You Wanted It, You Got It

You Wanted It, You Got It

      In a decision from Delaware decided last year, the court held that, where the controlling shareholder caused a corporation to adopt a forum selection by-law, that majority shareholder consented to venue in that jurisdiction. In re: Pilgrim’s Pride Corp. Derivative Litigation, C.A. No. 2018-0058-GTL, 2019 WL 1224556 (Del. Ch. March 15, 2019). 

      The controlling shareholder of Pilgrim’s Pride orchestrated the sale of the company. Coincident with the approval of that sale, Pilgrim’s Pride’s Board of Directors amended its by-laws to provide, inter alia, that disputes with respect to the internal governance of the company must be heard in Delaware. When, after the transaction was approved, certain of the shareholders brought a derivative action in Delaware against that controlling shareholder, the controlling shareholder sought to have the suit dismissed on the basis of lack of jurisdiction. This assertion the Chancery Court rejected, observing: 

On the same day that the Acquisition was approved, the Board voted unanimously to adopt a forum-selection bylaw, with the Director Defendants whom Parent controlled constituting a five-member majority of the nine-member Board. The bylaw made the Delaware courts exclusive forum for breach of fiduciary litigation involving the Company. This decision holds that on the facts alleged, Parent implicitly consented to personal jurisdiction in this court for the purposes of claims falling within the forum-selection bylaw.