In March 2020, the Delaware Supreme Court issued its landmark decision in Salzberg v. Sciabacucchi holding that forum selection clauses in corporate charters requiring that stockholder claims under the Securities Act of 1933 be brought exclusively in federal court are facially valid and enforceable. While Sciabacucchi definitively answered that question under Delaware law, it left at least one question unanswered: would courts in other states enforce such federal forum provisions (FFPs) in the charters of Delaware corporations? Now that a little more than a year has passed, and despite some pointed criticism of the Sciabacucchi decision by other state courts, the answer—at least so far—appears to be yes.
The ‘Sciabacucchi’ Decision
In Sciabacucchi, stockholders who had purchased shares of three companies in their initial public offerings (Apron Holdings, Roku and Stitch Fix) sought declaratory judgment that FFPs adopted in each company’s charters were invalid under Delaware law. The Delaware Court of Chancery agreed, holding that, because Securities Act claims do not involve the “internal affairs” of the corporation, a Delaware corporation cannot restrict the forum in which a stockholder may litigate claims under that federal statute.