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FedEx/Chevron Appeal Voluntarily Dismissed: Smart But Problematic Tactical Move

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I woke up this morning to news from the ever-faithful and thorough Chancery Daily that the plaintiffs in the FedEx/Chevron exclusive forum provision litigation have voluntarily dismissed their appeal of Chancellor Strine’s June 25, 2013 opinion generally validating forum selection bylaw provisions.

Plaintiffs’ counsel could hardly have made a more tactically intelligent move. As persuasive as Chancellor Strine’s opinion is – most people I talk to in Delaware believe that it was a shoe-in for affirmance – taking away the possibility of an endorsing opinion from the Delaware Supreme Court leaves at least a residual crack of daylight for plaintiffs to argue, in cases brought outside of Delaware, that exclusive forum bylaw provisions are generally unenforceable. That crack of daylight can only assist plaintiffs’ counsel who, for tactical reasons, would rather not litigate class or derivative claims in Delaware due to a sense that at least in some cases those claims would have settlement value that they wouldn’t have if brought in Delaware.

As you might guess, I view the dismissal of the appeal with considerable disappointment. I was hoping for and expecting a strong affirmance of the Chancellor’s ruling. Moreover, I expect that other plaintiffs’ counsel will learn a lesson from the FedEx/Chevron plaintiffs and make defendants invoke exclusive forum bylaws in jurisdictions outside of Delaware, where the courts may be less sympathetic to them.

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[…] We previously highlighted the Court of Chancery decision that upheld a forum selection provision in corporate bylaws that required certain suits involving the internal affairs of the corporation to be filed in Delaware. Boilermakers Local 154 Retirement Fund v. Chevron Corporation, C.A. No. 7220-CS (Del. Ch. June 25, 2013). Professor Larry Hamermesh writes about the voluntary dismissal yesterday of the appeal of that decis… […]

[…] Hamermesh’s on the school’s Institute of Delaware Corporate & Business Law blog (here), the plaintiffs in the Chevron and Fed Ex cases voluntarily dismissed their appeal of Chancellor […]

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