It looks like fee-shifting bylaws are going to have a very short life, at least in Delaware.
About a year ago, the Delaware Supreme Court upheld a loser-pays bylaw that required the unsuccessful party in any intracorporate litigation to pay the costs and attorneys’ fees of the prevailing party. The case, ATP Tour, Inc. v. Deutscher Tennis Bund, involved a non-stock corporation, but nothing in the case indicates the result would not apply to ordinary corporations, and the relevant statutory rules make no distinction between non-stock and stock corporations.

However, the Delaware General Assembly has passed, and the Governor is almost certain to sign, a bill that rejects loser-pay provisions in either the bylaws or the certificate of incorporation.

The bill, SB 75, amends Del. § 102 to provide:

(f) The certificate of incorporation may not contain any provision that would impose liability on a stockholder for the attorneys’ fees or expenses of the corporation or any other party in connection with an internal corporate claim, as defined in § 115 of this title.

It adds the following language to Del. § 109(b):

The bylaws may not contain any provision that would impose liability on a stockholder for the attorneys’ fees or expenses of the corporation or any other party in connection with an internal corporate claim, as defined in § 115 of this title.

Section 115 defines “internal corporate claims” as “claims, including claims in the right of the corporation, (i) that are based upon a violation of a duty by a current or former director or officer or stockholder in such capacity, or (ii) as to which this title confers jurisdiction upon the Court of Chancery.”

The full text of SB 75 is available here.