Roberts v. Triquint Semiconductor, Inc.

• Decision Date: 10 December 2015
• Docket Number: 1403–02757,SC S062642.,CC 1402–02441
• Citation: 364 P.3d 328,358 Or. 413
• Parties: 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.
• Court: Oregon Supreme Court

358 Or. 413

364 P.3d 328

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,andRF 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,andRF Micro Devices, Inc.; Rocky Merger Sub, Inc. ; Trident Merger Sub, Inc. ; and Rocky Holding, Inc., Defendants.

CC 1402–02441

1403–02757

SC S062642.

Supreme Court of Oregon, En Banc.

Argued and Submitted June 16, 2015.

Decided Dec. 10, 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.

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 conclude 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 established 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 incorporation, 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 allowing board to unilaterally alter bylaws as long as certificate 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 directors 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 corporation 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 corporation 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 connection 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 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 corporate 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 mandamus, 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 P.3d 1109 (2004) ; see also Reeves v. Chem. Industrial Co., 262 Or. 95, 101, 495 P.2d 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 discretion. Cf. Kohring v. Ballard, 355 Or. 297, 301–02, 325 P.3d 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, 495 P.2d 729 (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, 495 P.2d 729 (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, 495 P.2d 729 (applying Oregon law in deciding whether to enforce a forum-selection clause designating 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).

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 U.S. 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 A.3d 934 (Del.Ch.2013). Alternatively, plaintiffs argue that the trial court correctly 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 corporation'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 corporation and its shareholders. See Airgas, Inc. v. Air Prod. & Chem., Inc., 8 A.3d 1182, 1188 (Del.2010) (explaining that "[c]orporate charters and bylaws are contracts among a corporation's shareholders"). Although a corporation's bylaws may address only certain statutorily prescribed subjects, see 8 Del. C. § 109(b), forum-selection bylaws regarding internal corporate governance—such as...