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So, you'll remember the Boilermakers case in which the validity of Chevron and FedEx's forum provision bylaws were challenged in the Delaware Chancery Court. In that case, Chancellor Strine was asked to rule on the facial validity of the forum selection provisions in the bylaws of both Chevron and FedEx. The case was important because in Galaviz v Berg [an enhanced version of this opinion is available to lexis.com subscribers], a federal court in California had ruled invalid a forum provision bylaw that was adopted unilaterally by the board after the challenged act occurred. Although Boilermakers drew a lot of attention - from me as well - I think there was very little doubt by most observers that when asked a Delaware court would say that such a provision was facially valid. Strine did not disappoint (Boilermakers opinion) [enhanced version].
However, Chancellor Strine was restrained and made it clear that although such a provision was facially valid, he would leave it to other courts - in other jurisdictions - to consider as applied challenges to these provisions. He also encouraged the parties to bring an appeal so that the Delaware Supreme Court could weigh in on the issue. Although the plaintiffs initially sought an appeal of the Chancellor's ruling, they later voluntarily dismissed it, perhaps believing that a little ambiguity might help them later in other cases.
The issue has now shifted to the West Coast. There is parallel litigation in front of Judge Tigar in the Norther District of California. In that litigation, plaintiffs are - among other things - challenging whether the forum selection provision is proper. Chevron is now moving for the appellate review that Boilermakers avoided in Delaware -- apparently seeing blood, counsel wants to stamp on this victory and get the conclusive word on the question of the facial validity of forum selection bylaws.
Chevron has now asked the Calfornia to certify a question to the Delaware Supreme Court on the validity of the forum selection bylaws (Chevron Certified Question Motion).
Delaware is one of the very few states that will entertain certified questions. They do this because they believe it is important for their franchise for the Supreme Court to always be available to provide definitive guidance on novel corporate law questions as they arise. In this case, Chevron is asking for Judge Tigar to certify the question of validity of the provision to Delaware. If Delaware affirms the facial validity of the provision, which I suspect they would, then that would effectively end that challenge.
So, if Judge Tigar certifies this question, the whole show will move back to Dover. We'll see.
Visit the M&A Law Prof Blog, hosted by Brian JM Quinn, for blogs on legal developments in corporate governance and mergers & acquisitions.
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