January 4, 2019

Delaware Chancery Rules “Federal Forum” Provisions Ineffective

We didn’t forget about the Chancery’s ruling invalidating federal forum charter provisions – this is Broc’s recent blog about it over on Here’s news from Richards Layton (we’re posting memos in our “Post-Acquisition Disputes” Practice Area):

The Delaware Court of Chancery, in Sciabacucchi v. Salzberg, C.A. No. 2017-0931-JTL (Del. Ch. Dec. 19, 2018), has declared “ineffective and invalid” provisions in three corporations’ certificates of incorporation that purported “to require any claim under the Securities Act of 1933 to be brought in federal court.” Ruling on cross-motions for summary judgment, the Court, by Vice Chancellor Laster, ruled that “[t]he constitutive documents of a Delaware corporation cannot bind a plaintiff to a particular forum when the claim does not involve rights or relationships that were established by or under Delaware’s corporate law. In this case, the federal forum provisions attempt to accomplish that feat. They are therefore ineffective and invalid.”

John Jenkins