Delaware Business Litigation Report

Superior Court CCLD Grants Anti-Suit Injunction

American International Industries v. The Neslemur Company, C.A. No. N19C-04-258 MMJ CCLD (Del. Super. Dec. 10, 2020)

Anti-suit injunctions are an extraordinary form of relief. This decision illustrates the narrow circumstances where one may be warranted. Here, plaintiff American International Industries (“AII”) entered into an Asset Purchase Agreement (“APA”) with The Neslemur Company (“Neslemur”), in which the assets AII acquired later gave rise to third-party product liability claims against AII involving asbestos-contaminated talcum powder across the United States. AII sued Neslemur in the Delaware Superior Court for contractual indemnification under the APA. AII then sought to join Neslemur as a defendant in several pending tort actions in other jurisdictions, including California and New Jersey, seeking statutory and common law indemnification, as well as contribution. In response, Neslemur sought an anti-suit injunction in Delaware against AII to prevent AII from pursuing its indemnification claims in jurisdictions other than Delaware.

The Superior Court, in a matter consolidated with an action filed in the Court of Chancery, and sitting with equitable powers by designation from the Delaware Supreme Court, granted the injunction. In doing so, the Court found no meaningful distinction between an “anti-suit” injunction and an “anti-claim” injunction, and applied the typical anti-suit injunction standard. As the Court noted, anti-suit injunctions are “appropriate for claims that ‘necessarily implicate’ an agreement at issue in [a] Delaware Court.” Here, AII’s alternative claims for statutory or common law indemnification, even under the laws of the foreign jurisdictions, would implicate the same facts as those that would be adjudicated under the APA in Delaware. The APA would also control the issue of indemnification in all relevant jurisdictions because those jurisdictions also “follow[ed] the maxim that where the terms of an applicable contract address indemnification obligations, the contract controls.” Further, the Court observed that there was no requirement for AII to add Neslemur as a defendant in the other jurisdictions for AII to prevail on its product line exception to successor liability defense. And claims in other jurisdictions presented “the potential for judgments inconsistent with the outcome of the Delaware litigation.” These circumstances supported entering the requested injunction.

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