Opinion ID: 2763005
Heading Depth: 2
Heading Rank: 1

Heading: 3d 696, 720 n.2 (Del. Ch. 2014).

Text: 111 Indeed, the plaintiffs did not make any mention of Nabors‟ alleged aiding and abetting liability until their reply brief below, and then only in a cursory way. See Reply Br. at 34. 112 See, e.g., Hazel, 38 Del. Ch. at 117 (“A „preliminary injunction‟ decides no facts, fixes no right, and is not at all necessary to the final determination of the cause. It is mere process of the court, issued to hold in statu quo the subject-matter upon which the decree is to operate until the court shall be enabled to ascertain and adjudicate the rights of the parties.”). 113 See, e.g., Richard Paul, Inc. v. Union Improvement Co., 86 A.2d 744, 748 (Del. Ch. 1952) (“Relief by mandatory injunction should only be awarded in a clear case, free from doubt, and when necessary to prevent irreparable injury.”). 36 judicial power inconsistent with the standards that govern the award of mandatory injunctions under Delaware law.114 That is especially the case when the stockholders subject to irreparable harm are, as here, capable of addressing that harm themselves by the simple act of casting a “no” vote.115 In a situation like this one, where no rival bidder has emerged to complain that it was not given a fair opportunity to bid,116 and where there is no reason to believe that stockholders are not adequately informed or will be coerced into accepting the transaction if they do not find it favorable, the Court of Chancery should be reluctant to take the decision out of their hands.117 Moreover, almost any judicial injunction, much less one of this unusual kind, creates a greater risk that the underlying transaction might not be available to the stockholders after the injunction is lifted.118 And there is also the 114 See, e.g., In re Netsmart Technologies, Inc. S’holders Litig., 924 A.2d 171, 209 (Del. Ch. 2007) (declining to enjoin the transaction because the court could “perceive no basis where [it] would have the equitable authority to require [buyer] to remain bound to complete their purchase of [target] while simultaneously reforming the Merger Agreement to increase their transactional risk in that endeavor” and finding that such an “an unusual exercise of authority” was not justified absent a showing of buyer misconduct); Toys “R” Us, 877 A.2d at 1021 (“The central purpose of Revlon is to ensure the fidelity of fiduciaries. It is not a license for the judiciary to set arbitrary limits on the contract terms that fiduciaries acting loyally and carefully can shape in the pursuit of their stockholders‟ interest. 115 See El Paso, 41 A.3d at 449; Netsmart, 924 A.2d at 208; Toys “R” Us, 877 A.2d at 1023. 116 See Pennaco, 787 A.2d at 715 (“The court is also unconvinced that other sophisticated energy companies lack the information they need to determine whether to make a topping bid, given the abundance of information that is publicly available about Pennaco and its potential.”). 117 McMillan v. Intercargo Corp., 1999 WL 288128, at  (Del. Ch. May 3, 1999) (“The shareholders are not threatened with irreparable harm, because it is they who in the end will decide whether or not the company will be sold now. As long as the shareholders‟ decision is informed, the choice between whether or not to merge will be voluntary and cannot in any legally meaningful sense be said to threaten irreparable harm.”). 118 Under Section 7(e) of the parties‟ merger agreement, it is a condition precedent to the obligation of both parties that “No temporary restraining order, preliminary or permanent injunction or other order or judgment issued by any Governmental Entity of competent jurisdiction (an „Injunction‟) enjoining or prohibiting the consummation of the Merger shall be in 37 important issue of whether C&J‟s breach of the no-solicitation clause of the contract would excuse Nabors from closing if it determined doing so was in its interests.119 We are mindful that an after-the-fact monetary damages case is an imperfect tool, and we acknowledge that there are colorable questions about the interests of certain key players in the transaction that have not been fully explored given the expedited nature of the proceedings. But, as noted, the Court of Chancery did not find that the plaintiffs‟ duty of loyalty claims had any merit based on the record,120 and could not even find a reasonable probability of success as to any care-based breach of fiduciary duty claim. To rely on this insufficient premise to issue a powerful mandatory injunction, when no rival transaction was available, and when the stockholders can reject the deal for themselves if they do not find its terms to be value-maximizing, was an error. For all these reasons, the order of the Court of Chancery is hereby REVERSED. The mandate shall issue immediately. effect. There shall not be any action taken, or any law, rule, regulation or order enacted, entered or enforced in respect of the Merger, by any Governmental Entity of competent jurisdiction that makes the consummation of the Merger illegal.” App. to Opening Br. at 229 (Merger Agreement at 77). In this case, enjoining the merger for 30 days poses substantial risk, because Section 8.1(c) of the merger agreement provides that if the merger has not been consummated by December 31, 2014, either party may terminate the agreement, with no exception for delays caused by a court-imposed injunction. App. to Opening Br. at 231 (Merger Agreement at 79). 119 It is a general principle of contract law that a party‟s prior material breach can discharge the other party‟s obligation to perform, or at least allow the other party to recover damages for the breach. See 14 SAMUEL WILLISTON & RICHARD A. LORD, A TREATISE ON THE LAW OF CONTRACTS § 43.5 (4th ed. 2003). The Court of Chancery has previously refused to grant a preliminary injunction that would result in a “breach of fundamental [merger agreement] provisions” in similar cases. El Paso, 41 A.2d at 434 (“[Plaintiff seeks] to keep [buyer] bound but to allow [target] to prospect for more. I understand that, but they are stuck with the requirements of equity, which is that they accept the risks that come with enjoining the Merger, including the risk that [buyer] will walk when the drop-dead date expires.”); see also Netsmart, 924 A.2d at 209. 120 Bench Opinion at 13. 38