Recently, I took note of the fact that the California Supreme Court as granted review of EpicentRx, In.c v. Superior Court, 95 Cal. App. 5th 890 (2023), review granted 539 P.3d 118 (2023). This was a case that I discussed last September in which the Court of Appeal had held that enforcement of the forum selection clauses in a Delaware corporation’s corporate documents would operate as an implied waiver of the plaintiff's right to a jury trial—a constitutionally-protected right that cannot be waived by contract prior to the commencement of a dispute.
It so happens that last week, United States District Court Judge Michael M. Anello granted summary judgment against EpicentRx in a case that it had instituted against the Chief Business Officer of a Delaware corporation in which EpicentRx owned shares. Judge Anello applied the following choice of law analysis as to EpicentRx' direct claim:
EpicentRx's direct claim, California has codified the internal affairs doctrine. Cal. Corp. Code § 2116; see also Villari v. Mozilo, 208 Cal. App. 4th 1470, 1478 n.8 (Cal. Ct. App. 2012) (“Corporations Code section 2116 codifies [the internal affairs doctrine] in California.”). Here, the Court finds that Plaintiff's breach of fiduciary duty claim falls within this doctrine and therefore applies Delaware law. See Davis & Cox v. Summa Corp., 751 F.2d 1507, 1527 (9th Cir. 1985) (“Claims involving “internal affairs” of corporations, such as the breach of fiduciary duties, are subject to the laws of the state of incorporation.”) superseded by statute on other grounds. “[C]orporate officers owe fiduciary duties that are identical to those owed by corporate directors.” Gantler v. Stephens, 965 A.2d 695, 708 (Del. 2009).
I disagree. It appears that the defendant in this case was sued as an officer. As I have previously pointed out, California Corporations Code Section 2116 refers only to directors. It makes no mention of officers. See Court Of Appeal Finally Notices That Section 2116 Says Not A Word About Officers. As I have noted elsewhere, I question why choice of law principles governing agency relationships should not be applied. See Why Is McDonald's Former V.P. Being Judged In Delaware By Delaware Law?
