Posts tagged Injunctions

Court Of Chancery Provides Guidance On Reconciling Public Policy Exception To Noncompete Agreements

Cabela’s LLC v. Wellman, C.A. 2018-0607-TMR (October 26, 2018)

Delaware law broadly enforces noncompete agreements. However, it will not do so when the public policy of a state with greater contacts to the parties prohibits that enforcement. As this decision explains, how to decide what exactly that competing public policy is may not be easy to do given the exceptions to that policy that frequently exist. Here the Court carefully examines the public policy of Nebraska and finds it permits enforcement of noncompete agreements when to do so will prevent unfair competition. More ›

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Court of Chancery Explains Anti-Suit Injunctions

Village Green Holding LLC v. Holtzman, C.A. No. 2018-0631-TMR (Del. Ch. Oct. 5, 2018)

This decision provides an excellent summary on Delaware law concerning when the Court will enjoin litigation in another jurisdiction to enforce a contract’s forum selection clause, as the Court did in this case.  It also notes a potential trap for the unwary in situations where the clause selects only a court lacking jurisdiction to hear the dispute, rendering the forum selection invalid.  That may occur for Delaware forum selection clauses when the Court of Chancery is the sole selected forum but cannot hear the dispute because of its limited subject matter jurisdiction.  To avoid that problem, it would be best to identify an alternative within the jurisdiction, or accept any court within the jurisdiction.

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Court Of Chancery Explains How To Set A TRO Bond

Applied Energetics Inc. v. Farley, C.A. 2018-0489-TMR (August 14, 2018)

A plaintiff who obtains a TRO must post a bond to cover any damages the defendant may suffer from the TRO. How to calculate the amount of that bond is often difficult. This decision does a good job of explaining how to make that calculation.

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Court Of Chancery Enjoins Improper Suit in Another Forum

Stratcap Investments Inc. v. Mears,  C.A. 12548-CB (July 11, 2016)

This transcript ruling shows that the Court is not sympathetic to parties who make up excuses for violating the forum selection provisions of their contract.

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Court Of Chancery Limits Contractual Right To An Injunction

AM General Holdings LLC v. The Renco Group Inc.,  C.A. Nos. 7639-VCN and 7668-VCN (December 29, 2015)

Practitioners often assume that if they provide a contractual right to an injunction for breach of contract, that the Court is obligated to find such a breach constitutes the irreparable harm that warrants an injunction. Not so fast, holds this decision. More ›

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Court Of Chancery Calculates The Length Of An Injunction Against Unfair Competition

Revolution Retail Systems LLC v. Sentinel Technologies Inc., C.A. 10605-VCP (October 30, 2015)

How long should competition in violation of an agreement be enjoined? Normally, that would depend on what the agreement says. But when that is not set out by the parties’ contract, this decision explains how to determine the time during which the unfair competition will be enjoined.

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Court Of Chancery Issues Novel Injunction

Numoda Corporation v. Numoda Technologies Inc., C.A. 9163-VCN (March 27, 2014)

It is common in a Section 225 action seeking the determination of the composition of a company's board of directors for the court to issue a status quo order.  Those orders stop the company from taking any actions out-of-the-ordinary course of business until the Court decides who is really in control.  Here the Court issued a similar order pending a decision on whether the plaintiff was entitled to have stock issued to it to take control.  This extends the use of status quo orders to a new realm.

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Court Of Chancery Upholds Clickwrap Non-Compete Agreement

Newell Rubbermaid Inc. v. Storm, C.A. 9398-VCN (March 27, 2014)

This decision holds that a clickwrap agreement is sufficient to bind an employee to a non-compete agreement.  This is an important innovation as it will permit employers to implement non-compete agreements quickly and without much fuss.

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Court Of Chancery Enforces Forum Selection Agreement

BE&K Engineering Company LLC v. Rocktenn CP LLC, C.A. 8837-VCL (January 15, 2014)

Anti-suit injunctions to enforce a choice of forum clause are not always easy to get.  Delaware courts do not like to interfere with other courts jurisdiction.  Instead, they prefer that a party aggrieved by the violation of a contract that selects Delaware as the forum to resolve disputes ask the non-Delaware court to stay its hand. However, as this decision illustrates, when pressed, a Delaware court will enjoin litigation elsewhere in the right circumstances. One such circumstance is when the party to be enjoined has tried to manipulate the system by taking inconsistent positions on what forum the contract requires. Trickery with the Courts is never a good idea.

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Court Of Chancery Denies Anti-Suit Injunction

The North River Insurance Company v. Mine Safety Appliances Company, C.A. 8456-VCG (December 20, 2013)

The Court of Chancery has again denied a request for an anti-suit injunction. This time the Court noted that the litigation sought to be enjoined would actually continue by a party not before the Court. Hence, the injunction was not going to accomplish an end to duplicative litigation. 

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Court Of Chancery Provides Guidelines On Stantdstill Orders

IMO Dissolution Of Adir Managment Services, C. A. Nos. 8717 and 8718-VCN (August 9, 2013)

The Court of Chancery often enters standstill orders or status quo orders when the control of a Delaware entity is in dispute.  The orders are designed to prevent actions that may not be what the actual management would do in circumstances when the identity of that management is not in doubt. Disputes over the form of these orders are common and this decision seems to settle how one provision should be worded.  At least in the absence of special circumstances, the provision of the order that prevents extraordinary actions should be worded so as to permit action after 7 days notice to the other side, who is then free to seek court action if it objects.

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Supreme Court Upholds Forum Selection Clause

National Industries Group v. Carlyle Investment Management LLC,  No. 586, 2012 (May 29, 2013)

This is an important decision because it upholds the power of the Delaware Court of Chancery to enforce by an injunction the forum selection clause in a contract.  Previously, there was some doubt under the existing case law whether such an injunction would issue, but, at least among sophisticated litigants, there is no doubt any more.  Note that the clause in question provided that a "court in Delaware" would hear any dispute.  A clause that attempted to vest jurisdiction only in the Court of Chancery is questionable because a contract alone cannot confer jurisdiction on that court with its limited equity jurisdiction.

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Court Of Chancery Enjoins Solicitation

Kallick v. Sandridge Energy Inc., C.A. 8182-CS (March 8, 2013)

This is an important decision dealing with a so-called "Proxy Put."  Briefly, a Proxy Put permits creditors to call corporate debt when a new board of directors is elected without the consent of the current board.  This decision applies the reasonableness standard of Unocal rather than the stricter standard of review of Blasius to decide if the Board has properly refused to approve a competing slate of directors for purposes of preventing a Proxy Put.

The Court carefully distinguished other circumstances where such a Put might be upheld, such as when a competing slate's election might cause immediate harm to the corporation.

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Court Of Chancery Denies Expedition Of Money Claim

Intrepid Investments LLC v. Selling Source LLC,  C.A. 8261-VCN (February 8, 2013)

It is not always easy to have the Court of Chancey expedite your case just because you ask for an injunction.  Here, the Court denied expedition because the plaintiff had waited 5 months to ask for it and because the plaintiff's claim was really just for damages.

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Court of Chancery Discusses Expedited Proceedings

The Renco Group Inc. v. MacAndrews AMG Holdings LLC, C.A. 7668-VCN (January 18, 2013)

This decision provides a good review of when the Court will expedite a proceeding.

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