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CALIFORNIA CORPORATE & SECURITIES LAW

Enforceability Of Exclusive Forum Bylaw May Hinge On The Meaning Of “May”

No California appellate court has yet addressed the validity of forum selection bylaws in a published decision.  When the question comes before a California appellate court, the outcome may turn on the meaning of “may” in California Corporations Code Section 2116.  The statute in its entirety provides: The directors of a foreign corporation transacting intrastate…

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Dismissal Based On Forum Non Conveniens Does Not Trigger Fee Shifting

California generally follows the “American Rule” with respect to attorney’s fees.  Trope v. Katz, 11 Cal.4th 274, 278 (1995).  Under the American Rule, each party to a lawsuit must ordinarily pay his own attorney’s fees.  A contract may provide, however, that the prevailing party to an action on the contract may recover attorney’s fees.  Sometimes these clauses are unilateral…

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Professor Bainbridge On My “Beef” With Gantler v. Stephens

Professor Stephen Bainbridge yesterday provided a well considered assessment of my “beef” with the Delaware Supreme Court’s holding in Gantler v. Stephens, 965 A.2d 695, 709 (Del. 2009) that “the fiduciary duties of officers are the same as those of directors”.  To the extent that Professor Bainbridge is saying that officers are not agents “pure and simple”. …

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What The Delaware Supreme Court Overlooked In Gantler v. Stephens

I have never been reconciled to the Delaware Supreme Court’s pronouncement in Gantler v. Stephens, 965 A.2d 695, 709 (Del. 2009) that “the fiduciary duties of officers are the same as those of directors”.  Officers are, as I’ve previously noted, agents of the corporation while directors are not.  This means that an officer’s duties are…

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Court Of Appeal Voids Jury Trial Waiver Notwithstanding New York Choice of Law

A New York state of mind, but California dreaming A sophisticated lender and borrower negotiate a loan agreement in New York, the lender disburses the loan proceeds in New York, and both parties agree that New York law governs.  This choice-of-law is memorialized in bold face type and capital letters in the loan agreement.  In…

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Court Rejects Challenge To Internal Affairs Doctrine

Marvell Technology Group, Ltd. is a publicly traded company that is incorporated in Bermuda.  Marvell’s U.S. operating subsidiary is based in California.  A year ago, an institutional stockholder filed a derivative suit against Marvell and several of its officers and directors.  The factual bases for the plaintiff’s suit were securities law violations but the plaintiff…

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More Silliness In California’s Revised Uniform Limited Liability Company Act

Readers will know that I have been a frequent critic of California’s Revised Uniform Limited Liability Company Act, Cal. Corp. Code § 17701.01 et seq. In many cases, it is simply hard to believe that the legislature really intended what it enacted. See, e.g., How Confused Is This? California Defines LLCs Subject To New Law To Include…

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New California Law Threatens To Destroy Plan Uniformity

Companies often include a choice of law provision in their equity and other compensation plans.  Some companies include a choice of law  in the award agreement, either in lieu of, or in addition to, the plan document.  Specifying applicable law helps to ensure that plans are consistently interpreted and applied.  Uniformity may be particularly important…

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Ouch! Proxy Statement Argues That Resolving Dispute In California Court Was “Costly And Time Consuming”

As Ralph Waldo Emerson once famously told Oliver Wendell Holmes, Jr.: ““Holmes, when you strike at a king, you must kill him.”  For the full story, see The Corporations Code Can Make Suing Your Former Employees Costly.  I was reminded of this advice when reading the following in the proxy statement of a California-based company in favor…

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Which Code Applies When A Stock Certificate Has Been Lost, Destroyed Or Wrongfully Taken?

Earlier this week, I wrote about Judge Edward M. Chen’s ruling in Sender v. Franklin Res., Inc., 2015 U.S. Dist. LEXIS 171453, 3-4 (N.D. Cal. Dec. 22, 2015).  Judge Chen applied California Corporations Code Section 419 to a Delaware corporation on the basis that the replacement of a lost or stolen stock certificate was not governed…

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