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Editor: Brian JM Quinn
Boston College Law School

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Wednesday, April 10, 2013

Forum selection bylaws in court today

The challenge to Chevron's forum selection bylaw is before Chancellor Strine today.  Here's the complaint.  I've blogged about these challenges before (here).  Although, I have advocated for forum selection provisions in corporate charters, forum selection bylaws are easier to adopt.  In part the ease of adoption exaplains why a number of firms put them in place in recent years. The ease of their adoptino is, however, their biggest weakness.  In a challenge before a federal district court in California (Galaviz v Berg), the judge ruled that forum selection provisions adopted as bylaws lacked "sufficient indicia of consent."  This wouldn't be a problem with forum selection provisions adopted at charter provisions.

Although other boards have dropped their bylaws in the face of legal challenges, Chevron has stuck to its guns.  Today we will get some sense whether the Delaware courts agree with the California federal court about the sufficiency of a bylaw for the purpose of narrowing possible forums.  Looks like the plaintiffs are hoping that the recent Delaware Supreme Court opinion in Pyott v La. Mun. will be enough to keep Chancellor Strine in line.  Maybe. 

-bjmq

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