Research Handbooks in Corporate Law and Governance series
Edited by Jennifer G. Hill and Randall S. Thomas
Chapter 16: Whose law is it? Battling over turf in shareholder litigation
The June 2013 decision in Boilermakers Local 154 Retirement Fund v Chevron is a legal watershed. In Boilermakers, Delaware’s Chancellor Leo Strine upheld a forum selection provision that had been adopted solely by the corporation’s board of directors. Chancellor Strine rested his decision on the view that shareholders are linked to the corporation via contract, which in part is formed by the evolving provisions of the company’s bylaws. Less than a year later, the Delaware Supreme Court in ATP Tour, Inc. v Deustscher Tennis Bund, reflected its full agreement with the approach taken in Boilermakers by opining that a bylaw shifting fees to the losing party was valid. While Boilermakers and ATP Tour, Inc. deal with very different features of shareholder-initiated litigation, they share a common concern: a belief that shareholder initiated litigation is too frequent and invariably vexatious. This fear is most easily understood with respect to the problem addressed via forum selection clauses.
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