Until 2010, stockholders initiated intra-corporate, derivative suits by default in the state of incorporation. Vice Chancellor Laster of the Delaware Court of Chancery suggested in dicta in In re Revlon that boards of directors and stockholders could include an exclusive forum selection clause in their charter provisions. One year later, in Galaviz v. Berg, a California federal court held that corporate boards of directors could not unilaterally adopt forum selection bylaws. Until this June, little guidance existed for stockholders-plaintiffs and director-defendants. On June 25, the Delaware Court of Chancery held in Boilermakers that forum selection bylaws are enforceable. However, the court limited its analysis. It did not reach the fact-laden question of fiduciary duties violations by the board. Going forward, it is unclear how non-Delaware courts will respond. The enforceability of forum selection bylaws will be decided on a state-by-state basis. Delaware law will apply via the internal affairs doctrine for Delaware corporations, but its application does not mean that forum selection bylaws will be universally upheld. No clear guidance exists for foreign courts encountering this issue of first impression, especially when suits involve potential fiduciary duties violations.
This Note proposes a framework for non-Delaware courts to aid them in determining the enforceability of forum selection bylaws. It focuses on fiduciary duties challenges under Delaware law, which the court in Boilermakers did not directly reach. The step-by-step guide mediates stockholders’ and directors’ respective fiduciary duties and multi-jurisdiction litigation concerns.