Affinity Wealth Management, Inc. v. Chantler et al., , C.A. No. 5813-VCP (Del. Ch. Sept. 22, 2010), read transcript of oral ruling here.
This Court of Chancery action sought injunctive relief for the breach of a non-compete agreement. In this oral ruling, the Court granted the plaintiff’s motion for expedited proceedings. On September 10, 2010, Affinity Wealth Management (“AWM”), an investment management firm, brought suit against two former employees, Steven Chantler and Matthew Riley, alleging that they continued to solicit and service clients of AWM after abruptly resigning from AWM and forming their own financial services company, Genesis Advisors LLC, in violation of non-compete agreements they signed with AWM.
On the same day the complaint was filed, AWM filed a Motion for Expedited Proceedings and Expedited Discovery, on the grounds that “[a]n expedited proceeding and discovery is necessary to avoid the irreparable injury that AWM will suffer if Chantler and Riley are allowed to continue to service and solicit clients of AWM in violation of their written agreements with AWM.” (C.A. No. 5813-VCP, Trans. ID 33175018, ¶ 5.) A few short days thereafter, AWM filed a motion for preliminary injunction seeking to enjoin Chantler and Riley from continuing to service clients they had brought with them in violation of their restrictive covenant, to their new firm, Genesis Advisors.
The Court held a teleconference with the parties on September 22, 2010. During that teleconference, Vice Chancellor Parsons granted AWM’s motion for expedited proceedings, stating that “I would say that there has been enough of a showing here for a motion to expedite.” (Sept. 22, 2010 Tr. at 20:9-11.) The Court explained that “when we decide a motion for expedited proceedings, we have to determine . . . whether in the circumstances, the plaintiff has articulated a sufficiently colorable claim and shown a sufficient possibility of a threatened irreparable injury as would justify imposing on the defendants and the public the extra costs of an expedited preliminary injunction proceeding.” (Id. at 20:19-21:3.) The Court then concluded that “the plaintiff’s papers . . . do meet the standard of having a colorable claim for breach of contract and other relief against a named defendant.” (Id. at 21:9-12.) Next, as to the “threatened irreparable injury” inquiry, the Court concluded that “in this case, we’ve got a situation where the agreements indicate that injunctive relief would be available.” (Id. at 21:15-17.) Finally, the Court stated that in cases involving non-compete agreements where it is difficult to quantify the plaintiff’s damages, the Court “usually set[s] hearings fairly promptly, and . . . grant[s] expedited discovery.” (Id. at 21:18-22:4.)
**Full disclosure: Francis Pileggi represented AWM in this matter. Shortly after expedited discovery was completed, the parties reached a confidential settlement.