In Unusual Circumstances, Chancery Declines to Stay Discovery Pending Motion to Dismiss

Morris James LLP

Edward Deane, et al. v. Robert Maginn, Jr., C.A. No. 2017-0346-LWW (Del. Ch. Sept. 8, 2021)

Delaware courts often grant a motion to stay discovery pending the resolution of a potentially case-dispositive motion to dismiss. In “[t]he unique circumstances of this case,” however, the Court of Chancery denied a stay. The court focused on the parties’ responsibility to adhere to the discovery schedule to which they previously agreed.

Vice Chancellor Will noted that the court always has discretion to stay discovery and, citing In re McCrory Parent Corp. (Del. Ch. 1991) (Allen, C.), outlined three specific, non-exhaustive factors in favor of denying a stay, including 1) where the decision will not preclude further litigation, 2) where the plaintiff seeks interim relief, and 3) where the plaintiff may be prejudiced by delay because information will not be available in the future.  While these factors favored the defendant, the Vice Chancellor reasoned that the “twin goals of efficiency and fairness” required further inquiry.

The court considered the specific circumstances of the case and noted that, if the stay of discovery were granted, the parties would have less than a month to conduct discovery.  This would be prejudicial to the plaintiffs and contrary to the parties’ agreed schedule.  The court also reasoned that the risk to the plaintiffs was amplified by the defendant waiting a month between receiving the discovery requests and filing the motion to dismiss.  The Vice Chancellor also noted that scheduling issues had been an issue over the course of the matter, and the court had already urged the parties to adhere to the schedule.  Finally, the court noted that the defendant retained its prerogative to seek a protective order if, contrary to the plaintiffs’ representations, the discovery at-issue posed an undue burden to the defendant.  For such reasons, the court denied the motion to stay.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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