Recent newspaper stories recount how a billionaire Silicon Valley entrepreneur secretly financed a lawsuit to put Gawker out of business. These news accounts underscore the relevance of a recent state Superior Court case determining a motion to dismiss a lawsuit on the grounds that the plaintiff’s litigation financing agreement with a third party violated Delaware’s prohibition against champerty and maintenance. In Charge Injection Technologies v. E.I. du Pont de Nemours & Co., C.A. No. 07C-12-134-JRJ (Del. Super. March 9, 2016), Delaware Superior Court President Judge Jan R. Jurden denied DuPont’s motion to dismiss on the grounds that the litigation financing agreement at issue did not give the third-party funder any right to direct, control, or settle the claims, nor did the funder have any de facto control over the litigation. Along the way, Jurden held that the financial terms of the agreement were protected from disclosure by the work product doctrine.
The case had a long and contentious history. The complaint, alleging that DuPont wrongfully used and disclosed Charge Injection Technologies’ (CIT) proprietary and confidential information, was filed in 2007. After the case began, CIT entered into a forward purchase agreement (FPA) with Aloe Investments Ltd., pursuant to which Aloe provided financing in exchange for a percentage of any future proceeds of the litigation and obtained a security interest in CIT’s claim as collateral.
