July 21, 2025|Publications
July 21, 2025 | Supreme Court of California | Published Opinion
Executive Summary
In a published decision, Chief Justice Guerrero of the California Supreme Court reversed the Court of Appeal and held that a Delaware forum selection clause in a corporation’s certificate of incorporation and bylaws was enforceable, even though litigating in Delaware’s Court of Chancery would deprive the plaintiff of a civil jury. The plaintiff, a minority stockholder, argued that California’s strong policy favoring jury trials barred enforcement. The defendants countered that forum selection clauses are routine in corporate law and that the California jury trial right does not extend beyond California courts. The Court agreed with defendants, disapproving Handoush v. Lease Finance Group, LLC, 41 Cal. App. 5th 729 (2019), and The Comedy Store v. Moss Adams LLP, 106 Cal. App. 5th 784 (2024), to the extent inconsistent. The Court remanded for further proceedings, but its ruling confirms that freedom of contract and predictability in forum selection outweigh generalized jury trial concerns.
Relevant Background
Plaintiff EpiRx, L.P., a minority investor, filed suit in San Diego County Superior Court against EpicentRx, Inc., its controlling stockholder InterWest Partners, and several individuals. Plaintiff alleged breach of contract, fraudulent concealment, promissory fraud, breach of fiduciary duty, and unfair business practices, claiming a $5 million investment was solicited under false pretenses and later diluted by misconduct.
EpicentRx, incorporated in Delaware but operating in California, had amended its certificate of incorporation and bylaws to include mandatory forum selection clauses designating the Delaware Court of Chancery as the exclusive venue for stockholder disputes. Defendants moved to dismiss on forum non conveniens grounds, arguing the claims fell squarely within the clauses. Plaintiff opposed, contending that the provisions were adopted after the alleged misconduct, were not consented to, and, most importantly, would deprive plaintiff of a jury right guaranteed in California.
The Superior Court (Hon. Timothy B. Taylor) denied the motion, holding that sending the case to Delaware would be a “de facto predispute waiver” of a jury trial, contrary to Grafton Partners v. Superior Court, 36 Cal. 4th 944 (2005). The Court of Appeal agreed, following Handoush, and the defendants sought review in the California Supreme Court.
Decision
The California Supreme Court reversed. The Court began by reaffirming the long-standing principle that “[f]orum selection clauses serve vital commercial purposes and should generally be enforced.” Smith, Valentino & Smith, Inc. v. Superior Court, 17 Cal. 3d 491, 495 (1976). It rejected the analogy drawn by the lower courts between a predispute jury trial waiver and a forum selection clause, explaining that “a forum selection clause is not equivalent to a predispute jury trial waiver. The former reflects where a dispute will be litigated, while the latter reflects how it will be litigated.” EpicentRx, Inc. v. Superior Court, No. S282521, 2025 WL 2027272, at *9 (Cal. July 21, 2025).
The Court emphasized that California’s jury trial right is “a policy that protects litigants in California courts, not litigants everywhere.” Id. at *8. Quoting Rincon EV Realty LLC v. CP III Rincon Towers, Inc., the Court explained: “When litigation proceeds in a forum other than California courts, the jury trial right the parties enjoy in our courts would not travel with them.” 8 Cal. App. 5th 1, 18 (2017). Accordingly, the mere absence of a jury trial in Delaware’s Court of Chancery was not enough to invalidate the clause.
The Court also made clear that freedom of contract weighed heavily in the analysis: “Freedom of contract is an important principle, and courts should not blithely apply public policy reasons to void contract provisions.” EpicentRx, 2025 WL 2027272, at *6 (quoting Kaufman v. Goldman, 195 Cal. App. 4th 734, 745 (2011)). Predictability in forum selection, the Court reasoned, is central to commerce, echoing the United States Supreme Court’s view that “[t]he enforcement of valid forum-selection clauses, bargained for by the parties, protects their legitimate expectations and furthers vital interests of the justice system.” Atlantic Marine Constr. Co. v. United States Dist. Court, 571 U.S. 49, 63 (2013).
Finally, the Court expressly disapproved Handoush and The Comedy Store “to the extent [they] are inconsistent with this opinion.” EpicentRx, 2025 WL 2027272, at *13. Both had held that the loss of a jury trial right justified invalidating a forum clause. By rejecting that reasoning, the Court limited the public policy exception to cases in which enforcement would contravene a statute or constitutional provision, such as California Business and Professions Code section 20040.5 (barring out-of-state venues for franchise disputes) or Labor Code section 925 (limiting employment venue clauses).
The case was remanded for consideration of other arguments, including whether the adoption of the forum clause in the certificate of incorporation and bylaws was procedurally proper. But the Court’s holding was unambiguous: the absence of a jury trial in Delaware is not, by itself, grounds to invalidate a contractual forum clause.
Looking Forward
This ruling has particular significance for franchisors and employers. Delaware is the state of incorporation for thousands of businesses, including many franchise systems and private equity-backed enterprises. Its Court of Chancery is widely relied upon for governance disputes, and mandatory Delaware forum provisions have become boilerplate in corporate charters and bylaws.
At the same time, many franchisors include contractual jury waivers in franchise agreements, development agreements, and employment contracts. This case makes clear that California courts will not treat Delaware forum provisions as disguised jury waivers. The Court recognized that while California zealously guards the jury trial right in its own courts, “California does not have a strong public policy against forum selection clauses or agreements to litigate in a jurisdiction that does not recognize the same civil jury trial right.” EpicentRx, 2025 WL 2027272, at *13.
For franchisors and employers, the decision provides assurance that their Delaware forum clauses will generally be enforced, even if enforcement means claims will be tried without a jury. The ruling also underscores the importance of carefully drafting forum selection provisions and pairing them with statutory compliance: while jury trial arguments will not suffice to defeat a clause, statutory carveouts—such as those found in California’s franchise and employment codes—remain fully operative.
By reaffirming freedom of contract and predictability in cross-border disputes, the Court has strengthened the position of franchisors and employers who rely on Delaware incorporation and forum selection to manage system-wide litigation risk.
This article is based solely on the opinion of the Court in this matter. The author has not conducted any independent investigation into the facts. For the avoidance of doubt, each statement related to the law and facts in this article is drawn from the Court’s opinion in this case.
Thomas O’Connell is a Shareholder at Buchalter APC and Chair of the firm’s Franchise Practice Group. For questions about this article or media inquiries, you can contact Tom at toconnell@buchalter.com.
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