Keith Paul Bishop offers several reasons to think that California courts may not follow Strine's opinion.Two of them seem right to me (the last two), but his main argument strikes me as less plausible:
[Bishop writes that he expects] that plaintiffs will try to set aside forum selection clauses on the basis of Article 1, Section 16 of the California Constitution which provides in relevant part:
Trial by jury is an inviolate right and shall be secured to all, but in a civil cause three-fourths of the jury may render a verdict. A jury may be waived in a criminal cause by the consent of both parties expressed in open court by the defendant and the defendant’s counsel. In a civil cause a jury may be waived by the consent of the parties expressed as prescribed by statute.”
In Grafton Partners L.P. v. Superior Court, 36 Cal.4th 944 (2005), the California Supreme Court interpreted this provision as rendering unenforceable pre-dispute contractual jury trial waivers. The Delaware Court of Chancery is a court of equity and doesn’t generally have jury trials. These plaintiffs will likely have to contend with AJZN, Inc. v. Yu, 2013 U.S. Dist. LEXIS 2943 (Jan. 7, 2013), in which Judge Lucy H. Koh rejected a challenge to forum selection clauses on this basis. However, that case involved transferring the case to the U.S. District Court in Delaware, a court that does hold jury trials.
The difficulty I have with that argument is that California law recognizes that there is no state constitutional right to jury trials in equity cases:
Our state Constitution expressly guarantees the right to a jury trial. (Cal. Const., art. I, § 16.) But the right guaranteed is that of a jury trial as it existed at common law, when the state Constitution was first adopted. ( Cornette v. Department of Transportation (2001) 26 Cal.4th 63, 75–76, 109 Cal.Rptr.2d 1, 26 P.3d 332.) Consequently, the constitutional right to a jury trial does not apply to actions in equity ( Matter of Coburn (1913) 165 Cal. 202, 219, 131 P. 352) or to special proceedings ( Cornette, supra, 26 Cal.4th at p. 76, 109 Cal.Rptr.2d 1, 26 P.3d 332), although the Legislature may provide for a jury trial in these situations by statute ( ibid.; Estate of Dolbeer (1908) 153 Cal. 652, 657, 96 P. 266.)
Corder v. Corder, 161 P.3d 172, 179 (Cal. 2007). So why would California object to Delaware's lack of jury trials? In addition, as Bishop notes, California courts may decide whether or not to follow strine on a case-by-case as applied basis rather than a facial basis. If so, note that Interactive Multimedia Artists, Inc. v. Superior Court (Allstate Ins. Co.), 62 Cal.App.4th 1546, 73 Cal.Rptr.2d 462 (Cal.App. 2 Dist.,1998), held that:
Under both Delaware law and California law, entitlement to jury trial depends on whether an action is legal or equitable. ( Park Oil, Inc. v. Getty Refining & Marketing (Del.Supr.1979) 407 A.2d 533, 535; Southern Pac. Transportation Co. v.Superior Court (1976) 58 Cal.App.3d 433, 435, 129 Cal.Rptr. 912.) In Delaware, the equity jurisdiction of the Court of Chancery as it existed prior to the separation of the colonies determines whether an action is legal or equitable.FN4 **466 ( Du Pont v. Du Pont(Del.Supr.1951) 85 A.2d 724, 727.) In California, the right to a jury trial is coextensive with that right as it existed in 1850 under English common law. ( C & K Engineering Contractors v. Amber Steel Co. (1978) 23 Cal.3d 1, 8, 151 Cal.Rptr. 323, 587 P.2d 1136.) ...
IMA's cause of action is based on equitable principles. The fiduciary duty of a controlling shareholder or director to a minority shareholder is based on “powers in trust.” ( Jones v. H.F. Ahmanson & Co. (1969) 1 Cal.3d 93, 107, 81 Cal.Rptr. 592, 460 P.2d 464.) “'For that power is at all times subject to the equitable limitation that it may not be exercised for the aggrandizement, preference, or advantage of the fiduciary.... Where there is a violation of these principles,equity will undo the wrong or intervene to prevent its consummation.”' ( Id. at p. 109, 81 Cal.Rptr. 592, 460 P.2d 464, quotingRemillard Brick Co. v. Remillard–Dandini Co. (1952) 109 Cal.App.2d 405, 420–421, 241 P.2d 66, emphasis added.)
Trust relationships are premised on equitable principles. (See McMahon v. New Castle Associates (Del.Ch.1987) 532 A.2d 601, 604; *1556 Jones v. H.F. Ahmanson & Co., supra, 1 Cal.3d at p. 107, 81 Cal.Rptr. 592, 460 P.2d 464.) In addition, “entire fairness” is about adjusting equities. (See C & K Engineering Contractors v. Amber Steel Co., supra, 23 Cal.3d at p. 11, 151 Cal.Rptr. 323, 587 P.2d 1136 [court is required to exercise equitable principles when it adjusts rights, equities, and interests].) The test requires weighing various considerations in order to reach a just result. ( Cinerama, Inc. v. Technicolor, Inc., supra, 663 A.2d at pp. 1162–1163 [explaining entire fairness test].) That standard illustrates a court's equitable power to weigh various considerations in order to reach a just result. The sole method of obtaining damages in this case is by application of equitable principles. It follows that this action, under California law, is properly classified as an equitable action.
See also Dodds v. Meng, 2012 WL 5208561 (Cal.App. 4 Dist. 2012) (unpublished and hence uncitable in court) ("We have no difficulty concluding that the case before us is a shareholder derivative lawsuit. ... Such a case is essentially equitable in nature.").
Since many--if not most--of the suits that would be affected by forum selection bylaws will involve such claims, and since California would not grant a jury trial as a matter of right in such cases, I see no reason why a California court would not enforce a Delaware corporatio's forum selection bylaw in such cases.
