Opinion
Civil Action No. 174-N.
Submitted: March 29, 2005.
Decided: April 4, 2005.
Alan J. Stone, R. Judson Scaggs, Jr., James G. McMillan, III, Jerry C. Harris, Jr., Morris, Nichols, Arsht Tunnell, Wilmington, DE.
John L. Reed, Daniel V. Folt, Gary W. Lipkin, Matt Neiderman, Duane Morris LLP, Wilmington, DE.
Kevin R. Shannon, Brian C. Ralston, Joseph B. Cicero, Potter Anderson Corroon LLP, Wilmington, DE.
Dear Counsel:
After careful consideration of the parties' submissions with respect to defendants' Motion For Protective Order Staying Discovery (the "Motion") and plaintiffs' request that the Court fix a time for oral argument on defendants' pending motion to dismiss plaintiffs' remaining claim as moot, I have decided that defendants' Motion must be denied; discovery in this matter may proceed. Counsel shall confer about the dates provided below and inform the Court of the agreed-upon date for oral argument on defendants' motion to dismiss. The Court reserves the right to cancel oral argument if, after review and consideration of the written submissions, it appears that further argument would not be useful.
On November 8, 2004, this Court issued a Memorandum Opinion, dismissing all of plaintiffs' claims except a single claim relating to the December 2001 sale of Aggregate between the Regency subsidiaries. Shortly after the issuance of the Opinion, the plaintiffs served on defendants various interrogatories and requests for the production of documents, and several motions for the commission of various witnesses. Defendants responded in turn. Now, defendants have filed a motion to dismiss plaintiffs' remaining claim as moot, asserting that the transaction underlying plaintiffs' suit has been unwound. Defendants, therefore, have moved for a protective order, staying discovery pending the resolution of the motion to dismiss. In addition, it appears that plaintiffs had agreed to an informal discovery stay, but have since changed their minds.
Court of Chancery Rule 26(c) provides: "Upon motion by a party and for good cause shown, the Court may make any order which justice requires to protect a party or person from annoyance, embarrassment, oppression, or undue burden or expense, including . . . [t]hat the discovery not be had. . . ." Defendants insist that an order staying discovery is common when a dispositive motion is before the Court. This is often the case. Nevertheless, the decision whether to grant such a motion falls within the sound discretion of the Court, and the Court must balance the broad policy of allowing discovery against the dual goals of fairness and efficiency, goals that may or may not be advanced when the Court stays discovery pending the resolution of a motion to dismiss.
Dann v. Chrysler Corp., 166 A.2d 431 (Del.Ch. 1960).
See Fish Eng'g Corp. v. Hutchinson, 162 A.2d. 722 (Del. Ch. 1960) (allowing discovery unless the Court is satisfied that the administration of justice will be impeded by such an allowance).
A stay of discovery should not be granted automatically. Schick, Inc. v. Amalgamated Clothing Textile Workers, 1987 Del. Ch. LEXIS 540, at *4 (June 18, 1987). And discovery should be permitted to go forward absent a showing by the movant that the Court should exercise its discretion and stay it. Boxer v. Husky Oil, 1981 Del. Ch. LEXIS 565, at *4-5 (Mar. 4, 1981).
Here, several factors influence my decision to deny defendants' Motion. First, at this point, I am unconvinced that the motion to dismiss presents a reasonable expectation of avoiding further litigation. Second, because of the Court's schedule, I cannot reasonably anticipate that the pending motion to dismiss will be decided shortly. Finally, because the remaining litigable issue is a narrow one, the potential for undue burden and expense on the defendants is de minimis when compared with the prejudice to plaintiffs that may result through the passage of more time. Therefore, after balancing the parties' interests, I conclude that discovery should continue.
See Szeto v. Schiffer, 1993 Del. Ch. LEXIS 264, at *6 (Nov. 24, 1993) (finding that a motion to stay discovery is more appropriate when the Court anticipates that the pending motion to dismiss will be decided shortly and when it does not appear that either party will be prejudiced by the stay).
As I alluded to above, the Court's schedule will not permit oral argument on the defendants' motion to dismiss until late May. The following are the dates and times the Court has available: Tuesday, May 31, 2005, at 2:30 p.m. in Wilmington, or Wednesday, June 1, 2005, at 2:00 p.m. in Wilmington. Counsel shall confer, and inform the Court of their choice.
For the foregoing reasons, defendants' Motion For Protective Order Staying Discovery is DENIED.