Business Courts from Tennessee to Delaware

Vanderbilt Law School and the Nashville Bar Association recently hosted a CLE seminar conducted by Vice Chancellor Joseph R. Slights III of the Delaware Court of Chancery and Chancellor Anne C. Martin of the Chancery Court of Davidson County. Chancellor Martin also serves as the Business Court Docket judge by virtue of her appointment by the Tennessee Supreme Court. The seminar, titled Business Courts from Tennessee to Delaware focused on the business court movement. Both judges emphasized that the “business court model” works and that, where appropriate, litigators should advise their clients to utilize business courts.

When asked to define business courts, both judges agreed. Business courts prioritize flexibility, speed, and well-written opinions that can be made available to reduce legal uncertainty in the future. Drawing on the first two of these themes, and to quote Vice Chancellor Slights, business cases frequently have time constraints such that if the parties cannot receive guidance from the court before a specific date, any relief granted thereafter “is just not going to matter.”

Chancellor Martin’s Hines v. Good Horse Business Court case (No. 210737-BC) serves as a prime example. There, a complaint and motion for preliminary injunction (filed on August 2, 2021) sought guidance that, if not granted before August 31, would potentially scuttle an $80 million transaction. Chancellor Martin was able to issue her Memorandum and Order on August 20 in which she made preliminary factual findings and construed multiple, complex, provisions of the Purchase and Sale Agreement. With this guidance, the parties were able to resolve their dispute1—meaning that the real estate development project could proceed.

Both the Tennessee Business Court and the Delaware Court of Chancery have procedural mechanisms for litigants to inform the court of key deadlines in their disputes soon after the commencement of proceedings. In Delaware, parties may file a Motion to Expedite—which requires a showing of: (i) a colorable claim (a non-frivolous claim) and (ii) a possibility of irreparable harm if relief is not granted before a specific date. If this standard is met, the entire Delaware court system is prepared to go to extreme lengths to meet the parties’ deadlines. For example, in the 1993 Paramount v. QVC litigation, a complaint was filed on October 21, 1993, seeking an injunction to stop a transaction. Following 31 depositions, the production of 1 million pages of documents, 400 pages of briefing, and an evidentiary hearing, the Court of Chancery issued a 60-page opinion granting a preliminary injunction on November 23. Following an expedited appeal and hearing, the Delaware Supreme Court affirmed on December 9. This extraordinary pace is intended to ensure that the Delaware courts can “move

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at the speed of business”—which is a common goal shared by all business courts.

The Tennessee Business Court Docket has similar procedures for expedition.2 Within 30 days of service of a complaint, a party may file a Request for Designation, provided the case meets certain eligibility requirements. Upon designation, the Court “promptly” issues an order setting a conference to enter a Case Litigation Plan pursuant to T.R.C.P. 16. Through this Plan, the parties can request—and the Court can order—that the litigation proceeds with sufficient speed to give guidance before it becomes moot.

According to both judges, business courts will frequently be amenable to case-specific scheduling orders. An example provided by Vice Chancellor Slights is that parties may request the option of conducting targeted, expedited discovery to allow for an early Motion for Summary Judgment on a discreet issue—without resolving other significant aspects of the dispute. This could be an efficient option for litigants where the resolution of a single, hard-fought issue might permit more productive mediation opportunities for the larger case.

Finally, both judges stated that one of the important roles of business courts is to make their decisions available so that they can offer guidance to non-parties and reduce legal uncertainty over time. The Tennessee Business Court publishes many of its decisions online,3 and most Delaware Court of Chancery Opinions, Memorandum Opinions, and Orders are published on Westlaw and LexisNexis. One caveat to this general rule is that oral Bench Rulings issued by the Delaware Court of Chancery are not published but must be individually collected and curated—a practice common to many Delaware law firms. n

WILL PUGH is an associate at Sherrard Roe Voigt Harbison, where he represents clients in a wide range of practice areas including both litigation and transactional matters involving corporate, mergers and acquisitions, commercial real-estate, and bankruptcy law. He also specializes in complex business disputes and fiduciary duty litigation.

Endnotes

1 Drew Hutchinson, “Hines, Martin Management, Jim Reed Automotive lawsuit over Midtown land deal dismissed,” Nashville Business Journal, January 18, 2022, https://www.bizjournals.com/ nashville/news/2022/01/18/reed-lawsuit-resolved.html 2“Guide To The Business Court Docket—Phase 2,” https://www.tncourts.gov/node/4761374 3 Tennessee State Courts, Business Court Decisions, https://www.tncourts.gov/node/3938267

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