Nine companies sued over "exclusive forum" bylaws
(Reuters) - Chevron Corp (CVX.N) and eight other corporations were sued by shareholders on Tuesday for adopting a bylaw that requires common types of shareholder lawsuits be brought exclusively in Delaware's Chancery Court.
"Exclusive forum" bylaws are being adopted by more and more corporations as a way to control a surge in shareholder litigation, though the move has been resisted by shareholders.
The interest in the bylaw comes as shareholders are increasingly bringing simultaneous lawsuits making nearly identical claims in two or more courts, often challenging merger deals.
Tuesday's lawsuits said the nine companies adopted the bylaw to reduce the risk that directors would be found liable.
"(The bylaw) was initiated, timed, structured and approved to benefit the directors at the expense of the stockholders," said the lawsuits.
Shareholders have resisted being forced to bring claims for breach of fiduciary duties and other matters of Delaware corporate law in the state's Chancery Court, which is often perceived as being overly protective of management at the expense of shareholders.
Some companies have adopted the "exclusive forum" through shareholder votes to amend charters, while others such as Facebook Inc have adopted them ahead of an initial public offering. The nine companies that were sued by shareholders adopted the bylaw by a vote of the board of directors.
In addition to Chevron, the companies are Priceline.com Inc (PCLN.O), Franklin Resources Inc (BEN.N), SPX Corp (SPW.N), Autonation Inc (AN.N), Superior Energy Services Inc (SPN.N), Danaher Corp (DHR.N), Navistar International Corp (NAV.N) and Curtis Wright Corp (CW.N).
The lawsuits were all brought by the Kessler Topaz Meltzer & Check LLP and Prickett, Jones & Elliott PA law firms.
(Reporting By Tom Hals; Editing by Bernard Orr)