IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
`ROCKET LAWYER INCORPORATED,
`by and through the members of the
`Special Committee,
`Plaintiff,
`v.
`CHARLES L. MOORE and ACENDI
`INTERACTIVE COMPANY, LLC,
`Defendants.
`)
`)
`)
`)
`)
`)
`)
`)
`)
`)
`)
`)
`C.A. No. 2025-
`PLAINTIFF’S MOTION FOR ENTRY OF A STATUS QUO ORDER
`Rocket Lawyer Incorporated (the “Company”), a Delaware corporation, by
`and through the members of the Special Committee (the “Special Committee”),
`composed of David Drummond, David Flannery, Brendan Renehan, and Issac
`Vaughn (“Special Committee Members”), of the Company’s Board of Directors (the
`“Board”), hereby moves the Court for an order to maintain the status quo pending
`resolution of its action, under 8 Del. C. § 225, to confirm the removal of Charles L.
`Moore as Chief Executive Officer of the Company. The grounds for this motion are
`as follows and are supported by the Company’s Verified Complaint (the
`“Complaint”):
`PUBLIC VERSION
`FILED
`0202-SEM
`May 23, 2025
`EFiled: May 23 2025 04:00PM EDT
`Transaction ID 76333100
`Case No. 2025-0202-SEM
`
`
`
`
`
`
`
`2
`BACKGROUND
`1. Moore caused the Company to pay to the lawyers
`representing him in his divorce over a four-year period (the “Personal Divorce
`Expenses”). Compl. ¶¶ 5, 24, 120, 186. No contract, bylaw, or other source entitled
`him to have the Company bear these personal expenses. Worse, he actively
`concealed the payments from the Board all the while. Id. ¶¶ 80, 97, 185. This self-
`dealing was a breach of his fiduciary duties to the Company and its stockholders in
`his capacities as CEO and director.
`2. For years, Moore deflected to bring the Personal
`Divorce Expenses to the Board’s attention. Id. ¶¶ 7–8, 65–68, 76–77, 107–11. He
`Id. ¶¶ 69–73. He was right.
`3. After Moore’s misuse of Company funds was brought to the Board’s
`attention in June 2024, id. ¶¶ 115–18, Moore and his controlled-affiliate, defendant
`Acendi Interactive Company, LLC (“Acendi”), compounded the breach by
`removing two independent directors, David Drummond and Issac Vaughn, from the
`Board in an attempt to thwart the formation of a special committee to investigate his
`wrongdoing. Id. ¶¶ 139–40. Moore and Acendi appointed two new directors loyal
`to Moore.
`
`
`
`
`
`
`
`3
`4. An investor, Vista Credit Partners, L.P. (“Vista”),
`. He agreed to
`reinstate Drummond and Vaughn, cooperate with the Special Committee’s
`investigation, and comply with its findings. Id. ¶¶ 178–80. He also agreed to take
`an immediate leave of absence. Id. ¶ 180.
`5. In October 2024, the Special Committee was formed, consisting of
`Drummond and Vaughn, as well as Vista Board designees David Flannery and
`Brendan Renehan. Consistent with the Special Committee’s broad charge to take
`“any action that the Special Committee deem[ed] advisable . . . in connection with”
`Moore’s use of Company funds Id. ¶ 181 & Ex. A. The
`Special Committee retained as its independent counsel Wilson Sonsini Goodrich &
`Rosati, P.C., with a team led by former Vice Chancellor Joseph R. Slights III.
`6. With the assistance of counsel, the Special Committee conducted a
`four-month investigation, that culminated in finding that Moore had breached his
`fiduciary duties as CEO, director, and controlling stockholder in connection with the
`, including the Personal
`Divorce Expenses and on . The
`Special Committee also concluded that the same wrongdoing constituted a breach of
`Moore’s Employment Agreement with the Company. Compl. ¶ 185. The Special
`
`
`
`
`
`
`
`4
`Committee concluded that
` It also concluded that
`.
`7. The Special Committee directed the filing of a lawsuit to rectify
`Moore’s conduct if a settlement could not be reached, which proved to be the case.
`8. On February 21, 2024, the Special Committee executed a unanimous
`written consent (“Special Committee UWC”), effective at 12:30 p.m. ET, which,
`among other items (i) removed Moore as CEO, effective immediately, and (ii)
`terminated his employment for Cause and resolved to extend Moore’s leave of
`absence until the end of his employment term. Id. ¶ 198 & Ex. B.
`9. Later that day, Moore, acting through Acendi, again purported to
`remove Drummond and Vaughn from the Board and elect to the Acendi Board seats
`the same two directors as he had previously purported to replace Drummond
`and Vaughn with at the outset of the Special Committee process. Id. ¶¶ 200–01.
`These changes were obviously intended to thwart the Special Committee from
`carrying out its determinations.
`10. That same day, Moore, through Acendi, filed an action under 8 Del. C.
`§ 225 seeking to confirm the validity of the director removal and election. Id. ¶ 202.
`11. Herewith, the Complaint for: breach of fiduciary duty against Moore
`(Count I); breach of fiduciary duty against Acendi and Moore (Count II); breach of
`
`
`
`
`
`
`
`5
`contract against Moore (Count III); declaratory relief that Moore is validly removed
`as CEO of Rocket Lawyer (Count IV); and declaratory relief related to Moore and
`Acendi’s breaches of fiduciary duty, including that Moore’s employment is validly
`terminated under his employment agreement (Count V). Id. ¶¶ 207–29.
`12. Plaintiff now seeks a status quo order pending resolution of Count IV
`of the Complaint, which seeks relief under Section 225(a) that Moore was validly
`removed as the Company’s CEO and as any other officer of the Company. Through
`this motion for a status quo order, Plaintiff seeks to maintain the status quo
`preventing Moore from exercising control or authority over the Company in his
`purported capacity as CEO (or as any other officer of the Company) and taking any
`other action to prevent the Special Committee from pursuing the above-captioned
`action.
`ARGUMENT
`13. Count IV of the Complaint seeks relief under Section 225(a): a
`determination that the removal of a corporate officer was effective. “A status quo
`order is a practical instrument intended to operate in a practical manner by
`maintain[ing] stability in Section 225 disputes.” Zhou v. Deng, 2022 WL 1617218,
`at *6 (Del. Ch. May 23, 2022). Orders to “preserve the status quo of the company
`until a final determination of [a] controversy” are “fairly typical in § 225
`proceedings.” Gizzio v. Riddel, 2004 WL 117585, at *1 (Del. Ch. Jan. 21, 2004).
`
`
`
`
`
`
`
`6
`Indeed, status quo orders are “customary” in Section 225 actions. Rivera v. Angkor
`Cap. Ltd., 2024 WL 3873050, at *1 (Del. Ch. Aug. 20, 2024); see also Arbitrium
`(Cayman Islands) Handels AG v. Johnson, 1994 WL 586828, at *3 (Del. Ch. Sept.
`23, 1994) (“[I]t has become customary in § 225 actions to put into place, either by
`agreement of the parties or court order, a status quo arrangement that precludes the
`directors presently in control of the corporation from engaging in transactions
`outside the ordinary course of the corporation's business until the control issue is
`resolved.”). This case should be no exception.
`14. The requirements for entry of a status quo order are: “(1) that the order
`will avoid imminent irreparable harm; (2) a reasonable likelihood of success on the
`merits; and (3) that the harm to plaintiffs outweighs the harm to defendants.” Raptor
`Sys., Inc. v. Shepard , 1994 WL 512526, at *2 (Del. Ch. Sept. 12, 1994). The
`Complaint easily satisfies all three elements.
`A. The Company Has Shown Reasonable Likelihood of Success on the
`Merits.
`15. At the outset of litigation, even “plausible” arguments will “suffice[]
`for purposes of” a status quo order. Salamone v. Gorman, 2014 WL 3905598, at *3
`(Del. Ch. July 31, 2014). “The burden of demonstrating a colorable claim is
`minimal.” Ehlen v. Conceptus, Inc. , 2013 WL 2285577, at *2 (Del. Ch. May 24,
`2013). The Court need only conduct “an almost superficial factual assessment” of a
`
`
`
`
`
`
`
`7
`plaintiff’s claims, id., and must accept the complaint’s well-pleaded allegations are
`accepted as true. TCW Techs. Ltd. P’ship v. Intermedia Commc’ns, Inc., 2000 WL
`1478537, at *2 (Del. Ch. Oct. 2, 2000). All that is required is that the claims are
`“non-frivolous.” Reserves Dev. Corp. v. Wilm. Trust Co., 2008 WL 4951057, at *2
`(Del. Ch. Nov. 7, 2008).
`16. The facts alleged in the Complaint easily support a colorable claim for
`the Special Committee’s members to seek a declaration that the Special Committee,
`in the Special Committee UWC, acting on behalf of the Company pursuant to its
`authority to “tak[e] any actions that the Special Committee deems advisable and in
`the best interests of the Company,” removed Moore as CEO (or as any other officer
`of the Company) based on the Special Committee’s conclusion that
` breaches of fiduciary duty detailed in the
`Complaint. The Special Committee UWC was executed by all four members of the
`Special Committee on or before Friday, February 21, 2025, at 12:30 p.m. ET—that
`is, it was executed prior to Moore’s purported removal, through Acendi, of
`Drummond and Vaughn from the Board and therefore also the Special Committee.
`B. The Company Will Face Irreparable Injury Absent A Status Quo
`Order.
`17. Where an injury cannot be adequately compensated by monetary
`damages, irreparable harm exists. ZRII, LLC v. Wellness Acquisition Grp., Inc. ,
`
`
`
`
`
`
`
`8
`2009 WL 2998169, at *13 (Del. Ch. Sept. 21, 2009). Absent a status quo order,
`there is nothing to prevent Moore from denying the validity of his termination and
`continuing to act as he has in the past to the detriment of the Company and its
`stockholders. These are precisely the type of “unauthorized actions [that] could not
`be unwound or remedied” if Plaintiff prevails in this action and would therefore lead
`to irreparable injury. Klaasen v. Allegro Dev. Corp., 2013 WL 5967028, at *3 (Del.
`Ch. Nov. 7, 2013).
`18. Given Moore’s track record of abusing his authority, allowing him to
`continue to wield the power of a corporate officer while this case is litigated will
`cause irreparable harm. He has demonstrated that he cannot be trusted to act as a
`loyal steward of the Company’s resources. He has further demonstrated that he will
`conceal his behavior from the Board and remove directors who threaten to hold him
`accountable.
`C. The Equities Favor Entry of A Status Quo Order.
`19. Courts also consider whether “the equities favor preserving the status
`quo.” Raptor Sys., 1994 WL 512526, at *2. The balance of the equities favors entry
`of the Company’s proposed status quo order. The potential harm to the Company
`described above outweighs any harm that may come from the entry of a status quo
`order.
`
`
`
`
`
`
`
`9
`20. Moore is in no position to argue otherwise. He agreed to abide by the
`Special Committee’s determination, which is that he breached his fiduciary duties
` Additionally, Moore has been on leave from the
`Company since October 15, 2024. Thus, the status quo for months has been that he
`has not been acting as an officer of the Company; there is no reason for that to change
`now that he has been removed as CEO.
`21. Finally, the plaintiff has moved for expedited proceedings in
`connection with its Section 225 claim. For that reason, any potential hardship to
`Moore from entry of a status quo order in these limited circumstances is minimal
`given the short period of time before this matter will be adjudicated on the merits.
`CONCLUSION
`22. For the reasons stated above, the Company respectfully requests that
`the Court enter its proposed status quo order.
`
`
`
`
`
`
`
`10
`Dated: February 24, 2025 WILSON SONSINI GOODRICH
`& ROSATI, P.C.
`/s/ Andrew D. Cordo
`Brad D. Sorrels (#5233)
`Andrew D. Cordo (#4534)
`Leah E. León (#6536)
`Jacqueline G. Conner (#7181)
`222 Delaware Avenue, Suite 800
`Wilmington, DE 19801
`(302) 304-7600
`bsorrels@wsgr.com
`acordo@wsgr.com
`leah.leon@wsgr.com
`jconner@wsgr.com
`Attorneys for Rocket Lawyer
`Incorporated and the members of the
`Special Committee
`Words: 1,921 of 3,000
`
`
`
`
`
`
`
`