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Chancery Court Allows Discovery Against Deloitte LLP on Damages It Sought Against its Own Partners

By Francis G. X. Pileggi, Esq.

Deloitte LLP v. Flanagan, No. 4125-VCN (Del. Ch., Aug. 4, 2009),  read letter decision here.

In this very short letter opinion, the court decided a discovery issue in which Mr. Flanagan sought data and details regarding prior efforts by Deloitte to enforce a penalty provision against other Deloitte partners based on conduct similar to that alleged in this particular lawsuit in which Deloitte was seeking to enforce a liquidated damages provision against its former partner.

Several other Chancery Court decisions and a Delaware Supreme Court decision involving the Deloitte firm and its partnership disputes have been summarized on this blog here.

The court referred to the rather broad scope of discovery allowable under Chancery Court Rule 26, and concluded that: 'To enable Mr. Flanagan to have access to the basic facts necessary to evaluate whether Deloitte's past use of the liquidated damages provision may aid the Court in understanding his arguments, the Court concludes that limited discovery is appropriate.'

The court emphasized that nothing in its decision should be interpreted to express any views about any potential liability in any form of Mr. Flanagan. Rather, the court sought to find a way to compare the conduct alleged here with other efforts by Deloitte to impose penalty provisions against other partners with similar agreements.

 

 

Full post as published by Delaware Corporate and Commercial Litigation Blog on August 05, 2009 (boomark / email).