In adopting an exclusive forum selection bylaw, companies can avoid the cost and complication of multi-forum litigation after an M&A transaction.

In response to the wasteful and burdensome trend of multi-forum shareholder litigation, many companies have recently enacted forum selection bylaws designating a single jurisdiction for fiduciary duty claims and other intra-corporate litigation. In the past, some courts outside of Delaware had shown a reluctance to enforce such bylaws; however, Delaware courts have since upheld their validity as a general matter. Undeterred, some plaintiffs have continued to bring suits outside bylaw-designated forums, forcing courts outside Delaware to decide the issue in light of the recent Delaware decisions. On December 12, 2014, the Superior Court of California for Alameda County enforced one of these bylaws, a key development in the evolving jurisprudence regarding their enforceability.

In Brewerton v. Oplink Communications Inc., a California court recognized the validity of an exclusive Delaware forum selection bylaw that was enacted at the same time a merger agreement was signed, rejecting the plaintiff’s argument that the bylaw could not be enforced against stockholders who bought their shares before the bylaw. This is key precedent in a jurisdiction as large and commercially active as California, and marks a win for companies based there that are considering or have decided on a strategic transaction.