This Week in Chancery Court: FedEx Cloud Dispute, John Leguizamo

A FedEx Corp. unit will ask the Delaware Court of Chancery this week to fast-track its lawsuit alleging that a private equity-backed software firm cut their access to tech support and maintenance as part of a push to switch customers to a subscription-based model.

Here’s more from the Chancery Court and the Delaware Supreme Court calendars:

Tuesday: Chitel v. NGL Holdings LLC, Del. Ch., No. 2023-1077, hearing 3/26/24.

At issue: The ex-owners of NGL Collective—a Latino-focused digital media business co-founded by the actor John Leguizamo—claim they were duped into a fraudulent buyout deal by GoDigital Media Group LLC. The lawsuit also targets three GoDigital affiliates and a law firm that allegedly helped cover up the scheme. GoDigital has asked the court to dismiss the case, arguing in a brief that the sellers “received all information necessary to move forward with the deal.” The law firm named as a defendant, Stubbs Alderton & Markiles LLC, said in its own brief that the complaint “fails to allege with specificity that Stubbs made any false misrepresentations” that would show they participated in fraud. David Chitel, whose answering brief states he represents 14 former co-owners, argues the buyers also have failed to make an $8 million payment under earn-out provisions in the stock purchase agreement.

Court action: Arguments on the motion to dismiss will be heard remotely by Delaware Superior Court Judge Vivian Medinilla. Certain Superior Court judges are designated to hear breach of contract cases to help alleviate the Chancery Court’s busy caseload.

John Leguizamo’s Company Co-Founder Sues GoDigital Over Buyout

Wednesday: Mobile Inv. LLC v. Tygon Peak Cap. Mgmt. LLC, Del., No. 363,2023, oral argument 3/27/24.

At issue: Delaware’s highest court will hear an interlocutory appeal of a Chancery Court order granting Tygon Peak Capital Management LLC’s partial motion for judgment on the pleadings with respect to Mobile Investors LLC’s obligation to pay an annual management fee. “This appeal concerns a premature and erroneous interpretation of a contract” that would entitle Tygon to $300,000 annually in perpetuity, according to Mobile’s opening brief. Tygon sued Voice Comm LLC and its ownership group in 2019, alleging Voice Comm wrongly withheld management fees owed to Tygon under agreements that handed control of the mobile phone accessories wholesaler over to Rockwave Capital LLC and Seven Shores LLC. A November trial in Chancery Court will be rescheduled, after Tygon filed a third amended complaint.

Court action: Oral arguments before the Delaware Supreme Court in Dover, Del.

Private Equity Firm Targeted by Voice Comm ‘Sham Offering,’ It Says

Thursday: FedEx Corp. Servs. v. Cloud Software Grp. Inc., Del. Ch., No. 2024-0235, oral argument 3/28/24.

At issue: Cloud Software Group Inc. formed when Vista Equity Partners Management LLC and Elliott Investment Management LP bought Citrix Systems Inc. in 2022 and combined it with Vista’s Tibco Software Inc., which allegedly has had a licensing and service agreement with FedEx since 2011. FedEx argues that platforms and services that support the processing and tracking of shipments “could be partly or totally disrupted if the Cloud software stops working,” according to its motion to expedite proceedings in the lawsuit filed earlier this month.

Court action: A hearing on FedEx’s motion to expedite proceedings will be heard via teleconference.

FedEx Unit Sues Cloud, Says Contract Breaches Threaten Business