Judge Davis Denies Defendants’ Motions to Dismiss

October 31, 2018


In KT4 Partners LLC v. Palantir Technologies, Inc., 2018 WL 4033767 (Del. Super. Ct. Aug. 22, 2018), Judge Davis denied the defendants’ motions to dismiss, finding that the plaintiffs alleged viable claims for tortious interference with prospective economic advantage and civil conspiracy. The plaintiffs, shareholders of defendant Palantir Technologies, Inc., initiated this action alleging that Palantir’s officers misappropriated information regarding the proposed sale of the plaintiffs’ shares to an asset management firm. According to the plaintiffs, Palantir directed its broker, defendant Disruptive Technology Advisors LLC, to offer the asset management firm the opportunity to buy the shares directly from Palantir. The plaintiffs alleged that, as a result, Palantir’s stock price declined and they were unable to sell their shares at a comparable price.

In their motions to dismiss, the defendants advanced three arguments: (1) California law governed the claim for tortious interference with prospective economic advantage and civil conspiracy; (2) under California law, the plaintiffs failed to state a claim for tortious interference with prospective economic advantage because plaintiffs did not plead that the defendants’ conduct was wrongful; and (3) without a proper tortious interference claim, the plaintiffs failed to state a claim for civil conspiracy.

Ultimately, the Court rejected the defendants’ arguments. Judge Davis noted that Delaware and California law conflict regarding the “wrongfulness” element necessary to establish a claim for tortious interference. However, the Court determined that a choice of law analysis was unnecessary at the motion to dismiss stage because the plaintiffs pled a viable cause of action under either Delaware or California law. As a result, Judge Davis also determined that the plaintiffs pled a viable claim for civil conspiracy.

Analysis: In deciding motions to dismiss, the Court accepts all well-pled factual allegations as true and only dismisses a case where the plaintiff would not be entitled to recover under any reasonably conceivable set of circumstances. See Central Mortg. Co. v. Morgan Stanley Mort. Capital Holdings LLC, 27 A.3d 531, 536 (Del. 2011). Based on this pleading standard, Judge Davis allowed the plaintiffs’ claims to stand. However, he encouraged the parties “to develop admissible facts supporting the choice-of-law analysis in the event the matter comes before the Court in a future motion or before trial.” KT4 Partners, 2018 WL 4033767, at C.A. No. N17C-05-020-PRW-CCLD, *6. This decision highlights that a choice of law analysis can be undertaken later in cases once the Court has sufficient record evidence to make a determination.

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