The Delaware Court of Chancery has ruled that a company bylaw allowing fee-shifting for unsuccessful stockholder suits filed outside of Delaware was invalid in light of 2015 amendments to the Delaware General Corporation Law.
Plaintiff John Solak had challenged the provision on behalf of a class of investors in the Illinois-based payroll firm Paylocity Holding Corp., arguing that it tried to circumvent Delaware’s ban on the bylaws that followed the state Supreme Court 2015 ruling in ATP Tour v. Deutscher Tennis Bund that fee-shifting was permissible for Delaware nonstock corporations.
