The Dangers of Equitable Remedies

Introduction: While Delaware jurisprudence is renowned for its clarity and sophistication, one area of its corporate case law is, by design, uncharacteristically ambiguous: equitable remedies. One Delaware judge summarized his equitable powers as follows: [T]his court will use its \u27broad discretion to tailor [a remedy] to suit the situationas it exists.\u27 As Delaware has long recognized, \u27the Court of Chancery [has] the inherent powers of equity to adapt its relief to the particular rights and liabilities of each party. The most well known of the equitable remedies is the Schnell doctrine, which allows the court to invalidate conduct that is technically in compliance with applicable law if the court deems that conduct to be inequitable. Perhaps less well known is the equitable remedy of quasi-appraisal rights. Courts use that doctrine to grant shareholders the equitable equivalent of an appraisal remedy even though they did not perfect their appraisal rights. Although equitable remedies, by definition, require great flexibility, this article questions whether these equitable remedies have morphed beyond even reasonably flexible parameters, and if so, what concerns these elastic doctrines raise