In Kinexus Representative LLC v. Advent Software, Inc., C.A. No. 1161-VCN (July 5, 2012), the Court of Chancery granted defendant’s renewed Rule 41 motion to dismiss an action filed seven years ago which involved a dispute about an “earn out” payment related to defendant Advent’s acquisition of Kinexus Corp. approximately ten years ago. A year ago, the Court denied the defendant’s Rule 41 motion to dismiss while severely criticizing the plaintiffs for their failure to take steps to prosecute the action. The Court then entered a revised scheduling order, but unfortunately for the plaintiffs, nothing of any substance happened. Indeed, the only things that changed in the interim were the reasons why the plaintiffs could not comply with the discovery schedule or proceed with the case — bankruptcy, a federal investigation, and the resignation of lead trial counsel.
Under Court of Chancery Rule 41(b), the Court may dismiss an action for a failure to prosecute the matter or a failure to comply with a court order. Noting that prejudice to the defendant included additional costs; extensive turnover in personnel making it more burdensome to find appropriate witnesses and “the simple fact that the passage of a decade from the events in question will dim memories,” the Court found that both components of Rule 41(b) were met — the plaintiffs had failed to prosecute the case and to comply with the Court’s scheduling order.