Chancery Enforces California Forum Selection Clause in Lawsuit to Invalidate Director’s Employment Agreement with Delaware Entity

Short summary

Delaware's Court of Chancery enforced a forum selection clause requiring corporate disputes over an employment agreement to be litigated in California, not Delaware. The court found that employment agreements with governance features can be treated as stockholder governance agreements under recent Delaware law. This impacts how founders and executives structure equity and severance provisions.

• •Forum selection clauses in employment agreements can be enforced to require litigation in non-Delaware courts
• •Employment agreements with governance features may qualify as DGCL § 122(18) stockholder governance agreements
• •This ruling creates a route for companies to challenge severance and equity provisions in California instead of Delaware

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