If your company documents require disputes to be litigated in the Delaware Court of Chancery, you may have to resolve your business divorce without a jury trial, even if California law would otherwise guarantee one.
The Case: EpicentRx v. Superior Court
On July 21, 2025, the California Supreme Court issued its highly anticipated opinion in EpicentRx, Inc. v. Superior Court, 18 Cal. 5th58 (2025). It held that a forum selection clause designating the Delaware Court of Chancery as the sole and exclusive forum for stockholder suits could be enforced against a minority stockholder because the absence of a civil jury trial right in the chosen forum did not violate the strong public policy respecting the right to jury trial in California courts. This holding applies equally to forum selection clauses in Operating Agreements of limited liability companies. This was highly anticipated due to the recent, exponential use of mandatory choice of forum provisions selecting the Delaware Court of Chancery in the governing documents of various corporate entities.
In EpicentRx, the plaintiff, a minority stockholder, filed a lawsuit in California against the company, its controlling shareholder, and certain board members alleging claims of breach of fiduciary duty, breach of contract, and fraudulent concealment, among other claims. The defendants moved to dismiss the California lawsuit on the ground of forum non conveniens. They relied on the corporation’s certificate of incorporation and bylaws, which contained mandatory forum selection clauses requiring most stockholder lawsuits against the corporation and related individuals to be brought in the Delaware Court of Chancery. Both the trial court and the Court of Appeal denied the motion reasoning that if plaintiff’s claims were litigated in California, plaintiff would have a right to a jury trial, but the Delaware Court of Chancery does not recognize a similar right. In their view, because the forum selection clauses would effectively deprive plaintiff of its right to a jury trial, similar to a predispute jury trial waiver, which is unenforceable under California law, enforcement of the forum selection clauses would be contrary to California public policy.
California Supreme Court’s Reasoning
The California Supreme Court took a different view. Specifically, it found that forum selection clauses serve vital commercial purposes and should generally be enforced. While certain California statutes expressly prohibit forum selection clauses, for example in employment agreements where the employee primarily resides and works in California, there is no such statute applicable to stockholder suits. Further, unlike unenforceable pre-dispute jury waivers, a forum selection clause reflects where a dispute will be litigated not how it will be litigated. Although the practical effect may be the same, the California Supreme Court found that California’s public policy does not require invalidation of forum selection clauses in all cases for that reason alone. In sum, the Court found that California has a strong public policy in favor of the right to a jury trial and against predispute waivers of the right, but California does not have a strong public policy against forum selection clauses or agreements to litigate in a jurisdiction that does not recognize that same civil jury trial right.
In short, absent additional factors, if a business divorce case is filed in California, the court will enforce a forum selection clause providing for a different jurisdiction, even if the forum, such as the Delaware Court of Chancery, does not allow for a jury trial. Companies and investors should review their governing documents with this in mind, especially when minority shareholders may assume California jury rights will apply.
