A Blog About Intellectual Property Litigation and the District of Delaware


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Andrew E. Russell, CC BY 2.0

We posted earlier this year about Judge Connolly's new standing orders requiring plaintiffs to disclose litigation funding and Rule 7.1 disclosure requirements for certain entities such as LLCs.

In that post, we pointed out that "the language seems to apply to existing cases, but there is no explicit deadline for compliance. Personally, though, I'd probably get moving..."

Apparently, counsel for the parties in VLSI Technology LLC v. Intel Corporation, C.A. No. 19-426 (D. Del.) do not read the blog.

About two weeks ago, the Court issued oral orders in VLSI directing the parties to comply with his standing orders:

ORAL ORDER: It is HEREBY ORDERED that each party shall certify by a sworn declaration filed with the Court no later than July 18, 2022 that it has complied with the Court's April 18, 2022 Standing Order Regarding Third-Party Litigation Funding Arrangements.
ORAL ORDER: It is HEREBY ORDERED that each party shall certify by a sworn declaration filed with the Court no later than July 18, 2022 that it has complied with the Court's April 18, 2022 Standing Order Regarding Disclosure Statements Required by Federal Rule of Civil Procedure 7.1.

VLSI is a long-running, busy case with nearly 1000 docket entries. Some of the claims appear to be stayed, but the parties briefed summary judgment in March, and the Court recently granted-in-part a motion to exclude expert testimony.

In response to the oral orders, both parties filed updated disclosures. Today, the Court issued an order staying the action due to plaintiff's relatively long—but inadequate—updated Rule 7.1 disclosures:

The Rule 7.1 Disclosure Order requires any party that is a nongovernmental joint venture, limited liability corporation (LLC), partnership, or limited liability partnership to disclose "the name of every owner, member, and partner of the party, proceeding up the chain of ownership until the name of every individual and corporation with a direct or indirect interest in the party has been identified." Mr. Stolarski states in his declaration that VLSI is a "subsidiary" of CF VLSI Holdings LLC (VLSI Holdings); and he identifies seven LLCs and three limited partnerships that, he says, "own" VLSI Holdings. . . . Mr. Stolarski says that he "[is] informed" that one of the seven LLCs "is wholly owned by a closed end investment fund family comprised of six individual funds," but he does not identify those six funds or say that the funds are corporations. . . . Mr. Stolarski says that the remaining six LLCs and three partnerships "are investment funds," but he does not identify the funds or their legal status. . . . These disclosures are clearly inadequate to meet the requirements of the Rule 7.1 Disclosure Order, and that failure raises questions about whether VLSI has complied with the Litigation Funding Order.

The Court also unsealed Plaintiff's disclosures after finding that plaintiff could not justify filing them under seal:

I am troubled as well by VLSI's initial filing of Mr. Stolarski's declaration under seal and the redactions it has made to its proposed public version of the declaration. VLSI has redacted from the declaration Mr. Stolarski' s representation that the six funds that allegedly own one of the LLC owners of VLSI have "combined total net assets of approximately $1.8 billion as of June 30, 2022"; that "the ultimate owners of [that LLC] are composed of pension and retirement funds, sovereign wealth funds, foundations, high net worth individuals, endowments and other institutional investors"; and that the other nine owners of VLSI are managed "on behalf of outside institutional investors." . . . VLSI identifies, and I can think of, no reason that would justify hiding from the public this information.

Judge Connolly stayed the case until the plaintiff complies with the Rule 7.1 order:

NOW THEREFORE, at Wilmington on this First day of August in 2022, it is HEREBY ORDERED that the Declaration of Michael Stolarski (D.I. 972) is UNSEALED, the redacted version of that declaration (D.I. 974) is STRUCK, and the case is STAYED until VLSI complies with the Court's April 18, 2022 Standing Order Regarding Disclosure Statements Required by Federal Rule of Civil Procedure 7.1.

The full, unsealed disclosures are attached below. On first glance, they look reasonably fulsome, but after digging in the Court found they do not actually meet the requirements. It is clearly paying attention to this issue. So if you still haven't filed updated Rule 7.1 statements in your Judge Connolly cases involving LLCs, LLPs, and partnerships, now might be a good time.

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