(Reuters) - The Delaware Court of Chancery saw a year-over-year uptick in corporate and commercial law case filings in April and May, a sign that pandemic-related disputes may be driving an overall increase in litigation there, a recent report found.
Despite business shutdowns because of the coronavirus, 32% more commercial law cases and 7% more corporate law cases were filed in the court in May 2020 than in May 2019, and 26% more commercial cases and 3% more corporate law cases were filed in April 2020 than April 2019, according to a report released Thursday by Lex Machina Inc, which tracks civil litigation data.
The total number of new case filings in the Court of Chancery rose for those two months, while those year-over-year rates plummeted in California, Texas and Nevada state courts less focused on commercial and corporation law, the report found.
Many of the Court of Chancery’s commercial and corporate cases filed in April and May 2020 involved specific performance, breach of contract relating to a sale or merger, and/or breach of fiduciary duties, and whether COVID-19 qualifies as a material adverse effect, the report said.
The pandemic in mid-March led U.S. states nationwide to enact economic shutdowns in an effort to slow the spread of the virus, hitting retail, travel, energy, entertainment and other industries hard and sparking mass layoffs and several bankruptcies. Supply chain disruptions, canceled events and general economic uncertainty have led many companies to consider the legal defense of force majeure to get out of previous plans.
But the shutdowns also closed up courts, and many states paused non-essential trials, temporarily drying up new case filings.