EFiled:Sep28201211:32AMEDT TransactionID46698334 CaseNo.

7717VCG

IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE

LAUREN GLASSMAN, Plaintiff/ Counterclaim Defendant, v. CROSSFIT, INC., a Delaware corporation, and GREG GLASSMAN, Defendants/ Counterclaim Plaintiffs

) ) ) ) ) ) ) ) ) ) ) )

C.A. No. 7717-VCG

DEFENDANTS' MOTION TO COMPEL PRODUCTION OF DOCUMENTS FROM WTAS LLC Defendants/Counterclaim Plaintiffs CrossFit, Inc. ("CrossFit" or the "Company") and Greg Glassman ("Mr. Glassman," together, "Defendants"), through their counsel, move this Court, pursuant to Court of Chancery Rule 37(a)(2), for an Order compelling third-party WTAS LLC ("WTAS") to produce documents responsive to Defendants' Subpoena Duces Tecum and Ad Testificandum directed to WTAS ("Subpoena"). FACTUAL BACKGROUND 1. The above-captioned action was commenced by Plaintiff Lauren

Glassman ("Plaintiff" or "Ms. Glassman"), asserting fiduciary duty claims against Defendants arising out of their efforts to acquire a corporate aircraft for Defendant CrossFit. 2. Defendants, in turn, asserted Counterclaims against Plaintiff arising out of

her misuse of confidential Company information and other actions taken in furtherance of her own interests to the detriment of CrossFit. 3. Specifically, Defendants contend that Plaintiff provided confidential

internal Company materials to third-party Anthos Capital L.P. ("Anthos") in furtherance of her

RLF1 7269104v.1

efforts to sell her equity interest in CrossFit to Anthos.1 Plaintiff provided those materials to Anthos without CrossFit's knowledge and without CrossFit being designated as a beneficiary under the non-disclosure agreement that purportedly governed the exchange of materials between Plaintiff and Anthos. As a result, CrossFit had no opportunity to stop the disclosure of its documents, and now has no rights under the non-disclosure agreement to act to prevent misuse of those materials by Anthos. 4. CrossFit's documents were purportedly provided to Anthos as "due

diligence" materials, although they appear to have been provided after the parties had reached a valuation for Ms. Glassman's equity and otherwise established the basic terms of the purchase agreement. Thus, it appears that these confidential materials were provided to Anthos for reasons other than to enable it to evaluate the potential acquisition of CrossFit equity. 5. WTAS is Ms. Glassman's financial advisor. It was apparently retained to

value Ms. Glassman's equity and to represent Ms. Glassman in dealings with Anthos and its counsel, which included the preparation of certain valuation analyses. 6. Given Defendants' counterclaims, WTAS plainly possesses discoverable

information. Accordingly, Defendants served the Subpoena on WTAS on August 29, 2012. See Ex. 1 ("Subpoena Duces Tecum and Ad Testificandum"). 7. On September 4, 2012, Bergeson LLP served Plaintiff's Objections to the

Subpoena. See Ex. 2 ("Plaintiff Lauren Glassman's Objections to Defendants CrossFit, Inc.'s and Gregory Glassman's Subpoena Duces Tecum and Ad Testificandum to WTAS LLC"). Those objections generally recited that Plaintiff objected to the production of material that "is subject to the attorney-client privilege; (ii) constitutes work product; (iii) was prepared in anticipation of
1

Defendants allegations are more fully set out in their Counterclaims, filed August 8, 2012, and Motion for a Temporary Restraining Order, filed on August 31, 2012. 2

RLF1 7269104v.1

litigation or for trial; (iv) is subject to the business strategy immunity; and/or (v) is otherwise privileged or exempt from disclosure; [and] seeks production of documents and information that are non-public confidential, proprietary, sensitive or would otherwise cause injury if publicly disclosed; and (e) seeks information and documents protected by the constitutional right to privacy of Plaintiff and third parties." Id. passim. 8. For the same reasons that those privileges are inapplicable to Plaintiff, See Defendants' Motion to Compel Production of

they are also inapplicable to WTAS.

Documents (Motion to Compel"), Defendants' Reply Memorandum in Further Support of Their Motion to Compel the Production of Documents ("Reply Brief"), Defendants' Response to Plaintiff's September 19, 2012 Sur-Reply to the Honorable Sam Glasscock III In Further Support of their Motion to Compel ("Response to Sur-Reply"). 9. WTAS itself never served responses and objections to the Subpoena.

Rather, on September 6, 2012, Steven Levy of Goldberg Kohn sent a letter to counsel for CrossFit, indicating that WTAS would refrain from producing documents until after resolution of Ms. Glassman's objections or the subpoena was modified. See Ex. 3 (Letter from S. Levy). 10. On September 14, as part of Plaintiff's response to Defendant's Motion to

Compel as to Plaintiff Lauren Glassman, Plaintiff produced privilege logs with respect to her documents and those of her counsel. In particular, Plaintiff's counsel Bergeson LLP produced a log solely related to its communications with WTAS. See Ex. 4 (Log of Bergeson re WTAS.) That log included five communications with attached analyses. 11. On September 20, Defendants' counsel contacted Goldberg Kohn

regarding WTAS' production. Counsel confirmed that WTAS was not asserting any privilege on its own behalf as to its production, but would redact or withhold material subject to the privileges 3
RLF1 7269104v.1

and other doctrines raised by Plaintiff. Counsel further confirmed that, notwithstanding his September 6 Letter, WTAS would produce non-privileged documents and a privilege log. 12. On Monday, September 24, 2012, Defendants received a "Privilege and

Redaction Log" and production from Goldberg Kohn. See Ex. 5 ("Privilege and Redaction Log") This production comprised 99 pages, of which 63 comprised a CV and promotional brochure for WTAS. The remaining communications related to the arranging of conference calls, many of which contained redactions purportedly on the bases of privilege, work product and business strategy. See id. WTAS did not produce any valuation analyses and logged only one document purporting to be such an analysis. See id. Nor did WTAS log or produce any valuation model inputs (such as data on comparable companies, financial statements, etc.) or other non-email electronic documents apart from its engagement letter. (Ex. 5 # 11, 12, 17.) In sum, it appears that WTAS' privilege log is substantially incomplete.2 13. On September 27, 2012, counsel for Defendants raised these issues with

Goldberg Kohn. WTAS' counsel stated that their production was complete and that they did not believe there were additional analysis documents. He further confirmed that he intended to honor the objections raised by Ms. Glassman's counsel. 14. Given the rapidity with which trial in this matter is approaching,

Defendants respectfully request that the Court order WTAS to complete its production of documents: to produce documents withheld as "confidential trade secret, or other commercial sensitive information" or constitutionally private materials, to produce documents on the basis of

Interestingly, while WTAS produced and logged communications between WTAS and Bergeson LLP (Plaintiff's professed trial counsel) and Cooley (Anthos's counsel), WTAS produced and logged no communications between WTAS and Gunderson Dettmer Stough Villanueve Franklin & Hachigian LLP (Plaintiff's professed transaction counsel). 4

RLF1 7269104v.1

"business strategy" or other privilege, and to provide a privilege log of any documents withheld on other grounds, by October 5, 2012. ANALYSIS 15. Defendants again note that WTAS has not provided responses and

objections to Defendants' requests. To the extent that any objections have been raised, they have been asserted by Plaintiff's counsel. Similarly, to the extent documents have been withheld, that decision was apparently made solely by Plaintiff's counsel. Both because those objections have not been raised by WTAS and because they are wholly without merit, WTAS must produce all responsive materials that it has thus far withheld or redacted. 16. Even if WTAS had formally objected to the production of documents, it

(or Plaintiff, to the extent that she has validly interposed objections on WTAS' behalf) would bear the burden of establishing that it is entitled to withhold documents on the basis of the "business strategy" doctrine, attorney-client privilege, constitutional right to privacy and right to protect confidential or otherwise sensitive information. See Moyer v. Moyer, 602 A.2d 68, 72 (Del. 1992) ("The burden of proving that the privilege applies to a particular communication is on the party asserting the privilege"). Neither party has done so. As explained in Defendants' Motion to Compel, Reply Brief, and Response to Sur-Reply, those objections fail when made by Plaintiff vis--vis her communications with Anthos both before and after they entered into the purchase and sale agreement ("Purchase Agreement"). 17. WTAS' objections to the extent it is deemed to have made them through

Plaintiff's counsel regarding similar communications and documents necessarily fail for the same reasons. In the interest of efficiency, Defendants will not repeat their arguments with respect to the business strategy and common interest doctrines in full. Rather, they hereby 5
RLF1 7269104v.1

incorporate by reference the arguments made with respect to those issues in their Motion to Compel, Reply Brief, and Response to Sur-Reply, and discuss them only in brief below. I. THE BUSINESS STRATEGY EXCEPTION DOES NOT PROTECT WTAS' OTHERWISE RESPONSIVE DOCUMENTS AND COMMUNICATIONS FROM PRODUCTION 18. documents. Plaintiff has no basis to assert business strategy privilege over WTAS'

The business strategy privilege is a limited privilege that "entitles a target

corporation to shield itself from time-sensitive information in the takeover context." Pfizer Inc. v. Warner-Lambert Co., 1999 WL 33236240, at *2 (Del. Ch. Dec. 8, 1999). 19. There is no active takeover at issue and no reason to shield any party's

strategy with respect to the negotiation of the Purchase Agreement. More broadly, there is no basis in law at all for WTAS' assertion of business strategy protection as to plans unrelated to either party's negotiation strategy, such as plans for forcing CrossFit and Mr. Glassman to approve the Purchase Agreement, or for management of CrossFit post-acquisition. See Motion to Compel, 21-27; Reply Brief 42-46, 51; Response to Sur-Reply 25-27. 20. To the extent that Plaintiff or WTAS possesses a concern regarding

disclosure of Ms. Glassman's "reserve price," Defendants note that they have already offered to match Anthos's offer; therefore, and there is therefore no "bidding war" at issue. Further, such data can be produced on an "attorneys' eyes only" basis, or with such other protections as this Court sees fit. II. WTAS MUST ACCOUNT FOR AND PRODUCE ITS COMMUNICATIONS AND WORK PRODUCT 21. Further, it appears that WTAS has not produced, or even collected and

logged, all of its work product pertaining to valuations of Ms. Glassman's shares.

6
RLF1 7269104v.1

22.

The discrepancies between the WTAS log and the Bergeson log of WTAS

documents indicate numerous additional documents in particular, emails and attachments between WTAS and Bergeson which exist and should be produced. The completeness of the WTAS production and log is further called into question by the absence of production or logging of electronic documents that would presumably be generated as part of its engagement spreadsheets, model inputs, project plans, and so forth.3 23. As set forth above, WTAS has no basis to withhold these documents on

the basis of "business strategy." Nor has Plaintiff met her burden of showing that these materials are privileged or attorney work product, as they were created to accomplish a commercial objective (Plaintiff's sale of equity) rather than in response to a request for legal advice, or in anticipation of litigation. See In re John Q. Hammons Hotels Inc. Sh'holder Litig., 2009 WL 891805, at *2 n.4 (Del. Ch. Mar. 25, 2009) (requiring production of valuation opinions and noting their relevance to breach of fiduciary duty claims); Greenlight Cap. Qualified, L.P. v. Emerging Commc'ns, Inc., 2000 WL 1810258, at *1 (Del. Ch. Dec. 7, 2000) (noting that claims of privilege over valuation analyses appear "far-fetched" and plaintiff offered no support for work product claims). CONCLUSION

24.

Defendants respectfully request that this Court enter an order in the form

attached hereto compelling WTAS to produce communications and all other documents in its possession, custody and control responsive to Defendants' Subpoena that it might otherwise withhold on the basis of the "business strategy immunity", attorney-client privilege, work
3

Defendants understand that WTAS' counsel believes his document collection to be complete. However, Defendants do not have any visibility into WTAS' document collection methodology, and cannot independently confirm this conclusion. 7

RLF1 7269104v.1

product or other improper bases, and a log detailing any documents that it does in fact intend to withhold on any other grounds, so that Defendants may seek further relief without having to speculate as to the nature and quantity of documents being withheld.

/s/ Raymond J. DiCamillo Raymond J. DiCamillo (#3188) Kevin M. Gallagher (#5337) Richards, Layton & Finger, P.A. 920 North King Street Wilmington, Delaware 19801 (302) 651-7700 Attorneys for Defendants CrossFit, Inc. and Greg Glassman

Dated: September 28, 2012

8
RLF1 7269104v.1