Wild Meadows MHC, LLC v. Weidman ( 2021 )

IN THE SUPREME COURT OF THE STATE OF DELAWARE
WILD MEADOWS MHC, LLC, §
§
Petitioner Below, § No. 253, 2020
Appellant, §
§
v. § Court Below – Superior Court
§ of the State of Delaware
DAVID J. WEIDMAN, ESQUIRE, §
ARBITRATOR, §
§ C.A. No. K19M-07-003
Respondent Below, §
Appellee, §
§
and §
§
WILD MEADOWS HOMEOWNERS’ §
ASSOCIATION §
§
Intervenor/ Respondent Below, §
Appellee. §
Submitted: February 10, 2021
Decided: April 14, 2021
Before SEITZ, Chief Justice; VAUGHN and MONTGOMERY-REEVES, Justices.
Upon appeal from the Superior Court of Delaware. AFFIRMED
Michael P. Morton, Esquire, Robert J. Valihura, Jr., Esquire, and David C. Zerbato, Esquire,
MORTON, VALIHURA & ZERBATO, LLC, Greenville, Delaware; Attorneys for
Appellant, Wild Meadows MHC, LLC.
James P. Sharp, Esquire, MOORE & RUTT, P.A., Georgetown, DE; Attorney for Appellee,
David J. Weidman, Esquire, Arbitrator.
Olga Beskrone, Esquire, COMMUNITY LEGAL AID SOCIETY, INC., Wilmington,
Delaware; Attorney for Appellee Intervenor/Respondent Wild Meadows Homeowners’
Association.
MONTGOMERY-REEVES, Justice:
In this appeal, Wild Meadows MHC, LLC (“Wild Meadows”) challenges the
Superior Court’s dismissal of its petition for a writ of prohibition. Wild Meadows contends
that the Superior Court erroneously held that an arbitrator appointed under Delaware’s Rent
Justification Act has the authority to compel discovery and impose a confidentiality
agreement upon parties concerning discovery material. For the reasons set forth below, we
AFFIRM the judgment of the Superior Court.
I. BACKGROUND
The Wild Meadows manufactured home community (the “Community”), owned by
appellant Wild Meadows, is located in Dover, Delaware.1 Those living in the Community
own their manufactured homes but pay rent for the land. Therefore, the Community is
governed by the Manufactured Home Owners and Community Owners Act2 and its
subsection commonly known as the Rent Justification Act (the “Act”).3 Appellee
Intervenor/Respondent Wild Meadows Homeowners’ Association (the “HOA”) represents
these homeowners.
1
App. to the Opening Br. A018 (hereinafter “A . . .”).
2
See 25 Del. C. §§ 7001-67 (2013) (amended 2019). As the Superior Court noted the below, the
Assembly redesignated (i.e., renumbered) and amended the statutory provisions relevant to this
appeal. See 82 Del. Laws ch. 38, § 42 (2019) (amending and redesignating statutory sections); Wild
Meadows MHC, LLC v. Weidman, 2020 WL 3889057, at *1 n.3 (Del. Super. Ct. July 10, 2020).
(providing that the Superior Court cited to the old codification). This opinion will cite the former
statutes as they existed before the amendments because the issues in question arose before the Act’s
redesignation.
3
See 25 Del. C. §§ 7040-7046 (current version at 25 Del. C. §§ 7050-56).
2
On October 31, 2018, Wild Meadows notified each homeowner with an expiring
lease that lot rent would increase above the average annual increase of the Consumer Price
Index (the “CPI-U”) under the Act. Subsequently, Wild Meadows conducted the statutorily
required meeting, under § 7043(b), to disclose and explain the reasons for the rent increase.4
Multiple homeowners rejected Wild Meadows’ rent increase and, through the HOA, filed a
petition with the Delaware Manufactured Home Relocation Authority (the “Authority”).5
The Authority appointed Appellee David J. Weidman, Esquire as the arbitrator under
§ 7043(c). Arbitration was scheduled for February 6, 2019.6 Before the scheduled
arbitration, the HOA requested financial information from Wild Meadows relating to the
Community’s recent revenue and costs.7 Wild Meadows refused to provide this
information.8 The HOA filed a motion to compel discovery and a motion for summary
judgment with Weidman.9
In his initial decision dated January 18, 2019, Weidman granted discovery of any
financial documents that Wild Meadows intended to rely upon at arbitration, but he denied
the HOA’s motion to compel the production of additional financial documents from Wild
4
A021.
5
Wild Meadows, 2020 WL 3889057, at *1.
6
A061.
7
Intervenor Answering Br. 4.
8
Id. at 4-5.
9
A061.
3
Meadows.10 The HOA submitted a motion for reconsideration of the first decision regarding
four categories of documents:
1. Income statements from Wild Meadows for fiscal years 2016,
2017 and 2018.
2. Audited financial statements for Wild Meadows for FY 2016,
2017 and 2018.
3. The trial balances for Wild Meadows for FY 2016, 2017 and
2018.
4. Whatever else Wild Meadows intends to rely upon to
establish at arbitration that the rent increase it seeks is “directly
related to operating, maintaining or improving” the Wild
Meadows community.11
In the interim, this Court issued its opinion in Sandhill Acres MHC, LLC v. Sandhill
Home Owners Association.12 Weidman, relying on our Sandhill decision, granted the HOA’s
requests for discovery of all four categories in his decision dated June 7, 2019.13 Having
determined that he could compel discovery, Weidman ordered Wild Meadows to submit a
proposed confidentiality agreement and ordered the HOA to submit any comments on the
draft.14 He warned that if the parties could not come to a consensus, he would issue a final
10
A064-66.
11
A069.
12
210 A.3d 725 (Del. 2019).
13
A070-72.
14
A072.
4
confidentiality agreement.15 Wild Meadows submitted its proposed confidentiality
agreement, to which the HOA voiced numerous concerns.16
Weidman issued a final confidentiality agreement on June 26, 2019.17 Weidman
rejected many of the changes the HOA proposed, but he expanded the “attorney’s eyes only
provision” to include “any directors, officers, or Board representatives who are attending the
arbitration on behalf of the Association, up to the five (5) person limit, and only if those
persons execute the [confidentiality agreement] to keep any confidential material . . .
confidential.”18 To further protect confidential information, the agreement provided:
Recipients of any Confidential Material are prohibited
from copying or permitting to be copied (whether by taking
notes, photographs, Xerox machine or otherwise), or creating an
electronic image of all or any portion of the Confidential
Material, except for use by counsel for the parties for use in the
Arbitration. Recipients shall not permit any person to review all
or any portion of the Confidential Material, other than as
provided in this Agreement. Further, Recipients shall not
discuss or disclose any Confidential Material to any 3rd Party
outside of the persons set forth in Paragraphs 5(A) through (E).19
Wild Meadows refused to sign the confidentiality agreement and, on July 3, 2019,
filed for a writ of prohibition in the Superior Court.20 In its writ of prohibition, Wild
15
Id.16
Opening Br. 15; Intervenor Answering Br. 6.
17
A075.
18
Id. (“This decision balances the need for confidentiality against the ability of the [HOA]’s
representatives to meaningfully participate with counsel in preparing for the arbitration.”).
19
A080-81. This was just one of many safeguards Weidman included in the confidentiality
agreement. See A079-84.
20
Wild Meadows, 2020 WL 3889057, at *2.
5
Meadows argued that Weidman exceeded his authority by ordering Wild Meadows to
(1) “produce documents and engage in discovery matters not to be used or relied upon by
[Wild Meadows] in the arbitration” and (2) “agree to a Confidentiality [agreement] which
[Wild Meadows] will not accept.”21 In response, both Weidman and the HOA filed separate
motions to dismiss.22 Wild Meadows filed a motion for judgment on the pleadings.23 Oral
arguments were held on June 18, 2020.24
On July 10, 2020, the Superior Court granted the motions to dismiss filed by both the
HOA and Weidman.25 The court ruled that Weidman had the authority, under the Act and
this Court’s caselaw, to compel discovery of the financial information.26 The Superior Court
also denied Wild Meadows’ challenges to the confidentiality agreement, concluding that
Weidman “properly wielded [that authority] to balance the HOA’s right to access to the
information with Wild Meadows’ confidentiality and proprietary concerns.”27 Wild
Meadows appeals this decision.
21
A031.
22
A008-009 (The HOA filed its motion to dismiss on November 27, 2019. Weidman’s was filed on
January 31, 2020).
23
A008.
24
A090.
25
Wild Meadows, 2020 WL 3889057, at *1.
26
Id. at *6-10.
27
Id. at *10-12.
6
II. ANALYSIS
Wild Meadows argues that the Superior Court erroneously dismissed its petition by
incorrectly holding that the Rent Justification Act permits arbitrators to compel discovery of
financial information and to impose a confidentiality agreement upon the parties in rent
justification proceedings.
This Court reviews a decision granting a motion to dismiss de novo.28 The standards
governing a motion to dismiss for failure to state a claim are well settled: we (1) accept all
well-pleaded factual allegations as true, (2) accept even vague allegations as “well-pleaded”
if they give the opposing party notice of the claim, (3) draw all reasonable inferences in favor
of non-moving party, and (4) do not affirm a dismissal unless the plaintiff/petitioner would
not be entitled to recover under any reasonably conceivable set of circumstances.29
We also review a trial court’s interpretation of the Act, like any other statutory
interpretation, de novo.30 Our role is to determine and give effect to the legislature’s intent.31
In doing so, we must “interpret the statutory language that the General Assembly actually
adopt[ed], even if unclear and explain what [this Court] ascertain[s] to be the legislative
intent without rewriting the statute to fit a particular policy position.”32 If the statute in
28
Cent. Mortg. Co. v. Morgan Stanley Mortg. Cap. Hldgs., LLC, 27 A.3d 531, 535 (Del. 2011)
(citing Savor, Inc. v. FMR Corp., 812 A.2d 894, 896 (Del. 2002)).
29
Savor, Inc., 812 A.2d at 896-97.
30
Sandhill Acres, 210 A.3d at 728.
31
LeVan v. Indep. Mall, Inc., 940 A.2d 929, 932 (Del. 2007).
32
Taylor v. Diamond State Port Corp., 14 A.3d 536, 542 (Del. 2011); Pub. Serv. Comm'n v. Wilm.
Suburban Water Corp., 467 A.2d 446, 451 (Del. 1983) (“Judges must take the law as they find it,
7
question is unambiguous, this goal is accomplished by applying the plain, literal meaning of
its words.33 Stated differently, “[i]f a statute is not reasonably susceptible to different
conclusions or interpretations, courts must apply the words as written, unless the result of
such a literal application could not have been intended by the legislature.” 34
A. Ability to Compel Discovery
Wild Meadows argues that an arbitrator lacks statutory authority to compel discovery
because the text of the Act omits any reference to discovery proceedings. According to Wild
Meadows, a community owner must produce whatever it intends to rely on to justify its
rents.35 If the homeowners request additional information to test the community owner’s
justifications and the community owner does not comply, then the community owner runs
the risk that the arbitrator will find the rent increase unjustified. Thus, according to Wild
Meadows, the community owner completely controls the flow of information in a rent
justification proceeding.36 We disagree with this interpretation of the Act.
An arbitrator may compel the production of documents under the Act and applicable
provisions of the Delaware Administrative Code. The General Assembly, through the
and their personal predilections as to what the law should be have no place in efforts to override
properly stated legislative will.”).
33
Arnold v. State, 49 A.3d 1180, 1183 (Del. 2012) (citing Dennis v. State, 41 A.3d 391, 393 (Del.
2012)).
34
Leatherbury v. Greenspun, 939 A.2d 1284, 1289 (Del. 2007) (citing Rubick v. Sec. Instrument
Corp., 766 A.2d 15, 18 (Del. 2000)).
35
Opening Br. 22.
36
Id. at 24-30.
8
Manufactured Home Owners and Community Owners Act, created the Authority.37 The
Authority was tasked with overseeing manufactured home communities and was granted the
explicit power to “[a]dopt a plan of operation and articles, bylaws, and operating rules.”38
Under 25 Del. C. § 7011(c)(1), the Authority has the power to create regulations; the most
relevant here are the Rent Increase Dispute Resolution Procedures.39 Under 1 Del. Admin.
C. § 202-1.0, the Authority recognized its obligation to “implement[] and oversee[] the
process by which rent increase disputes are resolved . . . .”40 To that end, the Authority
promulgated § 202-7.10, which expressly allows an arbitrator to compel discovery of
documents that are relevant to the rent increase at issue.
The arbitrator is authorized to schedule an informal
preliminary conference with the parties (in person or by
telephone) as the arbitrator deems appropriate in order to narrow
the issues and minimize the expense of the arbitration process.
The arbitrator is authorized to require the parties to exchange
or provide to the other parties documents relevant to the rent
increase at issue, including documents related to the standards
set forth in 25 Del. C. § 7042.41
This regulation is consistent with the overall purpose of the Act. The General
Assembly enacted the Rent Justification Act to “protect the substantial investment made by
manufactured homeowners, and enable the State to benefit from the availability of affordable
37
25 Del. C. § 7011 (2013) (current version at 25 Del. C. § 7041).
38
Id. § 7011(c)(1).
39
See 1 Del. Admin. C. §§ 202-1.0 to 9.0.
40
Id. § 202-1.0.
41
Id. § 202-7.10 (emphasis added).
9
housing for lower-income citizens, without the need for additional state funding.”42 At the
same time, the General Assembly recognized the property and other rights of manufactured
home community owners and sought to provide them with fair return on their investment.43
Therefore, the overarching purpose of the Act is to balance the conflicting interests of
protecting manufactured homeowners from “unreasonable and burdensome . . . rental
increases while simultaneously providing . . . community owners . . . a just, reasonable, and
fair return on their property.”44
To ensure a fair return on their property, community owners may raise a homeowner’s
rent in an amount greater than the CPI-U. But to protect the homeowners from an
“unreasonable increase,” a community owner must demonstrate that such an increase is
justified.45 To make this showing, the community owner must show that it “has not been
found in violation of” health and safety regulations “during the preceding 12-month period,”
and that “[t]he proposed rent increase is “directly related to operating, maintaining, or
improving the manufactured home community, and justified by 1 or more factors listed
under subsection (c) . . . .”46
In Bon Ayre II, we explained the “directly related” inquiry as such:
To impose an increase beyond CPI-U, the landowner
must prove more. In particular, it must show that the increase is
42
25 Del. C. § 7040.
43
Id.
44
Id.
45
Id. § 7042(a).
46
Id. § 7042(a)(2); see id. § 7042(c).
10
“directly related to operating, maintaining or improving the
manufactured home community.” That is, the landowner must
show that its original expected return has declined, because the
cost side of its ledger has grown. If a landowner can show that
its costs have gone up, that opens the door to a rent increase
based on § 7042(c)’s factors, including market rent. If a
landowner invests in its development, and therefore has
“improve[ed]” the community, it can also reap the reward from
that investment through higher-than-inflation rent increases.
But, unless the landowner has seen its costs increase for
“operating, maintaining or improving the manufactured home
community,” the Rent Justification Act preserves the initial
relationship the landowner creates between its revenue and its
costs. The homeowner with her home semi-permanently
planted in the community is protected from material increases
in rent unrelated to the benefits and costs of living in the
community, and the landowner receives the return it originally
anticipated.47
Thus, “[t]o make a prima facie case that a rent increase is directly related to improving
the community—a requirement that we have previously described as ‘modest’—it suffices
for the community owner to offer evidence that in making some capital improvement, the
community owner has incurred costs that are likely to reduce its expected return.”48 Once
the community owner has established its prima facie case, homeowners are “entitled to rebut
that prima facie case by offering evidence of [their] own that the expenditure did not in fact
reflect any increase in costs—for example because the expenditure was offset by reduced
47
Bon Ayre Land, LLC v. Bon Ayre Cmty. Ass’n. (Bon Ayre II), 149 A.3d 227, 234-35 (Del. 2016).
48
Sandhill Acres, 210 A.3d at 729 (citing Bon Ayre II, 149 A.3d at 235–36).
11
expenses in other areas . . . .”49 Homeowners are allowed to “fairly test” the community
owner’s proffered justifications.50
If adopted, Wild Meadows’ interpretation of the Act would negate a homeowner’s
ability to rebut a prima facie case, undermining the Act’s stated goal of balancing the
homeowner’s and community owner’s competing interests. If tenants are not allowed to
compel the production of documents relevant to the proceedings, the process skews heavily
in the favor of community owners, leaving the tenants little opportunity to reasonably vet the
information selected and provided by the community owner. Permitting an arbitrator to
compel production of documents, subject to reasonable confidentiality protections, furthers
the Act’s goals of ensuring a fair process for all parties in a rent justification dispute.
Furthermore, this Court has implicitly, if not explicitly, recognized the importance of
a homeowner’s ability to test a community owner’s justifications. For example, in Donovan
Smith HOA v. Donovan Smith MHP, LLC, we affirmed the arbitrator’s holding that the
increase in rent was justified.51 But we expressly rejected the idea that nothing in the statute
requires the community owner to expose its financial information (i.e. its underlying
business records) to scrutiny.52 We explained that “it is not the case that a landowner may
proceed under the [Act] to argue that it is entitled to an above-inflation rent increase without
49
Id.
50
See Donovan Smith HOA v. Donovan Smith MHP, LLC, 2018 WL 3360585, at *3 (Del. July 10,
2018).
51
Id. at *2.
52
Id. at *2-3.
12
also being willing to produce documents to contesting homeowners that allow them to fairly
test that assertion.”53 Further, we recognized that the arbitrator may control the production
of documents by imposing “appropriate conditions” to address confidentiality concerns and
may “require production” of the relevant books and records if the homeowners “fairly
demand” that discovery.54
This Court expanded its discussion of discovery in Sandhill Acres MHC, LLC v.
Sandhill Acres Home Owners Association.55 We explained that “both sides of the
community owner’s financial statements bear logically on whether and to what extent a rent
increase is ‘directly related to operating, maintaining or improving the manufactured housing
community’ under the Act.”56 Additionally, we emphasized that the parties to a case should
shape the record by exchanging requests for information and stressed that
a community owner seeking a rent increase would not be in any
equitable or legal position to resist a reasonable request for
information about its costs and profit margins . . . . As a bottom-
line matter, the community owner must make a choice. Refrain
from seeking an increase above inflation and thus be able to
keep its financial information to itself, or seek an increase and
be willing to incur the concomitant requirement to justify that
53
Id. at *3 (emphasis added).
54
See id. (“To the extent that there is a legitimate basis for claiming confidentiality as to any business
record—a status that has to be proven—the Superior Court, or the arbitrator in the first instance,
may condition discovery and use of the document to appropriate conditions.”); id. (“[T]he outcome
could be quite different, especially if the homeowners fairly demand discovery of the landowner’s
books and records relevant to the question of whether the proposed above-inflation rent increase is
‘directly related to operating, maintaining or improving the manufactured home community’ and the
arbitrator fails to require production of those records.”).
55
210 A.3d at 731-32.
56
Id. at 731.
13
increase. On a complete record, that allows the tenants to make
fair arguments and the arbitrator to assess whether the proposed
increase satisfies the directly related requirement in view of a
balanced record taking into account both key factors: revenues
and costs.57
We have also acknowledged the arbitrator’s power to oversee and direct such discovery by
addressing legitimate confidentiality concerns through restrictions or by denying excessively
burdensome requests.58 Both Donovan Smith and Sandhill Acres acknowledge that a
community owner’s relevant business records are a necessary part of a homeowner’s ability
to rebut a community owner’s prima facie case.
Thus, based on a plain reading of the Act, the applicable sections of the Delaware
Administrative Code, and our jurisprudence, we conclude that the Superior Court correctly
held that Weidman, as an arbitrator, possessed the authority to compel the production of
documents. Furthermore, the Superior Court did not err in ruling that Weidman correctly
compelled the discovery of Wild Meadows relevant financial information.
Wild Meadows cannot create a unilateral process where it, as the community owner,
gets to singularly choose what documents make the record. If failing to obtain an above-
inflation rent increase poses an “enormous risk for the community owner,”59 then being
assessed an above-inflation rent increase without a mechanism to test the community
owner’s assertions poses an enormous risk to homeowners, particularly given the deference
57
Id. (emphasis added).
58
Id.
59
Reply Br. 10-11.
14
that a reviewing court applies to an arbitrator’s decision.60 Imposing such an asymmetric
burden on homeowners is contrary to the statute’s purpose of “accommodate[ing] the
conflicting interests” of homeowners and landowners.61 Therefore, Weidman acted within
his authority by compelling Wild Meadows to produce business records to afford the HOA
a chance to fairly test Wild Meadows’ justifications for its rent increase.
To raise rent above the CPI-U is a business decision that community owners should
not take lightly. A community owner has two options—either keep rent adjustments at
inflation and keep business records private or seek higher rent adjustments and bear the
responsibility of justifying that increase.62 Community owners have a modest threshold
burden to justify the increase; but homeowners are afforded the opportunity to test that
threshold. Here the community owner sought an increase above inflation; thus, it may be
compelled to produce records relating to its revenues and costs.63
60
See, e.g., Sandhill Acres, 210 A.3d at 731 n.37 (“The Rent Justification [Act] is somewhat unclear
about the appellate standard of review, stating that the reviewing court must determine ‘whether the
record created in the arbitration is sufficient justification for the arbitrator’s decisions and whether
those decisions are free from legal error.’ Considering substantially similar language in a prior
version of the statute, we previously observed that this language sounds somewhat like substantial
evidence review. . . . We therefore conclude that substantial evidence review is the appropriate
standard of review for the arbitrator’s factual findings.” (quoting 25 Del. C. § 7044 (current version
at § 7054)) (citing Bon Ayre Land LLC v. Bon Ayre Cmty. Ass’n (Bone Ayre I), 133 A.3d 559, 2016
WL 747989, at *2 n.11 (Del. Feb. 25, 2016) (TABLE))).
61
See 25 Del. C. § 7040.
62
210 A.3d at 731.
63
Id.
15
B. Ability to Impose Confidentiality Agreement
Wild Meadows also argues the Superior Court erred in holding that Weidman had
statutory authority to impose a confidentiality agreement that Wild Meadows contested.
Specifically, Wild Meadows complains that:
Petitioner is a privately-held business, and engages in its
business in a highly competitive market which today, in
Delaware, is dominated by large competitors. If Petitioner’s
internal financial information were made available generally or
disclosed publicly, Petitioner would face incalculable
irreparable harm. Petitioner’s competitors would gain an
enormous tactical and strategic advantage, to the permanent
detriment of Petitioner and of the value of its investment in Wild
Meadows. Thus, an “attorney’s eyes-only level of protection
was included in Petitioner’s proposed confidentiality stipulation
....
....
The Confidentiality Stipulation did not and could not
have “reasonably protected” Petitioner’s private, competitively
sensitive and highly confidential financial documents without
an attorney’s eyes-only provision. If the arbitrator is imbued
with the authority to compel discovery, a confidentiality
agreement protecting the highly confidential documents of
parties with an attorney’s eyes-only tier must be offered and
made available to the parties in the arbitration.64
We disagree.
The Authority, under 25 Del. C. § 7011(c)(1), has promulgated 1 Del. Admin. C. §
202-7.17. Under 1 Del. Admin. C. § 202-7.17:
Any party may request that the arbitrator accord
confidential treatment to some or all of the information
contained in a document. If the claim of confidentiality is
64
Opening Br. 16, 43.
16
challenged by any party, then the party claiming confidential
treatment must demonstrate to the arbitrator that the designated
information is confidential as recognized by state law.
Notwithstanding any claim of confidentiality, any party to the
proceeding shall be allowed to inspect a copy of the confidential
document upon the signing of a confidentiality agreement in a
form approved by the arbitrator.65
Further, this Court has emphasized that “legitimate confidentiality and proprietary concerns
should be addressed by the arbitrator through the imposition of use restrictions.”66 Thus, the
arbitrator possessed the authority to impose a confidentiality agreement on the parties.
Wild Meadows contends that a confidentiality agreement without an attorney-eyes
only provision insufficiently protected its interests and exposed it to “irreparable harm.”67
Yet Weidman recognized, and addressed, the need for confidentiality when dealing with
Wild Meadows’ business records. After taking input from both parties, Weidman crafted a
confidentiality agreement in which he balanced the legitimate business interests of Wild
Meadows against the HOA’s interest in “fairly testing” Wild Meadows’ justifications.
Section 5 of the contested agreement limits who may access confidential information:
5. Confidential Discovery Material may be disclosed,
summarized, described, characterized, or otherwise
communicated or made available in whole or in part only to the
following persons:
A. The Parties, and the directors, officers, or
Board members of the Association who are attending the
Arbitration and assisting counsel with decisions
65
1 Del. Admin. C. § 202-7.17.
66
Sandhill Acres, 210 A.3d at 731; see also Donovan Smith, 2018 WL 3360585, at *3 (citing Super.
Ct. Civ. R. 26(c)(7); 1 Del. Admin. C. § 202-7.17).
67
A129.
17
concerning the Litigation, to the extent deemed
reasonably necessary by counsel of record for the
purpose of assisting in the prosecution or defense of the
Arbitration for use in accordance with this Stipulation,
only if and after such directors, officers, or Board
members of the Association execute Exhibit A attached
hereto;
B. Counsel who represent Parties in this
Arbitration (including in-house counsel), and the
partners, associates, paralegals, secretaries, clerical,
regular and temporary employees, and service vendors
of such counsel (including outside copying and
Arbitration support services) who are assisting with the
Arbitration for use in accordance with this Stipulation;
C. Subject to Paragraph 7, experts or consultants
assisting counsel for the Parties, and partners, associates,
paralegals, secretaries, clerical, regular and temporary
employees, and service vendors of such experts or
consultants (including outside copying services and
outside support services) who are assisting with the
Arbitration;
D. The Arbitrator, persons employed by the
Arbitrator, and court reporters transcribing any hearing in
this Arbitration, and the Court, persons employed by the
Court, and court reporters transcribing any hearing in any
appeal therefrom; and
E. Any other person only upon (i) order of the
Arbitrator entered upon notice to the Parties, or (ii)
written stipulation of, or statement on the record by, the
Producing Party who provided the Discovery Material
being disclosed, and provided that such person signs an
undertaking in the form attached as Exhibit A hereto.
Recipients of any Confidential Material are
prohibited from copying or permitting to be copied
(whether by taking notes, photographs, Xerox machine or
18
otherwise), or creating an electronic image of all or any
portion of the Confidential Material, except for use by
counsel for the parties for use in the Arbitration. Recipients
shall not permit any person to review all or any portion of
the Confidential Material, other than as provided in this
Agreement. Further, Recipients shall not discuss or disclose
any Confidential Material to any 3rd Party outside of the
persons set forth in Paragraphs S(A) through (E).68
These individuals may only receive confidential documents if they agree to sign this
agreement.69
Section 12 adds that “[a]ll materials designated as Confidential Discovery Materials
or filed pursuant to Paragraph 10 shall be released from confidential treatment only upon
Order of a Court.”70 Additionally,
[t]he Parties agree to be bound by the terms of this
Stipulation pending the entry by the Court of this Stipulation,
and any violation of its terms shall be subject to the same
sanctions and penalties as if this Stipulation had been entered by
a Delaware Court of competent Jurisdiction.71
Wild Meadows does not expressly address why the specific provisions of this
agreement are inadequate. Instead, Wild Meadows vaguely argues that, as a private entity
that engages in a competitive market, it faces “irreparable harm” if it is forced to disclose its
business records.72 The party claiming a need for confidentiality, or greater confidentiality,
bears the burden of proof; business records are not entitled to an “attorneys’ eyes only”
68
A079-80.
69
A075.
70
A083.
71
A085.
72
A129-30.
19
designation simply because they are business records. Wild Meadows’ vague assertions are
not useful in assessing the need for greater protection because they do not identify legitimate
deficiencies in the actual language of the agreement. To the contrary, Weidman carefully
balanced Wild Meadows’ concerns in order to “reasonably protect” its sensitive information.
Therefore, we affirm the Superior Court’s conclusion that Weidman possessed the
statutory authority to impose this confidentially agreement on the parties.
III. CONCLUSION
For the reasons provided above, we AFFIRM the Superior Court’s judgment.
20