When the minority stockholders of a Nevada corporation, Scientific Games Corporation sued the company’s controlling stockholder and members of its allegedly “handpicked” board of directors for breaches of fiduciary duty and violations of the Delaware General Corporation Law, Vice Chancellor Joseph R. Slights III had some questions:
Sylebra Capital Partners Master Fund, et al. v. Ronald O. Perelman, et al., 2020 Del. Ch. LEXIS 312.
It turns out that Scientific Games had been a Delaware corporation and the plaintiffs had invested in the Delaware corporation. The plaintiffs further claimed that the alleged misconduct began while Scientific Games was a Delaware corporation.
Scientific Games, however, had subsequently reincorporated in Nevada and adopted bylaws that included a Nevada forum selection clause. Vice Chancellor Slights ruled that this forum selection clause was enforceable and required dismissal of the plaintiffs' Delaware action. In so ruling, he found that the plaintiffs had not carried the burden of showing that (i) they had not consented to the bylaw; (ii) the bylaw was unreasonable or unjust; or (iii) the bylaw was procured by fraud.