In re USG Corporation Stockholder Litigation ( 2020 )

COURT OF CHANCERY
OF THE
SAM GLASSCOCK III STATE OF DELAWARE COURT OF CHANCERY COURTHOUSE
VICE CHANCELLOR 34 THE CIRCLE
GEORGETOWN, DELAWARE 19947
Date Submitted: October 12, 2020
Date Supplemented: November 18, 2020
Date Decided: December 1, 2020
Blake A. Bennett, Esq. Raymond J. DiCamillo, Esq.
COOCH AND TAYLOR, P.A. Srinivas M. Raju, Esq.
The Nemours Building Robert L. Burns, Esq.
1007 N. Orange St., Suite 1120 Matthew D. Perri, Esq.
Wilmington, Delaware 19899 Angela Lam, Esq.
RICHARDS, LAYTON & FINGER, P.A.
One Rodney Square
920 North King Street
Wilmington, Delaware 19801
RE: In re USG Corporation Stockholder Litigation,
C.A. No. 2018-0602-SG
Dear Counsel:
This Letter Opinion considers, and rejects, the Plaintiffs’ Motion for
Reargument of my August 31, 2020 Memorandum Opinion 1 (the “Opinion”)
dismissing this matter against all Defendants. Under Chancery Rule 59(f), the road
to reargement is straitened; a successful movant must demonstrate that the court
overlooked a controlling precedent or principle of law, or misapprehended the facts,
1
In re USG Corp. S’holder Litig., 2020 WL 5126671 (Del. Ch. Aug. 31, 2020) [hereinafter, the
“Opinion”].
and that such error resulted in the outcome for which reargument is sought.2 Where
a court has considered the law and the facts, but applied them in a way with which
the movant disagrees—that is, where the movant simply disagrees with the court’s
decision—relief must be through appeal, not reargument. 3
Here, the Plaintiffs seek reargument on two grounds: first, that I overlooked
the fact that one Defendant, Jennifer Scanlon, was an officer as well as a director of
USG, and that, in her officer role, she was not exculpated from damages for a
violation of a duty of care in relation to a disclosure to stockholders; and second,
that I misapprehended the law on the meaning of bad-faith breach of the duty of
loyalty in way of a transaction implicating Revlon.
With respect to Ms. Scanlon, the Plaintiffs argue that I overlooked that their
Complaint adequately alleged that she breached the duty of care in her role as an
officer facilitating distribution of proxy materials, and that my rationale that the
Plaintiffs had not pled a non-exculpated claims thus must be reconsidered. I have
reviewed the Complaint, the briefing on the Defendants’ Motion to Dismiss, and the
oral argument on that Motion. It does not appear that the Complaint alleges Ms.
Scanlon, as a corporate officer, was grossly negligent in the dissemination of
2
In re Hawk Sys., Inc., 2019 WL 5681447, at *2 (Del. Ch. Nov. 1, 2019).
3
Manti Holdings, LLC v. Authentix Acquisition Co., Inc., 2019 WL 3814453, at *1 (Del. Ch.
Aug. 14, 2019) (“A motion for reargument, as this Court has pointed out on numerous occasions,
does not provide a forum to relitigate issues decided by the trial judge, and if the trial court is in
error on those issues, vindication is available on appeal, not via reargument.”).
2
disclosures. To the extent that, given the Plaintiff-friendly pleading standard on this
Motion to Dismiss, it may be so read, the Plaintiffs failed to brief the issue in
response to the Motion sufficiently to consider it raised, and failed to raise it at oral
argument as well. The claim, accordingly, was waived. 4 Thus, reargument is
inappropriate on this ground.
The second ground alleged to support reargument is that I misapprehended
the meaning of bad faith in the context of a change-in-control transaction, and
accordingly reached an unsupportable legal conclusion. However, this argument too
is misplaced; I considered the Plaintiffs’ contentions and rejected them in the
Opinion. 5 Therefore, reconsideration is inappropriate; relief, if any, must be via
appeal.
Finally, the parties provided memoranda on the Chancellor’s recent opinion
in Baker Hughes,6 a case decided after the Opinion issued. That case involved a
pleading, found to be sufficient to sustain a claim, that an action in signing an
inaccurate disclosure by a corporate officer implicated the duty of care. While Baker
Hughes is well reasoned, it did not change substantive law. And while the parties’
memoranda were thoughtful, the case is inapplicable here, where I have found that
4
See Thor Merritt Square, LLC v. Bayview Malls LLC, 2010 WL 972776, at *5 (Del. Ch. Mar. 5,
2010) (failure to brief an issue may result in waiver).
5
The Opinion, at *29–*31.
6
In re Baker Hughes Inc. Merger Litig., 2020 WL 6281427 (Del. Ch. Oct. 27, 2020).
3
the issue of Scanlon’s exercise of the duty of care in disseminating disclosures to
stockholders was not adequately before me. Thus, reconsideration is not required.
For the forgoing reasons, the Plaintiffs’ Motion for Reargument is DENIED.
IT IS SO ORERED.
Sincerely,
/s/ Sam Glasscock III
Sam Glasscock III
cc: All counsel of record (by File & ServeXpress)
4