EFiled:Oct18201204:04PMEDT TransactionID47137841 CaseNo.

7717VCG

INTHECOURTOFCHANCERYOFTHESTATEOFDELAWARE LAURENGLASSMAN, ) ) Plaintiff/Counterclaim ) Defendant, ) ) v. ) C.A.No.7717VCG ) CROSSFIT,INC.,aDelaware ) corporation,andGREGGLASSMAN, ) ) Defendants/ ) CounterclaimPlaintiffs ) MEMORANDUMOFLAWINSUPPORTOF DEFENDANTSMOTIONFORCONTEMPT Defendantsbringthismotionseekinganorderofcontemptandsanctionsagainst PlaintiffforherwillfuldefianceofthisCourtsOctober12,2012ordergranting Defendantsmotiontocompel(theOrder).Plaintiffhasadmittedtohercontinued violationoftheOrder,andshehasnolegalbasisforherfailuretocomply.Indeed, Plaintiffapparentlyrecognizestheimproprietyofherconduct,asshedidnotproduceany ofthedocumentsthisCourtorderedhertoproduceuntilafterDefendantsbroughther failuretocomplytotheCourtsattentionandthisCourtcalledforaconference.Even then,however,Plaintiffdidnotproducealloftheoverduedocuments.Andwhen Plaintifflearnedthatthehearingcouldnotbeconvenedbecausehercoconspirator, AnthosCapital(Anthos),declinedtomakeitselfavailablePlaintiffgaveupthe pretenseofdelayedcomplianceandannouncedthatshehadnointentionofproducingthe remainingmaterialsthatweresubjecttotheCourtsOrder.Thatistheverydefinitionof contempt.

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Plaintiffsgamesmanshipisnothingmorethanacontinuationofherstrategyof delay.TheCourtwillrecallthatsheextendedthebriefingprocessonDefendants motiontocompelfortwomonthsbyraisingandthenabandoningarguments,and requiringrepeatedhearingsandresponsebriefstoaddressherultimatelybaselessclaims ofbusinessstrategyandcommoninterest.Plaintiffsstallingtacticisparticularly egregiousinlightoftheupcomingtrialdatethatwassettoaccommodatePlaintiffsown unilaterallyimposeddeadlineforresolutionofthismatter.GiventhatPlaintiff admittedlywillnotcomplywiththeCourtsOrder,Defendantsherebymoveforanorder holdingPlaintiffincontempt,requiringtheimmediateproductionofthedocuments withheldincontraventionoftheCourtsOrder,andimposingsanctions. PROCEDURALHISTORY OnAugust31almosttwomonthsagoDefendantsmovedtocompelthe productionofcertaindocumentsinPlaintiffspossession,custody,orcontrolthatshe refusedtoproduceonthebasisofsupposedcommoninterestandbusinessstrategy privileges.Inbrief,Plaintiffassertedthatthesedoctrinesshieldedcommercial communicationsbetweenherandAnthosregardingtheirstrategytoclosetheirpurported PurchaseandSaleAgreement.Defendantsmovedtocompelproductionofall documentswithheldonthosegrounds. Byraisingandthendroppingfrivolousarguments(suchasthataconstitutional righttoprivacyshieldedthedocumentsfromproduction,orthatCalifornialawshould

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governthisDelawareproceeding),Plaintiffmanagedtodragouttheadjudicationof DefendantsMotiontoCompelthroughfivebriefsandtwooralarguments. Ultimately,onFriday,October12,theCourtgrantedDefendantsmotioninits entirety.SeeGlassmanv.CrossFit,2012WL4859125,at*6(Del.Ch.Oct.12,2012) (attachedheretoasExhibitA).TheOrderheldunequivocallythat(despitehermany bitesattheapple)Plaintiffhadnotmetherburdenofprovingthatthebusinessstrategy andcommoninterestdoctrinesapplied,andorderedPlaintifftoproducealldocuments withheldonthosebases. DefendantspromptlyrequestedthatPlaintiffproducethosedocumentsby5:00 p.m.onMonday,October15th.SeeEx.B.DefendantsalsoprovidedPlaintiffwitha secureuploadlinktobeusedfortheproduction,suchthatthedocumentscouldbe immediatelytransferredwithoutdelay.SeeEx.C. Plaintiffdidnotrespondtotheserequests.Rather,lateinthedayonMonday, October12th,counselforAnthosrequestedthatDefendantsconsenttoMs.Glassmans continuedwithholdingofcommoninterestdocumentsuntilAnthoscouldrespondto DefendantspendingmotiontocompelagainstAnthos. 1SeeEx.D.Plaintiff,apparently takingdirectionfromAnthos,producednodocumentsonMondaynotevendocuments subjectonlytothebusinessstrategydoctrine,whichAnthosrequestdidnotaddress.

AnthoscounselcontendsthatitcannotrespondtoDefendantsmotiontocompeluntiltheweekof October22.SeeEx.D.Atthesametime,Anthoscontendsthatitwillnotbeabletoproduceaprivilege logorcompleteproductionuntiltheendofOctober.SeeEx.G.Therefore,itisunclearwhattimeframe forMs.GlassmansproductionwascontemplatedbyAnthosrequest,asitappearsthatifAnthoshasits waytheCourtwillbeunabletoruleontheAnthosdocumentissuesuntilNovemberattheearliest.

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Thenextmorning,DefendantsagaincontactedPlaintiff,notedherlackof response,andrequestedconfirmationthatsheintendedtocomplywiththeOrder. DefendantsspecificallyadvisedPlaintiffthatiftheydidnotreceivesuchconfirmation, theywouldseekrelieffromtheCourt.SeeEx.E.Atthatpoint,Plaintifffinally responded,statingthatwewill,ofcourse,abidebytheCourtsrulingandwilldoso withinareasonabletime.Ex.F.Plaintiffstilldidnotproduceanydocuments,however. Laterthatday,AnthossubmittedalettertotheCourtaskingtheCourttoholdits Orderinabeyanceastodocumentswithheldonthebasisofcommoninterest.SeeEx.G. Defendantsrespondedthatsameday:opposingAnthosrequest,askingtheCourtto orderproductionofalldocumentswithheldbyPlaintiff,andrequestingabriefing scheduleastotheAnthosmotiontocompel. 2SeeEx.H.Defendantsletteralsonoted thatPlaintiffhadfailedtoproducethedocumentsasordered,andhadnotevenprovideda datecertainbywhichshewoulddoso,despiteDefendantsrequest.Thatafternoon,the CourtcontactedthepartiesandAnthos,requestingaconferenceonthoselettersthenext day.SeeEx.K. FacedwithimmediateinterventionbytheCourt,Plaintiffapparentlychanged courseand,ontheeveningofOctober16,producedover500pagesfromherownfiles andover1000pagesfromthoseofhercounselBergesonLLP.However,Plaintiffdid notidentifywhetherthisproductionwaspurportedlycomplete,orwhetherany

Aswenotedinthatresponse,Anthositselfhadrecommendedthatthepartiesshouldwaitforthe benefitofanydecisionbyViceChancellorGlasscockonthatmotionbeforefinalizingbriefingonthe motionagainstAnthos.Ex.I(October16,2012emailtoA.Dunning)seealsoEx.J(October10,2012 emailtoA.Dunning).Thus,AnthosmadeadeliberatechoicetoallowthisCourttoruleonthemotionas toPlaintiffwithoutAnthosinput,andwhen.itdidnotliketheoutcomesought.tohaveMs.Glassman avoidcompliancesothatitcouldtakeanotherbiteatthediscoverywithholdingapple.

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documentscontinuedtobewithheldonthebasisofcommoninterestorbusinessstrategy. SeeExs.L,M(coverletterstoproduction).Further,Plaintiffmadeherproductionintwo blockPDFfiles,makingitimpossibletodeterminehowmanydocumentswerebeing producedwithoutalengthyreview.DefendantscompletedsuchareviewonTuesday eveningandWednesdaymorning.Fromthatreview,itappearedthatseventeen documentscomprisingcommunicationsbetweenPlaintiffandAnthos(andtheiragents) remainedwithheldonthebasesofvariouspurportedprivileges. 3 LaterWednesdaymorning,thepartiesinformedtheCourtthattheywereavailable toconferregardingthelettersthatafternoonhowever,theCourtwasnotfreeatthe proposedtimeandinformedthepartiesthat,iftheycouldnotmeetthatday,thenext availableperiodwasonOctober23.SeeEx.N.Defendantsvolunteeredtomake themselvesavailableattheCourtsconvenience.AlthoughAnthosindicatedthatitwas attemptingtoascertainitsleadcounselsavailability,neitherPlaintiffnorAnthos indicatedtheiravailabilityforaconferencebeforetheCourtswindowofavailabilityhad closed.Seeid. OnceitappearedthattheCourtwouldnot,infact,beabletointerveneon Wednesday,Plaintiffreturnedtoherstallingtactics.HercounselwroteDefendantsan emailclaimingthatPlaintiffandBergesonproducedalldocumentspursuanttothe courtsmemorandumopinionyesterdaybutinthenextbreathimmediately

Likewise,itappearsthatPlaintiffiswithholdingadditionaldocumentsinhercounselspossession reflectingcommunicationswithotherthirdpartiesspecifically,shecontinuestowithhold,eitherinwhole orinpart,32documentscomprisingcommunicationswithWTAS,herfinancialadvisor.Giventhatthose documentsareinPlaintiffspossession,custody,orcontrol,theyaresubjecttotheCourtsOrderand shouldalsobeproducedimmediately.

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acknowledgedthatshehadinfactnotproduced13documentswithheldfromthe Bergesonlog.SeeEx.O.Defendantsimmediatelyresponded,notingthatPlaintiff actuallywaswithholdingatleastseventeendocuments,reiteratingthatPlaintiffhadno basistoavoidproductioninthefaceoftheCourtsOrder,andrequestingimmediate production.SeeEx.P. OnThursdayafternoon,PlaintiffscounselrespondedtoDefendantsletter,again acknowledgingthatPlaintiffhadnotproduced13documentsfromBergesonsprivilege log.4SeeEx.Q.InthelightofPlaintiffscontinuedrefusaltoproducedocuments responsivetotheCourtsorder,Defendantshavenochoicebuttofilethismotion. ARGUMENT A. PlaintiffHasRefusedToComplyWithThisCourtsOctober12Order CourtofChanceryRule70(b)authorizesthisCourttoprovidereliefintheformof

contempt[f]orfailuretoobeyortoperformanyorder.Ct.Ch.R.70(b).Theremedy ofcivilcontemptservestopreserveandenforcetherightsofprivatepartiestosuits,and tocompelobediencetoordersanddecreesmadetoenforcetherightsandadministerthe remediestowhichthecourthasfoundthemtobeentitled.Wilmingtonv.General TeamstersLocalUnion326,321A.2d123,125(Del.1974)(citationomitted)seealso Millerv.StellerEnters.,1980WL6432,at*3(Del.Ch.Dec.22,1980)(grantingcivil contempttoenforceCourtsinjunctionorder).

DefendantscontinuetoreviewPlaintiffsproductionstoconfirmthatthedocumentswithheldby Plaintiffare,infact,limitedtothosethirteensetforthinExhibitQ.

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TheCourtalsoisempoweredbyCourtofChanceryRule37tograntarangeof sanctionsforviolationofadiscoveryorder,includingtheissuanceofanorderstriking pleadingsorrefusingtoallowthedisobedientpartytosupportoropposedesignated claimsordefenses,orcontemptofCourt.Ct.Ch.R.37(b)(2). Apartymaybeheldincontemptwhere(1)itisboundbyanorder,(2)hasnotice oftheorder,and(3)neverthelessviolatestheorder.AvetaInc.v.Bengoa,986A.2d 1166,1181(Del.Ch.2009)seealsoMotherAfricanUnionFirstColoredMethodist ProtestantChurchv.ConferenceofAfricanUnionFirstColoredMethodistProtestant Church,1998WL892642,at*6(Del.Ch.Dec.11,1998)(Toestablishcivilcontempt, themovantsmustshowthatthedefendantsviolatedanorderofthisCourt,andthatthe sanctiontheyseekiscoerciveorremedialinnature.Iftherespondentsactionsare violativeofthisCourtsOrder,theirstateofmindisimmaterialforpurposesofcontempt adjudication,buttheintentionalorwillfulnatureoftheiractsmaybeconsideredin determiningtheappropriatesanction.)(citationomitted).Inacontemptproceeding, theCourtwillnotconsideranexcusebaseduponanargumentthattheorderinquestion wasimperfectorerroneous.Magnessv.Krewson,2004WL877348,at*3(Del.Ch. Apr.15,2004).Apartypetitioningforafindingofcontemptbearstheburdentoshow contemptbyclearandconvincingevidencetheburdenthenshiftstothecontemnorsto showwhytheywereunabletocomplywiththeorder.TRInvestors,LLCv.Genger, 2009WL4696062,at*15(Del.Ch.Dec.9,2009). First,thereisnoquestionthatPlaintiffisboundbythisCourtsOctober12order toproducealldocumentswithheldasprivilegedonthebasisofbusinessstrategyor
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commoninterest.Defendantsmovedtocompelproductionofallsuchdocumentsin Plaintiffspossession.TheCourtsordergrantedthatmotionandmadeplainthatthe commoninterestdoctrinedoesnotprotectthedocumentsthatMs.Glassmanseeksto withhold[she]hasfailedtoshowthatthecontentsofthesedocumentswerecreatedin furtheranceofdevelopingajointlegaldefenseorstrategy.Glassman,2012WL 4859125,at*3. Second,PlaintiffplainlyhadnoticeoftheOrder.TheOrderwasloadedontothe Courtselectronicdocketingsystem,whichprovidesnoticetoallparties,onFriday afternoon,October12.DefendantsseparatelyprovidedacopyoftheOrdertoPlaintiffs counsel,andtoAnthoscounsel,onFridayafternoonshortlyafterreceivingit.SeeEx. B.Asnotedabove,theOrderisunequivocalinitsscopeandapplication.Plaintiff, indeed,acknowledgestheOrderanditsterms,yetsomehowcleavestothepositionthatit canunilaterallydetermine,afterthefact,whichdocumentsitshouldandshouldnot produce.SeeEx.O.Therefore,therequirementofnoticeisuncontroverted. Finally,thereisnoquestionastoPlaintiffswillfulviolationoftheOrder. Plaintiffacknowledgesthatshecontinuestowithholddocumentsonthebasisofcommon interest.Seeid.BeyondthedocumentsthatPlaintiffacknowledgeswithholding, DefendantshaveidentifiedadditionaldocumentslistedonBergesonLLPsprivilegelog thatdonotappeartohavebeenproduced.SeeEx.P.Thetimeforobjecting,conferring, andbriefingPlaintiffsrighttowithholdsuchdocumentspassedweeksagoyetPlaintiff continuestoflouttheCourtsOrderthatsheproducethedocumentsinquestion.

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Therefore,Defendantsrequest,andareentitledto,afindingofcontemptandsanctions forPlaintiffsnoncompliance. B. SanctionsAreNecessary Theremedyofcivilcontemptservesthepurposesofcoercingcompliancewiththe

orderbeingviolatedandremedyingtheinjurysufferedbytheotherpartiesasaresultof conductinviolationofacourtorder.DelawareStateBarAssnv.Alexander,386A.2d 652,665(Del.1978).Indeed,theCourtofChancerypossessesbothcommonlawand statutorypowerstoenforceitsjudgments.SeeWilmington,321A.2dat125(recognizing thepoweroftheCourttoimposeafineorawarddamagesfortheharmsustainedasa resultoffailuretoobeyinjunctiveorder)DiSabatinov.Salicete,671A.2d1344,1348 (Del.1996)(notingtheinherentcontemptpowerofDelawareCourtsand[that]the breachofitsscopearewellestablished)Ct.Ch.R.70(b)(authorizingtheCourtto providerelief[f]orfailuretoobeyarestrainingorinjunctiveorder,ortoobeyorto performanyorder). Ifcontemptisfound,theCourtmayimposeafineorawarddamagesfortheharm sustainedasaresultofit.Magness,2004WL877348,at*3seealsoMiller,1980WL 6432,at*3.DelawarelawalsoempowersthisCourttoorderDefendantstopaythecosts andattorneysfeesassociatedwithcompellingcompliancewithunambiguouscourt orders.TritonConst.Co.,Inc.v.EasternShoreElec.Services,Inc.,2009WL1387115, at*7(Del.Ch.May18,2009)(awardingreasonableattorneysfeesandcostsfor

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violationofapreliminaryinjunction)seealsoMiller,1980WL6432,at*3(notingthat awardofcounselfeesisalsoaproperconsiderationforcontemptsanction). Indeed,ithasbeenstatedthat,underCourtofChanceryRule37,whenaparty failstocomplywithdiscoveryordersoftheCourtorotherwiseengagesindiscovery abuses,theawardofattorneysfeesandexpensestotheopposingpartyismandatory, absentashowingbythewrongdoerthathisactionsweresubstantiallyjustifiedorthat othercircumstancesmaketheawardunjust.Baderv.Fisher,504A.2d1091,1096(Del. 1996)accordBeckv.Atl.CoastPLC,868A.2d840,85152(Del.Ch.2005).Plaintiff doesnot,andcannot,makesuchashowing.Shehashadnumerousoccasions,priorto thisCourtsOrder,tomakeherbestlegalarguments,andfailedtoestablishanybasisfor withholdingrelevantdocuments.Herpresentactionsarenotsubstantiallyjustifiedin anysense. Here,Defendantshaveincurredconsiderablecostsinforcingcompliancewiththe Courtsunequivocalorderrequiringproduction.Defendantshavebeenforcedto(i) respondtoPlaintiffsvariousequivocalstatementsregardingthetimingandscopeof theirproductionrequiredbytheOctober12Order(ii)respondtoAnthosOctober16, 2012letter(iii)reviewPlaintiffseventualpartialproductiontodeterminewhetherany documentswerewithheld(becausePlaintiffdidnotinitiallyexpressherintentionto ignoretheCourtsOrderandcontinuewithholdingcertaindocuments)and,(iv)upon discoveringPlaintiffsnoncompliancewiththeOrder,filethepresentmotion.

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Inaddition,Defendantsareentitledtoexpensesassociatedwiththeunderlying motiontocompelpursuanttoCourtofChanceryRule37(a)(4),whichprovidesthatthe prevailingpartyisentitledtosuchfeesandcostsuponthegrantofamotiontocompel. Defendants,therefore,seekcostsandfeesassociatedwiththeunderlyingmotion andalltasksundertakentoensurecompliancewiththeCourtsOctober12Order,aswell asanorderofcontemptastoPlaintiffLaurenGlassman,andsuchotherreliefasthis Courtdeemsfit. /s/RaymondJ.DiCamillo RaymondJ.DiCamillo(#3188) KevinM.Gallagher(#5337) Richards,Layton&Finger,P.A. 920NorthKingStreet Wilmington,Delaware19801 (302)6517700 AttorneysforDefendantsCrossFit,Inc.and GregGlassman

Dated:October18,2012

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