In re Xura, Inc. Stockholder Litigation
E. Montejo, Esquire Rudolf Koch, Esquire Robert S. Saunders,
Esquire Michael F. Bonkowski, Esquire Peter B. Ladig, Esquire
Submitted: January 10, 2019
December 31, 2018, the court-appointed Special Master, Peter
B. Ladig, Esquire, issued his Report and Recommendation No. 3
(the "Report") in which he recommended that the
Court deny the parties' competing requests for fee
shifting.Specifically, the Petitioner, Obsidian
Management, LLC, requested that the Court shift fees as a
sanction for alleged spoliation of evidence by
representatives of Respondent, Xura, Inc., and non-party,
Siris Capital Group, LLC. Xura and Siris cross-moved for fee
shifting as a sanction for Obsidian's alleged violation
of Court orders relating to discovery in aid of
Obsidian's spoliation allegations. The Special Master
determined that Obsidian's request for fee shifting must
await the Court's merits adjudication of Obsidian's
motion for an adverse inference based on spoliation. As for
Xura and Siris's request, the Special Master denied that
request on the grounds that the movants had not carried their
onerous burden of demonstrating bad faith and had not
otherwise justified fee shifting as a sanction for discovery
violations. Based on these findings, the Special Master
recommended that both parties bear the Special Master's
and Siris have filed joint exceptions to the
Report. For the reasons that follow, the
exceptions are overruled.
Court of Chancery Rule 144(c), "[a]ny party may take
exception to a final report or a draft report" issued by
a court-appointed special master. When exceptions are taken,
the Court reviews those exceptions, and the recommendations
of the special master, de novo.
the exceptions rest principally on the premise that the
Special Master ignored the fact that Obsidian initiated and
pursued spoliation discovery in violation of the Court's
orders. I disagree. The Special Master's Report clearly
reflects that he was well aware of the Court's orders
with respect to spoliation discovery and was also well aware
of Obsidian's discovery conduct following the entry of
those orders.With knowledge of the Court's orders,
the Special Master characterized Obsidian's discovery
conduct as "aggressive but not
unjustified." I share that view. He also concluded,
after careful analysis, that Xura and Siris had not carried
their "stringent burden" of demonstrating that
Obsidian engaged in bad faith litigation conduct in pursuing
spoliation discovery. After carefully reviewing the matter, I
agree with that conclusion as well. Accordingly,
"[b]elieving the [Special] Master to have dealt with the
issues in a proper manner and having articulated the reasons
for [his] decision well, there is no need for me to repeat
exceptions to the Special Master's Report are OVERRULED.
The Report is hereby adopted in its entirety.
IS SO ORDERED.
R. Slights III J.
 D.I. 285.