Have at It, Court of Chancery . . .

Bushansky v. Soon-Shiong, No. D072213 (D4d1 May 25, 2018)

Over the past decade, it has become increasingly prevalent for corporations to enact what are called forum-selection bylaws. These require stockholders who sue the company or its directors in stockholder litigation to bring their claims only in the state of incorporation, usually Delaware. Because bylaws are, more or less, a contractual arrangement between the company and its stockholders, the theory is that the bylaws are an enforcible forum selection contract. The Delaware Supreme Court agrees, and has held that they are enforceable. I’m not aware of a reported California appellate decision that’s given a thumbs-up, but the parties in this case seem to agree that the bylaw here is valid and enforceable. They just disagree that it applies.

Toto, I’ve a Feeling We’re Not in Delaware Anymore...

Quanta Computer Inc. v. Japan Commc’ns Inc., No. B280042 (D2d5 Mar. 16, 2018)

TaiwanCo contracted to make some phones in Taiwan and sell them to JapanCo in Japan. Presumably to pick a neutral forum, the contract chose California law and laid exclusive forum in California, despite the fact that there’s basically no connection here.
 

Procedural Perfection Is a Lot to Expect

Laboratory Specialists Int'l, Inc. v. Shimadzu Sci. Indus., No. G054056 (D4d3 Nov. 21, 2017)
 
The contract in this commercial dispute selected Maryland law and a county in Maryland for venue. Defendant first demurred on forum nonconveniens, and after the court noted that was improper, it filed a proper motion to dismiss or stay under Code of Civil Procedure § 410.30. The court granted the motion, and Plaintiff appeals.

Plaintiff mostly lays its appeal on a technical argument that Defendant forfeited its chance to raise forum non by raising the issue in a demurrer. It points to § 418.10(e)(3), which says you forfeit the right to raise FNC if you don’t make a motion “at the time of filing a demurrer.” But Defendant did, in fact, raise the convenience of the forum at the time it filed a demurrer, so there’s no forfeiture. The fact that it did so in the demurrer—instead of a separate motion filed at the same time—is sufficiently substantial compliance to avoid a forfeiture. That’s the case even though forum non is not an appropriate grounds to demur. It was well within the trial court’s discretion to treat the request in the demurrer as a separate request to stay or dismiss under § 410.30.

So far as the merits of the motion go, the court finds that the forum clause was mandatory and that it covered the claims filed by Plaintiff. Which means the only question is whether enforcing the clause is unfair or unreasonable. Which it wasn’t. Finally, Plaintiff claims that the trial court erred by dismissing the action instead of just staying it. But Plaintiff didn’t make that complaint to the trial court, so the Court of Appeal declines to reach it.

Affirmed.