In City of Providence v. First Citizens BancShares, __ A.3d__, 2014 Del. Ch. LEXIS 168 (Del. Ch. Sept. 8, 2014), Delaware Court of Chancery Chancellor Andre G. Bouchard extended then-Chancellor Leo E. Strine Jr.’s decision in Boilermakers Local 154 Retirement Fund v. Chevron, 73 A.3d 934 (Del Ch. 2013), to address an “issue of first impression”—the validity of a board-adopted bylaw that designates an exclusive forum other than Delaware for intra-corporate disputes—and further clarified the circumstances under which such forum bylaws will be enforced by Delaware courts.
A growing number of public companies have adopted bylaws that designate an exclusive forum in which certain types of claims may be brought against the corporation or its directors and executives. In Chevron, Strine held that a bylaw designating Delaware courts as the exclusive forum for certain claims was facially valid. Chevron did not present the Chancery Court an opportunity, however, to address the enforceability of a non-Delaware exclusive forum bylaw provision in a real-world “as-applied” context. Citizens did.
