In an effort to reduce the volume of litigation brought against them, corporations have embraced the forum selection clause—a contractual clause that stipulates certain types of litigation brought against the company must be brought within the company’s jurisdiction of choice. To thwart derivative lawsuits brought under the Securities Exchange Act of 1934, some corporations have devised forum selection clauses that stipulate any derivative suit brought against the corporation must be brought in the state courts of Delaware. Because state courts do not possess jurisdiction to hear cases where violations of the Exchange Act are at issue, these clauses effectively prohibit shareholders from suing the corporations derivatively under the Exchange Act.
The validity of these clauses has produced a circuit split. Specifically, in Seafarers Pension Plan ex rel. In Boeing Co. v. Bradway, the Seventh Circuit held that Boeing’s forum selection clause violated the Exchange Act’s anti-waiver provision and was therefore void. Alternatively, the Ninth Circuit in Lee ex rel. The Gap, Inc. v. Fisher upheld the validity of such a forum selection clause.
This Note argues that these types of forum selection clauses do run afoul of the Exchange Act’s anti-waiver provision and are therefore void. Further, it argues that preventing shareholders from bringing forward derivative suits weakens their ability to recover, and that direct suits and derivative suits address different harms.
* J.D. Candidate, 2025, University of Illinois College of Law; B.J., 2018, University of Missouri. I want to thank Professor Verity Winship for her invaluable guidance and input throughout the writing process. Any errors or flaws in this work are mine alone. This Note is dedicated to my father, Paul, my mother, Maria, my brother, Will, and my partner, Natalie. Thank you for the endless love and support, throughout both life and law school.
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