A Delaware court has granted a motion to stay a lawsuit involving Follett Content Solutions, LLC and Literati, Inc., favoring a previously filed case in Texas. The ruling affects both companies as they navigate a dispute over a book fair business and its associated loyalty rewards program.
The case, titled Follett Content Solutions, LLC v. Literati, Inc., was filed under docket number N25C-09-070 PAW CCLD. It centers on a contractual disagreement that arose after Literati, the buyer of Follett's book fair business, fell behind on its financial obligations related to a rewards program.
Background
Follett Content Solutions, LLC, a provider of educational materials, sold its book fair business to Literati, Inc. in January 2022. As part of the sale, the two companies entered into an agreement titled the “Titlewave Rewards Program Service Agreement.” This agreement required Follett to manage a loyalty rewards program for Literati's book fairs, including issuing gift certificates to customers.
After the agreement was executed, Literati struggled to meet its payment obligations. In August 2025, Follett notified Literati of a default, claiming that Literati owed over $2.8 million for gift certificates issued to customers. In response, Literati filed a lawsuit in Texas, alleging that Follett breached the agreement’s audit rights provisions. Shortly thereafter, Follett filed a lawsuit in Delaware, seeking damages for breach of contract.
The Ruling
The Delaware Superior Court, presided over by Judge Patricia A. Winston, ruled to stay the Delaware action in favor of the Texas lawsuit. The court determined that the Texas action was the first filed and therefore entitled to deference under the McWane doctrine, which favors the court that first takes jurisdiction over a dispute.
The court ruled, "Because the Court agrees that the Texas Action was first filed and is entitled to greater deference under McWane, the Court grants Defendant’s motion to stay."
The court found that both actions involved the same parties and similar issues, specifically whether Follett had the right to invoice Literati for the gift certificates. The Texas court was deemed capable of providing prompt and complete justice, further supporting the decision to stay the Delaware case.
Impact
This ruling has significant implications for both companies. By staying the Delaware action, the court has effectively prioritized the Texas lawsuit, which could determine the financial obligations of Literati under the agreement with Follett. If the Texas court rules in favor of Literati, it may affect Follett’s claims in Delaware.
The decision underscores the importance of jurisdiction and the timing of legal filings in business disputes. It also illustrates how courts may defer to the first-filed action to avoid duplicative litigation and inconsistent rulings.
What's Next
The Delaware court's decision to stay the case means that Follett may have to wait for the outcome of the Texas lawsuit before pursuing its claims in Delaware. The Texas case is still active, and its developments will likely influence any future proceedings in Delaware.