On Monday, the Nevada legislature commenced its 81
st session. The legislature meets biennially in odd numbered years. The Session is limited to 120 days. Nev. Const. Art. 4, § 2. Yesterday, Senator James Ohrenschall introduced SB 95 which would make numerous significant changes to Nevada s private corporation law.
Among other things, SB 95 would amend NRS 78.046 to permit a Nevada corporation s articles or bylaws to require that concurrent jurisdiction actions be brought solely or exclusively in the court(s) specified in the articles or bylaws. The bill defines concurrent jurisdiction action as any action, suit or proceeding against the corporation or any of its directors or officers, that:
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As previously discussed in our
Wong v. Restoration Robotics, Inc., Case No. 18-CIV-02609 (Cal. Super. Ct. Sept. 1, 2020), the Superior Court of California for the County of San Mateo dismissed claims against an issuer and its directors and officers, asserted under the Securities Act of 1933 (Securities Act), in favor of a federal forum-selection provision (FFP) in the issuer-defendant’s certificate of incorporation. This was the first state court case to opine on the enforceability of FFPs in the wake of the Delaware Supreme Court’s decision in
Salzberg v. Sciabacucci (
Cyan, Inc. v. Beaver Cty. Emps. Ret. Fund, 138 S. Ct. 1061, 1069 (2018).
Since the
As New York commercial practitioners will recall, the U.S. Supreme Court in
Cyan, Inc. v. Beaver Cty. Emps. Ret. Fund held that state and federal courts have concurrent jurisdiction over class actions alleging violations of only the Securities Act of 1933 (the “1933 Act”) and, further, that defendants in such suits filed in state court cannot remove those actions to federal court to avoid state-court jurisdiction.[1] Not surprisingly, this development has led to an increase in the filing of securities claims in state courts.
In the nearly two-and-a-half years since
Cyan, New York courts and the Commercial Division in particular have asserted their role in securities litigation under the 1933 Act. For example, as this blog previously covered here and here, Commercial Division justices have denied motions filed by defendants seeking to stay state-court actions pending resolution of later-filed federal securities actions. Those decisions reasoned,
In March, the Delaware Supreme Court held in
Salzberg v. Sciabacucchi, 227 A.3d 102 (Del. 2020) that Federal Forum Selection Provisions, corporate bylaw or charter provisions that require claims under the Securities Act of 1933 (the Securities Act ) to be brought in federal court, are facially valid under Delaware s General Corporation Law. Wilson Sonsini represented Stitch Fix, Inc. and Roku, Inc. and their respective directors in the
Sciabacucchi case, and previously issued an alert describing the
Sciabacucchi opinion. The Delaware Supreme Court, however, expressly left open the question of whether Federal Forum Provisions were enforceable, leaving that decision to the various state courts in which Securities Act claims were filed. Three recent decisions in California have considered the enforceability of Federal Forum Provisions adopted by Restoration Robotics, Inc., Uber, Inc., and Dropbox, Inc., as a matter of first impression, and each found the provisions enfor