Weinberg v. Waystar, Inc.

IN THE SUPREME COURT OF THE STATE OF DELAWARE TRACEY WEINBERG, §

§ Plaintiff Below, Appellant, § No. 274, 2022

§ v. §

§ Court Below: Court of Chancery WAYSTAR, INC., DERBY TOPCO § of the State of Delaware INC., DERBY TOPCO PARTNERSHIP § LP and DERBY GP, LLC, § C.A. No. 2021-1023

§ Defendants Below, Appellees. §

Submitted: January 18, 2023 Decided: March 16, 2023

Before SEITZ, Chief Justice; VALIHURA, and VAUGHN, Justices.

Upon appeal from the Court of Chancery. AFFIRMED.

Steven P. Wood, Esquire, (argued), Andrew S. Dupre, Esquire, Travis J. Ferguson, Esquire, McCarter & English, LLP, Wilmington, Delaware for Appellant.

Kevin M. Gallagher, Esquire, Caroline M. McDonough, Esquire, Richards, Layton & Finger, P.A., Wilmington, Delaware. Of Counsel: Sarah A. Zielinski, Esquire, (argued), Amy Starinieri Gilbert, Esquire, McGuire Woods LLP, Chicago, Illinois for Appellee. VALIHURA, Justice:

This appeal turns on the meaning of the word “and” in three distinct, but related, option agreements. Specifically, the question is whether two separate events (separated by the word “and”) must both occur in order for the company to exercise a call right, or whether the call right may be exercised if only one event has occurred. Plaintiff-below, Appellant Tracey Weinberg (“Weinberg”) is the former Chief Marketing Officer of defendant-below, Appellee Waystar, Inc., a Delaware corporation (“Waystar”). During her employment at Waystar, the company granted her options to purchase stock in its co- defendant Derby TopCo, Inc., a Delaware corporation (“Derby Inc.”), pursuant to a Derby TopCo 2019 Stock Incentive Plan (the “Plan”). Weinberg was awarded three option grants under the Plan pursuant to three option agreements executed between October 2019 and August 2020 (the “Option Agreements”). By the time Weinberg was terminated on August 16, 2021, 107,318.96 of her options had vested. She timely exercised all of them on November 12, 2021, and the options immediately converted to economically equivalent partnership units in co-defendant Derby TopCo Partnership LP, a Delaware limited partnership (“Derby LP”) (the “Converted Units”).

Each Option Agreement contains an identical call right provision providing Appellees (defined below) the right to repurchase Weinberg’s Converted Units (the “Call Right”), “during the six (6) month period following (x) the (i) [t]ermination of [Weinberg’s] employment with the Service Recipient for any reason . . . and (y) a Restrictive Covenant Breach.”1 On approximately November 18, 2021, five days after Weinberg exercised her options, Appellees exercised the Call Right and repurchased all of Weinberg’s Converted Units. Although Weinberg had been terminated within the time frame specified by the Call Right Provision (defined below), a Restrictive Covenant Breach had not occurred. The parties dispute whether the Call Right is available in the absence of a Restrictive Covenant Breach. The Vice Chancellor decided that it was. Weinberg filed suit against Appellees, and Appellees filed a counterclaim, to resolve whether Appellees validly exercised the Call Right under the Option Agreements. Weinberg appeals the Court of Chancery’s judgment.

For the reasons set forth below, we AFFIRM the judgment of the Court of Chancery.

I. RELEVANT FACTS AND PROCEDURAL BACKGROUND2 A. The Option Agreements

Weinberg began working for Waystar in July 2018. During her approximately three-year employment with Waystar, Waystar awarded her three option grants under the Plan. Each was governed by a distinct Option Agreement: (i) a Substitute Option Agreement, dated October 22, 2019 (the “First Option Agreement”); (ii) an Option Agreement, dated October 23, 2019 (the “Second Option Agreement”); and (iii) an Option Agreement, dated August 9, 2020 (the “Third Option Agreement”). Each Option “Restrictive Covenant Breach” is defined as a breach of the restrictive covenant agreement attached as an exhibit to each Option Agreement. Id. at A54 (First Option Agreement § 2(e)(iv), at 3), A65 (Second Option Agreement § 2(c)(xi), at 3), A83 (Third Option Agreement § 2(c)(xi), at 3).

Agreement granted to Weinberg the option to purchase shares of common stock in Derby Inc. Once Weinberg exercised the options, the Derby Inc. stock would automatically convert into Converted Units.

1. The Call Right

Section 10(a) of the First and Second Option Agreement, and Section 10(b) of the Third Option Agreement (the “Call Right Provision”) provides Appellees with the right to repurchase Weinberg’s Converted Units. It reads:

The Converted Units shall be subject to the right of repurchase (the “Call Right”) exercisable by Parent, a member of the Sponsor Group, or one of their respective Affiliates, as determined by Parent in its sole discretion, during the six (6) month period following (x) the (i) the Termination of [Weinberg’s] employment with the Service Recipient for any reason (or, if later, the six (6) month anniversary of the date of the exercise of the [Substitute] Options in respect of which the Option Stock was issued, and (y) a Restrictive Covenant Breach. The Call Right shall expire on the earlier of (i) an Initial Public Offering or (ii) a Change of Control.3

The Call Right provision in the First Option Agreement includes the word “Substitute,” but it is otherwise identical to the Call Right provision in the Second and Third Option Agreements.4

B. Waystar Terminates Weinberg

On August 16, 2021, Waystar terminated Weinberg without cause. On the date of her termination, 89,318.96 of the options under the First Option Agreement had vested; 16,000 of the options under the Second Option Agreement had vested; and 2,000 of the options under the Third Option Agreement had vested. Under each Option Agreement, Weinberg had 90 days from the date of her termination without cause to exercise the vested options. On November 12, 2021, within 90 days of her termination, Weinberg elected to exercise all of her vested options. She purchased 107,318.96 shares of Derby Inc. common stock, which were immediately converted into Converted Units in Derby LP, for a total purchase price of $898,756.74.

C. Waystar Exercises its Call Right

On approximately November 18, 2021, Appellees exercised the Call Right and repurchased all of Weinberg’s Converted Units for a total purchase price of $1,824,422.32. The parties agree that, as of this date, Weinberg had been terminated without cause and that a Restrictive Covenant Breach had not occurred.

D. Weinberg Files Suit

Five days after Appellees exercised the Call Right, on November 23, 2021, Weinberg sued Waystar and its affiliates Derby LP, Derby Inc, and Derby GP, LLC (collectively, “Appellees”), in the Court of Chancery. She sought, among other things, a declaratory judgment that Appellees breached the Option Agreements by exercising the Call Right, and an injunction enjoining Appellees from asserting the Call Right. The parties cross-moved for judgment on the pleadings. The Court of Chancery heard oral argument on April 20, 2022. Following supplemental letter submissions, it issued its memorandum opinion on July 6, 2022, granting Appellees’ Motion for Judgment on the Pleadings, and entered judgment on July 26, 2022.

Weinberg filed a notice of appeal on August 5, 2022. We heard oral argument on January 18, 2022.

II. CONTENTIONS ON APPEAL

Weinberg argues that the trial court erred in finding that “and” in the Call Right Provision was meant in its “several” sense. She presents four reasons in support of her contentions: (1) first, “and” can only unambiguously mean “or” if the trial court finds an absurd result, which the trial court did not do here;5 (2) second, the Call Right Provision is mandatory, thus, the word “and” must be read conjunctively; (3), third, the First Option Agreement governs more than 80% of Weinberg’s options and did not contain the provision the Vice Chancellor found would be rendered superfluous by reading “and” in the conjunctive and joint sense; and (4) finally, because the Call Right is, at least, ambiguous, and the Option Agreements are contracts of adhesion, the trial court should have construed the ambiguity against Appellees as the drafters.

III. SCOPE AND STANDARD OF REVIEW

Our standard of review of the grant of a motion for judgment on the pleadings “is to determine whether the court committed legal error in formulating or applying legal precepts.”6 Accordingly, we review the grant of a motion for judgment on the pleadings de novo.7 The scope of our review is limited to the contents of the pleadings.8

IV. ANALYSIS

A. Delaware Principles of Contract Interpretation

In addressing the question of how to interpret the word “and” in the Call Right Provision, and specifically, whether both events must occur before Appellees can exercise the Call Right, we apply our well-established principles of contract interpretation. In construing a contract, our goal is to give effect to the intent of the parties.9 “Delaware adheres to the ‘objective’ theory of contracts, i.e. a contract’s construction should be that which would be understood by an objective, reasonable third party.”10 We will read the contract as a whole and “enforce the plain meaning of clear and unambiguous language.”11 In doing so, we endeavor “to give each provision and term effect” and not render any terms “meaningless or illusory.”12

Moreover, “[i]n giving sensible life to a real-world contract, courts must read the specific provisions of the contract in light of the entire contract.”13 Where language is unambiguous, we “will give effect to the plain meaning of the contract’s terms and provisions.”14 “Language is ambiguous if it is susceptible to more than one reasonable interpretation.”15 “An interpretation is unreasonable if it ‘produces an absurd result’ or a result ‘that no reasonable person would have accepted when entering the contract.’”16 “The parties’ steadfast disagreement over interpretation will not, alone, render the contract ambiguous.”17 “The determination of ambiguity lies within the sole province of the court.”18

B. An Overview of Interpreting “And”

Resolution of this dispute lies in the correct interpretation of “and” — one of the most common words in the English language. One should not be fooled by the size and ubiquity of the word.19 The use of this seemingly simple word in legal drafting has long been the cause of extensive litigation and debate.20 Yet, as illustrated below, the debate has not firmly established any clear rules for interpreting the word. Nevertheless, two avenues of interpretation — the “conjunctive or disjunctive” path and the “joint or several” path — have emerged from the, at times, lively debate.

1. Conjunctive or Disjunctive?

First, “and” may be interpreted conjunctively or disjunctively. Many legal authorities support Weinberg’s suggestion that ordinarily “and” is conjunctive, while “or” is disjunctive, and that courts will construe each word accordingly, absent strong reasons to break from the general rule.21 When courts depart from the ordinary, conjunctive meaning of “and,” and construe it, instead, as a disjunctive “or,” it is often because they acknowledge that sloppy drafting sometimes confuses the two.22 Accordingly, courts interpret “and” in the disjunctive sense to prevent an absurd or unreasonable result, or to give effect to the parties’ intent and reasonable expectations. In these cases, courts discern the meaning of the word from the context of the provision and the contract as a whole. In short, although “and” typically bears a conjunctive meaning, that presumption can be overcome by context.

2. Joint or Several?

Second, “and” may be used in the joint or several sense.23 Like the Court of to carry that nonliteral meaning unless there were clear indications in the statute that dictate that result.”) (citing 1A NORMAN J. SINGER & J.D. SHAMBIE SINGER, Sutherland Statutes and Statutory Construction § 21.14 (7th ed. 2021))), cert. granted, 2023 WL 2227657 (U.S. Feb. 27, 2023); OfficeMax, Inc. v. United States, 428 F.3d 583, 589 (6th Cir. 2005) (“‘[A]nd’ presumptively should be read in its ‘ordinary’ conjunctive sense unless the ‘context’ in which the term is used or ‘other provisions of the statute’ dictate a contrary interpretation.”) (citing Crooks v. Harrelson, 282 U.S. 55, 58 (1930))), reh’g and reh’g en banc denied, No. 04-4009, 2006 U.S. App. LEXIS 8294 (6th Cir. Mar. 30, 2006); 11 Williston on Contracts § 30:12 (4th ed.) (“It has been said that the words ‘and’ and ‘or’ should not be considered interchangeable in construing a contract, absent strong supporting reasons.”); SCALIA & GARNER, supra note 13, at 116 (explaining that “[a]nd joins a conjunctive list, or a disjunctive list—but with negatives, plurals, and various specific wordings there are nuances”).

Chancery, we view this as the dispositive question before us.24 Some legal scholars maintain that “[t]he meaning of and is usually several.”25 The several “and” denotes A and B, jointly or severally. The joint “and” denotes A and B, jointly but not severally. 26 For example, when we say: “the law punishes assault and battery,” we mean a person will be punished for committing the two crimes either when both crimes are committed together (jointly) or separately (severally). However, when we say: “the law punishes drinking and driving,” we mean that the law punishes the two activities together (jointly), but not separately (severally).

The determination between joint and several is distinct from the determination between conjunctive and disjunctive. As Judge John Rogers explained in his dissent in OfficeMax, Inc. v. United States:

In each sentence the word “and” has the same conjunctive meaning — the difference lies in whether the preceding words are distributed over the conjoined elements or not. Whether to interpret the preceding words as distributed over the conjoined elements or not depends on the context of the sentence, and what we externally know about the conjoined elements.27 in the third edition, the one published in 2011 and cited by this opinion. There, he restates that “the meaning of ‘and’ is usually several.” GARNER, supra note 20, at 639.

The phrase preceding the two elements in the Call Right Provision, “[t]ermination . . . for any reason” and “a Restrictive Covenant Breach,” is “during the six (6) month period following.” If one distributed this preceding phrase across each element, the Call Right Provision would read, in relevant part:

The Converted Units shall be subject to the right of repurchase (the “Call Right”) exercisable by Parent, a member of the Sponsor Group, or one of their respective Affiliates, as determined by Parent in its sole discretion, during the six (6) month period following (x) the (i) the Termination of [Weinberg’s] employment with the Service Recipient for any reason (or, if later, the six (6) month anniversary of the date of the exercise of the Options in respect of which the Option Stock was issued, and during the six (6) month period following (y) a Restrictive Covenant Breach.

In both the Call Right Provision as written and the distributive interpretation above, the “and” remains conjunctive. Accordingly, when confronting whether “and” is several or joint, we will look to “the context of the sentence, and what we externally know about the conjoined elements.”28

3. Illustrating the “And” versus “Or” Debate

Courts have struggled with both the conjunctive or disjunctive determination and the joint or several determination, often conflating the two issues.29 The Vice Chancellor an event asking their host for a drink. One says, “I like bourbon and water,” while the other says, “I like beer and wine.” The second guest is disgusted when the host brings a glass of beer mixed with wine. This is because, although “and” is being used conjunctively in both phrases, common sense and context dictate that “I like beer and wine” means “I like beer and I like wine,” and not, “I like beer and wine, together.” In other words, the phrase “I like” is distributed over both items, beer and wine, whereas the phrase is not distributed in the phrase “I like bourbon and water.” Id. used an example from Professor Reed Dickerson who explained that a writer intending “that the person covered by [a] statute [governing donations] is to be free to have either, neither, or both, [] may use any of these three sentences to express the idea”:

(A) ‘He may contribute to charitable or educational institutions.’ (B) ‘He may contribute to charitable institutions and educational institutions.’ Here, ‘and’ is several, not joint. (C) ‘He may contribute to charitable institutions or educational institutions.’ Here, ‘or’ is inclusive, not exclusive.30

Of the three options, Professor Dickerson recommended option (B) — using the “several” meaning of “and.” He noted that the only difference between sentences (B) and (C) is that one uses “and” and the other uses “or,” illustrating that “‘and’ and ‘or’ produce the same result in such a context.”31 Professor Dickerson noted that the several “and” and the inclusive “or” are interchangeable, but “this does not [mean] that ‘and’ means ‘or,’” but rather, that “in such a context the two words are reciprocally related in that the implied meaning of one is the same as the expressed meaning of the other.”32

Perhaps the best illustration of this debate is the federal circuit split that has developed recently regarding the interpretation of “and” in a federal criminal statute In other words, that “and” does not mean “or.” This is unhelpful to Weinberg’s cause not only because her arguments implicate an issue separate from the joint versus several issue, but also because the trial court expressly stated that “and” does not mean “or,” “but rather, that ‘in such a context the two words are reciprocally related in that the implied meaning of one is the same as the expressed meaning of the other.’” Chancery Opinion, 2022 WL 2452141 at *4 (citing Dickerson, supra note 25, at 313). (known as the First Step Act).33 Both sides in this case have relied upon at least one of these federal appellate decisions in support of their interpretation of “and.”

Part of the First Step Act, set forth in 18 U.S.C. § 3553(f), and known as the Safety Valve Provision, empowers a court to grant a criminal defendant relief from a mandatory minimum sentence.34 18 U.S.C. § 3553(f) provides a sentencing safety valve to criminal defendants, allowing courts to disregard the statutory minimum sentence if:

(1) the defendant does not have —

(A) more than 4 criminal history points, excluding any criminal history points resulting from a 1-point offense, as determined under the sentencing guidelines; (B) a prior 3-point offense, as determined under the sentencing guidelines; and (C) a prior 2-point violent offense, as determined under the sentencing guidelines.35

The Safety Valve Provision’s use of “and” before prong (C) prompts the question of whether a defendant is ineligible for relief if he has any of the three subsections (the government’s view)36 or a defendant is ineligible only if he has all three subsections (the defendant’s view).37 Put another way, “[t]he question presented is whether — as the government argues . . . — this provision requires the defendant to show that he has none of the criminal history described in subsections (A)–(C); or whether instead — as [the defendant] argues — the defendant must show only that he lacks the criminal history described in any one of [the] subsections.”38

At least seven federal circuit courts of appeal have addressed the “and” in the Safety Valve Provision in the last two years. Three have concluded that the “and” is several, or distributive, meaning that a criminal defendant must not have any of (A), or (B), or (C), to obtain relief under the statute. One reached the same conclusion about the meaning of the statute but reasoned that the “and” was disjunctive. And three found the opposite: that, so long as a criminal defendant did not have all three, (A), (B), and (C), the defendant was eligible for relief under the statute.

a. The Ninth Circuit The Ninth Circuit was the first to confront the issue, in United States v. Lopez, a case cited by Weinberg. That court asked whether the Safety Valve Provision’s “and” is conjunctive or disjunctive.39 After “[a]pplying the tools of statutory construction,” it held that “[the Safety Valve Provision’s] ‘and’ is unambiguously conjunctive.”40 “Put another way, [it held] that ‘and’ means ‘and.’”41 The Lopez court began its analysis by emphasizing, that “the government concedes that the plain and ordinary meaning of [the Safety Valve Provision’s] ‘and’ is conjunctive,” a proposition with which the court agreed.42 Although it acknowledged that where context requires, a court may give disjunctive effect to “and,” it held that the context of the Safety Valve Provision did not call for a disjunctive reading.43 Therefore, the “and” was unambiguously conjunctive, meaning “[a] defendant must have all three [(A), (B), and (C)] before [the Safety Valve Provision] bars him or her from safety-valve relief.”44

b. The Eighth Circuit Over a year later, the Eighth Circuit decided United States v. Pulsifer,45 a case relied upon by Appellees here. The court acknowledged that “[t]he most natural reading of ‘and’ is conjunctive” and that it should be construed as such absent “clear indications in the statute that dictate” it means “or.”46 But it framed the issue differently, using the distributive/several framework:

The parties discuss whether “and” should be read conjunctively or disjunctively, but we do not believe that is the important question. . . . The important question here is in what sense the statute uses the word “and” in the conjunctive. When used as a conjunctive, the word “and” has “a distributive (or several) sense as well as a joint sense.”47

The court then concluded that the “better reading of the statute” was that the “and” in the Safety Valve Provision was distributive (or several).48 In other words, “[t]he text distributes the introductory phrase ‘does not have’ across each statutory condition.”49 The court pointed to a “strong textual basis to prefer a distributive reading of ‘and,’”50 namely, that prong (A) would be rendered surplusage if “and” were read jointly.51 In other words, the defendant fails to qualify for the “safety valve” if he has any of (A), (B), or (C). Although the defendant did not have a two-point violent offense, he had a four-point offense and a three-point offense, and, thus, he was not eligible.52

c. The Seventh Circuit Then, two months after Pulsifer, the Seventh Circuit threw its hat in the ring in United States v. Pace.53 The Pace court is an outlier: It held that “[a]lthough Mr. Pace is correct that the word ‘and’ is commonly utilized conjunctively and is used in that way in other parts of § 3553(f), the context of the word ‘and’ in [the Safety Valve Provision] supports the view that it should be read disjunctively.”54 The court reasoned that a conjunctive interpretation “cannot be squared with the canon against surplusage.”55 Moreover, it found that “[t]he use of the em-dash following subsection one . . . to connect the subsections demonstrates that the lead-in ‘does not have’ modifies each subsection requirement.”56 Finally, the circuit court concluded that a conjunctive interpretation would “produce[] absurd results.”57 And the rule of lenity did not apply because the statute was not ambiguous.

The Seventh Circuit is the only federal appellate court to ultimately conclude that to be eligible for relief, a criminal defendant must demonstrate that he does not have any of the criminal history criteria described in the Safety Valve Provision, because the meaning of “and” is disjunctive. This reasoning drew a concurring opinion from Judge Kirsch, who agreed with the Eighth Circuit that the “and” was conjunctive, several, and distributive.58

d. The Fifth Circuit Writing two months after Pace, the Fifth Circuit next weighed in. In United States v. Palomares, it stated: “We agree with the Eighth Circuit that Congress’s use of an em- dash following ‘does not have’ is best interpreted to ‘distribute’ that phrase to each following subsection.”59 Like the Eighth Circuit, it acknowledged that although “[t]he ordinary meaning of ‘and,’ which [the Safety Valve Provision] uses to join the three subsections, is conjunctive,”60 “when used as a conjunctive, the word ‘and’ has ‘a distributive (or several) sense as well as a joint sense.”61 “To determine whether ‘and’ is used in a ‘joint’ sense or a ‘distributive’ sense in [the Safety Valve Provision], we must look to the context of the statute itself.”62

Looking to the context, the court confirmed “the ‘distributive approach’ is the most natural and indeed the most likely intent behind Congress’ choice of a unique structure for [the Safety Valve Provision].”63 It concluded that “the distributive meaning of ‘and’ . . . is the preferred interpretation because it avoids violating the canon against surplusage,”64 whereas “[t]he alternative readings are implausible because they each fail to account for the plain meaning of the statute in some way.”65 Accordingly, the defendant could not have any of the criminal history described in subsections (A)–(C) to qualify for relief.

e. The Sixth Circuit The Sixth Circuit then addressed the issue in United States v. Haynes, and it agreed with the Eighth and Fifth Circuits.66 It held that the “and” in the Safety Valve Provision was conjunctive, in accordance with its ordinary meaning, and several, as confirmed by the statutory context. The Haynes court primarily relied on two reasons to support its reading of the Safety Valve Provision. First, the content of the government’s proposed reading (that “and” is several) is “logically coherent” and “more plausible” because each of the conditions, (A)–(C), “is quite plausibly an independent ground to deny a defendant the extraordinary relief afforded by the safety valve.”67 Second, the distributive “and” is the only interpretation that abides by the “cardinal principle” of statutory construction to avoid surplusage.68 The Sixth Circuit affirmed the district court’s judgment that the defendant, Haynes, was ineligible for safety valve relief because he had a prior conviction for which he was assigned three points under the Sentencing Guidelines.

f. The Fourth Circuit Most recently, the Fourth Circuit Court of Appeals voiced its opinion on the matter in United States v. Jones.69 It concluded “the [g]overnment’s argument is nothing more than an exaggerated way of saying ‘and’ means ‘or,’ an interpretation we must reject.”70 It was compelled to reject the government’s argument because the Safety Valve Provision’s “plain language is unambiguous.”71 “And” means “along with or together with,” requiring all of the conditions in a list, and such meaning “does not change simply because it is preceded by a negative marker.”72 It found this ordinary meaning was buttressed by the canon of consistent usage.

g. The Eleventh Circuit The Eleventh Circuit presents a microcosm of the debate all by itself. Writing a few weeks before Haynes, an en banc panel of the Eleventh Circuit reached the opposite conclusion as the Fifth, Sixth, Seventh, and Eighth Circuits, in United States v. Garcon.73 In doing so, it reversed a unanimous three-judge panel, which had itself vacated the judgment of the district court.74 The district court had held that “and” in the Safety Valve Provision was conjunctive such that Garcon, the criminal defendant, needed to have all three prongs before he is ineligible for relief. The three-judge panel of the Eleventh Circuit vacated and reversed the district court, holding that, although “‘and’ is presumed to have its ordinary, conjunctive meaning unless the context dictates otherwise,” “and,” as used here, was disjunctive.75 It reasoned that if “and” were read conjunctively, subsection (A) would be superfluous.

However, the Eleventh Circuit en banc panel agreed with the district court and interpreted “and” in accordance with its ordinary conjunctive meaning, a meaning which it held was retained “when a list of requirements follows a negative.”76 Relying in part on the ordinary-meaning canon of construction, the court found that the statutory context confirmed its reading of “and.”77 And, importantly, the en banc panel found that the ordinary meaning of “and” did not produce a surplusage.78 In doing so, the court expressly rejected the distributive, or several, interpretation of “and” advocated for by the government-appellee and accepted by the Fifth, Sixth, and Eighth Circuits.79 Reframing the issue, it stated:

Essentially, the government invites us to read “and” to mean “or,” even as it concedes elsewhere in its briefs that this reading is mistaken. Neither the government nor our dissenting colleagues offer any authority that adopts this novel reading of “and,” other than recent decisions by our sister circuits that concern the same statutory provision. . . . The government is asking us to inject the words “does not have” into the statute where they do not appear.80 Accordingly, the en banc panel rejected the government’s arguments that to construe “and” in the joint sense would produce surplusage, an absurd result, and be contrary to legislative intent. Four judges dissented, three of whom wrote separately, and two judges concurred.81

In explaining their differing views on the interpretation of “and,” the federal circuit courts also divided on the canon of surplusage, with a majority (four) of the federal circuit courts holding that the joint construction of “and” would impermissibly render subsection (A) surplusage, and the remaining (three) circuit courts reaching the opposite conclusion. As the “Safety Valve” example illustrates, there is room for disagreement even among appellate panels when interpreting the word “and,” and even where the context remains constant.

C. The Trial Court’s Decision

We acknowledge that the Safety Valve statute’s text, structure, and context is different from the text before us and, thus, the ultimate resolution by the United States Supreme Court, which has granted certiorari, will not bear on this case.82 However, the foregoing discussion of the federal courts’ epic battle over “and” illustrates the range of possible interpretations our federal appellate sister courts have endorsed in construing “and.” Notably, the conjunctive/several interpretation is not, as Appellants vehemently suggest, a mere aberrational academic construct invented by a law professor that is unsupported by case law. These opinions also illustrate that the language in the statute can be unambiguous, notwithstanding a plethora of conflicting views among panels of judges have applied the rule of lenity to settle the ambiguity. Id. at 1286. The dissenters argued that the majority adhered too rigidly to the ordinary-meaning and consistent usage cannons at the expense of the “cardinal principle of statutory construction that a statute ought, upon the whole, to be so construed that, if it can be prevented, no clause, sentence, or word shall be superfluous, void, or insignificant.” Id. at 1300 (Branch, J., dissenting). and even among the circuit courts of appeal. As this Court recently reaffirmed, “[t]he parties’ steadfast disagreement over interpretation will not, alone, render the contract ambiguous.”83

In this case, the Court of Chancery found that the “and” in each of the Option Agreements was unambiguous for two reasons. First, it found that “the plain language of the Call Right provision supports [Appellees]’ interpretation because it is consistent with the ‘several’ use of ‘and’ that is used in permissive sentences” and because it “aligns with the colloquial understanding of English as commonly used.”84 The court’s holding did not depend on whether “and” was conjunctive or disjunctive. Rather, the Court of Chancery adopted Professor Reed Dickerson’s suggestion that whether “and” is several or joint depends in part on whether it is used in a permissive or mandatory sentence.

Because the Call Right Provision gave Appellees the broad right to repurchase Weinberg’s Converted Units, exercisable at Derby LP’s sole discretion, the Court of Chancery found the Call Right Provision to be permissive. Accordingly, the “and” in the Call Right Provision was several, in accordance with its ordinary meaning. 85 The trial court noted that this does not mean “and” means “or,” rather, it means that “in such a context the two words are reciprocally related in that the implied meaning of one is the same as the expressed meaning of the other.”86

Second, the Court of Chancery found that Appellees’ interpretation of the Call Right is the only interpretation that gives effect to all terms in the Second and Third Option Agreements. Specifically, the court found that Weinberg’s interpretation would render another provision, which determines the price which Appellees will pay to repurchase Weinberg’s Converted Units, surplusage. Accordingly, the Court of Chancery held that the Call Right Provision is exercisable upon satisfaction of one of the conditions, and that both a termination for any reason and a Restrictive Covenant Breach are not required. Because Waystar exercised its Call Right on November 21, within six months of the date Weinberg was terminated, the exercise was timely and valid.

D. The Plain Language and Context Confirm the Court of Chancery’s Interpretation

Weinberg challenges the trial court’s reliance on Professor Dickerson’s permissive versus mandatory principle, and she argues, in the alternative, that the Call Right Provision is mandatory, not permissive. Although, like the Vice Chancellor, we view the provision as permissive,87 we conclude that the Court of Chancery’s second reason for concluding the “and” in the Call Right Provision is several and distributive is a sufficient and compelling reason to reject the merits of Weinberg’s appeal. That is, the Court of Chancery’s interpretation of the Call Right is the only interpretation that gives effect to all provisions of the Option Agreements.88 The plain language of each of the Option Agreements, read as a whole, and taking account of the overall context, evinces the parties’ unambiguous intent to grant Appellees a Call Right exercisable after Weinberg’s termination, with or without a Restrictive Covenant Breach.

1. “[I]f later, the six (6) month anniversary of the date of the exercise of the

Options . . .”

First, the Call Right Provision not only specifies under which conditions the Call Right may be exercised, but it also specifies its temporal limits. It provides that the Call Right is exercisable during the six-month period following Weinberg’s termination for any reason “(or, if later, the six (6) month anniversary of the date of the exercise of the Options in respect of which the Option Stock was issued” and “a Restrictive Covenant Breach.” The “if later” clause relates to Section 3 of each Option Agreement, which allows an award recipient 90 days after the date of their termination without cause, or their resignation, to exercise their vested and exercisable options.

But Section 3 of the Second and Third Option Agreements further provides that, immediately upon a Forfeiture Event, the award recipient “may not exercise any vested and exercisable Options” and “such vested Options shall immediately terminate and expire (without payment of any consideration therefor).”89 In both agreements, a “Forfeiture Event” includes “the date of a Restrictive Covenant Breach.”90 This means that the date of exercise of an award recipient’s vested and exercisable options can never be after the date of a Restrictive Covenant Breach. Under Weinberg’s reading, Appellees may only exercise the Call Right if a Restrictive Covenant Breach has occurred, effectively depriving the “if later” clause in the Second and Third Option Agreements of meaning or application.91

2. The Two-Tiered Repurchase Price Provision

Second, we agree with the Court of Chancery that Weinberg’s reading of the Call Right would render another provision in the Second and Third Option Agreements, a two- tiered repurchase price provision (the “Repurchase Price Provision”), surplusage.92 Although all three Option Agreements have identical Call Right Provisions, the Second Option Agreement and the Third Option Agreement contain the Repurchase Price Provision, which the First Option Agreement lacks.93

The Repurchase Price Provision, in Paragraph 10(b) of the Second Option Agreement and Paragraph 10(c) of the Third Option Agreement, provides:

In the event the Call Right is exercised, the purchase price for the Converted Units subject to the exercised Call Right shall be the Fair Market Value (as defined in the Partnership Agreement) per unit on the closing date of the repurchase; provided that in the case of a Forfeiture Event, the purchase price for the Converted Units subject to the exercised Call Right shall be the lesser of (x) the per unit price paid by the Participant for the Converted Units, as adjusted to reflect any dividends or distributions paid in respect of such units and (y) the Fair Market Value (as defined in the Partnership Agreement) per exercise period . . . until the earlier of (x) . . . and (y) the Final Expiration Date.” Id. (First Option Agreement § 9, at 5). unit on the closing date of the repurchase.94 In other words, the Second and Third Option Agreements set two different prices at which Appellees may exercise their Call Right, depending on whether a “Forfeiture Event” has occurred. Both agreements define “Forfeiture Event” to include “the date of a Restrictive Covenant Breach”:

“Forfeiture Event” means (A) the date of the Participant’s Termination for Cause (or voluntary resignation by the Participant at a time when the Board reasonably determines that the Employer could have terminated the Participant’s employment for Cause) or (B) the date of a Restrictive Covenant Breach.95

Accordingly, if we were to read the Call Right Provision as Weinberg does, the first tier of the Repurchase Price Provision would be rendered meaningless and would never apply. This is because if both termination for any reason and a Restrictive Covenant Breach were required to trigger the Call Right, the repurchase of Converted Units would always be subject to the price reserved for Forfeiture Events.

The inclusion of the two tiered Repurchase Price Provision demonstrates that the drafters contemplated (and Weinberg reasonably should have understood) that the Call Right could be triggered absent a Forfeiture Event, i.e., absent a Restrictive Covenant Breach. Otherwise, there would have been no need to provide a purchase price for that scenario.96

On appeal, Weinberg points out that the First Option Agreement, which governs 89,318.96 of Weinberg’s Converted Units (approximately 83% of the options), does not have the same Repurchase Price Provision. Instead, the First Option Agreement has a repurchase price provision with only one tier: It sets the repurchase price at “the Fair Market Value (as defined in the Partnership Agreement)97 per unit on the closing date of the repurchase.”98 It does not differentiate between a price when the Call Right is triggered by a Forfeiture Event or absent a Forfeiture Event. She argues that it was error for the Court of Chancery not to analyze each Option Agreement independently, as separate, and independent contracts. Further, she contends that if the presence of the Repurchase Price Provision in the Second and Third Option Agreements requires us to affirm the Court of Chancery’s ruling, then the absence of the Repurchase Price Provision in the First Option Agreement compels us to reverse its ruling as to those options.

We are not persuaded by Weinberg’s arguments. All three Option Agreements are between the same parties, Appellees and Weinberg, and concern the same subject matter — the granting of options to purchase shares of Derby Inc. under the Plan. All three Option interpretation is very strongly negated if it would render some provisions superfluous.”). Cf. Charney v. Am. Apparel, Inc., 2015 WL 5313769, at *15 (Del. Ch. Sept. 11, 2015) (“The canon against surplusage, moreover, is most properly used to fathom the objective intent of the contracting parties, not ‘to trap a careless draftsperson into including a contract right that he did not mean to include. And [the canon] does not change the fact that courts will not bend contract language to read meaning into the words that the parties obviously did not intend.’”) (quoting Majkowski v. Am. Imaging Mgmt. Servs., LLC, 913 A.2d 572, 588 (Del. Ch. 2006))). Agreements were executed within the same year, with the First Option Agreement and the Second Option Agreement executed within 24 hours of each other. The Call Right Provision is identical in all three Option Agreements and should be interpreted consistently. It would be illogical to conclude that the identical Call Right Provision in the First Option Agreement, signed the day before the Second Option Agreement, by the same parties, has a different and contradictory meaning than the one in the Second and Third Option Agreements. If the parties had intended for the Call Right Provisions to have different meanings, and conditions, it is reasonable to conclude that they would have changed the language in the Call Right Provision itself.

E. The Several Reading of “And” Is the Only Reasonable Reading

Further, although Weinberg sets forth arguments as to why “and” means “and,” (in the conjunctive, joint sense) and why we should not rely on an article written 60 years ago by a law professor, she does not set forth any arguments as to why “and” should be interpreted jointly, rather than severally. This is problematic because, for one, interpreting “and” severally does not contradict Weinberg’s proposition that “and” is conjunctive, or in other words, that “and” means “and.”

Weinberg does not explain why the Court of Chancery’s interpretation is tantamount to reading “and” as “or.” As discussed above, the joint versus several determination is distinct from the conjunctive versus disjunctive determination. Moreover, there is another distinction that would come into play, even if we were to hold that “and” is disjunctive, i.e., that “and” means “or,” that is also separate from the conjunctive versus disjunctive determination. We would need to ask (as in the charitable/educational institution example above) whether “or” was being used inclusively (A or B, or both) or exclusively (A or B, not both).99 As that example illustrated, the inclusive “or” may be used interchangeably with the several “and,” but this does not mean that “and” means “or.” More importantly, the several use of “and” is the only reasonable reading of the Call Right Provision for the additional reasons set forth below which consider, more broadly, the context of the provision.

1. The Permissive Use of “And” Here Suggests Its “Several” Sense

First, as a baseline, although some scholars maintain that “the meaning of and is usually several,”100 it is, at least, commonplace. This is especially true in permissive sentences101 and aligns with our understanding of common, ordinary usage. For example, if the litigants went to a breakfast meeting and the host said, “You may have a yogurt, a muffin, and a bagel,” the litigants would understand that they may take any of the food items, all of the food items, or none of the food items. In the same situation, albeit with a more demanding host, if the litigants were told, “You must take a yogurt, a muffin, and a bagel,” they would understand that they must take all three food items. The example is easily tweaked to demonstrate why Weinberg’s suggestion, which is offered without explanation, that the Court of Chancery’s interpretation renders “and” to mean “or” is illogical. If our host told the litigants, “You may take a yogurt, a muffin, or a bagel,” the question would be raised whether the litigants could take all three food items, or they were limited to one. In other words, a question would exist as to whether “or” was inclusive or exclusive. As our example illustrates, “and” does not mean “or.”102

2. The Call Right is a Restriction on Weinberg’s Rights

Second, the nature of a Call Right and the plain language of the Call Right Provision in each Option Agreement suggest that a reasonable third party would expect that Appellees retained a broad right to repurchase Weinberg’s Converted Units. The phrasing of the provision, “[t]he Converted Units shall be subject to the right of repurchase,” rather than being mandatory and obligating Appellees, is a statement subjecting Weinberg’s Converted Units to Appellee’s repurchase right, which they have “sole discretion” to exercise.103

3. The Joint Reading of “And” Produces an Illogical Result

Third, Weinberg’s joint interpretation of “and” in the Call Right Provision would prevent Waystar from exercising its Call Right despite an employee’s for-cause termination, other than one based upon a Restrictive Covenant Breach. For-cause termination is defined in the Plan as including, for example, willful failure to substantially perform her duties and responsibilities, substantial negligence in the performance of her duties and responsibilities, and conviction of a felony.104 Her reading is not logical. It is highly unlikely a company would structure its right to repurchase its equity in such a restrictive manner — depriving itself of the ability to repurchase equity from one who has willfully failed to perform, who has been substantially negligent, or who perhaps even has committed a felony, while inexplicably ordaining a Restrictive Covenant Breach with outsized importance by requiring a Restricted Covenant Breach to have occurred before the Call Right can be exercised.105

4. The Several Use of “And” Aligns with the Scheme of the Plan

Fourth, the meaning of the Call Right Provision that best aligns with the scheme of the Plan is the conjunctive, several interpretation.106 Thus, we disagree with Weinberg’s contention that her interpretation of the Call Right is “entirely consistent with ordinary executive compensation arrangements and serves a fulsome, rational contract purpose: to incentivize Appellant to abide by her Restrictive Covenant obligations, on pain of forfeiting her future upside participation in Appellees’ companies.”107

As Weinberg acknowledges, a typical and logical purpose of an equity incentive plan is to align employee incentives with those of the company.108 Accordingly, call rights allow companies to “retire the shares of a departing shareholder who is no longer presumably because options granted under that agreement were subject to an entirely different vesting schedule, with 98.95% of the options vesting on the date of the grant. important to the success of the venture.”109 An employee is generally no longer important to a venture when they cease to be an employee, for any reason.110 Weinberg argues that it is a reasonable aspect of the scheme of the Plan for her to hold company equity indefinitely as a mechanism to ensure loyalty to the restrictive covenants (which she is already contractually obligated to comply with). But Weinberg’s contractual obligations in the Restrictive Covenant Agreements expire after specified time periods.111 Absent being repurchased by Appellees, Weinberg could hold the Converted Units indefinitely.

Further, the Plan documents state that the purpose of the Plan is to attract and retain key personnel, with an end goal of “strengthening their commitment to the welfare of the Company Group and aligning their interests with those of the Company’s stockholders.”112 The Second and Third Option Agreements provide that Weinberg’s options were to vest upon two schedules: one based on her time at the company113 and one based on whether the company achieved certain performance goals.114 This structure indicates that the Option Agreements were meant to induce Weinberg both to continue her services to the company and to increase the company’s value, as well as to benefit her own financial position.115 Thus, we reject Weinberg’s characterization of the Call Right as a sanction. We observe that Weinberg netted approximately $925,665 when Waystar repurchased her Converted Units.

F. The Option Agreements are Unambiguous: The Doctrine of Contra Proferentum

Does Not Apply Finally, Weinberg argues that the Call Right Provision is, at least, ambiguous. Accordingly, she asserts that we must apply the doctrine of contra proferentum because

Purpose. The purpose of [the Plan] is to provide a means through which the Company and other members of the Company Group may attract and retain key personnel and to provide a means whereby directors, officers, employees, consultants, and advisors of the Company and other members of the Company Group can acquire and maintain an equity interest in the Company, or be paid incentive compensation measured by reference to the value of Common Stock, thereby strengthening their commitment to the welfare of the Company Group and aligning their interests with those of the Company’s stockholders. the Option Agreements, and the Partnership Agreement, are contracts of adhesion. However, for the reasons discussed above, we hold that the Call Right Provision is unambiguous and accordingly, contra proferentum does not apply.116

V. CONCLUSION

For the foregoing reasons, we AFFIRM the judgment of the Court of Chancery.