The Delaware Court of Chancery recently published a comprehensive and scholarly analysis of the limited scope of the subject-matter jurisdiction of Delaware’s court of equity, and refused to accept a case that sought a permanent injunction, in a formal opinion styled: In re Covid-Related Restrictions on Religious Services, Consol. C.A. No. 2021-1036-JTL (Del. Ch. Nov. 22, 2022).
Practice Tip: Depending on the level of scrutiny given by the court, either sua sponte or in response to the arguments made by the parties, if any, the request in a complaint for injunctive relief may not be sufficient to satisfy the requirements for enjoying the capacious benefits of the jealously-protected, narrow, equitable subject-matter jurisdiction of the Court of Chancery.
This decision corrects several mistaken prior Delaware decisions, and persuasively describes the true prerequisites for obtaining a permanent injunction. See Slip op. at 46-47.
Experienced equity practitioners should be forgiven if they discover when reading this thoughtful decision that the finer points and nuances of the circumscribed boundaries of the equitable jurisdiction of the Court of Chancery are not always absolutely clear–if only because the members of the court do not always uniformly give this somewhat esoteric issue the same level of scrutiny. In addition, there are cases where final decisions have been rendered but neither the parties nor the court sua sponte raised the issue of equitable jurisdiction.
Most veteran Delaware litigators naturally would think that if injunctive relief (a typical equitable remedy) were to be requested, that the Court of Chancery would have subject-matter jurisdiction–but that is not always true, and it was not true in the instant case.
For those experienced equity practitioners who thought they understood the equitable basis for the Court of Chancery’s limited jurisdiction, and wonder why the court in this case rejected subject-matter jurisdiction when injunctive relief was requested, perhaps their self-doubt might be assuaged by the court’s observation in the instant opinion that many prior Delaware decisions were wrong when they did not follow the majority view nationwide about what the requirements are for a permanent injunction. See Slip op. at 42-43 and n.9.
Although the Court of Chancery has, both recently and in the more distant past, awarded injunctive relief to enjoin the enforcement of unconstitutional statutes, and it remains well-settled generally that the violation of constitutional rights amounts to irreparable harm, see generally, Doe v. Coupe, C.A. No. 10983-VCP (Del. Ch. July 14, 2015)(highlighted on these pages), the instant case (and another recent letter ruling), found that the Court of Chancery lacked equitable jurisdiction notwithstanding the request for injunctive relief based on the violation of constitutional rights.
Procedural and Factual Overview of the Decision
This case sought permanent injunctive relief based on allegations that restrictions on religious worship during formal religious services imposed during the height of the Covid-19 pandemic by the Governor of Delaware were violations of fundamental constitutional rights. Those restrictions were eventually lifted more than two years ago, in part due to settlement of a federal lawsuit in Delaware making similar allegations–but the plaintiffs sought permanent relief to prevent similar future violations of their rights by the Governor. The Governor moved to dismiss for lack of subject-matter jurisdiction in Delaware’s court of equity.
The opinion begins with a overview of the almost two dozens Emergency Orders, as amended, that Delaware’s Governor issued, starting in early 2020, as the Covid-19 pandemic resulted in many public activities around the country and the world grinding to a halt.
In addition to engaging in a deep-dive into the underpinnings of equity jurisdiction, the court also provides a practical review of the basics.
For example, the three typical triggers for equitable subject-matter jurisdiction that open the doors of Delaware’s court of equity generally include the following:
The court “can acquire subject matter jurisdiction in the first instance by three different means: (1) the invocation of an equitable right; (2) a request for an equitable remedy when there is no adequate remedy at law; or (3) a statutory delegation of subject matter jurisdiction.” Kraft v. WisdomTree Invs., Inc., 145 A.3d 969, 973 (Del. Ch. 2016) (cleaned up). “[W]here a remedy provided by a law court of the state would be sufficient, that is, complete, practical, and efficient, this Court is without jurisdiction.” Int’l Bus. Machines Corp. v. Comdisco, Inc., 602 A.2d 74, 78 (Del. Ch. 1991) (cleaned up).
Slip op. at 29.
Requirements for a Permanent Injunction–And Why Prior Delaware Cases Are Wrong on this Point
The court candidly explains why, understandably, several prior Delaware decisions that have described the requirements for obtaining a permanent injunction are simply wrong:
Sometimes a Delaware decision deviates from a settled or majority rule intentionally and for good reason.³ Other times, a little digging uncovers one of the inevitable spontaneous mutations generated by an adversarial process in which practitioners
understandably seek to depict authorities in the manner most favorable to their clients, and in which busy judges do not always have the time for reflective consideration of every legal issue in the case.
This opinion then provides detailed reasoning, with copious citations, for this conclusion:
Delaware’s customary framing of the standard for a permanent injunction errs by projecting onto the ultimate remedial determination the requirement from earlier phases of the case that a plaintiff show imminent irreparable harm. When a party seeks interim injunctive relief, such as through a TRO or preliminary injunction, the plaintiff must show why the court needs to act at an early stage, before a final adjudication. A plaintiff makes the necessary showing by pointing to a threat of something happening that cannot be addressed after a final adjudication during the remedial phase, i.e., a threat of irreparable harm. Additionally, the threat must relate to something that may transpire before the case can reach a final adjudication during the remedial phase, i.e., it must be imminent. To earn a TRO or a preliminary injunction, therefore, a plaintiff must show imminent irreparable harm. (Some citations omitted.)
But when a plaintiff seeks permanent injunctive relief after a final adjudication, a showing of irreparable harm is sufficient but not necessary. As a leading procedural treatise explains, it should be noted that although a serious threat of irreparable injury usually must be shown on an application for a temporary-restraining order or a preliminary injunction, irreparable injury is not an independent requirement for obtaining a permanent injunction; it is only one basis for showing the inadequacy of the legal remedy.
Wright & Miller, supra, § 2944 (footnotes omitted). There is also no longer a near-term temporal requirement for the harm to take place before the court can review the matter further. Because the court is issuing its final ruling, the question is whether a permanent injunction is warranted because legal remedies are inadequate. The considerations driving that analysis need not be imminent; they need only be persuasive.
[The court divides into three parts its explanation for why imminent irreparable harm is not a requirement for a permanent injunction.]
This decision rejects the Governor’s argument that a permanent injunction requires a showing of imminent irreparable harm. The more detailed explanation unfolds in three parts. First, this decision describes the different forms of injunctive relief and the purposes they serve, which illustrates why imminent irreparable harm is a necessary element of the test for a TRO or a preliminary injunction but not for a permanent injunction. Second, this decision explains why the proper formulation of the standard for a permanent injunction should examine the inadequacy of other remedies. Finally, this decision explores how the irreparable injury prong entered Delaware’s permanent injunction test and confirms that it reflects an unintentional jurisprudential mutation rather than a conscious choice.
3 See Aranda v. Philip Morris USA Inc., 183 A.3d 1245, 1251–52 (Del. 2018)(“Although the federal courts and most state courts require an available alternative forum before dismissing for forum non conveniens, our Court never adopted this requirement. Admittedly, our cases have not directly addressed the question. But, several factors point to an implicit rejection of the requirement.” (footnotes omitted)); Abry P’rs V, L.P. v. F & W Acq. LLC, 891 A.2d 1032, 1059–64 (Del. Ch. 2006) (Strine, V.C.) (discussing the majority rule in Restatement (Second) of Contracts § 195 which prevents a contract from insulating a party from the consequences of its fraudulent conduct, then permitting a contractual anti-reliance clause to defeat a claim for extra-contractual fraud).
Slip op. at 32-34; and 42-43.
The court described the three different forms of injunctive relief that may be available–sometimes–in the Court of Chancery, and the subtle differences between them:
(ii) Preliminary Injunction; and
(iii) Permanent Injunction (which are further divided into mandatory and prohibitive injunctions.)
Slip op. at 34-38.
Inadequacy of Legal Remedy Required–But Irreparable Harm Not Needed for Permanent Injunction
Even experienced equity practitioners in Chancery who are familiar with equity practice may not be familiar with the minutiae discussed by the court in its explanation about why it must be demonstrated that a remedy at law would be inadequate–but notably: that irreparable harm is not a prerequisite for obtaining a permanent injunction. Slip op. at 38 and n.5. See also Slip op. at 44 and n.10-11.
After explaining why irreparable harm is not needed for a permanent injunction, though it remains one of several ways to show the inadequacy of a legal remedy, the court provided other examples of how the requisite inadequacy of a remedy at law may be demonstrated:
- If the defendant is insolvent and a judgment would not be collectible, but the defendant is capable of performance to which plaintiff is entitled as an alternative to the money.
- Defendant’s actions would require plaintiff to bring more than one suit to effectuate a legal remedy.
- Money damages cannot be measured with any degree of accuracy, and are so speculative that any award would be inadequate.
Slip op. at 43.
The court also noted that in addition to the common formulation of money damages not being sufficient to make a party whole, the situation may exist when:
… the legal remedy is not as practicable and efficient toward the ends of justice as an injunction.
Slip op. at n.6
Proper Formulation for Requirements to Obtain Permanent Injunction–Correcting Prior Errant Chancery Decisions on this Topic
Practitioners take note: contrary to prior recitations in prior Chancery decisions, the correct list of prerequisites for a permanent injunction include the following:
- Actual success on the merits.
- Inadequacy of a remedy at law; and
- Balancing of the equities that favors an injunction.
Slip op. at 46.
Additionally, in order to satisfy the test for equitable subject-matter jurisdiction when seeking a permanent injunction, a threshold requirement is to allege facts that:
“create a reasonable apprehension of a future wrong.”
Slip op. at 46-47.
The Reasonable-Apprehension Test
Two competing considerations must be addressed when attempting to satisfy this requirement:
- injunctions against future wrongdoing are generally unavailable–especially against government entities; but
- “on the other hand”, … where there is a reason to believe that a defendant will resume his wrongful course of conduct, a court may issue a permanent injunction.
Slip op. at 47.
However, to invoke equitable jurisdiction, there must be more than “unsupported, subjective concern about a future harm….” Slip op. at 48.
The reasonable-apprehension requirement was not satisfied in this case to the extent that there was no likelihood that the restrictions imposed on churches during the height of the pandemic are likely to be repeated, especially in light of the Governor not imposing the initial restrictions, later lifted, when subsequent surges of Covid-19 arose two years after the initial orders were terminated–and in light of the Federal Court settlement in which the Governor agreed not to impose similar restrictions.
In closing, the court provided a potential avenue for the plaintiff to return to the Court of Chancery if, in the future, the Governor were to fail to comply with the order of another Delaware court: in which case “… coercive relief from this court will be available.” Slip op. at 50.