One of the hot topics in the world of corporate and securities litigation in recent years has been the use of forum selection bylaws as a way for companies to try to manage their litigation risk by steering corporate and securities litigation to a specified forum. Courts have largely upheld these provisions. For example, as noted in a recent post, an en banc ruling of the Ninth Circuit dismissed a plaintiff’s claim against the board of The Gap in reliance on a forum selection clause in the company’s bylaws, even though the dismissal effectively deprived the plaintiff of a forum for its derivative Section 14(a) claims.
Now in a further development, a federal district court judge, again in a reliance on a forum selection clause, has granted the defendants’ motion to dismiss in a SolarWinds cyber incident-related derivative suit, even though the dismissal means that the plaintiff has no forum in which to assert his derivative Exchange Act claims – most notably including the plaintiff’s derivative claims under Section 10(b). At a minimum, the ruling expands the reach of what a forum selection clause may achieve, and it possibly could increase the chances that these issues ultimately wind up before the U.S. Supreme Court. A copy of the court’s July 12, 2023, order in the federal court derivative lawsuit can be found here. A July 14, 2023, post on CorporateCounsel.net about the ruling can be found here.Continue Reading Federal Court Derivative Suit Dismissed Based on Forum Selection Clause, Despite Exchange Act Claims