Galaviz

ORDER DENYING MOTIONS TO DISMISS FOR IMPROPER VENUE

I. INTRODUCTION

May corporate directors control the venue for shareholder derivative actions brought against them by adopting a bylaw purporting to require that such cases be filed in a particular forum? Under federal procedural law that controls such venue issues, parties may enter into contracts— including those where elements of adhesion exist — that contain legally enforceable forum selection clauses. Even when bringing a claim under a contract offered on a “take it or leave it” basis, however, a plaintiff can be said to have consented to the forum selection clause when he or she elected to enter into that contract.

A bylaw unilaterally adopted by directors, however, stands on a different footing. Particularly where, as here, the bylaw was adopted by the very individuals who are named as defendants, and after the alleged wrongdoing took place, there is no element of mutual consent to the forum choice at all, at least with respect to shareholders who purchased their shares prior to the time the bylaw was adopted. Accordingly, nominal defendant Oracle Corporation’s motions to dismiss these related actions on the basis that…