In re Rural Metro Corporation Shareholders Litigation, Cons. C.A. No. 6350-VCL (Del. Ch. Dec. 17, 2013).
Issue Addressed: Whether a post-trial declaration in a separate bankruptcy proceeding should be considered after the close of the trial record. Short Answer: Not based on the facts of this case.
After the trial of this matter the company filed for bankruptcy. The company sought to open the record after trial to introduce an affidavit by a new CFO that was filed in the bankruptcy proceeding.
The Court addressed the multiple factors that it considers in connection with a motion to open the record. The Court described them as the Pope factors based on the case styled Pope Invs. LLC v. Benda Pharm., Inc., 2010 WL 3075296 at *1 (Del. Ch. July 26, 2010). See also Carlson v. Hallinan, 925 A.2d 506, 520 (Del. Ch. 2006), clarified by 2006 WL 1510759 (Del. Ch. May 22, 2006). The Court noted that whether the new evidence is material and not merely cumulative is subsumed by consideration of whether the evidence would likely change the outcome.
Ultimately, a motion to reopen and supplement the trial record is addressed to the discretion of the trial court. The Court found the request to open the record in this case to be lacking in merit.
This short opinion is also useful for its analysis of Delaware Rule of Evidence 201 regarding judicial notice of adjudicative facts. The Court described adjudicative facts as simply the facts of a particular case. Under Rule 201(f) judicial notice of such facts “may be taken at any stage of the proceeding.” The Court emphasized that simply because a document may be suitable for judicial notice “for certain purposes does not mean that its contents can be used for any conceivable purpose.” The Court explained that even though the affidavit filed in a separate bankruptcy matter might be generally the subject of judicial notice, the Court explained that it could not take judicial notice of the contents of the declaration to establish the truth of its contents without discovery and a hearing.
The Court explained that Rule 201(f) regarding facts should be compared with and distinguished from Rule 202 which refers to the judicial notice of law.
The Court also referred to the comment to D.R.E. 202 which explained that there is no counterpart in the Federal Rules of Evidence or the Uniform Rules of Evidence to the Delaware version of Rule 202 which was intended to make it easier to encourage the admissibility of evidence of the law of other states and the federal government. In particular, Delaware added subsection (d). Rule 202(d) is entitled “private acts, regulations, ordinances, court records.”
The Court of Chancery concluded that it could take judicial notice of the declaration filed in the bankruptcy court for certain limited purposes, such as to understand the nature of rulings made by the bankruptcy court, but the rule did not permit the Court of Chancery to take notice of that filing for the truth of its contents. In order to consider it, the record would need to be reopened so evidence could be presented about the declaration. But the Court reasoned that an application of the Pope factors weighed against reopening the record, and judicial notice could not be used as a procedural shortcut to consider it.