Skadden Discusses California Ruling Upholding Exclusive Federal Forum Charter Provision

The CLS Blue Sky Blog

Peter B. Morrison Virginia F. Milstead Zachary Faigen

In September, 2020, a California state court held that an exclusive federal forum provision was enforceable under state law. The decision was the first by a California court to evaluate the enforceability of a Delaware charter provision requiring shareholder claims under the Securities Act of 1933 to be brought exclusively in federal court since the Delaware Supreme Court held that such provisions are facially valid, in Salzberg v. Sciabacucchi. If other states follow the ruling, securities litigation defendants may have greater ability to avoid duplicative litigation on overlapping claims in different jurisdictions.