TCV VI, L.P., TCV MEMBER FUND, L.P., and CONTINENTAL INVESTORS FUND LLC, Plaintiffs,
TRADINGSCREEN INC., PHILIPPE BUHANNIC, PIERO GRANDI, PIERRE SCHROEDER, and PATRICK BUHANNIC, Defendants.
Submitted: February 23, 2018
Gregory V. Varallo, Richard P. Rollo, Kevin M. Gallagher,
Sarah A. Galetta, RICHARDS, LAYTON & FINGER, P.A.,
Wilmington, Delaware; Attorneys for Plaintiffs TCV VI, L.P.
and TCV Member Fund, L.P.
G. Abrams, April M. Kirby, ABRAMS & BAYLISS LLP,
Wilmington, Delaware; Attorneys for Plaintiff Continental
Investors Fund LLC.
Philippe Buhannic, New York, New York; Pro Se Defendant.
Buhannic, New York, New York; Pro Se Defendant.
F. Connolly, MORGAN, LEWIS & BOCKIUS LLP, Wilmington,
Delaware; Attorney for Defendants TradingScreen Inc., Piero
Grandi, and Pierre Schroeder.
Kenneth J. Nachbar, Megan Ward Cascio, Richard Li, Thomas P.
Will, MORRIS, NICHOLS, ARSHT & TUNNELL LLP, Wilmington,
Delaware; Former Attorneys for Defendants.
Defendants Philippe and Patrick Buhannic previously moved for
an order compelling their former counsel-Morris, Nichols,
Arsht & Tunnell LLP ("Morris Nichols")-to
provide them with a copy of their litigation file. I granted
the motion, and Morris Nichols produced what the firm
believed it was obligated to provide. The Buhannics have now
moved to compel production of Morris Nichols' entire
litigation file and to penalize the firm for not producing
the entire file previously. In passing, the Buhannics ask to
lift the stay currently governing the case. This decision
orders additional production and otherwise denies the motion.
facts are drawn from the pleadings, prior decisions in this
case, the motions under consideration, and the documents
submitted in connection with those motions. The factual
background in this decision does not represent findings of
fact in the traditional sense, but rather how the relevant
record appears at this stage.
Philippe Buhannic is a founder of TradingScreen Inc. (the
"Company"). He previously served as its CEO and
Chairman of the Board. His brother, defendant Patrick
Buhannic, also previously served as a director of the
Company. Because the Buhannics share the same last name, this
decision refers to them by their first names to avoid
confusion. No disrespect is intended.
other defendants are Piero Grandi and Pierre Schroeder. They
remain directors of the Company. They have not taken any
position on the Buhannics' request to compel Morris
Nichols to produce its entire litigation file.
TCV VI, L.P., TCV Member Fund, L.P., and Continental
Investors Fund LLC own shares of preferred stock in the
Company. They have not taken any position on the
Buhannics' request to compel Morris Nichols to produce
its entire litigation file. They oppose the Buhannics'
request to lift the stay.
The Underlying Litigation
plaintiffs filed this action in 2014. They contended that the
Company had breached its obligation to redeem their preferred
stock and that the Buhannics, Schroeder, and Grandi had not
acted in good faith when determining that the Company only
had sufficient funds legally available to redeem a small
amount of their preferred stock. In the alternative, the
plaintiffs contended that the Buhannics, Schroeder, and
Grandi had breached their fiduciary duties when determining
how much of the preferred stock to redeem. The plaintiffs
contended that Phillippe made a bad faith determination to
preserve his control over the Company, that Patrick supported
Phillippe out of loyalty to his brother, and that Grandi and
Schroeder were beholden to Phillipe.
case proceeded through discovery, and trial was held in
February 2016. Morris Nichols represented all of the
defendants through trial.
post-trial briefing, a majority of the members of the
Company's board of directors (the "Board")
comprising Grandi, Schroeder, and two non-party directors,
placed Philippe on leave from his position as CEO. Philippe
refused to accept this decision, and the Buhannics attempted
to take action as stockholders to reconstitute the Board. The
four directors who had placed Buhannic on leave filed a
separate lawsuit in this court pursuant to Section 225 of the
Delaware General Corporation Law to determine the proper
composition of the Board and whether Philippe remained
action taken by a majority of the Board to place Philippe on
leave had implications for this case. The complaint
challenged decisions taken by a Board majority comprising the
Buhannics, Schroeder, and Grandi, and the plaintiffs
contended that Schroeder and Grandi were beholden to
Phillippe. Now, a new Board majority that included Schroeder
and Grandi had taken employment-related action against
Phillipe. Schroeder and Grandi's participation in that
decision had implications for the evidence presented at trial
to demonstrate that they were beholden to Phillippe. It also
seemed possible that a majority of directors might be in a
position to negotiate a settlement with the plaintiffs.
23, 2016, the plaintiffs moved to stay this action so that
the parties could work towards a settlement. Grandi and
Schroeder supported the motion, and I granted
parties subsequently began negotiating a potential
settlement. During the negotiations, the Buhannics took
positions adverse to Schroeder and Grandi.
of the conflict between their clients, Morris Nichols
withdrew as counsel to the Buhannics. Morris Nichols advised the
remaining defendants that it could not participate in any
communications about the settlement.
Morris Nichols withdrew, the parties other than the Buhannics
reached an agreement in principle to settle the case. The
Buhannics objected to the settlement and contended that it
could not be implemented over their objection.
Proceedings In New York
2016, the Buhannics filed a civil action against the Company
and the other members of the Board in the New York State
Supreme Court (the "New York Action"). The
complaint in the New York Action asserted claims for breach
of fiduciary duty against the other directors. It also
challenged aspects of the Company's capital structure.
Buhannics also commenced an arbitration in New York against
the Company and the other members of the Board (the "New
York Arbitration"). The Buhannics contended in the New
York Arbitration that the respondents had breached their
obligations under a document that the parties referred to as
the Founders' Agreement.
February 2017, the court in the New York Action issued a
preliminary injunction enjoining the Company from issuing
additional shares that could dilute the Buhannics'
position. The New York Action remains pending.
2017, a panel in the New York Arbitration ruled against the
Buhannics. The Buhannics promptly filed an action in the
United States District Court for the Southern District of New
York challenging the panel's decision. That action
The Buhannics Seek Their Litigation File.
March 2, 2017, I asked the parties for a status
report. The plaintiffs described the agreement in
principle to settle this litigation, which included an
amendment to the Company's certificate of incorporation.
The plaintiffs expressed concern about implementing the
settlement in light of the injunction in the New York Action,
so they asked to continue the stay. I entered an order granting
letter filed April 24, 2017, Philippe objected to the
stay. He also asserted for the first time that
Morris Nichols had refused to provide its litigation file.
His letter asked me to compel Morris Nichols to produce the
file. Morris Nichols filed a responsive letter explaining
that the other defendants had asserted attorney-client
privilege over the contents of the file. Both Buhannics
subsequently filed letters reiterating their
demands. By order dated May 30, 2017, I denied
their request and required that they seek any relief by
months later, on October 26, 2017, Philippe filed a motion
styled "Philippe Buhannic and Patrick Buhannic's
Motion for Court to Lift the Order Staying Action and Direct
Former Counsel to Hand Over a Copy of Litigation File to
Philippe Buhannic."The parties briefed the motion. By
order dated December 21, 2017, I denied the motion to lift
the stay. In a second order issued on the same
day, I granted the motion to compel Morris Nichols to produce
the litigation file (the "Litigation File
Order"). The Litigation File Order directed
Morris Nichols to "deliver a copy of the file to the
Buhannics within10 days."
The Current Motion
December 27, 2017, Morris Nichols emailed the Buhannics a
link to a secure website where they could access 5, 316
documents. That production included:
1. All pleadings in TCV VI, L.P. v. TradingScreen,
Inc., Del. Ch. C.A. No. 10164-VCL.
2. All invoices submitted to TradingScreen in connection with
the foregoing action.
3. All emails in the possession of Morris Nichols to, from or
cc'd [sic] to any of the TradingScreen directors it
represented: (Phillip [sic] Buhannic, Piero Grandi, Pierre
Schroeder, Patrick Buhannic); any person with a TCV email
address (i.e., Robert Trudeau, Ric Fenton), Frank Placenti (a
TCV board designee); anyone with an rlf.com email address;
anyone with an abramsbayliss.com email address; anyone with a
kasowitz.com email address.
emails included several iterations of a term sheet for the
agreement in principle to settle the case.
Buhannics were dissatisfied with that production. On January
8, 2018, they filed a motion styled "Philippe Buhannic
and Patrick Buhannic's Motion for Court to Lift the Order
Staying Action and Direct Former Counsel to Hand Over a Copy
of Litigation File to Philippe Buhannic." It largely
repeated verbatim the contents of the previous
motion to compel production of the litigation file. It added
an assertion that Morris Nichols had failed to produce its
entire litigation file and a specific request that Morris
Nichols produce the "COMPLETE litigation [file]"
including "all currently missing documents pertaining to
this case, especially the agreement between the Board
members, TradingScreen Inc. and TCV." The motion
asked "the court to penalize Morris Nicholls [sic] in a
way that is appropriate."
plaintiffs filed a response in which they opposed the motion
to lift the stay.Morris Nichols filed a response in which
it opposed the request for production of its complete
litigation file and the imposition of any
penalty. In its response, Morris Nichols argued
that its production satisfied the Litigation File Order. It
further argued that the Buhannics really only wanted a copy
of the agreement in principle to settle this litigation.
Morris Nichols submitted an email dated January 12, 2018, in
which Philippe stated, "Please do not forget what we
requested yet again which is the agreement you [r]eceived
between TCV, [Grandi, Schroeder] and the company. Nothing
else is important to us."
Nichols subsequently provided the Buhannics with a CD-ROM
containing its prior production. Morris Nichols also provided
the Buhannics with an index of the materials on the CD-ROM.
In the transmittal letter for the CD-ROM, Morris Nichols
offered to provide printed copies of the documents at the
Buhannics' expense. Morris Nichols also represented that
it did not have a copy of the agreement in
February 19, 2018, the Buhannics filed what appears to have
been intended as a reply in support of their motion. The
document was titled "Philippe Buhannic and Patrick
Buhannic's Motion for Court to Compell [sic] Former
Counsel to Hand Over a Complete Copy of Litigation File to
Philippe Buhannic." Its contents were substantially
identical to the earlier motion. It added as an exhibit a