Many public companies in California and across the country are trying to move shareholder lawsuits into one jurisdiction: Delaware. Companies are trying to rein in litigation and have all investor lawsuits tried in corporate-friendly Delaware instead of in courts around the country.

Perhaps surprisingly, there is some support for the migration from plaintiffs’ lawyers. However, not all shareholders are excited by the idea. In one of the first shareholder votes on an “exclusive forum” proposal that would mandate the jurisdiction of shareholder lawsuits, Allstate Corporation shareholders rejected the plan.

An example of the multiple-venue litigation that can result from shareholder challenges was the agreement for Arch Coal to buy International Coal for $3.4 billion. International Coal shareholders that thought the price was too low filed suits in West Virginia, where the company operates, and in Delaware, where it is incorporated.

The multiple-venue litigation frequently has to do with the perceived anti-shareholder bias of Delaware courts. Sometimes plaintiffs are in a hurry to file so that they can lead the litigation before other plaintiffs file cases.

A problem, from the plaintiffs’ perspective, is that companies defending shareholder actions can pit plaintiffs in multiple cases against each other. Sometimes plaintiffs end up opposing each other’s settlements.

Implementing exclusive venue provisions has been problematic in some cases. San Diego shareholders’ rights attorneys noted that earlier this year a federal judge in California refused to move a lawsuit involving Oracle Corp to Delaware. The company’s directors, who were the defendants in the shareholder suit, changed the bylaws to name Delaware as the exclusive venue for challenges, but the directors did so without a shareholder vote.

Source: Thomson Reuters News & Insight “Companies try to herd shareholder suits to Delaware” 5/20/2011