Delaware Business Litigation Report

Chancery Dismisses Simultaneously-Filed Delaware Action in Favor of New Jersey Action

Sweeney v. RPD Holdgs. Grp., LLC, C.A. No. 2020-0813-SG (Del. Ch. May 27, 2021)
Delaware’s forum non conveniens jurisprudence typically turns on when parties file competing actions. Under Cryo-Maid’s “overwhelming hardship” standard, a defendant seeking to stay a first-filed Delaware action in favor of litigation elsewhere must show that the six so-called Cryo-Maid factors tip overwhelmingly in the defendant’s favor. By contrast, under McWane’s less onerous discretionary standard, a defendant seeking to stay a later-filed Delaware action often succeeds if the defendant can point to foreign litigation between the same parties in a forum that can do prompt and complete justice.

Because of the effect of first-filed status, parties sometimes race to the courthouse and file separate actions in different fora within days (or hours) of each other. In this case, for instance, the defendant filed in New Jersey a day before the plaintiff filed in Delaware, and defendant sought to stay the Delaware action. But when parties file in such close proximity, the Court of Chancery will treat the two actions as simultaneously filed and will apply the Cryo-Maid factors without requiring a showing of overwhelming hardship. That is, the Court will conduct a traditional forum non conveniens analysis without giving either party “first-filed” status.

Here, the dispute involves a New Jersey trust formed by New Jersey residents and governed by New Jersey law. In the Court’s view, it would be “the epitome of lane-hogging” for a Delaware court to assert jurisdiction over the action in these circumstances. Consequently, the Court opted to stay in its lane and dismissed the Delaware action without prejudice in favor of the New Jersey action.

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