On July 21, 2025, the California Supreme Court issued an opinion in EpicentRx, Inc. v. Superior Court of San Diego County, overturning the lower courts’ decision to decline enforcement of a forum selection clause requiring that most stockholder lawsuits against the corporation and related individuals be brought in the Delaware Court of Chancery.

The lower courts determined that the forum selection clause was unenforceable because the Delaware Court of Chancery does not recognize a right to jury trial (unlike California courts), and, therefore, honoring the forum selection clause would effectively deprive plaintiff of its right to a jury trial, contrary to California public policy. The California Supreme Court disagreed for the reasons described below.

Background

According to the opinion, EpicentRx, Inc., a Delaware corporation with its principal place of business in California; its controlling stockholder, a California partnership with its principal place of business in California; and various associated individuals, the majority of whom were California residents, were sued for breach of contract, fraudulent concealment, promissory fraud, breach of fiduciary duty, and unfair business practices by the corporation’s minority stockholder. 

The defendants moved to dismiss the lawsuit on the ground of forum non conveniens, pointing to forum selection clauses in the corporation’s certificate of incorporation and bylaws, which designated the Delaware Court of Chancery as the sole and exclusive forum for bringing most stockholder lawsuits against the corporation and related individuals.

The plaintiffs argued that the forum selection clauses did not apply to its claims and offered to dismiss its breach of fiduciary duty claim to the extent it was covered by the forum selection clauses. Plaintiff also argued that the forum selection clauses were unfair and unreasonable because they were not adopted until after the alleged misconduct came to light, plaintiff did not agree to the clauses, and some defendants were not subject to suit in Delaware.

The trial court denied defendants’ motion to dismiss, but on different grounds. Noting that jury trials are unavailable in the Delaware Court of Chancery, the court found that the forum selection clause was a “de facto predispute waiver of the right to a trial by jury” and because California law does not permit predispute jury trial waivers, California public policy would prohibit enforcement of the forum selection clause. The Court of Appeal agreed with the trial court and denied a petition for writ of mandate challenging the trial court’s order.

In overturning the lower courts’ decisions, the California Supreme Court acknowledged that forum selection clauses serve vital commercial purposes and should generally be enforced, unless the forum selection clause would violate public policy. The court recognized California’s strong public policy, based on the California Constitution, in favor of the right to trial by jury, but concluded that while California’s strong public policy protects the jury trial right in California courts, it does not speak to the availability of the jury trial right in other forums. The court noted that “[a] forum selection clause is not unenforceable simply because it requires the parties to litigate in a jurisdiction that does not afford civil litigants the same right by jury as litigants in California courts enjoy” and “the impact on a party’s jury trial right does not, itself, provide grounds to decline to enforce a forum selection clause.”

The court also noted that while California has a strong public policy in favor of the right to a jury trial and against predispute waivers of that right, it 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, and that the Court of Appeal erred by treating them as equivalents.

Takeaways

The California Supreme Court’s ruling will come as a relief to corporations that have adopted forum selection clauses, confirming that California courts will honor their choice of venue for litigation, even if that venue does not afford litigants the same right to trial by jury as litigants in California courts would otherwise enjoy.