Sutherland v. Sutherland
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EFiled: May 30 2013 02:50PM EDT
Transaction ID 52537862
Case No. 2399VCN
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
MARTHA S. SUTHERLAND, as Trustee
of the Martha S. Sutherland Revocable Trust
dated August 18, 1976,
:
:
:
:
Plaintiff,
:
:
v.
:
:
PERRY H. SUTHERLAND, TODD L.
:
SUTHERLAND, and MARK B.
:
SUTHERLAND,
:
:
Defendants.
:
:
and
:
:
DARDANELLE TIMBER CO., INC., and
:
SUTHERLAND LUMBER SOUTHWEST, INC., :
:
Nominal Defendants.
:
C.A. No. 2399-VCN
MEMORANDUM OPINION
Date Submitted: February 6, 2013
Date Decided: May 30, 2013
Kurt M. Heyman, Esquire and Melissa N. Donimirski, Esquire of Proctor
Heyman LLP, Wilmington, Delaware, and Stewart T. Kusper, Esquire and Paul
Mallon, Esquire of Kusper Law Group, Ltd., Chicago, Illinois, Attorneys for
Plaintiff.
Robert S. Saunders, Esquire and Nicole A. DiSalvo, Esquire of Skadden, Arps,
Slate, Meagher & Flom LLP, Wilmington, Delaware, Attorneys for Individual
Defendants.
A. Gilchrist Sparks, III, Esquire, S. Mark Hurd, Esquire, and Jay N. Moffitt,
Esquire of Morris, Nichols, Arsht & Tunnell LLP, Wilmington, Delaware,
Attorneys for Nominal Defendants.
NOBLE, Vice Chancellor
I. INTRODUCTION
The final claim in this long-standing stockholder derivative and doublederivative action between family members involves allegations of self-dealing in a
closely-held corporation relating to corporate expenditures on tax and accounting
services.1 All other claims in this action have been resolved.2 What remains is the
allegation that, from August 31, 2001 until November 1, 2003 and beyond, certain
corporate funds were expended on tax and accounting services benefiting the
controlling directors at the expense of other stockholders.3
II. BACKGROUND
Some of the facts in this case have been set forth on several prior occasions.4
Others required trial.5 Those relevant to the resolution of the remaining claim
involving self-dealing are set out below.
1
The Amended Joint Pretrial Stipulation and Order (the “Stipulation”) sets forth certain facts
that are no longer in dispute.
2
Stipulation § I, ¶ 4 n.1.
3
The Court has held that any claims are limited to events occurring after August 31, 2001.
Sutherland v. Sutherland, 2009 WL 857468, at *5 (Del. Ch. Mar. 23, 2009) (the “Statute of
Limitations Opinion”).
4
See, e.g., Sutherland v. Sutherland, 2010 WL 1838968 (Del. Ch. May 3, 2010) (the “Summary
Judgment Opinion”); Sutherland v. Sutherland, 958 A.2d 235 (Del. Ch. May 5, 2008) (the “SLC
Opinion”); Sutherland v. Sutherland, 2007 WL 1954444 (Del. Ch. July 2, 2007); Sutherland v.
Dardanelle Timber Co., 2006 WL 1451531 (Del. Ch. May 16, 2006) (the “Section 220
Opinion”).
5
The trial transcript is referred to as “Trial Tr.”.
1
A. The Parties
The Nominal Defendants, Dardanelle Timber Co., Inc. (“Dardanelle”) and
Sutherland Lumber Southwest, Inc. (“Southwest”) (collectively, the “Companies”),
have been Delaware corporations at all relevant times, and their principal place of
business is in Kansas City, Missouri.
Dardanelle is the sole stockholder of
Southwest. The Companies are in the retail lumber business and operate yards and
home improvement stores.
Plaintiff Martha S. Sutherland (“Martha”)6 and trusts established for her
children own 25 percent of Dardanelle’s common stock.
Defendant Perry H.
Sutherland (“Perry”) is a director, as well as the President and Chief Executive
Officer, of both Dardanelle and Southwest. Perry and trusts for his children own
25 percent of Dardanelle’s common stock.
Defendant Todd L. Sutherland
(“Todd”) is an officer and director of Dardanelle and Southwest. Todd and trusts
for his children own 25 percent of Dardanelle’s common stock.7
The third defendant, Mark B. Sutherland (“Mark”), became a director of
Southwest on February 20, 2004, after the events relating to Martha’s remaining
claim; and has been dismissed from this remaining claim.8 Dwight Sutherland, Jr.
6
Because the individual defendants and the plaintiff share the same last name; they are referred
to by first name.
7
Collectively, Perry and Todd are referred to as the “Defendants.”
8
Stipulation § 1, ¶ 2.
2
(“Dwight Jr.”), who is not a party to this lawsuit, and trusts for his children own
the remaining 25 percent of Dardanelle’s common stock.
B. Factual Background
Approximately thirty years ago, Dwight Sutherland Sr. (“Dwight Sr.”) gave
25 percent of Dardanelle’s common stock to each of his children: Dwight Jr.,
Martha, Perry, and Todd. At the time, Dwight Sr. and his wife, Norma Sutherland
(“Norma”), retained ownership of Dardanelle’s preferred stock.
From 1986
through when Perry received the titles of President and Chief Executive Officer of
Dardanelle and Southwest, Perry was actively engaged in the management of both
Companies as director and vice president.
As of 2001, the board of directors of Dardanelle consisted of Dwight Sr.,
Dwight Jr., Perry and Todd,9 and the board of directors of Southwest consisted of
Dwight Sr., Norma, Dwight Jr., Martha, Perry, and Todd.10 On June 14, 2002,
Dwight Jr. resigned from the board of Southwest. Martha was removed as a
director of Southwest on February 20, 2004 by unanimous consent actions of the
Companies, executed by Perry, Todd, and Mark.11
In 2002, Dwight Sr. placed all of the preferred shares of Dardanelle into a
Voting Trust, with himself as controlling trustee and Perry as successor trustee in
9
Stipulation § II, ¶ 8.
Stipulation § II, ¶ 9.
11
Stipulation § II, ¶ 9.
10
3
the event of Dwight Sr.’s death or incapacity.12 Dwight Sr. died in late October
2003, and as a result, Perry became the trustee of the Voting Trust and acquired the
power to vote those preferred shares.13 Because Perry controls the voting preferred
and because Perry and Todd together have 50 percent of the common stock, the
Defendants control both Companies.14
Martha initiated this action on September 6, 2006, by filing her original
derivative complaint (the “2006 Complaint”).
1. Cimarron
Cimarron Lumber & Supply Co. (“Cimarron”) provides tax and accounting
services to the Companies, and to individual members of the extended Sutherland
family and their affiliated businesses.15 Dardanelle is one of four equal partners in
Cimarron. In early 2001, retroactive to the fiscal year starting August 1, 2000,
Cimarron began to charge individual Sutherland family members and their
affiliated businesses a flat annual fee, to be paid quarterly, for tax and accounting
services (the “flat-fee system”).
Previously, all tax and accounting services
provided to members of Dwight Sr.’s family and their affiliated businesses were
fully paid for by Dardanelle.
12
Stipulation § II, ¶ 11.
Stipulation § II, ¶ 13.
14
See Section 220 Opinion, at *1.
15
Stipulation § II, ¶ 16.
13
4
Cimarron charged individual family members an annual fee depending on
their generation: $4,000 for Dwight Sr., $3,000 for Dwight Jr., Martha, Perry and
Todd, and $1,000 for their children.16 Their affiliated businesses were charged
varying amounts: Choctaw Racing Stables (“Choctaw”), for instance, was charged
$7,500, which it paid in full.17 The work performed by Cimarron for members of
Dwight Sr.’s family and their affiliated entities was still fully charged to
Dardanelle; the flat fees would then be credited to Dardanelle’s account. Any
difference between the flat fees charged by Cimarron and the cost of actual work
performed would either be absorbed as overages, or inure to the benefit of
Dardanelle.
On January 19, 2001, David Dotson (“Dotson”), the manager of Cimarron’s
tax department at the time, sent a letter to family members regarding the
implementation of the flat-fee system.18 Perry was consulted before the creation of
the flat-fee system, and knew that it was in use thereafter.19
Cimarron employees each had hourly rates that were periodically adjusted.20
They recorded their time worked in a spreadsheet on Cimarron’s computer
system.21 The spreadsheet specifically listed each of the four branches of the
16
Stipulation § II, ¶ 19.
Stipulation § II, ¶ 19.
18
Stipulation § II, ¶ 17; Defs.’ Exhibit (“DX”) 20.
19
Stipulation § II, ¶¶ 20-21.
20
Stipulation § II, ¶ 27.
21
Stipulation § II, ¶ 23.
17
5
extended Sutherland family, which each owned similar companies. Each day,
Cimarron employees would record lump-sum entries denoting the time they had
spent on a particular Sutherland company or individual.
The Dwight Sr. branch of the Sutherland family had four possible
spreadsheet entries: Dardanelle, Southwest, Lawrence Financial Ltd. Partnership
(“Lawrence”), and a catch-all category “All DDS Family Yards.”22 Any time spent
by Cimarron employees on members of Dwight Sr.’s family, and on any of their
affiliated companies (excluding Dardanelle, Southwest, or Lawrence) was recorded
under the general “All DDS Family Yards” category.23 Time recorded under the
“All DDS Family Yards” category was not itemized or recorded separately for
each individual or company, and the spreadsheet did not include information from
which those time entries could be broken down.24
Martha’s current claim includes only “those companies in which the
Defendants had an interest not shared equally with Dardanelle’s other
stockholders.”25
While these are not limited to Choctaw, Martha has
acknowledged that “she does not have a separate claim for any specific expenses
paid to Cimarron for audit services other that those relating to Choctaw matters.”26
22
Stipulation § II, ¶ 25.
Stipulation § II, ¶ 27.
24
Stipulation § II, ¶ 27.
25
Sutherland v. Sutherland, C.A. No. 2399-VCN, at 42-43 (Del. Ch. Dec. 14, 2011)
(TRANSCRIPT) (the “December Tr.”).
26
See Sutherland v. Sutherland, 2011 WL 4445648, at *2 (Del. Ch. Sept. 21, 2011).
23
6
Despite this, Martha contends that the companies affiliated with Perry and Todd
benefiting from the flat-fee system include at least “Choctaw, Latigo Cattle,27 Deep
Water Farms,28 DDS Family Investment Co.,29 Finney Kearney County Gas
Venture,30 Indian Creek Land & Investment Co.,31 PHS Family Interests, LP, and
Space Savers LLC” (the “Other Companies”).32
In the spring of 2004, Cimarron began charging actual time worked for
certain individuals and companies that used to be billed to the “All DDS Family
Yards” billing code, retroactively to November 1, 2003.33 On March 17, 2004,
Dotson announced the change in billing by Cimarron from the “flat-fee” system to
a partial “actual time” system to Martha, Dwight Jr., and others by letter.34 During
the three years in which the flat-fee system was in place (2001-2003), Dardanelle
27
Latigo Cattle was wholly owned by Dwight Sr. before his death. It is now owned by a trust for
the benefit of Norma, for which Perry is a paid trustee. Trial Tr. 200.
28
From 2001 through 2003, Perry and Todd each had a 17 percent partnership interest in Deep
Water Farms. Martha had no partnership interest in the company at the time. Trial Tr. 198.
29
From 2001 through 2003, Perry and Todd both had ownership interests in DDS Family
Investment Co., and Perry had a general partnership interest. Trial Tr. 199. Martha did not have
a general partnership interest in the company at the time. Id.
30
Since 1979, Perry and Todd have maintained a 12.5 percent partnership interest in FinneyKearny. Trial Tr. 194. Martha has had no partnership interest in Finney-Kearny. Trial Tr. 198.
31
From 2001 through 2003, Perry was a general partner of Indian Creek Land Investment Co.,
and Martha had no such interest. Trial Tr. 199.
32
Stipulation § I, ¶ 4 n.1.
33
Stipulation § II, ¶ 34.
34
Pl.’s Exhibit (“PX”) 98. Although Cimarron began to charge fees for actual time for certain
entities after this date, the parties dispute the full extent in which Cimarron transitioned away
from the flat-fee system. Martha alleges that certain of the Other Companies were still charged a
flat fee after this date. Pl.’s Reply Post Trial Brief (“PTRB”) 10 n.7.
7
paid Cimarron a total of $688,602.76 for its tax and accounting services.35 For the
three-year period immediately after, Dardanelle paid Cimarron a total of
$465,909.15 for its tax and accounting services.36
2. Choctaw
Choctaw was a personal horseracing venture jointly owned by Perry and
Dwight Sr. prior to his death in late October 2003.37 During Dwight Sr.’s lifetime,
he owned more than 99 percent of Choctaw, and Perry owned less than one
percent.38 Perry is now currently the sole owner of Choctaw.39 From at least 2000
through the present, neither of the Companies ever held an ownership interest in
Choctaw.40 Choctaw was charged and paid the amount it was billed by Cimarron,
which was $7,500 annually, or $1,875 each quarter.41 Part of the work done by
Cimarron for Choctaw involved the Internal Revenue Service’s (“IRS”) audit of
Choctaw and its owners (the “Choctaw Audit”), which began in December 2000.42
While Martha alleges that the work done for Choctaw “was substantially and
factually intense, both in general and also for the work on the Choctaw Audit,”43
35
PX 54-56.
PX 57-59.
37
Trial Tr. 193.
38
Trial Tr. 301; DX 18, 19, 48, 49, 53, 77, 90, 99.
39
Trial Tr. 17-20.
40
Stipulation § II, ¶ 15.
41
Stipulation § II, ¶ 19.
42
Stipulation § II, ¶ 30; Trial Tr. 241, 301-02; DX 16.
43
Pl.’s Opening Post-Trial Br. (“PTOB”) 2-3.
36
8
the Defendants instead contend that the Cimarron’s role was minor44 and that its
“primary work in connection with the Choctaw Audit was simply to provide source
data in response to IRS requests.”45
C. Procedural History
In March 2004, one month after Martha was removed from the Southwest
board of directors, she informally requested books and records from the
Companies to investigate concerns she had about potential wrongdoing by the
Defendants.46 Later, Martha made a formal written demand for certain categories
of books and records for both Companies under 8 Del. C. § 220. Following the
rejection of her demand, Martha filed a Section 220 action for inspection of certain
categories of the Companies’ books and records (the “220 action”),47 which was
generally successful.48
After receiving documents from the 220 action, Martha filed the 2006
Complaint.49 In response, the boards of directors of both Companies amended
their by-laws by unanimous written consent.50
Bryan Jeffrey (“Jeffrey”) was
appointed as a member of each board, and a special litigation committee (“SLC”)
consisting solely of Jeffrey was formed. The SLC hired independent counsel, and
44
Defs.’ Post-Trial Answering Br. (“PTAB”) 20.
Trial Tr. 302.
46
PX 113-116.
47
Section 220 Opinion, at *5.
48
See Section 220 Opinion, at *8-9.
49
PX 121; Stipulation § II, ¶ 11.
50
SLC Opinion 238.
45
9
was given final and binding authority with regard to the claims asserted by Martha
in the 2006 Complaint. The Court then stayed the action while Jeffrey conducted
his investigation. In March 2007, Jeffrey filed his report which concluded that the
Companies should not pursue any of the claims alleged in the 2006 Complaint. 51
The Companies, relying on the report, moved to dismiss. The Court denied the
Companies’ motion because significant errors or shortcomings in the SLC’s report
undermined the Court’s confidence in the SLC’s entire investigation and because
the SLC’s selective investigation did not adequately address all of Martha’s
claims.52
Martha then amended her complaint in September 2008 (the “2008
Complaint”).53
The Defendants moved to dismiss, but the Court denied that
motion except for the determination that Martha’s claims were “time-barred as to
any transactions occurring more than three years prior to the date the 220 action
was instituted, i.e. prior to August 31, 2001.”54 The Defendants’ next motion was
for summary judgment.
The Court denied the motion as to Martha’s claims
relating to the flat-fee system, and kept open the possibility that some of Martha’s
attorneys’ fees and court costs might be shifted to the Defendants due to the
51
SLC Opinion 238.
SLC Opinion 242-45.
53
Statute of Limitations Opinion, at *2.
54
Statute of Limitations Opinion, at *5.
52
10
amendments made to Perry and Todd’s employment agreements in response to this
litigation, but granted the Defendants’ motion as to Martha’s other claims. 55
The Court later clarified that trial on the flat-fee system was not limited to
sums paid by the Companies to Cimarron for Choctaw matters,56 but was limited
“to those companies in which the Defendants had an interest not shared equally
with Dardanelle’s other stockholders.”57 Trial was held in November 2012.
III. CONTENTIONS
Martha claims that Perry and Todd violated their fiduciary duties as directors
of Dardanelle by benefiting from the flat-fee system at the expense of other
Dardanelle stockholders, including Martha. Martha seeks damages relating to any
overages incurred by Dardanelle as a result of the flat-fee system, and fee-shifting
for her costs of litigating this claim. Martha also seeks attorneys’ fees and court
costs for her success on certain other claims she has pursued in this action.
In response, Perry and Todd argue that Martha’s claim fails because (i) it is
barred by the doctrine of laches and the analogous statute of limitations; 58
(ii) Martha conceded that Dwight Sr. did not breach any fiduciary duties relating to
the flat-fee system, and Dwight Sr. was at the very least similarly situated to Perry
and Todd as a director of Dardanelle until his death in late October 2003;
55
Summary Judgment Opinion, at *7, *17.
Sutherland v. Sutherland, 2011 WL 4445648, at *1 (Del. Ch. Sept. 21, 2011).
57
December Tr., at 42-43.
58
PTAB 45-50.
56
11
(iii) Perry and Todd did not breach their duty of loyalty relating to the flat-fee
system because they did not receive a material benefit, or alternatively if they did
receive a material benefit it was one generally available to all Dardanelle
stockholders; and (iv) Perry and Todd did not breach their duty of care, because
they did not act “without the bounds of reason” in failing to stop the
implementation of the flat-fee system by Dotson and John Sutherland (a brother of
Dwight Sr.).
Martha, in rejoinder, contends that (i) Martha’s flat-fee system claim should
be tolled through the books and records action, during which Martha sought to
obtain information related to all of the claims set forth in the 2006 Complaint;
(ii) Dwight Sr. had relinquished control of Dardanelle and Southwest in favor of
Perry after 1998; (iii) Perry and Todd have the burden of demonstrating the entire
fairness of the flat-fee system,59 and (iv) Perry and Todd breached their duty of
care because they failed to inform themselves adequately about the ramifications of
the flat-fee system.
IV. ANALYSIS
A. Laches
The Defendants argue that Martha’s claims are barred by laches “because all
the payments to Cimarron she complains about took place more than three years
59
PTRB 13.
12
before she filed suit.”60 In evaluating a laches defense, the Court generally applies
the analogous legal statute of limitations.61 The analogous statute of limitations
period for derivative claims for breach of fiduciary duty seeking money damages is
three years.62 Because Martha filed the 2006 Complaint on September 6, 2006, all
claims accruing before September 6, 2003 are time-barred unless Martha can
establish grounds for tolling.
Although the Court earlier dismissed Martha’s
claims as to all events occurring before August 31, 2001 (the date three years
before Martha filed her 220 action),63 it reserved the question (pending further
discovery) as to whether the 220 action would toll the statute of limitations as to
any events occurring between August 31, 2001 and September 6, 2003.64
At the summary judgment stage, the Court addressed the Defendants’
argument that the statute of limitations for the flat-fee system claim began to run
upon its implementation in January 2001. The Court held that the statute of
limitations would not begin to run until an actual overage of tax and accounting
fees was charged to Dardanelle. The statute of limitations would then accrue upon,
60
PTAB 45.
In re Mobilactive Media, LLC, 2013 WL 297950, at *10 (Del. Ch. Jan. 25, 2013).
62
U.S. Cellular Inv. Co. of Allentown v. Bell Atl. Mobile Sys., Inc., 677 A.2d 497, 502 (Del.
1996).
63
Statute of Limitations Opinion, at *5.
64
Sutherland v. Sutherland, 2009 WL 1177047, at *1 (Del. Ch. Apr. 22, 2009) (holding that
“there is no hard and fast rule tolling the running of the state of limitations during the pendency
of books and records litigation” and that “the relationship between [a books and records action]
and the claims eventually filed, may in some circumstances operate to toll the limitations
period,” but that at this stage there were “material issues of fact regarding the state of the
plaintiff’s knowledge before the books and records litigation began” that remained).
61
13
and for, each quarterly payment made to Cimarron for these overages. The Court
also rejected the Defendants’ argument that Martha was on notice of the alleged
wrongdoing as of Dotson’s January 2001 letter informing Martha of the
implementation of the flat-fee system because Dotson’s letter did not explain how
overages would be handled, and because the letter itself was not dispositive of
when Martha learned that these overages would be absorbed by Dardanelle.
Finally, the Court held that it could not determine on the summary judgment record
when Martha learned of the Choctaw Audit and the possibility that substantial
work had been performed by Cimarron because of it.65
Under Delaware law, “the statute of limitations is tolled for claims of
wrongful self-dealing . . . until an investor knew or had reason to know of the facts
constituting the wrong.”66 At trial, the Defendants sought to establish that Martha
had knowledge of overages relating to the flat-fee system before filing her
220 action on August 31, 2004.
The Defendants proffered three pieces of
information: (i) Dotson’s November 2003 statement to Martha that he and other
Cimarron personnel had been working on the IRS audit of Choctaw, 67 (ii) Dotson’s
March 17, 2004 letter regarding payment for work performed by Cimarron
65
Summary Judgment Opinion, at *5 n.19.
In re Dean Witter P’ship Litig., 1998 WL 442456, at *6 (Del. Ch. July 17, 1998), aff’d, 725
A.2d 441 (Del. 1999) (TABLE).
67
Trial Tr. 96; DX 126.
66
14
personnel for Choctaw,68 and (iii) Dotson’s April 2, 2004 letter regarding the
same.69
Even without reaching the parties’ arguments regarding whether the
220 action would toll the statute of limitations70—if the Court takes the earliest
November 2003 date cited by the Defendants as the date upon which Martha had
inquiry notice of any potential wrongful self-dealing regarding Cimarron,71 Martha
had until sometime in November 2006 before the statute of limitations would bar
her claims. Because Martha filed her original complaint on September 6, 2006,
68
Trial Tr. 100; DX 93.
Trial Tr. 100; DX 99.
70
The Defendants argue that Martha’s 220 action should not toll the statute of limitations
because Martha “knew all of the purported facts on which she later based her derivative claim
before she even commenced her books and records case” and because Martha “did not learn
through the books and records case a single fact” that supports her claim. PTAB 48. In her
220 action, Martha specifically requested “[a]ll documents relating to expenditures of [the
Companies] pertaining to the Choctaw Racing Stables, whether such expenditures were made
directly by [the Companies] or indirectly by [the Companies] through [Cimarron] for the last 7
years.” Compl., Ex. A, Aug. 31, 2004. That request was granted by the Court. Section 220
Opinion, at *11. “It is settled Delaware law that the institution of other litigation to ascertain the
facts involved in the later suit will toll the statute while that litigation proceeds.” Technicorp
Int’l II, Inc. v. Johnston, 2000 WL 713750, at *9 (Del. Ch. May 31, 2000). The Delaware
Supreme Court has “expressly encouraged potential derivative plaintiffs to utilize the ‘tools at
hand’ to obtain information bearing on the subject of their claims.” Technicorp, 2000
WL 713750, at *9 n.26 (citing Rales v. Blasband, 634 A.2d 927, 932-35, 934 n.10 (Del. 1993)).
A 220 action has also been “regarded as ‘strong evidence that plaintiff was aggressively asserting
its claims at that time.’” Id. (citing Gotham P’rs, L.P. v. Hallwood Realty P’rs, L.P., 714 A.2d
96, 105 (Del. Ch. 1998)). As Martha sought to develop her claims relating to Choctaw and
Cimarron through her 220 action, tolling pending her books and records action is appropriate.
71
Notably, the Defendants raise these dates. Trial Tr. 96-101. The Defendants have not
challenged their significance, nor have they suggested any earlier occasions on which Martha
may have acquired inquiry notice as to Dardanelle’s absorption of overages or the Choctaw
Audit.
69
15
within three years of November 2003, her claim with regard to the flat-fee system
is not barred by the statute of limitations.
In the alternative, the Defendants argue that dismissal based on laches
nonetheless ought to be granted due to “an intervening change in conditions
prejudicial to the party raising the defense.”72
The Defendants suggest that
Martha’s claim ought to be barred due to her “delay in waiting until Dwight Sr.’s
death to bring her claims substantially prejudiced Perry and Todd by rendering
them unable to offer Dwight Sr.’s testimony.”73 This argument mischaracterizes
the timeframe of Martha’s claims, and the cases cited by the Defendants in support
are inapposite.
Dwight Sr. died suddenly and unexpectedly in late October 2003. 74 Before
2004, there was never an actual meeting of Dardanelle stockholders, and as a
Southwest director, Martha never received any financial reports or any information
regarding major decisions.75
Dwight Sr.’s death sparked Martha’s inquiries,
whether informally or formally through her 220 action, and it was on the basis of
72
Skouras v. Admiralty Enters., Inc., 386 A.2d 674, 682 (Del. Ch. 1978) (“Laches, however,
unlike the statute of limitations at law, is not predicated upon the mere passage of time but rather
calls for a showing that if the claim sought to be tardily enforced will result in an inequity
because of an intervening change in conditions prejudicial to the party raising the defense, then it
should be barred.”).
73
PTAB 50.
74
Stipulation § II, ¶ 12.
75
Trial Tr. 11.
16
these inquiries that Martha filed this action. Fike v. Ruger76 and Cooch v. Grier77
can therefore be distinguished, because those cases involved situations where a
party, knowledgeable of his claim, sat on such claim (for more than a decade) until
after the death of key witnesses78 or other interested parties.79
Martha can
therefore bring her claim free of laches.
B. Duty of Loyalty
1. Dwight Sr.
The Defendants argue that because Martha stated at trial that she did not
believe Dwight Sr. ever breached his fiduciary duties to the Companies,80 and
because Dwight Sr., like Perry and Todd, was a director and officer of Dardanelle
at the time the flat-fee system was put in place, Perry and Todd could not have
violated their fiduciary duties.81 The decision about whether a director violated his
fiduciary duties is for the Court;82 it is not one for Martha to make. Moreover, a
76
752 A.2d 112 (Del. 2000).
59 A.2d 282 (Del. Ch. 1948).
78
Fike v. Ruger, 752 A.2d 112, 114 (Del. 2000) (affirming summary judgment partially on the
grounds that the defendants would be prejudiced by the plaintiffs’ unreasonable delay of over a
decade in bringing claims, due to the death of two witnesses that would have been key in refuting
the plaintiffs’ claims).
79
Cooch v. Grier, A.2d 282, 288 (Del. Ch. 1948) (holding a 15-year delay bars the plaintiff’s
claims due to laches, as “death has removed the alleged fraudulent grantee from the scene and
when the grantee could have defended the action had the real estate transfer been attacked with
reasonable promptness.”).
80
Trial Tr. 105.
81
PTAB 33-35.
82
In re Walt Disney Co. Deriv. Litig., 2004 WL 550750, at *1; see also United Rentals, Inc. v.
ARM Hldgs., Inc., 2007 WL 4465520, at *1 (Del. Ch. Dec. 13, 2007).
77
17
daughter may assess her father’s conduct in different ways and for different
reasons. It is understandable that a daughter might seek to avoid accusing her
(deceased) father of wrongdoing, and that human impulse may impair her capacity
to draw proper conclusions about his conduct. In any event, Martha’s apparent
concessions about her father’s actions—admittedly not all different from those of
Perry and Todd—does not bar her fiduciary duty claims asserted at trial.
2. Perry and Todd
The business judgment rule “is a presumption that in making a business
decision the directors of a corporation acted on an informed basis, in good faith
and in the honest belief that the action taken was in the best interests of the
company.”83 A board’s decision will not be overturned by the Court unless it
cannot be “attributed to any rational business purpose.”84 In attempting to rebut
this presumption, the plaintiff bears the burden of proof.85 She must allege “facts
sufficient to overcome one of the elements of the rule.”86 That requires her to
“introduc[e] evidence either of director self-interest, if not self-dealing, or that the
83
Aronson v. Lewis, 473 A.2d 805, 812 (Del. 1984).
Sinclair Oil Corp. v. Levien, 280 A.2d 717, 720 (Del. 1971); see also Unocal Corp. v. Mesa
Petroleum Co., 493 A.2d 946, 954 (Del. 1985).
85
Citron v. Fairchild Camera & Instrument Corp., 569 A.2d 53, 64 (Del. 1989) (citing Smith v.
Van Gorkom, 488 A.2d 858, 872 (Del. 1985)); see also Solomon v. Armstrong, 747 A.2d 1098,
1111-12 (Del. Ch. 1999) (“Under the business judgment rule, the burden of pleading and proof is
on the party challenging the decision. . . .” (footnote omitted)), aff’d, 746 A.2d 277 (Del. 2000)
(TABLE)).
86
Carsanaro v. Bloodhound Techs., Inc., 2013 WL 1104901 (Del. Ch. Mar. 15, 2013) (citation
omitted).
84
18
directors either lacked good faith or failed to exercise due care.”87 If the plaintiff
“fails to meet her burden of establishing facts rebutting the presumption, the
business judgment rule, as a substantive rule of law, will attach to protect the
directors and the decisions they make.”88 Only if the business judgment rule is
rebutted will the burden shift to the defendants to demonstrate the “entire fairness”
of the challenged transaction.89
Martha claims that Perry and Todd were self-interested directors because
they benefited from the flat-fee system at the expense of other Dardanelle
stockholders.90
However, a director is not self-interested merely because she
receives a benefit from a transaction; self-dealing requires that such benefit not be
generally available to other stockholders.91 Further, “the mere fact that a director
received some benefit that was not shared generally by all shareholders is
insufficient; the benefit must be material.”92 For allegations of self-interest to
rebut the business judgment rule, a “stockholder must show that the directors’ selfinterest materially affected their independence.”93 Materiality requires that the
benefit be significant enough “in the context of the director’s economic
87
Citron, 569 A.2d at 64.
Id.
89
Nixon v. Blackwell, 626 A.2d 1366, 1376 (Del. 1993); Mills Acquisition Co. v. Macmillan,
Inc., 559 A.2d 1261, 1279 (Del. 1989); Weinberger v. UOP, Inc., 457 A.2d 701, 710 (1983).
90
PTOB 1.
91
Aronson, 473 A.2d at 812.
92
In re Transkaryotic Therapies, Inc., 954 A.2d 346, 364 (Del. Ch. 2008) (citations omitted).
93
McGowan v. Ferro, 859 A.2d 1012, 1029 (Del. Ch. 2004) aff’d, 873 A.2d 1099 (Del. 2005)
(TABLE) (citing Cede & Co. v. Technicolor, Inc., 634 A.2d 345, 363 (Del. 1993)).
88
19
circumstances, as to have made it improbable that the director could perform her
fiduciary duties to the . . . shareholders without being influenced by her overriding
personal interest.”94 “‘To be disqualifying, the nature of the director interest must
be ‘substantial,’ not merely ‘incidental.’”95
The Defendants argue that because the flat-fee system was available to all of
Dwight Sr.’s children, as well as their affiliated entities, any benefits received by
Perry and Todd under the flat-fee system were generally available to all Dardanelle
stockholders, including Martha.96
Martha received benefits from the flat-fee
system, but it is possible that the sheer number of entities solely affiliated with
Perry and Todd and able to benefit from the flat-fee system, as compared to the
much smaller number associated with Martha, would nonetheless rise to the level
of a significant benefit received by Perry and Todd and not available to Martha.
The Defendants assert that many of the fees charged to Dardanelle by Cimarron
during the three-year flat-fee system period were for entities in which Perry, Todd
94
In re Gen. Motors Class H S’holders Litig., 734 A.2d 611, 617 (Del. Ch. 1999).
Id. (citing Cinerama, Inc. v. Technicolor, Inc., 663 A.2d 1156, 1169 (Del. 1995)); Perlegos v.
Atmel Corp., 2007 WL 4754533, at *17 (Del. Ch. Feb. 8, 2007) (“[T]o declare a director to have
a disabling, disqualifying conflict of interest requires a finding that the nature of the director
interest is ‘substantial’ or ‘material,’ but not ‘merely incidental.’”). See also President &
Fellows of Harvard Coll. v. Glancy, 2003 WL 21026784, at *21 (Del. Ch. Mar. 21, 2003) (“[I]t
is not enough to establish the interest of a director by alleging that he received any benefit not
equally shared by the stockholders. Such benefit must be alleged to be material to that director.
Materiality means that the alleged benefit was significant enough ‘in the context of the director’s
economic circumstances, as to have made it improbable that the director could perform [his]. . .
duties. . . .’”).
96
PTAB 39-41.
95
20
and Martha had the same interest.
The difficulty, of course, results from
Cimarron’s timekeeping system which, at the time, did not include separate entries
by company, making it impossible to break down the amount of time spent on any
of the Other Companies.97
Central to Martha’s claim is the difference between the fees charged by
Cimarron
to
Dardanelle
during
the
three-year
flat-fee
system
period
($688,602.76)98 and the three years immediately after ($465,909.15),99 a difference
of $222,693.61, which averages to an annual difference of around $74,231.20.
Because more detailed records were not kept by either Cimarron or Dardanelle,
these are the only figures available to the Court. Martha argues that the additional
annual sums paid to Cimarron can be reasonably inferred to have been incurred by
Dardanelle’s paying for the Choctaw Audit.
The Defendants challenge the inference that Martha would have the Court
draw to the effect that the discrepancy in annual fees paid to Cimarron was
primarily attributable to the Choctaw Audit. The most important piece of evidence
provided by Martha supporting this inference was the tangential testimony from a
Cimarron bookkeeper about the work done by Cimarron for Choctaw during a time
97
Stipulation § II, ¶ 27.
PX 54-56.
99
PX 57-59.
98
21
period before the Choctaw Audit.100
The Defendants, however, note that
Cimarron’s primary work in connection with the Choctaw Audit was to provide
source data in response to IRS requests,101 and that Cimarron was not required to
do substantial work on the Choctaw Audit because Choctaw hired and paid outside
professionals to handle the protest and later appeal.102
Barbara Courtney, a
bookkeeper for Cimarron, testified that during the period of the Choctaw Audit the
bookkeeper for Choctaw, Connie Campfield, “did not require any assistance” from
other bookkeepers, and “completed all of her regular work on time.” 103 Therefore,
according to Courtney, the Choctaw Audit “was really not a significant draw on
[Cimarron’s] bookkeeping resources at that time at all.”104
Much of the work on the Choctaw Audit occurred either before August 31,
2001 (which would be time-barred), or after November 1, 2003, when the flat-fee
system was discontinued as to Choctaw.105 The Defendants cite testimony that by
August 31, 2001, Cimarron had already received and responded to seven of the
IRS’s nine inquiries.106 Only the follow-up questions to two inquiries were worked
100
PTOB 10.
Trial Tr. 302.
102
Trial Tr. 202-03, 240, 302-03.
103
Trial Tr. 415.
104
Trial Tr. 415-16.
105
PTAB 21-23; DX 93. Even if the flat-fee system remained in effect until early 2004, that
would not significantly affect the analysis.
106
Trial Tr. 309, 312-13.
101
22
on after August 31, 2001.107 After the IRS responded in January 2002, Choctaw
hired a certified public accountant and a tax attorney. From that point, Cimarron
only participated in a “couple of telephone conferences” with those professionals,
and pulled documents for them.108
The professionals prepared the protest
document,109 and the tax lawyer’s bills show only infrequent conferences with
Cimarron.110
The Defendants also offer alternative explanations for the difference in
annual fees charged by Cimarron during and after the flat-fee system.111
According to Brian Maxwell, a tax manager at Cimarron from 2000 onwards,112
during the flat-fee period, work for Dwight Sr. and Norma “by far” took up the
most of Cimarron’s resources, and that Dwight Sr. was “easily the largest user” of
Cimarron prior to his death.113 After Dwight Sr.’s death in October 2003, all of
that work was no longer billed to Dardanelle, but to Dwight Sr.’s estate and
Norma’s trust.114 Courtney testified that Martha was the second largest user of
Cimarron’s services,115 until Martha transferred her work away from Cimarron in
107
Trial Tr. 313.
Trial Tr. 315-17.
109
Trial Tr. 315-16.
110
PX 39, 40; DX 50.
111
PTAB 27-30.
112
Trial Tr. 298.
113
Trial Tr. 320, 334.
114
DX 93.
115
Trial Tr. 385-86.
108
23
the summer of 2004.116 Maxwell also explained that developments in tax law and
regulations resulted in more work for Cimarron in 2001-03 compared to the later
period.117
On balance, Martha has not established by a preponderance of the evidence
that the average annual difference between the three-year flat-fee system period
and the three years after can be inferred to be attributable to the Choctaw Audit.
More importantly, because the Choctaw Audit does not explain a significant
proportion of the difference in Cimarron’s fees, Martha has not established by a
preponderance of the evidence that the expectation of a material benefit from the
flat-fee
system affected
Perry and
Todd’s
judgment
in
allowing
its
implementation.118 It is worth noting that the shift to a flat-fee system, from the
previous arrangement under which Dardanelle would pay for all of Cimarron’s
services in full,119 was at least a marginal, if not significant, improvement from the
standpoint of Dardanelle’s stockholders. Martha has not rebutted the business
judgment rule presumption with regard to the flat-fee system, and Perry and Todd
cannot be found by a preponderance of the evidence to have violated their
116
Trial Tr. 11-12.
Trial Tr. 334-35.
118
As discussed above, Martha does not have a separate claim for any specific expenses paid to
Cimarron by Dardanelle other that those relating to Choctaw matters.
119
Trial Tr. 227, 370-71.
117
24
fiduciary duty of loyalty or to bear the burden of justifying their actions under the
entire fairness standard.120
Because Martha has not made the evidentiary showing necessary to impose
upon Perry and Todd the burden of demonstrating the entire fairness of the flat-fee
system, her claim is subject to the presumptions of the business judgment rule.
With that benefit, Perry and Todd’s actions are presumed not to have been disloyal
to the Companies or to their shareholders.
Perry and Todd did not directly attempt to prove the entire fairness of the
flat-fee system. But, under the circumstances, a brief review of the evidence
related to an entire fairness analysis may be helpful to an understanding of why the
outcome here is not the product of a technical application of doctrine. The course
of this proceeding has been complicated by the nature of a family business, the
animosity within the family, and the actions of a father whom Martha was and is
unwilling to challenge directly.
Although Martha’s unwillingness to pursue comparable breach of fiduciary
duty allegations against her father does not preclude her action against two of her
brothers, her choices cannot be ignored in assessing the context in which the events
occurred. Perry and Todd could exercise the authority of the board, but the better
120
Even if Martha were able to attribute the billing differences to the Choctaw Audit, she has not
shown that those amounts were material to Perry and Todd. Indeed, it is unclear how they could
have been material to Todd in light of the simple fact that he has no ownership interest in
Choctaw.
25
inference is that Dwight Sr., during the approximately thirty years after he gave
control of Dardanelle’s common stock to his children, still had de facto authority
over the Companies’ actions about which he cared.121 While alive, he received the
most benefit from the flat-fee system. The flat-fee system did not survive for long
after his death.
The flat-fees were set by Dotson and John Sutherland, the uncle of the
individuals involved in these proceedings and a member of one of the other
Sutherland family branches involved in the lumber business and holding an interest
in Cimarron. Dotson, as the head of Cimarron’s tax department, could reasonably
be expected to have (and most likely did have) the best knowledge of the annual
needs of each of the entities (and individuals) for which Cimarron provided
accounting and bookkeeping services. As a threshold matter, it was reasonable for
Perry and Todd to rely upon the fee assessments made by John Sutherland and
Dotson.122
121
Even though he had given his Dardanelle common stock away, Dwight Sr. remained
President and Chief Executive Officer of Dardanelle and Southwest. Perry was responsible for
managing the lumber business, but Dwight Sr. controlled major decisions in financial matters.
Trial Tr. 213-14, 221. See also DX 93 (Dotson’s Mar. 2004 Letter recounting how Dwight Sr.
“called the shots” over Cimarron’s billing of his family’s entities). Dwight Sr.’s ongoing control
of important aspects of Dardanelle’s corporate governance is not at odds with Perry’s affidavit to
the effect that Dwight Sr. spent limited time on Dardanelle matters and that he, Perry, was
responsible for ongoing operations. PTRB 9; PX 24-26.
122
Dwight Sr. was the member of his branch of the family who managed Cimarron (along with
brothers, John Sutherland and Herman Sutherland) up until his death.
26
The absence of Cimarron time records during the flat-fee period makes
impossible a precise calculation of whether that system conferred benefits unjustly
on Perry and Todd, or the entities they owned disproportionately. Martha points
out that they accepted and benefited from the flat-fee system and now seek to
benefit from the lack of documentation of the work performed by Cimarron.
Martha is correct that those who breach their fiduciary duties should not be able to
avoid liability by also failing to maintain (or require the maintaining of) reasonable
records.
Although Martha challenges the use of flat-fees for allocating costs to other
entities controlled by Perry or Todd, her focus is on Choctaw.
Choctaw,
99 percent owned by her father (and one percent by her brother) until his death and
thereafter 100 percent by Perry, was the target of an IRS audit. Choctaw’s “tax
work” on the audit was largely done by a certified public accountant and a tax
lawyer paid for by Choctaw—not Cimarron. Cimarron’s tasks were primarily
reproducing and compiling financial information—largely a bookkeeping function.
Also, the bulk of the work associated with the audit was completed by the time of
Dwight Sr.’s death.
There seems to be nothing (and Martha has not identified anything) that is
inherently wrongful about a flat-fee billing system. The potential shortcoming is
that the fees will be inaccurately assessed or, perhaps to capture Martha’s
27
objections more accurately, understated. Why Perry or Todd should be expected to
have known that John Sutherland’s and Dotson’s allocation of costs understated
the burdens of serving Choctaw is not clear. A flat-fee should be subject to regular
re-evaluation to accommodate fluctuations in accounting and bookkeeping needs,
and the Cimarron fee system was materially altered shortly after Dwight Sr.’s
death. On these facts, the conduct of Perry and Todd did not constitute a breach of
either the duty of loyalty or the duty of care. The process of fee allocation by John
Sutherland and Dotson was reasonable and the persistent and foreseeable
deviation, if any, from actual cost was, at most, minimal. 123 As for the other
entities for which Cimarron provided services, the setting of the fees by John
Sutherland and Dotson was reasonable, and no credible basis for discounting their
efforts has been presented.124
Perhaps Cimarron’s fees were unfair to Martha and, given Perry and Todd’s
attitudes toward her, one can understand why she holds such a view, but, on the
record before the Court, a preponderance of the evidence supports Perry and
123
The annual fees ($7,500) charged to Choctaw were at the highest level of fees charged by
Cimarron. Also, although not dispositive, it should be noted that because the father held
99 percent ownership in Choctaw until his death, most of the benefits of any inaccurate fee
assessment accrued to him, but Martha—for understandable reasons—did not choose to pursue
such a claim against her father or his estate.
124
This takes on added significance if the flat-fee system continued as to some of these entities
beyond March 2004. DX 93.
28
Todd’s roles with respect to Cimarron’s fees and the benefits that might have
flowed from those flat-fees.125
C. Duty of Care
Martha also raises a duty of care claim; she argues that Perry and Todd
“failed to inform themselves about the bills and fees generated by using the flat-fee
system and the alternative of converting to a straight actual time charges system for
all of the companies in the Dwight Sr. branch of the family.”126
A failure to act on an informed basis rebuts the business judgment rule.127
For a board to be informed, it need not know every single fact relating to a
transaction. A board only needs to consider “material facts that are reasonably
available,” those that are “relevant and of a magnitude to be important to directors
in carrying out their fiduciary duty of care in decisionmaking.”128 There is no
“prescribed procedure”129 or any “special method that must be followed to satisfy
125
Cimarron’s services were not just allocated in one direction. Martha, during her divorce
proceedings, received substantial assistance from Cimarron. Cimarron routinely arranged for the
payment of her bills and prepared her tax returns; Cimarron performed accounting services for
her fine arts business from its inception in 1999 until mid-2004. Trial Tr. 140-41. The fee
structure imposed upon her was generally consistent with the methodology used to determine the
fees for Perry and Todd and the entities in which they held disproportionate interests (except for
a few entities which were billed on a time basis).
126
PTRB 22.
127
Cede & Co. v. Technicolor, Inc., 634 A.2d 345, 367 (Del. 1993) (“The duty of the directors of
a company to act on an informed basis . . . forms the duty of care element of the business
judgment rule.”).
128
Brehm v. Eisner, 746 A.2d 244, 260 n.49 (Del. 2000).
129
Levine v. Smith, 591 A.2d 194, 214 (Del. 1991).
29
the duty of due care.”130 The standard to determine whether a board’s decision is
“informed” is gross negligence.131 In the duty of care context, gross negligence is
“conduct that constitutes reckless indifference or actions that are without the
bounds of reason.”132
Martha does not cite any material fact of which Perry and Todd were
uninformed; her duty of care claim instead rests on the Defendants’ alleged failure
to “investigate the proposed flat-fee billing system, the potential impacts upon
transactions between Cimarron and Dardanelle, or the advisability of following
that system rather than going to actual time charges.”133 According to Martha, the
Defendants did not investigate “the propriety of the fees assessed to the companies
under the flat-fee system” or the “amounts ultimately charged to Dardanelle to
determine whether participation in the flat-fee system harmed Dardanelle.”134
Martha also asserts that there was “absolutely no involvement by the Defendants in
any deliberative process through which this flat-fee system, which materially
impacted Dardanelle, was implemented.”135
130
In re KDI Corp. S’holders Litig., 1990 WL 201385, at *3 (Del. Ch. Dec. 13, 1990).
Citron, 569 A.2d at 66.
132
McPadden v. Sidhu, 964 A.2d 1262, 1274 (Del. 2008).
133
PTOB 36.
134
PTRB 23.
135
PTRB 24.
131
30
Dotson and John Sutherland decided that Cimarron would begin to
implement the flat-fee system.136
Perry and Todd had no role in the actual
implementation of the flat-fee system, nor in determining the amount of fees to be
charged to each individual or entity.137
The Court has acknowledged “the
Defendants’ ability, as Dardanelle directors, to refuse to commit company funds
for certain family member expenses or otherwise negotiate a more limited billing
plan with Cimarron.”138
Nonetheless, in the duty of care context, 8 Del. C.
§ 141(e) protects “directors who rely in good faith upon information presented to
them from various sources, including ‘any other person as to matters the member
reasonably believes are within such person’s professional or expert competence
and who has been selected with reasonable care by and on behalf of the
corporation.’”139
Dotson was a tax professional who managed Cimarron’s tax department.
The fees under the flat-fee system were set by Dotson and John Sutherland, who
compared the amount of work required for Sutherland family members and
affiliated businesses and came up with flat fees which they thought were fair and
136
Stipulation § II, ¶ 17; PX 96 (John Sutherland’s approval of Dotson’s draft letters announcing
the flat-fee system).
137
Trial Tr. 229, 267. Perry was consulted about the flat-fee system before its implementation.
Stipulation § II, ¶ 20.
138
Summary Judgment Opinion, at *6 n.30 .
139
In re Walt Disney Co. Deriv. Litig., 906 A.2d 27, 59-60 (Del. 2006).
31
reasonable.140 In an April 2, 2004 letter to Dwight Jr., Dotson wrote that “the flat
fee amounts are, in fact, estimates and one year an estimate for a particular
individual or entity might be high and in another year it might be low.”141 In other
letters to Sutherland family members, Dotson further explained that he would
review the fees annually and make any appropriate changes,142 a review he and
John Sutherland did every year.143 At trial, Perry explained that he relied on
Dotson and John Sutherland to set the flat fees fairly, because they knew how
much work was involved in each set of books.144 Todd also explained that he
trusted them because of their experience to know better than he what the fees
should be.145 Because Perry and Todd reasonably believed that the flat-fee system
was within Dotson’s “professional or expert competence,” and that Dotson’s
setting and annual review of the flat fees to be charged was “not so deficient
that. . . the Board would have reason to question it,”146 Section 141(e) protects the
Defendants against any claim that they may have violated their duty of care.
140
Trial Tr. 229, 371-72, 438-40.
DX 99.
142
Trial Tr. 230; DX 20.
143
Trial Tr. 372, 422-23.
144
Trial Tr. 423 (“[Dotson] was the manager of our whole department, the director of the tax
department. And he knew how much work was involved in each set of books.”); Trial Tr. 18384 (“I had professionals working for me that I depended on to do that, Dave Dotson being
primarily one of them.”).
145
Trial Tr. 287.
146
In re Walt Disney Co. Deriv. Litig., 906 A.2d at 59.
141
32
D. Fees and Costs
Martha also seeks to recover her attorneys’ fees “for her success on certain
claims she has pursued in this action.”147
Those claims generally involve
amendments made to Perry and Todd’s employment agreements.148 The Court
retains jurisdiction to address this application.
V. CONCLUSION
For the foregoing reasons, judgment will be entered in favor of the
Defendants on Martha’s remaining substantive claim: her fiduciary duty claim
based on the flat-fee system.
The Court will retain jurisdiction to consider
Martha’s application for attorneys’ fees and expenses.
Counsel are requested to confer and to submit a form of implementing order.
147
148
PTOB 4.
Summary Judgment Opinion, at *17.
33
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