In Drulias v. 1st Century Bancshares, Inc. 30 Cal. App. 5th 696 (2018), the plaintiff was a shareholder in a Delaware corporation whose board of directors approved a merger agreement and at the same time adopted a forum selection bylaw, requiring claims to be adjudicated in Delaware. After the forum selection bylaw was adopted, the plaintiff sued the corporation and its directors in California alleging breach of fiduciary duty related to the merger. On appeal, it was undisputed that Delaware law governed the validity of the forum selection bylaw. The trial court concluded the bylaw was enforceable and, accordingly, stayed the action under Code of Civil Procedure section 410.30. The shareholder appealed, but the Court of Appeal affirmed the trial court's ruling. See Court Of Appeal Finds No Right To Sue Directors In California.

In Drulias, the corporation had been a Delaware corporation. What if the corporation was a California corporation that reincorporates in Delaware when the plaintiff purchased shares and when he filed suit? That was the question in Sanchez v. Robbins, 2024 WL 2952546 (June 12, 2024). In an unpublished opinion, the Court of Appeal found that the trial court did not abuse its discretion in enforcing the Delaware forum selection bylaw. The Court of Appeal noted that there was no indication that the corporation had adopted the bylaw in response to the plaintiff's suit. The Court further noted that the reincorporation proposal (which included the Delaware bylaw provision) had been approved overwhelmingly by the corporation's shareholders.

The plaintiff unsuccessfully argued that the trial court's decision should reversed because it would lead to forum gamesmanship:

Plaintiff contends . . . under the trial court's reasoning nothing "would stop a company from unilaterally adopting a forum bylaw any time it is sued in a forum that it does not like," or "from litigating a lawsuit in the forum of its choosing and then, if it is losing, unilaterally adopting a forum bylaw and moving to dismiss on that basis[.]"

The Court of Appeal rejected this argument: "Plaintiff's concerns ignore the discretion vested in trial courts case-by-case to deny a motion to dismiss if applying a forum selection clause in a specific case would be 'unfair or unreasonable.'"

In the meantime, readers may recall EpicentRX, Inc. v. Super. Ct., 95 Cal. App. 5th 890 (2023), the Fourth District Court of Appeal held that enforcement of the forum selection clauses in a Delaware corporation’s corporate documents would operate as an implied waiver of the plaintiff's right to a jury trial—a constitutionally-protected right that cannot be waived by contract prior to the commencement of a dispute. See Don't Say You Weren't Warned! Court Of Appeal Declines To Enforce Delaware Forum Selection Clause In Delaware Corporation's Certificate Of Incorporation. The California Supreme Court granted review of that case, 539 P.3d 118 (2023), and according to the Supreme Court's docket, argument has now been scheduled.