Clean-Up Doctrine to Adjudicate Legal Claims in Chancery May Take Precedence Over Request for Jury Trial
Firststring Research, Inc. v. JSS Medical Research Inc., C.A. No. 2020-0332-KSJM (Del. Ch. May 28, 2021)
Delaware has not merged its courts of law and equity, which may have implications for a litigant seeking a jury trial. When a counterclaim-plaintiff seeks a jury trial for a claim otherwise within the subject-matter jurisdiction of the Court of Chancery, application of the clean-up doctrine might justify retaining the counterclaims in Chancery and forgoing jury-trial rights.
Plaintiff, a biopharmaceutical company, brought suit against defendant, a company that had entered into an agreement to manage clinical studies for plaintiff’s investigational new drug. Plaintiff alleged defendant had mismanaged a terminated study. Among other relief, plaintiff sought specific performance of defendant’s obligation to cooperate with plaintiff in winding down the study. Defendant filed mirror-image breach of contract claims in Delaware Superior Court and demanded a jury trial. Defendant demanded a constitutional right to a jury trial and sought to transfer the original action from the Court of Chancery to Superior Court on the grounds that the plaintiff’s request for specific performance was pretextual and insufficient to vest Chancery with subject-matter jurisdiction.
The Court found that plaintiff had established a genuine need for specific performance, and thus established a sound basis for subject-matter jurisdiction in the Court of Chancery. The defendant had contractually agreed that cooperation in winding down a study was important to ensure subject safety, continuity or discontinuity of treatment, and compliance with local and national regulations. Replevin might not be an adequate remedy; more than just return of data, ongoing collaboration was essential for winddown, and specific performance might be required to achieve full relief. Application of the clean-up doctrine would allow for judicial efficiency and provide complete relief, which justified the Court of Chancery exercising jurisdiction over plaintiff’s legal claims. The Court next rejected defendant’s argument that its right to a jury trial trumped the efficiency concerns underlying the clean-up doctrine. In Acierno v. Goldstein, 2004 WL 1488673 (Del. Ch. June 25, 2004), the Court had ruled that a litigant is not entitled to a jury trial in the Superior Court for claims that are within the subject-matter jurisdiction of the Court of Chancery. The Court explained how this settled principle of law regarding the clean-up doctrine comports with the evolution of law and equity in Delaware, the United States, and England between the 18th and 20th centuries.Share