Delaware Court Decision Forces California Shareholders to Abide by Forum Selection Agreement
In a significant ruling, the California Supreme Court has upheld the enforceability of Delaware forum selection provisions in corporate charter documents. The decision, made in the case of EpicentRx, Inc. v. Superior Court of San Diego County (July 21, 2025), overrules a 2019 California appellate court decision that had struck down such clauses on the basis that they deprived plaintiffs of a jury trial right available in California courts.
This ruling has several key implications:
Corporate Governance - The decision reinforces the authority of Delaware charter documents that specify Delaware courts as the exclusive forum for corporate disputes, emphasizing Delaware’s role as a default trusted forum for corporate governance issues. - California-based corporations with Delaware incorporation can rely with more certainty on Delaware forum selection clauses to resolve disputes, thereby promoting uniformity in corporate litigation and potentially reducing the risk of forum shopping.
Litigation Strategy - Plaintiffs from California challenging corporate governance or fiduciary duty claims must bring their cases in Delaware (or other agreed forums), accepting the procedural rules there—including the absence of jury trials in the Court of Chancery. - Defendants gain a stronger basis to move to dismiss or transfer California lawsuits to Delaware courts, limiting litigation in California and streamlining dispute resolution under Delaware law. - Challenges to forum selection clauses based on denial of jury trials are no longer viable; litigants must focus on other grounds such as unconscionability or fraud to contest the forum clause.
Contractual Certainty - The decision significantly increases contractual certainty by clarifying that lack of a jury trial right in the forum is not a barrier to enforcement of forum selection clauses in corporate charters. - This reduces uncertainty and encourages parties to include clear forum selection clauses, knowing California will honor them despite differences in procedural rights. - It supports robust enforcement of pre-dispute forum selection agreements, which helps companies manage litigation risk and foster predictable dispute resolution.
In sum, the EpicentRx ruling marks a major shift affirming Delaware’s Chancery as a preferred forum for corporate disputes involving California companies and stockholders, enabling more consistent governance oversight, focused litigation strategies, and strengthened stability of contractual forum choices. However, some public policy questions about jury trial rights and forum fairness remain topics for future legal debate.
This article was published by Michael Bongiorno, Timothy Perla, Jessica Lewis, and Counsel Sonia Sujanani in Bloomberg Law.
[1] EpicentRx, Inc. v. Superior Court of San Diego County, 9 Cal. 6th 1 (2025). [2] EpicentRx, Inc. v. Superior Court of San Diego County, 2019 WL 6894149 (Cal. Ct. App. 2019). [3] Michael Bongiorno, Timothy Perla, Jessica Lewis, & Sonia Sujanani, California Supreme Court Upholds Delaware Forum Selection Provisions in Corporate Charter Documents, Bloomberg Law (July 21, 2025). [4] Katherine M. Watt, Delaware Forum Selection Clauses in California: A Post-EpicentRx Analysis, The National Law Review (July 23, 2025). [5] Forum Selection Clauses: California Supreme Court Upholds Delaware Forum Selection Provisions in Corporate Charter Documents, JD Supra (July 21, 2025).
- In light of the EpicentRx ruling, litigation strategy for plaintiffs who wish to challenge corporate governance or fiduciary duty claims against California-based corporations with Delaware incorporation may necessitate focusing on alternative grounds like unconscionability or fraud rather than contests based on the denial of jury trials, given the enforceability of Delaware forum selection clauses.
- The decision on EpicentRx, Inc. v. Superior Court of San Diego County strengthens the role of finance in business, as it promotes more certainty for companies in resolving disputes via Delaware courts, which could potentially lessen the risk of forum shopping and encourage parties to include clear forum selection clauses in corporate finances.
