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Novell, Inc. S'holder Litig.

COURT OF CHANCERY OF THE STATE OF DELAWARE
Feb 4, 2013
Consolidated C.A. No. 6032-VCN (Del. Ch. Feb. 4, 2013)

Opinion

Consolidated C.A. No. 6032-VCN

02-04-2013

Re: In re Novell, Inc. Shareholder Litigation

Stuart M. Grant, Esquire Grant & Eisenhofer P.A. Edward P. Welch, Esquire Skadden, Arps, Slate, Meagher & Flom LLP


JOHN W. NOBLE
VICE CHANCELLOR
Stuart M. Grant, Esquire
Grant & Eisenhofer P.A.
Edward P. Welch, Esquire
Skadden, Arps, Slate, Meagher & Flom LLP
Dear Counsel:

The Novell Defendants have moved for certification of an interlocutory appeal of the Court's Memorandum Opinion and Order, dated January 3, 2013. The Court's ruling dismissed many of the claims brought by Plaintiffs, but it allowed a claim alleging bad faith conduct by the Novell Defendants to survive.

The Novell Defendants are Albert Aiello, Jr., Fred Corrado, Richard L. Crandall, Gary G. Greenfield, Judith H. Hamilton, Ronald W. Hovsepian, Patrick S. Jones, Richard L. Nolan, and John W. Poduska, Sr.

In re Novell, Inc. S'holder Litig., 2013 WL 322560 (Del. Ch. Jan. 3, 2013).

Del. Supr. Ct. R. 42(b).

One aspect of this matter may be particularly appropriate for interlocutory review. The motion to dismiss was governed by the reasonable conceivability standard. One formulation of the bad faith standard involves a fiduciary's actions that were "so far beyond the bounds of reasonable judgment that it seems essentially inexplicable on any ground other than bad faith." The process for measuring the reasonable conceivability of a pleading asserting that type of bad faith claim can be challenging. Ancillary to the core analysis are a couple other questions: How far beyond the complaint may the Court go in seeking out an explanation for the conduct being assessed? May the Court conjure up an explanation on its own? Is information sharing with various bidders during the negotiation process leading up to a merger agreement one of those topics that does not fit well within the bad faith analytical framework?

Central Mortg. Co. v. Morgan Stanley Mortg. Capital Hldgs., LLC, 27 A.3d 531, 537 (Del. 2011).

In re Alloy, Inc. S'holder Litig., 2011 WL 4863716, at *12 (Del. Ch. Oct. 13, 2011).

The Novell Defendants struggle with demonstrating that the Court's ruling established a legal right within the meaning of Rule 42(b). They point to "a right to be free from the burdens and expense of a trial" but that presumably would be true of any defendant unhappy with the denial of her Rule 12(b)(6) motion. Interlocutory appeals of decisions denying motions under Court of Chancery Rule 12(b)(6) are rare. One exception is where "such rulings will so substantively affect the merits of a case or change the status of the parties . . ." Nothing decided in the Court's ruling is likely to have any such lasting effect. Indeed, the Court noted that "it might not take much evidence from the Novell Defendants to put that disparate treatment [of the two bidders] in a different context and to show that Plaintiffs' claim lacks merit." Because the Court does not understand that its ruling established a legal right, it may not certify the proposed interlocutory appeal.

The Novell Defs.' Mem. of Law in Supp. of their Application for Certification of Interlocutory Appeal 19.

Levinson v. Conlon, 385 A.2d 717, 720 (Del. 1978).

In re Novell, Inc., 2013 WL 322560, at *9.
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Accordingly, an order will be entered denying the Novell Defendants' Application for Certification of Interlocutory Appeal.

Proceedings in this action, however, will be stayed pending the Supreme Court's consideration of this matter.

Very truly yours,

John W. Noble JWN/cap
cc: Srinivas M. Raju, Esquire

Stephen P. Lamb, Esquire

Register in Chancery-K


Summaries of

Novell, Inc. S'holder Litig.

COURT OF CHANCERY OF THE STATE OF DELAWARE
Feb 4, 2013
Consolidated C.A. No. 6032-VCN (Del. Ch. Feb. 4, 2013)
Case details for

Novell, Inc. S'holder Litig.

Case Details

Full title:Re: In re Novell, Inc. Shareholder Litigation

Court:COURT OF CHANCERY OF THE STATE OF DELAWARE

Date published: Feb 4, 2013

Citations

Consolidated C.A. No. 6032-VCN (Del. Ch. Feb. 4, 2013)