Oracle Corp. is based in Redwood City. Every year, Oracle holds its annual shareholder meeting at its executive headquarters in California. By any measure, the nerve hub of Oracle is California. Therefore, if an executive or director of Oracle is going to be sued for breaching his fiduciary duty, the lawsuit must be brought in … Delaware? Though it seems counterintuitive, that is the current argument Oracle is making in a shareholder derivative action presently being litigated in the U.S. District Court for the Northern District of California before Judge Richard Seeborg in Galaviz v. Berg , C 10-3392 RS. In a matter of first impression, Oracle is moving to dismiss the action because a bylaw amendment approved by its board of directors in 2006 mandates a shareholder can only sue fiduciaries in Delaware for breaching their duties. The outcome of this motion will likely have wide-ranging effects on corporate litigation throughout the country.
On March 16, Vice Chancellor J. Travis Laster of the Delaware Chancery Court issued the opinion In re Revlon, Inc. Shareholders Litigation , 990 A.2d 940, which immediately became one of the most widely discussed rulings concerning fiduciary duty litigation in recent memory, mostly because Laster took the unusual step of replacing the lead plaintiffs’ counsel. He took umbrage with the plaintiffs’ counsel’s litigation of the case, in particular, the lack of expediency in which they handled the matter before coming to a settlement. In Revlon , Laster addressed the argument that his opinion might cause plaintiffs to file in other jurisdictions besides Delaware. In a footnote, he stated that corporations could prevent this occurrence by creating or amending articles of incorporation to include charter provisions that select an exclusive forum for intra-entity disputes.
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