Bringing an End to “Derivative” Section 14(a) Claims – Without Waiting for the Supreme Court to Weigh In

Much has been written lately about a circuit split on the question whether a company’s forum selection bylaw mandating shareholder derivative lawsuits be brought in Delaware state court trumps a federal lawsuit asserting a derivative claim under Section 14(a) of the Securities Exchange Act of 1934 (which can only be asserted – if at all – in federal court).

The Seventh Circuit answered this question “no” while the Ninth Circuit sitting en banc answered “yes,” in both cases over vigorous dissents.  Many have speculated that the U.S. Supreme Court may weigh in to resolve this clear circuit split.

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