Organovo Holdings, Inc. v. Dimitrov

IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE

ORGANOVO HOLDINGS, INC., a )
Delaware Corporation )
)
Plaintiff, )
)
v. ) C.A. No. 10536-VCL
)
GEORGI DIMITROV, )
)
Defendant. )

OPINION

Date Submitted: March 3, 2017
Date Decided: June 5, 2017

John L. Reed, Ethan H. Townsend, Harrison S. Carpenter, DLA PIPER LLP,
Wilmington, Delaware; Grant P. Alexander, DLA PIPER LLP, Los Angeles, CA,
Counsel for Organovo Holdings, Inc.

David L. Finger, FINGER & SLALINA, LLC, Counsel for Georgi Dimitrov.

LASTER, Vice Chancellor.
 Defendant Georgi Dimitrov moved to vacate the entry of default judgment against

him. His motion is granted.

I. FACTUAL BACKGROUND

The facts are drawn from the Verified Complaint (the “Complaint”) and the

materials submitted by the parties during post-default proceedings. A default judgment

“deem[s] admitted all the well-pleaded facts in the complaint.”1 This decision also takes

judicial notice of previous proceedings in a related action.

A. The Parties

Plaintiff Organovo Holdings, Inc. (“Organovo” or the “Company”) is a Delaware

corporation with its headquarters in San Diego, California. The Company designs and

creates functional human tissues through its use of proprietary three-dimensional bio-

printing technology. In July 2013, the Company listed its common stock on the New

York Stock Exchange. In the months following its initial listing, the Company’s stock

price fluctuated widely. Between October 2013 and March 2014, the Company’s stock

price ranged between $5.55 per share and $12.75 per share, with an average trading price

of $8.78.

Dimitrov is a man of mystery. In February 2014, he formed non-party Simeon

Research, LLC (“Simeon”), a Delaware limited liability company. Shortly afterwards, he

created a website for Simeon at the URL www.simeonresearch.com. He also secured for

1
Hauspie v. Stonington P’rs, Inc., 945 A.2d 584, 586 (Del. 2008).

1
Simeon the Twitter handle @SimeonResearch. Simeon’s Twitter bio described its feed as

“long/short analytical equity research.”2

Simeon engaged in a single activity: publishing negative information about the

Company. In March and April 2014, Dimitrov published two reports in Simeon’s name.

Dimitrov called attention to these reports by posting sixty-five comments on Simeon’s

Twitter account.

B. The March Report

In March 2014, Dimitrov posted a fifty-seven page report on Simeon’s website

titled “Organovo: Dissecting the Fairy Tale – Full Report” (the “March Report”).3

Dimitrov styled the March Report to look like work product from a professional equity

research firm. He created official-looking letterhead and included a standard anti-reliance

disclaimer. The report claimed to be the product of “hundreds of hours of intensive

research from hundreds of journal publications, never-before seen primary sources, and

extensive industry interviews.”4 It contained 189 footnotes citing public filings, news

articles, and academic papers. It included numerous pictures and charts. Less

professionally, it made extensive use of bold and underlined typeface, which this decision

omits.

The beginning of the March Report summarized its key points.

2
Dkt. 34, Ex. B.
3
Dkt. 46, Ex. A.
4
Id. at 3.

2
 “Organovo’s bioprinting technology is not pivotal to tissue engineering or organ
fabrication. Simeon Research publishes for the first time to the public the views
expressed by Organovo’s scientific founder: bioprinting – ‘it’s nothing, it’s a stupid
exercise.’”

 “Organovo has misled investors in multiple instances about its technology, its
competitive position, and what it can deliver.”

 “A number of companies and academics have developed bioprinters that have better
capabilities than those of Organovo’s NovoGen bioprinter.”

 “Organovo has failed to deliver on its promises a number of times in the past, and has
experienced a wash-out of material partnerships.”

 “Organovo’s liver tissue data is years behind competitors in the 3D liver toxicology
market.”

 “Organovo’s intellectual capital has deteriorated significantly, as the founder exited
and key scientistis left.”

 “The scientific consensus on organ printing is that the media has hyperbolized it far
and above reality while the public has bought in . . . .”

 “Organovo has experienced a rabid run-up in price that is incongruent with its real
valuation, which we believe to be $1.35/share.”5

The bulk of the March Report focused on the bioprinting industry’s lack of

commercial promise and the Company’s technical inferiority to competitors in that field.

It mixed in accusations that the Company’s management had misled investors and

engaged in self-dealing.

Only the last three pages of the March Report analyzed the value of the

Company’s stock. Much of this final section consisted of quotes from outside analysts.

5
Id.

3
The only original valuation work appeared in the final two pages. Simeon ultimately

valued Organovo based on an asset-based approach described in a single paragraph:

We have demonstrated that Organovo lacks a competitive moat – its
bioprinting technology is just a “stupid exercise” in the words of its
scientific founder and it has been eclipsed by other bioprinting
manufacturers while its liver tissue is inferior to the product offerings of
other companies. Given this, we think it would be fairly easy to replicate
every tangible asset on which Organovo’s valuation is based – it thus
makes a good basis for valuing the company. Bioprinters from a competing
company. A warehouse. 35 scientists. $50M in cash. We will grant the
exceedingly generous 5x multiple to Organovo’s $13.5M in R&D spent
since inception. All of this brings us to ~ $120M. At the current diluted
share count, Organovo would be valued at $1.35/share. We think this is a
fair value and even generous given the cascade of red flags about the
company and its management.6

The Company responded to the March Report on its website. Among other things,

the Company asserted that the report “was issued by or at the request of a short seller or

short-sellers.”7

C. The April Report

The March Report portended further publications. “This report encompasses

roughly a third of the information Simeon Research has uncovered. Additional reports

will follow in the coming weeks.”8 In April 2014, Simeon published a second report on

its website titled “Bargaining with the Devil: How Organovo Used Fraudulent Brokers

6
Id. at 56-57.
7
Dkt. 46, Ex. B. at 23.
8
Dkt. 46, Ex. A at 3.

4
 and Promoters to Sell its Shares and Story” (the “April Report”).9 Dimitrov prepared the

April Report in the same style as the March Report.

The April Report asserted that the Company was defrauding its investors. The first

sentence of the April Report stated, “Organovo has carried out one of the most successful

penny stock promotions currently listed on a major exchange.” 10 The April Report

summarized its support for this assertion as follows:

 “Organovo paid millions to brokers with fraudulent histories to promote shares to
individual investors.”

 “Organovo paid for stock promotion services without disclosing the payments – it
enlisted ProActive Capital, which has been accused of paying a cadre of authors to
write promotional articles covering client stocks without SEC-required disclosures.”

 “During the course of this stock promotion, we believe that pro-Organovo articles
may have been published in exchange for compensation without any disclosure.”

 “Organovo has spent nearly 3x as much on selling shares and promoting its stock as it
has on Research & Development since the company was founded.”11

The April Report claimed that Simeon had “submitted [its] findings to the SEC

and look forward to their response.”12 It touted that Organovo’s stock price had fallen

9.3% since the publication of the March Report.

The April Report responded to the Company’s claim that Simeon was working on

behalf of short-sellers. It stated: “We want to make unequivocally clear that our research

9
Dkt. 46, Ex. B.
10
Id. at 1.
11
Id. at 3.
12
Id.

5
and publications are in no way whatsoever the result of a ‘request’ or compensation by

any third party. Our reports represent Simeon Research’s original investigations and

analysis. . . . [W]e stand by our work and believe in its accuracy.”13 The April Report also

claimed that “Organovo has, in the past, attempted to smear critical research of its

valuation by calling negative views ‘short and distort’ tactics.”14

D. The Tweets

Dimitrov called attention to Simeon’s two reports through the Company’s Twitter

account. After releasing the reports, Simeon sent out at least sixty-five tweets, all of

which concerned the Company. For example, two tweets on April 8, 2014 stated,

“Simeon Research reiterates $1.35 price target for Organovo shares . . . .” and

“[Organovo] is down 4% today and 12% since our first report in March. We believe

downside exists to $1.35/share.”15

13
Id.
14
Id.
15
Compl. ¶ 26.

6
 E. The Simeon Action

On April 21, 2014, the Company filed a lawsuit against Simeon in this court (the

“Simeon Action”).16 Because the Company did not yet know who controlled Simeon, the

Company included “unnamed Does 1-25” as defendants.

The complaint alleged that the March and April Reports (together, the “Simeon

Reports”) contained numerous false or misleading statements.17 The Company

specifically cited the following:

 “[Organovo] has failed to achieve renewal from its 2 key pharmaceutical partners and
secured fluff PR pieces instead.”

 “No researcher will shell out $200,000 to buy Organovo’s bioprinter when they can
make a comparable or better bioprinter on their own for a fraction of the price.
Organovo has placed 6 of these bioprinters with academic centers since 2009, or, 1
bioprinter per year. And they didn’t receive a cent – they loaned the printers at no
cost.”

 “Leapfrogging Organovo, researchers at Scotland’s Herriot-Watt University have
made a revolutionary breakthrough in tandem with privately-held Roslin Cellab by
bioprinting human embryonic stem cells with high levels of viability (>95% with
identical physiology post-printing) using a modified MakerBot printer. The work,
unlike the claims of Organovo, has been published in the journal Biofabrication – it
has been called “the greatest breakthrough in 3D bioprinting to date.”

 “Keith Murphy [the Company’s CEO] tells investors that Organovo can leverage its
platform to achieve partnership deals that bring in $10,000,000-$30,000,000 per deal
plus a 3%-7% royalty. That is 7 times to 22 times greater than Organovo’s largest
deal-to-date, a deal that has not been renewed.”

 “The company publicizes any thread of good news while sweeping detrimental events
under the rug without mention.”

16
See Organovo Hldgs. Inc. v. Simeon Research, LLC, C.A. 9563-VCL (Del. Ch.
2014)
17
Simeon Action, Dkt. 1 (the “Simeon Complaint”).

7
 “Of course, Organovo knows [that it did not develop the first bioprinter], because it
worked with nScrpyt to develop its own bioprinter.”

 “[E]ither Organovo’s management made dubious claims to raise money from
investors, or its employees and technology failed to achieve their targets.”

 “Organovo has a history of serial dilution and insider sales in the last half-year exceed
the amount of money the company invested in Research & Development.”

 “Back in 2012, every private investor in Organovo sold their shares into the market,
liquidating 32.1M shares (99.7% of their holdings) at a blended price of
$3.02/share.”18

 “[The fact that] Organovo has spent triple its entire R&D budget since inception on
raising money from small-time investors and stock promotion demonstrates that
Organovo is more penny-stock promotion than legitimate company.”

 “Organovo has spent nearly three times as much money ($36.5 million) compensating
its brokers and discounting shares in a follow-on as it has on Research and
Development ($13.5 million) since the Company’s inception.”

 “ProActive provided Organovo a number of stock promotion services in exchange for
Organovo’s business – many had none of the legally-required disclosures.”

 “ProActive Capital and DreamTeamGroup have absolutely no disclosures on any of
their operated websites that they were compensated by Organovo for their
promotions.”

 “Organovo paid these brokers more than $1 in cash, stock, and warrants for every $1
raised from investors.”19

The Company brought claims for libel, libel per se, and tortious interference with

prospective economic advantage. The Company sought an order “(i) enjoining Defendant

from making or publishing any further false and defamatory statements regarding

18
Id. ¶ 15.
19
Id. ¶ 17.

8
Plaintiff, and (ii) compelling Defendant to remove any and all defamatory and violative

statements from its website and Twitter account.”20

After suing Simeon, the Company identified Dimitrov by subpoenaing Simeon’s

registered agent. On May 15, 2014, the Company served Dimitrov with a subpoena at his

apartment in Alexandria, Virginia.21

F. Simeon Defaults.

Dimitrov caused Simeon to retain counsel, and Simeon moved to dismiss the

Simeon Complaint for lack of subject matter jurisdiction, lack of personal jurisdiction,

and failure to state a claim upon which relief could be granted.22 Then, on June 10, 2014,

Simeon’s counsel moved to withdraw, stating that his client “has ceased communicating

with counsel.”23 On June 16, I issued an order to show cause directing Simeon to file any

opposition to the motion to withdraw by a specified date. The order warned Simeon that

“[i]f no action is taken by this date, the Motion to Withdraw will be granted.” 24 Simeon

did not respond. On July 17, I granted the motion to withdraw.25

20
Id. ¶ 60.
21
Simeon Action, Dkt. 15.
22
Simeon Action, Dkt. 10.
23
Simeon Action, Dkt. 18.
24
Simeon Action, Dkt. 20.
25
Simeon Action, Dkt. 24.

9
 From that point on, Simeon did not participate in the litigation. The Company

asked the court to deny Simeon’s motion to dismiss and enter a default judgment. I

agreed in part and denied the motion to dismiss. I declined to enter a default judgment

and instead provided Simeon twenty-one days to answer the complaint. Simeon again did

not respond.

On August 26, 2014, the Company renewed its motion for default judgment. By

order dated September 3, 2014, I entered a default judgment against Simeon in the form

requested by the Company. The final order permanently enjoined Simeon from “making

any further defamatory statements about [the Company]” or “publishing or posting any

libelous statements about Plaintiff anywhere on the Internet.” Simeon was also ordered to

“immediately remove or cause to be removed any and all libelous statements from its

website, Twitter account, or any other public websites,” including the Simeon Reports

and all posts on Simeon’s Twitter account.26

G. This Action

On January 13, 2015, the Company filed this action against Dimitrov. The

Company contended that Dimitrov acted through Simeon and used the entity “solely for

the purpose of allowing him to shield his identity and assets, and to create the appearance

that a legitimate research company was challenging the business of [the Company].”27

26
Simeon Action, Dkt. 30.
27
Compl. ¶ 2.

10
The factual allegations of the Complaint were substantially identical to those alleged in

the Simeon Complaint.

The Company asserted for claims libel, libel per se, tortious interference with

prospective economic advantage, and negligence. The Complaint sought an injunction

substantially identical to the one asked for and obtained by default in the Simeon Action:

[T]he court should enter a permanent injunction (i) compelling Dimitrov to
remove any and all defamatory and violative statements from any website
he maintains and the @SimeonResearch Twitter account (ii) enjoining
Dimitrov from forming or creating new entities with the purpose of
preparing and/or publishing any false and defamatory statements regarding
[the Company.], and (iii) enjoining Defendant from forming or creating
new entities with the purpose of preparing and/or publishing any false and
defamatory statements regarding [the Company.]28

Despite seeking this relief, the Company acknowledged in its Complaint that Simeon’s

website had been taken down and that all of Simeon’s tweets about the Company had

been removed.29

H. Dimitrov Defaults.

The Company attempted to serve Dimitrov at his last known address in

Alexandria, Virginia. Someone accepted delivery, then returned the documents to UPS,

suggesting that Dimitrov either no longer resided there or was evading service. The

Company next attempted to contact Dimitrov via his last-known phone number, but he

did not answer and his voicemail was full. The Company also e-mailed Dimitrov at his

last known e-mail address, but Dimitrov did not respond. The Company then searched

28
Id. ¶ 69.
29
Id. ¶¶ 5, 26.

11
public records and sent a process server to an address in New York City, but a building

representative told the process server that Dimitrov did not reside there.30

The Company next sought and received permission to effectuate service by

publication. The order authorizing service by publication directed Dimitrov to appear on

May 18, 2015. It warned that “failure to appear shall be cause for entry of judgment by

default.”31 The Company published the required notice on March 20, March 27, and April

3, 2015.

On May 13, 2015, over a month after the last notice by publication, Dimitrov e-

mailed the Company’s counsel from a new e-mail address. His email stated:

Hello,

My name is Georgi Dimitrov. I recently discovered through a posting on
Delaware Online that Organovo has filed a civil suit against me due to my
publications through my LLC, Simeon Research. I am writing first to ask
the purpose of the suit, given my impression that by conceding the suit
against Simeon Research and removing all research material and statements
regarding Organovo the matter would be concluded.

Second, I am writing to inform you that I am currently in Europe, and due
to personal matters am wholly unable to be present in court on May 18th.
Therefore, I hope that a mutually favorable resolution can be reached, and
in the meanwhile, I hope that you would see fit to at least delay the court
date.32

Dimitrov did not contact the court.

30
Dkt. 5.
31
Dkt. 7.
32
Dkt. 10, Ex. A.

12
 By letter dated May 15, 2015, Organovo submitted Dimitrov’s letter to the court

and asked to proceed with the hearing as scheduled. The Company explained the lengths

to which it had gone to serve Dimitrov and provide notice of the hearing. The Company

also discussed the timing of Dimitrov’s email:

In his May 13 e-mail, Mr. Dimitrov claims to have “recently discovered
through a posting on Delaware Online that Organovo has filed a civil suit
against me due to my publications through my LLC, Simeon Research.” On
this point, we note that Organovo arranged for the Order to be published in
The News Journal on March 20, March 27, and April 3, 2015. Thus,
Mr.Dimitrov’s e-mail came more than 40 days after the most recent date the
Order was published in The News Journal.33

The Company inferred that Dimitrov “has gone through great effort to avoid learning the

‘purpose’ of this lawsuit.”34 The Company cited precedents in which Delaware courts had

scheduled hearings and entered default judgments when parties failed to attend.35

The Company provided a copy of its letter to Dimitrov using the email address

that he had used to contact the Company. From that point forward, copies of all filings in

this case were sent to Dimitrov at that email address. Dimitrov did not respond to the

Company’s letter.

The hearing went forward as scheduled on May 18, 2015. Dimitrov did not appear.

I held that he had defaulted.

33
Dkt. 10, at 3-4 (internal citations omitted).
34
Id. at 4 n.1.
35
Id. at 5.

13
I. Post-Default Proceedings

Despite ruling that Dimitrov was in default, I did not enter the form of default

judgment that the Company had proposed. I instead instructed the Company’s counsel to

brief two matters: (i) the amount of damages, and (ii) whether the requested injunctive

relief constituted an unconstitutional prior restraint on future speech.

By letter dated September 16, 2015, the Company submitted a Proposed Order and

Final Judgment of Default (the “Proposed Final Order”). The Proposed Final Order

included a request that Dimitrov disgorge his trading profits. This was the first time that

the Company had requested this relief. Lacking any public records reflecting Dimitrov’s

trades, the Company sought an order compelling Dimitrov to provide them. Dimitrov did

not oppose the request, and I granted it.

The Company commendably provided thorough and evenhanded briefing on the

constitutional issues raised by its request for injunctive relief. The Company proposed a

narrowly tailored injunction that permanently enjoined Dimitrov from republishing the

content of the Simeon Reports and tweets. The Company agreed that in any future

proceeding to enforce the injunction, the Company would bear the burden of establishing

Dimitrov’s noncompliance, which Dimitrov could rebut by demonstrating that the

defamatory statements had since become true or were not defamatory.

The Company was less modest in its damages request. The Company claimed

general damages equal to the decline in the Company’s market capitalization during the

twenty-six day period when Dimitrov published the Simeon Reports and tweets. During

that period, the Company’s stock traded at an average price of $7.79 per share, compared

14
to $9.67 in the thirty days preceding his publications. The Company’s damages theory

implied that Dimitrov was solely responsible for the aggregate decline in the Company’s

stock price.

The Company’s damages theory yielded general damages of $174,311,980.83.

That eye-popping figure would rank among the largest recoveries that this court has

awarded. In the alternative, the Company proposed using an index to factor out general

market and industry conditions. This marginally more conservative approach generated a

still-massive damages award of $134,291,463.00.36

The Company did not stop at general damages. It also requested a large amount of

special damages. The Company claimed harm from its “impaired ability to raise capital”

after Dimitrov’s publications. When Dimitrov published the Simeon Reports and tweets,

the Company was in discussions with an investment bank about raising $60 million in

financing. The Company claimed, without elaboration, that Dimitrov’s actions “caused

Organovo to put the brakes on the planned financing.”37 Instead, the Company raised

$16.6 million by selling shares in below-market offerings of common stock. The

offerings reduced the number of shares available for issuance under the Company’s shelf

registration statement, which forced the Company to file another shelf registration. The

Company later closed on an underwritten public offering that raised gross proceeds of

$46.1 million. The Company claimed that Dimitrov should be held responsible for $13.9

36
Dkt. 20, at 31-37.
37
Id. at 39.

15
million, representing the difference between the $60 million in financing that the

Company had discussed a year earlier and the $46.1 million that the Company raised in

its underwritten offering.

The Company also identified $70,000 in public relations costs incurred responding

to Dimitrov’s publications. The Company’s total request for special damages equaled

$13,970,000.

During a hearing on February 4, 2016, I choked on the Company’s aggregate

damages request and asked the Company to reconsider the magnitude of the damages it

was seeking. On May 2, the Company submitted a revised damages request. The

Company reduced its request for general damages to $38,442,781. The Company also

limited its request for special damages to the $70,000 in public relations costs. The

Company again requested disgorgement of Dimitrov’s trading profits, which it calculated

as amounting to $33,235.65. The Company continued to request a permanent injunction

against the republication of the Simeon Reports and tweets.

J. Dimitrov Enters a Limited Appearance.

On June 27, 2016, before this court had entered a final order, Dimitrov retained

the counsel that originally represented Simeon in the Simeon Action. Through counsel, he

entered a limited appearance and moved to vacate the default judgment. He argued that

the judgment was void because the court lacked subject matter jurisdiction over the

dispute and could not exercise personal jurisdiction over him. On March 3, 2017, the

court heard oral argument.

16
 II. LEGAL ANALYSIS

The entry of a default judgment does not prevent the defaulting party from

appearing and contesting the default. “A defendant is always free to ignore the judicial

proceedings, risk a default judgment, and then challenge that judgment on jurisdictional

grounds . . . .”38 That is what Dimitrov has done here.

Court of Chancery Rule 55(c) permits the court to set aside a default on the

grounds identified in Rule 60(b). Under Rule 60(b)(4), the court may vacate a judgment if

“the judgment is void.” A judgment is void if the court entering the default judgment

lacked subject matter jurisdiction or could not exercise personal jurisdiction over the

defendant.39 Although Dimitrov has challenged both the exercise of subject matter

jurisdiction and the assertion of personal jurisdiction, this decision only reaches the

former issue.

The Court of Chancery can exercise subject matter jurisdiction only when a case

falls into one of three buckets.40 First, jurisdiction exists if a plaintiff states an equitable

38
Ins. Corp. of Ireland v. Compagnie des Bauxietes de Guinee, 456 U.S. 694, 706
(1982).
39
See, e.g., Carlyle Inv. Mgmt. L.L.C. v. Nat’l Indus. Gp. (Hldg.), 2012 WL
4847089, at *6 (Del. Ch. Oct. 11, 2012) (Strine, C.), aff’d, 67 A.3d 373 (Del. 2013); Ford
v. Pep Boys, 1989 WL 16987, at *1 (Del. Super. Feb. 21, 1989); Read v. Walls, 1986 WL
628580, at *2 (Del. Ch. Jan. 16, 1986); accord 10 Charles Alan Wright et al., Federal
Practice and Procedure § 2695 (3d. 1998) (“The principal basis for an attack on a default
judgment under Rule 60(b)(4) asserts that it is void for lack of jurisdiction.”).
40
See generally Candlewood Timber Gp., LLC v. Pan Am. Energy, LLC, 859 A.2d
989, 997 (Del. 2004).

17
claim.41 Second, jurisdiction exists if a plaintiff requests equitable relief and there is no

adequate remedy at law.42 Third, jurisdiction exists by statute.43 Additionally, the clean-

up doctrine provides that if this court would have equitable jurisdiction over a part of a

controversy, then it can address the remaining portions of the controversy as well.44

“Equitable jurisdiction must be determined from the face of the complaint at the

time of filing, with all material factual allegations viewed as true.”45 “In deciding whether

or not equitable jurisdiction exists, the Court must . . . focus upon the allegations of the

complaint in light of what the plaintiff really seeks to gain by bringing his or her

claim.”46 “Chancery jurisdiction is not conferred by the incantation of magic words. . . . If

a realistic evaluation leads to the conclusion that an adequate remedy is available, this

court . . . will not accept jurisdiction over the matter.”47

41
See 10 Del. C. § 341.
42
See 10 Del. C. §§ 341, 342.
43
See, e.g., 8 Del. C. § 111; 6 Del. C. §§ 17-111, 18-111.
44
See generally Getty Ref. & Mktg. Co. v. Park Oil, Inc., 385 A.2d 147, 149 (Del.
Ch. 1978).
45
Int’l Bus. Mach. Corp. v. Comdisco, Inc., 602 A.2d 74, 78 (Del. Ch. 1991).
46
Candlewood, 859 A.2d at 997.
47
McMahon v. New Castle Assocs., 532 A.2d 601, 603 (Del. Ch. 1987) (Allen, C);
accord Comdisco, 602 A.2d at 78 (“[A] judge in equity will take a practical view of the
complaint, and will not permit a suit to be brought in Chancery where a complete legal
remedy otherwise exists but where the plaintiff has prayed for some type of traditional
equitable relief as a kind of formulaic ‘open sesame’ to the Court of Chancery.”);
Cochran v. F.H. Smith Co., 174 A.119, 121 (Del. Ch. 1934) (Wolcott, C.) (“It appears
sometimes to be thought that if fraud be present in any situation the open sesame has

18
 The Complaint asserts common law claims for libel, tortious interference with

prospective economic advantage, and negligence. None of these are equitable claims, and

the complaint does not invoke a statute that confers subject matter jurisdiction on the

court. Consequently, this court only has subject matter jurisdiction over the case if the

Complaint sought a viable equitable remedy.

The Company has cited two equitable remedies. The first is a permanent

injunction against future defamation. The second is an order compelling Dimitrov to

disgorge his profits. On the facts of this case, neither provided a basis for subject matter

jurisdiction. The default is therefore vacated.

A. Injunctive Relief

The Complaint alleged that Dimitrov defamed the Company and sought a

permanent injunction barring Dimitrov from engaging in future acts of defamation.

Whether that request for relief supported the exercise of equitable jurisdiction

necessitates a review of three strands of authority: (i) the general limitation on the

availability of an injunction when an adequate remedy exists at law, (ii) the specific

limitation on the ability of a court sitting in equity to enjoin defamatory speech, and (iii)

the narrow exceptions to the general rule against injunctions in defamation cases. On the

facts presented, the Company’s request for a permanent injunction against future

defamation did not provide a sufficient basis for exercising equitable jurisdiction.

been found upon the pronouncing of which the doors of equity are flung wide apart. That
is a misconception.”).

19
 1. An Adequate Remedy At Law

Generally, “a party injured as a result of a tort has a complete and adequate

remedy at law in the form of an action for damages[.]”48 Defamation is a common law

tort.49 This court lacks jurisdiction “to determine any matter wherein sufficient remedy

may be had by common law, or statute, before any other court or jurisdiction of this

State.”50 Damages are a standard remedy for defamation.51

In this case, a realistic evaluation of the Complaint demonstrates that the Company

had an adequate remedy at law in the form of money damages. The Complaint alleged

that Dimitrov’s defamatory statements negatively affected the Company’s stock price.

48
Hughes Tool Co. v. Fawcett Publ’ns, Inc., 297 A.2d 428, 432 (Del. Ch. 1974),
rev’d on other grounds, 315 A.2d 577 (Del. 1974); see also Gelof v. Prickett, Jones &
Elliot, P.A., 2010 WL 759663, at *1 (Del. Ch. Feb. 19, 2010) (Strine, V.C.) (finding that
a claim for professional negligence “can be completely remedied by legal relief”);
Cochran, 174 A. at 121 (“[A] court of the United States will not sustain a bill in equity to
obtain only a decree for the payment of money by way of damages, when the like amount
can be recovered at law in an action sounding in tort . . . .”) (quoting Buzard v. Houston,
119 U.S. 347, 352 (1886)).
49
See Doe v. Cahill, 884 A.2d 451, 463 (Del. 2005).
50
10 Del. C. § 342.
51
See, e.g., Gannett Co. v. Kanaga, 750 A.2d 1174, 1178 (Del. 2000) (affirming
jury determination of liability but remanding “for a new trial limited to damages”);
Spence v. Funk, 396 A.2d 967, 970-71 (Del. 1978) (discussing availability of general and
special damages for various forms of defamation); see also Milkovich v. Lorain Journal
Co., 497 U.S. 1, 23 (1990) (“Imperfect though it is, an action for damages is the only
hope for vindication or redress the law gives to a man whose reputation has been falsely
dishonored.”) (citation omitted); Dan V. Dobbs, The Law of Remedies 265 (2d ed. 1993)
[hereinafter Law of Remedies] (“Remedies for libel and slander are traditionally damages
remedies.”). See generally 2 Rodney A. Smolla, Law of Defamation §§ 9.01-9.65 (2d ed.
2012) (reviewing the often complex interaction between common law rules and
constitutional doctrine governing damages awards in defamation cases).

20
The Company asked for an award of damages equal to the aggregate value of the decline

in its market capitalization. Setting aside whether that was an appropriate quantum of

relief, it demonstrated that the Company’s injury could be remedied through a monetary

award.

The Company’s request for injunctive relief was forward-looking. Although the

Company’s past harm could be remedied with money, the Complaint sought an

injunction against further acts of defamation. An injunction against future wrongdoing is

not generally available.52 For forward-looking relief to be warranted, the plaintiff must

establish a “reasonable apprehension of a future wrong.”53

The Complaint did not meet this test. After the Simeon Action, Dimitrov stopped

defaming the Company. He complied with this court’s order by removing the Simeon

Reports and the Simeon Tweets and not publishing any additional defamatory material.54

52
See Young v. Red Clay Consol. Sch. Dist., __A.3d__, 2017 WL 2271390, at *53
(Del. Ch. May 24, 2017) (“A permanent injunction against future conduct is not
warranted simply because a court has found past conduct illegal.”); Christiana Town Ctr.,
LLC v. New Castle Ctr., 2003 WL 21314499, at *3 (Del. Ch. June 6, 2003) (“The court
must presume that [parties] will respect any decision rendered by any competent court of
this case.”); accord Del. Bldg. & Constr. Trades Council v. Univ. of Del., 2014 WL
2218730, at *2 (Del. Ch. May 29, 2014) (holding that injunctive relief was not warranted
where a plaintiff “merely contends that, because the Defendants have purportedly not
complied with [a] statute in the past, they will continue this alleged pattern of non-
compliance” after a court order); Reeder v. Del. Dep’t of Ins., 2006 WL 510067, at *16
(Del. Ch. Feb. 24, 2006) (Strine, V.C.) (“There is no justification on this record for an
injunction requiring the Insurance Department to do what it must do in any event—
comply with applicable statutory constraints on its behavior.”).
53
McMahon, 532 A.2d at 606.
54
Compl. ¶¶ 5, 26.

21
When the Company filed suit, there was no “reason to believe that [Dimitrov would]

continue his wrongful course of conduct.”55

Judged under traditional equitable standards, therefore, the Complaint’s request

for an injunction did not provide a basis for subject matter jurisdiction. That conclusion

becomes all the more clear when evaluated under the special rules that apply to requests

for injunctions against future defamatory statements.

2. The No-Injunction Rule

The ability of a court to issue injunctive relief is even more constrained in a

defamation case than in a garden-variety tort case or breach of contract case.

Traditionally, the reason for the special rule was jurisdictional. Today, the rule is

primarily remedial but also rests on the importance afforded to the constitutional

protections of speech.

Historically, equity declined to exercise jurisdiction over a claim for defamation

based on a prayer for injunctive relief. This broadly held view was crystallized in the

55
Weinger v. Miller, 1990 WL 54915, at *1-2 (Del. Ch. Apr. 27, 1990).

22
“traditional maxim that ‘equity will not enjoin a libel.’”56 A more historically accurate

formulation was that “equity has no jurisdiction to enjoin a libel.”57

The no-injunction rule originated in England during the eighteenth century, when

one of Parliament’s major victories in the battles for freedom of the press was “to give

jurors, rather than judges, the power to determine whether publications were in fact

defamatory.”58 By the end of the eighteenth century, it was settled law in England that a

56
Smolla, supra, § 9.85; accord 2 Robert D. Sack, Sack on Defamation: Libel,
Slander and Related Problems § 10.6.1 (4th ed. 2010) (“One principle long adhered to in
defamation cases is that courts will not enjoin libels.”). See generally David S. Ardia,
Freedom of Speech, Defamation, and Injunctions, 55 William & Mary L. Rev. 1, 18
(2013) [hereinafter Freedom of Speech] (“The no-injunction rule has been a fixture of
Anglo-American law for more than three centuries.”).
57
Am. Malting Co. v. Keitel, 209 F. 351, 356 (2d Cir. 1913); see also Inland Steel
Prods. Co. v. MPH Mfg. Co., 25 F.R.D. 238, 243 (N.D. Ill. 1959); Palmer v. Travers, 20
F. 501, 501 (C.C.S.D.N.Y. 1884); Sid Dillon Chevrolet-Oldsmobile-Pontiac, Inc. v.
Sullivan, 559 N.W.2d 740, 747 (Neb. 1997); Venturelli v. Trovero, 105 N.E.2d 306, 308
(Ill. App. Ct. 1952); Lawrence v. Atwood, 295 S.W.2d 298, 300 (Tex. Ct. Civ. App.
1956); West Willow Realty Corp. v. Taylor, 198 N.Y.S.2d 196, 198 (Sup. Ct. 1960).
58
Michael I. Meyerson, The Neglected History of the Prior Restraint Doctrine:
Rediscovering the Link Between the First Amendment and the Separation of Powers, 34
Ind. L. Rev. 295, 306 (2001) [hereinafter Rediscovering the Link]. Until 1641, speech
was highly regulated by the Star Chamber, “an unhealthy hybrid of legislature and court,
issuing regulations and trying and sentencing those accused of violating its laws.” Id. at
299. After its abolition, Parliament increasingly pushed back against judicial suppression
of political speech in the lead-up to the Glorious Revolution. One example was Henry
Carr’s Case, where the King’s Bench asserted common law authority to restrain the
publication of a periodical before a conviction for criminal libel. See Trial of Henry Carr
(1680) 7 How. St. Tr. 1111. The House of Commons impeached the judge, declaring that
the ruling was “most apparently contrary to all justice, in condemning not only what had
been written without hearing the parties, but also all that might for the future be written
on that subject.” Impeachment of Scroggs (1680) 8 How. St. Tr. 198. See generally
Rediscovering the Link, supra, at 307-08; Stephen A. Siegel, Injunctions for Defamation,

23
court of equity had no jurisdiction to adjudicate a defamation claim.59 American courts

adopted the English approach.60 In his influential treatise on equity, Justice Story

explained that “matters of this sort [i.e., defamation] do not properly fall within the

jurisdiction of Courts of Equity to redress; but are cognizable, in a civil or criminal suit,

at law.”61

The merger of the historically separate courts of law and equity undercut the

traditional allocation of jurisdiction over defamation to the law courts, first in England

Juries, and the Clarifying Lens of 1868, 56 Buff. L. Rev. 655, 676-77 (2008) [hereinafter
Clarifying Lens].
59
See Gee v. Pritchard (1818) 36 Eng. Rep. 670, 674; 2 Swans. 403, 413 (Ch.)
(“It will not be necessary to trouble you [to argue that the letters are defamatory]. The
publication of a libel is a crime; and I have no jurisdiction to prevent the commission of a
crime.”); John Eden, A Treatise on the Law of Injunctions 317 (1821) (“So little has it
even been supposed that such a jurisdiction [to enjoin libels] . . . belonged to the court of
Chancery that it would be difficult to find any authority in which it has been in terms
denied.”); see also Clarifying Lens, supra, at 694 (“The sentiment [that equity lacked
jurisdiction to enjoin defamation] passed from [Chancellor] Hardwiche to Chancellors
Erskine and Eldon and on to other judges and commentators.”); Rediscovering the Link,
supra, at 310 (“While a few cases implied that equity could, in fact, enjoin a libelous
publication, these cases were quickly dismissed as aberrational throwbacks to a
discredited era.”); Roscoe Pound, Equitable Relief Against Defamation and Injuries to
Personality, 29 Harv. L. Rev. 640, 645 (1916) [hereinafter, Injuries to Personality]
(acknowledging that Gee v. Pritchard “foreclosed the matter” even though in the author’s
view “it was by no means settled by authority”).
60
See, e.g., Francis v. Flinn, 118 U.S. 385, 388-89 (1886); Edison v. Thomas A.
Edison, Jr., Chem. Co., 128 F. 957, 963 (C.C.D. Del. 1904); Reyes v. Middleton, 17 So.
937, 939 (Fl. 1895); Raymond v. Russell, 9 N.E. 544, 544 (Mass. 1887); Flint v.
Hutchinson Smoke-Burner Co., 19 S.W. 804, 806 (Mo. 1892); Allegritti Chocolate
Cream Co. v. Rubel, 83 Ill. App. 558, 565 (1898); Brandreth v. Lance, 8 Paige Ch. 24, 26
(N.Y. Ch. 1839). See generally Freedom of Speech, supra, at 21; Clarifying Lens, supra,
at 710.
61
2 Joseph Story, Commentaries on Equity Jurisprudence 263 (1843).

24
and then in the United States. After England unified its separate court systems in 1873,

English courts began to issue permanent injunctions in defamation cases after a jury had

found the defendant liable, but “the judge could enjoin no more than what the jury had

found to be defamatory.”62 Although this step was initially controversial, by the end of

the nineteenth century English courts also were willing to issue preliminary injunctions

pending the jury’s decision.63

During the late nineteenth and early twentieth centuries, many American

jurisdictions also merged their separate systems of law and equity. 64 American courts,

however, maintained the no-injunction rule in the face of contrary British practice.65 The

62
Clarifying Lens, supra, at 709 (internal citations and quotations omitted); see W.
Blake Odgers, A Digest of the Law of Libel and Slander 13-14 (1881) (“No injunction
can be obtained to prohibit the publication or republication of any libel, or to restrain its
sale. The matter must first go before a jury . . . [T]he courts, whether of Law or of Equity,
cannot, till after verdict issue any injunction.”).
63
Clarifying Lens, supra, at 709 n.289; William D. Lewis, English Cases on the
Restraint of Libel by Injunction Since the Supreme Court Judicature Act, 1873, 51 Am. L.
Reg. 322, 330 (1903) (noting that since the end of the nineteenth century, “no one has
questioned the power of the court under the Judiciary Act to grant an interim injunction
to restrain a libel. The power has been repeatedly asserted.”).
64
Unlike Delaware, most American states never maintained separate courts but
rather distinct dockets, one for actions at law and the other for proceedings in equity, both
of which were administered by the same court. See Thomas O. Main, Traditional Equity
and Contemporary Procedure, 78 Wash. L. Rev. 429, 448-49 (2003); Morton Gitelman,
The Separation of Law and Equity and the Arkansas Chancery Courts: Historical
Anomalies and Political Realities, 17 Ark. L. Rev. 215, 235 (1995). The federal courts
exemplified this approach until 1938, when the adoption of the Federal Rules of Civil
Procedure resulted in the creation of today’s “civil action.” See Fed. R. Civ. P. 2 (“There
shall be one form of action to be known as ‘civil action.’”).
65
See Clarifying Lens, supra, at 715; Freedom of Speech, supra, at 21.

25
leading decision grounded the continuing adherence to the no-injunction rule on

traditional equitable principles:

Charges of slander are peculiarly adapted to and require trial by jury; and
exercising, as we do, authority under a system of government and law
which by a fundamental article secures the right of trial by jury in all cases
at common law, and which by express statute declares that suits in equity
shall not be sustained in any case where a plain, adequate, and complete
remedy may be had at law, as has always heretofore been considered the
case in causes of libel and slander[,] we do not think that we would be
justified in extending the remedy of injunction to such cases.66

In the federal courts and the majority of states that unified their systems, courts recast the

earlier rule about equity lacking jurisdiction over a defamation claim as a principle that

equity would not grant injunctive relief to restrain a libel.67 In the minority of states that

66
Kidd v. Horry, 28 F. 773, 776 (Bradley, Circuit Justice, C.C.E.D. Pa. 1886).
67
See, e.g., Cmty. for Creative Non-Violence v. Pierce, 814 F.2d 663, 672 (D.C.
Cir. 1987) (“The usual rule is that equity does not enjoin a libel or slander and that the
only remedy for defamation is an action for damages.”) (internal quotations omitted);
Alberti v. Cruise, 383 F.2d 268, 272 (4th Cir. 1967) (“There is usually an adequate
remedy at law which may be pursued in seeking redress from harassment and
defamation.”); Oorah, Inc. v. Schick, 2012 WL 3233674, at *4 (E.D.N.Y. Aug. 6, 2012)
(“Oorah may seek damages if the School commits libel or slander; as it failed to
demonstrate the inadequacy of that remedy, equitable relief was inappropriate.”);
Greenberg v. DeSalvo, 229 So. 2d 83, 86 (La. 1969) (noting that one of the rationales
behind the no-injunction rule is that “there is an adequate legal remedy, either by an
action for damages or by criminal prosecution”); Mescalero Apache Tribe v. Allen, 469
P.2d 710, 711 (N.M. 1970) (“[A] court of equity will not enjoin threatened commission
of libel or slander where no continuing irreparable injury not compensable in a court of
law is shown.”); Schmoldt v. Oakley, 390 P.2d 882, 885 (Okla. 1964) (“[E]quity will not
restrain libel or slander . . . in the absence of acts of conspiracy, intimidation, or coercion,
because the party allegedly wronged has an adequate remedy at law.”).

In reformulating the rule, courts sometimes noted that its traditional underpinning
as a limitation on jurisdiction no longer applied in a merged law-and-equity court. See
Greenberg, 229 So. 2d at 85 (“Although equitable remedies in the past have sometimes

26
retained the division between law and equity, courts almost universally adhered to the

traditional rule against equity exercising jurisdiction over a defamation claim.68

The protection for freedom of speech in the federal and state constitutions

provided additional justifications for American resistance to the issuance of injunctions in

been denied in terms of lack of jurisdiction, the jurisdictional rationale is technically
inaccurate”). Others continued to rely (inaccurately) on the jurisdictional foundation. See,
e.g., Starns v. Success Portrait Co. 28 F. Supp. 711, 711 (E.D. Tenn. 1939); Atwood, 295
S.W.2d at 300; see generally Freedom of Speech, supra, at 21-22 (“Judges continued to
deny requests for injunctions targeting defamatory speech . . . long after law and equity
courts had merged in most jurisdictions in the United States, stating that they had no
authority to grant such relief.”); Estella Gold, Does Equity Still Lack Jurisdiction to
Enjoin a Libel Or Slander?, 48 Brook. L. Rev. 231, 239 (1982) (noting that “judicial
reliance on this want of equity jurisdiction is technically inaccurate” in merged
jurisdictions).
68
See, e.g., Esskay Art Galleries v. Gibbs, 172 S.W.2d 924, 927 (Ark. 1943) (“It is
settled . . . that where no breach of trust or of contract appears, equity will not enjoin
libelous or slanderous statements injurious to plaintiff’s business, trade or profession . . .
.”); Moore v. City Dry Cleaners & Laundry, 41 So. 2d 865, 873 (Fl. 1949) (“[A] court of
equity will not enjoin the commission of a threatened libel or slander . . . An action at law
will ordinary provide a full, adequate an[d] complete remedy in such cases . . . .”);
Montgomery Ward & Co. v. United Retail, Wholesale & Dep’t Store Empls. of Am., 70
N.E.2d 75, 86 (Ill. 1946) (“[It] is the settled doctrine in this country that a court has no
such power [i.e. to enjoin future libels.]”); Kwass v. Kersey, 81 S.E.2d 237, 247 (W. Va.
1947) (“[T]he cause of action, if any possessed by the plaintiff, was brought in the wrong
forum and should have been instituted on the law side of the court.”); Kyritsis v. Vierson,
382 S.W.2d 553, 559 (Tenn. Ct. App. 1964) (“In the instant case, we think complainant’s
remedy, if any, is by means of a suit of law.”); D’Ambrosio v. D’Ambrosio, 610 S.E.2d
876, 886 (Va. Ct. App. 2005) (“Because Fowler has an adequate remedy at law [for a
defamation claim], injunctive relief is inappropriate.”); see also Devine v. Devine, 90
A.2d 126, 129 (N.J. Sup. Ct. Ch. Div. 1952); Voltube Corp. v. B. & C. Insulation Prods.,
89 A.2d 713, 716 (N.J. Sup. Ct. Ch. Div. 1951); Weiss v. Levine, 32 A.2d 574, 576 (N.J.
Ch. 1943); John R. Thompson Co. v. Delicatessen & Cafeteria Workers Union, Local
410, 8 A.2d 130, 132 (N.J. Ch. 1939); A. Hollander & Son v. Joseph Hollander, Inc., 177
A. 80, 82 (N.J. Ch. 1935); Mayer v. Journeymen Stone-Cutters’ Ass’n, 20 A. 492, 495
(N.J. Ch. 1890).

27
defamation cases.69 In 1931, the United States Supreme Court elevated the common law

prohibition on prior restraints to a federal constitutional rule.70 Although the decision

held open the possibility of injunctive relief in an appropriate case, the United States

Supreme Court “has never held that an injunction directed at defamatory speech is

constitutional.”71 Today, a majority of the jurisdictions that refuse to enjoin future

defamatory speech rely primarily on constitutional grounds.72

69
See, e.g., Citizens’ Light, Heat & Power Co. v. Montgomery Light & Water
Power Co., 171 F. 553, 556 (C.C.M.D. Ala. 1909) (“The court cannot go outside of the
[Alabama] Constitution, or hold that to be an inadequate remedy which the Constitution
has declared to be the sole remedy.”); Montgomery Ward & Co. v. S.D. Retail Merchs.’
& Hardware Dealers’ Ass’n, 150 F. 413, 418 (C.C.D.S.D. 1907) (“[A publisher] is
entitled to invoke the constitutional guaranty contained in section 5, art. 6 of the
Constitution of South Dakota . . . In the jurisprudence of the United States, there is no
remedy for the abuse of this right conferred by the Constitution, except an action at law
for damages or a criminal proceeding . . . .”); Dailey v. Super. Ct. of S.F., 44 P. 458, 460
(Cal. 1896) (“We conclude that the order made by the trial court was an attempted
restraint on free speech, as guarant[e]ed by the constitution of this state.”); State ex rel.
Liversey v. Judge of Civil Dist. Ct., 34 La. Ann. 741, 746 (La. 1882) (finding an
injunction prohibiting future defamatory speech of any kind “a direct violation of the
[Louisiana] Constitution, ultra vires, and is absolutely null and void.”); Marlin Firearms
Co. v. Shields, 64 N.E. 163, 165 (N.Y. 1902) (noting that enjoining libels “would open
the door for a judge sitting in equity to establish a censorship”); Life Ass’n of Am. v.
Boogher, 3 Mo. App. 173, 180 (1876) (“It is obvious that, if this remedy be given on the
ground of the insolvency of the defendant, the freedom to speak and write, which is
secured, by the Constitution of Missouri, to all its citizens, will be . . . denied to one who
has no property liable to an execution.”); Brandreth, 8 Paige Ch. at 26 (“It is very evident
that this court cannot assume jurisdiction of the case presented . . . without infringing
upon the liberty of the press . . . .”).
70
Near v. Minnesota ex rel Olson, 283 U.S. 697, 712-13 (1931).
71
Freedom of Speech, supra, at 39.

Id. at 51. See, e.g., Metro. Opera Ass’n, Inc. v. Hotel Empls. & Rest. Int’l Union,
72

239 F.3d 172, 176 (2d Cir. 2001); Crosby v. Bradstreet Co., 312 F.2d 483, 485 (2d Cir.

28
 Although the underlying rationale has evolved over time, the general rule

continues to be that a court of equity will not issue an injunction against future

defamatory speech. In courts where law and equity are separate, the rule is jurisdictional.

In courts where law and equity have merged, the rule is prudential. Under both systems,

the rule accords with constitutional doctrine. The upshot is the same: a court of equity

generally cannot issue an injunction in a defamation case.73

1963); Saad v. Am. Diabetes Ass’n, 2015 WL 751295, at *2 (D. Mass. Feb. 23, 2015);
Gunder’s Auto Ctr. v. State Farm Ins., 617 F. Supp. 2d 1222, 1225 (M.D. Fla. 2009),
aff’d, 442 F. App’x 819 (11th Cir. 2011); Freedom Calls Found. v. Bukstel, 2006 WL
845509, at *22 (E.D.N.Y. Mar. 3, 2006); Ameritech v. Voices for Choices, Inc., 2003 WL
21078026, at *1-2 (N.D. Ill. May 12, 2003); Tilton v. Capital Cities/ABC Inc., 827 F.
Supp. 674, 682 (N.D. Okla. 1993); Willing v. Mazzocone, 393 A.2d 1155, 1158 (Pa.
1978); Paradise Hills Assocs. v. Procel, 1 Cal. Rptr. 2d 514, 518-19 (Ct. App. 1991);
Animal Rights Found. of Fl., Inc. v. Siegel, 867 So. 2d 451, 456-57 (Fl. Dist. Ct. App.
2004).
73
There is one decision from this court that appears at first blush to stand for a
contrary proposition. In a 2015 opinion, this court denied a motion to dismiss a complaint
that solely asserted a claim for defamation and sought a permanent and mandatory
injunction requiring the defendant to “(1) remove all libelous articles and related
hyperlinks from any of its websites; and (2) publish and promote a retraction of the
articles.” Perlman v. Vox Media, Inc., 2015 WL 5724838, at *8 (Del. Ch. Sept. 30, 2015).
The defendants, however, only moved to dismiss for failure to state a claim upon which
relief could be granted, so the decision did not have to reach the jurisdictional question.
Id. at *1. The default judgment that I entered in the Simeon Action also should not be
read to suggest that jurisdiction existed on the face of the complaint in that action.
Simeon initially moved to dismiss on jurisdictional grounds, then stopped participating in
the litigation. No one briefed the jurisdictional issues that this decision has addressed, and
I did not raise them sua sponte. Perhaps I should have thought to do so, but at the time, I
was focused on the propriety of entering a default judgment in light of Dimitrov’s on-
again, off-again litigation tactics, which was the issue that the Company asked me to
consider.

29
 Judged under the general test for determining whether an adequate remedy exists

at law, the Complaint’s request for an injunction did not support equitable jurisdiction.

Judged under the special rules that apply to requests for injunctions in defamation cases,

that result is all the more clear.

3. Two Recent Exceptions to the Anti-Injunction Rule

Despite the broad rule against injunctive relief in defamation cases, courts in the

twentieth century have carved out two exceptions. One is for business disputes. The other

resurrected the previously rejected English practice of granting narrow injunctive relief

after a final adjudication of falsity. Neither applies in this case.

a. Trade Libel

During the twentieth century, American courts increasingly granted preliminary

injunctions to address “trade libel,” a concept that initially covered statements

“disparaging the quality . . . of property,” then expanded “to encompass any injury to

economic advantage arising from false derogatory statements.” 74 Courts divided on the

74
Michael A. Albert & Robert L. Bocchino, Jr., Trade Libel: Theory and Practice
Under the Common Law, the Lanham Act, and the First Amendment, 89 Trademark Rep.
826, 827 (1999); accord William L. Prosser, Injurious Falsehood: The Basis of Liability,
59 Colum. L. Rev. 425, 425-28 (1959) [hereinafter Injurious Falsehood]. As the tort
expanded, the term “trade libel” became something of a misnomer, and commentators
used other terms such as “disparagement or “injurious falsehood,” with the latter term
adopted by Prosser and the Second Restatement of Torts. See Restatement (Second) of
Torts § 623A (Am. Law Inst. 1971); Injurious Falsehood, supra, at 425. Because many
of the relevant decisions use the term “trade libel,” this decision does as well.

30
availability of injunctive relief, with some judges issuing injunctions,75 others adhering to

the traditional anti-injunction rule,76 and many adopting a middle ground in which a

preliminary injunction would issue if the trade libel furthered another tort that

independently warranted equitable relief.77 The legitimacy of this type of injunction

largely became moot after the passage of statutes like the Lanham Act78 and state laws

against deceptive trade practices,79 which specifically authorized injunctive relief.80

75
See, e.g., Black & Yates v. Mahogany Ass’n, 129 F.2d 227 (3d. Cir. 1941);
Paramount Pictures, Inc. v. Leader Press, Inc., 106 F.2d 229 (10th Cir. 1939); Saxon
Motor Sales v. Torino, 2 N.Y.S.2d 885 (Sup. Ct. 1938); see Injurious Falsehood, supra,
at 428 (“These equity cases appear to complete the divorce from defamation, and to make
it clear that the complex with which we are dealing is to be classified as one form of
intentional interference with economic relations, and not as a branch of the special and
strict liability for the more general harm to personal reputation involved in libel or
slander.”).
76
See John R. Thompson Co, 8 A.2d at 132; Joseph Hollander, Inc., 177 A. at 82.
77
See, e.g., Maytag Co. v. Meadows Mfg. Co., 35 F.2d 403, 408 (7th Cir. 1929);
Keitel, 209 F. at 357-58; Edison, 128 F. at 963; Guion v. Terra Mktg. of Nev., Inc., 523
P.2d 847, 848 (Nev. 1974); Davis v. New England Ry. Pub. Co., 89 N.E. 565 (Mass.
1909); H.E. Allen Mfg. Co. v. Smith, 224 A.D. 187, 192 (N.Y. App. Div. 1928); Yood v.
Daly, 174 N.E. 779, 779 (Ohio Ct. App. 1930); see also Comment, The Law of
Commercial Disparagement, Business Defamation’s Impotent Ally, 63 Yale L.J. 65, 97-
98 (1953) (“When disparagement occurs in combination with enjoinable competitive
torts—notably appropriation of trade relations and interference with contract, courts will
prohibit the whole course of unlawful conduct.”); Injurious Falsehood, supra, at 428
(noting cases that have found injurious falsehoods “merely one method of unfair
competition or of interference with business relations and so . . . grant the injunction”).
78
15 U.S.C. § 1125.
79
E.g., 6 Del. C. § 2532.
80
See 15 U.S.C. § 1116 (“The several courts vested with jurisdiction of civil
actions arising under this chapter shall have power to grant injunctions, according to the
principles of equity and upon such terms as the court may deem reasonable.”); 6 Del. C. §

31
 A decision from this court examined the propriety of an injunction for trade libel

and joined the jurisdictions in the middle camp.81 The case involved two competing

businesses—Pitman & Sons, Inc. and Pitman Manufacturing Co.—that both

manufactured and sold fryers. Pitman & Sons sued Pitman Manufacturing for

expropriating its trade name, then sent a letter to its customers that included the following

statements:

 “The famous ‘Pitco Frialators’ are manufactured exclusively by the J.C. Pitman &
Sons, Inc. . . . Any association of the name Pitman with other than the ‘Pitco
Frialators’ is an attempt to confuse the trade and introduce a copy of our ‘Pitco
Frialotor’. . . .”82

 “[Pitman Manufacturing] has started a campaign to confuse and deceive the trade; by
unlawfully using the name Pitman; by unlawfully attempting to copy the genuine
Pitman Fryer; by unlawfully producing the advertising matter of J.C. Pitman and
Sons, Inc.; and by unlawfully attempting to force their inferior product on the trade in
place of the genuine Pitco Frialator.”83

 “It has become necessary to resort to court proceedings to stop this obvious deception;
to stop the unlawful sale of this New Fryer; and to stop this new concern from
capitalizing unlawfully on the good will honestly built up by J.C. Pitman and Sons . . .
.”84

2533 (“A person likely to be damaged by a deceptive trade practice of another may be
granted an injunction against it under the principles of equity and terms that the court
considers reasonable.”)
81
J.C. Pitman & Sons v. Pitman, 47 A.2d 721 (Del. Ch. 1946)
82
Id. at 723.
83
Id.
84
Id. at 724.

32
 “Any legitimate concern like yourself that buys or sells the products of this outfit
might unwittingly become involved in this litigation—which would be very costly to
you, and very regrettable to J.C. Pitman and Sons.”85

 “We, therefore, advise you not to deal with this new corporation until its rights to
manufacture and your right to buy or sell this questionable product is decided upon by
the courts.”86

Pitman Manufacturing brought a counterclaim alleging that the statements were

defamatory and sought a preliminary injunction prohibiting further publication of the

letters.

In ruling on the application for a preliminary injunction, the decision first

summarized the existing authorities:

Prior to . . . the Judicature Act of 1873, the English Court of Chancery
would not enjoin the publication of a mere trade libel . . . But while the
right to enjoin a trade libel is now established in that country, it will only be
exercised in plain cases of irreparable injury. It is unnecessary to consider
the peculiar statutory provisions involved, and whether there was any real
enlargement of the inherent powers of equity.

When no breach of trust or of contract rights appears, the American courts
have almost uniformly followed the English rule prior to 1873, and have
refused to enjoin mere trade libels. When, however, a court of equity has
jurisdiction on some other ground, the American courts will also usually
enjoin the continued publication of a trade libel incident thereto. That is
true when the libel is accompanied by some act of unfair business
competition, if irreparable damage is imminent . . . .87

Distilling a rule, the decision stated: “The necessary conclusion therefore is that a

continued course of wrongful action may, ordinarily, be stopped by injunction, although

85
Id.
86
Id.
87
Id. at 725 (citations omitted).

33
it includes a trade libel.”88 The court held that “[i]ntimidating possible customers by

baseless threats to sue, should they deal with the complainant, comes within that rule.”89

The court therefore issued an injunction enjoining Pitman & Sons from sending out more

letters. This instrumentalist approach to injunctive relief accorded with the middle

approach that many other jurisdictions had endorsed.

Viewing the Complaint charitably, the Company might be seen as having

attempted to plead a trade libel. Count III of the Complaint asserted a claim for tortious

interference with prospective economic advantage. Unlike defamation, injunctive relief is

a common and non-controversial remedy for tortious interference with prospective

economic advantage.90 Courts have recognized that a request for equitable remedies for

tortious interference with prospective economic advantage can provide the requisite basis

for equitable jurisdiction that can justify a related injunction against future speech.91

88
47 A.2d at 726.
89
Id.
90
See Copi of Del., Inc. v. Kelly, 1996 WL 633302, at *4-5 (Del. Ch. Oct. 25,
1996) (granting injunctive relief); Bowl-Mor Co. v. Brunswick Corp., 297 A.2d 61, 62
(Del. Ch. 1972) (same), aff’d, 297 A.2d 67 (Del. 1972); see also Triton Const. Co. v. E.
Shore Elec. Servs., Inc., 2009 WL 1387115 at *25 (Del. Ch. May 18, 2009) (considering
but ultimately denying injunctive relief on equitable grounds), aff’d, 988 A.2d 938 (Del.
2010) (TABLE).
91
Injurious Falsehood, supra, at 428; see, e.g., Carter v. Knapp Motor Co., 11 So.
2d 383, 385 (Ala. 1943); Pure Milk Producers Ass’n v. Bridges, 68 P.2d 658, 662 (Kan.
1937).

34
 In this case, however, the Complaint’s allegations failed to state a claim for

tortious interference with prospective economic advantage.92 To state such a claim, a

plaintiff must plead “(a) the reasonable probability of a business opportunity, (b) the

intentional interference by the defendant with that opportunity, (c) proximate causation,

and (d) damages . . . .”93 “[T]o plead a reasonable probability of a business opportunity,

[a plaintiff] must identify a specific party who was prepared to entered into a business

relationship but was dissuaded from doing so by the defendant and cannot rely on

generalized allegations of harm.”94 While the plaintiff does not need to identify a party by

name, the plaintiff must do more than offer “vague statements about unknown

92
A defendant “is entitled to contest the sufficiency of the complaint” even after
defaulting. Hauspie, 945 A.2d at 587.
93
DeBonaventura v. Nationwide Mut. Ins. Co., 419 A.2d 942, 947 (Del. Ch.
1980); accord Restatement (Second) of Torts § 766B.
94
Agilent Techs., Inc. v. Kirkland, 2009 WL 119865, at *7 (Del. Ch. Jan. 20,
2009) (Strine, V.C.) (internal quotations omitted).

35
customers.”95 A plaintiff cannot plead this element by alleging a “nebulous,

unascertainable class” of business relationships.96

Here, the Complaint alleged only that Dimitrov interfered with “valuable

prospective economic relationships and business opportunities with its bankers,

customers, lenders, investors and prospective investors . . . .”97 The Complaint provided

no factual support for this conclusory allegation. The Complaint stated that the Company

“believes it has lost potential investors,” but provided no details.98 The Complaint never

specified any customer relationships that Dimitrov harmed. Vague allegations of this sort

are insufficient.

There is also nothing in the Complaint to support a reasonable inference that

Dimitrov intended to interfere with the Company’s business relationships. There was no

95
Id.; accord Lipson v. Anesthesia Servs., P.A., 790 A.2d 1261, 1285 (Del. Super.
2001) (stating that a plaintiff must identify “specific prospective business relations”);
Wyschock v. Malekzadah, 1992 WL 148002, at *3 (Del. Super. June 10, 1992) (“[T]he
complaint fails to identify the parties and the subject matter of the business opportunity as
to which there was a reasonable probability of fruition which ended because of
defendant’s alleged statements.”); N.K.S. Distribs., Inc. v. Tigani, 2010 WL 2178520, at
*9 (Del. Ch. May 28, 2010) (“[T]he Counterclaims still do nothing more than imply the
existence of a potential loan facility through an unnamed lender . . . Such allegations are
insufficient to support a tortious interference with prospective contractual relations
claim.”).
96
Kimbleton v. White, 2014 WL 4386760, at *8 (D. Del. Sept. 4, 2014).
97
Compl. ¶ 53.
98
Id. ¶ 25. During briefing on the Proposed Final Order, the Company only
offered the single example of the $60 million investment from an investment bank and
alleged in a wholly conclusory manner that Dimitrov was responsible for the Company
losing that investment.

36
reason to believe that Dimitrov, who was unaffiliated with the Company, had any

knowledge of the Company’s ongoing discussions with potential investors. In fact, the

Complaint ascribed a different intention to Dimitrov. “Defendant’s acts in publishing the

[Simeon Reports] and the [Simeon Tweets] were intended solely to drive down the price

of Plaintiff’s common stock, so that Defendant could effectuate profitable short sales of

that stock.”99

Count III thus failed to state a claim upon which relief can be granted. It therefore

cannot provide a route to an injunction against defamatory statements that are part of a

larger trade libel. It consequently cannot provide a basis for subject matter jurisdiction.

b. Adjudicated Falsehoods

During the twentieth century, American courts also revisited the earlier resistance

to granting injunctions in traditional defamation cases. Citing the growing willingness to

consider injunctions in cases of trade libel, courts and commentators argued that the

parity of reasoning called for injunctive relief for defamation in general.100 Spurred by

99
Compl. ¶ 27.
100
See, e.g., Krebiozen Research Found. v. Beacon Press, Inc., 134 N.E.2d 1, 6
(Mass. 1956); Murphy v. Daytona Beach Humane Soc., Inc., 176 So. 2d 922, 926-27 (Fl.
Dist. Ct. App. 1965) (Wigginton, J., concurring); Koussevitzky v. Allen, Towne & Heath,
68 N.Y.S.2d 779, 785 (Sup. Ct. 1947); Mazzocone v. Willing, 369 A.2d 829, 831 (Pa.
Sup. Ct. 1976), rev’d, 393 A.2d 1155 (Pa. 1978). See generally William A. Bertelsman,
Injunctions Against Speech and Writing: A Re-Evaluation, 59 Ky. L.J. 319, 326 (1970)
(“An injunction to protect business interests is no more or less a prior restraint on speech
than an injunction to protect interests of personality.”); Robert Allen Sedler, Injunctive
Relief and Personal Integrity, 9 St. Louis U. L.J. 147, 154-55 (1964) [hereinafter
Personal Integrity] (“The inhibiting effect on expression is analytically the same
irrespective of the nature of the injury to the plaintiff.”).

37
these insights, American courts began issuing permanent injunctions as part of a remedial

package after speech had been judged defamatory. Five state Supreme Courts,101 three

United States Circuit Courts of Appeals,102 and several lower courts103 have endorsed

permanently enjoining a defendant from repeating speech found defamatory in an

adversarial proceeding. “[A]lthough the overall number of decisions granting injunctions

is small relative to the total number of cases in which the plaintiffs requested injunctive

relief, it is clear that a trend is emerging within both state and federal courts that permits

injunctions if the speech in question was adjudged to be defamatory.”104

101
Balboa Island Village Inn, Inc. v. Lemen, 156 P.3d 339, 343 (Cal. 2007); Retail
Credit Co. v. Russell, 218 S.E.2d 54, 62 (Ga. 1975); Hill v. Petrotech Res. Corp., 325
S.W.3d 302, 309 (Ky. 2010); Advanced Training Sys., Inc. v. Caswell Equip. Co., 352
N.W.2d 1, 11 (Minn. 1984); O’Brien v. Univ. Cmty. Tenants Union, Inc., 327 N.E.2d
753, 754 (Ohio 1975); see also Sid Dillon, 559 N.W.2d at 746 (expressing support for
this approach in dicta).
102
San Antonio Cmty. Hosp. v. S. Cal. Dist. Council of Carpenters, 125 F.3d 1230,
1238 (9th Cir. 1997); Brown v. Petrolite Corp., 965 F.2d 38, 51 (5th Cir. 1992);
Lothschuetz v. Carpenter, 898 F.2d 1200, 1208-09 (6th Cir. 1990) (Wellford, J.,
concurring in part and dissenting in part).
103
See, e.g., Baker v. Kuritzky, 95 F. Supp. 3d 52, 59 (D. Mass. 2015); ThermoLife
Int’l LLC v. Connors, 2014 WL 1050789, at *7 (D.N.J. Mar. 17, 2014); Wagner Equip.
Co v. Wood, 893 F. Supp. 2d 1157, 1163 (D.N.M. 2012); Saadi v. Maroun, 2009 WL
3617788, at *3 (M.D. Fla. Nov. 2, 2009); Lassiter v. Lassiter, 456 F.2d 876, 884 (E.D.
Ky. 2006); Rooks v. Krzewski, 2014 WL 1351353, at *31 (Mich. Ct. App. Apr. 3, 2014);
Chambers v. Scutieri, 2013 WL 1337935, at *14 (N.J. Super. Ct. App. Div. Apr. 4,
2013).
104
Freedom of Speech, supra, at 51. The trend has not escaped criticism, whether
via dissent or commentary. See, e.g., Metro Opera Ass’n, 239 F.3d at 178 (“We have
never held in this Circuit that a libel becomes subject to an injunction once its libelous
character has been adjudicated.”); Kramer v. Thompson, 947 F.2d 666, 677 (3d Cir.
1991) (“[T]he maxim that equity will not enjoin a libel has enjoyed nearly two centuries

38
 In my view, the potential availability of permanent injunctive relief following an

adjudication of falsity that is narrowly tailored to the scope of the adjudication cannot

reach back to support equitable jurisdiction.105 Determining whether equitable

jurisdiction exists at the outset of a case has different implications than awarding an

equitable remedy at its conclusion. Most significantly, analyzing the former issue results

in a judge making a preliminary determination about the viability of the defamation claim

on an incomplete, pleading-stage record. Such an approach contravenes both the

longstanding public policy against judges censoring speech and the equally longstanding

preference for juries addressing defamation claims.106 One of the principal arguments in

of widespread acceptance at common law. The welter of academic and judicial criticism
of the last seventy years has, in truth, done little more than chip away at its edges.”);
Kinney v. Barnes, 443 S.W.3d 87, 99 (Tex. 2014) (“[W]e hold that the Texas Constitution
does not permit injunctions against future speech following an adjudication of
defamation.”); Erwin Chemerinsky, Injunctions in Defamation Cases, 57 Syracuse L.
Rev. 157, 173 (2007) (criticizing the modern trend and arguing that “[t]he [United States]
Supreme Court and lower courts . . . should reaffirm the longstanding rule that equity will
not enjoin defamation and that such injunctions are prior restraints that inherently violate
the First Amendment.”).
105
To the court’s knowledge, no Delaware case has considered whether a court
may enjoin future defamatory speech following an adjudication of falsity. This decision
expresses no view on the issue. Nor should the permanent injunction that the court
entered in the Simeon Action be interpreted as endorsing the availability of injunctive
relief for defamation under Delaware law. The court entered final judgment in the form
requested by the Company without considering the legal issues discussed in this opinion.
As the Company acknowledged in its briefing on the Proposed Final Order, the breadth
of the injunctive relief granted in the Simeon Action is constitutionally suspect at best.
Dkt. 20 at 53-56; see Freedom of Speech, supra, at 53-54.
106
See Kramer, 947 F.2d at 677 (noting the “almost talismanic significance that
the case law attaches to the decisions of juries” in defamation cases); Kidd, 28 F. at 776
(“Charges of slander are peculiarly adapted to and require trial by jury.”); Hazy v. Woitke,

39
favor of permitting a post-trial award of permanent injunctive relief has been that it does

not violate these policies.107 Delaware law echoes the strong preference for jury

determinations of defamation claims.108

Unlike in a jurisdiction where law and equity have merged, there is another court

that can capably adjudicate the claim. “Equity and law courts should not be placed in the

48 P. 1048, 1049-50 (Colo. 1897); (“[T]he prosecutor or plaintiff must . . . satisfy a jury
that the words are such, and so published, as to convey the libelous imputation.”); Heller
v. Pulitzer Publ’g Co., 54 S.W. 457, 459 (Mo. 1899) (“But while a court may sustain a
demurrer . . . it cannot direct a verdict for the plaintiff in a libel case. In this respect libel
cases differ from other cases.”); Clarifying Lens, supra, at 704 (“[T]he continuation
throughout the nineteenth century of the Revolutionary era understanding that it was
impossible for a defamation defendant to be found liable without a jury verdict against
him stands as an exception to the general trend toward greater judicial control of juries.”).
See generally Injuries to Personality, supra, at 656 (“There is a clear policy in favor of
jury trial of an issue of truth in a charge of defamation. Juries are peculiarly adapted to try
such an issue . . . .”).
107
See Kramer, 947 F.2d at 675-77; Balboa, 156 P.3d at 350-51; Sid Dillon, 559
N.W.2d at 746; Caswell, 352 N.W.2d at 11. See generally Clarifying Lens, supra, at 735
(“The presence or absence of a jury was central to the considerations the sensibly
distinguished the impermissible regime of prior restraints from the permissible regime of
subsequent punishment.”); Personal Integrity, supra, at 154 (“Since we are no longer
concerned with questions of ‘equity jurisdiction’ the fact that the plaintiff seeks
injunctive relief would not prevent the court’s [sic] summoning a jury in a proper case.”)
108
See Del. Const. art. I, § 5 (providing that “in all indictments for libels the jury
may determine the facts and the law, as in other cases”); Kanaga, 750 A.2d at 1181
(holding that “the issue of whether the media defendants deviated from a journalistic
standard of care was well within the grasp of a jury” and did not require expert
testimony); Nichols v. Lewis, 2007 WL 1584622, *1 (Del. Ch. May, 24, 2007) (Strine,
V.C.) (transferring trade libel claims to Superior Court following dismissal of other
claims; concluding that although jurisdiction existed under the clean-up doctrine, transfer
was preferable and “the defendants’ desire to have a jury trial if the case proceeds that far
is one that I should give substantial weight, particularly in the context of a defamation
claim”).

40
position of competing for litigation nor should [a] [p]laintiff be afforded a choice of

forums.”109 The Superior Court has been the primary forum for adjudicating defamation

claims. That court’s ample experience provides an additional reason for this court to

decline jurisdiction.110 To the extent a case warrants an equitable remedy, a plaintiff has

procedural avenues available. On the request of a party or sua sponte, the Superior Court

may transfer a case to this court at the remedial phase to consider injunctive relief. 111 Or

the Chief Justice can designate the Superior Court judge to serve as a vice chancellor pro

hac vice.112

109
Johnson v. Penrose, Inc., 1983 WL 19789, at *2 (Del. Ch. Apr. 21, 1983);
accord Flinn, 118 U.S. at 389 (“If a court of equity could interfere and use its remedy of
injunction in [defamation] cases, it would draw to itself the greater part of the litigation
properly belonging to the courts of law.”).
110
See Gelof, 2010 WL 759663, at *3 (“Gelof’s claims should be heard in
Superior Court, which is the Court with jurisdiction, and, as a result, has substantial
experience in adjudicating professional negligence claims such as this.”).
111
See 10 Del. C. § 1902; Mass. Mut. Life Ins. v. Certain Underwriters at Lloyd’s
of London, 2010 WL 3724745, at *4 (Del. Ch. Sep. 24, 2010); see, e.g., Draper v.
Westwood Dev. P’rs, LLC, 2010 WL 2432896, at *5 (Del. Ch. June 3, 2010) (transferring
case back to Superior Court, where it was originally filed).
112
Del. Const. art. IV § 13(2); Employers Ins. Co. of Wausau v. Pinkerton’s Inc.,
2004 WL 1195369, at *1 (Del. Super. May 11, 2004) (“Subsequent to transfer . . . to the
Court of Chancery, either party may petition for, or either court may sua sponte initiate,
proceedings to consolidate the cases before one Judge or Chancellor in accordance with
Article IV, Section 13(2) of the Delaware Constitution of 1897.”). See, e.g., Caldera
Properties-Lewes/Rehoboth VII, LLC v. Ridings Dev., LLC, 2009 WL 2231716 (Del.
Super. May 29, 2009) (Judge Graves presiding over consolidated case as both Superior
Court Judge and Vice Chancellor by designation); Reybold Venture Gp. XI-A, LLC v. Atl.
Meridian Crossing, LLC, 2009 WL 143107, at *6 n.44 (Del. Super. Jan. 20, 2009)
(dismissing case for lack of subject matter jurisdiction but recommending appointment as
Vice Chancellor by designation); Monsanto Co. v. Aetna Cas. & Sur. Co., 1989 WL

41
 Because Delaware has maintained its separate courts of law and equity, the

potential availability of permanent injunctive relief following an adjudication of falsity

did not provide grounds for filing this case in this court. This case belonged in the

Superior Court.

B. Disgorgement

The other equitable remedy that the Company cites is disgorgement. As a

threshold matter, the Complaint did not ask for this form of relief. “Equitable jurisdiction

must be determined from the face of the complaint at the time of filing.”113 The Company

therefore cannot rely on disgorgement to ground jurisdiction in this court.

Disgorgement only entered the picture eight months after the Complaint was filed.

During the damages hearing, I balked at the Company’s request for a prodigious award

that seemed disproportionate to the harm it had suffered. I mentioned that disgorgement

of Dimitrov’s trading profits might be a more fitting measure. Candidly, I had not

considered when making this comment whether a disgorgement remedy comported with

formal doctrine. My thought instead was that it provided a good starting point for

measuring proportionality.

997183, at *3 (Del. Super. Sept. 29, 1989) (defendant moved to dismiss or transfer in
favor of parallel litigation in Court of Chancery; Judge Martin denied the motion after
being designated to sit in Chancery by designation); New Castle Cty. v. Christiana Town
Ctr., LLC, 2004 WL 1835103 (Del. Ch. Aug. 16, 2004) (Judge Gebelein sitting as Vice
Chancellor by designation); Interim Healthcare, Inc. v. Spherion Corp., 2003 WL
22902879 (Del. Ch. Nov. 19, 2003) (then-Judge Slights sitting as Vice Chancellor by
designation).
113
Comdisco, 602 A.2d at 78.

42
 After reviewing pertinent authority, the remedy of disgorgement appears

sufficiently disconnected from the tort of defamation that that a request for disgorgement

would not have supported equitable jurisdiction. “Remedies for libel and slander are

traditionally damages remedies. Restitutionary remedies have not been applied to

defamation cases . . . .”114 While theoretically a plaintiff might seek disgorgement or

another restitutionary remedy as an alternative to damages,115 the handful of cases to

consider the issue have rejected these requests.116

Traditional disgorgement also does not make sense in this case because Dimitrov’s

trading profits did not come at the Company’s pecuniary expense. A New York trial court

recently addressed this issue in a similar context.117 The plaintiff alleged that the

defendant “published defamatory letters and internet postings against it as part of a

114
Law of Remedies, supra, at 265.
115
Id. at 296; see also Kenneth H. York, The Extension of Restitutional Remedies
in the Tort Field, 4 UCLA L. Rev. 499, 539-46 (1957). One scholar has noted that “there
has been little real interest among lawyers” in extending restitutionary remedies to
defamation plaintiffs, “perhaps because plaintiffs are much better off with the vague
general or presumed damages and the unmeasurable emotional distress damages.” Law of
Remedies, supra, at 297.
116
Ventura v. Kyle, 825 F.3d 876, 887 (8th Cir. 2016) (“Neither the district court
nor Ventura cited any case awarding profits in a defamation case under an unjust
enrichment theory . . . We find none.”); Hart v. E.P. Dutton & Co., 197 Misc. 274, 282
(N.Y. Sup. 1949), aff’d, 277 A.D. 935 (N.Y. App. 1950) (denying action in assumpsit for
publishers’ profits from selling a defamatory book and holding that “[a]n action for
damages affords the plaintiff full compensation for any injuries which he had suffered.”);
see Dobbs, supra, at 296.
117
Silvercorp Metals Inc. v. Anthion Mgmt. LLC, 959 N.Y.S.2d 92, 2012 WL
3569952 (Sup. Ct. Aug. 12, 2012).

43
scheme to drive Silvercorp’s stock prices down in order to profit from their short sale

position.”118 Silvercorp asserted claims for both defamation and unjust enrichment. The

court dismissed both claims but stressed that even if Silvercorp had stated a claim for

defamation, its claim for unjust enrichment would fail. “Silvercorp cannot allege that

defendants have been unjustly enriched at Silvercorp’s expense, since Silvercorp did not

make any payments or financially contribute to the profits defendants received. The

profits defendants received simply did not come from Silvercorp, but from the shares

bought and sold on the stock exchange.”119 The same is true here. Dimitrov’s trading

profits came at the expense of other traders on the open market. While the Company was

harmed as a result of Dimitrov’s defamatory comments, it was not harmed as a result of

Dimitrov’s profitable trades.

It still seems to me that when sizing a damages award, a court might well consider

the vast difference between the magnitude of Dimitrov’s trading profits and the size of

the Company’s damages request. From a doctrinal standpoint, however, disgorgement

was not available as a remedy for defamation and does not provide a basis for this court

to exercise equitable jurisdiction.

III. CONCLUSION

Neither of the equitable remedies that the Company has cited support the existence

of jurisdiction in this court. There are no other grounds for equitable jurisdiction. This

118
Id. at *1.
119
Id. at *12 (citation omitted).

44
court therefore lacked subject matter jurisdiction over the Complaint. The motion to

vacate the default judgment is granted. The case is dismissed for lack of jurisdiction,

subject to the Company electing to have the matter transferred to the Superior Court.120

120
See 10 Del. C. § 1902.

45