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Our readers know that Delaware forum selection clauses have been enforced by courts in many states since Delaware Chancery’s 2013 decision in Boilermakers v. Chevron. Recently, the developments we’ve covered relating to forum selection have involved whether bylaws providing an exclusive forum for bringing claims under the Securities Act or the Exchange Act were permissible. The latest development is a bit different, although I can’t say unexpected, since Allen Matkin’s Keith Bishop predicted it just over a decade ago!

Last fall, Keith blogged about EPICENTERx, Inc. v. Superior Court (Cal. Ct. Appeal, 9/23) in which California’s Fourth District Court of Appeal refused to enforce the forum selection clause “in a Delaware corporation’s corporate documents” since it “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.”

This Sidley blog gives further background on the issue and explains that California is an outlier, although “other state courts could follow California’s approach.”

In California, forum selection clauses are typically enforced unless doing so would be unfair or unreasonable. But California courts will refuse enforcement if litigating in the selected forum would violate public policy. Normally the burden of proof to prove why the clause should not be enforced falls on the party opposing enforcement. Under California statutes, however, the burden is reversed when the issue bears on unwaivable rights. The right to a jury trial has been deemed “fundamental,” “inviolate,” and “sacred.” The Delaware Court of Chancery, as a court of equity, does not conduct jury trials. Therefore, the defendants must demonstrate that litigating in the Delaware Court of Chancery would not substantially diminish rights under California law. […]

California is an outlier in rejecting the enforcement of a Delaware Court of Chancery forum selection clause that is included in corporate documents. Most other state courts enforce Delaware forum selection clauses. Like California, nearly all state constitutions recognize the right to a jury trial. Yet California and Georgia appear to have the only courts that have expressly prohibited pre-dispute jury waivers. California courts point to the state’s constitution and Code of Civil Procedure that outlines only six actions that may waive the right to a jury trial, which do not include pre-dispute waivers, to demonstrate that forum selection clauses may not be enforced when they infringe upon such rights.

– Meredith Ervine