Imperial Dade Canada Inc. v. Veritiv Operating Company

IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE

IMPERIAL DADE CANADA INC., )
)
Plaintiff, )
)
v. ) C.A. No. 2024-0916-MTZ
)
VERITIV OPERATING COMPANY, )
)
Defendant. )

ORDER GRANTING IN PART AND DENYING IN PART
PLAINTIFF’S MOTION FOR PRELIMINARY INJUNCTION

WHEREAS:

A. On May 2, 2022 (the “Closing Date”), Veritiv Corporation sold its

Canadian subsidiary Veritiv Canada, Inc. (“Veritiv Canada”) to plaintiff Imperial

Dade Canada, Inc. (“Imperial”) pursuant to a stock purchase agreement (the

“SPA”). 1 In SPA Section 8.9(a)(i), Veritiv Corporation’s U.S. subsidiary Veritiv

Operating Company (“Veritiv US”) agreed not to compete in Canada for five years

the “Noncompete”). The Noncompete reads:

For a period of five (5) years immediately following the Closing Date,
[Veritiv US] shall not, and [Veritiv US] shall cause [its] controlled
Affiliates not to, directly or indirectly . . . anywhere within Canada . . .
own, operate, control, manage, or otherwise engage in any business or
activity that competes with the Business . . . . 2

1
D.I. 47 Ex. 1.
2
Id. § 8.9(a)(i).

1
B. The SPA also prohibits Veritiv US from taking “any action that is

intended to circumvent any provision of this Section 8.9(a).” 3

C. The SPA defines “Business” as “the business of distributing food

process and foodservice packaging, shipping and protective packaging, commercial

printing and facility supply products within Canada.” 4

D. Under the SPA, “Affiliate” means,

with respect to any specified Person, any other Person which directly
or indirectly controls, is controlled by or is under common control with
such specified Person. For purposes of this definition, ‘control,’ when
used with respect to any specified Person, means the power to direct or
cause the direction of the management and policies of such Person,
directly or indirectly, whether through ownership of voting securities
or equity or ownership interests or by contract, credit arrangement or
otherwise; and the terms ‘controlling’ and ‘controlled’ have meanings
correlative to the foregoing. 5

E. Veritiv Publishing & Print Management, Inc., d/b/a Bulkley Dunton

(“Bulkley Dunton”) is a controlled Affiliate of Veritiv US. 6

F. Section 8.9(a)(ii) carves out exceptions to the Noncompete. 7 Relevant

here, Section 8.9(a)(ii)(C)(2) permits Veritiv US to

continue to sell packaging products to . . . any current or future
customer of [Veritiv US] based in the United States of America that

3
Id. § 8.9(a)(iv).
4
Id. § 1.1.
5
Id. § 1.1.
6
D.I. 48 Ex. 24 at 8.
7
D.I. 47 Ex. 6 § 3; see also D.I. 47 Ex. 1 § 8.9(a)(ii).

2
requests on its own, without any solicitation, bid, pitch, proposal,
inducement or similar action by [Veritiv US] or any of its controlled
Affiliates, that [Veritiv US] supply packaging products to such U.S.
Customer at such U.S. Customer’s locations in Canada (such current or
future customer, a “U.S. Customer”); provided, that, with respect to
sales of such products at any time during the five (5) years immediately
following the Closing Date, prior to [Veritiv US] accepting or fulfilling
any request for any sale of such products, Seller shall notify the
Company in writing of the storage, handling and delivery terms
applicable to such products (a “Bid Request”) and the customer for
whom such storage, handling and delivery services are being requested
(the “3PL Services”) and Buyer shall be permitted to submit a proposal
to Seller within three (3) Business Days after receipt of the Bid Request
to provide such 3PL Services (a “Bid Response”). If Buyer’s terms for
providing the 3PL Services in the applicable Bid Response are, in the
aggregate, equal to or better than those offered on an arm’s-length basis
by other available third-party providers, [Veritiv US] shall obtain the
3PL Services from Buyer for such customer. 8

G. Imperial asserts Veritiv US violated the Noncompete with respect to

nine Veritiv US or Bulkley Dunton customers. 9 Imperial discovered evidence that

Veritiv US was breaching the Noncompete in January 2024 and began investigating

the possibility of further breaches. 10 It contacted Veritiv US about the issue by

February. 11 On September 3, Imperial filed its complaint, a motion to expedite, and

a motion for a preliminary injunction to enforce the Noncompete with respect to

8
D.I. 47 Ex. 6 § 3; see also D.I. 47 Ex. 1 § 8.9(a)(ii). The other exceptions, which are not
at issue, concern product sales to the “Category 1 Person” and “Category 2 Persons”
specified by the agreement. D.I. 47 Ex. 6 § 3.
9
See generally D.I. 1; D.I. 47 at 13–24.
10
D.I. 1 ¶ 39; see also D.I. 57 at 117–18.
11
See D.I. 49 Ex. 33.

3
what the parties call Customers 1–9 (the “Motion”). 12 I granted expedition, but

denied Imperial’s request to hold a preliminary injunction hearing in forty-five days,

explaining “that the months Plaintiff spent investigating and conferring before

bringing suit, while not undue, betray that Plaintiff is not suffering the sort of

irreparable harm necessary to move this litigation and this Court on that extreme

schedule.” 13 The parties briefed the Motion 14 and offered oral argument on

December 17. 15

H. Veritiv US has admitted competing with some customers in Canada. 16

For others, Veritiv US asserts its sales did not breach the Noncompete either because

Veritiv US itself did not ship the products into Canada, or because its sales complied

with Section 8.9(a)(ii)(C)(2)’sexception to the Noncompete. 17

I. “This Court has broad discretion to grant or deny a preliminary

injunction.” 18 A preliminary injunction “is not granted lightly,” and “the moving

party bears a considerable burden in establishing each of these necessary

12
D.I. 1; D.I. 65 Ex. A. The parties adopted code names for the customers for purposes of
these public proceedings. I have adopted those code names. D.I. 65 Ex. A.
13
D.I. 14.
14
D.I. 47; D.I. 54; D.I. 64.
15
D.I. 83.
16
D.I. 54 at 53–54.
17
D.I. 48 Ex. 14 at 5–6; D.I. 54 at 52–53.
18
Fletcher Int’l, Ltd. v. ION Geophysical Corp., 2010 WL 1223782, at *3 (Del. Ch. Mar.
24, 2010).

4
elements.” 19 To obtain a preliminary injunction, the movant must demonstrate: (i) a

reasonable probability of success on the merits; (ii) a threat of irreparable injury if

an injunction is not granted; and (iii) that the balance of the equities favors the

issuance of an injunction. 20 A party showing a reasonable probability of success

must demonstrate “that it will prove that it is more likely than not entitled to relief.” 21

Irreparable harm is not present if the plaintiff’s injury “is merely speculative or if

the injury can be fully compensated after a full trial on the merits, either by an award

of damages or by any other form of final equitable relief.” 22

J. Restrictive covenants like the Noncompete are enforceable when they

(i) are valid under general principles of law, (ii) are reasonable in their scope and

effect, (iii) bear a reasonable relationship to the advancement of legitimate interests,

and (iv) survive a balancing of the equities. 23 “Generally, covenants not to compete

in the context of a business sale are subject to a ‘less searching’ inquiry than if the

19
Id. at *3 (alterations omitted) (quoting La. Mun. Police Empls.’ Ret. Sys. v. Crawford,
918 A.2d 1172, 1185 (Del. Ch. 2007)).
20
Pell v. Kill, 135 A.3d 764, 783 (Del. Ch. 2016).
21
C & J Energy Servs., Inc. v. City of Miami Gen. Empls.’ & Sanitation Empls.’ Ret. Tr.,
107 A.3d 1049, 1067 (Del. 2014) (quoting Mitchell Lane Publ’rs, Inc. v. Rasemas, 2014
WL 4925150, at *3 (Del. Ch. Sept. 30, 2014)).
22
Cantor Fitzgerald, L.P. v. Cantor, 724 A.2d 571, 586 (Del. Ch. 1998) (footnote omitted).
23
Sunder Energy, LLC v. Jackson, 305 A.3d 723, 746 (Del. Ch. 2023) aff’d in part, rev’d
in part on other grounds, 2024 WL 5052887 (Del. Dec. 10, 2024).

5
covenant ‘had been contained in an employment contract.’” 24 “A non-competition

agreement will only be enforced to protect the legitimate economic interests of the

employer. Interests which the law has recognized as legitimate include protection

of employer goodwill and protection of employer confidential information from

misuse.” 25

IT IS HEREBY ORDERED this 29th day of January, 2025:

1. The Noncompete was validly executed between two businesses in

connection with the sale of a company. 26 Its purpose is “to protect the value and

goodwill of the Business and the substantial investment made by [Imperial].” 27

Imperial purchased goodwill in the Canadian paper and packaging market, and has

a legitimate business interest in protecting that goodwill. The Noncompete’s scope,

as circumscribed by the definition of Business, is properly limited to that market. 28

a. Veritiv US argues the Noncompete is unreasonable and

overbroad because it restricts Veritiv US’s ability to service U.S.-based customers

24
Kodiak Bldg. P’rs, LLC v. Adams, 2022 WL 5240507, at *4 (Del. Ch. Oct. 6, 2022)
(citing Tristate Courier & Carriage, Inc. v. Berryman, 2004 WL 835886, at *10 (Del. Ch.
Apr. 15, 2004)).
25
Rsch. & Trading Corp. v. Pfuhl, 1992 WL 345465, at *12 (Del. Ch. Nov. 18, 1992).
26
See generally D.I. 47 Ex. 1.
27
Id. § 8.9.
28
See id. § 1.1.

6
at their locations in Canada. 29 It contends Veritiv Canada was “only capable of

distributing certain products from one Canadian location to another” and therefore

could not have competed for the business of U.S.-based customers with products

sourced from outside Canada. 30 The record shows this is not so. Referencing a non-

Canadian paper company, Veritiv Canada’s former sales manager stated, “Prior to

the acquisition, I personally dealt with [company] employees located in Boston,

Massachusetts (its corporate headquarters) and in the Netherlands. I personally

negotiated contracts on behalf of Veritiv Canada with [the company’s]

employees.” 31 He further stated, “[M]y colleagues at Veritiv Canada visited [the

company’s] Boston office in 2019 and subsequently met with [company] employees

at other locations outside of Canada for business purposes.” 32 Veritiv US also

produced a spreadsheet titled “Sales by Customers Compressed for Veritiv Canada,”

which indicates that Customer 3, a U.S-based customer, was a Veritiv Canada

customer before the acquisition. 33 This evidence suggests Imperial has a legitimate

29
D.I. 54 at 39, 44–46.
30
Id. at 44–45.
31
D.I. 64, Doucet Aff. ¶ 5.
32
Id.
33
See D.I. 61 Ex. U (listing Customer 3 in row 4697); D.I. 58 Aff.; D.I. 48 Ex. 9 at 10
(identifying Customer 3 as U.S.-based).

7
business interest in Veritiv’s relationships with U.S.-based customers seeking goods

in Canada.

b. And the Noncompete does not prohibit Veritiv US from

distributing products to U.S.-based customers in Canada. Section 8.9(a)(ii)(C)(2)

allows Veritiv US to do so as long as Veritiv US follows certain procedures,

including allowing Imperial to match the 3PL terms those customers requested. 34

This carveout trims the Noncompete’s scope to fit Veritiv Canada’s cross-border

business.

2. Next, Veritiv US argues its sales to Customers 1–8 were permitted

under Section 8.9(a)(ii)(C)(2) as unsolicited sales to U.S-based customers. 35 Section

8.9(a)(ii)(C)(2)’s plain text allows Veritiv US to supply packaging products to a

U.S.-based customer at its Canadian locations as long as the customer requests the

products without solicitation and Veritiv US follows certain procedures. 36 Veritiv

US must notify Imperial of the order’s 3PL terms and allow Imperial to match those

3PL terms. 37 Veritiv US did not provide Imperial notice of the 3PL terms and an

opportunity to bid for any of Customers 1–8. 38 Veritiv contends that for U.S.-based

34
D.I. 47 Ex. 6 § 3.
35
D.I. 54 at 49–54.
36
D.I. 47 Ex. 6 § 3.
37
Id.
38
Certain sales to Customer 1 also fail to qualify for Section 8.9(a)(ii)(C)(2) because
Customer 1 picked up the products in the U.S. D.I. 49 Ex. 59 at 128–29; D.I. 48 Ex. 11.

8
customers who requested packaging products within Canada without soliciting 3PL

Services, Veritiv can supply such products without notifying Imperial as long as

those customers can be served via zero-cost-to-customer direct shipments. 39 Section

8.9(a)(ii)(C)(2)’s plain text makes no such distinction.

3. From there, I consider in turn whether Veritiv US’s sales to each

customer breached the Noncompete. The Motion is GRANTED as to Customer 1.

a. Nine purchase orders dated from July 18, 2022, to May 28, 2024,

show Veritiv US sold packaging products to Customer 1’s Canadian operation.40

For six of those orders, the evidence shows Customer 1’s carrier picked up the

products from Veritiv US in the U.S. before taking the products to Canada. 41 In its

Answer, Veritiv US admits it competed with the Business with respect to Customer

1 while denying wrongdoing. 42

b. Shipments from Veritiv US to Customer 1’s Canadian location

plainly compete with the Business within Canada in violation of the Noncompete.

In such instances, Veritiv US did not supply the products to Customer 1’s Canadian
location as required under the exception. The sales to Customer 7 also fail to qualify
because Customer 7 ordered commercial printing products, not packaging products. D.I.
48 Ex. 17 at PDF Page 13.
39
D.I. 54 at 49–54.
40
D.I. 48 Ex. 11.
41
D.I. 49 Ex. 59 at 128–29; see id. at 2; D.I. 48 Ex. 11; see also D.I. 54 at 30 (“[Customer
1] ordered products from [Customer 1’s] Canadian location but picked those items up from
Veritiv’s U.S. warehouse and took the products into Canada on its own.”).
42
D.I. 16 ¶ 47(c).

9
So does selling packaging products to Customer 1’s Canadian operation, even

though the customer picks up the products in the U.S. to bring them into Canada.

c. Veritiv US’s sales to Customer 1—which have persisted into

2024—threaten irreparable harm to Imperial’s ability to capitalize on the goodwill

it bought when it purchased Veritiv Canada. The market at issue involves fungible,

indistinguishable products, and Imperial is a new entrant. 43 As such, vendor and

customer relationships are crucial to Imperial’s future success,44 and the value of

maintaining those relationships would be difficult to quantify. 45

d. As to the balance of the equities, the preliminary injunction

enforces a heavily negotiated contract between sophisticated parties. Imperial paid

handsomely for Veritiv Canada’s customer base and goodwill. 46 There is no

inequity in holding Veritiv US to its deal.

4. The Motion is DENIED as to Customers 2 and 3.

a. As to Customer 2: two invoices dated August 15, 2022, and

December 7, 2022, show Veritiv US distributed packaging products to Customer 2

43
D.I. 49 Ex. 58 at 27, 76–77.
44
See id. at 31–32 (testifying paper was a new area of Business for Imperial); id. at 36–37
(testifying to the value of long-term vendor-customer relationships); D.I. 49 Ex. 56 at 153–
55 (testifying to the importance of reputation in the paper industry); D.I. 49 Ex. 57 at 163–
65 (testifying to the value of relationships in the business of selling packaging products).
45
See D.I. 49 Ex. 52 at 23.
46
See D.I. 47 Ex. 1 § 2.2.

10
in Canada. 47 In its Answer, Veritiv US admits it competed with the Business with

respect to Customer 2, while denying wrongdoing. 48

b. As to Customer 3: one invoice dated May 10, 2022, shows

Veritiv US distributed packaging products to Customer 3 in Canada. 49 In its Answer,

Veritiv US admits it competed with the Business with respect to Customer 3, while

denying wrongdoing. 50

c. Imperial’s evidence of isolated distributions from 2022 does not

demonstrate irreparable harm on a go-forward basis—the sine qua non of injunctive

relief. 51 Veritiv US has stated it is willing to resolve the issues through “appropriate

remuneration.” 52

5. The Motion is GRANTED as to Customers 4 and 5.

a. Customers 4 and 5 are both U.S.-based customers who placed

orders with Veritiv US, which shipped the products to a different entity in Canada.

b. As to Customer 4: five invoices dated from November 1, 2022,

to September 22, 2023, show Veritiv US sold packaging products to a Customer 4

47
D.I. 48 Ex. 12.
48
D.I. 16 ¶ 47(c).
49
D.I. 48 Ex. 13.
50
D.I. 16 ¶ 47(c).
51
See Kingsbridge Cap. Gp. v. Dunkin’ Donuts Inc., 1989 WL 89449, at *4 (Del. Ch. Aug.
7, 1989); Nebeker v. Berg, 115 A. 310, 311 (Del. Ch. 1921).
52
D.I. 54 at 53–54.

11
entity in New York, but shipped the products to a different Customer 4 entity in

Canada. 53

c. As to Customer 5: seven invoices dated from November 2, 2022,

to August 7, 2024, show Veritiv US sold packaging products to a Customer 5 entity

in New York, but shipped the products to a different Customer 5 entity in Canada. 54

d. Imperial has demonstrated likely success in proving Veritiv US

directly competed with the Business in Canada by shipping packaging products for

Customers 4 and 5 within Canada. Multiple Veritiv US invoices show orders placed

by Customers 4 and 5 that Veritiv US shipped to Canada.

e. Veritiv US contends that Customer 4 and Customer 5, based in

New York, “consigned those Restricted Products to [an entity] located in Lachine,

Canada. Veritiv [US] was not the exporter of the Restricted Products to Canada and

did not import those Restricted Products into Canada.” 55 Indeed, an October 3, 2022,

“Canada Customs Invoice” lists the Customer 5 entity in New York as the purchaser

53
D.I. 48 Ex. 15.
54
D.I. 48 Ex. 16.
55
D.I. 48 Ex. 14 at 5. The entity listed in this interrogatory response appears in the list of
entities for both Customer 4 and Customer 5.
Veritiv US also argues these sales were permitted under Section 8.9(a)(ii)(C)(2).
See D.I. 54 at 53. I have explained above why this is not so.

12
and the Customer 5 entity in Canada as the consignee. 56 It identifies another U.S.

company as the exporter. 57

f. But the customs invoice reflecting consignment also shows

Veritiv US is the vendor and originator of packaging products exported to Canada

from the U.S., and the invoice includes contact information for a Veritiv US

employee and Veritiv’s global trade compliance department. 58 So Veritiv US was

likely involved, at least indirectly, in distributing competing products to Customer 5

within Canada. And numerous other invoices show Veritiv US shipped products to

Customer 5 in Canada, activity that plainly competes with the Business.

g. As to irreparable harm, the sales to Customers 4 and 5 were to

customers whose goodwill Imperial purchased, and they continued into 2023 and

2024. As with the sales to Customer 1, the balance of equities favors enforcing the

Noncompete Veritiv US agreed to.

6. The Motion is GRANTED as to Customer 6.

a. Imperial discovered a “Canada Customs Invoice” dated August

3, 2022, listing Veritiv US as the vendor and originator of packaging products

exported to Canada from the U.S. 59 As with the Customer 5 customs invoice, it

56
D.I. 48 Ex. 17 at PDF page 9.
57
Id.
58
Id.
59
Id. at PDF page 1, 11.

13
includes contact information for a Veritiv US employee and Veritiv’s global trade

compliance department. 60 It lists a Customer 6 entity in Illinois as the purchaser and

a Customer 6 entity in Canada as the consignee. It identifies another U.S. company

as the exporter. 61

b. Veritiv US stated in an interrogatory response that “it Sold

products to . . . [a Customer 6 entity in Illinois] on or about August 3, 2022. [The

Illinois entity] consigned those products to [a Customer 6 entity in Canada]. Veritiv

[US] was not the exporter of the products to Canada and did not import those

products into Canada.” 62 Veritiv US would not produce additional documentation

of the Customer 6 sale because the Illinois entity was not listed in Imperial’s

complaint. 63 As with Customer 5, Veritiv US’s vendor and originator status on the

Customer 6 customs invoice, and the inclusion of contact information for a Veritiv

US employee and Veritiv’s global trade compliance department, tend to show

Veritiv US was likely involved, at least indirectly, in distributing packaging products

to Customer 6 in Canada. Customer 6’s purported “consignment” to Canada does

not dislodge the conclusion that Veritiv US arranged to ship goods to Customer 6 in

60
Id. at PDF page 11.
61
Id.
62
D.I. 48 Ex. 14 at 5.
63
Id.

14
Canada, thereby competing with the Business in Canada. Imperial has demonstrated

a likelihood of success on the merits.

c. While this invoice represents an isolated incident from 2022,

Veritiv US would not produce any additional documentation regarding Customer 6

that could indicate whether similar dealings with Customer 6 have occurred since.

Against that backdrop, the invoice Imperial discovered demonstrates the threat of

irreparable harm on a go-forward basis. The balance of equities also favors granting

a preliminary injunction.

7. The Motion is GRANTED as to Customer 7.

a. An electronic order confirmation dated January 3, 2023, shows

Veritiv US sold and shipped commercial printing products to Customer 7 in

Canada. 64 It includes a product identified as “UFREIGHT” with the description

“VERITIV TO PAY FREIGHT.” 65

b. Imperial discovered this invoice on its own; only then did Veritiv

US address Customer 7 in discovery. 66 Veritiv US stated in an interrogatory

response that its “publishing business sold products on or about January 3, 2023, to

. . . [Customer 7], based upon directed buy business that Veritiv [US]’s publishing

64
D.I. 48 Ex. 17 at PDF Page 13.
65
Id.
66
See id. at PDF Page 1, 13; D.I. 48 Ex. 14 at 6; see also D.I. 16 ¶ 47(g).

15
business has with its customer, [an LLC], that has [a well-known corporation] as one

of its members. [Customer 7] is located in Stouffville, Ontario. [Customer 7] had

the products sold by Veritiv [US] shipped to [an entity] located in Markham,

Ontario.” 67 Veritiv US’s brief presses that the well-known corporation facilitated

the sale and that Customer 7 “ultimately had those products delivered” to the entity

in Canada. 68

c. The preponderance of the evidence establishes a likelihood that

Veritiv US distributed commercial printing products to Customer 7 within Canada

in violation of the Noncompete. Even if the well-known corporation facilitated the

sale, the January 3 invoice indicates Veritiv US shipped the products to Canada and

paid the shipping costs, which constitutes business activity that competes with the

Business.

d. In light of Veritiv US’s failure to respond fully to interrogatories

until Imperial presented evidence bringing those failures to light, I am skeptical that

Veritiv’s breaches of the Noncompete with respect to Customer 7 are limited to one

transaction in early 2023. I therefore find Imperial has demonstrated a risk of

irreparable harm. The balance of equities also favors granting a preliminary

injunction. If this was a one-off transaction, an injunction poses no harm to Veritiv

67
D.I. 48 Ex. 14 at 6.
68
D.I. 54 at 29.

16
US; it merely enforces the Noncompete Veritiv US agreed to. If Veritiv US’s

dealings with Customer 7 are ongoing, the preliminary injunction prevents further

harm to Imperial.

8. The Motion is GRANTED as to Customer 8 for packaging products

shipped to Customer 8 in Canada.

a. A spreadsheet titled “Veritiv - Viper Sales Data” shows sales

made under a Customer 8 account for products shipped to locations in Canada from

May 2022 through September 2024. 69 In response, Veritiv US contends that under

a “U.S. National Supplier and Purchase Agreement” between Veritiv US and

Customer 8, the “items were to be delivered to U.S. locations.” 70 Yet in its Answer,

Veritiv US admits that “since May 2, 2022, [it] has been distributing foodservice

packaging products to [Customer 8] and/or certain affiliated entities . . . in

Canada.” 71 Veritiv US’s brief also “acknowledges that it delivered certain products

for [Customer 8] to . . . locations in Canada” 72 and offers “appropriate

69
D.I. 48 Ex. 18.
70
D.I. 54 at 54 (citing D.I. 59 Ex. S, D.I. 59 Ex. T, and D.I. 61 Ex. Y).
71
D.I. 16 ¶ 37.
72
D.I. 54 at 54 (citing D.I. 48 Ex. 18).

17
remuneration.” 73 In response to an interrogatory, Veritiv US acknowledged its use

of what it called 3PL services for Customer 8. 74

b. Those deliveries constitute activities that compete with the

Business. The spreadsheet bears out Veritiv US’s apparent admissions that it

competed with the Business in Canada with respect to Customer 8. 75 The agreement

under which items “were to be delivered” to the U.S. does not negate the evidence

that the items were delivered to Canada. Veritiv US’s statement that it is willing to

provide remuneration for violations of the Noncompete as to Customer 8 is no

substitute for injunctive relief: its deliveries to Customer 8 in Canada have

continued through 2024, presenting Imperial with the same threat of irreparable

harm presented by Customers 1, 4, 5, 6, and 7. 76 The balance of the equities again

favors holding Veritiv US to its bargain; Imperial paid for Veritiv Canada’s

goodwill, and Veritiv US signed onto that deal.

9. The Motion is GRANTED as to Customer 9.

73
D.I. 54 at 54.
74
D.I. 48 Ex. 9 at 10 (“Veritiv’s sales of Restricted Products to [a specified entity] are the
same as Veritiv’s sales to [Customer 8] as [the specified entity] is [Customer 8’s] last few
miles 3PL provider.”).
75
See D.I. 16 ¶ 37; D.I. 54 at 54 (citing D.I. 48 Ex. 18).
76
See D.I. 48 Ex. 18.

18
a. A spreadsheet shows paperboard products that Bulkley Dunton,

a Veritiv US controlled Affiliate, distributed to Customer 9 in Canada in 2022. 77

Veritiv US also produced a 2023 amendment to a paper supply contract between

Bulkley Dunton and Customer 9. 78 As of November 8, 2024, Bulkley Dunton and

Customer 9 were in the process of negotiating a new paper supply contract. 79 In its

Answer, Veritiv US admits that “[a]fter May 2, 2022, Veritiv Bulkley Dunton has

distributed commercial printing products to its customer [Customer 9] in Montreal,

Canada.” 80

b. Veritiv US argues Bulkley Dunton’s sales to Customer 9 do not

violate the Noncompete because Bulkley Dunton is not a paper goods or packaging

company: in the Veritiv corporate structure, Bulkley Dunton is a publishing

company. Veritiv US argues that because Section 8.9(a)(ii) is silent as to the

publishing business, it does not reach publishing companies that happen to supply

paper goods. 81 But whether Bulkley Dunton is a publishing company is not relevant

to Section 8.9(a)(ii): the Noncompete’s scope is circumscribed by the definition of

“Business,” not the sector in which the company operates.

77
D.I. 48 Ex. 30; see D.I. 49 Ex. 56 at 109; D.I. 49 Ex. 55 at 94–96.
78
D.I. 48 Ex. 31.
79
See D.I. 48 Ex. 32.
80
D.I. 16 ¶ 81.
81
D.I. 54 at 46–49.

19
c. From there, Veritiv US appears to argue a Noncompete including

Bulkley Dunton would be unreasonable: because publishing was not part of Veritiv

Canada’s business, interpreting the definition of “Business” to include Bulkley

Dunton “exceeds the scope of [Imperial’s] legitimate economic interest in what it

purchased.” 82 Not so. The Noncompete defines the competitive space it protects as

the distribution of specified categories of products within Canada. Imperial paid for

that sector of Canadian enterprise regardless of the nature of the competitor. And in

this case, Bulkley Dunton supplies the same products to Customer 9 as Veritiv

Canada distributed to its own customer before the acquisition. 83

d. As for irreparable harm, the evidence presented suggests Bulkley

Dunton will continue to sell to Customer 9 absent injunctive relief. 84 The balance

of equities also favors granting the injunction as to Customer 9. Veritiv US contends

that if a preliminary injunction is entered, “Bulkley Dunton, which was never part

of the Transaction, will have to divest pre-existing business and will be enjoined

from performing its contractual commitments to its long-term customer, [Customer

9], that would result in significant liabilities.” 85 It also contends the harm to

Customer 9—being forced to source its paper products elsewhere—weighs in favor

82
Id. at 48.
83
D.I. 56 at 147–53; D.I. 49 Ex. 55 at 100–01; D.I. 48 Ex. 30.
84
See D.I. 48 Ex. 32.
85
D.I. 54 at 62–63.

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of denying the Motion. 86 While inconvenient and not without consequences for

Bulkley Dunton and Customer 9, such consequences are part and parcel of any

business-sale noncompete in which the seller agrees that it and its controlled

affiliates will cease doing business with pre-existing customers. Bulkley Dunton’s

divestiture of its business with Customer 9 is precisely the purpose of the

Noncompete. Imperial paid for the right to attempt to earn Customer 9’s business

without interference from Veritiv US or its controlled Affiliates.

10. Veritiv US makes three additional arguments against a preliminary

injunction. First, it argues monetary relief would be sufficient to remedy any

breaches after a full trial on the merits. But as explained, Imperial’s lost opportunity

to capitalize on Veritiv Canada’s goodwill in an industry built on customer

relationships, and in which Imperial is a new participant, would be difficult to

quantify.87

11. Second, it argues such relief would be a mandatory injunction and

“would constitute final relief which could not be reversed after a final judgment

because it would require Veritiv [US] to cease doing business with numerous

customers, many of whom it has enjoyed long-standing relationships with that pre-

86
Id. at 63.
87
D.I. 49 Ex. 52 at 23; D.I. 49 Ex. 58 at 31–32, 36–37; D.I. 49 Ex. 56 at 153–155; D.I. 49
Ex. 57 at 163–165.

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date the Transaction.” 88 This argument misunderstands the nature of the relief

sought, which is interim, insofar as it can be lifted if Veritiv US wins at trial, and

prohibitory. The potential harm to Veritiv US’s customer relationships is considered

in the balancing of the equities.

12. Finally, Veritiv US argues the doctrine of laches precludes a finding of

irreparable harm. “Generally, in order to establish a laches defense, a defendant

must show: (1) that the plaintiff had knowledge of a legal claim; (2) that the plaintiff

unreasonably delayed in bringing the claim; and (3) that the defendant has suffered

a resulting prejudice.” 89 Knowledge of the claim is a prerequisite to unreasonable

delay. 90 Prejudice for purposes of laches must be “the result of the [plaintiff’s]

unreasonable delay.” 91 Accordingly, there must be “some change in the condition

or relation of the parties or the property involved in the pending lawsuit.” 92

88
Veritiv US cites Dunkin Donuts, Inc. v. O’Connor, 1994 WL 178142, (Del Ch. Apr. 28,
1994), as a case where this Court denied a preliminary injunction that would have
effectively required the defendant to stop doing business. D.I. 54 at 55–56. But there, a
preliminary injunction would have closed down the defendant’s Dunkin Donuts franchise
“altogether.” 1994 WL 178142, at *2 (Del Ch. Apr. 28, 1994).
89
Fotta v. Morgan, 2016 WL 775032, at *10 (Del. Ch. Feb. 29, 2016).
90
See id. at *12 (“Once the claimants are charged with sufficient knowledge of a potential
claim, the Court must determine if the claimant’s delay was reasonable.”).
91
Id. at *13.
92
Lebanon Cnty. Employees’ Ret. Fund v. Collis, 287 A.3d 1160, 1221 (Del. Ch. 2022)
(citing 2 Donald J. Wolfe, Jr. & Michael A. Pittenger, Corporate and Commercial Practice
in the Delaware Court of Chancery § 15.07[c][4] at 15–18 (2d ed. 2021)).

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a. Veritiv US argues Imperial “has been aware of Bulkley Dunton’s

business with [Customer 9] in Canada since at least 2019.” 93 Veritiv US contends

that five-year delay negates any argument Imperial might make that it will suffer

irreparable harm. 94 This argument is wholly meritless: the earliest a claim for

breach of the Noncompete could have arisen is 2022, when the parties signed the

SPA. And Imperial’s knowledge of Bulkley Dunton’s business with Customer 9 in

2019 does not imply Imperial knew Bulkley Dunton continued distributing

commercial printing products to Customer 9 after the acquisition. Without evidence

to the contrary, it is fair to presume Imperial expected Veritiv US would perform

under the Noncompete and cause Bulkley Dunton to cease its business with

Customer 9 after the acquisition.

b. Veritiv US next argues, “With regard to the other Identified

Customers, [Imperial] claims it first became aware of Veritiv [US]’s business with

[Customer 8] in January 2024, but the record reflects that [Imperial’s] current

president . . . was well-aware of the [Customer 8] business at the time of the

Transaction.” 95 Imperial then “waited more than two years before bringing this to

the fore.” 96 Again, Imperial’s knowledge of Veritiv US’s business with Customer 8

93
D.I. 54 at 59.
94
Id.
95
Id.
96
Id.

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at the time of the acquisition does not show Imperial knew Veritiv US was breaching

the Noncompete. Customer 8 is based in the U.S., 97 so Veritiv US could have done

business with Customer 8 in a manner that respected the Noncompete. 98

c. From there, Veritiv US argues Imperial’s “delay will

significantly prejudice Veritiv [US] and Bulkley Dunton should the preliminary

injunction be granted by disrupting pre-existing business that was never included in

the Transaction.” 99 Veritiv US points to my September order denying

hyperexpedition based on Imperial’s delay. 100 But that order specified Imperial’s

delay was “not undue.” 101 And as explained, Bulkley Dunton’s business was

included in the Transaction insofar as it met the definition of “Business.”

d. Veritiv US has also not demonstrated the kind of prejudice laches

requires. Here, the only prejudice Veritiv US cites is the disruption of Bulkley

Dunton’s pre-existing business with Customer 9. Veritiv US does not point to any

change in condition that worked to its disadvantage. 102

97
See D.I. 48 Ex. 9 at 10.
98
For instance, Veritiv US could have conducted business solely with Customer 8’s U.S.
locations.
99
D.I. 54 at 59.
100
Id. at 60 (citing D.I. 14).
101
D.I. 14.
102
See Collis, 287 A.3d at 1221.

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e. Imperial is entitled to a preliminary injunction enforcing the

Noncompete as to Customers 1 and 4–9.

/s/ Morgan T. Zurn
Vice Chancellor Morgan T. Zurn

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