Richard Frank v. Michael Mullen ( 2023 )

COURT OF CHANCERY
OF THE
STATE OF DELAWARE
MORGAN T. ZURN LEONARD L. WILLIAMS JUSTICE CENTER
VICE CHANCELLOR 500 N. KING STREET, SUITE 11400
WILMINGTON, DELAWARE 19801-3734
June 20, 2023
Blake A. Bennett, Esquire Raymond J. DiCamillo, Esquire
Cooch and Taylor, P.A. Richards, Layton & Finger, P.A.
1007 North Orange Street, Suite 1120 920 North King Street
Wilmington, DE 19801 Wilmington, DE 19801
Via Electronic Mail:
Francine McKenna
TheDig@Substack.com
RE: Richard Frank v. Michael Mullen, et al.,
Civil Action No. 2023-0381-MTZ
Dear Counsel:
This action was initiated on March 30, 2023, with the filing of a confidential
complaint.1 A public, redacted version of the complaint was filed on April 5.2 On
May 8, the Court docketed a letter from Francine McKenna, “an independent
journalist and full-time lecturer in accounting at the Wharton School at the
University of Pennsylvania,” challenging “the Order to grant confidential
treatment” of the complaint.3 The Court entered a minute order later that day
1
Docket Item (“D.I.”) 1.
2
D.I. 5.
3
D.I. 9 at 1.
Richard Frank v. Michael Mullen, et al.,
Civil Action No. 2023-0381-MTZ
June 20, 2023
Page 2 of 6
informing the parties that the Court was treating McKenna’s letter as a notice of
challenge under Court of Chancery Rule 5.1(f).4
This Court has a constitutional mandate to ensure its proceedings are open to
the public.5 A party may rather keep pleadings under seal; members of the public,
and press, may file notices of challenge to require that party to show good cause
for maintaining them under seal.6 Rule 5.1(f) governs those challenges to
confidential treatment, and sets firm deadlines with mandatory consequences for
missing them. Under Rule 5.1(f)(2), which governs documents for which a public
version is required, “any person may seek continued Confidential Treatment for
the Confidential Information redacted from the public version by filing a motion
within five days after the filing of the challenger’s notice.”7 If no such motion is
4
D.I. 10.
5
Soligenix, Inc. v. Emergent Prod. Dev. Gaithersburg, Inc., 289 A.3d 667, 671 (Del. Ch.
2023) (citing Del. Const. art. I, § 9); Horres v. Chick-fil-A, Inc., 2013 WL 1223605, at
*1–2 (Del. Ch. Mar. 27, 2013).
6
Ct. Ch. R. 5.1(f) (“Any person may challenge the Confidential Treatment of a
Confidential Filing by filing a notice raising the challenge with the Register in
Chancery.”); see, e.g., In re Boeing Co. Deriv. Litig., 2021 WL 392851 (Del. Ch. Feb. 1,
2021) (confidentiality challenge from “Dow Jones & Company, Inc., publisher of The
Wall Street Journal” and a Wall Street Journal reporter); P’r Invs., L.P. v. Theranos,
Inc., 2018 WL 1906085 (Del. Ch. Apr. 23, 2018) (confidentiality challenge from a
“journalist and documentary film maker”); Okla. Firefighters Pension Ret. Sys. v. Corbat,
2017 WL 5484125 (Del. Ch. Nov. 15, 2017) (confidentiality challenge from a Wall Street
Journal reporter).
7
Ct. Ch. R. 5.1(f)(2).
Richard Frank v. Michael Mullen, et al.,
Civil Action No. 2023-0381-MTZ
June 20, 2023
Page 3 of 6
filed within five days, “then the Confidential Filing shall become part of the public
record, and the Register in Chancery shall permit access to the Confidential Filing
on the docket system to the same extent as any other public filing.”8 If a motion is
timely filed, “[t]he person challenging Confidential Treatment shall have five days
to file an opposition.”9 “If an opposition to the motion is not timely filed, then the
challenge shall be deemed withdrawn and the Confidential Filing shall continue to
receive Confidential Treatment.”10
Under Rule 5.1, McKenna’s challenge required the defendants to file a
motion for continued confidential treatment by May 15. On May 15, the
defendants filed an updated public version of the complaint that included fewer
redactions.11 After the 5:00 p.m. filing deadline passed,12 the defendants also
attempted to file a Motion for Continued Confidential Treatment of Documents
Filed Under Seal (the “Motion”) responding to “[c]hallenger Francine McKenna”
and requesting that the Court keep the complaint confidential. That Motion was
filed without a proposed order, and was therefore rejected. The defendants refiled
8
Id.9
Id.10
Id.11
D.I. 12.
12
Ct. Ch. R. 79.2.
Richard Frank v. Michael Mullen, et al.,
Civil Action No. 2023-0381-MTZ
June 20, 2023
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on the sixth day, May 16, making the Motion untimely.13 The Motion was
accompanied by a certificate of service, which omitted McKenna but included the
plaintiff in this action.14
Indeed, the defendants did not serve McKenna with the Motion upon filing.
Rather, on May 30, over two weeks later, the defendants notified the Court that
they had neglected to serve McKenna, and represented that “[t]oday, Defendants
are serving Ms. McKenna with a copy of the Motion by email and by registered
mail.”15 Based on this representation, the defendants suggested “that the time for
Ms. McKenna to respond (should she choose to respond) begin today or
tomorrow.”16
On June 14, the Court requested a notice of service for McKenna,17 which
the defendants filed that same day.18 That notice provides proof of service by
registered mail to “The Digging Company LLC” sent May 30, but no proof of
13
D.I. 13.
14
Id. at Certificate of Service.
15
D.I. 14 at 1.
16
Id.17
D.I. 15.
18
D.I. 16.
Richard Frank v. Michael Mullen, et al.,
Civil Action No. 2023-0381-MTZ
June 20, 2023
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service by email, and no proof of service on McKenna herself.19 In the absence of
proof of service by email, service by mail affords the recipient three additional
days to take any required action.20 No opposition to the Motion has been received.
In sum, the defendants failed to timely file their Motion; failed to serve
McKenna at the time of filing; represented to the Court they would serve her by
email and certified mail on May 30 and the Court should start the clock for
McKenna’s opposition on May 30 or 31; failed to provide proof of service until
requested; and only provided proof of service by mail, not email, and on an entity,
not McKenna. If the Court had accepted that the Motion had been timely filed and
served by email, McKenna’s silence five days after that service would have
19
D.I. 16, Ex. A. The notice of service states that the Motion was served on June 3. D.I.
16. Under Court of Chancery Rule 5(b), “Service by mail is complete upon mailing.” Ct.
Ch. R. 5(b). The Digging Company was served on May 30.
The defendants have offered no explanation as to how service on The Digging
Company effectuated service on McKenna. I might infer from McKenna’s notice of
challenge that she is affiliated with The Digging Company, given that her newsletter is
named “The Dig,” her email address is TheDig@Substack.com, and her letterhead
contains a sketch of an excavator. D.I. 9. But her letterhead provides her letter
originated in Philadelphia, while The Digging Company was served in Chicago. Id.; D.I.
16, Ex. A. I cannot conclude the signature on the green card matches her notice of
challenge, and the recipient did not print their name. D.I. 9; D.I. 16, Ex. A. I cannot
conclude that McKenna was actually served.
20
Ct. Ch. R. 6(e).
Richard Frank v. Michael Mullen, et al.,
Civil Action No. 2023-0381-MTZ
June 20, 2023
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compelled the erroneous conclusion that her notice of challenge was withdrawn,
and that the complaint should remain confidential.21
But the defendants did not timely file their Motion on May 15. They
succeeded in filing it on May 16. Rule 5.1(f)(2) mandates that if a motion seeking
continued confidential treatment is not timely filed, “then the Confidential Filing
shall become part of the public record.”22 The defendants filed the Motion a day
late. The Motion is DENIED: the Register in Chancery shall unseal the
complaint.
Sincerely,
/s/ Morgan T. Zurn
Vice Chancellor
MTZ/ms
cc: All Counsel of Record, via File & ServeXpress
21
Ct. Ch. R. 5.1(f)(2).
22
Id. (emphasis added).