As discussed here, on June 25, 2013, the Delaware Court of Chancery upheld the facial validity of forum selection bylaws unilaterally adopted by the boards of directors of Chevron Corporation and FedEx Corporation. Last week, the plaintiffs in that case voluntarily dismissed their appeal of that decision, thereby avoiding the possibility of the Delaware Supreme Court’s (likely) affirmation of Chancellor Strine’s opinion.
Many publicly traded Delaware corporations have adopted forum selection bylaws designating Delaware as the exclusive venue for stockholders’ derivative suits and certain other stockholder suits. The purpose of these provisions is to reduce the high cost of duplicative, multi-forum suits challenging corporate actions and to help ensure that the matters in dispute will be heard relatively swiftly by a knowledgeable and highly regarded judiciary. However, the validity of these types of bylaw provisions had been in doubt, so the Chancery Court’s decision in June was welcome news for many public companies.