216 A.3d 1
Del. Ch.2019Background
- Preston Hollow Capital (investor in high-yield municipal bonds) alleges Nuveen executives phoned broker-dealers and lenders, making false statements about Preston Hollow and threatening to withhold business, harming Preston Hollow’s prospective transactions.
- Preston Hollow filed suit in Delaware Chancery Court claiming tortious interference (with prospective business relations), a Donnelly Act violation, contract interference, and defamation; it sought only injunctive relief (no damages).
- The Court denied dismissal of the tortious interference and Donnelly Act claims but withheld decision on the defamation count and asked for supplemental briefing on whether equity may enjoin future defamatory speech.
- The alleged defamatory communications were oral (phone calls) to third-party financial institutions—thus pleaded as slander (oral defamation), potentially slander per se because they attacked Preston Hollow’s business reputation.
- Preston Hollow sought a forward-looking injunction preventing Nuveen from making further unlawful/tortious communications about Preston Hollow; Chancery considered whether equity has jurisdiction to grant such relief for alleged defamation.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Chancery may enjoin future defamatory speech (slander) | Preston Hollow: equity may enjoin future business-related defamation, particularly where a separate business tort is pleaded | Nuveen: equity lacks jurisdiction to enjoin libel/slander; defamation belongs in courts of law (jury) | Court: equity will not enjoin libel/slander; defamation claim must be dismissed or transferred to Superior Court |
| Applicability of the "trade-libel" (trade-libel/unfair competition) exception | Preston Hollow: having pled tortious interference, Pitman permits injunctive relief that incidentally bars defamatory speech | Nuveen: Pitman does not authorize a standalone equitable slander remedy; exception is narrow | Held: Pitman is narrow—equity may enjoin non-speech business torts even if remedy incidentally restrains trade libel, but Pitman does not permit a separate equitable slander count or broad forward-looking suppression of speech |
| Whether Chancery should retain claim because plaintiff seeks only equitable relief (no damages) | Preston Hollow: injunctive relief is the appropriate remedy and vests Chancery with jurisdiction over defamation here | Nuveen: the requested injunction raises substantial constitutional and procedural concerns; relief at law (jury) is required | Held: Requested injunction unavailable in Chancery; plaintiff may transfer defamation claim to Superior Court or pursue non-speech equitable claims in Chancery |
| Whether constitutional speech concerns need resolution here | Preston Hollow: (argues need for relief) | Nuveen: constitutional free-speech issues counsel against prior restraints in equity | Held: Court did not reach constitutional questions because it concluded Chancery lacks jurisdiction to enjoin slander under the general no-injunction rule and narrow Pitman exception |
Key Cases Cited
- Spence v. Funk, 396 A.2d 967 (Del. 1978) (distinguishes libel and slander and emphasizes jury role in defamation).
- Organovo Holdings, Inc. v. Dimitrov, 162 A.3d 102 (Del. Ch. 2017) (survey of no-injunction rule and trade-libel exception; dismissed trade-libel where supporting business tort failed).
- J.C. Pitman & Sons, Inc. v. Pitman, 47 A.2d 721 (Del. Ch. 1946) (recognizes narrow trade-libel exception where injunction remedies a separate non-speech business tort).
- Riley v. Moyed, 529 A.2d 248 (Del. 1987) (truth is a defense to defamation).
- Getty Ref. & Mktg. Co. v. Park Oil, 385 A.2d 147 (Del. Ch. 1978) (discusses limits of Chancery’s jury role and transfer of defamation matters to courts of law).