Another Diversity Suit Tossed On Forum Selection Grounds

This week, another shareholder derivative suit was dismissed based on a forum selection clause contained in the company's bylaws. In November 2020, a shareholder filed a derivative action alleging that directors and officers of The Gap, Inc., an apparel company, had failed to create meaningful diversity on the Board of Directors on within the company's leadership roles. The plaintiff also alleged that Gap made false statements about the diversity of the company's workforce, as well as its efforts to increase diversity among its employees.

Importantly, the plaintiff brought her lawsuit in the Northern District of California. In its motion to dismiss the complaint, Gap argued it maintains bylaws that designate the Delaware Court of Chancery as the exclusive forum for derivative claims brought on behalf of the company. Acknowledging that her lawsuit fell within the scope of the clause and that the clause was valid, the plaintiff argued that the clause should not have