TPLF disclosure proposals are introduced in state legislatures

February 13, 2023 / 28 min read

Third-party litigation funding (TPLF) issues will continue to present challenges on several fronts in the new year. With 2023 settling in, one area of continued interest (and debate) concerns the question of whether plaintiffs should be required to disclose information regarding the existence of third-party funding -- or the actual TPLF agreement itself – to the defendant (and potentially other parties) as part of claims litigation. On this question, new TPLF disclosure bills have recently been introduced in Kansas, Mississippi, and Montana. The Mississippi proposal was introduced as a stand-alone bill, while Kansas’s proposal is included as part of proposed changes to existing discovery provisions. Montana’s proposed TPLF disclosure provision is part of a wider set of proposals aimed at regulating several different aspects of TPLF practice in general. As outlined more fully below, a common feature in each bill is a provision which would require automatic disclosure of the TPLF agreement without a formal discovery request, unless otherwise stipulated or ordered by the court.

tplf-disclosure

This article provides a general overview of these proposed TPLF disclosure bills in order of their introduction,^[1] as well as, a general overview of larger TPLF disclosure issues, as follows:

Mississippi proposal – House Bill 1193

On January 16, 2023, Mississippi House Bill 1193 was introduced in the Mississippi House of Representatives. This bill, titled Litigation funding by third parties; require all parties liable for costs, would, if enacted as currently drafted, require plaintiffs to produce the TPLF agreement without a formal discovery request, unless otherwise stipulated or ordered by the court. On this point, Mississippi House Bill 1193 proposes that “[e]xcept as otherwise stipulated or ordered by the court, a party shall, without awaiting a discovery request, provide to the other parties any agreement under which any person, other than an attorney permitted to charge a contingent fee representing a party, has a right to receive compensation that is contingent on and sourced from any proceeds of the civil action, by settlement, judgment or otherwise.”^[2]

Further, the bill proposes that a third-party funder could be liable for costs or monetary sanctions. In this regard, Mississippi House Bill 1193 proposes that “[a]ny person, other than an attorney permitted to charge a contingent fee representing a party, that has a right to receive compensation that is contingent on and sourced from any proceeds of that civil action, by settlement, judgment or otherwise, is jointly liable for costs assessed pursuant to the Mississippi Rules of Civil Procedure, and amendments thereto, or any monetary sanction imposed pursuant to the Mississippi Rules of Civil Procedure, and amendments thereto, on the party with whom such person has such an agreement.”^[3]

Kansas proposal – Senate Bill No. 74

On January 20, 2023, a similar TPLF disclosure bill was introduced in the Kansas state Senate as part of Kansas Senate Bill No. 74 which proposes various amendments to existing statutes regarding general discovery matters.^[4]

Regarding TPLF, one of these proposed amendments would, if enacted as currently drafted, require production of a TPLF agreement without a formal discovery request, unless otherwise stipulated or ordered by the court. More specifically, Section (3)(B) as contained in Kansas Senate Bill No. 74 proposes as follows: “Third-party agreements. Except as otherwise stipulated or ordered by the court, a party shall, without awaiting a discovery request, provide to the other parties any agreement under which any person, other than an attorney permitted to charge a contingent fee representing a party, has a right to receive compensation that is contingent on and sourced from any proceeds of the civil action, by settlement, judgment or otherwise.”

In addition, like the Mississippi bill, Kansas Senate Bill No. 74 contains a proposal which would also make a third-party funder jointly liable for costs or monetary sections in certain situations per Kansas law. Specifically, the bill proposes the following: “Any person, other than an attorney permitted to charge a contingent fee representing a party, that has a right to receive compensation that is contingent on and sourced from any proceeds of that civil action, by settlement, judgment or otherwise, is jointly liable for costs assessed pursuant to K.S.A. 60-2002, and amendments thereto, or any monetary sanction imposed pursuant to K.S.A. 60-211(c), 60-226(f)(3) or 60-237(d)(3), and amendments thereto, on the party with whom such person has such an agreement.”

Montana proposal – Senate Bill No. 269

On February 3, 2023, Montana Senate Bill No. 269 was introduced into the Montana state Senate which contains, in part, a TPLF disclosure provision.^[5] As noted above, the Montana bill also contains a wide range of proposals aimed at addressing various aspects of TPLF practices from a consumer protection and regulatory standpoint. While a breakdown of these other proposals is beyond this article’s scope, it is noted, in general, that some of the consumer protection and regulatory proposals in Montana Senate No. Bill 269 are similar to those contained in Illinois’s recently enacted Consumer Litigation Funding Act.

Focusing on TPLF disclosure, Section 6 of Montana Senate Bill No. 269 is titled “Disclosure and discovery of litigation financing contracts” which proposes, in full, as follows:

(1) Except as otherwise stipulated or ordered by a court of competent jurisdiction, a consumer or the consumer's legal representative shall, without awaiting a discovery request, disclose and deliver to the following persons the litigation financing contract: (a) each party to the civil action, administrative proceeding, claim, or cause of action, or to each party's legal representative; (b) the court, agency, or tribunal in which the civil action, administrative proceeding, claim, or cause of action may be pending; and (c) any known person, including an insurer, with a preexisting contractual obligation to indemnify or defend a party to the civil action, administrative proceeding, claim, or cause of action.

(2) The disclosure obligation under subsection (1) exists regardless of whether a civil action or an administrative proceeding has commenced.

(3) The disclosure obligation under subsection (1) is a continuing obligation, and within 30 days of entering into a litigation financing contract or amending an existing litigation financing contract, the consumer or the consumer's legal representative shall disclose and deliver any new or amended litigation financing contracts.

(4) The existence of the litigation financing contract and all participants or parties to a litigation financing contract are permissible subjects of discovery in any civil action, administrative proceeding, claim, or cause of action to which litigation financing is provided under the litigation financing contract, regardless of whether a civil action or an administrative proceeding has commenced

Similar to the Kansas and Mississippi bills, the Montana proposal would also require automatic disclosure of the TPLF agreement without a formal request, unless otherwise stipulated or ordered by the court. Outside of this, the Montana proposals contains some other interesting items. For example, the Montana bill can be viewed as more specific in terms of to whom the agreement must be provided stating that the disclosure must be made to “each party to the civil action, administrative proceeding, claim, or cause of action, or to each party’s legal representative.”^[6]In addition, the bill proposes that disclosure must also be made to an insurer. On this point, as noted above Section 6 (1)(c)proposes that disclosure must be furnished to “any known person, including an insurer, with a preexisting contractual obligation to indemnify or defend a party to the civil action, administrative proceeding, claim, or cause of action.”^[7] Montana Senate Bill No. 269 also requires disclosure to the court^[8]and specifies that the disclosure requirement “exists regardless of whether a civil action or administrative proceeding has commenced”^[9]and places a continuing disclosure obligation.^[10] Another interesting provision, as noted above, is the proposal which provides that “existence of the litigation financing contract and all participants or parties to [the contract] are permissible subjects of discovery … regardless of whether a civil action or an administrative proceeding has commenced.”^[11]

TPLF disclosure – general considerations

In the bigger picture, Mississippi House Bill 1193 and Kansas Senate Bill No. 74, in particular, are very similar to TPLF disclosure statutes enacted by West Virginia and Wisconsin a few years ago^.[12]Going forward, it will be interesting to monitor the progress of the Kansas, Mississippi, and Montana bills to see if they will ultimately become law, and whether other states will introduce similar TPLF disclosure proposals in the coming months as many state legislatures head into session. Of note, Illinois’s recently enacted Consumer Litigation Funding Act, which regulates several different aspects of TPLF practices, does not address TPLF disclosure.

Turning our focus to TPLF disclosure at the federal level, there has been on-going efforts to amend Fed. R. Civ. P. 26(a)(1)(A) to include a TPLF disclosure requirement. Very generally, this effort, which has been largely spearheaded by the United States Chamber Institute for Legal Reform, seeks to amend Rule 26 by adding a new subsection (v) to Rule 26(a)(1)(A) to require automatic disclosure in all civil cases as follows: “[A]ny agreement under which any person, other than attorney permitted to charge a contingent fee representing a party, has a right to receive compensation that is contingent on, and sourced from, any proceeds of the civil action, by settlement, judgment or otherwise.”^[13] While a complete examination into these efforts is beyond the scope of this article, it is noted that, to date, the Federal Advisory Committee on Civil Rules has not taken any steps toward implementing a TPLF disclosure provision as part of the Federal Rules of Civil Procedure. For a more detailed overview of these efforts, please see the author’s recent article.

While efforts to amend the federal discovery rules continue, some federal courts have promulgated their own “local” TPLF disclosure rules.^[14] Notably, however, none of these local rules require the production of the litigation funding agreement itself.^[15]Further, these rules have reportedly focused more on TPLF disclosure for the purposes of helping courts assess potential judicial recusal or disqualification issues,^[16]rather than providing defendants with third-party funding information as part of litigation discovery. Two noted exceptions are the United States District Courts for the Northern District of California and New Jersey as these two courts have promulgated local rules aimed more at providing defendants with TPLF information. For example, in 2017 the U.S.D.C. for the Northern District of California reportedly became the first U.S. court to institute a standing order requiring disclosure of TPLF information in class actions.^[17] In general, this rule requires plaintiffs to file a “Certification of Interested Entities or Persons” disclosing certain information regarding third-party funding and imparts a continuing duty to supplement this certification during the pendency of the case as more fully outlined in the endnote to this sentence.^[18]

In June 2021, the United States District Court for New Jersey issued local civil rule, N.J. Civ. Rule 7.1.1 (June 21, 2021) which is also geared toward providing defendants with information regarding the existence of third-party funding. New Jersey’s local rule states, in general, that all parties (including intervening parties) must file a “statement” disclosing certain information where “any person or entity that is not a party and is providing funding for some or all if the attorneys’ fees and expenses for litigation on non-recourse basis in exchange for (1) a contingent financial interest based on upon the results of the litigation or (2) a non-monetary result that is not in the nature of a personal or bank loan.”^[19]In this situation, the following information must be disclosed: “(1) the identity of the funder(s), including name, address, and if a legal entity, its place of formation; (2) whether the funder’s approval is necessary for litigation decisions or settlement decisions in the action and [if so], the nature of the terms and conditions relating to that approval; and (3) a brief description of the nature of the financial interest.”^[20] In addition, under Rule 7.1.1 parties “may seek additional discovery of the terms of any such agreement upon a showing of good cause that the non-party has authority to make material litigation decisions or settlement decisions, the interests of parties or the class (if applicable) are not being promoted or protected, or conflicts of interest exist, or such other disclosure is necessary to any issue in the case.”^[21]

In April 2022 Chief Judge Colm F. Connolly for the United States District Court for the District of Delaware issued a Standing Order regarding TPLF disclosure patterned after N.J. Civ. Rule 7.1.1. This order, titled “Standing Order Regarding Third-Party Litigation Funding Arrangements,” applies to “all cases assigned to Chief Judge Connolly.”^[22]Judge Connolly’s order, the text of which is very similar to N.J. Civ. Rule 7.1.1, requires parties, in general, to disclose certain TPLF information and permits a party to seek additional information in certain situations. Judge Connolly’s order can be viewed in full via the link above.

Of note, the plaintiff in a patent case before Judge Connolly recently filed a Petition for Writ of Mandamus to the United States Court of Appeals, Federal Circuit challenging, in part, Judge Connolly’s Standing Order as reported at In re: Nimitz Technologies LLC, 2022 WL 17494845 (U.S. Court of Appeals, Federal Circuit, December 8, 2022). While a complete examination into this interesting dispute is beyond the scope of the article, very generally, the plaintiff in this case filed a response indicating that it “[had] not entered into any arrangement with a Third-Party Funder, as defined in the Court’s [Standing Order].”^[23]However, upon becoming aware of subsequent information, the court had further questions which resulted in a court hearing and the court requesting additional information.^[24] This then prompted the plaintiff to file a Writ of Mandamus and the U.S. Court of Appeals entering a stay pending further review of the matter.^[25] As part of its Writ of Mandamus, the plaintiff argued that Judge Connolly’s Standing Order “in and of itself constituted an abuse of discretion as it has no basis in the Patent Act or the Federal Rules of Civil Procedure.”^[26]Further, the plaintiff argued that the court’s requests for additional documents would force it to disclose confidential information and materials protected by the work product doctrine.^[27]The U.S. Court of Appeals rejected this challenge finding, in part, that the plaintiff “[had] not shown entitlement to the ‘drastic and extraordinary remedy’ of a writ of mandamus” based on the facts and underlying proceedings,^[28]although it expressed “no view on whether there has been any violation of the particular legal standards that correspond to the concerns recited by the district court or, if so, what remedies … would be appropriate.”^[29]Accordingly, the U.S. Court of Appeals denied the plaintiff’s petition and lifted the stay.^[30]

In another Delaware development, in June 2022 the Delaware State Senate passed Delaware Senate Concurrent Resolution No. 127 titled “Encouraging the Delaware Judiciary to Study Transparency in Third-Party Litigation Funding.”^[31] This resolution, in which the Delaware House of Representatives concurred, “encourages the Delaware Judiciary to study and, if appropriate, recommend revisions to courts’ rules of procedure or statutes, if needed, to implement a disclosure requirement for third-party litigation funding.”^[32] The text of this resolution cites, in part, several items for consideration as part of its call for the Delaware Judiciary to examine the TPLF disclosure, including concerns regarding transparency, possible conflicts of interest, the potential for third-party funders to have direct or indirect control over litigation, and the fact TPLF practices remain largely unregulated at the present time.^[33]This resolution also references Judge Connolly’s order.^[34]

There have also been Congressional efforts toward TPLF disclosure over the past few years. For example, in March 2021 the Litigation Funding Transparency Act of 2021 (LFTA) was reintroduced in the House and Senate.^[35] Similar to previous efforts, these bills proposed, in part, that the identity of the funder and a copy of the funding agreement be disclosed in federal class actions and multi-district litigation (MDL) cases.^[36]The LFTA was not ultimately passed into law as part of the 117^th Congress which concluded on January 3, 2023. As such, the bill will need to be reintroduced into the new Congressional session (the 118th Congress) which is scheduled to convene from January 3, 2023, to January 3, 2025. At this time, it is unknown whether the LFTA will be reintroduced into the new Congressional term.

Questions?

Please do not hesitate to contact the author if you have any questions regarding the above. In the interim, the author will continue to monitor developments on the TPLF front and provide future updates as warranted.

See our other TPLF and social inflation resources!

For additional information, please see our other TPLF articles.

[1] The author notes that this article is not, and is not intended to be, a 50-state survey on state TPLF bills in general, or on the issue of TPLF disclosure.

[2] Mississippi House Bill 1193, Litigation funding by third parties; require all parties liable for costs, 2023 Regular Session, Section 1 (2).

[3] Mississippi House Bill 1193, Litigation funding by third parties; require all parties liable for costs, 2023 Regular Session, Section 1 (1).

[4] On this point, Kansas Senate Bill No. 74 states as follows: “[An Act] concerning the code of civil procedure; relating to litigation funding by third parties; providing for joint liability for costs and sanctions; requiring certain discovery disclosures; payment of certain costs for nonparty subpoenas in third-party funded action; amending K.S.A. 2022 Supp. 60-226 and 60-245 and repealing the existing sections.”

[5] Montana Senate Bill No. 269 is titled:

A BILL FOR AN ACT ENTITLED: "AN ACT ESTABLISHING THE LITIGATION FINANCING TRANSPARENCY AND CONSUMER PROTECTION ACT; REQUIRING THE REGISTRATION OF LITIGATION FINANCERS; ENSURING THE PUBLIC TRANSPARENCY OF PERSONS INVOLVED IN LITIGATION FINANCING ACTIVITIES; ESTABLISHING CONSUMER PROTECTIONS AND REGULATING THE PRACTICE OF LITIGATION FINANCING; ESTABLISHING MINIMUM STANDARDS AND DISCLOSURES FOR LITIGATION FINANCING CONTRACTS; REQUIRING THE DISCLOSURE IN A CIVIL ACTION OF ANY LITIGATION FINANCING TRANSACTION AND LITIGATION FINANCING CONTRACT; CREATING CERTAIN EXEMPTIONS; AUTHORIZING THE SECRETARY OF STATE TO ESTABLISH ADMINISTRATIVE RULES; PROVIDING RULEMAKING AUTHORITY; PROVIDING DEFINITIONS; AND PROVIDING AN IMMEDIATE EFFECTIVE DATE AND AN APPLICABILITY DATE."

[6] Montana Senate Bill, No. 269, Section 6 (1)(a).

[7] Montana Senate Bill, No. 269, Section 6 (1)(c).

[8] Montana Senate Bill, No. 269, Section 6 (1)(b).

[9] Montana Senate Bill, No. 269, Section 6 (2).

[10] Montana Senate Bill, No. 269, Section 6 (3).

[11] Montana Senate Bill, No. 269, Section 6 (3).

[12] Wisconsin’s statute, codified at Wis. Stat. Ann. § 804.01(2)(bg) and West Virginia’s statute, codified at W. Va. Code Ann. § 46A-6N-6, both require production of third-party funding agreements to the defendant without a specific discovery request, unless otherwise stipulated or ordered by the court.

These statutes read as follows:

Wis. Stat. Ann. § 804.01(2)(bg) – “Third party agreements. Except as otherwise stipulated or ordered by the court, a party shall, without awaiting a discovery request, provide to the other parties any agreement under which any person, other than an attorney permitted to charge a contingent fee representing a party, has a right to receive compensation that is contingent on and sourced from any proceeds of the civil action, by settlement, judgment, or otherwise.”

Va. Code Ann. § 46A-6N-6: “Except as otherwise stipulated or ordered by the court, a party shall, without awaiting a discovery request, provide to the other parties any agreement under which any litigation financier, other than an attorney permitted to charge a contingent fee representing a party, has a right to receive compensation that is contingent on and sourced from any proceeds of the civil action, by settlement, judgment, or otherwise.”

[13] See, Federal Advisory Committee on Civil Rules Booklet, October 5, 2021, at 375.

[14] On this point, a well-researched memorandum prepared for the Federal Advisory Committee’s April 2018 meeting noted that, as of late 2017, six U.S. Courts of Appeals 24 out of the 94 federal district courts had formulated local rules requiring identification of litigation funders. Regarding the U.S. Court of Appeals, see, Patrick A. Tighe, Survey of Federal and State Disclosure Rules Regarding Litigation Funding, February 7, 2018, at 210, as contained in the Advisory Committee on Civil Rules Booklet, April 10, 2018. In Appendix A, Mr. Tighe provides the following listing of local circuit court rules regarding disclosure of TPLF finance arrangements, with the scope and type of disclosure varying by circuit: “Third Circuit (3^rd Cir. L.R. 26.1.1(b); Fourth Circuit (4^th Cir. L.R. 26.1(2)(B); Fifth Circuit (5^th Cir. L.R. 28.2.1); Sixth Circuit (6^th Cir. L.R. 26.1(b)(2)); Tenth Circuit (10^th Cir. L.R. 46.1(D)); and Eleventh Circuit (11^th Cir. L.R. 26.1-1(a)(1); 11^th Cir. L.R. 26.1-2(a).” Id. at 220. Regarding the United States District Court, see, Patrick A. Tighe, Survey of Federal and State Disclosure Rules Regarding Litigation Funding, February 7, 2018, at 210, as contained in the Advisory Committee on Civil Rules Booklet, April 10, 2018. In Appendix B, Mr. Tighe provides the following listing of local district court rules regarding disclosure of TPLF finance arrangements, with the scope and type of disclosure varying by district: “Arizona (no local rule, but corporate disclosure statement); C.D. California (C.D. L.R. 7.1-1); N.D. of California (N.D. Cal. L.R. 3-15; Standing Order for All Judges of the N.D. Cal (1/17/2017); M.D. Florida (Interested Persons Order for Civil Cases 6/14/2013, only applies to some judges; no local rule or order applicable to all district court judges); N.D. Georgia (N.D. Ga. L.3.3); S.D. Georgia (S.D. Ga. L.R. 7.1); N.D. Iowa (N.D. Iowa L.R. 7.1); S.D. Iowa (S.D. Iowa L.R. 7.1); Maryland (M.D. L.R. 103.3(b)); E.D. Michigan (E.D. Mich. L.R. 83.4); W.D. Michigan (Form-Corporate Disclosure Statement; No local rule order); Nevada (Nev. L.R. 7.1-1);E.D. North Carolina (E.D. N.C. L.R. 7.3); M.D. North Carolina (Form-Disclosure of Corporate Affiliations; No local rule order); W.D. North Carolina (Form-Entities with a Direct Financial Interest in Litigation Form, No local rule or order); N.D. Ohio (N.D. Ohio L. Civ. R. 3.13(b); Form – Corporate Disclosure Statement); S.D. Ohio (S.D. Ohio L.R. 7.1); E.D. Oklahoma (Form-Corporate Disclosure Statement, No local rule order); N.D. Oklahoma (Form-Corporate Disclosure Statement; No local rule or order); N.D. Texas (N.D. Tex. L.R. 3.1(c), 3.2(c), 7.4, 81.1); W.D. Texas (W.D. Tex. L.R. CV-33); W.D. Virginia (Form-Disclosure of Corporate Affiliations and Other Entities with a Direct Financial Interest in Litigation; No local rule order); and W.D. Wisconsin (Form-Disclosure of Corporate Affiliations and Financial Interest; No local rule or order).” Id. at 223-229.

[15] See, Patrick A. Tighe, Survey of Federal and State Disclosure Rules Regarding Litigation Funding, February 7, 2018, at 209, as contained in the Federal Advisory Committee on Civil Rules Booklet, April 10, 2018,

[16] See, Patrick A. Tighe, Survey of Federal and State Disclosure Rules Regarding Litigation Funding, February 7, 2018, at 209, as contained in the Federal Advisory Committee on Civil Rules Booklet, April 10, 2018, two references cited include Fifth Circuit’s local rule, 5^th Cir. L.R. 28.2.1 at 213, citing, C.D. Cal. L. R. 7.1-1. Id. at 209.

[17] See, Joseph J. Stroble and Laura Welikson, Third-Party Litigation Funding: A Review of Recent Industry Developments, IADC Defense Counsel Journal, April 30, 2020.

[18]

Paragraph 19 of this standing order, referenced as U.S.Dist.Ct.Rules N.D.Cal., Attachment C. Standing Order for All Judges of the Northern District of California--Contents of Joint Case Management Statement, states as follows:

Disclosure of Non-party Interested Entities or Persons: Whether each party has filed the “Certification of Interested Entities or Persons” required by Civil Local Rule 3-15. In addition, each party must restate in the case management statement the contents of its certification by identifying any persons, firms, partnerships, corporations (including parent corporations) or other entities known by the party to have either: (i) a financial interest in the subject matter in controversy or in a party to the proceeding; or (ii) any other kind of interest that could be substantially affected by the outcome of the proceeding.

Local Rule 3-15, cited as U.S.Dist.Ct.Rules N.D. Cal., Civil L.R. 3-15, provides, in part, that “upon making a first appearance in any proceeding in this Court, each party must file with the Clerk a ‘Certification of Interested Entities or Persons’” which “must disclose any persons, associations of persons, firms, partnerships, corporations (including parent corporations), or other entities other than the parties themselves known by the party to have either: (i) a financial interest of any kind in the subject matter in controversy or in a party to the proceeding; or (ii) any other kind of interest that could be substantially affected by the outcome of the proceeding.” Further, this rule provides that “[i]f a party has no disclosure to make pursuant to subparagraph (a)(1), that party must make a certification stating that no such interest is known other than that of the named parties to the action. A party has a continuing duty to supplement its certification if an entity becomes interested within the meaning of section (1) during the pendency of the proceeding.” This rule does not apply to governmental entities or its agencies.

[19] Id.

[20] Id.

[21] Id.

[22] Standing Order Regarding Third-Party Litigation Funding Arrangements, issued by Chief Judge Colm Connolly for the United States District Court for the District of Delaware (April 18, 2022).

[23] In Re: Nimitz Technologies LLC, 2022 WL 17494845, at *1

[24] In Re: Nimitz Technologies LLC, 2022 WL 17494845, at *1.

On this point, the court’s opinion outlines the following information:

In May 2022, in the cases that are the subject of the mandamus petition before us, the district court ordered Nimitz to certify compliance with the above-described standing orders. After Nimitz failed to timely respond, the district court ordered Nimitz to show cause why it should not be held in contempt. Two days later, Nimitz filed an amended disclosure statement identifying Mark Hall as the sole owner and LLC member of Nimitz and a statement representing that Nimitz “has not entered into any arrangement with a Third-Party Funder, as defined in the Court’s Standing Order Regarding Third-Party Litigation Funding Arrangements.” Appx357. The district court thereafter became aware of information, initially from an exhibit in a separate case before it, indicating that an entity called IP Edge LLC was arranging assignments of patents to different LLCs that were plaintiffs in actions filed in the District Court for Delaware and that Mr. Hall seemed, from the email address given to the PTO, to have a connection with IP Edge. ECF No. 42-1 at 15–16, 28–29. The district court ordered Mr. Hall and Nimitz’s counsel, George Pazuniak, to appear at a hearing. See Appx9. At that hearing, which took place on November 4, 2022, Nimitz’s relationship with an entity called Mavexar (among other topics) was explored. Afterwards, on November 10, 2022, the court ordered the production of various documents, including communications and correspondence between (1) Mr. Hall, Mavexar, and IP Edge and (2) Mr. Pazuniak, Mavexar, and IP Edge, relating to, among other things, the formation of Nimitz, Nimitz’s assets, Nimitz’s potential scope of liability resulting from the acquisition of the patent, the settlement or potential settlement of the cases, and the prior evidentiary hearing. The court also asked for monthly bank statements held by Nimitz. In re: Nimitz Technologies LLC, 2022 WL 17494845, at *1-*2.

[25] In Re: Nimitz Technologies LLC, 2022 WL 17494845, at *1

[26] Petition for Writ of Mandamus, United States Court of Appeals for the Federal Court, In re Nimitz Technologies, LLC, November 15, 2022.

[27] In Re: Nimitz Technologies LLC, 2022 WL 17494845, at *2.

Regarding the plaintiff’s arguments, the court’s opinion states as follows:

Nimitz contends that the district court’s November 10, 2022, order would force it to turn over “highly confidential litigation-related information, including materials protected by the attorney client privilege and work-product immunity.” Pet. at 1. The district court, however, has made clear that its order “does not require Nimitz to docket these records or otherwise make them public” and is “free to submit and to publicly file at the time of its production of the records in question an assertion that the records are covered by the attorney-client privilege and/or work product doctrine and a request that for that reason (and perhaps other reasons) the Court maintain the records under seal.” ECF No. 42-1 at 77. Under such circumstances, Nimitz has not shown that mandamus is its only recourse to protect privileged materials. Nor has Nimitz shown a clear right to preclude in camera inspection under these circumstances. In re: Nimitz Technologies LLC, 2022 WL 17494845, at *2.

[28] In Re: Nimitz Technologies LLC, 2022 WL 17494845, at *2.

[29] In Re: Nimitz Technologies LLC, 2022 WL 17494845, at *2.

As part of its ruling, the court stated:

Nimitz makes clear that it is “not ask[ing] th[is] Court to reverse either Standing Order.” Reply at 14. And it is clear that a direct challenge to those standing orders at this juncture would be premature, as Nimitz has not yet been found to violate those orders and will have alternative adequate means to raise such challenges if, and when, such violations are found to occur. While Nimitz asks the court to terminate the district court’s inquiry under the standing orders, it has not shown a “clear and indisputable” right to such relief. Cheney, 542 U.S. at 381 (citation omitted). The district court identified four concerns as the basis for its information demand. All are related to potential legal issues in the case, subject to the “principle of party presentation,” United States v. Sineneng-Smith, 140 S. Ct. 1575, 1579 (2020) (discussing the principle and its limits), or to aspects of proper practice before the court, over which district courts have a range of authority preserved by the Federal Rules of Civil Procedure, see Fed. R. Civ. P. 83(b); Chambers v. NASCO, Inc., 501 U.S. 32 (1991). The district court did not seek information simply in order to serve an interest in public awareness, independent of the adjudicatory and court-functioning interests reflected in the stated concerns. In denying mandamus, we express no view on whether there has been any violation of the particular legal standards that correspond to the concerns recited by the district court or, if so, what remedies (e.g., against Nimitz, its counsel, or others) would be appropriate. In Re: Nimitz Technologies LLC, 2022 WL 17494845, at *2.

[30] In re: Nimitz Technologies LLC, 2022 WL 17494845, at *3.

[31] 2021 Delaware Senate Concurrent Resolution No. 127, Delaware One Hundred Fifty-first General Assembly – Second Regular Session. The resolution’s sponsors are noted as Senators Gay, Townsend, and Hansen; and Representatives Griffith and Lynn. Id. From the author’s review, this resolution was introduced on June 28, 2022, and passed that same day. See, Westlaw “Delaware Bill Tracking” indicating as follows: “Status: 06/28/2002 Introduced in Senate [and] 06/28/2022 Passed by Senate. Votes: 20 Yes 1 Absent.”

[32] 2021 Delaware Senate Concurrent Resolution No. 127, Delaware One Hundred Fifty-first General Assembly – Second Regular Session. On this point, the resolution states as follows: “BE IT RESOLVED by the Senate of the 151st General Assembly, the House of Representatives concurring therein, that the General Assembly encourages the Delaware Judiciary to study and, if appropriate, recommend revisions to courts’ rules of procedure or statutes, if needed, to implement a disclosure requirement for third-party litigation funding.” Id. Further, the resolution states that “[i]n this Senate Concurrent Resolution, the Delaware General Assembly requests that the Delaware Judiciary study and, if appropriate, recommend revisions to courts’ rules of procedure or statutes, if needed, to implement a disclosure requirement for third-party litigation funding.” Id.

[33] 2021 Delaware Senate Concurrent Resolution No. 127, Delaware One Hundred Fifty-first General Assembly – Second Regular Session.

[34] 2021 Delaware Senate Concurrent Resolution No. 127, Delaware One Hundred Fifty-first General Assembly – Second Regular Session.

[35] The Litigation Funding Transparency Act of 2021 was introduced in the House as H.R. 2025 and in the Senate as S. 840 on March 18, 2021, and proposed to amend Chapter 114 of title 28, United States Code. In terms of specifics, the discovery provisions contained in each bill were basically the same outlined as follows: Regarding class action suits, these bills, in pertinent part, proposed: “In any class action, class counsel shall— (1) disclose in writing to the court and all other named parties to the class action the identity of any commercial enterprise, other than a class member or class counsel of record, that has a right to receive payment that is contingent on the receipt of monetary relief in the class action by settlement, judgment, or otherwise; and (2) produce for inspection and copying, except as otherwise stipulated or ordered by the court, any agreement creating the contingent right.” As for MDL actions, these bills, essentially proposed the same disclosure requirements as class actions stating, in pertinent part, as follows: “In any coordinated or consolidated pretrial proceedings conducted pursuant to this section, counsel for a party asserting a claim whose civil action is assigned to or directly filed in the proceedings shall (A) disclose in writing to the court and all other parties the identity of any commercial enterprise, other than the named parties or counsel, that has a right to receive payment that is contingent on the receipt of monetary relief in the civil action by settlement, judgment, or otherwise; and (B) produce for inspection and copying, except as otherwise stipulated or ordered by the court, any agreement creating the contingent right.”

[36] See n. 27.