FW Deep Value Opportunities Fund I, LLC v. The Carlyle Group, Inc.FW Deep Value Opportunities Fund I, LLC v. The Carlyle Group, Inc.
Before me is Respondents Carlyle Group Management and Carlyle Investment Management‘s (collectively, “Respondents“) Objections to the Magistrate Judge‘s March 16, 2026, Memorandum Order (the “Magistrate Judge‘s Order“) (D.I. 71). (D.I. 75). I have considered the parties’ briefing. (D.I. 75, 80). For the reasons set forth below, Respondents’ Objections to the Magistrate Judge‘s Order are OVERRULED.
I. BACKGROUND
Voltage BidCo GmbH (“Voltage“), an аffiliate of Respondents, announced a voluntary takeover offer to acquire all outstanding Schaltbau shares; on the same day that the takeover offer was announced, Voltage announced it planned to buy out the remaining Schaltbau shareholders through a domination and profit loss transfer agreement. (D.I. 2 at 4–6). A group of Schaltbau shareholders, including FW Deep Value Opportunities Fund I (“Petitioner“), rejected the takeover offer and initiated an appraisal proceeding before a Munich court (the “Takeover Offer Appraisal Proceeding“).1 (D.I. 60 at ¶ 3). Petitioner initiated this ancillary proceeding under
After the action in this Court was closed, a group of shareholders who had accepted Voltage‘s takeover offer commenced a separate proceeding in the Munich court to challenge Voltage‘s compliance with German minimum price requirements (the “Minimum Price Proceeding“).2 (D.I. 59 at 2; D.I. 60 at ¶ 3). Petitioner was added as a plaintiff in the Minimum Price Proceеding. (D.I. 59 at 2 n.1). In the Minimum Price Proceeding, Petitioner filed seventeen documents that Respondents had produced as Confidential or Highly Confidential according to the Protective Order. (D.I. 57 at ¶ 8). Respondents sent Petitioner a letter demanding it withdraw the documents from the Minimum Price Proceeding. (D.I. 62-5, Ex. E). Petitioner refused, offering to negotiate another protective order or to file another application under
II. ANALYSIS
A. Standard of Review
Respondents argue that the Protective Order dispute is dispositive because the “dispute is all that is left in the case.” (D.I. 75 at 1 n.1). Accordingly, Respondents assert that the Magistrate Judge‘s Order should be reviewed de novo. (Id.). In response, Petitioner argues that rulings on discovery disputes, including protective orders and discovery related sanctions, are non-dispositive orders. (D.I. 80 at 1). As a non-dispositive decision, Petitioner argues that the Magistrate Judge‘s Order should be reviewed for clear error. (Id.).
The Federal Magistrates Act allows district court judges to delegate certain matters to a Magistrate Judge.
To my knowledge, the Third Circuit has not determined whether the enforcement of a protective order filed in a Section 1782 ancillary proceeding is dispositive or not.
“Unlike a nondispositive motion (such as a discovery motion), a motion is dispositive if a decision on the motion would effectively determine a claim or defense of a party.” City of Long Branch, 866 F.3d at 98. While “discovery orders are not normally dispositive,” Arcelik A.S. v. E.I. DuPont de Nemours & Co., 856 F. App‘x 392, 395 (3d Cir. 2021), the Third Circuit has recognized at least one exception to the general rule. In N.L.R.B. v. Frazier, 966 F.2d 812, 818 (3d Cir. 1992), the Third Circuit explained that whether to enforce an administrative subpoena is dispositive because the “decision [is] not a pretrial determination of a motion collateral to the main proceeding before the district court, but a final decision which disposed entirely of the Board‘s business before the court.” While there are similarities between the decision to grant an application under Section 1782 and to enforce an administrative subpoena,3 I need not decide whether the decision to grant
It does not matter that the current discovery dispute is the only issue left before the Court in the Section 1782 proceeding. As other courts have explained, “whether an order is ‘final’ or ‘immediately appealable’ under
Nor does Respondents’ request for sanctions change the conclusion that the Magistrate Judge‘s Order is nondispositive. Courts in this District have determined that orders granting sanctions that do not preсlude a claim or defense (such as monetary sanctions) or denying requests for sanctions are nondispositive orders. See Leonard v. Stemtech Int‘l, Inc., 2012 WL 3655512, at *1 n.1 (D. Del. Aug. 24, 2012), report and recommendation adopted, 2012 WL 4591453 (D. Del.
This ancillary action only concerns discovery; by definition, the claims related to a Section 1782 proceeding are litigated in another court. Thus, there are no sanctions the Court could order that would dispose of any claim or defense. This conclusion is particularly true as Petitioner previously dismissed the action. (D.I. 47). In the Rule 11 context, the Ninth Circuit has explained that because “the parties had already settled the case prior to [plaintiff] filing his motion [that resulted in sanctions], the Rule 11 sanctions imposed in this case are properly characterized as non-dispositive.”5 Maisonville, 902 F.2d at 747.
As the Magistrate Judge‘s Order is nondispositive, I will “review findings of fact for clear error” and “review matters of law de novo.” City of Long Branch, 866 F.3d at 99.
B. Violation of Protective Order
Respondents make three objections to the Magistrate Judge‘s Order.
1. Interpretation of the Protective Order
Respondents argue that the Protective Order only allows Petitioner to use documents in the Takeover Offer Appraisal Proceeding. (D.I. 75 at 1). Respondents argue that when the phrase “related proceedings” is read in the full provision of the Protective Order, viewed in the context of the Section 1782 application, and understood based on the intent of the parties at the time of agreeing to the order, it is clear that “related proceeding” can only be those “arising from the ‘Appraisal Proceeding.‘” (Id.). Petitioner responds that the magistrate judge‘s interpretation was correct and supported by the parties’ negotiation of the Protective Order. (D.I. 80 at 2–3).
“A consensual stipulation of the parties is to be interpreted according to the general principles of contract construction.”6 USX Corp. v. Penn Cent. Corp., 130 F.3d 562, 566 (3d Cir. 1997) (internal quotation omitted). This rule applies to stipulations entered аs an order by the court. See Moore v. Ford Motor Co., 755 F.3d 802, 807 n.10 (5th Cir. 2014); S.E.C. v. Merrill Scott & Assocs., Ltd., 600 F.3d 1262, 1271–72 (10th Cir. 2010); City of Hartford v. Chase, 942 F.2d 130, 134–35 (2d Cir. 1991) (“Because the Confidentiality Order was part of a court-approved agreement, it must be construed according to general principles of contract law.“). “[T]he role of a court is to effectuate the parties’ intent.” Lorillard Tobacco Co. v. Am. Legacy Found., 903 A.2d 728, 739 (Del. 2006). “When interpreting contracts, we construe them as a whole and give effect to every provision if it is reasonably possible. A meaning inferred from a particular provision cannot control the agreement if that inference conflicts with the agreement‘s overall scheme.” Norton v. K-Sea Transp. Partners L.P., 67 A.3d 354, 360 (Del. 2013).
The relevant portion of the Protective Order states:
The Material produced or provided by Respondent shall be handled in accordance with this Stipulation, and shall be used by the Receiving Party (Petitioner, along with each German Party, as defined below, that has signed Exhibit A, is a “Receiving Party“) only in the 1782 Proceeding, the action pending before the Munich I Regional Court, 5th Chamber for Commercial Matters in Munich, Germany (the “Munich Court“) commenced by writ dated October 13, 2022, filed by Petitioner, with the heading case numbers 5 HK O 9734/22 e, as well as any appeals thereto and any related proceedings (the “Appraisal Proceeding“), or in connection with the taking of discovery from any party who is already the recipient of the Confidential Material or Highly Confidential Material as permitted herein and for no other purpose.
(D.I. 25 at 1–2 (emphasis added) (internal footnote omitted)). When taking out the additional descriptive material, the Protective Order identifies three instances that mаterials can be used, (1)
The quoted portion of the Protective Order is the only time “Appraisal Proceeding” is defined. The definition of Appraisal Proceeding has three components, (1) “the action pending before the Munich I Regional Court, 5th Chamber for Commerсial Matters in Munich, Germany (the “Munich Court“) commenced by writ dated October 13, 2022, filed by Petitioner, with the heading case numbers 5 HK O 9734/22 e,” which is the action I am referring to as the “Takeover Offer Appraisal Proceeding,” (2) “any appeals thereto,” and (3) “any related proceedings.” (D.I. 25 at 1–2). The parties agree that the Protective Order does not define “any related proceedings.” (D.I. 56 at 2; D.I. 59 at 2).
While the term “any related proceedings” may be ambiguous when read alone, “a court must construe the agreement as a whole, giving effect to all provisions therein.” E.I. du Pont de Nemours & Co. v. Shell Oil Co., 498 A.2d 1108, 1113 (Del. 1985). As used in the Protective Order, the “Takeover Offer Appraisal Proceeding” provision is not limited to specific actions or disputes within the larger case. As such, later raised issues within the Takeover Offer Appraisal Proceeding are already included in the permissible uses described in the Protective Order. If “any related proceedings” were to apply only to actions arising in the Takеover Offer Appraisal Proceeding, then the “any related proceedings” provision would be rendered meaningless. The term “any related proceedings” must, therefore, refer to proceedings separate from the Takeover Offer Appraisal Proceeding.7 There is nothing in the Protective Order that requires a separate proceeding
Contrary to Respondents’ arguments (D.I. 56 at 2–3; D.I. 75 at 1), it does not matter that the Protective Order uses the name “Appraisal Proceeding” to refer to the set of permissible uses of discovery. The chosen shorthand does not override the fact that “Appraisal Proceeding” is defined as three separate components: the Takeover Offer Appraisal Proceedings, any appeals, and any related proceedings. Nor does the tripartite reading of “Appraisal Proceeding” create conflict with any of the other twenty-six times the term is used in the Protective Order. The only limit created by the other uses of “Appraisal Proceeding” arises in paragraph ten of the Protective Order. Here, the Protective Order grants the Munich Court the power to determine how confidential materials can be used at triаl or in other public forums in the Appraisal Proceeding. (D.I. 25 at ¶ 10). This distribution of responsibility indicates that “any related proceeding” may be limited to actions in the Munich Court.9 Similarly, there is nothing in the Protective Order limiting “any related proceeding” to actions that existed at the time the Protective Order was signed. Rather, the Protective Order is necessarily forward looking as it applies to unknown future appeals. If the
Thus, “any related proceedings” applies to actions separate from the Takeover Offer Appraisal Proceeding, including those arising after the Protective Order was signed.
2. Whether the Minimum Price Proceeding is a “Related Proceeding”
Respondents argue that even using the interpretation of the Protective Order that the Magistrate Judge used, the Minimum Price Proceeding was not “related” because, under German law, “valuation in each proceeding asks distinct questions under different laws.” (D.I. 75 at 3). Respondents state that the proceedings involve different legal standards, use different rules of civil procedure, involve distinct parties, rely on different evidence, and have no bearing on the factual or legal findings in one another. (D.I. 56 at 3). Petitioner responds by arguing that the Minimum Price Proceeding is related to the Takeover Offer Appraisal Proceeding because both disputes arose from the same incident, involve similar parties, and have overlapping factual questions. (D.I. 80 at 3–4; see D.I. 59 at 2–3).
The Minimum Price Proceeding arose from the same set of events (i.e., Voltage‘s voluntary takeover offer) that gave rise to the Takeover Offer Appraisal Proceeding. Petitioner and Respondents are parties to both proceedings. Both proceedings ultimately involve the valuation of Schaltbau shares, еven if different portions of the evidence are relevant to each valuation.10 The two proceedings are “connected by” shared factual origins, and the overlap in the parties,
Therеfore, the Minimum Price Proceeding is “related to” the Takeover Offer Appraisal Proceeding for purposes of the Protective Order.
3. Other Violations of the Protective Order
Respondents argue that the Magistrate Judge‘s Order failed to address two of its arguments, (1) that Petitioner used confidential information to purchase a claim and to commence separate litigation (the “collateral purpose argument“), and (2) that the dissemination of protected materials to other plaintiffs in the Minimum Price Proceedings violated the Protective Order (the “dissemination of protected materials argument“). (D.I. 75 at 4).
Respondents do not provide a citation identifying where the collateral purpose argument was addressed in their original letter. (D.I. 75 at 4). I could not find any discussion in Respondents’ letter11 (D.I. 56) or in the declarations submitted in support (D.I. 57; D.I. 58) regarding Petitioner‘s collateral purpose argument. The Court has a standing order that states: “Any party filing objections . . . must include . . . a written statement еither certifying that the objections do not raise new legal/factual arguments, or identifying the new arguments and describing the good cause for failing to previously raise [them] before the Magistrate Judge.” Standing Order for Objections Filed under
Respondents’ dissemination of protected materials argument was not presented as an independent argument in its initial letter. Instead, the argument was phrased as support for its position that Petitioner knew that the Minimum Price Proceeding was not related. (D.I. 56 at 3). The relevant portion of Respondents’ initial letter states:
Under Petitioner‘s reading, “Appraisal Proceeding” includes the [Minimum Price] Proceeding. But if that were so, Petitioner had to cause parties in the [Minimum Price] Proceeding to execute Certificates of Acknowledgement as a precondition to receiving Carlyle‘s materials. PO ¶ 4. Petitioner also had to provide Carlyle prior “written notice” of the Reply. See id. ¶¶ 10–11. Petitioner did neither, Basso Decl. ¶¶ 8–9, because it understood “related proceedings” exclude the [Minimum Price] Proceeding.
(D.I. 56 at 3). As the wording of this portion was not presented as an independent argument, there was no reason for the magistrate judge to address it in her Order. Respondents did not identify the dissemination of protected materials argument in their Certification required under the Standing Order. (D.I. 75-1). Without identifying the argument in the Certification, Respondents have nоt shown good cause as to why I should decide an issue that was not before the Magistrate Judge. Respondents’ dissemination of protected materials argument is thus overruled.
Respondents’ Objections to the Magistrate Judge‘s Order (D.I. 75) are OVERRULED. Respondents’ motion for sanctions (D.I. 56) is DENIED.
Entered this 6th day of August, 2026
Richard G. Andrews
United States District Judge