May 31, 2012
Another Delaware NDA Case: Private Equity Buyers
Thanks to this Kaye Scholer memo, we have news of another Delaware confidentiality agreement-related case in recent days, RAA Management LLC v. Savage Sports Holdings – first one was Martin Marietta Materials – where the Delaware Supreme Court affirmed enforceability of non-reliance and waiver provisions in a non-disclosure agreement to bar claims by a would-be buyer of a business based on alleged fraudulently omitted or misstated information in due diligence.
And here’s some analysis from John Grossbauer of Potter Anderson:
Recently, the Delaware Supreme Court affirmed the Superior Court’s dismissal of a complaint brought by RAA Management, LLC against Savage Sports Holdings. RAA, once a potential bidder for Savage, alleged that Savage fraudulently misled RAA into incurring $1.2 million in due diligence and negotiation costs by falsely claiming at the outset of discussions that there were “no significant unrecorded liabilities or claims against Savage.”
The Court held that non-reliance disclaimer language in the non-disclosure agreement executed by the parties prevented RAA from bringing such claims. Although the Court decided the matter under New York law, it confirmed that the results would be the same under Delaware law. A key point is that the Court rejected the attempt to read some disclosure obligation into an NDA that expressly disclaimed any reliance on anything other than final agreement representations.