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Shareholders sue 9 companies over “exclusive forum” bylaws

Chevron, Navistar, Priceline and others named as defendants

Nine companies are suffering the legal consequences of disappointing their shareholders.

Yesterday, shareholders sued Autonation Inc., Chevron Corp., Curtis Wright Corp., Danaher Corp., Franklin Resources Inc., Navistar International Corp., Priceline.com Inc., SPX Corp. and Superior Energy Services Inc. for implementing bylaws requiring shareholders to bring lawsuits exclusively in the Delaware Court of Chancery. The shareholders claim the companies adopted the bylaws to shield directors from liability.

According to Reuters, “exclusive forum” bylaws are becoming increasingly popular among corporations as a way to control a rise in shareholder litigation, particularly when it comes to M&A lawsuits.

But many shareholders oppose the bylaws because they claim the Chancery Court favors business management over shareholders. Meanwhile, most companies prefer litigating in the Chancery Court, which is recognized as an expert in corporate law and more predictable than other forums.

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