A recent Delaware Court of Chancery decision provides noteworthy guidance about how to reconcile conflicting forum selection clauses. In Kelly Roofing Holdings, LLC v. Flores, C.A. No. 2025-1049-BWD (Del. Ch. June 4, 2026), the court provides a wealth of practical analysis in a relatively short opinion that should be required reading for anyone who is interested in the latest iteration of Delaware law on the following issues: (i) when language in a forum clause is permissive or mandatory; (ii) which venue prevails when two related agreements provide for different forum requirements; and (iii) when the first-filed McWane rule is trumped by a forum selection clause.

Spoiler Alert—Case Remains in Delaware

The court determined that the forum clause in the Asset Purchase Agreement (APA) for the sale of a business had a mandatory Delaware forum clause, but that the employment agreement for the president of the surviving company had a forum clause allowing lawsuits to be filed in Florida, with the net result being that a motion to dismiss the Delaware case was denied.

Recent Decisions Compared

This case should be compared with other recent Chancery cases involving competing forum clauses in a “primary” agreement and a conflicting forum clause in a related employment agreement. For example, in Masimo Corp. v Kiani, highlighted on these pages, the Court of Chancery in April of this year granted a motion to dismiss while enforcing a California forum selection clause, notwithstanding breach of fiduciary duty claims against a Delaware entity, based on the expansive scope of a forum clause in an employment agreement–and despite the name of the agreement, it triggered DGCL Section 122 (18) as a stockholder governance agreement.

A comparison should also be made with the determinative factual differences in a Chancery bench ruling in the matter styled: Mawson Infrastructure Grp., Inc. v. Mewawalla, which several months ago granted a motion to dismiss fiduciary duty claims against a Delaware director in favor of a Washington State forum selection clause in an employment agreement. Note that unlike the Masimo case, there was no forum clause in an agreement in Mawson requiring a Delaware forum (though there was a Delaware bylaw provision), and no issue in Mawson involving the forum clause in a governance document under DGCL § 122 (18).

Highlights

Back to the Kelly Roofing case. The court rejected the argument that language in the APA providing that suits arising out of the APA “may be instituted” in state or federal courts in Delaware was superseded by the following dispositive phrase in the same paragraph: “Each party irrevocably submits to the exclusive jurisdiction of such courts in any such action.” The court also reasoned that the plaintiffs did not waive that mandatory provision by filing a separate action in Florida to enforce a different agreement involving the employment of the president of the surviving company.

  • An important procedural note is the court’s observation that under Court of Chancery Rule 12(b)(3), when addressing a motion to dismiss, “The court is not shackled to the plaintiff’s complaint and is permitted to consider extrinsic evidence from the outset.” Footnote 1.
  • The specific language that may initially make a reasonable reader conclude that the forum provision was permissive was the language that any suit arising out of the APA “may be instituted” in Delaware—except that the provision continued in the same sentence to provide that “each party irrevocably submits to the exclusive jurisdiction of such courts . . ..” The court determined, in essence, that the later phrase made the forum provision mandatory.
  • The same provision also provided that the parties “unconditionally waive any objection to the laying of venue . . . in such courts . . .” and they also irrevocably agreed not to object to such Delaware courts being an inconvenient forum. The court reasoned that not regarding that wording as mandatory would make the language superfluous. Slip op. at 12-13.
  • By contrast, the employment agreement for the president of the surviving company included a permissive forum selection clause for suits to be filed in Florida.
  • Procedurally, the president, who was terminated not long after the closing on the sale of her company, filed suit in Florida based on the employment agreement. The buyers, the defendants in this Delaware case, also filed suit in Florida. The president, the plaintiff in this case, filed a motion to dismiss based on the forum clause in the APA being only permissive or otherwise waived by the defendants filing first in Florida.

Key Aspects of Court’s Reasoning

  • The court instructed that the first-filed McWane rule is dependent on the absence of a binding forum clause, and that when there is an enforceable forum clause, “a court should honor the parties’ contract and enforce the clause, even if, absent any forum selection clause, the McWane principle might otherwise require a different result.” Slip op. at 8.
  • The court explained that a permissive forum clause does not prohibit litigation elsewhere—but that a mandatory forum clause that contains clear language requires that “litigation will proceed exclusively in the designated forum.” Id. at 10.
  • The court cited to several decisions in other jurisdictions that interpreted an almost identical forum clause and reasoned that even though the phrase “may be instituted” appears at the beginning of the forum clause, the subsequent phrase in the same paragraph that the parties “irrevocably submit to the exclusive jurisdiction of such courts . . .” makes the provision mandatory. Slip op. at 11-12.
  • The court distinguished cases relied on by defendants that addressed apparently conflicting forum clauses. Footnotes 6-7.
  • Although the court recognized that a forum selection provision can be waived by filing suit in another state, in this case there was no waiver under the APA because the employment agreement expressly authorized suit to be filed in Florida under that agreement. Slip op. at 14.

Rae Ra, a corporate and commercial litigation associate in the Delaware office of Lewis Brisbois, prepared this synopsis.


The Court of Chancery analyzed the newly amended 8 Del. C. § 144(d)(2) for the first time recently, in Patrick Ayers v. Foley, et al., C.A. No. 2025-0650-LWW (Del. Ch. June 15, 2026) (the “Opinion”), and held that the recent statutory amendments to Section 144 heighten the presumption of independence for certain directors beyond Section 144’s safe harbor provisions, “including when assessing director disinterestedness for purposes of Rule 23.1.” Opinion at 26-27.

In short, when a director is not a party to the challenged transaction and is deemed independent by the national exchange’s standards, for the purposes of a Rule 23.1 analysis, the statute raises the burden for a plaintiff to plead both substantial and particularized facts, and we focus on this narrow portion of the Opinion below. 

Background

In this derivative action, plaintiff challenged the board’s actions with regard to 1) a one-time equity grant to Foley, the company’s founder (the “Equity Grant”), and 2) compensation the non-employee directors awarded themselves (the “NED Compensation”).

Because this was a derivative suit where the plaintiff did not make a demand, the demand futility requirement of Rule 23.1 applied. And because the directors who approved the Equity Grant were deemed to satisfy the national stock exchange independence standards, the newly enacted Section 144(d)(2) applied, under which a plaintiff can rebut the presumption of disinterestedness with “substantial and particularized facts that such director has a material interest in such act or transaction or has a material relationship with a person with a material interest in such act or transaction.” 8 Del. C. § 144(d)(2).

Analysis

After explaining that the Equity Grant and the NED Compensation were separate transactions that each warranted separate analysis, see generally Opinion at 16-22, the Court began its application of the Zuckerberg test to the Equity Grant to assess demand futility. (Note: The defendants did not contest demand futility for the NED Compensation. See id. at 21-22.)

Under Zuckerberg prong three, the Court analyzed the independence of the three of the five challenged directors who qualified as independent under NYSE rules. Id. at 23.  The Court held that Section 144(d)(2) “is not confined to the safe harbors in Sections 144(a), (b), and (c)[,]” id. at 25, and ultimately, the plaintiff here failed to meet “this exacting standard” for pleading both substantial and particularized facts. Id. at 30.

  • Applying the principles of statutory interpretation, the Court held that Section 144(d)(2)’s “purposeful omission” of limiting language to within Section 144, id. at 26, as well as the statutory mandate for not only particularized but also “substantial” facts, id. at 27, demonstrated the legislature’s intent to strengthen the presumption of impartiality of directors beyond the Rule 23.1 standard.
  • Under this analytical framework, the plaintiff’s assertions–that the three challenged directors had business ties with Foley, received fees for their board service over the last decade, and engaged in co-investments–did not pass muster. Id. at 30-31. The “substantial” has to be understood in the “qualitative sense”, and the plaintiff “must plead specific, non-conclusory facts of sufficient qualitative significance to support a reasonable inference of a material interest or relationship that would impar the director’s objective judgment.” Id. at 28-29.

This opinion thus presents an important clarification of a recently amended Delaware corporate statutory provision and provides a lesson on the heightened burden of pleading standards to challenge the independence of certain directors.

Delaware Supreme Court Justice Karen L. Valihura recently presented the 2026 Weinburg Distinguished Lecture entitled “Legacies, Lessons and Launch Pads: Charting Delaware’s Course in a New Era, now available in an article format.

My own paraphrasing of a few takeaways: (i) the scholarly presentation included references to icons among prior court decisions in Delaware; (ii) how issues debated in the past can inform current issues in corporate law; and (iii) where we go from here—but you should read the whole article to get the full benefit of the learned insights.

The Delaware Senate approved the nomination of Vice Chancellor Morgan Zurn to become a Justice on the Delaware Supreme Court. Congratulations to Her Honor.

She takes over for Justice Valihura who did not seek re-appointment when her term ends this month. The process to fill the new opening for Vice Chancellor of the Court of Chancery has begun.

In addition to the Annual Review of Key Delaware Corporate and Commercial Decisions that I have compiled on these pages for the last 21 years, I periodically select cases for a semi-annual review. We recently presented these selected cases in a webinar with a PowerPoint.

The selection of these cases is necessarily subjective, and I typically favor those cases that have not already been widely discussed in the trade publications or elsewhere online, as well as those that have practical usefulness for those of us “in the trenches”. I invite comments or suggestions for other cases to include–if not now, then for my annual review.

As the Editor-in-Chief of the National Law Review‘s publication called the Delaware Corporate and Commercial Law Monitor, I’m pleased to share the latest edition that has now been published. The newsletter includes articles from authors around the country on the titular topic. My role for this publication is in addition to my full-time practice and maintaining this blog–now in its 21st year–as well as upholding my rich family life and participation in various religious, cultural, professional and community organizations.

Our new podcast series by Wilmington Managing Partner Francis G.X. Pileggi, Esq. and Partner Chauna Abner, offers practical insights on fiduciary duties, shareholder disputes, corporate governance issues, and other high-stakes business litigation matters arising in the State of Delaware and beyond.

In our inaugural episode, Francis and Chauna welcome veteran trial lawyer Jonathan Blank of McGuireWoods LLP to the show for a discussion on what every non-Delaware attorney needs to know about litigating in the Delaware Court of Chancery. From the unique role of Delaware counsel to the importance of collaboration in high-stakes corporate disputes, this episode offers practical insights from lawyers who have navigated some of the nation’s most complex corporate and commercial litigation.

Listen to the full episode on Spotify here: No Such Thing as “Local Counsel” in Delaware Court of Chancery (feat. Jonathan Blank from McGuireWoods) – Delaware Corporate Litigation Insights: A Lewis Brisbois Podcast | Podcast on Spotify

The idea for this topic came from an article we wrote on these pages with a similar title that compiled court decisions and commentary on the topic.

A recent ruling of the Delaware Court of Chancery addressed the standards for enforcing scheduling orders and explained the circumstances in which they might be modified. In Volt Energy Utility, LLC v. Elliott, C.A. 2024-0385-PAF, Order (Del. Ch. Mar. 4, 2026), the court instructed that: “Scheduling orders are not merely guidelines but have the same full force and effect as any other court order.” Id.

The factual context for this order denying a motion to amend the scheduling order was a lack of clear communication among counsel about scheduling issues. The court also observed that a common provision in scheduling orders allows a deposition of a trial witness not previously disclosed to be taken within 14 days. This is designed to promote fairness to allow a party who is not calling the witness to take the deposition to avoid being blindsided at trial–even though that might not be explicit. In this case however, the movant sought to use that provision to depose its own proposed trial witness. Another point made by the court in this case is that a non-natural person may not serve as a trial witness, but one party attempted to use that provision for something other than its intended purpose.

The order cites to Court of Chancery Rule 6 (b)(1)(B) for the requirement that good cause must be shown to extend the time to complete discovery on a motion made after the time has expired if the party failed to act because of excusable neglect. Excusable neglect generally focuses on “(1) Whether a party has demonstrated reasonable diligence; and (2) Whether the opposing party will be improperly prejudiced by an extension.” Id. (citation omitted).

The court explained that: “If a party cannot meet a deadline, the onus is on the party to be forthcoming and transparent about the situation and the reasons for it. . . . Attorneys shirk their obligations to the court and make matters worse when they fail to communicate with the other side, allow problems to escalate, and miss critical deadlines.” Id. (citation omitted).

The court concluded that the facts of this case demonstrated neglect that is not excusable, and that is prejudicial based on the imminent trial date. Although the motion to amend the scheduling order was not successful, the court denied a request for fee shifting because the motion was not the product of bad faith.

Previously on these pages over the last 21 years or so, I have highlighted decisions of the Delaware Supreme Court and Delaware trial courts, as well as a law review article by a Vice Chancellor, all of which provide additional reminders of the importance of complying with deadlines in scheduling orders and explanations of the standards to seek modification of them. See, e.g, here, here, here, here, and here.

Although related to compliance with discovery rules in general, in addition to compliance with deadlines in scheduling orders, the following quote from the 2018 Chancery decision in the matter styled In Re Examworks Group, highlighted on these pages at the foregoing hyperlink, is relevant to this topic and eminently worth repeating:

“If participants suspect that others are not following the rules, then the process deteriorates. People who follow the rules feel like chumps when others seem to be cutting corners or breaking rules and getting ahead. People who otherwise might not think of pushing limits become more aggressive if they think everyone else is doing it. It is this broader, systemic interest that the Delaware Supreme Court seems to have had in mind when stressing the courts must address discovery abuse not only to protect litigants, but also to protect the public and the bar.” See footnote 57.

This post was prepared by Rae Ra, a corporate and commercial litigation associate in the Delaware office of Lewis Brisbois.

In William J. Brown v. Matterport, Inc., et al., C.A. No. 2021-0595-LWW (Del. Ch. June 1, 2026) (“Letter Decision”), the Court of Chancery addressed on remand the limited issue of determining post-judgment interest in an action.

Plaintiff argued that, under 6 Del. C. § 2301, a fixed rate of 10.50% was “mandated,” while Defendants argued that a fixed 5.25%, the same interest as the pre-judgment rate, was appropriate to prevent a windfall to the plaintiff. Letter Decision, at 2.

The Court rejected both values, and instead held that “[a]pplying a floating rate compounded quarterly appropriately accounts for the economic realities and significant fluctuations in interest rates[.]” Id. at 3.  Clarifying that the “statutory legal rate serves as a benchmark, not an inflexible rule,” id. at 2, the Court explained that a “fixed 10.50% rate would create an inequitable windfall for [Plaintiff]” while a “fixed 5.25% rate would not fully compensate [Plaintiff]” for his losses.  Id. at 2-3.

The takeaway here is that the Court of Chancery is not statutorily limited from exercising in its discretion to determine an appropriate interest rate.  Here, the Court did just that, with mindfulness toward both equitable and practical concerns.