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Delaware Court to Rule on Exclusive-Forum Bylaws

Jaclyn Jaeger | February 22, 2012

Thinking about adopting bylaws designating Delaware as the exclusive forum for shareholder litigation? Then get ready for a fight.

In a single week earlier this month, shareholders filed class-action lawsuits in Delaware Chancery Court against 11 companies challenging so-called “exclusive forum bylaws.” The targets include FedEx, Chevron, Priceline.com, Danaher, Navistar, and others. Plaintiff lawyers say more such complaints are on the way.

The complaints argue that the companies' forum selection bylaws aren't binding because they were added without shareholder approval. The lawsuits further claim the bylaws are unilateral in effect because, while shareholders can only bring claims in Delaware, the bylaws provide no forum restrictions on the companies themselves.

The lawsuits ask the court to decide whether the bylaws are enforceable. “We don't think it's...

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