A recent decision from the Delaware Court of Chancery addresses an issue that may be rarely encountered but nonetheless will be a useful decision to be aware of when needed. Organovo Holdings, Inc. v. Dimitrov, C.A. No. 10536-VCL (Del. Ch. June 5, 2017). The opinion features a “deep dive” into the doctrinal and historical basis of equitable jurisdiction, with extensive footnotes to decisions of several centuries ago in England, as well as decisions from various states and the U.S. Supreme Court. In addition, multiple treatises and law review articles are cited to support the conclusion that “a court of equity cannot issue an injunction in a defamation case.” This opinion also explored the limits of forward-looking injunctive relief.
Basic Overview: This opinion granted a motion to vacate a default judgment based on Court of Chancery Rule 60(b). This ruling in particular found that there was no equitable jurisdiction for the default judgment that was entered. This decision also features a very thorough analysis to explain why the Court of Chancery does not have the authority to grant a preliminary injunction to enjoin defamatory statements. Part of that reasoning is based on constitutional principles. See pages 17 to 21 and footnotes 52 and 53.
Of potentially more widespread application is the court’s discussion of the limits on the scope of “forward-looking” injunctive relief. The court noted two exceptions to the lack of equitable jurisdiction over defamation claims. Neither of those exceptions was applicable based on the facts. One exception relates to business disputes and is now mostly codified in statutes that allow a court to enjoin deceptive trade practices. Similarly, federal law such as the Lanham Act allows for injunctive relief in connection with trademark infringement.
Notably, this limitation should be distinguished from equitable relief that may be available to enjoin tortious interference with prospective economic advantage. See pages 33 to 37.