Ten years ago, I questioned in this space whether a Delaware forum selection charter provision would survive constitutional scrutiny if it involved a de facto waiver of a jury trial:
"Most of the discussion of bylaw forum selection clauses has explicitly or implicitly assumed that the chosen forum will be Delaware. See, e.g., Joseph A. Grundfest & Kristen Amy Savelle, The Brouhaha Over Intra-Corporate Forum Selection Provisions: A Legal, Economic, and Political Analysis (Nov. 20, 2012) ("The overwhelming majority of these entities are Delaware chartered corporations seeking to resolve intra-corporate litigation in Delaware courts.") available at: http://ssrn.com/abstract=2164324. As a court of equity, however, the Delaware Court of Chancery does not have jury trials. See Donald F. Parsons Jr. and Joseph R. Slights III, The History of Delaware's Business Courts: Their Rise to Preeminence, 17 Business Law Today (March/April 2008). Thus, it remains to be seen whether Delaware forum selection bylaw provisions will be attacked as unconstitutional waivers of the right to a jury trial." (emphasis added)
Yesterday, the Fourth District Court of Appeal held that enforcement of the forum selection clauses in a Delaware corporation’s corporate documents would operate as an implied waiver of the plaintiff's right to a jury trial—a constitutionally-protected right that cannot be waived by contract prior to the commencement of a dispute. EPICENTERx, Inc. v. Superior Court, Cal. Ct. Appeal Case no. D081670 (Sept. 21, 2023).
The plaintiff in the case was a minority shareholder who sued the corporation and several of its officers, employees, and affiliates for, among other things, fraudulent concealment, promissory fraud, and breach of contract causes of action. On appeal, there was no dispute that the plaintiff would be entitled to a jury trial on these causes. However, jury trials in the Delaware Court of Chancery are generally not available. The Court of Appeal noted that "to the extent a jury in the Court of Chancery is not extinct, it is a vestigal structure, more evocative of the human appendix or coccyx than that vital organ, the Superior Court petit jury” (quoting Preston Hollow Capital LLC v. Nuveen LLC, 216 A.3d 1, 11, fn. 64 (Del. Ch. 2019)).
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