The Volokh Conspiracy

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Houyhnhnms in Chancery


From Delaware Vice Chancellor Glasscock in Thursday's Preston Hollow Capital LLC v. Nuveen LLC:

Plaintiff Preston Hollow Capital LLC ("Preston Hollow") and Defendants Nuveen LLC, Nuveen Investments, Inc., Nuveen Securities LLC and Nuveen Asset Management LLC (collectively, "Nuveen") are all institutional investors in municipal bonds. Preston Hollow and Nuveen are competitors in that market. Preston Hollow alleges that Nuveen tortiously contacted institutions that Preston Hollow had business relationships with, lied about Preston Hollow's business practices, and threatened to remove its considerable business from those institutions if they continued doing business with Preston Hollow. Nuveen denies that it made false representations about Preston Hollow.

In Gulliver's Travels, Swift puts Gulliver in contact with the Houyhnhnms, beings so moral and rational that they cannot comprehend the art of lying. They do not even have a word for the concept, and are forced to describe a lie as "the thing which is not."

After hearing the testimony of some of Nuveen's witnesses, one might think they were such beings. Their circumlocutions for falsehoods—"hedge," "bluff," "exaggeration," "role-play," "scenario," "overstatement," "blustering," "short-cutting," "puff," "shorthand," "overblowing"—in situations where more quotidian creatures would simply say "lie," might make one doubt that the latter word is in their vocabulary. Their testimony was generally that institutional investors and their bankers speak in an argot of forceful misstatements that all parties involved know is posturing, so that no real untruth is conveyed. Perhaps. Far more likely is that institutional investors, like the rest of us Yahoos, make statements of fact, true or false, with the intent to be believed.

In this post-trial Memorandum Opinion, I find that Nuveen used threats and lies in a successful attempt to damage the Plaintiff in its business relationships. Accordingly, Nuveen is responsible for the tort of intentional interference with business relations. I find the equitable relief sought by Preston Hollow is unavailable, however.

My reasoning follows….