Rule 42’s “Exceptional Circumstances” Standard Bars Interlocutory Review of Fact-Bound Ancillary Personal Jurisdiction Rulings
1. Introduction
In Lester L. Cole v. STI Group Holdco, LLC (Del. Jan. 30, 2026), the Delaware Supreme Court
refused an interlocutory appeal from a Court of Chancery bench ruling that denied a motion to dismiss certain fiduciary-duty
claims for lack of personal jurisdiction. The underlying dispute arose from a 2023 Share and Interest Purchase Agreement
(the “PSA”) under which STI Group Holdco, LLC and STI Group, Inc. (the “Buyers”) acquired two Georgia entities
(the “Acquired Companies”) from William Anderson II and Southern Trust Corporation (the “Sellers”).
Lester Cole was the Acquired Companies’ president and CEO.
The PSA contained an exclusive Delaware forum selection clause for disputes “arising out of or relating to” the agreement.
Defendants conceded jurisdiction for fraud and contract claims under that clause, but challenged Delaware jurisdiction over
separate fiduciary-duty claims. The Court of Chancery held it could exercise ancillary personal jurisdiction over the
fiduciary claims because they were sufficiently related to the claims properly before it. Defendants sought interlocutory review
under Delaware Supreme Court Rule 42; the Court of Chancery denied certification; the Supreme Court then refused the appeal.
2. Summary of the Opinion
The Supreme Court held that the application did not meet Rule 42’s “strict standards” for interlocutory review. Giving due weight
to the Court of Chancery’s analysis, the Court found no “exceptional circumstances” warranting interlocutory review and concluded
that any potential benefits did not outweigh the “inefficiency, disruption, and probable costs” of an interlocutory appeal.
The interlocutory appeal was therefore REFUSED.
3. Analysis
A. Precedents Cited
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Cantor Fitzgerald v. Chandler, 1999 WL 1022065 (Del. Ch. Oct. 14, 1999)
The Court of Chancery relied on Cantor Fitzgerald as the foundational Delaware authority recognizing that, in appropriate
circumstances, the court may exercise ancillary personal jurisdiction over claims as to which personal jurisdiction would not
otherwise exist, when those claims are sufficiently related to claims properly before the court. The Chancery court applied
Cantor Fitzgerald’s fact-sensitive considerations—such as shared operative facts, efficiency, prejudice, and comity—and
found ancillary jurisdiction appropriate. The Supreme Court did not revisit the merits of that analysis; instead, it treated the
ruling as a paradigmatic example of a discretionary, fact-bound decision not warranting interlocutory intervention absent
exceptional circumstances.
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Cap. Grp. Cos., Inc. v. Armour, 2004 WL 2521295 (Del. Ch. Oct. 29, 2004)
Quoted by the Court of Chancery for the proposition that ancillary jurisdiction permits litigation “before a single tribunal”
where jurisdiction exists for some claims and the others are “sufficiently related.” This citation reinforces that the Chancery
court viewed its approach as settled Delaware practice rather than a novel extension of jurisdiction. That framing mattered to the
Rule 42 analysis because Rule 42 certification is most compelling when an order resolves a novel legal question or conflicts with
other authority; the Chancery court concluded neither was true here, and the Supreme Court agreed.
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STI Group Holdco, LLC v. Anderson, 2025 WL 3655165 (Del. Ch. Dec. 17, 2025)
This is the Court of Chancery’s written decision denying certification under Rule 42, which the Supreme Court endorsed as
“well-reasoned.” The Supreme Court’s reliance on that analysis underscores a practical point: Rule 42 review is not a vehicle for
routine second-guessing of certification denials, particularly where the trial court has methodically applied Rule 42’s
requirements.
B. Legal Reasoning
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Rule 42’s gatekeeping function is strict.
The Supreme Court emphasized that interlocutory review is discretionary and requires meeting “strict standards,” including the
presence of “exceptional circumstances.” The Court concluded those circumstances were absent.
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The order under review was not suited to interlocutory correction.
The decision below was a personal-jurisdiction ruling grounded in ancillary jurisdiction—an inherently fact-sensitive doctrine
applied through considerations like prejudice, common operative facts, efficiency, and comity. The Chancery court found:
(i) no undue prejudice, (ii) a common nucleus of operative facts, (iii) efficiency gains from one forum, and (iv) no overriding
comity concerns (including because the parties jointly sought a stay of a parallel Georgia action). The Supreme Court did not
identify any systemic legal error or unsettled legal question requiring immediate review.
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Costs and disruption outweighed benefits.
The Court expressly balanced potential benefits of interlocutory review against inefficiency, disruption, and costs—an evaluative
step central to Rule 42(b)(iii). It concluded the balance cut against review.
C. Impact
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Fewer interlocutory appeals from ancillary-jurisdiction rulings.
The order signals that ancillary personal jurisdiction determinations—often discretionary and fact-bound—will rarely present the
“exceptional circumstances” necessary for interlocutory review, even when the trial court has “sustained the controverted
jurisdiction.”
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Reinforcement of litigation-efficiency rationales in M&A disputes.
Where a forum selection clause anchors Delaware jurisdiction over core transaction claims, related non-contract claims (including
fiduciary-duty allegations tied to the same transaction narrative) may remain in Delaware through ancillary jurisdiction, and
challenges to that joinder may have to await final judgment.
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Practical effect on strategy.
Parties seeking early appellate review must do more than argue “transactional uncertainty” or label an issue as “substantial”;
they should identify a true conflict in authority, a novel and outcome-determinative legal question, or a statutory/constitutional
issue that warrants immediate Supreme Court intervention.
4. Complex Concepts Simplified
- Interlocutory appeal
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An appeal taken before the case ends. Delaware generally disfavors these because they slow trial proceedings and increase cost,
allowing them only in exceptional circumstances.
- Delaware Supreme Court Rule 42
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The rule governing interlocutory appeals. It requires, among other things, that the appeal present exceptional circumstances and
that the likely benefits outweigh the costs and disruption.
- Personal jurisdiction
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A court’s authority over a defendant. Even if a Delaware court can hear some claims against a defendant, it may not automatically
have power to hear every claim unless jurisdiction is otherwise established.
- Forum selection clause
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A contract term specifying where disputes must be litigated. Here, it anchored Delaware jurisdiction over claims “arising out of or
relating to” the PSA.
- Ancillary personal jurisdiction
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A doctrine allowing a court to hear additional, closely related claims—even if those claims would not independently support
personal jurisdiction—so the dispute can be resolved efficiently in one proceeding, subject to fairness and comity limits.
- Common nucleus of operative facts
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A shorthand for claims that are tightly connected factually—so much so that splitting them across courts would duplicate evidence,
witnesses, and litigation effort.
- Comity
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Respect for another jurisdiction’s courts and proceedings. Here, comity concerns were reduced because the parties had jointly moved
to stay the parallel Georgia action.
5. Conclusion
This decision’s core contribution is procedural and institutional: the Delaware Supreme Court reaffirmed that interlocutory review
under Rule 42 is reserved for exceptional cases and is generally inappropriate for fact-driven applications of settled doctrines like
ancillary personal jurisdiction. Even where jurisdiction is contested, parties should expect to litigate through final judgment
unless they can show a genuine need for immediate appellate intervention and a clear net benefit to the justice system.