Posts tagged Business Torts

Court Of Chancery Upholds Power To Enjoin Employment

NuVasive Inc. v. Lanx, Inc.,  C. A. 7266-VCG (July 11, 2012)

Litigation to restrain the employment of former employees is often complicated by jurisdictional issues. This decision resolves some of those issues by holding that a Delaware court may restrain a Delaware corporation from employing a former employee of the plaintiff even when that employee is not himself subject to the jurisdiction of the Delaware courts.

This decision, coupled with the enforcement of the choice of Delaware law clauses in other employment decisions, means that Delaware is a preferred forum for such litigation.

Share

Court Of Chancery Interprets Release

Travelers Casualty And Surety Company v. Sequa Corporation,  C.A. 7055-VCG (May 29, 2012)

This decision involved an interesting argument over the scope of a release.  As is common, the release was signed on behalf of a parent company and all its subsidiaries. To escape the scope of the release, a subsidiary argued that it was only bound to release the same claims that its parent had, but not any claims that were unique to the subsidiary.  The Court sidestepped that argument because in any case the release did not cover the claims asserted by the subsidiary.  However, this stands as a warning to better draft releases that cover all entities in a control group.

Share

Court Of Chancery Explains Burden Of Proof In Accounting Case

Whittington v. Dragon Group LLC, C.A. 2291-VCP (May 25, 2012)

This decision explains how to apply the burden of proof in an accounting case.  Merely producing a cancelled check is not enough.

Share

Superior Court Limits Savings Clause

Huffington v. T.C. Group LLC, C.A. N11C-01-030-JRJ-CCLD  (April 18, 2012)

Delaware has a savings statute that generally prevents the statute of limitations from expiring when a case is dismissed for technical reasons and then refiled in the right court.  But, as this decision points out, the savings statute has a much narrower scope than some might believe.  Thus, when as here, a case is filed in a jurisdiction other than that chosen by the parties in their contract and then dismissed for having violated the forum selection clause, the savings statute does not apply.

Share

Court Of Chancery Limits Fraudulent Inducement Claims

Schonfeld Group Holdings LLC v. Trillium Holdings LLC, C.A. 6759-VCL (March 6, 2012)

It occurs more than you might think that a party to a release later claims that the release is not binding because she was fraudulently induced to sign it.  Applying recent New York law, here the Court holds that if the release covers "unknown claims," then it cannot be set aside by an claim that it was fraudulently induced.

Share

Court Of Chancery Clarifies Pleading Rules For Bad Faith Claims

Clean Harbors Inc. v. Safety-Kleen Inc.,  C.A. 6117-VCP (December 9, 2011)

This decision clarifies the detail that must be pled to assert a claim that the defendant acted in "bad faith."  The short answer is that any set of facts that warrants such an inference is enough to state such a claim.

Share

Superior Court Explains Physical Evidence Requirement

Elegant Slummimg Inc. v. NGM,  C.A. 810C-11-013-RFS (November 30, 2011)

This scholarly review of Delaware law explains the "physical evidence requirement" in some insurance policies. 

Share

CCLD Explains Pleading Rules For Fraud

Brevet Capital Special Opportunities Funds L.P. v. Fourth Third LLC, C.A. N10C-12-071 JRS (CCLD)

The Superior Court's Complex Commercial Civil Division is issuing more and more opinions in the various matters that are now becoming ripe for decision.  Here the Court explains when both fraud and breach of contract claims may be filed in the same case and how to adequately plead the fraud count under the particularity standard required.

Share

Delaware Superior Court Recognizes New Tort Theory

Allen Family Foods Inc. v. Capital Carbonic Corporation , C.A. N10C-10-313 JRS CCLD (March 31, 2011)

In this decision the Delaware Superior Court declined to follow federal precedent and adopted the liability theory of the Restatement (Second) of Torts Section 766A. Under that Section, a claim is permitted for interfering with a plaintiff's contract rights with a third party even when the contract is not broken.  This is different from a more typical interference claim where the third party refuses to perform because of some wrongful act.

Share

Court Of Chancery Calculates Interest On A Judgment

Gentile v. Rossette, C.A. 20213-VCN (September 10, 2010)

A frequently asked question is how does the Court of Chancery determine the interest due on a judgment when the Court is not bound by the legal rate imposed by other courts.  This decision explains how the Court searches for a fair rate.

Share

Court Of Chancery Explains Damage Calculations

Gentile v. Rossette, C.A. 20213-VCN (May 28, 2010)

The calculation of damages for the wrongful conversion of convertible stock is not easy.  This decision explains how.

Share

Court Of Chancery Awards Big Damages In Stealing Business Case

Beard Research Inc. v Kates, C.A. 1316-VCP (April 23, 2010) This is an excellent primer on how to litigate a business tort case arising out of an employee's stealing all your confidential information and using it to lure away your customers to his new firm. It also includes a good outline on how to prove damages.  What we found particularly interesting is the interplay between a trade secret claim and a claim for breach of fiduciary duty.  You can have both in one case.  Of course, the elements of proof vary but together these prove an efficient way to maximize a recovery. Share

Court Of Chancery Explains Damage Calculations In Trade Secret Litigation

Agilent Technologies Inc. v. Kirkland, C.A. 3512-VCS ( February 18, 2010)

Calculating damages in trade secret litigation is often difficult.  Lost profits may overlap with unjust enrichment claims and the whole process may be affected by possible injuntive relief. This decision explains how a court will decide the right remedy and calculate damages.  It is also a particularly good example of the Court of Chancery's thoughtful approach to remedies.

Share

Court Of Chancery Explains Damages For Breach Of Non-compete Agreement

Great American Opportunities Inc. v Cherrydale Fundraising LLC., C.A. 3718-VCP (January 19, 2010)

This decision is a landmark case on Delaware law on non-compete agreements with employees. It establishes so many new precedents that it is hard to briefly summarize. For example, it holds that it is possible to assign an employee non-compete agreement in connection with an asset sale.

Perhaps the most significant part of the decision is its discussion on how to calculate damages when an at-will employee is lured away by a competitor and then violates his non-competition agreement.  Damages are not, under this decision, what the new employer won in new business with the purloined employee.  Instead, how to calculate damages in such a case is much more complicated and requires a careful reading of this decision.

Share

Court Of Chancery Explains How To Limit Fraud Claims Post Deal

Mitsubishi Power Systems Americas Inc. v. Babock & Brown Infrastructure Group US LLC, C.A. 4499-VCL (January 22, 2010)

Deal attorneys try to limit the ability of a buyer to make post deal claims for misrepresentation. That is hard to do by contractual provisions that plainitffs are all too clever at avoiding and courts are often reluctant to enforce.

Here the Court of Chancery took the time to go over exactly what contract language may limit post deal claims. All deal lawyers should study it carefully.

Share