Nederlander San Francisco (NSF) LLC Secures Decisive Legal Victory In San Francisco Theater Dispute

NEW YORK, June 28, 2019 /PRNewswire/ -- Nederlander San Francisco (NSF) announced that the company achieved a decisive victory in the Delaware Supreme Court, which overturned a lower court decision and ruled that Carole Shorenstein Hays, her husband and affiliates, owners of the Curran Theatre, are prohibited from staging Broadway shows that harm Shorenstein Hays-Nederlander Theatres LLC ("SHN").  SHN owns and operates the Golden Gate and Orpheum theaters in San Francisco and presents one of the nation's largest and most successful Broadway subscription series.

The legal dispute stemmed from Mrs. Hays' acquisition and operation of the Curran Theater in direct competition with SHN, while she still retained her 50% ownership stake in SHN.  In its ruling, the Delaware Supreme Court held that Mrs. Hays, her husband Dr. Jeffrey Hays, and their affiliates are prohibited from engaging in conduct that violates their duties to maximize SHN's economic success, including staging competitive productions that harm the SHN joint venture.  In its opinion, the Court also found that Mrs. Hays had personally engaged in litigation misconduct by offering "flagrantly evasive, nonresponsive, and flippant" testimony, as well as "ridiculous and problematic responses" while under oath. 

"We are pleased that the Supreme Court's ruling will allow NSF and SHN to continue to serve the community as the leading theater operators in San Francisco, and confirms that Mrs. Hays should abide by her longstanding commitment to support this effort," said Dechert litigation partner Matthew Larrabee. "This should finally put an end to the efforts of Mrs. Hayes and her affiliates to undermine SHN's decades-long program of bringing the best of Broadway to Bay Area residents," he added, noting that "the prior claims of victory in this litigation by Mrs. Hays' representatives were obviously premature and have now been proven wrong."

In a July 2018 decision, the Delaware Chancery Court ruled that Mrs. and Dr. Hays had both breached their fiduciary duties to the joint venture and that Mrs. Hays had engaged in bad faith litigation tactics warranting sanctions. Mrs. Hays chose not to appeal these decisions.  The Court also held, and issued a declaration, that the Hayses and their affiliates are bound by provisions of SHN's operating agreement, which prohibits them from showing certain competing productions in San Francisco.  Nevertheless, the Hayses moved forward with plans to stage Dear Evan Hansen and Harry Potter and the Cursed Child at the Curran Theater. SHN filed a second lawsuit in September 2018 seeking to enjoin the Shorenstein's presentation of these two shows at the Curran. 

On appeal from the trial court ruling denying NSF's request for a preliminary injunction, the Delaware Supreme Court affirmed that Mrs. Hays was bound by the non-compete provisions and, critically, confirmed that Mrs. Hays was prohibited from using the Curran to compete with SHN in violation of her duty to maximize SHN's economic success.

SHN (formerly Shorenstein Hays Nederlander Theatres) is a theatrical production company in San Francisco. Under the leadership of commercial Broadway producers Carole Shorenstein Hays and Robert Nederlander, SHN has evolved from its inception in 1977 as a promoter of short engagements of national tours in one theatre to become the pre-eminent theatrical entertainment company in San Francisco presenting a year-round season of plays and musicals. SHN also owns and operates two historic theatres in San Francisco: the Orpheum and Golden Gate. Nederlander San Francisco (NSF) has 50% Interest in SHN with offices in Detroit, Michigan and New York, New York.

SOURCE Nederlander SF