In BAE Systems Information and Electronic Systems Integration, Inc. v. Lockheed Martin Corp., C.A. No. 3099-VCN (Del. Ch. June 30, 2011), read letter ruling here, the Delaware Court of Chancery granted a motion to bifurcate what the Court described as an “indisputably complex” case, into a “contract interpretation phase” and a “damages phase”.
Factors to Determine Bifurcation
The Court applied the following four factors to determine bifurcation: (i) the complexity of the litigation and the need for different proof; (ii) whether discovery on certain claims would delay a single trial; (iii) whether different counsel would probably try the various claims; and (iv) whether prejudice would result from separate trials. See Court of Chancery Rule 42(b).
The parties agreed in principle to the bifurcation and thus the Court’s application of the criteria was abbreviated because the Court agreed with the parties that bifurcation was appropriate in this case.
Cross-Motions to Compel
Both parties filed competing motions to compel discovery. Bifurcation made some of the issues moot in the motions to compel, but two aspects of the ruling on the motions to compel can be viewed as “takeaways” with broader application to business litigation disputes in general:
(1) BAE sought documents related to the contract at issue–even for the period after the complaint was filed through the present. The Court agreed with Lockheed that there should be some cutoff of the time period after the filing of the complaint during which documents are discoverable. In this case the Court found that two years after the complaint was filed was a reasonable deadline because documents generated after that date were not likely to be reliable indicators of the meaning of the agreement at issue.
(2) Court of Chancery Rule 33(d) requires a party to “specify” the records where the answer to an interrogatory may be obtained, which means that one does not comply with the rule by simply referring generally, as the party in this case did, to: “documents produced or to be produced in this case.” Therefore, the Court required supplementation of the replies to interrogatories to identify specific documents that were responsive to each interrogatory.
The Court denied both requests for attorneys’ fees in connection with the cross-motions to compel. Some members of the Court of Chancery are more inclined than others to shift fees when a motion to compel discovery is granted. It is not uncommon for fees to be granted, but it is not uniformly predictable in advance.