A Delaware jurist questioned Monday some applications of the Court of Chancery's "laches" counterpart to regular, statutory courts' three-year deadline for bringing claims, saying during arguments on dismissal of a special purpose acquisition company suit that claims in equity "may well" get less time to file.

Vice Chancellor Nathan A. Cook raised the point at the end of a dismissal hearing for a suit, filed in 2024, seeking damages tied to a $1.4 billion deal in which principals of Collective Growth Corp. took autonomous vehicle software provider Innoviz public in April 2021.

Investors in the SPAC, Collective Growth Corp., sued its sponsor, Shipwright SPAC I LLC, and others, challenging the deal in late March 2024. The case hit Chancery Court more than a week beyond a three-year threshold for commencing a regular suit making statutory claims, based on filing of an allegedly misleading proxy on March 11, 2021.

"At least as traditionally understood, at the point where we're bumping up at the end of two or three years, if you were to talk to an equity judge 50 or 75 years ago, they would have no problem saying, 'That's just too long, and we're not going to start rooting around in questions of "Should it have been two days sooner or three days sooner"'" to commence in Chancery Court, the vice chancellor said.

"It may well be that folks get less than three years to bring what are considered timely claims as a matter of equity," the vice chancellor said, referencing in part a January 2010 opinion by then Vice Chancellor Leo E. Strine — later Chief Justice — in the case of Sunrise Ventures LLC v. Rehoboth Canal Ventures LLC , observing that parties "may not slumber" on rights despite tolling limits.

Vice Chancellor Cook added that "some would argue" that a court of equity "never really intended a 'bright line' standard for laches," Chancery's label for unreasonable delay in bringing a claim.

The suit alleged misleading disclosures, a sale process tilted in favor of SPAC insiders and an inherently unfair and conflicted structure that rewarded Collective Growth directors and controllers and left public stockholders "holding the bag."

Kelly Tucker of Grant & Eisenhofer PA, counsel to a proposed stockholder class alleging that the deal gave insiders a substantial, unfair benefit, said the court should find that the claims accrued "when they lost their opportunity to redeem their shares," for their original $10 investment.

Inaccurate and inadequate deal disclosures, the suit said, caused stockholders to miss their opportunity to redeem their shares for the original value.

"Plaintiff reasonably relied on the competence and good faith of the fiduciaries," Tucker said.

Accusations included unjust enrichment and breaches of fiduciary duty, with the suit calling the transaction "abysmal" for investors. Shares fell from the $10 entry to less than $7.25, then $6.55 four months later, $3.92 one year later and continuing to fall.

In a brief filed ahead of the argument, attorneys for lead stockholder Sheadrick Richards argued that "the statute of limitations is tolled for claims of wrongful self-dealing, even in the absence of actual fraudulent concealment, where a plaintiff reasonably relies on the competence and good faith of a fiduciary."

Douglas L. Shively of BakerHostetler, counsel to Shipwright SPAC I LLC and Shipwright Partners and their principals, told the vice chancellor that the complaint included a substantial due diligence process.

"It's also important to know what's not alleged in this case. Unlike many SPAC cases in this court, it's not alleged that the proxy omitted significant information," Shively said.

There are no allegations in the complaint, Shively said, "that there is anything beside the disclosure risk that accounts for post transaction stock performance, let alone that any such thing was known to the defendant and not disclosed in the proxy statement."

Formed in 2016, Israel-based Innoviz Technologies Ltd. creates sensor technologies and software for autonomous vehicles. As a startup, it raised hundreds of millions of dollars through several funding rounds.

The company announced in December 2020 it would merge with Austin, Texas-headquartered Collective Growth and go public through a transaction that valued Innoviz at $1.4 billion at the time.

The SPAC told investors at the time it was looking for a merger target in the CBD industry or the industrial hemp sector.

Under its charter, Collective Growth had 18 months to find a merger partner and get stockholder approval, or liquidate and return the cash proceeds to its public stockholders, Richards said in an opposition to a motion to dismiss.

Richards' complaint asserted that Collective Growth CEO Bruce Linton and the SPAC's co-founder and president at the time, Geoffrey W. Whaling, dominated the process leading up to the merger, creating an unfair process that favored the blank-check firm's insiders.

The proxy statement given to Collective Growth stockholders allegedly "painted an overly rosy picture" of the Innoviz's business that failed to disclose the true amount of cash underlying each Collective Growth share, the complaint said.

When Collective Growth went public, Linton, a defendant in the Chancery Court case, had steered mergers and acquisitions involving cannabis businesses and was formerly the CEO of cannabis device maker Canopy Growth Corp.

Whaling, who is also a defendant in the case, was additionally serving as chair of the National Hemp Association, a hemp sector advocacy group.

Sheadrick Richards is represented by Michael J. Barry, Christine M. Mackintosh, Kelly L. Tucker and Jonathan C. Millis of Grant & Eisenhofer PA.

Shipwright SPAC I LLC and the other named parties are represented by Raymond J. DiCamillo, Kevin M. Gallagher and Sandy Xu of Richards Layton & Finger PA and Douglas W. Greene and Douglas L. Shively of BakerHostetler.

The case is Sheadrick Richards v. Shipwright SPAC I LLC et al., case number 2024-0320, in the Court of Chancery of the State of Delaware.