Francis Pileggi, Cheneise Wright Publish Commentary for Delaware Business Court Insider on Chancery Court Decision Implicating Delaware’s First-Filed Rule

Wilmington, Del. (October 22, 2021) - Wilmington Managing Partner Francis G.X. Pileggi and Associate Cheneise V. Wright recently co-authored a commentary for the Delaware Business Court Insider (part of Law.com) titled, “Chancery Declines to Follow First-Filed Rule in Advancement Case.” The article discusses a recent Delaware Court of Chancery opinion that applied an exception to the general rule that Delaware courts will exercise their discretion to dismiss or stay a Delaware action in favor of a first-filed action between the parties that is pending in another jurisdiction.

The authors open the article by describing Delaware’s first-filed rule, also known as the McWane doctrine, based on the Delaware Supreme Court decision in McWane Cast Iron Pipe v. McDowell-Wellman Engineering. The rule provides that a Delaware court’s “discretion should be exercised freely in favor of the stay when there is a prior action pending elsewhere, in a court capable of doing prompt and complete justice, involving the same parties and the same issues.”

Mr. Pileggi and Ms. Wright then describe the recent decision in Lay v. Ram Telecom International, a case filed pursuant to Section 145 of the Delaware General Corporation Law. As the authors explain, the Court of Chancery analyzed the “nuances” of the first-filed rule, ultimately declining to stay the Delaware action in favor of a California action. Describing the court’s analysis in detail, the authors point out that the court based its decision, in part, on the fact that the plaintiffs in this case did not select California as the forum. Instead, the defendant sought a declaratory judgment in the California action. As such, according to the authors, the Lay fact pattern differed from other similar Delaware matters that have implicated the first-filed rule.

The authors close with an observation concerning an interesting footnote in the court’s decision, explaining, “In a concluding footnote the court regaled readers with the entertaining linguistic observation that in addition to not being in its penultimate phase, the California Action did not appear to be in an antepenultimate or even a pre-antepenultimate phase.”

Mr. Pileggi and Ms. Wright are members of Lewis Brisbois’ Complex Business & Commercial Litigation Practice. They focus primarily on high-stakes disputes of corporations, stockholders, members of boards of directors, members and managers of LLCs, and those with managerial or ownership interests in other forms of entities. In addition, since 2004, Mr. Pileggi has also maintained the Delaware Corporate & Commercial Litigation Blog, at www.delawarelitigation.com, in which he analyzes key corporate and commercial decisions from Delaware's Supreme Court and Court of Chancery.

You can read the full Delaware Business Court Insider article here (subscription may be required).