Turner v. Lam Research Corporation
1:23-cv-00435
| D. Del. | Nov 13, 2024Background
- Gary Turner, a former employee of Lam Research Corporation (initially a California corporation), was issued 2,375 shares as a stock bonus in 1988.
- After a corporate merger and redomiciling in Delaware, Turner retained his original stock certificate, never exchanging it for a Delaware certificate.
- Due to multiple changes in transfer agents over time, current records do not reflect Turner's ownership, and Plaintiffs (Gary and his wife) cannot sell the now-valuable shares.
- Plaintiffs filed suit in federal district court seeking restoration of share ownership records, a replacement certificate, and dividend payments.
- Lam Research moved to dismiss based on a forum selection clause in its bylaws requiring disputes to be heard in the Delaware Court of Chancery, raising additional arguments on fiduciary duty and statute of limitations.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Enforceability of forum selection clause | Enforcement would be unreasonable as it deprives Plaintiffs of their right to a jury trial under the Seventh Amendment | The clause is enforceable as part of the corporate bylaws accepted by shareholders, and a non-jury forum is not unreasonably inconvenient | Clause is enforceable; lack of jury trial alone does not render it unreasonable |
| Applicability of forum selection clause | Asserted internal affairs doctrine does not apply to these claims | Claims arise under the DGCL and seek relief governed by Chancery Court; Plaintiffs’ requests (e.g., new certificate) fall under scope | Clause applies; Plaintiffs waived arguments otherwise |
| Adequacy of Chancery as alternative forum | (No substantial argument presented) | Chancery routinely hears such claims and remedies are available there | Chancery is an adequate forum |
| Public interest factors in forum non conveniens | No factors offered | Delaware courts have interest in resolving corporation’s internal disputes | No public interest factors disfavoring transfer |
Key Cases Cited
- Atl. Marine Constr. Co. v. U.S. District Court, 571 U.S. 49 (2013) (forum selection clauses typically enforced through forum non conveniens)
- Coastal Steel Corp. v. Tilghman Wheelabrator Ltd., 709 F.2d 190 (3d Cir. 1983) (discussing enforceability of forum selection clauses and exceptions)
- M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1 (1972) (outlining strict standard for unreasonableness in forum selection enforcement)
- Granfinanciera, S.A. v. Nordberg, 492 U.S. 33 (1989) (Seventh Amendment right to jury trial for legal claims, not equitable claims)
- Carnival Cruise Lines, Inc. v. Shute, 499 U.S. 585 (1991) (forum selection clauses in consumer contracts are generally enforceable)