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CALIFORNIA CORPORATE & SECURITIES LAW

Court Finds Tort Claims To Be Covered By Forum Selection Agreement

Contractual forum selection provisions are often broadly written so as to encompass not just claims involving enforcement of the contract but claims arising out of or related to the contract.  But how far do these clauses reach?  In the case of Laboratory Specialists International, Inc. v. Shimadzu Scientific Instruments, Inc., 2017 Cal. App. LEXIS 1036, the…

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Shareholders Sues Officer Of Delaware Corporation In California State Court, Should Texas Law Apply?

Yesterday’s post discussed one aspect of the California Court of Appeal’s opinion in Central Laborers’ Pension Fund v. McAfee, Inc., 2017 Cal. App. LEXIS 1008.  The case arose from Intel Corporation’s acquisition of McAfee, Inc., a Delaware corporation.  Among other things, the plaintiff complained that David DeWalt, McAfee’s erstwhile president and CEO, in pursuit of his…

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Can Shareholders Sue CEOs For Corporate Social Activism?

In an August 17, 2017 opinion piece published in The Wall Street Journal, Jon L. Pritchett and Ed Tiryakian had the following message for shareholders: Our message to small shareholders of companies like Starbucks, Merck and Target: You can sue when a CEO decides to institute a corporate social-responsibility program that has no benefit to the business.…

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California Judge Honors Delaware Forum Selection Bylaw

In May, I wrote about Judge Peter H. Kirwan’s ruling in Drulias v. 1st Century Bancshares, Inc., (Cal. Super. Ct. Case No. 16-CV-294673, Nov. 18, 2016).  As readers may recall, Judge Kirwan declined to approve a disclosure only settlement based on In re Trulia, Inc. Stockholder Litig., 129 A.3d 884 (Del. Ch. Jan. 22, 2016).  Recently, Judge Brian C. Walsh…

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Can Pseudo-Foreign Corporations Exonerate Their Directors?

Corporations Code Section 2115 is not an easy read.  Fortunately, California Supreme Court Chief Justice Tani Cantil-Sakauye has provided a more digestible overview of the statute: Section 2115 was enacted as part of a comprehensive revision of the Corporations Code in the mid-1970s.  The section addressed so-called pseudoforeign corporations—entities incorporated outside California, but that meet two…

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Officers Of Foreign Corporations And The California Courts

Yesterday’s post concerned Section 2116 of the California Corporations Code.  Courts sometimes describe Section 2116 as codifying the internal affairs doctrine.  See, e.g., Vaughn v. LJ Internat., Inc., 174 Cal. App. 4th 213, 223 (2009) and Voss v. Sutardja, 2015 U.S. Dist. LEXIS 8795 (N.D. Cal. Jan. 26, 2015).  To the extent that Section 2116 codifies the…

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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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