Expedited Proceedings

August 10, 2016

Delaware Chancery Court Blocks Former Exec’s Effort to Invalidate Noncompete in a Massachusetts Court

When litigation involving the same dispute and parties has been commenced in two different venues, many courts adhere to the “first-filed rule” which provides that the litigation should be confined to the forum in which it is first commenced. This often results in a race to the courthouse by litigants seeking to have the dispute heard in their preferred choice of venue.

Delaware courts, as a general matter, have followed this common law rule and allow judges broad discretion to grant a stay when there is a prior action pending in another state and involving the same parties and issues. There is, however, one important exception to this rule.

In cases where contracting parties have expressly agreed to a legally enforceable forum selection clause, the Delaware Supreme Court has held that courts must honor the parties’ contract and enforce the clause, even if, absent any forum selection clause, the first-filed rule might otherwise require a different result. As a result, a party’s effort to avoid a Delaware forum selection clause by commencing suit in a different state can be defeated if the proper steps are taken. A recent proceeding in case pending in the Delaware Court of Chancery provides guidance.

January 29, 2014

Survey of Chancery Court Cases Shows Most Litigants Obtain Expedited Relief

by Scott Holt

A recent survey conducted by several of my colleagues demonstrates the speed in which litigants can obtain preliminary relief from the Court of Chancery. The survey included a sampling and analysis of approximately 200 cases between 2009 and 2011, in which the court ruled upon a motion for temporary restraining order or a motion for preliminary injunction. The results reflect the frequency and speed at which the court has granted injunctive relief in recent years:

For cases in which the court ruled on a motion for temporary restraining order, the court granted the motion 58 percent of the time. On average, the court granted the motion 7 days after its filing.
For cases in which the court ruled on a motion for preliminary injunction, the court granted the motion 30 percent of the time. On average, the court granted the motion 26 days after its filing.
The survey also looked at cases from the sample that involved trade secret claims and in which the court ruled on a motion for temporary restraining order or preliminary injunction. In those cases, the court granted the motion for temporary restraining order 88 percent of the time and granted the motion for preliminary injunction 75 percent of the time.

Based on these statistics, there seems to be little doubt that the court will order injunctive relief on an expedited basis in cases where circumstances require expedition, including those involving noncompete agreements and misappropriation of trade secret.

A copy of the full article drafted by my colleagues and published by BNA can be obtained on the Young Conaway Stargatt & Taylor website.

May 25, 2010

Expedited Proceedings in the Delaware Court of Chancery

by Scott Holt

Expedited proceedings are a vital component to the enforcement of noncompetition agreements. In Delaware, a motion for expedited proceedings is usually filed simultaneously with the verified complaint in the Court of Chancery. Typical relief includes shortening the time to answer the complaint, establishing discovery cut-off dates, and setting a date for the preliminary injunction hearing. A telephonic hearing is normally held by the Court shortly after the motion is filed.

The main purpose of expediting the proceedings is, of course, to get prompt relief before irreparable harm occurs. Such proceedings also have the effect of placing the ex-employee (and in some cases, the new employer) on the ropes in quick fashion.

The Delaware Court of Chancery Rules provide the court with broad power to permit expedited proceedings. The burden for obtaining expedited proceedings is fairly light. The party seeking relief must demonstrate a “sufficiently colorable claim” and show a sufficient possibility of a threatened irreparable injury to justify the costs involved. For non-compete cases, this burden is usually satisfied.