Silicon Valley is the pre-eminent location for start-ups. But to the lament of the tech entrepreneurs there, Northern California is also a hub for another type of innovation: litigation against companies that have disappointing IPOs.

An otherwise nondescript state courthouse in Redwood City, California, has become one of the most popular venues for class-action securities lawsuits where shareholders argue for compensation from newly-listed companies whose shares have fallen, claiming they filed false or misleading prospectuses.

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Worries about 1933 Act claims in state court have led companies planning an IPO, including Snap, BlueApron and Stitch Fix, to resort to the so-called Grundfest solution. Named after a former SEC commissioner-turned-law professor, the tactic is to write into the company charter and bylaws that any 1933 Act claim can only be brought in federal court.

Companies have had success writing such charter provisions that force corporate law litigation into one specific state court. Typically that is Delaware, a state that has become increasingly corporation friendly. But whether these federal forum provisions that Grundfest developed are legal under Delaware law has yet to be determined.