Sean Brennecke Authors Article for Delaware Business Court Insider On Recent Decision Demonstrating Chancery Court’s Discretion

Wilmington, Del. (December 4, 2023) – Wilmington Partner Sean Brennecke recently authored an article for the Delaware Business Court Insider(DBCI) (part of titled, “Chancery Finds Breach of Noncompetes and Issues Sanctions for Contempt and Spoliation of E-Documents.” The article discusses a recent decision in which the Delaware Court of Chancery exercised its discretion in addressing a party’s misconduct and reviewed the elements of a variety of causes of action.

Mr. Brennecke opens the article by observing that the Court of Chancery’s post-trial opinion in Gener8 v. Castanon is “a good reminder of the flexibility that the Court of Chancery has in addressing egregious conduct.” He notes that the opinion also serves as “a helpful resource” because it discusses the elements of numerous causes of action, including spoliation, breach of the implied covenant of good faith and fair dealing, unclean hands, and others. Next, Mr. Brennecke describes the facts and issues at play in the Gener8 case, including claims that the defendant breached noncompete and non-solicitation provisions of an equity purchase agreement. 

Mr. Brennecke goes on to describe the court’s opinion, detailing the manner in which the court addressed the defendant’s litigation-related misconduct. As Mr. Brennecke describes, the defendant’s misconduct included, among other things, willfully or recklessly failing to preserve electronic evidence as well as lying about his use of text messages. The court acknowledged that the defendant’s conduct was “knowing, egregious, and reckless,” but declined to enter default judgment. Instead, it “resorted to the lesser sanction of drawing an adverse inference” against the defendant and awarding the plaintiffs fees and expenses associated with filing their motion for sanctions. 

Mr. Brennecke also discusses the court’s analysis of the merits of the case and the elements necessary to establish the relevant causes of action. In doing so, he notes that “like the sanctions analysis, the court’s damages award was measured and demonstrated the flexibility the Court of Chancery has in responding to misconduct.”

Mr. Brennecke is a member of the firm’s Complex Business & Commercial Litigation, Corporate, and Bankruptcy & Insolvency Practices. For more than 15 years, he has represented corporations and alternative entities as well as their respective directors, officers, shareholders, members, and managers in complex litigation matters. Mr. Brennecke is a regular contributor to DBCI, most recently penning an article titled, “Chancery Court Clarifies What Is Required to Defeat a Motion to Dismiss a Dissolution Petition.”

Read the full DBCI article here (subscription may be required).

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