Chancery Enforces California Forum Selection Clause in Lawsuit to Invalidate Director’s Employment Agreement with Delaware Entity
The Delaware Chancery Court dismissed Masimo's lawsuit, enforcing the employment agreement's California forum selection clause.Summary
The Delaware Court of Chancery dismissed Masimo Corp.'s lawsuit seeking to invalidate Joe Kiani's employment agreement, ruling that the agreement's forum selection clause requiring litigation in California Superior Court, Orange County, governed the dispute. The court found that Masimo's claims for breach of fiduciary duty and waste arose out of or related to the agreement, and therefore must be brought in California under the broad 'arising out of or relating to' language. It held that DGCL § 122(18), effective August 1, 2024, permits stockholder agreements to select non‑Delaware fora for internal affairs claims, and that the agreement, which included governance provisions such as change‑in‑control triggers and supermajority removal rights, qualified as a stockholder governance agreement rather than a pure employment contract. Consequently, the court granted Kiani's motion to dismiss, enforcing the California forum selection clause and clarifying that corporations can route internal affairs disputes to out‑of‑state forums via agreements with governance features.
(Source：National Law Review)