Gibbons Commercial Litigation News
The courts share the following common features advantageous to the adjudication of these sorts of business and corporate disputes.
Experienced judicial officers. Each court is comprised of judicial officers with specialized experience and knowledge of the law relating to the sorts of claims that are regularly brought there. The judicial officers serve as the finders of fact, as these types of claims are not decided by a jury. These features result in more predictability in each court’s rulings, which is valuable to the parties that appear there.
Expedited proceedings. Unlike the trial courts of law, the states’ chancery courts allow for emergency relief and expedited proceedings. These courts are structured to be nimble and available on short notice to prioritize and address emergent issues that are important to the parties before them. Moreover, even if a matter is not formally expedited, it can move at a faster pace than in the respective state’s court of law.
Availability of interim and permanent injunctive relief. Each court allows for equitable relief in the form of interim (temporary) and permanent injunctive relief, including interim orders to maintain the status quo in a relationship while the litigation proceeds to a final decision on the merits.
Fairness and flexibility. As courts of equity, the decisions of each court are ultimately guided by principles of equity and fairness, which afford judicial officers with the flexibility to fashion remedies that meet the particular circumstances of each case.
NEW JERSEY’S GENERAL EQUITY PART
OF THE CHANCERY DIVISION
While rooted in the same history and tradition as Delaware and sharing the aforementioned common features of chancery practice, New Jersey does chancery its own way. In addition to having substantive differences in its corporate law, New Jersey’s General Equity Part of the Chancery Division has unique practices and procedures that any regular practitioner in the court should know.
- Since 1947, the General Equity Part of New Jersey’s Chancery Division lies within New Jersey’s Superior Court. Each of the state’s 15 vicinages has a Chancery Division – General Equity Part with one to three judges. There are currently a total of 24 General Equity Part judges in the state.
- The court has jurisdiction of all actions that seek primarily equitable relief rather than those that seek remedies at law.
The court generally will sua sponte transfer misfiled matters to the appropriate division. Alternatively, a party may move to transfer a misfiled case to the appropriate division, either within 10 days after the time prescribed for service of the last responsive pleading or on or before the return date for summary actions. The transfer is final and a case cannot be re-transferred back to the Chancery Division from the Law Division.
Litigants may seek legal relief, i.e., monetary damages, for supplementary claims as long as the primary relief sought in the action is equitable in nature.
- Litigants seeking primarily equitable relief in non-arbitrable business disputes can defer to the chancery judge’s knowledge and past experience of complex commercial issues.
- Cases are individually managed by the same judge throughout the lifespan of the action. This unique feature of the General Equity Part:
- Allows for efficient and expedited case management
- Enables a judge to be informed and familiar with the issues of the case
- Augments the likelihood of settlement
- The General Equity Part will schedule a brief and informal case management conference within 30 days from the filing date of the responsive pleading to the complaint.
- At the conference, the judge will set a discovery schedule, define the scope of discovery, and set the next event date (a subsequent case management conference, a settlement conference, or a pretrial conference) in the case management order.
- Cases typically are on an expedited track. Lengthy discovery is not common and discovery motions are filed less frequently relative to the Law Division, Civil Part.
- With few exceptions, the court will schedule trial within one year of the complaint’s filing date.
- Litigants are permitted to participate in the court’s settlement program: the Early Settlement Panel (ESP).
- Each vicinage has its own established ESP, in which the presiding judge works with the county bar associations (and volunteer attorneys) to conduct settlement conferences.
- Conferences through the ESP are complementary and do not incur any cost to litigants. Orders referring parties to the ESP will contain a deadline for the end of meditation, and the court will generally schedule a status conference as a next event date.
- Parties that fail to participate in the program may incur an assessment of counsel fees and/or a dismissal of their pleadings.
- Pretrial conferences are generally conducted within a month of the scheduled trial. The purpose of a pretrial conference is to outline issues for trial and inform the parties when exhibit lists, witness lists, and trial briefs are to be submitted. Counsel must submit a pretrial memorandum and pretrial brief prior to the conference.
- Trial briefs that outline the parties’ position and trial presentation are submitted to the court before the commencement of trial.
- Trials typically have an intermittent schedule, occurring over the span of weeks or months on nonconsecutive days.
- At the conclusion of trial, the chancery judge will schedule a deadline for litigants to file their post-trial submissions (finding of facts and conclusions of law) with the court.
Final and interlocutory appeals are filed with the Appellate Division of the New Jersey Superior Court. Appeals from final judgments are taken as of right. Interlocutory appeals require a motion seeking leave of court. If denied, the party may seek appellate review upon the entry of final judgment.
DELAWARE’S COURT OF CHANCERY
Just like New Jersey has its unique chancery practice, so does Delaware. Given the number of companies throughout the nation that are organized in Delaware and the resultant volume of sophisticated corporate matters that are regularly heard and decided by the esteemed members of the court, the Delaware Court of Chancery is regarded as the most prominent business court in the nation. It draws lawyers from around the country who work in association with Delaware counsel, to whom the court looks to maintain the high level of professionalism and practice it expects. Very much a national court with a local practice, the court’s structure and some unique features of practice before it are as follows.
- The Court of Chancery is a statewide court. It consists of seven judges, the Chancellor and six Vice Chancellors. Typically, most of the members of the court are resident in New Castle County (Wilmington), with one member resident in Kent County and one in Sussex County. Each jurist is appointed for a 12-year term.
The court takes seriously its status as a court of limited equitable jurisdiction. The court will sua sponte assess the propriety of its subject matter jurisdiction in cases brought before it, and parties are cautioned against attempting to fashion a truly legal claim, i.e., one in which there is an adequate remedy at law, as an equitable one in order to improperly gain jurisdiction in the court.
- That being said, there are statutory bases for affording Delaware corporations access to the court and its expertise in matters that might not fall within the court’s traditional equitable jurisdiction. In particular, the court maintains a “mediation only” docket through which Delaware corporations may be able to have their disputes mediated by a sitting member of the court before bringing a lawsuit. The court also affords jurisdiction to “technology disputes,” as defined by statute, that might involve only claims for money damages. Each of these programs is aimed at servicing the dispute resolution and litigation needs of Delaware corporations.
- Punitive damages generally are not available in the Court of Chancery. If a party wishes to pursue punitive damages, any such claim should be pursued in the Superior Court, Delaware’s trial court of law.
- All complaints and other affirmative claims, including counterclaims, filed in the Court of Chancery must be verified by an individual party or a director, officer, or other appropriate representative of an entity party pursuing the claim.
- Parties may file complaints under seal as confidential filings without prior permission of the court. The confidential filing is pursuant to certain prescribed rules, which include immediate notice to and consultation with the adversary regarding the filing of a public, redacted version of the complaint, which must be made within three days of the confidential filing.
In order to avoid multiple rounds of Rule 12(b)(6) motions, a plaintiff faced with a motion to dismiss for failure to state a claim must file an amended complaint or run the risk of a dismissal of its original complaint with prejudice, i.e., without permission to amend the original complaint.
- Similarly, in order to avoid duplicative motions, parties are encouraged to refrain from opposing proposed amended complaints on futility (or failure to state a claim) grounds and instead are urged to consent to the filing of amended complaints with a reservation of the right to challenge the merits of the amended complaint after it is filed.
Any matter which seeks temporary restraints or a preliminary injunction, or which calls for a summary proceeding, e.g., pursuant to statute, is to be accompanied by a motion for expedited proceedings and an indication as to the desired pace of the action. Parties are typically expected to attempt to resolve such motions in the first instance by stipulation, subject to the court’s approval.
The Court of Chancery maintains its own set of rules and a body of interpretative case law. The Court of Chancery Rules generally track the Federal Rules of Civil Procedure (FRCP), and if and as appropriate, the court may consider federal case law as persuasive in interpreting its rules.
- While they generally track the FRCP, the Court of Chancery Rules relating to expert discovery do not include the protections against the disclosure of draft expert reports and communications between lawyers and experts that are contained in the FRCP and Delaware Superior Court Civil Rules. However, the parties may (but need not) stipulate to the non-discoverability of those items and other parameters for expert discovery. There is a court-approved form of protocol governing expert discovery that parties may consider and modify, subject to the court’s approval, to fit the needs of their case.
- The assigned Chancellor or Vice Chancellor will preside over the case from inception through trial. Decisions on substantive motions and post-trial briefing are to be rendered within 90 days of their submission. There is an automatic right of appeal to the Delaware Supreme Court from final judgments of the court.
- While previously a court of unwritten practices, the court has issued Guidelines, recently updated during COVID, regarding its expectations of counsel and the handling of case scheduling and other litigation and procedural issues before the court, including standards governing document preservation, collection and review, and privilege logs. The Guidelines also include various forms, including forms of confidentiality orders and discovery protocols, which are aimed at assisting parties in resolving procedural issues so they can focus on the merits of their matters. The Guidelines are required reading for any Court of Chancery practitioner.
If a matter does not satisfy the court’s equitable jurisdiction and involves more than $1 million at issue, parties may file the matter in the Complex Commercial Litigation Division (CCLD) of the Superior Court, which consists of five specially assigned judges and has developed as the de facto legal arm of the Court of Chancery. In fact, the Court of Chancery has recently instituted procedures for vetting cases that might be more appropriately assigned to and handled by a Superior Court CCLD judge in order to ensure the Court of Chancery’s capacity to properly tend to its busy docket.
New Jersey’s and Delaware’s chancery courts provide specialized forums with specialized judges for the handling of complex business and corporate disputes. Each court maintains unique practices and procedures that allow for the handling of those disputes in an efficient and predictable manner, which is valuable for any corporation involved in litigation. A strong working knowledge of those practices and procedures is essential to any corporate litigant and practitioner.
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Gibbons P.C., headquartered in Newark, New Jersey, with an office in Wilmington, Delaware, regularly handles business and corporate disputes in New Jersey’s General Equity Part and Delaware’s Court of Chancery and Superior Court CCLD. Frederick A. Alworth is Chair of the firm’s Commercial & Criminal Litigation Group. Jonathan S. Liss leads the Corporate Governance and General Equity Litigation Team in the Commercial & Criminal Litigation Group. Christopher Viceconte is the Administrative Director of the firm’s Wilmington, Delaware office. Leonardo A. Di Stasio is an associate with a foundation in commercial litigation and chancery practice.