois 60603 Wilmington, Delaware 19801

Marc E. Rosenthal, Esq. B. Lane Hasler, Esq. PROSKAUER ROSE LLP 33 North Dearborn, Suite 2330 70 West Madison, Suite 3800 Chicago, Illinois 60602 Chicago, Illinois 60602

RE: Sperling & Slater v. SilkRoad, Inc. and SilkRoad Equity, LLC C.A. No. N21C-11-152-PRW CCLD Third-Party Defendant, Thomas A. DePasquale Management Trust’s Motion to Stay for Forum Non Conveniens or, in the Alternative, Dismiss for Improper Venue

Dear Counsel:

This Letter Order resolves Third-Party Defendant, Thomas A. DePasquale Management Trust’s Motion to Stay for Forum Non Conveniens or, in the Alternative, Dismiss for Improper Venue.

C.A. No. N21C-11-152 PRW CCLD November 14, 2022 Page 2 of 17

I. BACKGROUND

The parties and the Court are well-acquainted with the factual and procedural

background of this action.1 A detailed summary of the facts is set forth more fully

in the Court’s earlier order granting the Trust’s motion to intervene and denying the

Trust’s motion to stay or rescind the interpleader order.2

Given the parties’ almost decade-long and still ongoing litigious relationship,

the Court asked for a stipulated factual and procedural history of the parties’ legal

disputes.3 Because their previous lawsuits largely occurred in Illinois, the instant

motion has long been anticipated, and the Court deemed prudent a stipulated,

truncated version of the parties’ past to aid in a timely disposition of the now-

pending forum question. But the parties failed to reach any agreement on such.4

In their most recent submissions, the parties repeated and incorporated the

same versions of facts set forth in their initial submissions. Thus, given their

inability to provide a concise, stipulated factual history, the disposition of the instant

motion will be determined based on the incomplete record provided.

1 Sperling & Slater v. SilkRoad, Inc. and SilkRoad Equity, LLC, 2022 WL 1014128 (Del. Super.

Ct. Apr. 4, 2022). 2 Id.

3 Id. at *7.

4 Status Conf. Tr. at 3, May 2, 2022 (D.I. 51) (“I received [letters from the parties] indicating that they were at an impasse trying to carry that task out.”).

C.A. No. N21C-11-152 PRW CCLD November 14, 2022 Page 3 of 17

The Trust filed the instant Motion to Stay for Forum Non Conveniens or, in

the Alternative, Dismiss for Improper Venue.5 Silkroad, Inc. (“SRI”) docketed its

Letter of No Position.6 And Sperling & Slater, P.C. (“Sperling”) filed an answering

brief opposing a dismissal or stay.7 The Court heard argument on the Trust’s motion

and that application is now ripe for decision.8

II. APPLICABLE LEGAL STANDARDS A. DISMISSAL FOR IMPROPER VENUE

This Court’s Civil Rule 12(b)(3) governs a motion to dismiss for improper

venue.9 A reviewing court “must assume as true all the facts pled in the complaint

and view those facts and all reasonable inferences drawn from them in the light most

favorable to the plaintiff.”10 The Court “is not shackled to the plaintiff’s complaint

and is permitted to consider extrinsic evidence from the outset.”11 A dismissal

motion may be granted “before the commencement of discovery on the basis of

5 D.I. 46.

6 D.I. 52.

7 D.I. 53.

8 D.I. 49.

9 Del. Super. Ct. Civ. R. 12(b)(3).

10 Loveman v. Nusmile, Inc., 2009 WL 847655, at *2 (Del. Super. Ct. Mar. 31, 2009) (citation omitted). 11 Id. (citation omitted).

C.A. No. N21C-11-152 PRW CCLD November 14, 2022 Page 4 of 17

affidavits and documentary evidence if the plaintiff cannot make out a prima facie

case in support of its position.”12

When considering such a motion, the Court must “give effect to the terms of

private agreements to resolve disputes in a designated judicial forum out of respect

for the parties’ contractual designation.”13 “If a forum selection clause validly limits

a plaintiff to a single forum, that clause operates to divest a court that otherwise has

jurisdiction of its status as a proper venue for the plaintiff to sue.”14

B. STAYS FOR FORUM NON CONVENIENS

“Motions to stay litigation on grounds of forum non conveniens are granted

only in the rare case.”15 Indeed, Delaware courts are “hesitant to grant motions to

stay based on forum non conveniens, and the doctrine is not a vehicle by which the

Court should determine which forum would be most convenient for the parties.”16

Any such stay determination is left to this Court’s sound discretion.17

In analyzing a motion to stay or dismiss an action for forum non conveniens,

12 Id. (citation omitted).

13 Id. at *3 (citation omitted).

14 Simon v. Navellier Series Fund, 2000 WL 1597890, at *6 (Del. Ch. Oct. 19, 2000).

15 In re Bear Sterns Cos., Inc. S’holder Litig., 2008 WL 959992, at *5 (Del. Ch. Apr. 9, 2008).

16 In re Citigroup, Inc. S’holder Deriv. Litig., 964 A.2d 106, 117 (Del. Ch. 2009) (citing Taylor v. LSI Logic Corp., 689 A.2d 1196, 1199 (Del. 1997)). 17 GXP Cap., LLC v. Argonaut Mfg. Servs., Inc., 253 A.3d 93, 97 (Del. 2021).

C.A. No. N21C-11-152 PRW CCLD November 14, 2022 Page 5 of 17

the Court applies the Cryo-Maid factors.18 Those factors are:

(1) the relative ease of access to proof; (2) the availability of compulsory process for witnesses; (3) the possibility of the view of the premises, if appropriate; (4) all other practical problems that would make the trial of the case easy, expeditious and inexpensive; (5) whether or not the controversy is dependent upon the application of Delaware law which the courts of this State more properly should decide than those of another jurisdiction; and (6) the pendency or nonpendency of a similar action in another jurisdiction.19

“When an older case is pending in another jurisdiction, the hardship factors

are measured using the ‘McWane test’ instead, in which a trial court is directed to

freely exercise its discretion in favor of the relief requested by the defendant in the

later-filed Delaware action.”20 McWane requires the Court analyze whether there

“(1) is there a prior action pending elsewhere; (2) in a court capable of doing prompt

and complete justice; (3) involving the same parties and the same issues?” 21 “If all

three criteria are met, McWane and its progeny establish a strong preference for the

litigation of a dispute in the forum in which the first action was filed.”22

18 Gramercy Emerging Mkts. Fund v. Allied Irish Banks, P.L.C., 173 A.3d 1033, 1036 (Del. 2017). 19 Id. at 1036-37 (cleaned up).

20 GXP Cap., LLC v. Argonaut Mfg. Servs., Inc., 234 A.3d 1186, 1194 (Del. Super. Ct. 2020)

(citing McWane Cast Iron Pipe Corp. v. McDowell-Wellman Eng’g Co., 263 A.2d 281, 283 (Del. 1970)), aff’d, 253 A.3d 93 (Del. 2021). 21 LG Elecs., Inc. v. InterDigital Commc’ns, Inc., 114 A.3d 1246, 1252 (Del. 2015) (internal citation omitted). 22 Id. (citation and quotation marks omitted).

C.A. No. N21C-11-152 PRW CCLD November 14, 2022 Page 6 of 17

III. PARTIES’ CONTENTIONS A. THE TRUST’S MOTION TO STAY FOR FORUM NON CONVENIENS OR, IN THE ALTERNATIVE, DISMISS FOR IMPROPER VENUE

Citing the three-factor McWane test, the Trust urges the Court to grant its

motion because, in its view, the parties have a (1) previously-filed and competing

action in an Illinois Court; (2) that involves the same parties and the same issues;

and (3) the Illinois Court, as it has done in the past, is capable of providing “prompt

and complete justice.”23 As such, it contends that Illinois “has been the location for

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