EFiled:Oct22201206:46PMEDT TransactionID47231046 CaseNo.

7717VCG IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE

LAUREN GLASSMAN, Plaintiff/CounterclaimDefendant, v. CROSSFIT, INC. and GREG GLASSMAN, Defendants/CounterclaimPlaintiffs.

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C.A. No. 7717-VCG

PLAINTIFFS MEMORANDUM IN OPPOSITION TO DEFENDANTS MOTION FOR CONTEMPT Plaintiff, Lauren Glassman, by and through her undersigned counsel, respectfully submits this memorandum in opposition to the motion (the Motion) for contempt filed by Defendants CrossFit, Inc. (CrossFit or the Company) and Greg Glassman (collectively, the Defendants) seeking to hold Plaintiff in contempt of an order of this Court and to impose sanctions against Plaintiff. Introduction Defendants Motion is premised upon Plaintiffs purported willful violation, following the Courts issuance of its October 12, 2012 Memorandum Opinion, of Defendants unilaterally imposed deadline to produce documents that had previously been withheld by Plaintiff as privileged. Plaintiff satisfied Defendants initial self-imposed deadline, which later decreased from 48 business hours to 24 business hours. Although neither deadline was ordered by the Court, Defendants demand sanctions based on Plaintiffs temporary withholding of 13 documents, which are the subject of a third partys pending application to the Court for relief

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from Plaintiffs disclosure of these privileged documents and which is scheduled to be heard on October 23, 2012. As Defendants Motion concedes, however, to obtain such a finding Defendants must first make a showing that Plaintiff knowingly disobeyed an order of this Court. But, here, no order exists that mandates the production of documents on Defendants unilateral timeline. Though the inquiry could end there, this Motion is particularly lacking given that a third party has sought the protections of the Court with respect to such production, and the Court has scheduled a hearing to address its application. Moreover, the challenges to character and personal attacks contained in the Motion are primary examples of what the Principles of Professionalism of Delaware Lawyers seek to avoid. These principles call for professional civility toward not only the courts and colleagues, but also for all people encountered in practice. Principles of Professionalism of Delaware Lawyers (2003). Indeed, [a] lawyer should represent a client with vigor, dedication and commitment. Such representation, however, does not justify conduct thatis abusive, rude or disrespectful. A lawyer should recognize that such conduct may be detrimental to a clients interests and contrary to the administration of justice. Id. As this Court has instructed, it is incumbent upon Delaware attorneys to uphold the expectations for practitioners before this Court. This includes resisting importunate demands for aggressive litigation tactics, whether those demands originate externally with a client or internally from the belligerent emotions that inevitably cloud at times the judgment of those engaged in the adversary process. Phillips v. Firehouse Gallery, LLC, 2010 WL 3220677, at *3 (Del. Ch. Aug. 9, 2010). In bringing this Motion, Defendants have disregarded these principles in exchange for what can only be seen as an effort to color the Courts view of Plaintiff, with bold, counterfactual

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assertions against her character and that of the attorneys involved in this case. Defendants communications with Plaintiffs attorneys, as well as their submissions to the Court, have become increasingly inflammatory and have resulted in the inevitable escalation of hostilities between the parties. For its unqualified lack of merit and its troubling lack of civility, Defendants Motion should be denied. Background There are two critical facts that dictate the denial of the relief requested by Defendants. First, the Memorandum Opinion (the Opinion) was issued by the Court late in the day on Friday, October 12, 2012. The Opinion made certain rulings with respect to the application of the common interest doctrine and business strategy immunity as they applied to a number of documents Plaintiff had been withholding from its production. Later that evening, counsel for Plaintiff received two emails from Defendants counsel. The first email demanded that the documents being withheld by Plaintiff be produced to Defendants by Tuesday, October 16, 2012. (Ex. B to Motion). In the second email, which came a few minutes later, Defendants determined that a Tuesday deadline was insufficient and that a more appropriate timetable for production would be 5:00 p.m. on Monday. (Id.). Importantly, neither of these deadlines imposed by Defendants was based on an order of the Court. Nor was it based on an agreement of the parties. Instead, the Defendants demands were both unilateral and self-imposed. Though under no obligation to do so, counsel for Plaintiff worked through the weekend to compile and prepare for production nearly two thousand pages of documents. These

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documents were produced to Defendants on Tuesday, October 16, which, in any event, was the date on which Defendants initially demanded they be produced. 1 (See Exs. L and M to Motion). In her October 16th production, Plaintiff turned over to Defendants all but 13 of the communications that were the subject of Defendants motion to compel. 2 Though their Motion suggests that the withholding of these 13 documents came as a complete surprise to Defendants, such a suggestion is again contradicted by the facts. Indeed, on Monday, October 15th before any production had even been made both Plaintiff and Defendants received an email from counsel for Anthos in which it explained the privilege and waiver implications that the Opinion could have on Anthoss communications and that, as a result, it was seeking Defendants agreement to hold back these documents until a resolution of the pending motion to compel against Anthos was reached. (Ex. D to Motion). When Defendants refused to agree to counsels request, Anthos immediately entered its appearance in this action and submitted a letter to the Court in which it requested that the portion of the Opinion that was directed to the common interest doctrine be held in abeyance for the

Not surprisingly, however, when Plaintiff did not meet Defendants unilaterally-imposed Monday deadline, she promptly received a third email from Defendants threatening to begin contempt proceedings if documents were not produced immediately. (Ex. E to Motion). While it would be cumbersome to defend against all of the allegations contained in Defendants Motion, Plaintiff must clarify that she proceeded in good faith in collecting and preparing for production the thousands of pages being produced to Defendants. Her production on Tuesday, October 16 only two business days following the issuance of the Opinion was both fair and reasonable under the circumstances. Defendants rely on nothing other than their unsupported allegations to suggest otherwise.
2

Plaintiff disclosed the temporary withholding of all but 13 of the communications the next day on October 17, 2012. (Ex. O to Motion). Defendants opted to forego the meet and confer process and, within hours, alleged that Plaintiff temporarily withheld more than the claimed 13 documents. (Ex. 1 hereto). Plaintiff encouraged Defendants to resolve any inadvertent errors that naturally arise when producing documents within a 48-hour time period through the meet and confer process. When Defendants eventually did agree to meet and confer, Plaintiff produced additional attachments to emails she inadvertently did not produce, and Plaintiff has turned over to Defendants all but 13 of the communications. (Ex. 2 hereto).
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short additional duration necessary to allow [the motion to compel pending against Anthos] to be fully briefed and decided. (Ex. G to Motion). Relying on, among other things, the final paragraph of the Courts Opinion, in which it emphasized that it has not ruled on the application of these, or other, discovery doctrines as they pertain to the Defendants outstanding Motions to Compel brought against third parties which are not yet submitted for decision (Opinion at 15), counsel for Anthos explained that the production of certain documents in Plaintiffs possession, which are also in the possession of Anthos (i.e. the 13 documents Plaintiff has not yet produced), will have the effect of waiving Anthoss attorney-client privilege and will moot its opposition to the pending motion against it. (Ex. G to Motion). On October 16, 2012, Defendants submitted a response to Anthoss letter (Ex. H to Motion) and, on the same day, the parties were informed that the Court would like a teleconference tomorrow [October 17, 2012] with reference to the letters filed with reference to production of documents that are protected by common interest privilege. (Ex. K to Motion). Due to a previously scheduled, court-imposed hearing, the parties were unable to find a time on October 17th that both they and the Court were available. 3 Alternatively, the Court indicated that it could hold the teleconference on Tuesday, October 23, 2012. (Ex. 3 hereto). The teleconference is currently scheduled to convene on this date.

When initially contacted by Chambers, the parties understood that the Court was available for the teleconference at any time after 11:00 a.m. Counsel was asked to confer on a time for argument. Upon conferring, counsel requested that the Court schedule the teleconference for 4:30 p.m., in response to which counsel was informed that the Court was unavailable after 2:00 p.m. (Ex. 3 hereto). However, counsel for Anthos was engaged in a court-imposed hearing in California, which did not conclude before 2:00. (Ex. 4 hereto). Although, typically, such a lengthy explanation with respect to the reasoning behind the scheduling would be superfluous, such details have become necessary in this proceeding given Defendants bold (yet unsupported) suggestion that counsel declined to make itself available. (Motion at 1). 5

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Against this backdrop, Defendants seek to hold Plaintiff in contempt for her failure to produce documents on Defendants timetable and her withholding of the 13 documents, which are the subject of Anthoss pending application. But given that (1) Defendants timetable is not the product of a Court order and (2) a teleconference has already been scheduled to address the very application pursuant to which these 13 documents have been withheld, Defendants are not entitled to the holding they seek. As there has been no showing of a violation of a Court order, there is no basis for a finding of contempt. Argument I. Plaintiff Did Not Violate The Courts Orders. Contempt is a serious matter under Delaware law and a clear violation of the Courts order must be shown. In order for a court to grant civil contempt, the party must, in fact, fail to comply with an order and must knowingly have done so. Arbitrium (Cayman Islands) Handels AG v. Johnston, 1997 WL 589030, at **3-5 (Del. Ch. Sept. 17, 1997). Indeed, it is [a] cardinal requirement for any adjudication of contempt that the order allegedly violated give clear notice of the conduct being proscribed. Mother African Union First Colored Methodist Protestant Church v. Conference of African Union First Colored Methodist Protestant Church, 1992 WL 83518, at *9 (Del. Ch. Apr. 22, 1992). As the movants, Defendants bear the burden of proving a violation of the court order by clear and convincing evidence. Dickerson v. Castle, 1991 WL 208467, at *4 (Del. Ch. Oct. 15, 1991) (In order to [exercise its contempt power]this Court must find by clear and convincing evidence that a violation of the Court Order has taken place.). Moreover, in order for a party to be held in contempt for a failure to comply with a court order, the violation cannot be a mere technical shortcoming, but rather must constitute a failure to obey the order in a meaningful way.

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Dickerson, 1991 WL 208467, at *4 & n.4 (technical noncompliance not meaningful where evidence demonstrates that defendants are making serious and good faith efforts to cooperate with Plaintiffs and to assure future compliance). Here, Defendants have failed to meet their burden. Plaintiff did not violate the letter or the spirit of the Courts Opinion. The Opinion made certain findings relating to the application of the common interest doctrine and business strategy immunity to the documents being withheld from production by Plaintiff. Upon receiving the Opinion, Plaintiff began preparing for production the documents subject to the Courts Opinion. That Plaintiff did not do so on Defendants timetable is not grounds for contempt. Moreover, before any production could be made, Anthos promptly intervened in the action and requested that the Court hold in abeyance its decision as it applies to a small subset of Plaintiffs production, the disclosure of which would prejudice Anthoss right to be heard on the pending motion to compel that Defendants brought against it. Anthoss application is based on the Courts emphasis at the conclusion of its Opinion that the rulings made therein did not apply to the motion to compel pending against Anthos. (Opinion at 15). Upon receipt of this application, the Court scheduled a hearing to address the letters filed [by Anthos and Defendants] with reference to production of documents that are protected by common interest privilege. (Ex. K to Motion). This hearing is currently set to go forward on October 23, 2012. Had Plaintiff produced these documents over Anthoss application, however, the need for the October 23rd hearing would be moot. Though this appears to be the goal of Defendants submission, such actions would irreparably prejudice the rights of Anthos, which has its own interests in this action. As Defendants well know, this is simply not how the adversary system is intended to work.

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It is clear in these circumstances that Plaintiffs actions do not constitute the makings of contempt. Nonetheless, Defendants attempt to impute to Plaintiff an improper motive for her reasonable actions. This, of course, has become standard for Defendants in this case. Also standard is the absence of any evidence to support these purported motives. But even putting aside the factual history relevant to this Motion, which belies Defendants assertions, the Motion itself provides no actual evidence to support their very serious claim that Plaintiff willfully violated an order of this Court. Indeed, to find that Plaintiffs conduct constituted a violation of the Courts orders would impute a deadline into the Opinion which does not exist. It would also render meaningless the Courts scheduling of a hearing for the specific purpose of addressing Anthoss application for relief. 4 Because no such clear and convincing evidence has been established, the imposition of civil contempt sought by Defendants is altogether inappropriate. Magness v. Krewson, 2004 WL 877348, at **5-6 (Del. Ch. Apr. 15, 2004) (denying plaintiffs motion for contempt where defendants acted neither egregious[ly] nor ...in bad faith and did not clearly violate the courts order, and where the motion was being pursued as a strong-arm tactic[] against the nonmovant). II. Sanctions Against Plaintiff Is Both Unwarranted And Inequitable. Requesting sanctions is not something to be done lightly. New Castle Shopping, LLC v. Penn Mart Discount Liquors, Ltd., 2009 WL 5197189, at *2 (Del. Ch. Oct. 27, 2009). Recognizing the inherently inflammatory nature of these requests, the Court has cautioned counsel to think twice, three times, four times, perhaps more before seeking Rule 11 sanctions
4

Several weeks ago, the Court informed the parties of its intention to hear and decide Defendants motions to compel against Plaintiff and Anthos together. Defendants thereafter submitted a letter to the Court requesting that the motion against Plaintiff be heard first because briefing had already been complete, which request the Court accommodated. 8

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or moving for fees under the bad faith exception. Air Products & Chemicals, Inc. v. Airgas, Inc., 16 A.3d 48, 67 (Del. Ch. 2011) (quoting Katzman v. Comprehensive Care Corp., C.A. No. 5982VCL (Del. Ch. Dec. 28, 2010) (Transcript at 13, 16)). In so doing, the Court noted that [t]hese types of motionsinvolve allegations of intentional misconduct by counsel and, as a result, what they usually result in almost inevitably is an escalation of hostilities. Id. As a result, the Court has explained that [f]or most types of conduct that really merits Rule 11 or feeshifting, you shouldnt need to point it out. It should be obvious from the briefing that someones out of line. Id. But where, instead, the basis for a request for sanctions is so tenuous to the facts of the case, the Court has considered issuing a rule to show cause as to why some form of sanction should not be issued against [the moving party] for making the request. New Castle Shopping, LLC, 2009 WL 5197189, at *2 (emphasis added). As is the case with its Motion for Contempt, Defendants decision to seek sanctions in these circumstances disregards the Courts guidance and unnecessarily creates a hostile litigation environment for the parties. As set forth above, Defendants have failed to meet this Courts standard for the very serious finding of contempt against Plaintiff. However, even if the Court were to make such a finding, sanctions would be inappropriate in this instance given the nature and context of any purported violation and Plaintiffs good faith efforts to comply with the Courts Opinion. See Dickerson, 1991 WL 208467, at *4 (Even if a finding of contempt is made, the Court need not impose sanctions for failure to comply with its Order if it perceives that the party is making a good faith effort to remedy the problems which necessitated the action.); Aveta Inc. v. Bengoa, 986 A.2d 1166, 1181 (Del. Ch. 2009) (imposing sanctions only where contemnor did not make any effort to comply in response to the Rule to Show Cause; had such an effort been made, the Court would have taken into account his good faith efforts to comply).

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Being presented with (1) Defendants demands for the immediate production of documents, (2) Anthoss application to the Court seeking to preclude Plaintiffs production of 13 of such documents, and (3) the anticipated hearing on Anthoss application, Plaintiffs actions in producing to Defendants within two business days of the Opinion all of the requested information other than the 13 documents at issue was both prudent and reasonable under the circumstances. Had Plaintiff done anything differently, she would have mooted both Anthoss right to assert its privilege over these documents and the need for the hearing previously scheduled by the Court. Perhaps more troubling than the request for sanctions itself is the scope of the sanctions being sought. Not only do Defendants seek costs associated with bringing this Motion, but they also seek from Plaintiff the costs associated with responding to Anthoss application to the Court. (Motion at 10). To the extent a response to such a request is even necessary, it is clear that Defendants cannot recover from Plaintiff for work they performed in responding to a filing made by a third party. In addition to these costs, Defendants appear to be seeking the costs associated with bringing their original motion to compel against Plaintiff. (Motion at 10). This request was not made in their motion to compel, their reply, or their sur-sur-reply submitted in connection with that motion. Nor was it addressed in the Courts Opinion. Such a request has, therefore, been waived and is not properly before the Court. Lastly, were the Court to ever reach Defendants request for sanctions associated with the costs in bringing the present Motion, Defendants have failed to show as they concede they must that they have suffered harm as a result of Plaintiffs actions. Defendants received the documents they demanded in two business days of the Courts ruling. Their dispossession of the

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13 documents that are the subject of Anthoss application could not conceivably have caused Defendants any harm, as depositions have not even commenced in this case. In fact, Defendants only completed their own document production less than two weeks ago. In short, this Motion is nothing more than a continuation of Defendants efforts to color the Courts views of Plaintiff and Anthos in an attempt to gain a litigation advantage. The Motion has no more merit than the countless other allegations made by Defendants against Plaintiff, Anthos, and their respective counsel throughout the course of this proceeding. Defendants conduct constitutes an abuse of the process of this Court and their tactics should not be tolerated. WHEREFORE, for the foregoing reasons, Plaintiff respectfully requests that the Court deny the Motion for Contempt and grant such further relief as the Court deems necessary or appropriate. ASHBY & GEDDES, P.A.

Of Counsel: BERGESON, LLP Daniel Bergeson Grace Y. Park 303 Almaden Blvd. Suite 500 San Jose, CA 95110

/s/ Philip Trainer, Jr. (#2788) Philip Trainer, Jr. (#2788) Toni-Ann Platia (#5051) 500 Delaware Avenue, 8th Floor P.O. Box 1150 Wilmington, Delaware 19899 (302) 654-1888 Attorneys for Plaintiff/CounterclaimDefendant Lauren Glassman

Dated: October 22, 2012

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