Recently, the Delaware Supreme Court issued a decision upholding corporate charter provisions that establish federal courts as the exclusive forum for class action cases under the Securities Act of 1933 (“Securities Act”), reversing a 2018 decision by the Delaware Court of Chancery that invalidated such provisions as a matter of law. The Delaware Supreme Court’s decision provides Delaware corporations with a significant tool to address the explosion of Securities Act cases filed in state courts following the Supreme Court’s decision in Cyan, Inc. v. Beaver Cty. Emps. Ret. Fund, 138 S. Ct. 1061 (2018), which held that certain Securities Act class actions filed in state courts were not removable to federal courts. If they have not done so already, Delaware corporations should strongly consider amending their charters to include forum selection clauses that make federal court the exclusive forum for litigating claims under the Securities Act.
