Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

In re Good Technology Corporation Stockholder Litigation

Court of Chancery of Delaware

October 27, 2017

IN RE GOOD TECHNOLOGY CORPORATION STOCKHOLDER LITIGATION

          Submitted: October 24, 2017

          Joel Friedlander, Jeffrey M. Gorris, Christopher P. Quinn, FRIEDLANDER & GORRIS, P.A., Wilmington, Delaware; Randall J. Baron, A. Rick Atwood, Esther Lee, ROBBINS GELLER RUDMAN & DO WD LLP, San Diego, California; Attorneys for Stockholder Plaintiffs.

          Peter J. Walsh, Jr., Frank R. Martin, Travis R. Dunkelberger, POTTER ANDERSON & CORROON LLP, Wilmington, Delaware; Attorneys for Defendants Christy Wyatt, BrandelL. Carano, John H.N. Fisher, Barry Schuler, Thomas Unterman, and Christopher Varelas.

          William M. Lafferty, Ryan D. Stottmann, Alexandra M. Cumings, MORRIS, NICHOLS, ARSHT & TUNNELL LLP, Wilmington, Delaware; Attorneys for Defendants Oak Management Corporation, Oak Investment Partners X, LP, Oak X Affiliates Fund, LP, Draper Associates, L.P., Draper Associates, Inc., Draper Fisher Jurvetson ePlanet Partners, Ltd., Draper Fisher Jurvetson ePlanet Partners Fund, LLC, Draper Fisher Jurvetson ePlanet Ventures GmbH & Co. KG, Draper Fisher Jurvetson ePlanet Ventures L.P., Draper Fisher Jurvetson Management, LLC, Draper Fisher Jurvetson Fund VI, L.P., Draper Fisher Jurvetson Partners VI, LLC, DFJ Growth Fund 2006, Ltd., Draper Fisher Jurvetson Growth Fund 2006, L.P., Draper Fisher Jurvetson Growth Fund 2006 Partners, L.P., Draper Fisher Jurvetson Partners Growth Fund 2006, LLC, Draper Associates Riskmasters Fund III, LLC, Saints Rustic Canyon LLC, Saints Rustic Canyon, LP, Riverwood Capital Management, L.P., Riverwood Capital L.P., Riverwood Capital Partners L.P., Riverwood Capital Partners (Parallel-A) L.P. and Riverwood Capital Partners (Parallel-B) L.P.

          Edward B. Micheletti, Alyssa S. O'Connell, Sarah Runnells Martin, Lauren N. Rosenello, SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP, Wilmington, Delaware; Attorneys for Defendant J.P. Morgan Securities LLC

          MEMORANDUM OPINION

          LASTER, V.C.

         The plaintiffs sued an array of defendants that included individuals and their affiliated entities. The plaintiffs and a subset of the defendants[1] mediated with Robert A. Meyer, whom they engaged through JAMS. They reached an agreement in principle on the terms of a settlement, which they memorialized in a term sheet.

         When they attempted to finalize a global settlement agreement, disputes arose. The term sheet includes a dispute resolution clause, which states: "Any disputes arising out of this Term Sheet or the final memorialization of the settlement shall be referred to Robert A. Meyer, who shall have the sole authority and exclusive jurisdiction to resolve any such disputes."[2] The D&O Defendants contacted Meyer, informed him that a "dispute has arisen" under the term sheet, and asked that he "take the matter under consideration promptly."[3] Meyer declined to a serve, opining that he was "disqualified from serving in that capacity given the numerous confidential communications that I have had with counsel for all concerned, as mediator, concerning the subject matter of the dispute."[4]

         After receiving Meyer's response, the D&O Defendants moved to enforce the term sheet in this court. After reviewing a copy of the motion, Meyer wrote the parties:

Although I continue to believe that I cannot appropriately decide specific issues involving the Term Sheet, I nevertheless believe that it was the intention of the parties to have a mechanism for alternative dispute resolution in the event that a disagreement arose (including the type of dispute that is the subject of the present motion). ...
Regarding dispute resolution, given my inability to serve, I would think that a logical alternative-and one I believe I may be able to compel-is to direct the parties to agree to an alternate neutral and if an agreement can't be reached, to appoint one. I'd like your views on this as soon as possible.[5]

         The D&O Defendants declined Meyer's offer to appoint a successor neutral. They asserted that they "did not agree to a generic alternative dispute provision, " nor to "any procedure that would authorize an alternative neutral."[6] They instead pressed the court to resolve the dispute over the term sheet.

         The plaintiffs countered with a motion to dismiss the D&O Defendants' application for lack of jurisdiction. According to the plaintiffs, this court lacks jurisdiction to resolve disputes over the term sheet because of the Dispute Resolution Clause. They believe the Dispute Resolution Clause is a broad arbitration clause that requires the parties to arbitrate "[a]ny disputes arising out of this Term Sheet." The D&O Defendants, by contrast, assert that they only agreed to have Meyer serve as a mediator, not as an arbitrator.

         An arbitration clause is a specialized type of forum selection clause.[7] When interpreting such a clause, courts "apply ordinary state-law principles that govern the formation of contracts."[8] Because "the public policy of Delaware favors arbitration, " the ordinary principles or contract interpretation are supplemented by the rule that "[a]ny doubt as to arbitrability is to be resolved in favor of arbitration."[9]

         In my view, the Dispute Resolution Clause constitutes an agreement to arbitrate. Delaware courts "do not require the magic word, 'arbitration, ' to find that parties intended to arbitrate."[10] A clause is sufficient if it provides for "a final and binding remedy by a neutral third party."[11] When interpreting a clause, Delaware's ordinary principles of contract interpretation require that a court enforce the plain language of its terms.[12]

         The plain language of the Dispute Resolution Clause empowers Meyer "to resolve" any disputes "arising out of this Term Sheet." It further speaks in terms of Meyer having "sole authority and exclusive jurisdiction." This language makes clear that the parties intended to divest the court of jurisdiction over disputes arising out of the term sheet and vest that authority exclusively in an alternative decision maker. Read in the context of the Dispute Resolution Clause, the plain meaning of the term "resolve" contemplates a binding decision. Dictionaries define the verb "resolve" as to "to reach a decision about, "[13] "to deal with successfully, " "clear up, " and "to find an answer to."[14] The Dispute Resolution Clause recognized that Meyer would "resolve" any disputes arising out of the term sheet, that he would have the "sole authority" to do so, and that his jurisdiction would be "exclusive." Given its plain language, the Dispute Resolution Clause constitutes an agreement to arbitrate any disputes arising under the term sheet.

         The D&O Defendants contend that such an interpretation would be nonsensical because this case is a class action and any settlement requires court approval under Court of Chancery Rule 23(e). It is true that the terms of the settlement, once finalized, must be approved by this court before the settlement can become effective and be implemented. That is a different issue than disputes over the terms of the settlement and their implementation in the final settlement documents. The Dispute Resolution Clause governs disputes over the term sheet and its implementation in final settlement documents. Once the final settlement documentation is complete, it will be submitted to the court for approval.

         The D&O Defendants also contend that any agreement to arbitrate has failed because Meyer recused himself. They rely on a series of federal decisions which have held that if the parties to an arbitration agreement have selected a specific individual whose identity as the arbitrator is integral to the parties' agreement to arbitrate, and if the individual cannot ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.