The recent Delaware Court of Chancery opinion in Deutsch v. ZST Digital Networks, Inc., C.A. No. 8014-VCL (Del. Ch. June 14, 2018), addresses the court of equity’s authority to issue arrest warrants to enforce its orders. But because it involves facts that are so unusual, for purposes of a short blog post, the only aspect of the decision that is likely to be of widespread application is the court’s careful and scholarly analysis of why it has the authority to issue bench warrants for the arrest of corporate officers whose company has failed to comply with prior court orders finding the company in contempt.
Although the court has the authority to issue bench warrants for the arrest of the corporate officers for the failure of their company to comply with prior court orders, the court decided that before it would issue bench warrants, it would give the corporate officers one final attempt to comply with prior orders and, if requested, the court would hold an evidentiary hearing. In any event, the corporate officers would be able to purge the sanction of coercive imprisonment at any time by complying with the prior orders of the court.
The background facts and procedural history include a demand for books and records from a Delaware company whose principal place of business is, or was, in China. The company ignored multiple prior orders of the court, including prior contempt findings, based on the failure of the company to comply with prior orders.
SUPPLEMENT: A Bloomberg article links to this post and provides a more detailed commentary on this case.