Del. Chancery Is Uniquely Suited For Coronavirus Response

By Rose Krebs
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Law360 (March 27, 2020, 11:51 AM EDT) -- Delaware's Chancery Court, known far and wide for its expertise handling complex corporate litigation, may be more well-positioned than other courts to handle complications related to the novel coronavirus pandemic, legal experts and litigators say.

Like other courts around the U.S., the Chancery Court has been on overdrive responding to the public health crisis by shuffling schedules, postponing many proceedings, determining which hearings need to be held now, and using technology to keep the court's busy docket moving while adapting to daily changes.

But unlike some others, the court already deals with many matters on an expedited basis, and given its busy docket, it has in recent years handled more hearings via phone, especially those that must be held quickly.

Also, the court doesn't use jurors — the chancellor or vice chancellors render decisions after trials or motion arguments. Thus, it's been possible to move certain arguments to telephone proceedings rather seamlessly, with coordination between the court and counsel, attorneys said.

"From the attorney's perspective, we have been well-positioned for a long time," said Catherine G. Dearlove of Richards Layton & Finger PA. Attorneys are used to making court filings electronically, and the use of teleconferences was already on the rise, Dearlove said.

"The Court of Chancery is well-positioned to weather this all," she said. "Times like these force us all to do some balancing: move things forward while taking individual concerns into account."

That doesn't mean the picture is all rosy, as there have been challenges. Trials will be a tricky proposition until in-court hearings can be scheduled once again, experts said. Due to caution over COVID-19 and an anticipated large crowd, the court already had to call off a high-profile trial earlier this month, in which Elon Musk was expected to take the stand to defend himself from stockholder claims challenging Tesla's $2.6 billion merger with SolarCity.

As the coronavirus crisis has unfolded, the Chancery's message to litigators has been clear: uphold the collegial and professional reputation for which the First State's legal community is known while adapting and being reasonable with adversaries as everyone adjusts to circumstances.

"Our nation is confronting a crisis that has disrupted our daily lives and the normal operations of businesses, law firms, government institutions, and other enterprises in unprecedented ways," Chancellor Andre G. Bouchard said in a statement earlier this week. "The reality is that many hearings and case schedules will have to be adjusted, perhaps multiple times."

The chancellor said "the court will be solicitous of granting any reasonable requests for extensions," and urged "practitioners to be flexible and to work together cooperatively to do the same without the need for court involvement whenever possible, consistent with the longstanding tradition of professionalism that has defined our bar."

Earlier this week, Delaware Chief Justice Collins J. Seitz Jr. said the First State's courts would shut their doors to the public until April 15 as part of the coronavirus response. The announcement came before a statewide stay-at-home order by Gov. John Carney that also closed nonessential businesses, effective Tuesday morning.

Weeks into the COVID-19 pandemic, some litigators and others said it seems stakeholders are thus far taking things in stride and trying to work together to solve problems as they arise.

"I think Chancery is actually uniquely well-positioned to deal with this situation," said Lawrence A. Hamermesh, professor emeritus at Widener University Delaware Law School.

Since the chancellor and vice chancellors are the court's jurists, and make decisions based on briefings that are filed in advance of oral argument, it is not as difficult for the court to transition to having much of its motion practice done via phone with judges still able to make decisions as needed, Hamermesh said.

And the technology was already largely in place to do so.

Before the COVID-19 pandemic closed courts across the nation, the Chancery had a system in place to conduct certain hearings via telephone, with attorneys, and sometimes media, calling in for those proceedings.

The court also uses an online telephonic court appearance service that lets attorneys put in a pin number so they are identified when they are speaking during proceedings, attorney David Tejtel of Friedman Oster & Tejtel PLLC said. The system also allows the judge to notify attorneys when they want to chime in.

Tejtel said he has already participated in a few arguments with the technology and that things have gone pretty smoothly.

"The court's efforts have been truly Herculean and, I think, very effective thus far in handling things," Tejtel said. "The wheels of justice must keep moving and the court has done a good job in making sure that happens."

Delaware having a small and tight-knit legal community that often works closely with each other and the court is also key, Tejtel said.

There has been "a real sense of collaboration and empathy, and a feeling we are all in this together," he said.

Jill E. Fisch, professor of business law and co-director of the Institute for Law and Economics at the University of Pennsylvania Law School, said the Delaware bar is a "group of repeat players" she expects will work cooperatively in this unprecedented time.

Tejtel also pointed out that many of the Chancery's litigants are highly sophisticated parties or corporations with access to technology that can keep them apprised of goings-on.

However, the attorneys and legal experts seem to agree that trials pose a difficult technological challenge and are not as likely to be held remotely.

"The prospect of a telephonic trial seems almost impossible," Tejtel said.

And trials, much more so than in previous decades, have become a "fairly normal part" of the court's daily schedule, Hamermesh said. Thus, it is likely the court will face a backlog to its already hectic trial schedule once business as usual resumes.

Dearlove said the court and litigators will likely resist holding trials remotely, as "you lose something not being in court."

Witness credibility is better gauged in person, as is the mood of the judge, and depositions are challenging to do by phone, the attorneys who spoke with Law360 agreed.

"I would prefer to be in person. The judges would prefer us to be in person," Dearlove said.

If the situation drags on for many weeks, decisions will need to be made, they said.

Counsel for adversarial parties will need to be flexible and work together when figuring out how to move cases along, Lori W. Will of Wilson Sonsini Goodrich & Rosati PC told Law360.

Attorneys also emphasized they would much rather do arguments in court and said they look forward to getting back to business as usual once the court's doors are open once again.

"Court of Chancery practitioners hold ourselves to a high bar of professionalism and collegiality. Those traits will be more important than ever in the coming weeks, while we figure out together how to balance our clients' needs with the new challenges we're all facing," Will said. "If there is any court in the country that is well-equipped to manage its docket in these circumstances, it's the Delaware Court of Chancery."

--Editing by Marygrace Murphy.

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