As we have discussed in prior client alerts (see here and here), in the wake of the Delaware Supreme Court’s decision in Salzberg v. Sciabacucci (Salzberg), 227 A.3d 102 (Del. 2020), several California state courts have dismissed claims against issuers and their directors and officers asserted under the Securities Act of 1933 (Securities Act) in favor of federal forum-selection provisions (FFP) in the issuer-defendants’ certificates of incorporation or bylaws. More recently, in Hook v. Casa Systems, Inc., No. 654548/2019, 2021 WL 3884063 (N.Y. Sup. Ct. Aug. 30, 2021), a New York court reached a similar result, so there is now precedent enforcing FFPs in the two jurisdictions in which the vast majority of state court Securities Act claims have traditionally been brought.
As we have previously explained, many companies planning IPOs or secondary offerings began including FFPs in their certificates of incorporation or bylaws following the U.S. Supreme Court’s decision in Cyan, Inc. v. Beaver Cty. Emps. Ret. Fund, 138 S. Ct. 1061, 1069 (2018), which upheld a plaintiff’s ability to bring Securities Act claims in either state or federal court. The FFPs, which require that all complaints asserting claims under the securities laws be brought in federal district court, were designed to avoid potentially expensive and duplicative federal and state court litigation and preserve the benefits of litigating before a federal judiciary experienced in securities cases. In Salzberg, the Delaware Supreme Court held that FFPs are facially valid and enforceable, and do not violate federal law or policy. However, the court acknowledged the possibility that sister states could nevertheless find FFPs invalid if courts in those states determined that their enforcement would be “unreasonable and unjust” or would “contravene a strong public policy of the forum where the suit is brought.”
After the Salzberg decision, at least four California state court decisions have dismissed Securities Act claims in favor of FFPs. Notably, in the Uber case, the court dismissed the Securities Act claims against the underwriters in addition to those brought against the issuer. More recently, in Volonte v. Domo, Inc., No. 190401778, 2021 WL 1960296, at *6 (Utah Dist. Ct. Apr. 13, 2021), a Utah state court similarly dismissed Securities Act claims against the issuer and the underwriters in favor of the FFP in the issuer’s bylaws.
The Casa Systems Decision
In the first case in New York to consider the enforceability of FFPs post-Salzberg, in Casa Systems, the court enforced the FFP and dismissed Securities Act claims brought against the issuer, the underwriters and the alleged control person defendants. In contrast to the California decisions, which all analyzed whether FFPs were enforceable only under California law, the court in Casa Systems found that because Casa Systems was a Delaware corporation, the internal affairs doctrine applied and the Salzberg decision therefore controlled the issue of the enforceability of the FFP. The court went on to determine that even if the internal affairs doctrine did not apply, enforcement of the FFP was equally reasonable under New York law, and that plaintiffs’ arguments that enforcement of the FFP would violate the Commerce Clause and the Supremacy Clause were unavailing.
With respect to the underwriters and control person defendants, the court held that (i) under both New York and Delaware law, non-signatories may be bound by or enforce a forum selection clause, and (ii) the language of the FFP broadly applies to any complaint asserting claims under the Securities Act, including against non-signatories.
Although Casa Systems is not binding on other New York courts and appeals are possible, the court’s analysis follows what has become a clear trend in state court decisions, including now by courts in the two states in which the vast majority of state court Securities Act cases are filed.
 In addition to the Restoration Robotics, Uber and Dropbox cases discussed in our previous client alerts, in December 2020, the same judge who granted the motion to dismiss in Dropbox granted a similar motion to dismiss in a case against Sonim Technologies Inc., in which she incorporated her Dropbox decision by reference.
 A separate Securities Act case was brought against Casa Systems in Massachusetts state court. In that case, Shen v. Casa Sys., Inc., No. SUCV2019-3204-BLS2, 2020 WL 8839637 (Mass. Super. Jan. 11, 2020), the Massachusetts court declined to determine whether Massachusetts or Delaware law applied to the enforceability of the FFP because that was a novel question of law that had not been considered by a Massachusetts appellate court, and instead dismissed the complaint on the merits.