forum selection, bylaw, Securities Exchange Act of 1934, derivative litigation, Delaware Court of Chancery, Delaware General Corporation Law


This Note examines whether a forum selection provision in a corporation’s bylaws that requires shareholders to bring derivative claims in the Delaware Court of Chancery is enforceable when invoked by directors to dismiss derivative claims under the Securities Exchange Act (the “Exchange Act”)—claims over which federal courts have exclusive jurisdiction. In Seafarers Pension Plan ex rel. Boeing Co. v. Bradway, the U.S. Court of Appeals for the Seventh Circuit held that enforcing this type of bylaw would violate the act’s antiwaiver provision, which voids any stipulation that allows a person to waive compliance with the act. In Lee ex rel. Gap, Inc. v. Fisher, the U.S. Court of Appeals for the Ninth Circuit disagreed and held that the federal policy of enforcing forum selection provisions trumped any issues related to the Exchange Act’s antiwaiver provision. This Note proposes that courts should not mediate this issue with a primary focus on the Exchange Act’s antiwaiver provision, which inherently frames the issue in terms of the shareholder’s substantive right to bring derivative claims under the act. Instead, this Note argues that the propriety of enforcing a forum selection provision that precludes derivative claims under the Exchange Act is a function of whether the directors breached their fiduciary duties by invoking the forum selection provision.