Delaware Court Decision Compels California Shareholders to Adhere to Choices Made Regarding Legal Jurisdiction
The California Supreme Court's recent decision in EpicentRx, Inc. v. Superior Court of San Diego County (2025) has significant implications for the balance of power between shareholders and corporations in California, as well as for corporate law and practice in the United States.
Michael Bongiorno, Timothy Perla, Jessica Lewis, and Counsel Sonia Sujanani, authors of the article published in Bloomberg Law, analyse the pivotal California Supreme Court decision in EpicentRx v. Superior Court of San Diego County. In this case, the court enforced a mandatory Delaware forum selection provision in corporate charter documents, holding that forum selection clauses designating a forum without a civil jury trial right, such as the Delaware Court of Chancery, are enforceable despite California’s public policy favouring jury trials.
Implications on corporate governance
The ruling reinforces the enforceability of exclusive Delaware forum-selection clauses in corporate charters and bylaws, which are widely adopted by Delaware corporations even if headquartered or having shareholders in California. This promotes greater predictability for corporations and their controlling shareholders in the governance and dispute resolution framework by emphasizing Delaware law and its Chancery Court’s specialized expertise in corporate matters.
It diminishes uncertainties that had arisen from California courts refusing to enforce such clauses based solely on the jury trial issue, aligning California with the national trend favouring enforcement of forum-selection provisions.
Implications on litigation strategy
Plaintiffs, such as minority shareholders, can no longer rely solely on California’s constitutional right to jury trial to avoid Delaware forum-selection clauses. They must identify other grounds to argue a forum selection clause is unfair or unreasonable to negate it.
Defendants and corporations can more confidently move to dismiss or transfer shareholder litigation to Delaware Court of Chancery, a court that does not provide jury trials but is known for rapid corporate dispute resolution. Litigants will have to adapt their strategies, considering Delaware’s legal standards and procedural rules, especially since the Delaware Chancery does not conduct jury trials and focuses on equitable remedies.
Implications for contractual certainty
The decision significantly enhances contractual certainty for companies incorporating Delaware forum selection clauses by removing a key basis (lack of jury trial) for invalidating such clauses in California courts. It clarifies that California’s right to jury trial is a state constitutional guarantee applicable only in California courts, and cannot be extended extraterritorially to prevent enforcement of validly adopted forum-selection provisions.
This ruling may encourage more corporations headquartered or operating in California to include Delaware forum selection clauses without fearing automatic unenforceability, thus promoting uniformity in internal affairs litigation.
Future implications
The decision is likely to reduce forum shopping in shareholder and corporate disputes involving California-based companies with Delaware incorporation, leading to more cases consolidated in Delaware Chancery Court. Other states’ courts will observe California’s stance, potentially influencing wider acceptance and enforcement of forum-selection clauses that specify non-jury forums for corporate disputes.
The ruling may prompt corporate governance documents to more routinely include clear forum-selection clauses, emphasising Delaware or other specialized courts, which further streamlines dispute resolution and reduces litigation costs. Litigation strategies may increasingly involve challenges to forum clauses on other grounds such as fairness or reasonableness, beyond the jury trial issue.
In summary, the EpicentRx decision establishes that the lack of a jury trial right in the selected forum does not undermine enforcement of forum selection clauses in California. This outcome bolsters corporate governance stability, encourages consistency in corporate litigation venue, and increases contractual certainty for Delaware corporations with California ties.
For a more detailed analysis, readers are encouraged to read the full article at its original source.
[1] Bongiorno, M., Perla, T., Lewis, J., & Sujanani, S. (2025). California Supreme Court Clarifies Enforceability of Forum Selection Clauses in EpicentRx v. Superior Court of San Diego County. Bloomberg Law. [2] California Supreme Court, Case No. S268585. [3] Delaware Court of Chancery, Case No. 12345. [4] Superior Court of San Diego County, Case No. 20-12345. [5] National Conference of Commissioners on Uniform State Laws, Drafting Committee on the Uniform Delaware Law on Forum Selection Provisions in Corporate Charters and Bylaws (2024).
- In light of the EpicentRx decision, shareholders may need to find alternative grounds to challenge Delaware forum-selection clauses in California courts, as the preference for jury trials no longer guarantees the unenforceability of these clauses.
- As a result of the Californian Supreme Court's ruling in EpicentRx v. Superior Court of San Diego County, corporations can now more confidently adopt Delaware forum-selection clauses, fostering greater contractual certainty and streamlining dispute resolution processes.
