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Item 3. Legal Proceedings

2024-02-29 compared with 2023-03-01 · 73 added, 61 removed, 13 unchanged (91% of the section changed)

Legal Proceedings

On November 30, 2020, certain officers and members of Teucrium Trading, LLC (the “Sponsor”), along with the Sponsor, filed a Verified Complaint (as amended through the Amended Verified Complaint filed on February 18, 2021) (the “Gilbertie complaint”) in the Delaware Court of Chancery, C.A.

2020-1018-AGB. 

The Gilbertie complaint asserts various claims against Dale Riker, the Sponsor’s former Chief Executive Officer and Barbara Riker, the Sponsor’s former Chief Financial Officer and Chief Compliance Officer.

Sal Gilbertie v.

Dale Riker , 

et al.,  C.A.

2020-1018-AGB (Del.

Ch.) (the “

Gilbertie  case”) 

Among other things, the Gilbertie complaint responded to and addressed certain allegations that Mr.

Riker had made in a draft complaint that he threatened to file (and subsequently did file) in New York Supreme Court.

On September 13, 2018, Barbara Riker, the then-current Chief Financial Officer, Chief Accounting Officer and Chief Compliance Officer of Teucrium Trading, LLC (“Teucrium,” the “Sponsor” or the “Company”), resigned from each of her positions.

Riker was replaced by Cory Mullen-Rusin.

On September 17, 2018, Dale Riker, the then-current Chief Executive Officer (“CEO”) of the Sponsor, was removed from his position.

He was replaced by Sal Gilbertie.

Riker was removed as CEO, he pursued a books and records action against Teucrium in the Delaware Court of Chancery, which resulted in a final judgment on May 19, 2020, following a one-day trial.

Riker later decided to pursue litigation, and on November 24, 2020, he provided Teucrium with a draft complaint that he threatened to file (purportedly because of an order in the books and records action governing the disclosure), and subsequently did file, in New York Supreme Court.

See Dale Riker v.

Sal Gilbertie, et al., No.

Sal Gilbertie, et al.

656794-2020 (N.Y.

On November 30, 2020, certain officers and members of the Sponsor, along with the Sponsor, filed a Verified Complaint (as amended through the Amended Verified Complaint filed on February 18, 2021) (the “Gilbertie complaint”) in the Delaware Court of Chancery, C.A.

2020-1018-LWW (the “Gilbertie case”).

The Gilbertie complaint responded to and addressed certain allegations that Mr.

Riker had made in his draft complaint.

The Gilbertie complaint asserted various claims against Mr.

On December 7, 2020, Mr.

Riker filed his New York complaint.

On April 22, 2021, the Supreme Court of the State of New York, New York County dismissed Mr.

Riker’s case without prejudice to the case being refiled after the conclusion of the Gilbertie c ase in Delaware Chancery Court.

Riker’s case without prejudice to the case being refiled after the conclusion of the Gilbertie case in Delaware Court of Chancery.

See Dale Riker, et al.

1 unchanged sentence

6567943-2020 (N.Y.

The Gilbertie complaint asserts claims for a declaration concerning the effects of the final order and judgment in an earlier books and records action;

for a declaration concerning Mr.

Riker’s allegation that Mr.

Gilbertie had entered into an agreement to purchase Mr.

Riker’s equity in the Sponsor;

for an order compelling the return of property from Mr.

for a declaration concerning Mr.

Riker’s allegations that the Sponsor and certain of the plaintiffs had improperly removed him as an officer and caused purportedly false financial information to be published;

for breach of Ms.

Riker’s separation agreement with the Sponsor;

for tortious interference by Mr.

Riker with Ms.

Riker’s separation agreement;

for a declaration concerning the releases that had been provided to Ms.

Riker through her separation agreement;

for breach of the Sponsor’s Operating Agreement by Mr.

and for breach of fiduciary duty by Mr.

On June 28, 2021, Dale Riker, individually and derivatively on behalf of the Sponsor, filed a new suit in the Court of Chancery of the State of Delaware against the Sponsor’s officers and certain of the Sponsor’s Class A Members.

On June 29, 2021, Mr.

Riker, individually and derivatively on behalf of the Sponsor and Ms.

Riker, filed a new suit in the Delaware Court of Chancery against the Sponsor’s officers and certain of the Sponsor’s members.

See Dale Riker v.

Salvatore Gilbertie et al.

Salvatore Gilbertie et al., C.A.

2021-0561-LWW (the “Riker case”).

The Rikers’ complaint was similar, but not identical, to the complaint Mr.

Riker had earlier filed in New York, and which had earlier been dismissed by the New York Court.

The Court ordered Mr.

Riker’s newly filed Delaware action consolidated with the Gilbertie case, and thus the Rikers eventually refiled their remaining claims as counterclaims in the Gilbertie case.

Following various motions, five counts from the Gilbertie complaint and two of Mr.

Riker’s counterclaims remained in the Gilbertie case.

The first remaining count from the Gilbertie case was a claim brought by Teucrium against Ms.

Riker for an alleged breach of her separation agreement that she entered into after resigning from Teucrium.

The second count was a claim brought against Mr.

Riker for tortious interference with Ms.

Riker’s separation agreement.

The third count was a claim brought against Ms.

Riker seeking a declaration that the releases in her separation agreement are null and void.

The fourth count was a claim brought against Mr.

Riker for breach of Teucrium’s amended and restated limited liability agreement (the “Operating Agreement”).

The fifth count was a claim brought against Mr.

Riker for breach of fiduciary duty.

The first of Mr.

Riker’s remaining counterclaims was a claim against Messrs.

Gilbertie and Miller alleging that Mr.

Riker’s removal breached the Operating Agreement.

The second remaining counterclaim, which Mr.

Riker brought against Mr.

Gilbertie, sought specific performance of an alleged oral agreement for Mr.

Gilbertie to purchase Mr.

Riker’s equity in Teucrium.

In August of 2022, both Dale and Barbara Riker demanded advancement of their legal fees and costs related to the litigation, by virtue of their status as former officers of the Company and Dale Riker’s status as a member.

The Company denied the demand as to Barbara Riker.

As to Dale Riker, the Company informed his counsel that it was willing to advance some of the fees and costs, but not the full amount he had demanded to date.

On November 15, 2022, Dale Riker and Barbara Riker filed a verified complaint captioned “ Dale Riker and Barbara Riker v.

Teucrium Trading, LLC ,” C.A.

2022-1030-LWW, to obtain advancement of legal fees and costs in connection with the Gilbertie case.

Following briefing and a hearing, on June 13, 2023, the Court of Chancery ruled that the Rikers are entitled to advancement.

As a result of that ruling, the Company has paid to the Rikers, as payment of their fees and costs for the advancement action and as advancement pursuant to the Court ruling, a total of $2,180,464, including interest.

On June 23, 2023, Teucrium asked the Court to permit an appeal of the advancement ruling to the Delaware Supreme Court.

See Application for Certification of an Interlocutory Appeal , C.A.

2022-1030-LWW.

(the “

Riker c ase”).

On September 7, 2021, Dale Riker and Barbara Riker filed their answers to the Gilbertie complaint.

As a result of the Court having ordered the consolidation of the Gilbertie c ase and Riker c ase, the claims in the Riker c ase were re-filed as counterclaims in the Gilbertie c ase, which accompanied the Rikers’

The now-consolidated Gilbertie c ase and the Riker c ase is captioned Sal Gilbertie, Cory Mullen-Rusin, Steve Kahler, Carl Miller III, and Teucrium Trading LLC v.

Dale Riker and Barbara Riker , C.A.

On July 7, 2023, the Court denied Teucrium’s request for interlocutory appeal, finding that the costs of an interlocutory appeal, including the drain on judicial resources from adjudicating piecemeal appeals, would outweigh any benefits.

See June 13, 2023 Transcript Ruling and June 13, 2023 Order of the Court of Chancery of the State of Delaware, C.A.

2022-1030-LWW.

On April 6, 2022, the Court announced its decision on the motion to dismiss in an oral ruling, which was subsequently implemented in a written order dated April 18, 2022.

The Court dismissed all of the Rikers’

counterclaims, except for a portion of one count alleging breach of contract against Messrs.

Gilbertie and Miller.

All of the dismissals were with prejudice, with the exception of the dismissal of Mr.

Riker’s claim against Mr.

Gilbertie that sought specific performance of an alleged agreement for Mr.

Gilbertie to purchase Mr.

Riker’s equity in the Company.

The Court dismissed that claim without prejudice.

On April 25, 2022, Mr.

Riker filed a motion for reconsideration of the Court’s dismissal of his derivative claims for breach of contract against Mr.

Gilbertie and for unjust enrichment against Mr.

Gilbertie, Mr.

Kahler, and Ms.

Mullen-Rusin, both of which concern the Company’s advancement of legal fees on behalf of those individuals.

On November 15, 2022, Dale Riker and Barbara Riker filed a verified complaint captioned “Dale Riker and Barbara Riker v.

Teucrium Trading, LLC,”

2022-1030-KSJM, to obtain advancement of legal fees in connection with the Gilbertie-Riker litigation.

Through their counterclaims, the Rikers assert direct and derivative claims for breach of fiduciary duty, breach of contract, declaratory relief, specific performance, unjust enrichment, fraud, and conspiracy to commit fraud.

The Sponsor intends to pursue its claims and defend vigorously against the Rikers’

counterclaims in Delaware.

Teucrium subsequently petitioned the Delaware Supreme Court directly to accept an appeal from the ruling of the Court of Chancery, which that Court denied.

On June 22, 2023, Messrs.

Gilbertie, Kahler and Miller, Ms.

Mullen-Rusin and Teucrium, the plaintiffs in the Gilbertie case, filed a motion asking the Court of Chancery to allow them to voluntarily dismiss all of the plaintiffs’ remaining claims in the litigation.

See Plaintiffs ’ Motion To Grant Voluntary Dismissal of Claims with Prejudice, C.A.

2022-1030-LWW.

On July 7, 2023, the Rikers filed a response, arguing that any dismissal should be subject to various conditions.

On September 5, 2023, the Court ruled that it would grant the motion to voluntarily dismiss the plaintiffs’ claims, without any of the conditions that the Rikers had requested.

Following the Court’s ruling, Teucrium filed a motion in the advancement action to terminate its advancement obligation in light of the dismissal of the claims against the Rikers.

The Rikers opposed the motion.

On October 20, 2023, at a hearing on the motion, the Court granted the motion terminating advancement obligations.

On October 26, 2023, the Court issued a written implementing order, making clear that advancement obligations terminated on September 5, 2023, the day the Court granted the motion to dismiss claims voluntarily.

The two counterclaims by Mr.

Riker discussed above remain.

Except as described above, within the past 10 years of the date of this report, there have been no material administrative, civil or criminal actions against the Sponsor, the Trust or the Fund, or any principal or affiliate of any of them.

This includes any actions pending, on appeal, concluded, threatened, or otherwise known to them. 

Mine Safety Disclosures

1 unchanged sentence

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 3. Legal Proceedings