Delaware Supreme Court Upholds Federal Forum Selection Provisions Requiring Securities Claims Be Brought in Federal Court


Posted on March 30, 2020, by Doug Raymond and Donald Van Buren Jr. in General. Comments Off on Delaware Supreme Court Upholds Federal Forum Selection Provisions Requiring Securities Claims Be Brought in Federal Court

In its highly anticipated decision in Salzberg v. Sciabacucchi, No. 346, 2019 (Del. Mar. 18, 2020), the Delaware Supreme Court confirmed the facial validity of a provision contained in certificates of incorporation of many companies requiring that claims under the Securities Act of 1933 (the Securities Act) be brought only in federal court and not in a state court. The decision reverses the Delaware Court of Chancery’s decision.

Such charter provisions, referred to in the opinion as Federal-Forum Provisions or FFPs, have been adopted by corporations in response to an increased number of federal securities law claims being brought in state court, where pleading and other rules are often more advantageous to the plaintiffs, as well as to address the inefficiencies of parallel state and federal litigation.

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