MONTH-IN-BRIEF (Mar 2020)
Salzburg v. Sciabaccuchi: Delaware Supreme Court Upholds Certificate of Incorporation Provisions Making Federal Courts the Exclusive Fora for Federal Securities Act Claims
By K. Tyler O’Connell, Morris James LLP
In Salzburg v. Sciabaccuchi, 2020 WL 1280785, __ A. 3d __ (Del. Mar. 18, 2020), the Delaware Supreme Court upheld the facial validity under Delaware corporate law of certificate of incorporation provisions making the federal courts the exclusive fora for claims arising under the federal Securities Act of 1933, which requires corporations selling securities to make “full and fair disclosure of relevant information” in a publicly filed registration statement. Although ’33 Act claims may be brought in state or federal court, many corporations and their advisors prefer federal court due to procedural advantages, including a better ability to coordinate parallel suits filed in multiple jurisdictions. The corporations named in the suit accordingly had adopted the federal forum provisions in advance of their IPOs.