This terrific Cooley Alert, Ninth Circuit Upholds Delaware Forum-Selection Clause, Dismisses Federal Derivative Action, from our Securities Litigation + Enforcement group, discusses a recent Ninth Circuit decision, Lee v. Fisher, upholding the enforceability of forum-selection clauses requiring shareholders to file derivative claims—even derivative claims brought under Section 14(a) of the Exchange Act—in the Delaware Court of Chancery. Because Section 14(a) claims can be brought only in federal court, the Alert points out, the upshot of this decision is that shareholders cannot assert derivative claims under Section 14(a) in any court.
According to the Alert, in its split, en banc decision, the Ninth Circuit observed that the case “relates to a ‘modern trend’ in which plaintiffs file derivative claims ‘that normally arise under state law’ in federal court ‘in order to invoke exclusive federal jurisdiction and avoid any forum-selection clause pointing to a state forum.’” As a result of this significant decision, “a shareholder filing a derivative suit within the Ninth Circuit can no longer avoid forum-selection provisions by tacking on Section 14(a) claims.” Another consequence of the case is a split in the circuits. Is the issue ultimately headed to SCOTUS? Be sure to check out the Alert.
