Delaware Forum Selection Bylaw Upheld In California

 In late December, a California Court of Appeal upheld a forum selection bylaw requiring stockholder litigation to be brought in Delaware. The corporation was a Delaware corporation headquartered in California. Its board of directors adopted the forum selection bylaw at the same time it approved the sale of the corporation. The Court of Appeal held that the bylaw did not conflict with California law or public policy and affirmed the dismissal of the case.

Exclusive forum bylaws, which generally require state corporate law claims to be brought in a designated venue, have gained significant traction in recent years. Most exclusive forum bylaws have been adopted by Delaware corporations, and numerous courts in other jurisdictions have honored these bylaws by dismissing litigation brought in contravention of them.