Litigation parties have long sought to maneuver their cases into forums they believe to be more favorable to their positions or interests. In the following guest post, Richard Zelichov, Partner in the Corporate and Securities Litigation practice at DLA Piper (US), and Melanie Walker, Chair of the Corporate and Securities Litigation practice at DLA Piper (US), take a look at a recent variant of these efforts, involving shareholders who are seeking to avoid Delaware as a litigation forum. I would like to thank Richard and Melanie for allowing me to publish their article as a guest post on this site. I welcome guest post submissions from responsible authors on topics of interest to this site’s readers. Please contact me directly if you would like to submit a guest post. Here is Richard and Melanie’s article.

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Strategies and counter-strategies between corporations and their stockholders in efforts to find the most favorable law and courts to decide their disputes is a longstanding practice.  For example:

• In the immediate aftermath of the Private Securities Litigation Reform Act in 1995, stockholders started bringing “disguised” securities class action lawsuits in state court leading to the passage of the Securities Litigation Uniform Standards Act of 1997.  Pub. L. 105-353, 112 Stat. 3227.
• When stockholders challenged mergers in multiple jurisdictions in parallel, corporations filed so-called “jump ball” motions usually with the goal of steering litigation to the Delaware Court of Chancery.  See, e.g., In re Allion Healthcare Inc. Shareholders Litigation, 2011 WL 1135016 (Del. Ch. Mar. 29, 2011).
• Corporations subsequently amended their certificates of incorporation and/or bylaws to require breach of fiduciary duty and other cases involving a corporation’s internal affairs to make the Delaware Court of Chancery the exclusive forum for such litigation.  Stockholders challenged the adoption of these provisions in corporations’ certificates of incorporation and/or bylaws, but courts rejected those challenges. See, e.g., Boilermakers Local 154 Retirement Fund v. Chevron Corp., 73 A.3d 934 (Del. Ch. 2013); Drulias v. 1^st Century Bancshares, Inc., 241 Cal. Rptr. 3d 843 (Cal. App. 2018).
• Stockholders then pivoted to asserting federal securities claims along with state law claims in both direct and derivative lawsuits concerning a corporation’s internal affairs in federal courts.  In those cases, both corporations and stockholders have had some success in connection with insisting that such lawsuits must still be brought exclusively in the Delaware Court of Chancery.  Compare Lee v. Fisher, 70 F.4^th 1129 (9^th Cir. 2023) with Seafarers Pension Plan v. Bradway, 23 F.4^th 714 (7^th Cir. 2022).
• After stockholders started filing certain lawsuits exclusively under the Securities Act of 1933 in state courts, corporations unsuccessfully attempted to argue that such lawsuits could be removed to federal court.  See Cyan, Inc. v. Beaver County Employees Retirement Fund, 138 S. Ct. 1061 (2018).  Corporations then adopted changes to their certificates of incorporation or bylaws making federal courts the exclusive forum for lawsuits under the Securities Act of 1933, stockholders challenged the adoption of such amendments, and the stockholders lost.  See  Salzberg v. Sciabacucchi, 227 A.3d 102 (Del. 2020)

The first half of 2025 saw further developments in this continuing give and take.  Various media outlets have covered “DExit,” the trend of corporations considering or incorporating in a jurisdiction other than Delaware, based on the view that Delaware law and the Delaware Court of Chancery have become too stockholder friendly. The Delaware Legislature and Governor responded to DExit in the form of Senate Bill 21. 

Many law firms and others have also published alerts this year about recent changes to the law in both Nevada and Texas, and the efforts in those states to establish business courts to compete with Delaware.

However, there has been less discussion about stockholder efforts to try to avoid Delaware as a forum for litigation and avoid application of the law of a corporation’s place of incorporation to intra-corporate disputes.

Recent cases from California and New York – two jurisdictions relevant to many corporations – saw key developments in these areas in 2025. This alert discusses the decisions in three such lawsuits.

Epicentrx, Inc. v. Superior Court

On July 21, 2025, the California Supreme Court issued a decision in a case styled Epicentrx, Inc. v. Superior Court, __ P.3d __, 2025 WL 2027272 (Cal. July 21, 2025) – with Epirx, LP (Epirx) as the real party in interest.

In that case, the trial court and California Court of Appeal denied the defendants’ motion to dismiss on the ground of forum non conveniens, based on a forum selection provision in Epicentrx’s certificate of incorporation setting the Delaware Court of Chancery as the exclusive forum for most stockholder lawsuits. Id. at *1-3.  The courts refused to enforce the forum selection provision because there is no right to a jury trial in the Delaware Court of Chancery.

The California Supreme Court granted review and reversed, holding that the forum selection provision was not unenforceable as a pre-dispute jury trial waiver. Id. at *13. The Court explained that the modern trend favors enforcement of voluntarily adopted forum selection clauses in contracts and otherwise. Id. at *6. 

It further explained that “courts [should be] reluctant to decline enforcement of contractual [forum selection] provisions on public policy grounds, especially where no statute or constitutional provision directly speaks to the issue.” Id. at 7. 

The Court acknowledged that California’s public policy supports the right to a jury trial and that such right is guaranteed in its constitution and by statute, but it also noted that the right can be waived and, most importantly, that these provisions “concern the right to a jury trial in California courts, not elsewhere.” Id. at 9.

The Court then distinguished between a forum selection provision and a pre-dispute jury trial waiver noting that “[t]he former reflects where a dispute will be litigated, while the latter reflects how it will be litigated.” Id. at *9 (emphasis in original). 

Ezrasons, Inc. v. Rudd

In May 2025, the New York Court of Appeals issued two decisions concerning the application of New York law to disputes between stockholders and companies incorporated in foreign countries and the availability of a New York forum for such disputes.

In one case, Ezrasons, Inc. v. Rudd, __ N.E. 3d __, 2025 WL 14360000 (N.Y. May 20, 2025), the Court of Appeals held that the internal affairs doctrine – the principle that “the substantive law of the place of incorporation governs disputes relating to the rights and relationships of corporate shareholders and managers” – applied to a derivative lawsuit brought by a stockholder of Barclays PLC against current directors and officers of Barclays.  Id. at *1. 

The Court thus held that English law applied (as Barclays was incorporated in England), that the stockholder did not have standing to sue under English law, and that the case was properly dismissed. Id.

In so ruling, the Court rejected the stockholder’s argument that Sections 626(a) and 1319(a)(2) of the New York Business Corporations Law “displace[d] the internal affairs doctrine and mandate[d] application of New York substantive law to standing questions in shareholder derivative litigation brought” in New York. Id. at *3. 

Specifically, the Court held that the language of Section 626(a) – “[a]n action may be brought in the right of a domestic or foreign corporation to procure a judgment in its favor, by a holder of shares or of voting trust certificates of the corporation or of a beneficial interest in such shares or certificates”– provided New York courts with jurisdiction to hear derivative lawsuits brought on behalf of foreign corporations. Id. at *5.  It sets forth the “minimum predicates for a New York court to entertain” a derivative lawsuit, but the substantive law of the place of incorporation still determines which stockholders have standing to bring such lawsuits. Id. 

Similarly, the Court held that Section 1319(a)(2) – “doing business in this state” – provides the minimum standards for when a “foreign corporation” and “its directors, officers, and shareholders” can be sued in New York.

Haussman v. Baumann

In the other case from the New York Court of Appeals, Haussman v. Baumann, N.E.3d __, 2025 WL 1435989 (N.Y. May 20, 2025), the Court issued a two-page memorandum affirming the decision of the New York Supreme Court Appellate Division to dismiss a shareholder derivative action filed against a company incorporated in Germany on forum non coveniens grounds. 

The Court of Appeals did not conduct its own detailed analysis. Rather, it held that the New York Supreme Court “considered all relevant factors [in connection with its decision as to whether to dismiss on forum non conveniens grounds] and made no legal error in doing so.” Id. at __. 

Nonetheless, like the New York Court of Appeals in Rudd discussed above, both the New York Supreme Court and the Supreme Court Appellate Division held that the internal affairs doctrine applied, that the company in question was incorporated in Germany, that German law thus governed the dispute, and that the plaintiff did not have standing to bring a stockholder derivative lawsuit under German law. See Haussmann v. Baumann, 157 N.Y.S.3d 355, at *2, *5, *6 (Supr. Ct. Dec. 27, 2021); Haussmann v. Baumann, 192 N.Y.S.3d 81, 82-83 (Supr. Ct., App. Div. June 22, 2023). 

The Supreme Court also based its decision to dismiss on forum non conveniens grounds, in part on its conclusion that German law applied to the dispute. Haussmann v. Baumann, 157 N.Y.S.3d 355, at *5.

Conclusion

There is a long history of jockeying between corporations and their stockholders about the law applicable to disputes between them and the forum in which such suits will be litigated. These decisions in California and New York (along with DExit, SB 21, and the developments in Nevada and Texas) simply reflect the developments thus far in 2025. New strategies and counterstrategies are expected to develop in the years ahead.