NOELLE LEE V. ROBERT FISHER, No. 21-15923 (9th Cir. 2022)
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Plaintiff brought a shareholder derivative action alleging that The Gap, Inc. and its directors (collectively, Gap) failed to create meaningful diversity within company leadership roles, and that Gap made false statements to shareholders in its proxy statements about the level of diversity it had achieved. Gap’s bylaws contain a forum-selection clause that requires “any derivative action or proceeding brought on behalf of the Corporation” to be adjudicated in the Delaware Court of Chancery.
Notwithstanding the forum-selection clause, Plaintiff brought her derivative lawsuit in a federal district court in California, alleging a violation of Section 14(a) of the Securities Exchange Act of 1934, 15 U.S.C. Section 78n(a), along with various state law claims. The district court dismissed Plaintiff’s complaint based on its application of the doctrine of forum non conveniens, holding that she was bound by the forum selection clause.
The Ninth Circuit affirmed the district court’s dismissal and held that Plaintiff did not meet her burden to show that enforcing Gap’s forum-selection clause contravenes federal public policy, rejecting as unavailing the evidence Plaintiff identified as supporting her position: the Securities Exchange Act’s anti-waiver provision and exclusive federal jurisdiction provision, Delaware state case law, and a federal court’s obligation to hear cases within its jurisdiction. The court, therefore, concluded that the district court did not abuse its discretion in dismissing the complaint.
Court Description: Forum Selection The panel affirmed the district court’s dismissal of Noelle Lee’s shareholder derivative action alleging that The Gap, Inc. and its directors (collectively, Gap) failed to create meaningful diversity within company leadership roles, and that Gap made false statements to shareholders in its proxy statements about the level of diversity it had achieved. The district court dismissed the complaint based on its application of the doctrine of forum non conveniens, holding that Lee was bound by the forum-selection clause in Gap’s bylaws, which requires any derivative action to be adjudicated in the Delaware Court of Chancery. Lee conceded that the forum-selection clause is valid and, by its terms, applies to her lawsuit. Accordingly, the only question before this court was whether the clause is enforceable. Applying the doctrine of forum non * The Honorable Christina Reiss, United States District Judge for the District of Vermont, sitting by designation. LEE V. FISHER 3 conveniens, the panel wrote that a forum-selection clause creates a strong presumption in favor of transferring a case, that the plaintiff bears the burden to establish that transfer is unwarranted, and that the district court should transfer the case unless extraordinary circumstances unrelated to the convenience of the parties clearly disfavor a transfer. Noting that Lee did not contend that the forum-selection clause is invalid due to fraud, nor that litigating her derivative claim in the Delaware forum would be gravely difficult, the panel considered only the second factor derived from M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1 (1972)—whether enforcement of the clause would contravene strong public policy. The panel held that Lee did not meet her burden to show that enforcing Gap’s forum-selection clause contravenes federal public policy, rejecting as unavailing the evidence Lee identified as supporting her position: the Securities Exchange Act’s antiwaiver provision and exclusive federal jurisdiction provision, Delaware state caselaw, and a federal court’s obligation to hear cases within its jurisdiction. The panel therefore concluded that the district court did not abuse its discretion in dismissing the complaint. 4 LEE V. FISHER
The court issued a subsequent related opinion or order on October 24, 2022.
The court issued a subsequent related opinion or order on June 1, 2023.
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