By Jeff Montgomery

Law360 (November 18, 2020, 10:47 PM EST) -- Pandemic risks and oath-taking rules for overseas Chancery Court depositions briefly took center stage Wednesday in a Delaware battle over a collapsed $3 billion SoftBank Group tender offer to WeWork shareholders, with testimony from key witnesses in Japan and China in the balance.

At issue are efforts by attorneys for WeWork founder and former chief executive officer Adam Neumann and We Holdings LLC to secure the sworn testimony of SoftBank CEO and chairman Masayoshi Son as well as individuals in mainland China with ties to ChinaCo, a SoftBank affiliate that figured in the overall deal bust.

SoftBank, a Japan-headquartered, multinational holding company with investments in a range of industries, noted that Son can only be deposed under oath at the U.S. consulate under Japanese law, but the COVID-19 pandemic has made that option unavailable. Neumann's legal team suggested moving the deposition to Taiwan, more than 1,000 miles distant — an idea SoftBank opposed due to Son's age, 63, and increased risk in the current global health crisis.

Similar complications emerged for the testimony in China, where sworn depositions in foreign proceedings are not permitted. Softbank offered as an alternative an affirmation by both Son and those with ties to SoftBank's ChinaCo affiliate to the truthfulness of their statements, an option resisted by the Neuman side and questioned by Chancellor Andre G. Bouchard during a teleconference argument.

"What I want to know, very specifically, is: Will the affirmation be a statement that indicates that the deponent is impressed with the duty to tell the truth, and understand that he or she can be prosecuted for failing to do so?" Chancellor Bouchard asked during a teleconference argument.

SoftBank announced a $3 billion tender offer last year as part of a wider "master transaction agreement" and a $9.5 billion agreement to bail out The We Co. It announced termination of the deal on April 2, with a suit challenging the move filed days later.

Behind the questions on Wednesday were arguments by Neumann and allies that SoftBank orchestrated conditions that it said justified a walkaway from the deal, including what Neumann's camp said are suggestions that ChinaCo's interests potentially benefited from SoftBank's avoidance of the $3 billion WeWork stock purchase.

The case, slated for trial next year, has been complicated by disputes between dueling special committees of WeWork's board, with Neumann backing one special committee seeking to enforce the deal and another special committee of WeWork's SoftBank-controlled board seeking to have the suit dismissed.

Although answers might be in Japan and China, SoftBank argued that concessions might be needed to get testimony on the point, including "affirmations" to truthfulness, or transcripts of depositions, without the formal oath-taking required in U.S. courtrooms.

"I believe that, at least under Chinese law, as I read the submission of the Chinese lawyer, the court reporter would not be administering the affirmation, because administration by the court reporter makes it a foreign proceeding," said Elena C. Norman of Young Conaway Stargatt & Taylor LLP.

Neumann and those aligned with him opposed use of transcribed video interviews of the ChinaCo individuals, who are not parties to the suit, without oaths, but noted that Son is a party witness and along with his counsel is at risk of sanctions for failing to testify truthfully and accurately. They nevertheless said they preferred a sworn deposition — even if it meant a long trip to Taiwan for Son.

"There's a reason for all of this: the sanctity created by an officer of the court asking for the affirmation under penalty of perjury," said Eric Seiler of Friedman Kaplan Seiler & Adelman LLP, counsel to Neumann and We Holdings LLC. He added that the arrangement either meets court requirements for a sworn deposition or not, saying "I don't think the court can change the rule."

The chancellor said he was not yet ready to enter an order clearing the way for the options proposed, noting that "I want to know if we can get the answers that achieve what everyone would like to achieve. If we can't, we'll have to figure out where we are."

Separately on Wednesday, the Neumann interests asked Chancellor Bouchard to compel release of 1,700 records they argued were improperly labeled as privileged.

Shawn J. Rabin of Susman Godfrey LLP, counsel to the Neumann side, said that, among other concerns, his clients want to determine whether or not SoftBank was discussing an outcome where SoftBank's emerging technologies investment fund, Vision Fund, would "gobble up" $1 billion that otherwise would have gone into the WeWork tender offer, in order to compensate Vision Fund for benefits lost when the WeWork deal fell through.

"What we know from the documents we've seen so far is that, not long after the parties signed the MTA [master transaction agreement]," SoftBank started to view the tender offer as a bad investment decision. They didn't want to do it anymore. They concluded that a contractual commitment to buy an additional $3 billion of WeWork stock was, to use their words, 'not rational.'"

Erik J. Olson of Morrison & Foerster LLP, counsel to SoftBank, said that the Neumann side was seeking documents involving communications between parties with a common interest in the litigation.

"What they are going for is solely something that involves communication with an attorney involving a legal matter, not commercial interests," Olson told the chancellor.

Chancellor Bouchard rejected the Neumann side's order to compel a turnover of the documents, but directed SoftBank instead to provide more information on the justification for withholding each, rather than explanations covering broader groupings.

Separately, the chancellor said he would take under advisement Neumann's arguments for release of emails sent or received by some SoftBank-affiliated individuals using Sprint, another SoftBank investment.

WeWork was founded in 2010 and has grown to a global, "space as a service" business providing shared workspace and support for businesses and entrepreneurs.

SoftBank Group Corp. is represented by Elena C. Norman, Rolin P. Bissell and Nicholas J. Rohrer of Young Conaway Stargatt & Taylor LLP and Erik J. Olson, James Bennett and Jordan Eth of Morrison & Foerster LLP.

Adam Neumann and We Holdings LLC are represented by William M. Lafferty, Kevin M. Coen, Sabrina M. Hendershot and Sara Toscano of Morris Nichols Arsht & Tunnell LLP, Eric Seiler, Philippe Adler and Mala Ahuja Harker of Friedman Kaplan Seiler & Adelman LLP and William Christopher Carmody, Shawn J. Rabin, Arun Subramanian and Cory Buland of Susman Godfrey LLP.

SoftBank Vision Fund (AIV M1) LP is represented by Michael A. Barlow and E. Wade Houston of Abrams & Bayliss LLP and John B. Quinn and Molly Stephens of Quinn Emanuel Urquhart & Sullivan LLP.

The original We Co. special committee members are represented by William B. Chandler III, Brad D. Sorrels, Lori W. Will, Lindsay Kwoka Faccenda, Leah E. Brenner, David J. Berger and Dylan G. Savage of Wilson Sonsini Goodrich & Rosati PC.

The We Co. is represented by Robert S. Saunders, Sarah R. Martin and George A. Zimmerman of Skadden Arps Slate Meagher & Flom LLP.

The case is The We Co. v. SoftBank Group Corp. et al., case number 2020-0258, in the Court of Chancery of the State of Delaware.

--Additional reporting by Rose Krebs, Benjamin Horney, Mike LaSusa, McCord Pagan, Dave Simpson, Rachel Stone and Tom Zanki. Editing by Bruce Goldman.

Update: This story has been updated to make clear distinctions between WeWork and its current board special committee and one aligned with Neumann's interests.

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