Delaware Court Rules in Favor of Firm Client In Municipal Bond Market Defamation Action

The Firm won an important ruling from a Delaware Superior Court judge on behalf of its client, Preston Hollow Capital (“Preston Hollow”) in a case against municipal bond giant Nuveen. In April, the Firm had obtained a trial victory in a companion case in the Delaware Court of Chancery, which found that Nuveen had engaged in a campaign designed to destroy its smaller competitor Preston Hollow by using “threats and lies” in order to persuade the largest broker-dealers in the municipal bond industry to boycott Preston Hollow.

Following the decision of the Chancery Court, issued after a bench trial, the Firm moved for partial summary judgment in the Delaware Superior Court action, arguing that the Court of Chancery’s factual findings should bind Nuveen and that certain findings satisfied elements of Preston Hollow's defamation claim in the Delaware Superior Court action. Nuveen, among other things, argued that it should not be estopped from relitigating the Chancery Court’s findings.

Delaware Superior Court Judge Mary Johnston granted Preston Hollow’s motion in part. In particular, Judge Johnston held that Nuveen is “estopped from relitigating the ‘existence, falsity, and malicious nature’” of its statements to Goldman Sachs (one of the broker-dealers) that Preston Hollow lied to issuers and was facing scrutiny from states’ attorneys general when neither was the case. In doing so, the Court held that the “law of the case doctrine applies to the Chancery Court’s factual determinations.” As a result of these victories, the Firm has already established (1) the existence of Nuveen’s statements to Goldman Sachs, (2) the falsity of those statements, and (3) the fact that those statements were made with either knowledge of their falsity or reckless indifference to the truth. Discovery continues as to the other elements of Preston Hollow’s defamation claim against Nuveen as the case heads towards trial. (Preston Hollow also is represented in the Delaware litigations by Morris, Nichols, Arsht & Tunnel of Wilmington, Delaware).

A copy of the Court’s decision is available here.