114 A.3d 541
Del. Ch.2014Background
- Dole's controlling shareholder offered to take the company private; merger approved and closed at $13.50 per share; Hudson Bay and Ripe sought statutory appraisal for millions of shares after the merger.
- During discovery Dole sought pre‑litigation valuation materials and analyses that petitioners prepared, reviewed, or relied on when trading or deciding to seek appraisal; petitioners objected as irrelevant, premature, and privileged.
- Dole served Rule 30(b)(6) deposition notices covering petitioners' valuations; petitioners instructed their corporate designees not to answer valuation questions at the depositions on relevance grounds.
- Depositions revealed that petitioners had contemporaneous valuation work (Excel DCFs, comps, sum‑of‑the‑parts, and an internal Fortress memorandum with downside cases).
- Dole moved to compel production and supplemental depositions; the Court granted the motion, ordered production (with in camera review of the Fortress memorandum), and awarded Dole fees for the depositions and motion practice.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Discoverability of pre‑litigation valuations | Petitioners: valuations are irrelevant or premature until expert discovery; lay witnesses cannot give admissible valuation opinion | Dole: contemporaneous valuations are relevant and may lead to admissible evidence and are discoverable | Court: valuations are relevant and discoverable under Ct. Ch. R. 26(b)(1) |
| Potential admissibility of petitioners’ valuation materials at trial | Petitioners: valuations are lay opinions and inadmissible; valuation is expert territory | Dole: materials can be used (as lay opinion, via expert reliance under Rule 703, or as factual evidence) | Court: materials satisfy the low threshold of being reasonably calculated to lead to admissible evidence; may be admissible as lay opinion or via expert reliance |
| Privilege / work product protection for valuation documents | Petitioners/Ripe: some materials (e.g., Fortress memorandum) are privileged or work product | Dole: petitioners have not carried burden to show privilege; business‑purpose analyses are not protected | Court: generally not privileged; Fortress memorandum may contain legal advice — ordered in camera review to resolve privilege claim |
| Sanctions / fee shifting for deposition instructions not to answer | Dole: petitioners improperly instructed witnesses not to answer and should pay costs | Petitioners: instruction justified by objections | Held: instruction was improper (objection on relevance insufficient); Rule 37 fees awarded to Dole (but not punitive) |
Key Cases Cited
- Ala. By-Products Corp. v. Neal, 588 A.2d 255 (Del. 1991) (appraisal provides judicial determination of fair value)
- Cede & Co. v. Technicolor, Inc., 542 A.2d 1182 (Del. 1988) (central issue in appraisal is determination of fair value)
- M.G. Bancorporation, Inc. v. Le Beau, 737 A.2d 513 (Del. 1999) (both parties bear burden to prove valuation positions in appraisal)
- Rapid‑Am. Corp. v. Harris, 603 A.2d 796 (Del. 1992) (appraisal often characterized as a “battle of experts”)
- Matter of Cent. Ice Cream Co., 836 F.2d 1068 (7th Cir. 1987) (contemporaneous investor behavior can be persuasive market evidence)
- In re Delaware Racing Ass’n, 213 A.2d 203 (Del. 1965) (market value must be considered in an appraisal when an established market exists)