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While not addressing the question of whether a non-party
seeking the unsealing of documents has standing pursuant to Court of Chancery
Rule 5(g)(6), the Court held that a non-party nonetheless had standing to
intervene and seek unsealing under Rule 24. B.F. Rich Co., Inc. v. Gray,
C.A. No. 1896-VCP (Del. Ch. Apr. 8, 2011), read letter ruling here.
Blog summaries of prior Delaware decisions in this matter are available here
and here. See
also Espinoza v. Hewlett-Packard Co., summarized here,
addressing related issues.
This summary was prepared by Ryan P. Newell of Connolly
Bove Lodge & Hutz LLP.
Concerned that Rich Realty Inc. ("RRI") had sold assets
without providing notice, RRI shareholder Jepsco, Ltd. ("Jepsco") moved to
unseal documents in a matter in which RRI - but not Jepsco - was a
party. RRI objected to the request because Jepsco was not a
party. RRI pointed to Rule 5(g)(6)'s use of the word "party" as compared
to Rule 5(g)(5)'s use of the word "person" as indicative of an intent to limit
rights under Rule 5(g)(6) to parties. (The language of Rule 5(g)(6) states,
"[a]ny party who objects to the continued restriction on public access
to any document filed under seal" as compared to Rule 5(g)(5) which states that
"[a]ny person who seeks the continued sealing of any portion of a brief
or letter . . . .")
While noting that nonparties in other matters have moved
to unseal documents in the Court of Chancery, the Court did not resolve the
question as to Jepsco's standing issue under Rule 5(g)(6) and instead found
that Jepsco had a basis under Rule 24 to intervene. Under Rule 24(a) a
party has standing where a statute confers an unconditional right to intervene
or where the party can "claim, rather than prove, an interest in the subject of
the litigation . . . ." Under Rule 24(b), a party may intervene where
there is a conditional statutory basis or where "an applicant's claim or
defense and the main action have a question or fact or law in common."
The Court held that Jepsco had a basis under either Rule
24(a) or 24(b): "Jepsco has claimed an interest relating to the documents in
question, and as a practical matter, the continued sealing of those documents
in the context of actions taken by one or more of the parties in connection
with the settlement of this litigation, may impair or impede Jepsco's
interest." Additionally, Jepsco's interest related to RRI's prior action
and access to the documents would not prejudice the rights of the parties to
the underlying litigation.
Even though the Court held that Jepsco had standing to
seek unsealing, the Court asked for clarification from Jepsco as to whether it
was seeking a right to inspection subject to a protective order or whether it
was seeking to unseal the documents in general.
Read more Delaware business
litigation case summaries and commentary on Delaware
Corporate and Commercial Litigation Blog, a blog hosted by Francis G.X.
Pileggi, of Fox Rothschild LLP.
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