IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE THE CHEMOURS COMPANY, ) ) Plaintiff, ) ) v. ) C.A. No. 2019-0351-SG ) DOWDUPONT INC.; CORTEVA, INC.; ) AND E. I. DU PONT DE NEMOURS AND ) COMPANY, ) ) Defendants. ) REPLY BRIEF IN FURTHER SUPPORT OF DEFENDANTS’ MOTION TO DISMISS THE VERIFIED FIRST AMENDED COMPLAINT FOR LACK OF SUBJECT MATTER JURISDICTION Robert S. Saunders (ID No. 3027) Jennifer C. Voss (ID No. 3747) Arthur R. Bookout (ID No. 5409) Jessica R. Kunz (ID No. 5698) SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP One Rodney Square P.O. Box 636 Wilmington, Delaware 19899-0636 Tel.: (302) 651-3000 Attorneys for Defendants DATED: November 13, 2019 TABLE OF CONTENTS PAGE TABLE OF AUTHORITIES .................................................................................... ii PRELIMINARY STATEMENT ............................................................................... 1 STATEMENT OF FACTS ........................................................................................ 4 A. Chemours’ Alleged Fleeting Insolvency. .............................................. 4 B. The Kullman Affidavit. ......................................................................... 7 C. Chemours’ No-Counsel Argument. ...................................................... 8 D. Chemours’ Objection To The Arbitration Location. ............................ 9 ARGUMENT ........................................................................................................... 11 I. THE DELEGATION PROVISION COMPELS DISMISSAL. .................... 11 II. THE SEPARATION AGREEMENT IS A BINDING CONTRACT. .......... 13 A. Chemours Consented To The Separation Agreement. ........................ 14 1. Chemours’ consent is binding under Delaware law. ................ 14 (a) Anadarko. ........................................................................ 15 (b) Chemours’ other extreme arguments. ............................. 19 2. Equity does not favor letting subsidiaries selectively repudiate their contracts. ........................................................... 23 B. Chemours Repeatedly Ratified The Separation Agreement. .............. 26 C. THE DELEGATION PROVISION IS NOT UNCONSCIONABLE. ....................................................................... 31 1. Procedural unconscionability. ................................................... 32 2. Substantive unconscionability. ................................................. 32 CONCLUSION ........................................................................................................ 36 TABLE OF AUTHORITIES CASES PAGE(S) In re AbbVie Inc. Stockholder Derivative Litig., 2015 WL 4464505 (Del. Ch. July, 21, 2015) ................................................ 25 Abex Inc. v. Koll Real Estate Grp., Inc., 1994 WL 728827 (Del. Ch. Dec. 22, 1994) .................................................. 17 Allen v. Riese Org., Inc., 965 N.Y.S.2d 437 (N.Y. App. Div. 2013) ..................................................... 27 Anadarko Petroleum Corp. v. Panhandle E. Corp., 1987 WL 13520 (Del. Ch. July 7, 1987) ....................................................... 25 Anadarko Petroleum Corp. v. Panhandle E. Corp., 1987 WL 16508 (Del. Ch. Sept. 8, 1987), aff’d, 545 A.2d 1171 (Del. 1988) ...................................................... 16, 21, 25 Anadarko Petroleum Corp. v. Panhandle E. Corp., 545 A.2d 1171 (Del. 1988) ....................................................15, 16, 17, 19, 22 Aviall, Inc. v. Ryder System, Inc., 110 F.3d 892 (2d Cir. 1997) ..................................................17, 18, 20, 22, 31 Aviall, Inc. v. Ryder System, Inc., 913 F. Supp. 826 (S.D.N.Y. 1996), aff’d, 110 F.3d 892 (2d Cir. 1997) ............................................... 17, 18, 22, 31 Blackrock Capital Investment Corp. v. Fish, 799 S.E.2d 520 (W. Va. 2017) ...................................................................... 21 C & J Energy Servs., Inc. v. City of Miami Gen. Emps.’ and Sanitation Ret. Tr., 107 A.3d 1049 (Del. 2014) ............................................................................ 25 Camferdam v. Ernst & Young Int’l, Inc., 2004 WL 307292 (S.D.N.Y. Feb. 13, 2004) ................................................. 33 ii Ciro, Inc. v. Gold, 816 F. Supp. 253 (D. Del. 1993) ................................................................... 34 Colon v. Conchetta, Inc., 2017 WL 2572517 (E.D. Pa. June 14, 2017)................................................. 12 Corwin v. DeTrey, 1989 WL 146231 (Del. Ch. Dec. 4, 1989) .................................................... 15 Dervaes v. H.W. Booker Constr. Co., 1980 WL 333053 (Del. Super. Ct. May 28, 1980) ........................................ 20 Eagle Force Holdings, LLC v. Campbell, 187 A.3d 1209 (Del. 2018) ............................................................................ 15 Ellipso, Inc. v. Mann, 541 F. Supp. 2d 365 (D.D.C. 2008) ......................................................... 28, 29 Foss-Hughes Co. v. Norman, 119 A. 854 (Del. Super. Ct. 1923) ........................................................... 28, 29 Frazier v. W. Union Co., 377 F. Supp. 3d 1248 (D. Colo. 2019) .......................................................... 12 FrontFour Capital Grp. LLC v. Taube, 2019 WL 1313408 (Del. Ch. Mar. 11, revised Mar. 22, 2019) ..................... 25 Graham v. State Farm Mut. Auto. Ins. Co., 565 A.2d 908 (Del. 1989) ........................................................................ 24, 26 Highlands Insurance Group, Inc. v. Halliburton Co., 2001 WL 287485 (Del. Ch. Mar. 21, 2001), aff’d, 801 A.2d 10 (Del. 2002) (TABLE) ........................................................ 15 Home Buyers Warranty Corp. v. Jones, 2016 WL 2350103 (D. Del. May 4, 2016) .................................................... 26 Hughes v. Ancestry.com, 580 S.W.3d 42 (Mo. Ct. App. 2019) ....................................................... 12, 13 iii James v. Nat’l Fin., LLC, 132 A.3d 799 (Del. Ch. 2016) ................................................................. 31, 34 Janiga v. Questar Capital Corp., 615 F.3d 735 (7th Cir. 2010) ......................................................................... 20 Kelley v. Thomas Solvent Co., 725 F. Supp. 1446 (W.D. Mich. 1988) .......................................................... 23 Lee Builders, Inc. v. Wells, 92 A.2d 710 (Del. Ch. 1952), rev’d on other grounds, 99 A.2d 620 (Del. 1953) ................................................................................ 33 In re M.M., 2013 WL 1415837 (Del. Ch. Apr. 4, 2013) ................................................... 32 In re Massey Energy Co., 2011 WL 2176479 (Del. Ch. May 31, 2011) ................................................ 23 McGrew v. VCG Holding Corp., 244 F. Supp. 3d 580 (W.D. Ky. 2017), aff’d, 735 F. App’x 210 (6th Cir. 2018) ........................................................ 12 NAMA Holdings, LLC v. Related WMC LLC, 2014 WL 6436647 (Del. Ch. Nov. 17, 2014) ................................................ 24 PacifiCare Health Sys., Inc. v. Book, 538 U.S. 401 (2003)................................................................................. 35, 36 Papaioanu v. Comm’rs of Rehoboth, 186 A.2d 745 (Del. Ch. 1962) ................................................................. 26, 29 In re Paragon Offshore PLC, 588 B.R. 735 (Bankr. D. Del. 2018) ........................................................ 12, 31 In re Pinnacle Land Grp., LLC, 2018 WL 4348051 (Bankr. W.D. Pa. Sept. 10, 2018) ................................... 26 Prairie Capital III, L.P. v. Double E Holding Corp., 132 A.3d 35 (Del. Ch. 2015) ......................................................................... 14 iv Quadrant Structured Products Co. v. Vertin, 102 A.3d 155 (Del. Ch. 2014) ....................................................................... 23 Rent-A-Center, W., Inc. v. Jackson, 561 U.S. 63 (2010)....................................................................... 11, 12, 32, 35 Rohe v. Reliance Training Network, Inc., 2000 WL 1038190 (Del. Ch. July 21, 2000) ................................................. 22 Santich v. VCG Holding Corp., 2017 WL 4251944 (D. Colo. Sept. 26, 2017), report and recommendation adopted in pertinent part, 2018 WL 3968879 (D. Colo. Aug. 20, 2018) ................................................ 12 Standard Gen. L.P. v. Charney, 2017 WL 6498063 (Del. Ch. Dec. 19, 2017), aff’d, 195 A.3d 16 (Del. 2018) ...................................................................... 31 Staples v. Billing, 1994 WL 30548 (Del. Ch. Jan. 31, 1994) ............................................... 26, 27 Stolt-Nielsen S.A. v. AnimalFeeds Int’l Corp., 559 U.S. 662 (2010)....................................................................................... 20 Trenwick Am. Litig. Trust v. Ernst & Young, L.L.P., 906 A.2d 168 (Del. Ch. 2006), aff’d sub nom. Trenwick Am. Litig. Tr. v. Billett, 931 A.2d 438 (Del. 2007) (TABLE) ......... 20 In re Tronox, Inc., 503 B.R. 239 (Bankr. S.D.N.Y. 2013) .......................................................... 23 Trounstine v. Remington Rand, 194 A. 95 (Del. Ch. 1937) ............................................................................. 24 Tulowitzki v. Atl. Richfield Co., 396 A.2d 956 (Del. 1978) .............................................................................. 32 In re Tyson Foods, Inc. Consol. S’holder Litig., 919 A.2d 563 (Del. Ch. 2007) ....................................................................... 15 v