Media Coverage
Source: Compliance Week
Media Coverage
08.06.13
A recent ruling by the Delaware Chancery Court allows companies to designate exclusive judicial forums in their bylaws to address shareholder claims, including litigation related to derivative actions, breach of fiduciary duty, the company's charter or bylaws, and other internal affairs.
According to Sarah Good, a partner in Pillsbury’s litigation practice in San Francisco and Silicon Valley, investor groups have said that the ruling will chill shareholders’ ability to challenge damaging corporate practices and will “results in more cases being adjudicated in Delaware.”
Good noted, “There's been a lot of concern over the years about the forum shopping done by plaintiffs' lawyers, and the response has been by some companies to put in these forum selection provisions in their bylaws.”
She added that the decision left several questions unanswered, including to what extent the reasoning of the decision could be applied to other forum selection bylaws. “For example, what would the court say if there was a forum selection bylaw that specified arbitration? How would the court view that?”