Although I blog
on business issues, I spent most of my professional life as a litigator and
this semester I teach civil procedure. A few weeks ago I asked my students to
draft a forum selection clause and then discussed the Boilermakers v. Chevron forum selection bylaw case, which at the
time was up on appeal to the Delaware Supreme Court.  The bylaws at issue required Delaware to be
the exclusive venue for matters related to derivative actions brought on behalf of the corporation;
actions alleging a breach of fiduciary duties by directors or officers of the
corporation; actions asserting claims pursuant to the Delaware General
Corporation Law; and actions implicating the internal affairs of the
corporation.  

While I was not
surprised that some institutional investors I had spoken to objected to
Chevron’s actions, I was stunned by the vitriolic reactions I received from my
students. I explained that Chevron and FedEx, who was also sued, were trying to
avoid various types of multijurisdictional litigation, which could be
expensive, and I even used it as a teachable moment to review what we had
learned about the domiciles of corporations, but the students weren’t buying
it.

Perhaps in
anticipation of the likelihood of an affirmance from Delaware’s high court, the
plaintiffs voluntarily dismissed their appeal, which may have been a smart
tactical move. Now let’s see how many Delaware corporations move from the wait
and see mode and join the 250 companies that already have these kinds of bylaws.
 Interestingly, prior to the dismissal,
only 1% of those surveyed
by Broc Romanek indicated that they would never institute a forum selection
bylaw. Given how broad some of these bylaws are, it may stem the tide of some
of the litigation that I blogged about here
as plaintiffs’ lawyers are forced to face Delaware jurists.  Yesterday, as we were discussing venue, I
broke the news about the dismissal of the appeal to my students. Needless to
say, many were disappointed. Perhaps they will feel differently after they have
taken business associations next year.