## Facts

- A Chemed Corporation shareholder filed a shareholder derivative action alleging Chemed’s directors and officers caused a subsidiary to submit improper Medicare/Medicaid claims, made misleading public statements, and engaged in insider trading, mismanagement, and unjust enrichment.
- Chemed is incorporated in Delaware and headquartered in Ohio.
- Chemed’s charter authorized the board to amend bylaws without shareholder approval.
- After the derivative action was filed in federal court in Ohio, the board adopted a bylaw requiring shareholder derivative and similar internal corporate claims to be brought in Delaware (Delaware Court of Chancery or another specified Delaware forum).
- Defendants moved to transfer the Ohio federal case to the District of Delaware under 28 U.S.C. § 1404(a), relying on the new forum-selection bylaw.
- The shareholder opposed transfer, arguing she did not consent to the bylaw, the bylaw was adopted for an improper purpose to deter litigation, and Delaware would be inconvenient.

## Issues

1. Whether a board-adopted exclusive forum-selection bylaw, adopted after suit was filed, was valid and enforceable against a shareholder bringing a derivative action involving a Delaware corporation.
2. Whether the case should be transferred to the District of Delaware under 28 U.S.C. § 1404(a) in light of the forum-selection bylaw and the transfer framework for forum-selection clauses.

## Decision

- The court granted the motion to transfer venue to the District of Delaware under 28 U.S.C. § 1404(a).
- The court treated the forum-selection bylaw as facially valid under Delaware law and applicable to the derivative claims.
- The court held the shareholder had not shown enforcement would be unjust or unreasonable, or the product of fraud or overreaching.
- Applying the controlling approach for valid forum-selection clauses, the court gave no weight to the plaintiff’s forum choice and found no exceptional public-interest factors defeating transfer.

## Legal Principles

- Under Delaware corporate law, when a corporation’s charter and statute authorize board-adopted bylaws, shareholders are generally bound by bylaws duly adopted within that authority, including bylaws selecting an exclusive forum for internal corporate claims.
- A valid, applicable forum-selection clause is ordinarily enforced through a § 1404(a) transfer, and the party resisting enforcement bears the burden to show exceptional circumstances.
- When a valid forum-selection clause governs, private-interest considerations are treated as favoring the selected forum; analysis focuses primarily on public-interest factors, which rarely defeat enforcement.
- The internal-affairs character of derivative and fiduciary-duty claims supports litigating in the incorporating state’s forum, particularly where that state’s corporate law will govern.

## Conclusion

The court enforced a board-adopted exclusive-Delaware forum bylaw against a shareholder pursuing derivative claims and transferred the action to the District of Delaware, finding no exceptional reason to deny transfer under § 1404(a).


North ex rel. Chemed Corp. v. McNamara, 2014 WL 4684377 (S.D. Ohio 2014)