Stephen M. Bainbridge is William D. Warren Distinguished Professor of Law, UCLA School of Law and serves as the WLF Legal Pulse’s Featured Expert Contributor, Corporate Governance/Securities Law.

In Salzberg v. Sciabacucchi, (Del. Mar. 18, 2020), the Delaware Supreme validated forum selection clauses in the certificates of incorporation of Blue Apron Holdings, Inc., Stitch Fix, Inc., and Roku, Inc., all of which required that claims against the companies brought under the Securities Act of 1933 be brought in federal courts. In 2015, the Delaware legislature had added § 115 to the Delaware General Corporation Law (DGCL) to validate forum selection clauses that “require … that any or all internal corporate claims shall be brought solely and exclusively in any or all of the courts in this State.” Although § 115 on its face neither validated nor banned federal forum selection clauses, many corporations have adopted such clauses.

Section 115 arose out of concern with a substantial increase in the volume of multijurisdictional litigation against Delaware firms involving corporate law issues. Traditionally, most corporate law cases involving a Delaware corporation were tried in the Delaware Chancery Court. Starting around 2000, however, there were two dramatic changes in corporate litigation. First, there was a substantial increase in the number of cases being brought, especially with respect to mergers and acquisitions. Indeed, lawsuits challenging some aspect of an acquisition became near universal. Second, it became common for multiple lawsuits to be filed in multiple jurisdictions against each deal.