EFiled: Oct 24 2012 08:04PMjD^" Transaction ID 47317681 Case No.

7717-VCG IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE LAUREN GLASSMAN, Plaintiff/ Counterclaim Defendant, C A . No. 7717-VCG CROSSFIT, INC., a Delaware corporation, and GREG GLASSMAN, Defendants/ Counterclaim Plaintiffs DEFENDANTS' MOTION TO QUASH AND FOR A PROTECTIVE ORDER TO PRECLUDE THE PRODUCTION OF DOCUMENTS BY, AND DEPOSITIONS OF, THL CREDIT ADVISORS LLC AND LEVEL EQUITY MANAGEMENT LLC Defendants CrossFit, Inc. ("CrossFit" or the "Company") and Greg Glassman ("Mr. Glassman," and with CrossFit, the "Defendants") hereby move, pursuant to Court of Chancery Rules 26 and 45, for a protective order to quash the subpoenas duces tecum and ad testificandum served by Plaintiff Lauren Glassman on non-parties THL Credit Advisors LLC ("THL Credit") and Level Equity Management LLC ("Level Equity," and, together with THL Credit, the "Lenders"). In support of their motion, Defendants state as follows: INTRODUCTION L On October 10, 2012, Plaintiff caused subpoenas duces tecum and ad

testificandum (the "Subpoenas," attached hereto as Exhibit A) to be served on THL Credit and Level Equity, both Delaware corporations, through their respective registered agents. The Subpoenas seek to compel the production of documents that Defendants

provided to the Lenders in connection with the Lenders' considerations of whether to finance Mr. Glassman's proposed purchase of Plaintiff s shares of the Company, and depositions of the Lenders on topics related to those documents. 2. Plaintiff has attempted to gain access to this information from three

different sources in two different lawsuits. First, she served document requests on the Defendants in this litigation, seeking all documents they had provided to any person contacted for the purpose of providing financing for Mr. Glassman's proposed purchase of Plaintiff s shares. Then she requested the same documents in the Arizona divorce proceedings (the "Divorce Action"). And finally, notwithstanding the fact that Plaintiff filed a still-pending motion to compel (the "Motion to Compel," [Dkt. #96]) to resolve Defendants' objections to her demands in this case, Plaintiff then issued the Subpoenas to the Lenders seeking the exact same documents. 3. To be clear, there is absolutely no difference between the scope of

Plaintiffs document requests to Defendants in this action and the scope of the Subpoenas. The requests to Defendants call for: "All documents provided to any Person that was contacted for the purpose of providing financing in connection with the acquisition of Plaintiff s interest in CrossFit, including but not limited to THL Credit Advisors LLC and Level Equity Management, LLC," and "all documents relating to any nondisclosure or confidentiality arrangement agreed to by you and any Person identified in Request No. 1." See Exhibit B (Plaintiffs Second Request for Production of Documents). And the Subpoenas call for: "All documents provided to you by [Defendants] for the purpose of your providing financing, or your consideration of

whether to provide financing, to [Defendants]" and "all documents relating to any nondisclosure or confidentiality arrangement discussed or agreed to by you and [Defendants].'' See Exhibit A. 4. Accordingly, the Subpoenas are a transparent attempt to make an end-run

around both Defendants' objection to the production of such documents and the motion before the Court. There is absolutely no legitimate reason to burden the non-party Lenders when Plaintiff can obtain the documents sought from Defendants - if the Court determines that they are the proper subject of discovery. 5. Not only are Plaintiffs demands improperly directed at non-parties but, as

discussed in Defendants' Opposition to Plaintiffs Motion to Compel, there is no justification for taking this discovery in the first place. It is absolutely irrelevant to Plaintiffs claims and defenses in this action. Rather, Plaintiff is plainly attempting to advance her position in the Arizona divorce proceedings. Mr. Glassman has tendered a formal offer in that matter to acquire Plaintiffs interest in CrossFit for the exact same after-tax price that Anthos Capital, L.P. has offered her, and the Subpoenas are an effort to undermine his ability to obtain the funds necessary to do so by harassing his potential lenders. Ms. Glassman may also believe that she will uncover information that will allow her to question Mr. Glassman's ability to satisfy his tender offer. Regardless of whether the Subpoenas were intended solely for their in terrorem effect or also as a fishing expedition for discovery that may (or may not) be relevant in the Divorce Action, Plaintiff should not be allowed to invoke this Court's authority for such improper purposes.

6. quashed.

For these reasons and as articulated below, the Subpoenas should be

PROCEDURAL HISTORY 7. As this Court is aware, the above-captioned action is only one of two

actions pending between Plaintiff Lauren Glassman and Defendant Greg Glassman. Mr. and Ms. Glassman are also parties to the previously-filed Divorce Action pending in the Superior Court of Arizona, Yavapai County. In connection with the broader question of how to divide assets held as community property, Ms. Glassman has sought approval in the Divorce Action of the purported sale of her interest in CrossFit to Anthos Capital, L.P. ("Anthos"). 8. As part of his response to Ms. Glassman's request in the Divorce Action for

approval of the sale to Anthos, Mr. Glassman has proposed to match the legal and financial terms of the Anthos offer, such that the Court could keep ownership of CrossFit undivided without working hardship on either party. On September 6,2012, Mr. Glassman's divorce counsel sent a letter to Plaintiffs divorce counsel, indicating that Mr. Glassman intended to pay Ms. Glassman $16,092,000 - the after-tax equivalent of Anthos' offer - for her shares. See Exhibit C (September 6,2012 letter from H. Brown to J. Sparks and C. Hamilton). Shortly thereafter, on September 19, 2012, Mr. Glassman submitted a Notice of Tender and Motion to Approve Sale of Stock in CrossFit, Inc. From Petitioner to Respondent ("Motion to Approve Sale") to the Arizona court. See Exhibit D (Motion to Approve Sale). The Motion to Approve Sale seeks a ruling from the Arizona divorce court allowing Mr. Glassman to match the financial and legal terms

of Anthos' offer to acquire Plaintiffs interest in the Company, and indicates that multiple lenders have made commitments sufficient to support a cash payment equal to that offer. 9, During an October 3, 2012 hearing in the Arizona proceeding, Mr.

Glassman's counsel confirmed that Mr. Glassman was committed to obtaining financing for a $16 million loan on or before November 15th to purchase Plaintiffs shares. See Exhibit E, Oct. 3 Tr. at 28:25-29:13. Plaintiff conceded that the monetary and legal terms of Mr. Glassman's offer were equal to the Anthos offer, and satisfactory to her, yet expressed reservations about Mr. Glassman's ability to raise those funds. See id. at 45:20-46:1. The Arizona court indicated that it would take the matter under advisement and that Mr. Glassman should continue to move to secure the funding. See id. at 46:1922; 56:7-11. 10. Whether out of fear of litigation with Anthos if their deal collapses or out of

mere spite for Mr. Glassman, Plaintiff is attempting to undermine Mr. Glassman's efforts to resolve the Divorce Action by engaging in a two-front effort to obtain information regarding Defendants' interactions with the Lenders.' On September 20, 2012, Plaintiff served a Second Request for Production of Documents on Defendants (the "Second Request for Production") in this litigation, seeking the exact same documents that she now seeks through the Subpoenas. Shortly thereafter, Plaintiff requested similar
The Court may wonder why Ms. Glassman does not simply accept Mr. Glassman's economically identical offer, which would eliminate the need for much of the pending litigation. After all, his money is just as green as Anthos'. There are only two plausible explanations: (1) Ms. Glassman fears that doing so will result in a suit by Anthos for breach of their Purchase and Sale Agreement, or (2) Ms. Glassman is simply bound and determined to sell to Anthos to harm Mr. Glassman, because she knows that doing so will destroy the company he has spent his life building. Mr. Glassman is thus in the unusual position of being unable to resolve pending litigation even though he is willing to pay eveiy penny of what Plaintiff is seeking.

information regarding the lending process in the Divorce Action. See Exhibit F (September 25, 2012 letter from C. Hamilton to H. Brown and S. Wolfson). 11. Mr. Glassman's divorce counsel responded to the request in the Divorce

Action and questioned why Plaintiff would need access to such materials, stating "if your client is going to accept the proposal, then it's a simple matter to acknowledge the acceptance and provide a reasonable period of time to complete the transaction. If for any reason Mr. Glassman and/or Cross Fit is not able to fund the transaction . . . then your client has lost nothing since apparently she still has her argument to try and convince the Court to accept the Anthos offer." See Exhibit G (September 25, 2012 letter from R. Schwartz to C. Hamilton). 12. On October 8, 2012, Defendants timely objected to Plaintiffs Second

Request for Production, asserting, among other things, that the documents requested are wholly irrelevant to the claims alleged in Plaintiffs Verified Complaint and Defendants' Counterclaims and not reasonably calculated to lead to the discovery of admissible evidence. On October 10, 2012 - without any attempt whatsoever to meet and confer or otherwise address the substance of Defendants' objections - Plaintiff filed her Motion to Compel. Defendants have responded to Plaintiffs Motion to Compel concurrently with this filing.

Plaintiff filed an initial motion to compel on October 3, 2012, despite the fact that Defendants had indicated to Plaintiffs counsel that they would deliver their final production and objections to the Second Request for Production on October 8, 2012. After receiving Defendants' production and objections to the Second Request for Production on October 8, Plaintiff filed the amended Motion to Compel.

13.

Not content to seek the documents directly from Defendants, the same day

that she filed the Motion to Compel, Plaintiff also served the Subpoenas directly on the Lenders seeking the exact same documents. ARGUMENT 14. Under Court of Chancery Rule 26(c), the Court may "make any order

which justice requires to protect a party or person from annoyance, embarrassment, oppression, or undue burden or expense." Ct. Ch. R. 26(c); see also U.S. Die Casting & Dev. Co. v. Security First Corp., 1995 WL 301414, at *2 (Del. Ch. Apr. 25, 1998) ("[T]he purpose behind protective orders is prohibiting improper discovery requests, outside the proper scope of discovery, through Court intervention."). 15. Likewise, the Court is entitled on its own initiative or pursuant to a motion

under Court of Chancery Rule 26(c) to limit discovery that the Court determines is "unreasonably cumulative or duplicative, or is obtainable from some other source that is more convenient, less burdensome, or less expensive." Ct. Ch. R. 26(b)(1); see also Ct. Ch. R. 45(3)(A)(iii) (empowering the Court to quash or modify a subpoena if it "subjects a person to undue burden"). 16. For the reasons set forth below, Defendants respectfully request that this

Court quash the Subpoenas and issue a protective order prohibiting Plaintiffs improper discovery requests pursuant to Court of Chancery Rules 26 and 45.

A. 17.

The Information Requested Is Irrelevant to the Present Case and Is Being Sought Solely for Use in the Arizona Litigation. As outlined above, Plaintiff has initiated a two-front attack to obtain access

to the information she seeks from the Lenders in the Subpoenas, requesting the information both in the Divorce Action and in this litigation. That information, however, is not relevant to any issue in this case, and Plaintiff is only seeking it for use in connection with the Divorce Action.3 18. Plaintiff claims that the documents sought in the Second Request for

Production (the same information requested in the Subpoenas) are related to Defendants' Counterclaims. She argues that there is a "similarity" between Defendants' actions in seeking financing to purchase Plaintiffs interest and Plaintiffs misuse of confidential Company materials to sell her interest. As explained more fully in Defendants' Opposition to Plaintiffs Motion to Compel, however, there is nothing remotely similar about Defendants' provision of information to the Lenders with the full knowledge and consent of management and Plaintiff s providing such information to Anthos without even advising the Company, let alone obtaining its consent. See Defendants' Opposition to Motion to Compelfflj22-26. 19. To the extent that CrossFit information was provided to the Lenders, it was

provided by the Company with the full knowledge of CrossFit's management, such that

Plaintiffs tactic of using the Delaware litigation for purposes of obtaining discovery in the Divorce Action is clear and was articulated by counsel for her co-conspirator Anthos - at the very outset of this litigation. See Exhibit H (August 10, 2012 email from M. Tanoury to D. Bergeson asking "Might information of wrongdoing discovered from the Delaware action be useful in the Arizona divorce proceeding?")

the Company could decide what information to provide and whether it was necessary given the circumstances to seek confidentiality protections. Plaintiff, however, did not inform the Company that she intended to turn over confidential information to Anthos, did not allow the Company to decide what information could be turned over, did not afford the Company a chance to impose confidentiality obligations that it deemed appropriate, and gave the Company no ability to protect itself against misuse of the information. Rather, she breached her fiduciary duties by secretly turning over confidential information for her own gain, without so much as even informing CrossFit of her intent to do so - let alone requesting its permission. Accordingly, CrossFit's provision of information to the Lenders has no relevance to Defendants' claims that Plaintiff breached her fiduciary duties. Plaintiffs argument that it does is a mere pretext - and a thin one at that - for her attempts to scare off the Lenders and use any information obtained in connection with the Divorce Action. 20. Mr. Classman has committed in the Divorce Action to obtain financing to

purchase Plaintiffs interest in the Company. Plaintiff has a history of repeated attempts to meddle in the Company's business with non-parties - by contacting Cirrus, the manufacturer of the airplane at issue in Plaintiffs complaint, and threatening to disrupt that transaction, and by contacting CrossFit's affiliates and counterparties to press them to support her sale to Anthos. These Subpoenas are simply more of the same. They are designed to intimidate the Lenders and disrupt Mr. Classman's ability to finalize the proposed loans.

21.

Plaintiff may also intend to use the information obtained pursuant to the

Subpoenas to argue in the Divorce Action that Mr. Glassman does not have the resources to complete the proposed tender, as that is the only objection she has raised to the proposed transaction. See Oct. 3 Tr. at 45:20-46:1 ("The Court: Let me ask you a question: Are we talking process at this point? Are we talking value? . . . [A]re you concerned about the amount or are you concerned about his ability to meet the amount by a specific date? Ms. Hamilton: Meet the amount, yeah."). 22. Plaintiffs desire to use this information in the Divorce Action, however,

does not justify her serving subpoenas here, in a litigation in which it has absolutely no relevance. The Court of Chancery has squarely held that its processes should not be used solely for the purposes of gathering discovery for parallel actions. In United Nuclear Corporation v. Energy Conversion Devices, Inc., 1980 WL 272832 (Del. Ch. Aug. 29. 1980), the Court faced a situation much like this one. The plaintiff in that matter sought discovery in a suit in Illinois state court, which the defendants strongly resisted. Plaintiff withdrew a motion to compel that discovery in the Illinois proceeding, and subsequently focused its efforts on obtaining the same discovery against the same defendants through a subsequently-filed litigation in this Court. This court declined to allow the discovery, noting that it was clear "what is really involved here is an attempt by the plaintiff to take discovery in the Delaware action which, for some reason, it does not desire to take in the Illinois action although it intends to use the fruits of the discovery in the Illinois action." Id. at *2. Accordingly, the Court determined that "[fjhe Court in which the controversy is to be tried ought to be the Court which rules on pretrial discovery for reasons of comity

and judicial economy. This Court ought not concern itself with discovery which will be used in another court in another state." Id; see also Berkowitz v. Legal Sea Food, Inc., 1997 WL 153815, at * 3 (Del. Ch. Mar. 20, 1997) (denying discovery relief under 8 Del. C. 220 where plaintiffs "real purpose is to use this proceeding to obtain discovery in his [foreign] action"). 23. The impropriety of Plaintiff seeking discovery here for use in the Divorce

Action is especially clear given that the Arizona court is more than capable of handling a discovery dispute relevant to the matters before it. Formal mechanisms of discovery such as document requests and interrogatories are available to Plaintiff under Arizona family law, and any motion practice regarding whether Plaintiff should have access to those documents can be litigated before the Arizona judge. Accordingly, the Arizona court "ought to be the Court that rules on pretrial discovery." United Nuclear Corp., 1980 WL 272832, at *2. B. The Documents and Deposition Testimony Requested in the Subpoenas are Unreasonably Duplicative and Can Be Obtained More Easily from Another Source - Defendants Even if the Court determined that Plaintiff is entitled to the materials she

24.

seeks for use in this action, the Subpoenas are unnecessary given that the information is otherwise available from Defendants. Given that they are already parties to the action, the discovery request is properly directed to Defendants and not the non-party Lenders. 25. Delaware courts have quashed discovery requests when the information has

already been produced or can be gathered with less burden from other sources. See Dell, Inc. v. Merritt, 2012 WL 3871852, at *1 & n. 2 (Del. Super. Sept. 6, 2012) (granting

Plaintiffs Motion for a Protective Order preventing the deposition of the founder, chairman, and CEO of Dell, Inc. when the defendant failed to demonstrate that the information provided in the deposition would not be "cumulative or duplicative of the information already available through discovery," and that discovery was "obtainable from other sources"). 26. As noted above, Plaintiffs Second Request for Production asks Defendants

to produce the exact documents, and provide the same information, that Plaintiff seeks from the Lenders through the Subpoenas. Indeed Plaintiffs subpoena is facially overboard and unduly burdensome to the extent that it seeks documents from the Lenders that Plaintiff has already sought from Defendants, and which Lenders only have by virtue of receiving them from Defendants. Plaintiffs request to depose the Lenders on the receipt of such documents is overbroad and unduly burdensome for the same reasons. C. The Documents and Deposition Testimony Requested in the Subpoenas are Designed to Harass Both THL Credit and Level Equity, and Defendants. Delaware courts, when examining discovery requests, weigh the need for

27.

the information against the possibility of harassment of the party from which it is sought. See Loretto Literary & Benev. Inst. v. Blue Diamond Coal Co., 1980 WL 268060 (Del. Ch. Oct. 24, 1980), at *4 (noting that "in granting or denying discovery the Court must balance the legitimate need of the parties to discover admissible evidence against the possibility of harassment of the opponent"); see also Wright & Miller, Federal Practice and Procedure, Civil 2036. ("Even very slight inconvenience may be unreasonable if there is no occasion for the inquiry and it cannot benefit the party making it.")

28.

The information requested in the Subpoenas is irrelevant to the Delaware

litigation and can be better obtained from Defendants, and it appears that the Subpoenas were directed at the Lenders in a blatant attempt to burden them as to disrupt their negotiations to provide funding. In other words, they are designed and intended to harass the Lenders, and the Court should therefore issue a protective order to prevent that from happening. CONCLUSION 29. For the foregoing reasons, Defendants respectfully request that the Court

quash the subpoenas directed to THL Credit and Level Equity, and enter a protective order precluding the production of documents from those non-parties and the taking of their depositions. /s/ Raymond J. DiCamillo Raymond J. DiCamillo (#3188) Kevin M. Gallagher (#5337) Richards, Layton & Finger, P.A. 920 North King Street Wilmington, Delaware 19801 (302)651-7700 Attorneys for Defendants CrossFit, Inc. and Greg Classman

OF COUNSEL: Blair G. Connelly William O. Redder Paul Serritella Kyle L. Wallace Latham & Watkins LLP 885 Third Avenue New York, New York 10022 (212)906-1200 Dated: October 24, 2012

CERTIFICATE OF SERVICE I HEREBY CERTIFY that on October 24, 2012, a copy of the foregoing was served by LexisNexis File & Serve on the following attorneys of record:

Philip Trainer, Jr., Esquire Toni-Ann Platia, Esquire 500 Delaware Avenue, 8th Floor P.O. Box 1150 Wilmington, Delaware 19899 Brian C. Ralston, Esquire J. Matthew Belger, Esquire Potter Anderson & Corroon LLP 1313 N. Market Street P.O. Box 951 Wilmington, Delaware 19899 Curtis S. Miller, Esquire Kevin M. Coen, Esquire Morris, Nichols, Arsht & Tunnell LLP 1201 North Market Street Wilmington, Delaware 19801

Is/Kevin M. Gallagher Kevin M. Gallagher (#5337)