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Books and records actions are being assigned to Masters in Chancery: Here's the Chancellor's guidance

In light of its status as a court of equity, the Delaware Court of Chancery sometimes needs to move fast—very fast. And a crowded docket doesn’t mix well with highly expedited litigation. Accordingly, as a result of the Court’s never-ending quest to streamline the administration of (equitable) justice, there has been an observable uptick in the usage of Masters to adjudicate summary proceedings—specifically, books and records actions.

A quick primer on the usage of Masters in the Court of Chancery

The Court of Chancery is authorized, by statute, to appoint a Master in Chancery “in any cause.” 10 Del. C. § 372.  As the Delaware Supreme Court confirmed in DiGiacobbe v. Sestak, this statutory authorization allows the Court of Chancery to appoint a Master to hear and evaluate the entirety of a case (at least in the first instance) unless otherwise provided by statute or rule of court.  743 A.2d 180, 182 (Del. 1999).

Under Court of Chancery Rule 144(a), Masters are required to “issue a decision in the form of a final report” which “include[s] factual and legal determinations sufficient to support the Master’s decision and to permit de novo review by the Court.” Unless the parties stipulate to a final decision by the Master, they are permitted to take exceptions to the Master's final report which—as suggested by the language of Rule 144(a)—the Court will review de novo.

The Chancellor's guidance for books and records actions assigned to Masters

On April 4, 2023, Chancellor McCormick assigned Masters to hear multiple books and records actions.  E.g., MotoFuze Hldgs., LLC v. AutoAlert Acquisitions Hldgs., LLC, C.A. No. 2023-0369-SEM (Del. Ch. Apr. 4, 2023) (assignment letter). In the assignment letters, the Chancellor began by noting that books and records actions are, by nature, summary proceedings that the Court attempts to resolve within 90 days (unless the plaintiff states expedition is not required or the parties stipulate otherwise). To ensure the expeditious resolution of the actions, the Chancellor instructed the parties to:

  • Confer on a schedule designed to resolve the action before the Master within 60 days (and submit the proposed schedule within a week of the assignment order);
  • Be mindful that pleading-stage motions are generally disfavored by the Court in summary proceedings (absent a compelling need or extraordinary circumstances); and
  • Meet and confer within a week of the issuance of the assignment letter to attempt to minimize the scope of disputes presented to the Master.

With respect to scheduling, Chancellor McCormick indicated that a 60-day schedule was necessary to permit resolution of the action on a summary basis in view of the exceptions process permitted by Court of Chancery Rule 144. The letter did, however, indicate that, if the parties seek a more leisurely schedule, they should “strongly consider” submitting the action to a final decision by the Master that, pursuant to Rule 144(h), would not be subject to further judicial review. The Chancellor even provided sample language to include in a Stipulation and (Proposed) Order for Final Resolution by the Master in Chancery:

The parties hereby agree that, subject to approval by the Court, the above-captioned action shall be submitted to a Master in Chancery for a final decision under Court of Chancery Rule 144(h). The parties hereby waive the right to seek further judicial review of the Master in Chancery’s decision at the trial level and confirm their understanding that the Master in Chancery’s final decision will be subject to direct appeal to the Delaware Supreme Court, under all applicable rules. In making this stipulation, each party has either consulted with counsel or been notified of the right to consult with counsel and declined to do so.

Regarding the meet-and-confer to minimize the scope of the disputes, the Chancellor instructed each defendant to (during the meet-and-confer): (i) identify the defenses it intends to assert to each category of documents; (ii) identify the location of each category of documents (or state that responsive documents do not exist); and (iii) if the defendant objects on the grounds of volume or burden, the defendant shall provide evidence of the volume and burden of documents sought.


delaware law, delaware court of chancery, corporate