11/08/2011 09:52:00 AM EST
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
Thanks are due to Delaware litigator Kurt Heyman for
forwarding this transcript.
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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