SolarWinds forum selection clause kills shareholders’ derivative suit

Details

Publish Date:

July 10, 2023

Author(s):

Frankel, Alison

Source:

Reuters

Related Person(s):

Related Organization(s):

Foreign Corrupt Practices Act Clearinghouse (FCPAC),
Stanford Program in Law, Science & Technology,
Securities Class Action Clearinghouse (SCAC),
John M. Olin Program in Law and Economics,
Arthur and Toni Rembe Rock Center for Corporate Governance

Summary

Forum selection clause proponent Joseph Grundfest, a law professor at Stanford University, defended Pitman’s ruling. Theoretically, he said, there’s a difference between direct and derivative 10(b) claims. But in reality, Grundfest said, there is no remedy shareholders can obtain from derivative Exchange Act suits that they can’t get from Delaware breach-of-duty suits and direct Exchange Act class actions. “Why do these cases exist?” Grundfest said. “Because law firms want a piece of the fees.”