Delaware Court of Chancery Retains Delaware Jurisdiction Despite Competing California Suits

In Parcell v. Southwall Technologies, Inc., C.A. No. 7003-VCL (Del. Ch. Nov. 7, 2011)(transcript), the Delaware Court of Chancery refused to stay litigation challenging a transaction despite parallel litigation pending in California challenging the same transaction. Read transcript here.

Thanks are due to Delaware litigator Kurt Heyman for forwarding this transcript.

Brief Overview: Most readers know that transcript rulings are often cited in briefs in Delaware as persuasive authority. In this ruling, the vice chancellor acknowledged his respect for the erudition and competence of the California judiciary, as well as the recurring problem of multiple suits pending in multiple jurisdictions over the same challenged transaction. The Court of Chancery focused on the internal affairs doctrine that would apply Delaware law in this case and the wisdom of having the court whose state law applied being the forum where the case was adjudicated. Unresolved by this ruling was whether the jurists in California would also decide, for their own reasons, to allow the parallel cases before them to proceed simultaneously.

Also noteworthy is that the Delaware court would not order expedited proceedings but did state in this decision that it would entertain expedition if the parties agreed to submit a stipulated scheduling order with an expedited timetable. The Court's reasoning, in part, was that: (i) there was no apparent basis to suggest that the majority shareholder's interests were not aligned with other shareholders; and (ii) there was no need to enjoin the transaction because a quasi-appraisal remedy was available under the Berger v. Pubco case.

Other posts on these pages addressing the issue of simultaneous multi-jurisdiction litigation are available here.

Read more Delaware business litigation case summaries and commentary on Delaware Corporate and Commercial Litigation Blog, a blog hosted by Francis G.X. Pileggi, of Eckert Seamans.

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