In a major ruling, a judge of the Delaware Chancery Court has held that companies can designate Delaware as the exclusive forum for shareholder derivative lawsuits. The decision is expected to make it easier and cheaper for corporations to defend themselves against such suits.
In a 49-page decision, Chancellor Leo Strine Jr. dismissed shareholder challenges to forum selection clauses in the bylaws of Chevron Corporation and FedEx Corporation. Strine wrote that there's little basis for thinking such clauses will undermine shareholders' rights, despite the "parade of horribles" conjured up by the plaintiffs' counsel in the case.
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