‘McWane' Superseded By Forum-Selection Clause

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By Michael Greene

April 20 — Delaware's first-filed rule does not apply if the parties agree that the state's courts have jurisdiction over the dispute pursuant to a non-exclusive forum selection clause, according to an April 15 Delaware Chancery Court ruling.

Vice Chancellor Donald F. Parsons Jr. concluded that Utilipath LLC's lawsuit regarding a dispute over the correct purchase price under a redemption agreement should not be dismissed or stayed in favor of a prior-pending action in the Eastern District of Pennsylvania.

In his decision, Parsons refused to dismiss the plaintiff's lawsuit under the McWane doctrine—which allows the court to dismiss or stay lawsuits in favor of a pending action elsewhere—even though the parties agreed that jurisdiction and venue is proper in other courts.

Instead, he found that he was precluded from dismissing the lawsuit on McWane grounds because the parties clearly and unambiguously agreed that jurisdiction and venue would properly lie in the chancery court pursuant to a non-exclusive forum selection clause in the redemption agreement.

Application of ‘McWane'

The ruling marks the second time in a week that the Delaware courts have been asked to apply the McWane doctrine.

In a novel ruling April 14, the Delaware Supreme Court dismissed a lawsuit on the grounds that an arbitration proceeding had been filed first. The decision appears to be the first time the state's high court has determined an arbitration proceeding can constitute a “prior action” under the McWane doctrine.

To contact the reporter on this story: Michael Greene in Washington at mgreene@bna.com

To contact the editor responsible for this story: Kristyn Hyland at khyland@bna.com

The opinion is available at http://www.bloomberglaw.com/public/document/Utilipath_v_Baxter_McLindon_ Hayes_No_9922VCP_2015_BL_ 106326_Del_C.