Roberts v. TriQuint Semiconductor, Inc.

No. 54 December 10, 2015 413

IN THE SUPREME COURT OF THE

STATE OF OREGON

Donald L. ROBERTS,

individually and on behalf of

all others similarly situated,

Plaintiff-Adverse Party,

v.

TRIQUINT SEMICONDUCTOR, INC.;

Ralph G. Quinsey; Steven J. Sharp;

Charles Scott Gibson; David Ho;

Nicolas Kauser; Roderick Nelson;

Walden C. Rhines; and Willis C. Young,

Defendants-Relators,

and

RF MICRO DEVICES, INC.,

Defendant.

Marina LAM,

individually and on behalf of

all others similarly situated,

Plaintiff-Adverse Party,

v.

Steven J. SHARP;

Ralph G. Quinsey; Charles Scott Gibson;

David Ho; Nicolas Kauser; Roderick Nelson;

Walden C. Rhines; Willis C. Young;

and TriQuint Semiconductor, Inc.,

Defendants-Relators,

and

RF MICRO DEVICES, INC.;

Rocky Merger Sub, Inc.; Trident Merger Sub, Inc.;

and Rocky Holding, Inc.,

Defendants.

(CC 1402-02441, 1403-02757; SC S062642)

414 Roberts v. TriQuint Semiconductor, Inc.

En Banc

Original proceeding in mandamus.*

Argued and submitted June 16, 2015.

Sarah J. Crooks, Perkins Coie LLP, Portland, argued the

cause and filed the brief for defendants-relators. With her on

the brief were Ronald L. Berenstain and Sean C. Knowles.

Scott A. Shorr, Stoll Stoll Berne Lokting & Shlachter P.C.,

Portland, argued the cause for plaintiffs-adverse parties.

Mark A. Friel, Stoll Stoll Berne Lokting & Schlachter P.C.,

and Kim T. Buckley, Esler Stephens & Buckley, Portland,

filed the brief. With them on the brief were Gary M. Berne,

Stoll Stoll Berne Lokting & Schlachter P.C.; Michael J.

Esler, Esler Stephens & Buckley; David T. Wissbroecker

and Maxwell R. Huffman, Robbins Geller Rudman &

Dowd LLP, San Diego, California; and Kent Bronson, Todd

Kammerman, and Christopher Schuyler, Milberg LLP, New

York, New York.

Bridget Donegan, Larkins Vacura LLP, Portland,

and Leslie A. Brueckner, Public Justice, P.C., Oakland,

California, filed the brief for amici curiae Oregon Trial

Lawyers Association and Public Justice, P.C.

KISTLER, J.

Peremptory writ to issue.

Case Summary: Two plaintiffs filed shareholder derivative suits in

Multnomah County against TriQuint Semiconductor, Inc. and its directors, chal-

lenging a proposed merger between TriQuint and another company. TriQuint

moved to dismiss the suits on the basis of a forum-selection bylaw that desig-

nates the Delaware Court of Chancery as the exclusive forum for resolving share-

holder derivative suits. The trial court denied TriQuint’s motion, and the Court

allowed TriQuint’s petition for an alternative writ of mandamus. Held: (1) under

Delaware law, the forum-selection bylaw is facially valid and valid as-applied;

and (2) under Oregon law, enforcing the forum-selection bylaw is neither unfair

nor unreasonable.

Peremptory writ to issue.

______________

*  On petition for alternative writ of mandamus from an order of Multnomah

County Circuit Court, Michael A. Greenlick, Judge.

Cite as 358 Or 413 (2015) 415

KISTLER, J.

TriQuint Semiconductor, Inc., and its directors

(collectively TriQuint) are defendants in two consolidated

shareholder derivative suits filed in Multnomah County.1

TriQuint moved to dismiss those suits on the ground that its

corporate bylaws establish Delaware as the exclusive forum

for shareholder derivative suits. The trial court denied

TriQuint’s motion to dismiss, and we allowed TriQuint’s

petition for an alternative writ of mandamus. We now con-

clude that, as a matter of Delaware law, TriQuint’s bylaw is

a valid forum-selection clause and binds its shareholders.

We also conclude that, as a matter of Oregon law, the bylaw

is enforceable. We accordingly issue a peremptory writ of

mandamus directing the trial court to grant TriQuint’s

motion to dismiss.

The relevant facts are either undisputed or estab-

lished by the trial court’s order.2 TriQuint is a Delaware

corporation headquartered in Hillsboro, Oregon. TriQuint

designs and manufactures radio frequency products used in

a number of high-technology industries. Late in February

2014, TriQuint’s board of directors amended the company’s

bylaws to designate the Delaware Court of Chancery as the

exclusive forum for resolving internal corporate disputes,

including shareholder derivative suits.3 The board adopted

the bylaw pursuant to TriQuint’s certificate of incorpora-

tion, which allows the board of directors to “adopt, amend,

or repeal” the company’s bylaws unilaterally. See Amended

and Restated Bylaws of TriQuint Semiconductor, Inc., Art X

1

Other defendants were named in the consolidated suits but are not relators

in this mandamus proceeding.

2

TriQuint filed its motion to dismiss under ORCP 21 A(1), and the trial court

noted that, in resolving that motion, it could rely on facts drawn from the com-

plaint and matters outside the pleadings, including affidavits, declarations, and

other evidence. See Black v. Arizala, 337 Or 250, 265, 95 P3d 1109 (2004) (so stat-

ing). The parties do not challenge the historical facts set out in the trial court’s

order, and we assume that those facts are correct.

3

The bylaw provides that “the Court of Chancery of the State of Delaware

shall be the sole and exclusive forum for” resolving, among other things, share-

holder derivative suits, claims for breach of fiduciary duty, violation of the

Delaware General Corporation Law, and violation of TriQuint’s bylaws, and

claims governed by the internal affairs doctrine. Amendment to Second Amended

and Restated Bylaws of TriQuint Semiconductor, Inc., Art XI.

416 Roberts v. TriQuint Semiconductor, Inc.

(allowing board to unilaterally alter bylaws as long as cer-

tificate of incorporation authorizes that action); Amended

and Restated Certificate of Incorporation of TriQuint

Semiconductor, Inc. (NINTH) (so authorizing).

Two days after the board adopted the forum-

selection bylaw, TriQuint announced plans to merge with

RF Micro Devices, Inc. Each corporation’s board of direc-

tors unanimously approved the merger. Some of TriQuint’s

shareholders objected to the merger, however. They filed two

shareholder derivative suits in Oregon and three similar

suits in Delaware.

Roberts, acting as the representative of a proposed

class of TriQuint’s shareholders, filed a derivative suit in

Multnomah County Circuit Court shortly after the board

approved the merger. The complaint alleged that TriQuint’s

directors had breached their fiduciary duties to the corpora-

tion by approving the merger and that TriQuint had aided

and abetted the breach. Specifically, the complaint alleged

that the merger benefitted TriQuint’s board members by

giving them lucrative board positions in the new corpora-

tion in exchange for selling TriQuint stock at below-market

prices. Lam filed a second, similar class action the following

month in Multnomah County Circuit Court. The suits filed

by Roberts and Lam (plaintiffs) were consolidated. Three

other TriQuint shareholders filed derivative class action

suits in the Delaware Chancery Court, alleging a breach of

fiduciary duty on the part of TriQuint’s directors in connec-

tion with the merger.

TriQuint moved to dismiss the consolidated suits

filed in Oregon. Among other things, TriQuint argued that

its bylaws designate the Delaware Court of Chancery as the

exclusive forum in which shareholder derivative suits can

be filed. The trial court denied TriQuint’s motion. The trial

court recognized that Delaware law authorized TriQuint’s

board to unilaterally adopt a binding forum-selection

bylaw. The court noted, however, that Delaware law also

authorized TriQuint’s shareholders to modify or repeal the

company’s bylaws. The trial court reasoned that adopting

the forum-selection bylaw contemporaneously with the

merger effectively deprived TriQuint’s shareholders of their

Cite as 358 Or 413 (2015) 417

statutory right to repeal the forum-selection bylaw. The

court explained that “[f]orcing the plaintiffs to proceed in

Delaware would force them to accept the [forum-selection]

bylaw” in contravention of their rights under Delaware cor-

porate law to modify or repeal the bylaws adopted by the

board. The trial court accordingly declined to enforce the

bylaw. TriQuint petitioned for an alternative writ of manda-

mus, which we issued.

The question whether a trial court should dismiss

an action on the basis of a forum-selection agreement “is a

legal determination” that may be raised by way of an ORCP

21 A(1) motion to dismiss. Black v. Arizala, 337 Or 250, 264,

95 P3d 1109 (2004); see also Reeves v. Chem. Industrial Co.,

262 Or 95, 101, 495 P2d 729 (1972) (holding that an Oregon

court “will dismiss [an] action” when governed by a valid,

enforceable forum-selection clause). A party may bring a

mandamus action to enforce a forum-selection agreement

when a trial court’s decision not to enforce the agreement

falls outside the trial court’s permissible range of discre-

tion. Cf. Kohring v. Ballard, 355 Or 297, 301-02, 325 P3d 717

(2014) (holding that mandamus is appropriate when trial

court had no discretion to deny change-of-venue motion).

Ordinarily, a forum-selection clause will be part of

a larger contractual agreement. See, e.g., Reeves, 262 Or at

96-97 (considering such an agreement). Often, the parties

will not dispute the validity of the larger agreement but

instead will dispute whether it would be unreasonable or

unfair to enforce the forum-selection clause included in the

agreement. See id. at 98 (stating that standard). In that

instance, the law of the forum in which the action was filed

governs the decision whether a forum-selection clause will

be enforced. See id. at 97, 101 (applying Oregon law in decid-

ing whether to enforce a forum-selection clause designat-

ing Ohio as the exclusive forum, even though the contract

also included a choice-of-law provision stating that Ohio law

would govern the action); cf. Kevin M. Clermont, Governing

Law on Forum-Selection Agreements, 66 Hastings LJ 643,

649-50 (2015) (explaining that most jurisdictions use the

law of the forum in determining whether forum-selection

clauses should be enforced).

418 Roberts v. TriQuint Semiconductor, Inc.

This case does not arise in that usual posture.

Rather, TriQuint relies on a forum-selection bylaw adopted

by its board of directors. And plaintiffs argue that the bylaw

is itself invalid, as a matter of Delaware law, either because

the directors breached their fiduciary duty in enforcing the

bylaw or because applying the bylaw in this case would be

unreasonable under a test that the United States Supreme

Court announced in The Bremen v. Zapata Off-Shore Co.,

407 US 1, 92 S Ct 1907, 32 L Ed 2d 513 (1972), and that the

Delaware Chancery Court adopted in Boilermakers Local

154 Retirement Fund v. Chevron Corp., 73 A3d 934 (Del Ch

2013). Alternatively, plaintiffs argue that the trial court cor-

rectly concluded that, as a matter of Oregon law, it would be

unreasonable or unfair to enforce the bylaw.

In considering plaintiffs’ arguments, we first

briefly discuss Delaware law regarding forum-selection

bylaws. We then consider plaintiffs’ argument that the

board breached its fiduciary duty either in adopting or in

relying on the forum-selection bylaw in the circumstances

of this case. Finally, we consider plaintiffs’ argument that

it would be unreasonable or unfair under either the United

States Supreme Court’s decision in Bremen or this court’s

decision in Reeves to enforce the forum-selection bylaw

in the consolidated derivative suits filed in Multnomah

County.

The Delaware courts have held that a corpora-

tion’s board of directors can unilaterally adopt a forum-

selection bylaw, which will bind shareholders contractually.

Specifically, a Delaware corporation may “confer the power

to adopt, amend or repeal bylaws upon the directors.” 8 Del

C § 109(a). Those bylaws are a contract between the corpo-

ration and its shareholders. See Airgas, Inc. v. Air Prod. &

Chem., Inc., 8 A3d 1182, 1188 (Del 2010) (explaining that

“[c]orporate charters and bylaws are contracts among a cor-

poration’s shareholders”). Although a corporation’s bylaws

may address only certain statutorily prescribed subjects, see

8 Del C § 109(b), forum-selection bylaws regarding inter-

nal corporate governance—such as shareholder derivative

suits—come within the subjects that a corporation’s bylaws

may address. Chevron, 73 A3d at 951-55.

Cite as 358 Or 413 (2015) 419

The Delaware Chancery Court accordingly held in

Chevron that a board-adopted forum-selection bylaw was a

facially valid contract that bound the corporations’ share-

holders. Id. Having recognized that the bylaw was facially

valid, the court also recognized that it was possible that

a forum-selection bylaw could be invalid as applied. The

court explained that a shareholder could argue that, “under

Schnell [v. Chris-Craft Indus., Inc., 285 A2d 437 (Del 1971)],

the forum-selection clause should not be enforced because

the bylaw was being used for improper purposes inconsis-

tent with the directors’ fiduciary duties.” Chevron, 73 A3d at

958; see Black v. Hollinger Int’l, Inc., 872 A2d 559, 564 (Del

2005) (explaining that facially valid bylaws were neverthe-

less “invalid in equity and of no force and effect, because

they had been adopted for an inequitable purpose and had

an inequitable effect”). Alternatively, the court explained

that a shareholder could argue that, under Bremen, a forum-

selection bylaw was invalid as applied because it was the

result of “fraud, undue influence, or overweening bargain-

ing power” or because enforcement would be “unreasonable.”

Chevron, 73 A3d at 957 (citation omitted). Having noted the

possibility that a forum-selection bylaw could be invalid as

applied, the court limited its holding to the conclusion that

forum-selection bylaws were facially valid under Delaware

law. Id. at 963.

Given Chevron, plaintiffs do not dispute that

TriQuint’s forum-selection bylaw is facially valid. They

argue, however, that the bylaw is invalid as applied in

this case because it “[i]s being used for improper purposes

inconsistent with the directors’ fiduciary duties.” Chevron,

73 A3d at 958. Alternatively, they argue that the bylaw is

unenforceable or unfair under Bremen or Reeves primarily

because giving effect to the bylaw would deprive TriQuint’s

shareholders of their statutory right to amend the bylaws.

We begin with plaintiffs’ first argument.

Whether TriQuint’s board adopted the forum-

selection bylaw in violation of its fiduciary duties is a ques-

tion of Delaware law. Two Delaware cases bear on that issue:

Schnell and City of Providence v. First Citizens BancShares,

Inc., 99 A3d 229 (Del Ch 2014). Schnell did not involve a

420 Roberts v. TriQuint Semiconductor, Inc.

forum-selection bylaw. Rather, in Schnell, a group of dis-

sident shareholders notified the Securities and Exchange

Commission that they intended to wage a proxy contest

against the defendant corporation’s current management.

Schnell, 285 A2d at 439. In response, the corporation’s board

withheld critical information from the dissident sharehold-

ers; it also amended the corporation’s bylaws to advance the

date of the annual shareholders’ meeting and to designate a

relatively remote location for the shareholders’ meeting. See

Schnell v. Chris-Craft Indus., Inc., 285 A2d 430, 432 (Del Ch)

(setting out board’s actions), rev’d, 285 A2d 437 (Del 1971).

Although the board’s actions in amending the

bylaws were technically permissible under Delaware law,

the Delaware Supreme Court concluded that the board

improperly had used the “corporate machinery and the

Delaware Law for the purpose of perpetuating itself in

office[.]” Schnell, 285 A2d at 439. Specifically, the dissident

shareholders needed time to rally support to have a realistic

chance of prevailing in their proxy contest, and the court

determined that the board had “advance[d] the date [of

the shareholder meeting] in order to obtain an inequitable

advantage in the contest.” Id. That inequitable conduct ren-

dered what otherwise would have been a valid bylaw ineq-

uitable and unenforceable. See id. Citing Schnell, the court

observed in Chevron that, if a board adopts a forum-selection

bylaw in violation of its fiduciary duty to the shareholders,

the bylaw is invalid and may not be enforced. Chevron, 73

A3d at 959.

The Delaware Chancery Court’s opinion in First

Citizens also bears on this issue.4 In First Citizens, the board

of a North Carolina bank incorporated in Delaware unilat-

erally adopted a forum-selection bylaw designating North

Carolina as the exclusive forum for resolving internal cor-

porate disputes, including shareholder derivative suits. The

same day that the board adopted the bylaw, it announced

that it had agreed to a merger with a bank holding company.

99 A3d at 230-31. A shareholder filed a derivative suit in

4

Because the trial court issued its order in this case before First Citizens was

issued, the trial court did not have the benefit of the Delaware Chancery Court’s

analysis in that case.

Cite as 358 Or 413 (2015) 421

the Delaware courts challenging both the forum-selection

bylaw and the merger. The shareholder alleged that the

board had breached its fiduciary duty to the shareholders in

adopting the forum-selection bylaw because the board had

been “ ‘motivated by a desire to protect the interests of the

individual members’ ” and “ ‘to insulate itself from the juris-

diction of Delaware courts.’ ” Id. at 237 (quoting complaint).

The Chancery Court rejected the plaintiff’s breach

of fiduciary duty claim. It reasoned that designating North

Carolina as the exclusive forum for shareholder derivative

suits “d[id] not insulate the Board’s approval of the proposed

merger from judicial review.” Id. The court previously had

rejected the idea that only Delaware had the expertise to

adjudicate matters of Delaware corporate law, and it noted

the absence of any “well-pled facts to call into question the

integrity of the * * * courts of North Carolina or to explain

how the defendants are advancing their ‘self-interests’ by

having claims [challenging the merger] adjudicated in those

courts as opposed to the courts of Delaware.” Id. Applying

Delaware law, the court granted the defendant’s motion to

dismiss, reasoning that the plaintiff had failed to rebut the

board’s exercise of its business judgment in adopting the

forum-selection bylaw or to show that the board’s “selection

of North Carolina as the exclusive forum was irrational.” Id.

Although plaintiffs argue that Schnell governs

their claim in this case, we think that First Citizens is the

more applicable precedent. In Schnell, the board refused to

give the plaintiffs access to shareholder lists, unilaterally

accelerated the date of the annual shareholder meeting,

and moved the meeting to a remote location in upstate New

York. Given those facts, the court found that the board had

acted with the purpose and effect of frustrating the plain-

tiffs’ attempts to wage an effective proxy context. This case,

by contrast, is far closer to First Citizens. It is true that the

TriQuint board adopted the forum-selection bylaw making

Delaware the exclusive forum for resolving disputes con-

temporaneously with its approval of the merger. But that

was true in First Citizens as well.5 To paraphrase the court’s

5

Unlike First Citizens, plaintiffs have not alleged in this case that the board

breached its fiduciary duty in adopting the forum-selection bylaw.

422 Roberts v. TriQuint Semiconductor, Inc.

reasoning in First Citizens, TriQuint’s forum-selection

bylaw does not prevent its shareholders from challenging

the merger. It only provides where they may do so. Not only

does the forum-selection bylaw keep TriQuint’s assets from

being diluted by a multiplicity of suits in various states, but

Delaware, the state in which TriQuint is incorporated, is the

“most obviously reasonable forum [for internal affairs cases

because those cases] * * * will be decided in the courts whose

Supreme Court has the authoritative final say as to what

the governing law means[.]” Chevron, 73 A3d at 953. Guided

by First Citizens and Chevron, we conclude that TriQuint’s

forum-selection bylaw is not invalid or unenforceable under

Delaware law as a breach of the board’s fiduciary duty.

The remaining question is whether the trial court

erred in not giving effect to TriQuint’s forum-selection

bylaw. As noted, the trial court reasoned that applying

the bylaw in these circumstances would effectively deprive

TriQuint’s shareholders of their statutory right to modify or

repeal the bylaw. The Delaware Chancery Court addressed

a similar issue in First Citizens. As noted, in that case,

First Citizens’ board adopted a forum-selection bylaw the

same day that it announced a merger with another com-

pany. The plaintiff in First Citizens argued that it would

be unjust to apply the forum-selection bylaw to it because

it “effectively lack[ed] the ability to repeal” the bylaw since

it did not control a majority of the corporation’s shares. 99

A3d at 241.

In considering that argument, the Delaware

Chancery Court noted that Chevron had explained “that

a board-adopted forum selection bylaw, much like any

board-adopted bylaw, is ‘subject . . . to the most direct form

of attack by stockholders who do not favor them: stockhold-

ers can simply repeal them by a majority vote.’ ” Id. (quoting

Chevron, 73 A3d at 954). The Chancery Court explained in

First Citizens, however, that it “d[id] not interpret either the

[Delaware General Corporate Law] or Chevron to mandate

that a board-adopted forum selection bylaw can be applied

only if it is realistically possible that stockholders may repeal

it.” Id. To hold otherwise, the court explained, “would * * *

be tantamount to rendering questionable all board-adopted

bylaws of controlled corporations.” Id. at 241-42 (internal

Cite as 358 Or 413 (2015) 423

quotation marks omitted). Rather, the court explained, a

shareholder’s remedy against enforcing a board-adopted

forum-selection bylaw lies primarily in arguing that a

forum-selection bylaw runs afoul of Schnell. Id. at 242.

First Citizens did not consider the specific issue pre-

sented here. The shareholders in that case did not argue that

the forum-selection bylaw should not be given effect because

the shareholders did not have time to modify or repeal the

bylaw. The court’s reasoning, however, provides persuasive

guidance on that issue. As a matter of Delaware law, the

court in First Citizens gave effect to a board-adopted bylaw

even though it was not “realistically possible that stockhold-

ers may repeal it.” Id. at 241. Put differently, the fact that

shareholders lacked either the votes or, by inference, the

time to override a board-adopted bylaw did not mean that

the bylaw should not be given effect. Rather, as a matter of

Delaware law, a board-adopted bylaw will be given effect until

the shareholders modify or repeal it, unless the board lacked

authority to adopt it or the board breached its fiduciary duty

in adopting it. To hold otherwise would effectively read out of

Delaware law a corporate board’s authority to adopt bylaws

unilaterally because there always will be a gap between the

time that a board adopts a bylaw and the time that share-

holders have an opportunity to modify or repeal it.6

With First Citizens’ reasoning in mind, we turn

to plaintiffs’ arguments that it would be unreasonable or

unfair, under Bremen and Reeves, to give effect to the forum-

selection bylaw that TriQuint’s board adopted. We start with

Bremen.

As noted above, Chevron held that courts should

look to the criteria laid out in Bremen, 407 US at 10-15, to

determine whether a forum-selection bylaw is invalid as

applied under Delaware law. See Chevron, 73 A3d at 957.

The question in Bremen was whether a federal district court

in Florida should give effect to a forum-selection clause that

6

A contrary conclusion would effectively revive the vested rights doctrine,

which Delaware has abandoned. See Kidsco, Inc. v. Dinsmore, 674 A2d 483, 492

(Del Ch 1995) (explaining that “where a corporation’s by-laws put all on notice

that the by-laws may be amended at any time, no vested rights can arise that

would contractually prohibit an amendment”) (citation omitted).

424 Roberts v. TriQuint Semiconductor, Inc.

designated London as the exclusive forum for resolving

certain maritime disputes.7 In Bremen, the United States

Supreme Court started from the proposition that forum-

selection agreements are presumptively valid and “should

control absent a strong showing that [the forum-selection

agreement] should be set aside.” 407 US at 15. The Court

observed that a party challenging a forum-selection agree-

ment could show that enforcing the agreement would be

“unreasonable,” that the agreement was the product of

“fraud, undue influence, or overweening bargaining power,”

or that “enforcement would contravene a strong public policy

of the forum in which suit is brought[.]” Id. at 10, 12, 15.

Before considering how those criteria apply here,

we note an analytical issue that Chevron’s reasoning raises.8

To the extent that Chevron reasoned that Delaware courts

should use the Bremen criteria to determine when those

courts should not give effect to a forum-selection bylaw that

designates a different jurisdiction as the exclusive forum,

the court’s reasoning is unexceptionable. To the extent that

Chevron reasoned that other states should use the Bremen

criteria to make that determination, we question whether

one state can specify the criteria that another state must

use to make that determination. The question of which

state’s law applies to a forum-selection clause is one for the

forum state. See Reeves, 262 Or at 101; Clermont, Governing

Law on Forum-Selection Agreements, 66 Hastings LJ at

652-64 (discussing how forum states should resolve that

issue when contracts include choice-of-law provisions). To

the extent that Chevron held that, under Delaware law, a

forum-selection bylaw is invalid as-applied unless it complies

7

The claim in Bremen arose under the federal courts’ admiralty jurisdiction

and involved a dispute over damage that occurred to vessels involved in inter-

national trade. 407 US at 3-4. Although the Court noted that it was deciding

“the correct doctrine to be followed by federal district courts sitting in admi-

ralty” and emphasized the implications for “international trade” raised by the

parties’ “international commercial agreement,” id. at 10, 13, 16, Bremen’s ratio-

nale has not been confined to admiralty or international contract disputes. See

TradeComet.com LLC v. Google, Inc., 647 F3d 472, 476 (2d Cir 2011) (“Bremen

* * * did not create a narrow rule holding forum selection clauses to be prima facie

valid solely in admiralty cases, or those involving international agreements, but

rather approved of a pre-existing favorable view of such clauses.”).

8

We say “reasoning” because Chevron’s discussion of when a forum-selection

clause will be invalid as applied was technically not part of its holding.

Cite as 358 Or 413 (2015) 425

with the Bremen criteria, that statement of Delaware law is

one we must respect. And that appears to be what Chevron

says.9 Although we might question, for the reasons noted

below, whether that is what Chevron meant, we turn to an

application of the Bremen criteria.

The first criterion is whether it would be “unrea-

sonable” for Oregon to apply TriQuint’s forum-selection

bylaw designating Delaware as the exclusive forum in

which shareholder derivatives suits may be brought. See

Bremen, 407 US at 510. The primary reason that plaintiffs

have identified that it would be unreasonable to give effect

to TriQuint’s bylaw is that doing so would effectively deny

the shareholders’ statutory right to modify or amend the

bylaws. As explained above, however, the Delaware courts

have concluded, in an analogous context, that a sharehold-

er’s inability to exercise that statutory right does not provide

a basis for refusing to give effect to a forum-selection bylaw.

First Citizens, 99 A3d at 241-42. Plaintiffs have identified no

persuasive basis for this court to second-guess the Delaware

court’s assessment of that Delaware statutory right, nor is it

our role to instruct the Delaware courts on the meaning of

Delaware law.

The second Bremen criterion is whether the forum-

selection bylaw was the result of “fraud, undue influence,

or overweening bargaining power.” Bremen, 407 US at

12. That criterion has little or no application to a bylaw

that Delaware law permits a board to adopt unilaterally.

Put differently, if a forum-selection bylaw that a corpo-

rate board unilaterally adopts is facially valid, as Chevron

held, then it is difficult to see why the second criterion that

Bremen identified provides a reason for not giving effect to

that bylaw.

The third Bremen criterion is whether “enforce-

ment would contravene a strong public policy of the forum in

9

Chevron expressly states that a plaintiff who files in a different jurisdic-

tion from the one designated in a forum-selection bylaw can rely on the Bremen

criteria to argue that the bylaw should not be enforced. See 73 A3d at 958-59.

Because Delaware cannot require another jurisdiction to use the Bremen criteria

to determine whether a forum-selection bylaw is enforceable, Chevron presum-

ably viewed the Bremen criteria as bearing on whether the bylaw is invalid as

applied as a matter of Delaware law.

426 Roberts v. TriQuint Semiconductor, Inc.

which suit is brought[.]” Id. at 15. If, as Chevron appears to

hold, the Bremen criteria are relevant to determining, as a

matter of Delaware law, whether a forum-selection bylaw is

invalid as applied, the third Bremen criterion poses logical

difficulties. In this case, that criterion, read literally, would

direct an Oregon court to analyze Oregon public policy to

decide whether a forum-selection bylaw is invalid as a mat-

ter of Delaware law. That analytical difficulty causes us to

think that Chevron intended only for Delaware courts to use

the Bremen criteria to determine whether to give effect to a

forum-selection bylaw that designates another jurisdiction

as the exclusive forum.10

In any event, Oregon has no interest in giving

greater effect to a Delaware corporation shareholder’s right

to modify or repeal board-adopted bylaws than Delaware

would. And First Citizens teaches that a practical inability

to exercise that Delaware statutory right does not provide a

basis for refusing to give effect to a forum-selection bylaw.

Plaintiffs have identified no policy reason that would war-

rant holding TriQuint’s forum-selection bylaw invalid, as

applied, under Delaware law.

Having concluded that TriQuint’s forum-selection

bylaw is valid under Delaware law, we turn to whether it is

enforceable under Oregon law. Before 1972, this court took

a dim view of forum-selection clauses. See State ex rel Kahn

v. Tazwell, 125 Or 528, 266 P 238 (1928). This court viewed

forum-selection agreements as attempts to “oust” Oregon

courts of jurisdiction and held them void. See id. at 543 (rea-

soning that jurisdiction “cannot be diminished or increased

by the convention of the parties”). In Reeves, however, this

court recognized that “[t]he present trend of the law * * * is

to the contrary” and held that forum-selection clauses are

10

TriQuint faults the trial court for considering the Bremen criteria because

this court has not adopted them under Oregon law. We agree that this court

has not adopted the Bremen criteria, although they do not appear that differ-

ent from the criteria that Reeves identified. We also doubt that Delaware can

require Oregon courts to use those criteria—as opposed to Oregon law—in decid-

ing whether to give effect to a forum-selection clause. However, to the extent that

Chevron concluded that a forum-selection bylaw will be invalid as applied, as a

matter of Delaware law, then the trial court properly considered those criteria.

As discussed above, however, the Bremen criteria are ill-suited for that use.

Cite as 358 Or 413 (2015) 427

presumptively valid unless “unfair or * * * unreasonable.”11

262 Or at 100-01. Addressing the jurisdictional concerns

of Tazwell, this court explained in Reeves that “we are not

holding that [the forum-selection] clause ‘ousted’ the Oregon

court from jurisdiction.” Id. at 101. Rather, even when an

Oregon court has jurisdiction over the parties and the sub-

ject matter, that court “will dismiss [an] action” subject to

a forum-selection clause, as long as the clause is “valid and

should be enforced.”12 Id.

In Reeves, this court identified circumstances in

which enforcing a forum-selection clause will be unfair

or unreasonable that parallel the criteria that the Court

identified in Bremen. The court explained in Reeves that

“[c]lauses in * * * contracts of adhesion” that are “the product

of unequal bargaining power between the parties” fall within

the category of “unfair or unreasonable” forum-selection

agreements. 262 Or at 101 (internal quotation marks and

citation omitted). This court also noted a comment in the

Restatement in which the reporter explained that a forum-

selection agreement should “ ‘be disregarded if it is the result

of overreaching or of the unfair use of unequal bargaining

power or if the forum chosen by the parties would be a seri-

ously inconvenient one for the trial of the particular action.’ ”

Id. at 98 (quoting 1 Restatement (Second) of Conflict of Laws

§ 80 cmt a (1969)).

For the most part, plaintiffs’ arguments under

Reeves parallel their arguments under Bremen, which we

already have considered. Plaintiffs and amici advance an

additional argument under Reeves, however, that warrants

discussion. They note that Oregon does not enforce contracts

11

Reeves preceded Bremen by a matter of months and fit within a larger

trend of cases recognizing forum-selection clauses as presumptively valid. See,

e.g., Manrique v. Fabbri, 493 So2d 437, 440 (Fla 1986) (adopting that analy-

sis); U.S. Trust Co. v. Bohart, 197 Conn 34, 43, 495 A2d 1034 (1985) (same);

Volkswagenwerk, A.G. v. Klippan, GmbH, 611 P2d 498, 504-05 (Alaska 1980)

(same); Davenport Mach. & Foundry Co. v. Adolph Coors Co., 314 NW2d 432, 437

(Iowa 1982) (same); Green v. Clinic Masters, Inc., 272 NW2d 813, 815 (SD 1978)

(same).

12

Reeves explained that a forum-selection clause does not deprive a court

of subject matter jurisdiction, while this court later explained that a party can

move to dismiss for lack of subject matter jurisdiction based on a forum-selection

clause. See Black, 337 Or at 263-64.

428 Roberts v. TriQuint Semiconductor, Inc.

that are unconscionable or otherwise violate public policy.

Bagley v. Mt. Bachelor, Inc., 356 Or 543, 553, 340 P3d 27

(2014). Although Delaware permits corporate boards to uni-

laterally adopt bylaws that constitute contracts between

the corporation and the shareholders, plaintiffs argue that

Oregon requires mutual assent between contracting parties.

In their view, giving effect to Delaware law violates Oregon

public policy.

We reach a different conclusion. As noted above,

Delaware law permits a corporation to “confer the power to

adopt, amend or repeal bylaws upon the directors.” 8 Del C

§ 109(a). When that power has been conferred and a cor-

poration’s board of directors unilaterally adopts, amends,

or repeals the bylaws, “[s]uch a change by the board is not

extra-contractual[,] * * * rather it is the kind of change that

[Delaware’s] overarching statutory and contractual regime”

contemplates and allows. Chevron, 73 A3d at 956. When

purchasing stock in a Delaware corporation, shareholders

buy into a legal framework that allows corporate directors

to unilaterally amend the corporation’s bylaws and gives the

shareholders the right to repeal those bylaws. Comity and

respect for Delaware’s corporate law lead us to conclude that,

in the absence of compelling public policies to the contrary,

we should not interfere with that framework or attempt to

regulate the relationship between TriQuint’s directors and

its shareholders. See ORS 60.714(3) (providing that Oregon

should not attempt to regulate the internal affairs of for-

eign corporations);13 Tripp v. Pay ’N Pak Stores, Inc., 268

Or 1, 518 P2d 1298 (1974) (explaining that an Oregon stat-

ute regulating the issuance of stock options did not apply to

Washington corporation). We discern no public policy suffi-

cient to overcome that consideration or that would warrant

our subjecting the internal relationship between TriQuint

and its shareholders to the possibility of inconsistent regu-

lation in different forums. Cf. CTS Corp. v. Dynamics Corp.

of America, 481 US 69, 88, 107 S Ct 1637, 95 L Ed 2d 67

(1987) (recognizing constitutional limitations on state laws

13

ORS 60.714(3) provides:

“[ORS chapter 60] does not authorize this state to regulate the orga-

nization or internal affairs of a foreign corporation authorized to transact

business in this state.”

Cite as 358 Or 413 (2015) 429

that adversely affect interstate commerce by subjecting cor-

porate activities to inconsistent regulations); Edgar v. MITE

Corp., 457 US 624, 645-46, 102 S Ct 2629, 73 L Ed 2d 269

(1982) (same).

We also note that proceeding in the Delaware

courts will not be “seriously inconvenient” for the parties.

See Reeves, 262 Or at 98. Plaintiffs have not argued that

they lack the financial resources to litigate their derivative

claims in the Delaware Court of Chancery, nor have they

identified any basis for saying that it would be seriously

inconvenient for them to do so. Moreover, the Delaware

courts are well-equipped to resolve intra-corporate disputes

involving Delaware corporations. Finally, no evidence in

the record demonstrates that requiring plaintiffs to pur-

sue their claims in Delaware will infringe their substantive

rights, only that they will lose the ability to select the forum

in which to exercise those rights.

TriQuint, on the other hand, has the authority to

“protect against” the “potential for duplicative law suits

in multiple jurisdictions over single events” by channeling

those suits to a single forum. Chevron, 73 A3d at 953. To

that end, TriQuint has chosen to direct such suits to its state

of incorporation, the “most obviously reasonable forum” in

which to litigate intra-corporate disputes. Id. Plaintiffs have

not been deprived of their right to challenge the merger, only

the ability to challenge the merger in a forum other than

Delaware.14

In light of the foregoing, enforcing the forum-selection

bylaw in this instance is not “unfair or unreasonable” under

14

At oral argument, plaintiffs argued, for the first time, that litigating their

derivative claims in the Delaware Chancery Court could deprive them of the

right to a jury trial. No party raised that issue in the trial court or briefed it

here. Given that posture, we decline to explore the differences, if any, in a par-

ty’s right to a jury trial in shareholder derivative suits brought in Oregon and

Delaware and whether any difference would affect our conclusion. Cf. Ross v.

Bernhard, 396 US 531, 538, 90 S Ct 733, 24 L Ed 2d 729 (1970) (noting the “dual

aspects” of the right to a jury trial in shareholder derivative suits brought in the

federal courts: “first, the stockholder’s right to sue on behalf of the corporation,

historically [is] an equitable matter; second, the claim of the corporation against

directors or third parties on which, if the corporation had sued and the claim

presented legal issues, the company could demand a jury trial [under the Seventh

Amendment].”).

430 Roberts v. TriQuint Semiconductor, Inc.

Oregon law. Reeves, 262 Or at 101. The trial court, while cor-

rectly determining that the forum-selection bylaw is facially

valid as a matter of Delaware law, erroneously concluded

that enforcing the bylaw would run afoul of Oregon public

policy. We accordingly hold that a peremptory writ of man-

damus directing the trial court to grant TriQuint’s motion

to dismiss should be issued.

Peremptory writ to issue.