Chancery Rejects TRO Request to Enjoin Defamatory Statements

The Delaware Court of Chancery, relying on precedent, rejected a request for a TRO to enjoin future defamatory statements by one business partner against another, primarily because of constitutional principles prohibiting prior restraint of free speech rights protected by the First Amendment–especially in the procedural posture of a preliminary injunction or TRO, without a full trial on the merits. CapStack Nashville 3, LLC v. MACC Venture Partners, C.A. No. 2018-0552-SG (Del. Ch. Aug. 16, 2018). Brief Background In connection with the fallout between investors and managers of a joint venture for apartment complexes in Nashville, Tennessee–involving various Delaware entities that the court describes as “a rather baroque organizational structure”, one of the parties threatened to complain to the SEC and otherwise publicize allegations of fraud–which were denied. Although the word “extortion” was not used in the opinion, there was a…

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