June 11, 2024
Delaware Court of Chancery Continues Substantial Revision of Its Rules
On May 31, 2024, the Delaware Court of Chancery announced that it adopted a second set of amendments to its rules, which will go into effect on June 14, 2024. (As detailed in a prior legal update, the Court issued the first of its ongoing series of rules amendments on September 25, 2023.) These most recent amendments include changes to Rules 1 through 6, 8, 9, 11 through 15, 23, 23.1, and Rules 79, 79.1, 79.2, and 174. While each amendment varies in terms of substantive and procedural requirements, all amendments, for the most part, were adopted with the intention to modernize the Court of Chancery’s Rules to reflect current practice and conform to the Federal Rules of Civil Procedure.
For example, under revised Rule 3, a civil action is now commenced by only filing a complaint, and there is no longer a requirement to file service copies of the complaint. More significantly, the revisions to Rule 3 introduced a series of changes to fees, deposits, and charges. Rule 4 was revised to clarify that (1) service of process includes both the summons and the complaint, and (2) service may be made by any authorized means, such as when provided explicitly by a statute or Court Order. Rule 4(e) now identifies specific requirements for serving process under consent statutes for individuals in management positions with Delaware business entities: 6 Del. C. § 15-114, 6 Del. C. § 17- 109, 6 Del. C. § 18-109, and 10 Del. C. § 3114. In concert with Rule 4(e), Rule 4(h) was added to specifically deal with how service may be made under Del. C. § 3104(d).
Like Rule 4, Rules 5 through 6 introduced several procedural changes. For example, Rule 5(i)(2)(A) provides that Delaware attorneys may withdraw without Court approval if notice is provided and another Delaware attorney from the same law firm as the withdrawing attorney represents that client. Additionally, revised Rule 5 simplifies and expands several filing requirements; for example, papers served electronically (except for discovery) no longer must be filed with a certificate of service.
Rule 5.1, which governs filing documents under seal, now requires that notice of a confidential filing must be provided to any individual who has a legitimate interest in preserving the information as confidential. Revised Rule 5.1 also now allows parties to file documents as confidential before entry of a Court Order. Rule 6 has been amended to clarify that the Court’s rules for computing time and deadlines apply to statutes that include language expressly addressing the “timing of events” in this Court.
These amendments were adopted not just to lighten the load of attorneys, but also to alleviate the Court’s burden. For example, revised Rule 8(a)(1) now requires that pleadings include a short and plain statement explaining the grounds for the Court’s subject-matter jurisdiction; without such a statement, the Court can now promptly dismiss claims that lack subject-matter jurisdiction without hearing a jurisdictional motion. The pleading requirements also have been revised to require that parties (1) specifically admit or deny in their answer each allegation of a complaint, rather than asserting general denials to all allegations; and (2) include a short statement explaining the grounds for every asserted affirmative defense.
Other revisions (to Rules 13, 14, and 15) are intended to streamline the pleading procedures for counterclaims, crossclaims, third-party claims and amended complaints. Rule 23 has been amended to elaborate on the duties of counsel in class action, how attorneys’ fees in class actions are determined, and when a class action may be settled or dismissed. Also of note are the amendments to Rule 79, which account for advancements in electronic filings, and 174, which increases the first-day fee for the Court-sponsored mediation program (which had not been changed since the program’s inception) from $5,000 to $15,000.
For example, under revised Rule 3, a civil action is now commenced by only filing a complaint, and there is no longer a requirement to file service copies of the complaint. More significantly, the revisions to Rule 3 introduced a series of changes to fees, deposits, and charges. Rule 4 was revised to clarify that (1) service of process includes both the summons and the complaint, and (2) service may be made by any authorized means, such as when provided explicitly by a statute or Court Order. Rule 4(e) now identifies specific requirements for serving process under consent statutes for individuals in management positions with Delaware business entities: 6 Del. C. § 15-114, 6 Del. C. § 17- 109, 6 Del. C. § 18-109, and 10 Del. C. § 3114. In concert with Rule 4(e), Rule 4(h) was added to specifically deal with how service may be made under Del. C. § 3104(d).
Like Rule 4, Rules 5 through 6 introduced several procedural changes. For example, Rule 5(i)(2)(A) provides that Delaware attorneys may withdraw without Court approval if notice is provided and another Delaware attorney from the same law firm as the withdrawing attorney represents that client. Additionally, revised Rule 5 simplifies and expands several filing requirements; for example, papers served electronically (except for discovery) no longer must be filed with a certificate of service.
Rule 5.1, which governs filing documents under seal, now requires that notice of a confidential filing must be provided to any individual who has a legitimate interest in preserving the information as confidential. Revised Rule 5.1 also now allows parties to file documents as confidential before entry of a Court Order. Rule 6 has been amended to clarify that the Court’s rules for computing time and deadlines apply to statutes that include language expressly addressing the “timing of events” in this Court.
These amendments were adopted not just to lighten the load of attorneys, but also to alleviate the Court’s burden. For example, revised Rule 8(a)(1) now requires that pleadings include a short and plain statement explaining the grounds for the Court’s subject-matter jurisdiction; without such a statement, the Court can now promptly dismiss claims that lack subject-matter jurisdiction without hearing a jurisdictional motion. The pleading requirements also have been revised to require that parties (1) specifically admit or deny in their answer each allegation of a complaint, rather than asserting general denials to all allegations; and (2) include a short statement explaining the grounds for every asserted affirmative defense.
Other revisions (to Rules 13, 14, and 15) are intended to streamline the pleading procedures for counterclaims, crossclaims, third-party claims and amended complaints. Rule 23 has been amended to elaborate on the duties of counsel in class action, how attorneys’ fees in class actions are determined, and when a class action may be settled or dismissed. Also of note are the amendments to Rule 79, which account for advancements in electronic filings, and 174, which increases the first-day fee for the Court-sponsored mediation program (which had not been changed since the program’s inception) from $5,000 to $15,000.