California Appellate Court Affirms Enforceability of Federal Forum Provisions in Securities Act Litigation

This past spring, the California Court of Appeal affirmed the enforceability of federal forum provisions (“FFPs”) in corporate charters. Bullock v. Rivian Auto., Inc., No. G063033, 2025 WL 1177303 (Cal. Ct. App. Apr. 23, 2025). FFPs, which require stockholders to bring claims for violations of the Securities Act of 1933 (the “‘33 Act”) in federal court instead of state court, were deemed facially valid in Delaware in Salzberg v. Sciabacucchi, 227 A.3d 102 (Del. 2020). Underscoring the importance of the forum for suits based on securities offerings, the plaintiffs in Bullock sought review of the California court’s decision. On August 13, 2025, the Supreme Court of California declined the plaintiffs’ petition for review. Petition for review & publication request(s) denied, Bullock v. Rivian Auto., Inc., No. S290922 (Cal. Aug. 13, 2025). The plaintiffs have now indicated an intent to seek certiorari from the United States Supreme Court. See Application to Extend the Time to File a Petition for a Writ of Certiorari, Bullock v. Rivian Auto., Inc., No. 25A506 (U.S. filed Oct. 31, 2025), application granted (Nov. 4, 2025).

The case arose from a putative class action filed in California state court alleging that Rivian Automotive, Inc. (“Rivian”) and its underwriters made materially false and misleading statements in Rivian’s registration statement for its November 2021 initial public offering, in violation of Sections 11 and 15 of the ‘33 Act. Plaintiffs also sought a declaratory judgment that Rivian’s FFP, which mandates that all ‘33 Act claims be brought exclusively in federal court unless Rivian consents to an alternative forum, was invalid and unenforceable. Different plaintiffs had previously filed a similar ‘33 Act suit against Rivian and its underwriters in federal court.

Rivian moved to dismiss the state court action on the grounds of inconvenient forum. The underwriters joined in the motion. The trial court granted both motions and dismissed the case. On appeal, plaintiffs argued that: (1) the FFP violated the ‘33 Act’s anti-removal and anti-waiver provisions; (2) Delaware’s statutory scheme permitting FFPs contravened the Commerce Clause and Supremacy Clause of the Constitution; (3) the FFP was invalid under California law; and (4) the underwriters lacked standing to enforce the FFP, as they were not intended third-party beneficiaries.

The appellate court affirmed the trial court’s dismissal, relying heavily on precedent established in a prior California Court of Appeal decision, Wong v. Restoration Robotics, Inc., 78 Cal. App. 5th 48 (Cal. Ct. App. 2022). In Wong, the court held that FFPs are valid under Delaware law and the Constitution, and that the FFP at issue was enforceable under California law. Following Wong, the court in Bullock found:

• No Violation of the ‘33 Act’s Anti-Removal or Anti-Waiver Provision: The court clarified that the anti-removal provision prohibits only removal of cases from state to federal court, not the enforcement of a forum selection clause, and that the anti-waiver provision does not extend to procedural rights such as forum selection.
• Delaware Statutory Scheme Upheld: The court found that Delaware’s statutory framework authorizing FFPs did not violate the Supremacy Clause or Commerce Clause, citing Delaware’s legitimate interests in corporate governance and judicial efficiency, and noting that any burden on interstate commerce was minimal.
• Internal Affairs Doctrine Applies: The court held that the validity of the FFP was governed by Delaware law, as Rivian was incorporated in Delaware and the issue pertained to the corporation’s internal affairs and governing documents.
• Enforceability Under California Law: The court reiterated that forum selection clauses are generally enforceable in California unless shown to be unfair or unreasonable. Here, plaintiffs failed to demonstrate that the FFP was outside stockholders’ reasonable expectations or unconscionable.
• Standing of Underwriters: The court concluded that Rivian’s underwriters were sufficiently connected to the contractual relationships arising from the sale of Rivian stock to have standing to enforce the FFP.

The Bullock decision reaffirms the enforceability of FFPs in corporate governing documents including charters and bylaws for claims brought under the ‘33 Act, under both Delaware and California law. Importantly, it also concludes that underwriters may enforce an FFP adopted by an issuer. The refusal of the California Supreme Court to grant review further reinforces the enforceability of FFPs. This ruling should be useful in reducing the duplicative multi-fora litigation that has proliferated in ‘33 Act cases.

This post is as of the posting date stated above. Sidley Austin LLP assumes no duty to update this post or post about any subsequent developments having a bearing on this post.