Late last year, a verified shareholder derivative complaint was filed against The Boeing Co. (“Boeing”) in the U.S. District Court for the Northern District of Illinois. See Seafarers Pension Plan v. Bradway et al., Docket No. 1:19-cv-08095 (N.D. Ill. Dec. 11, 2019). The complaint alleged breaches of fiduciary duty against the Boeing directors and officers under state law, as well as asserted claims under the Securities and Exchange Act of 1934 (“Exchange Act”).
Since 2011, Boeing’s bylaws have contained a forum selection clause which mandates that all shareholder derivative suits must be litigated in Delaware Chancery Court. A forum selection clause is not uncommon and Delaware courts have routinely found these clauses to be valid. Accordingly, Boeing moved to dismiss the Illinois case based on the applicability of the forum selection clause. Seafarers Pension Plan (“Seafarers”) argued that enforcement of the forum selection clause would deprive shareholders the right to assert claims under the Exchange Act because these claims must be exclusively brought in a federal court; however, the district court granted Boeing’s motion to dismiss and Seafarers is currently appealing. See Seafarers Pension Plan v. Bradway et al., Docket No. 20-02244 (7th Cir. Jul. 9, 2020).
In addition to appealing to the 7th Circuit, Seafarers is also pursuing an action against Boeing and its directors and officers in Delaware Chancery Court. See Seafarers Pension Plan v. Bradway et al., Docket No. 2020-0556 (Del. Ch. Jul 8, 2020). The Chancery Court suit alleges that Boeing’s forum selection clause violates Delaware General Corporation Law, and is therefore, invalid and unenforceable because the forum selection clause precludes shareholders from bringing “derivative claims under the Exchange Act or any other exclusively federal law claim.” Further, the Chancery Court suit alleges that Boeing’s directors and officers are breaching their fiduciary duties by enforcing the forum selection clause. Among other things, Seafarers is seeking a declaration from the Chancery Court declaring that Boeing’s forum selection clause cannot be enforced.
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