IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE

SYLEBRA CAPITAL PARTNERS 

MASTER FUND, LIMITED and 

P SYLEBRA LTD., 

 Plaintiffs,

 v.

RONALD O. PERELMAN, KEVIN M. 

SHEEHAN, M. GAVIN ISAACS, 

RICHARD M. HADDRILL, PETER A. 

COHEN, DAVID L. KENNEDY, PAUL M. 

MEISTER, MICHAEL J. REGAN, 

BARRY F. SCHWARTZ, FRANCES F.

TOWNSEND, VIET D. DINH, GERALD J. 

FORD, GABRIELLE K. MCDONALD, 

SCIENTIFIC GAMES CORPORATION, 

BALLY GAMING, INC. and 

MACANDREWS & FORBES 

INCORPORATED,

 Defendants.

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C.A. No. 2019-0843-JRS

MEMORANDUM OPINION

Date Submitted: July 30, 2020

Date Decided: October 9, 2020

Samuel T. Hirzel II, Esquire and Gillian L. Andrews, Esquire of Heyman Enerio 

Gattuso & Hirzel LLP, Wilmington, Delaware and Patrick J. Smith, Esquire, 

Andrew J. Rodgers, Esquire and Nicholas J. Karasimas, Esquire of Smith Villazor 

LLP, New York, New York, Attorneys for Plaintiffs.
William M. Lafferty, Esquire, Susan W. Waesco, Esquire and Alexandra M. 

Cumings, Esquire of Morris, Nichols, Arsht & Tunnell LLP, Wilmington, Delaware 

and Kevin J. Orsini, Esquire and Rory A. Leraris, Esquire of Cravath, Swaine & 

Moore LLP, New York, New York, Attorneys for Defendants. 

SLIGHTS, Vice Chancellor
1

Minority stockholders of a Nevada corporation, Scientific Games Corporation 

(“Scientific Games” or the “Company”), have sued the Company’s controlling 

stockholder and members of its allegedly “handpicked” board of directors for 

breaches of fiduciary duty and violations of the Delaware General Corporation Law

(“DGCL”). The Company’s bylaws contain a provision that requires stockholders 

to bring claims for breach of fiduciary duty in the courts of Clark County, Nevada. 

And the claims at issue here are implicated by a first-filed action brought by the 

Company against the minority stockholders in, of all places, Nevada.

Right out of the gate, this picture ought to provoke questions, even upon a 

terse glance. Why are stockholders of a Nevada corporation invoking the DGCL? 

Why are these stockholders suing fiduciaries of a Nevada corporation in Delaware? 

In doing so, why are they asking a Delaware court to ignore a mandatory forum 

selection clause in this Nevada corporation’s by-laws? And why haven’t they 

asserted these claims in the first-filed Nevada action? 

According to the Delaware plaintiffs, to answer these questions, one must first 

take a brief sally down memory lane. Scientific Games has not always been 

chartered in Nevada. Before it relocated to Nevada in January 2018, the Company 

called Delaware home. The plaintiffs here invested in the Company when it was 

organized under Delaware law. And the conduct giving rise to the claims in this 

action—which involve an alleged scheme to force plaintiffs to redeem their 
2

Scientific Games shares at less than fair value—began when the defendants owed 

fiduciary duties to a Delaware corporation and its stockholders at a time when the 

Company was subject to the DGCL. Thus, say plaintiffs, the picture is more nuanced 

than it first appears and they have properly asserted their claims in Delaware.

Defendants respond that, notwithstanding plaintiffs’ attempt to create abstract 

art with creative pleading, the image of a misplaced lawsuit still shines through the 

prolix. According to Defendants, plaintiffs would have this Court adjudicate their 

claims, even though: (1) plaintiffs seek to invalidate provisions of Delaware 

constitutive documents that no longer exist and have not existed for more than two 

years; (2) plaintiffs were stockholders at the time Scientific Games left Delaware for 

Nevada, yet at no time before now have they challenged that move or sought to 

pursue their supposed Delaware claims; (3) plaintiffs’ claims require the Court to 

decide whether provisions in the constitutive documents of a Nevada corporation are 

enforceable; (4) the Company’s mandatory Nevada forum selection bylaw is broad 

and unambiguously covers plaintiffs’ supposed Delaware claims; and (5) there is a 

first-filed action pending in Nevada before a court that is fully capable of 

adjudicating all claims between these parties. 

Defendants have moved to dismiss. For reasons that follow, the motion must

be granted. 
3

I. BACKGROUND

I have drawn the facts from the Verified Amended Complaint and documents 

incorporated by reference or integral to that pleading.1 For purposes of the motion, 

I accept as true the Amended Complaint’s well-pled factual allegations and draw all 

reasonable inferences in Plaintiffs’ favor.2 

A. The Parties

Plaintiffs, Sylebra Capital Partners Master Fund, Limited (“Sylebra Capital”) 

and P Sylebra Ltd. (collectively with Sylebra Capital, “Sylebra”), are a Cayman 

Islands-based investment fund and a British Virgin Islands-based advisory client, 

respectively.3 Taken together, the Sylebra plaintiffs and another Sylebra-advised 

entity were, at all relevant times, Scientific Games’ second largest stockholder.4 

Defendant, Scientific Games, “is a publicly traded corporation organized and 

existing under the laws of the State of Nevada.”

5 The Company was a Delaware 

corporation until January 10, 2018, when it “re-domesticated” to Nevada, the state

 

1 Verified Am. Compl. (“Compl.”) (D.I. 23); Wal-Mart Stores, Inc. v. AIG Life Ins. Co., 

860 A.2d 312, 320 (Del. 2004) (noting that on a Motion to Dismiss, the Court may consider 

documents that are “incorporated by reference” or “integral” to the complaint).

2 Savor, Inc. v. FMR Corp., 812 A.2d 894, 896–97 (Del. 2002). 

3 Compl. ¶¶ 22–23.

4 Compl. ¶ 3.

5 Compl. ¶¶ 4, 27.
4

where it has maintained its principal place of business since inception.

6

 Scientific 

Games operates in the lottery and gaming industry. Defendant, Bally Gaming, Inc.

(“Bally”), is an indirect wholly-owned operating subsidiary of the Company, also 

incorporated in Nevada.7

Defendant, MacAndrews & Forbes, Inc., is a holding company formed and 

wholly owned by Defendant, Ronald Perelman, to “own and operate a diverse array 

of businesses.”8 Scientific Games is a MacAndrews & Forbes portfolio company.

9

Perelman, through MacAndrews & Forbes, beneficially owned 39% of the

Company’s outstanding common stock and was the Chairman of its board of 

directors (the “Board”) throughout the events described in the Complaint.10 

Defendants, Kevin M. Sheehan, M. Gavin Isaacs, Richard M. Haddrill, 

Peter A. Cohen, David L. Kennedy, Paul M. Meister, Michael J. Regan, Barry F. 

Schwartz, Frances F. Townsend, Viet D. Dinh, Gerald J. Ford and Gabrielle K. 

McDonald are each current or former officers or directors of the Company.11 Sylebra

 

6

Id.

7 Compl. ¶ 28.

8 Compl. ¶ 26.

9

Id.

10 Compl. ¶ 29.

11 Compl. ¶¶ 30–41.
5

alleges each of these defendants are beholden to Perelman and facilitated his 

breaches of fiduciary duty, as described below. 

B. Suitability Requirements, Article Tenth and the Redemption Standard

Sylebra first acquired stock in Scientific Games in early 2015.12 By February 

2017, Sylebra owned 8,619,044 shares (or 9.84%) of the Company’s Class A 

Common Stock.13 

As gaming companies, both Scientific Games and Bally are subject to 

numerous “licensure [requirements] and regulations” “across multiple 

jurisdictions.”14 These regulations include so-called “suitability” requirements that 

apply to the Company’s investors.15 Since this was Sylebra’s first foray as an 

investor in the gaming industry, it was particularly sensitive to the “suitability” 

requirements and worked diligently with the Company to ensure that it complied 

with the regulations in all jurisdictions where the Company operated.

16

 At first, the 

 

12 Compl. ¶ 63.

13 Id. 

14 Compl. ¶ 64.

15 “Suitability” regulations generally require companies in the gaming industry to ensure 

that their investors are not engaged in or associated with illegal or illicit activity. 

Compl. ¶ 4. If a company violates suitability regulations, the company risks losing its 

gaming licenses. Compl. ¶ 78.

16 Compl. ¶ 65.
6

Company was ready and willing to assist.

17

 Happy to receive Sylebra’s investment, 

the Company gave Sylebra no reason to be concerned that its structure, investment 

base or investment portfolio would run afoul of any suitability requirement.

18

In April 2017, at Perelman’s bidding, the Company began to question 

Sylebra’s investment in a company called Qiwi plc (“Qiwi”).

19

 The questions 

followed a 2015 New York Times article, where it was reported that pro-Russian 

groups were illegally utilizing payment terminals owned by Qiwi to fund the war in 

eastern Ukraine.20 While the Company expressed alarm that Sylebra would invest 

in a company like Qiwi, government authorities apparently did not share that alarm 

as none took any action against Qiwi in response to the 2015 article.21 Thus, from 

Sylebra’s perspective, the Company’s questions were pretext for Perelman’s effort 

to drive out an investor that posed “a threat to [Perelman’s] total command over 

Scientific Games.”

22

 

17 Id. 

18 Id.

19 Compl. ¶¶ 66–70. 

20 Compl. ¶ 68.

21 Id. 

22 Compl. ¶ 66.
7

On April 27, 2017, unbeknownst to Sylebra, the Company ratcheted its 

questions into action when it alerted numerous gaming regulators of Sylebra’s 

investment in Qiwi.

23

 According to Sylebra, the Company took this step so it could 

invoke “Article Tenth” of its then-operative Amended and Restated Articles of 

Incorporation (the “Delaware Charter”).

24

 Article Tenth, in relevant part, provided 

that, “all Securities of the [Company] shall be held subject to the suitability 

standards . . . of the [g]aming [a]uthorities.”25 It then laid out criteria by which the 

Company could deem that a stockholder was a “Disqualified Holder”: 

any holder of the [Company’s] Securities (1) who is requested or 

required . . . to . . . submit to the jurisdiction of, or provide information 

to, any [g]aming [a]uthority and either refuses to do so or otherwise 

fails to comply with such request or requirement within a reasonable 

period of time, (2) who is determined or shall have been determined by 

any [g]aming [a]uthority not to be suitable . . . or (3) whose holding of 

Securities may result, in the judgment of the Board of Directors, in the 

failure of the [Company] or any Affiliate to obtain, maintain, renew or 

qualify for a license, contract, franchise or other regulatory approval 

with respect to the operation or conduct of the business of the 

[Company] . . . or any of its Affiliates from a [g]aming [a]uthority 

which conditions approval upon holders of the [Company’s] Securities 

possessing prescribed qualifications.26

 

23 Compl. ¶¶ 70, 79–80. 

24 Compl. ¶ 71; Transmittal Aff. of Riley T. Svikhart to the Opening Br. in Supp. of the 

Defs.’ Mot. to Dismiss Pls.’ Verified Compl. (“Svikhart Aff.”), Ex. 8 (“Delaware 

Charter”).

25 Compl. ¶ 72; Delaware Charter, at 3.

26 Compl. ¶ 73. Delaware Charter, at 4.
8

If the Board deemed any stockholder to be a Disqualified Holder, then the 

Company could require the Disqualified Holder either to divest its interest within 

sixty days or, more relevant here, allow the Company to redeem the Disqualified 

Holder’s stock at a specified “Redemption Price.”27 The Redemption Price was 

defined as:

a price equal to the lesser of (1) the average closing sale price of such 

Securities as reported for composite transactions in securities listed on 

the principal trading market on which such Securities are then listed or 

admitted for trading during the 30 trading days preceding the Notice 

Date or, if such Securities are not so listed or traded, at the fair value of 

the Securities determined in good faith by the Board of Directors and 

(2) the holder’s original Purchase Price.28

Numerous regulators took the bait set by the Company and contacted Sylebra

to inquire about its relationship with Qiwi.29 Most notably, the Office of 

Enforcement Counsel of the Pennsylvania Gaming Control Board 

(the “Pennsylvania Regulator”) and the U.S. Virgin Islands Casino Control 

Commission (“Virgin Islands Regulator”) both initiated investigations of Sylebra’s 

suitability.

30

 

27 Compl. ¶¶ 76–77; Delaware Charter, at 4.

28 Compl. ¶ 77; Delaware Charter, at 4.

29 Compl. ¶ 8. 

30 Compl. ¶ 81.
9

C. The Pennsylvania and Virgin Islands Investigations

On April 27, 2017, the Pennsylvania Regulator informed the Company that it 

had “determined that Sylebra . . . need[ed] to file a Principal Entity License . . . in 

order that a determination [could] be made as to Sylebra’s suitability to maintain its 

association with Slot Machine Manufacturer Licensee Bally Gaming, Inc. and its 

affiliate Scientific Games.”

31

 Prior to this date, Sylebra was granted “institutional 

investor status” by the Pennsylvania Regulator, allowing it to bypass the Principal 

Entity Licensing requirements.32 Pending completion of its investigation, the 

Pennsylvania Regulator restricted Sylebra’s ability to divest its Scientific Games 

shares without permission.

33

The following day, on April 28, the Company instructed Goldman Sachs to 

freeze Sylebra’s investment to prevent divestment.34 A few days later, on May 1, 

the Company sent a letter to Sylebra informing it of the Pennsylvania Regulator’s 

demands regarding licensing and divestment.35 The Company made similar 

 

31 Compl. ¶ 84. Although not entirely clear from the Complaint, it appears the process of 

obtaining a Principal Entity License includes an investigation into the applicant’s fitness 

for licensure. Compl. ¶¶ 88, 90. 

32 Compl. ¶ 85.

33 Compl. ¶ 86.

34 Compl. ¶ 87. 

35 Compl. ¶ 88.
10

demands in its own right, and requested that Sylebra identify “all record holders of 

shares under Sylebra’s management.”

36

 Sylebra responded by informing the 

Company that it was in discussions with the Pennsylvania Regulator and had no 

intention of divesting its Scientific Games stock.37

On May 15, 2017, the Pennsylvania Regulator confirmed that Sylebra had 

divested a majority of its shares in Qiwi, but also confirmed that the investigation 

was still open pending Sylebra’s final divestiture of all Qiwi stock and its 

satisfactory explanation of the fund’s structure.38 On June 21, 2017, the 

Pennsylvania Regulator lifted its restrictions on Sylebra’s ability to divest its stock 

in the Company.39 Unfortunately, Sylebra’s regulatory woes did not end there. 

One day after the Pennsylvania Regulator lifted its trading restriction, the 

Virgin Islands Regulator issued a directive restricting Sylebra’s ability to divest its 

shares in the Company pending a suitability investigation of its own.

40

 This directive 

was issued by the Chairman of the Virgin Islands Regulator, Violet Anne Golden 

(“Chair Golden”), citing to both a letter from the Company in which it detailed the 

 

36 Id.

37 Compl. ¶ 90.

38 Compl. ¶ 91.

39 Compl. ¶ 92. 

40 Compl. ¶ 103. 
11

Board’s concerns, dated June 2, 2017, and Sylebra’s investment in Qiwi, as the bases

for the directive.41 

In a strange twist, Chair Golden directed “Sylebra to tender $75,000 to the 

Virgin Islands Regulator” to conduct a suitability investigation.42 Sylebra 

reluctantly complied. It later discovered that only a small portion of its $75,000 was 

used to pay for the suitability investigation.

43

 Not coincidentally, Chair Golden was 

later indicted on federal charges of embezzlement, conspiracy, wire fraud and 

obtaining money under false pretenses.44

On January 13, 2020, the Virgin Islands Regulator “lifted the trading 

restriction directive with immediate effect” after it reviewed the circumstances 

giving rise to the directive “following Chair Golden’s admission of guilt.”45 Bally 

immediately filed a motion for reconsideration, seeking a hearing and maintenance 

of the divestiture restriction.46 This regulatory investigation remains in limbo.

 

41 Compl. ¶ 106.

42 Compl. ¶ 108.

43 Compl. ¶ 111.

44 Id.

45 Compl. ¶ 114. 

46 Id. 
12

D. Scientific Games Performs Its Own Suitability Investigation of Sylebra 

In the midst of the Pennsylvania Regulator’s investigation, in May 2017, the 

Company sent a letter requesting that Sylebra provide the Company with the same

information it was providing to the Pennsylvania Regulator.47 The requested 

information included a list of Sylebra’s limited partner investors, a list of companies 

affiliated with Sylebra, a list of jurisdictions in which Sylebra is regulated and a list 

of companies in which Sylebra is invested.

48

 The Company explained that it sought 

this and other information about Sylebra in order to “ensure compliance with the 

Bank Secrecy Act and anti-money laundering requirements within the gaming 

industry.”49

Sylebra responded to the Company’s requests by providing both detail 

regarding “how Sylebra’s fund administrator applied industry-standard KYC and 

AML processes” to manage the fund and a breakdown of the world regions in which 

its investments originate.50 Sylebra explained that confidentiality restrictions 

prevented it from providing more details regarding its investors but proposed that it 

could provide that information to the Pennsylvania Regulator without violating its 

 

47 Compl. ¶ 116.

48 Id.

49 Compl. ¶ 118.

50 Compl. ¶ 121.
13

agreements with investors.51 The Company initially agreed that this course of action

would satisfy its concerns, but later “reneged on the agreement” without 

explanation.

52

E. Scientific Games Amends Its Delaware Bylaws 

Amidst growing tensions between the Company and Sylebra, the Board 

amended its Delaware Amended and Restated Bylaws (the “Delaware Bylaws”) on 

June 9, 2017, to include two new provisions: Section 8.05 and Section 8.06.53

Section 8.05 allowed the Company to invalidate the shares of any stockholder that 

had received a redemption notice following a determination that the stockholder was 

a Disqualified Holder.

54 Section 8.06 required the Company to conduct a suitability 

analysis of each “Significant Stockholder,” defined as any stockholder that 

beneficially owned 5% or more of any class of stock.55 In conducting such analyses, 

this Section authorized the Company to request “all relevant information pertaining 

to suitability and/or qualification.”56 

 

51 Compl. ¶ 122.

52 Compl. ¶¶ 122–24. 

53 Compl. ¶¶ 127, 131. 

54 Compl. ¶ 127. 

55 Compl. ¶ 131. 

56 Compl. ¶ 137. 
14

According to Sylebra, Section 8.05 exceeded the authority provided to the 

Company in Article Tenth since that Delaware Charter provision “said nothing about 

the Company’s ability to render securities held by a Disqualified Holder invalid such 

that it could void any transfer made by a stockholder that receives a redemption 

notice.”57 As for Section 8.06, Sylebra contends this Section also conflicts with 

Article Tenth, since that Charter provision did not “sanction[] the investigation of 

stockholders who otherwise satisfied the prescribed regulations of gaming 

authorities.”58 Of course, Sylebra did nothing to challenge these new bylaws at the 

time they were adopted.

Citing its new Delaware Bylaws, the Company sent Sylebra a letter on 

June 17, 2017, requesting further confidential information to facilitate the 

Company’s “continuing qualification and suitability analysis with respect to 

Sylebra.”59 As the Company’s suitability investigation escalated, so did tensions 

between the parties. 

 

57 Compl. ¶ 128. 

58 Compl. ¶ 133.

59 Compl. ¶ 140. 
15

F. Scientific Games Reincorporates in Nevada 

On September 18, 2017, the Company announced its plans to enter into a 

merger for the purposes of reincorporating the Company in Nevada

(the “Reincorporation Merger” or “Reincorporation”).

60

 The Company 

disseminated its proxy materials relating to the Reincorporation Merger 

(the “Proxy”) on October 20, 2017.61

According to Sylebra, the Proxy was materially false and misleading in 

several respects, including that it: (i) misrepresented the Company’s reasons for 

reincorporating in Nevada by failing to explain that the real reason for the move was 

to “further Perelman’s campaign to harm the Sylebra Plaintiffs’ investment and 

consolidate his power”; (ii) falsely disclosed that “the rights of stockholders under 

the New Charter and New Bylaws are substantially the same as under the Company’s 

[Delaware] Charter and Bylaws”; (iii) did not discuss the Board’s amendments to 

the Delaware Bylaws in June 2017; (iv) did not disclose that the change in the 

definition of Disqualified Holder was part of the Company’s campaign to prompt 

government regulators to make adverse findings against Sylebra; and (v) masked the 

change in Disqualified Holder, which now allowed the Company to deem 

 

60 Compl. ¶ 144. 

61 Compl. ¶ 145.

.
16

disqualified any stockholder that might “cause . . . the imposition of any materially 

burdensome or unacceptable terms or conditions on any Gaming License.”62

Sylebra also maintains the Proxy failed to highlight three important 

distinctions between the Delaware Charter and the to-be-enacted Nevada Amended 

and Restated Articles of Incorporation (the “Nevada Charter”): (i) Article Tenth 

(now Article VIII of the Nevada Charter) was changed to grant the Company power 

to look beyond the record holder to any beneficial owners when reviewing 

suitability; (ii) the Nevada Charter’s new Article VIII also gave the Board the 

discretion “to take such other action, to the extent not prohibited by law, as it deems 

necessary or advisable to protect the Company or any of its Affiliates from the denial 

or loss or threatened denial or loss of any Gaming license”; and (iii) the Nevada 

Charter added a provision that the Company is not required to redeem or repurchase 

shares owned or controlled by a Disqualified Holder, even though delivering a 

redemption notice to a Disqualified Holder constituted a binding agreement on 

behalf of the Company to redeem.63 In addition, the Proxy did not accurately 

disclose why the new Nevada Amended and Restated Bylaws (the “Nevada 

Bylaws”) would contain a forum selection bylaw designating the courts of Clark 

 

62 Compl. ¶¶ 146–56.

63 Compl. ¶¶ 157–62 (emphasis added); Svikhart Aff., Ex. 3 (“Nevada Charter”) at 5.
17

County, Nevada as the sole and exclusive forum to litigate stockholder disputes

(the “Forum Selection Bylaw”).

64

 

According to the Proxy, the move to Nevada was justified because “Delaware 

law does not afford the same substantive rights and protections under Nevada law,” 

specifically noting that “reincorporation will result in the elimination of any liability 

of an officer or director for a breach of the duty of loyalty unless arising from 

intentional misconduct, fraud, or a knowing violation of law.”65 Importantly, the

Proxy also explained that “[p]rimarily, the reincorporation merger will allow us to 

better align our legal domicile with our global corporate headquarters and our 

primary US manufacturing operations.”66

In unanimously approving the Reincorporation Merger and recommending it 

to stockholders, the Board determined that the transaction “[was] advisable, fair to 

and in the best interests of [the] stockholders.”

67

 On November 27, 2017, a majority 

of Scientific Games’ stockholders approved the Reincorporation Merger. According 

 

64 Compl. ¶ 164; Svikhart Aff., Ex. 2 (“Nevada Bylaws”) at 17.

65 Compl. ¶ 165; Svikhart Aff., Ex. 1 (“Proxy”) at 5. Along these lines, the Proxy indicates 

that incorporating in Nevada “may help us attract and retain qualified management by 

reducing the risk of lawsuits being filed against the Company and its directors and 

officers.” Proxy, at 4.

66 Proxy, at 4. 

67 Compl. ¶ 168.
18

to Sylebra, the vote was a sham because the stockholders were misled by the Proxy

and, therefore, did not understand that the Reincorporation was the latest salvo in 

Perelman’s campaign to drive Sylebra out of the Company.68 Sylebra also observes 

that the Reincorporation Merger would not have been approved had Perelman not 

voted his controlling block in favor of the transaction.

69

 

G. Scientific Games Files Suit Against Sylebra in Nevada 

The Reincorporation Merger was executed on January 10, 2018.70 In the 

months that followed, the Company ramped up its suitability investigation of Sylebra

by peppering it with requests for confidential information while declining to explain 

the reasons for its requests.

71

 When Sylebra’s offers to explore “an amicable 

solution” were summarily rejected,72 it began to question why the Company was not 

investigating other stockholders given that Sylebra was “in the same position as 

every investor that holds 5% or more of [the Company].”73 On June 14, 2019, the 

day after Sylebra sent its most direct rejoinder to the Company, the Company and 

 

68 Compl. ¶¶ 169–70. 

69 Compl. ¶¶ 169–70. 

70 Compl. ¶ 171.

71 Compl. ¶¶ 174–75. 

72 Compl. ¶¶ 176–77. 

73 Compl. ¶ 179. 
19

Bally filed suit against Sylebra in Nevada state court to compel Sylebra’s compliance 

with the suitability investigation under the Company’s Nevada Bylaws (the “Nevada 

Action”).

74

 After its attempt to remove the Nevada Action to federal court failed, 

Sylebra filed this Delaware action on October 23, 2019.

75

H. Procedural History

In its eleven count Complaint, Sylebra primarily seeks to have this Court 

declare as invalid and unenforceable: (1) Sections 8.05, 8.06 and 10.01 of the 

Delaware Bylaws, (2) amendments to Article VIII of the Nevada Charter, and (3) the 

Forum Selection Bylaw.76 Sylebra also seeks an order enjoining Defendants from 

depriving Sylebra of its rightful holdings in Scientific Games in breach of their 

fiduciary duties, which, as explained below, I interpret as effectively asking this 

Court to declare a number of provisions in the Nevada Charter, particularly 

Article VIII, unenforceable as against Sylebra.77

Following full briefing and oral argument on Defendants’ Motion to Dismiss, 

Sylebra filed a Motion for Leave to File a Second Amended Complaint on July 17, 

 

74 Compl. ¶ 180.

75 Id.

76 Compl., Prayer for Relief (b).

77 Compl., Prayer for Relief (a).
20

2020. Defendants oppose that motion as untimely, prejudicial and prohibited by 

Chancery Rule 15(aaa). 

II. ANALYSIS

The Defendants move to dismiss under both Chancery Rule 12(b)(3) for 

improper venue and Chancery Rule 12(b)(6) for failure to state viable claims. 

Because I am satisfied dismissal is mandated under Rule 12(b)(3), I will not address 

the merits of the claims under Rule 12(b)(6).78 Before addressing the grounds for 

dismissal, I take up Plaintiffs’ motion to amend. 

A. The Motion to Amend

Rule 15(a) makes clear that leave to amend pleadings “shall be freely given.”79

“Notwithstanding Rule 15(a),” however, this Court will deny leave to amend when 

a plaintiff fully engages on a motion to dismiss under Rule 12(b)(6) without first 

seeking leave to amend so that it can address the pleading deficiencies exposed in 

the motion.

80

 In such instances, where the plaintiff elects to oppose dismissal rather 

than amend, the Court will consider the motion to dismiss on the merits of the 

 

78 In my view, it is best for a court dismissing on venue grounds to avoid addressing the 

merits of claims, lest that gratuitous analysis confound the analysis of the court where 

venue properly lies. 

79 Ct. Ch. R. 15(a). 

80 Rule 15(aaa) provides that “a party . . . must file an amended complaint, or motion to 

amend . . . no later than the time such party’s answering brief . . . is due to be filed” or face 

dismissal with prejudice. Ct. Ch. R. 15(aaa). 
21

pleading as addressed in the motion, and will dismiss with prejudice where 

warranted.81 

Here, for reasons unclear, Sylebra filed its Motion to Amend two weeks after 

the hearing on Defendants’ fully briefed Motion to Dismiss. The Motion to Amend 

comes too late and Sylebra offers no bases upon which the Court can or should 

excuse it from the operation of Rule 15(aaa). 

Sylebra’s attempt to invoke Rule 41(a) as a means to avoid dismissal with 

prejudice is also unpersuasive. “In order to give Rule 15(aaa) its intended scope, 

once the time for amendment has passed under that rule, a party-plaintiff will not be 

permitted to resort to Rules 41(a), 23 or 23.1 to file a ‘without prejudice’ dismissal 

of its action.”82 The Motion to Amend is denied.

B. Sylebra’s Requests for Declarations Regarding the Delaware Charter 

Are Moot

To the extent Sylebra implicitly or explicitly would have the Court declare 

that provisions within the Company’s Delaware Charter or Delaware Bylaws are 

invalid or unenforceable, any such request faces an immediate and insoluble 

 

81 As our Supreme Court has explained, “[t]he purpose of Rule 15(aaa) [is] to curtail the 

number of times that the Court of Chancery [is] required to adjudicate multiple motions to 

dismiss the same action.” Braddock v. Zimmerman, 906 A.2d 776, 783 (Del. 2006). 

“The rule is intended to conserve litigants’ and judicial resources by discouraging a party 

from briefing a dispositive motion before filing an amended complaint.” E. Sussex Assocs., 

LLC v. W. Sussex Assocs., LLC, 2013 WL 2389868, at *1 (Del. Ch. June 3, 2013).

82 Stern v. LF Capital P’rs, LLC, 820 A.2d 1143, 1147 (Del. Ch. 2003). 
22

problem—the Delaware Charter and Delaware Bylaws no longer exist.83 They 

ceased governing Scientific Games the moment the Reincorporation Merger was 

effected. Any claim that seeks or depends upon a declaration of ongoing rights under 

these documents, or upon a declaration that provisions within them are invalid or 

unenforceable, therefore, is moot.84

C. Sylebra’s Complaint Implicates the Internal Affairs of a Nevada

Corporation

Sylebra would also have the Court declare that certain amendments and 

provisions of the Company’s Nevada Charter and Nevada Bylaws, including the 

Forum Selection Bylaw and the Nevada Charter’s redemption provision, are 

unenforceable as to Sylebra. In doing so, Sylebra would have this Court do what 

this Court strongly prefers courts in other jurisdictions not do with respect to 

 

83 See Compl. ¶¶ 185, 204–211, 213–220. 

84 See Mentor Graphics Corp. v. Shapiro, 818 A.2d 959, 963 (Del. 2003) (“Mootness arises 

when controversy between the parties no longer exists such that a court can no longer grant 

relief in the matter.”); Supermex Trading Co., Ltd. v. Strategic Sols. Gp., Inc., 1998 

WL 229530, at *9 (Del. Ch. May 1, 1998) (“The record reflects . . . those amendments 

have all been rescinded. Thus, I . . . will not enter any order with respect to those bylaws 

other than to note that they have been rescinded and to dismiss the claims with respect to 

them as moot for that reason.”); In re Tri-Star Pictures, Inc. Litig., 1990 WL 82734, at *2 

(Del. Ch. June 14, 1990) (“The Court ruled that the Article Sixth claim had been mooted 

because the merger had eliminated that Article from Tri-Star’s certificate of 

incorporation.”).
23

Delaware corporations—decide matters that impact the internal affairs of a 

corporation chartered in another state.85 

“The internal affairs doctrine is a long-standing choice of law principle which 

recognizes that only one state should have the authority to regulate a corporation’s 

internal affairs—the state of incorporation.”86 “By providing certainty and 

predictability, the internal affairs doctrine protects the justified expectations of the 

parties with interests in the corporation.”87 While the internal affairs doctrine is, 

fundamentally, a choice of law doctrine, as explained by the United States Supreme 

 

85 See, e.g., Sternberg v. O’Neil, 550 A.2d 1105, 1124–25 (Del. 1988) (“The Delaware 

courts and legislature have long recognized a ‘need for consistency and certainty in the 

interpretation and application of Delaware corporation law.’”) (quoting Armstrong v. 

Pomerance, 423 A.2d 174, 178 (Del. 1980)) (explaining that allowing important or novel 

questions of Delaware law to be resolved by other courts “might create excessive

uncertainty about the meaning of the Delaware law as a result of too many forums 

interpreting it since there would be no certiorari process available to the Delaware Supreme 

Court to resolve conflicts”); MacAndrews & Forbes Hldgs., Inc. v. Revlon, Inc., 1985 

WL 21129, at *2 (Del. Ch. Oct. 9, 1985) (“[N]ovel and substantial issues of Delaware 

corporate law . . . are best resolved in a Delaware court.”). Cf. Martinez v. E.I duPont 

de Nemours & Co., Inc., 86 A.3d 1102, 1107 (Del. 2014) (observing that our Supreme 

Court “has recognized that novel or important issues of Delaware law are best determined 

by Delaware courts”).

 

86 VantagePoint Venture P’rs 1996 v. Examen, Inc., 871 A.2d 1108, 1112 (Del. 2005); 

see also In re Topps Co. S’holders Litig., 924 A.2d 951, 953 (Del. Ch. 2007) (noting “it is 

well settled that jurisdiction in any case will be declined . . . where a determination of the 

rights of the litigants involves regulation and management of the internal affairs of [a] 

corporation dependent upon the laws of [a] foreign state”) (quoting Langfelder v. Universal 

Labs., 56 N.E.2d 550 (N.Y. Ct. App. 1944)).

87VantagePoint, 871 A.2d at 1113.
24

Court, there are notions of comity and deference inherent in the doctrine that should 

not lightly be ignored:

It has long been settled that a court—state or federal—sitting in one 

state will as a general rule, decline to interfere with, or control by 

injunction or otherwise, [a] corporation organized under the laws of 

another state but will leave controversies as to such matters to the courts 

of the state of the domicile.88

It is indisputable that the Nevada Charter and Nevada Bylaw provisions 

implicated by Sylebra’s claims fall within the purview of the internal affairs 

doctrine. For example, the Company’s Forum Selection Bylaw “plainly focus[es]

on [matters] governed by the internal affairs doctrine and thus the law of the state of 

incorporation.”89 The redemption clause likewise directly affects the Company’s 

internal affairs. That provision, in Article VIII of the Nevada Charter, allows the 

Board to redeem the shares of an investor it deems unsuitable.90 This is plainly a 

“matter[] which [is] peculiar to the relationships among or between the corporation 

and its current officers, directors and shareholders.”91

 

88 Rogers v. Guar. Tr. Co. of New York, 288 U.S. 123, 130 (1933); see also In re Topps 

Co., 924 A.2d at 958 (“Venerable authority recognizes that a chartering state’s interest in 

promoting an efficient and predictable corporation law can be undercut if other states do 

not show comity by deferring to the courts of the chartering state when a case is presented 

that involves the application of the chartering state’s corporation law.”).

89 See Boilermakers Local 154 Ret. Fund v. Chevron Corp., 73 A.3d 934, 962 (Del. Ch. 

2013).

90 Nevada Charter, at 5.

91 McDermott Inc. v. Lewis, 531 A.2d 206, 213 (Del. 1987).
25

In its Prayer for Relief, Sylebra asks this Court, among other relief, to 

(1) enjoin the Defendants from depriving Sylebra of its rightful holdings in the 

Company through the enforcement of the Nevada Charter and Bylaws provisions 

that purportedly require redemption; and (2) declare, under Delaware law, that the 

amendments to the redemption provisions of the Nevada Charter are invalid and 

unenforceable.92 I would no more enter that injunction or make that declaration than 

I would declare that a Nevada statute was unenforceable in Nevada as a matter of 

Delaware law. 

The application of internal affairs and comity principles is all the more 

appropriate here given that Sylebra seeks to prevent the Company from invoking its 

constitutive documents on a future date, when any resulting injury would occur in 

Nevada, not Delaware.

93

 As Sylebra’s counsel readily acknowledged during oral 

argument, “the real threat to [Sylebra] . . . is [Defendants] forc[ing] [Sylebra] to 

redeem.”94 That forced redemption has not happened yet, meaning it did not occur 

 

92 Compl., Prayer for Relief (a)–(b); see also Compl. ¶ 186 (asking the Court to declare 

that defendants breached their fiduciary duties by “approving the Nevada Charter” and 

“enacting the Nevada Bylaws”). 

93 In other words, the financial injury to Sylebra will occur, if at all, while the Company is 

a Nevada corporation. This means that, at least under Delaware law, if the Company forces 

redemption, Sylebra will be injured in the Company’s legal home, Nevada. See Sample v. 

Morgan, 935 A.2d 1046, 1057 (Del. Ch. 2007).

94 Telephonic Oral Arg. on Defs.’ Mot. to Dismiss (D.I. 53) (“Tr.”) at 52.
26

prior to the Reincorporation when Scientific Games still called Delaware home. As 

discussed below, Scientific Games has a Forum Selection Bylaw that requires 

Sylebra to bring its claims in Nevada. Unless there is good reason not to enforce 

that bylaw, Sylebra has no business bringing its claims in this court.95 

D. The Nevada Forum-Selection Clause is Enforceable and Requires 

Dismissal

“The proper procedural rubric for addressing a motion to dismiss based on a 

forum selection clause is found under Rule 12(b)(3), improper venue.”96 “Although 

Delaware courts have, in the past, framed a forum selection clause analysis as 

jurisdictional in some sense, recent cases have all proceeded under Rule 12(b)(3).”97

And, when addressing a motion under Rule 12(b)(3), “the court is not shackled to

 

95 To be clear, Sylebra could have brought an action in this court back in 2017, when the 

Company was still a Delaware corporation, to enjoin the Reincorporation Merger as the 

product of a controlling stockholder’s unlawful self-interest and an inadequate Proxy that 

prevented an informed stockholder vote on the transaction. It made no such claims. Now, 

almost three years later, with the Company firmly ensconced in Nevada, Sylebra comes to 

Delaware asking the Court to declare, in essence, that the Company never should have left 

here and, more remarkably, to declare that elements of its Nevada constitutive documents 

are unenforceable. If the Court were to entertain such claims, it would not only be 

departing from its “lane,” it would be crossing the centerline into Nevada’s lane. 

96 In re Bay Hills Emerging P’rs I, L.P., 2018 WL 3217650, at *4 (Del. Ch. July 2, 2018)

(quoting Bonanno v. VTB Hldgs., Inc., 2016 WL 614412, at *5 (Del. Ch. Feb. 8, 2016)).

97 Id. (quoting Troy Corp. v. Schoon, 2007 WL 949441, at *2 (Del. Ch. Mar. 26, 2007)).
27

the plaintiff's complaint and is permitted to consider extrinsic evidence from the 

outset.”98 

Forum selection bylaws are enforced “in the same way [Delaware] enforces 

any other forum selection clause.”99 Such clauses “are presumptively valid and 

should be specifically enforced unless the resisting party clearly show[s] that 

enforcement would be unreasonable and unjust, or that the clause [is] invalid for 

such reasons as fraud and overreaching.”100 

The Forum Selection Bylaw provides:

To the fullest extent permitted by law, and unless the Corporation 

consents in writing to the selection of an alternative forum, the Eighth 

Judicial District Court of Clark County, Nevada, shall be the sole and 

exclusive forum for any actions, suits or proceedings, whether civil, 

administrative or investigative or that assert any claim or counterclaim 

(a) brought in the name or right of the Corporation or on its behalf, 

(b) asserting a claim for breach of any fiduciary duty owed by any 

director, officer, employee or agent of the Corporation to the 

Corporation or the Corporation’s stockholders, (c) arising or asserting 

a claim arising pursuant to any provision of NRS Chapters 78 or 92A 

or any provision of the Articles of Incorporation or these Bylaws or 

(d) asserting a claim governed by the internal affairs doctrine. In the 

event that the Eighth Judicial District Court of Clark County, Nevada 

does not have jurisdiction over any such action, suit or proceeding, then 

any other state district court located in the State of Nevada shall be the 

sole and exclusive forum therefor and in the event that no state district 

court in the State of Nevada has jurisdiction over any such action, suit 

or proceeding, then a federal court located within the State of Nevada 

 

98 Id. 

99 Chevron, 73 A.3d at 940.

100 Ingres Corp. v. CA, Inc., 8 A.3d 1143, 1146 (Del. 2010) (internal quotations omitted). 
28

shall be the sole and exclusive forum therefor. Any person or entity 

purchasing or otherwise acquiring any interest in shares of capital stock 

of the Corporation shall be deemed to have notice of and consented to 

the provisions of this Section 10.01.

Sylebra has advanced three reasons the Court should decline to enforce this 

obviously broad Forum Selection Bylaw: (1) it did not consent to the bylaw, (2) the 

bylaw is both unjust and unreasonable and (3) the bylaw was procured by fraud. 

I address each in turn. 

Sylebra Consented to the Forum Selection Bylaw

Sylebra maintains it did not consent to the Forum Selection Bylaw because, 

at the time the Company adopted the bylaw, Sylebra had no ability to sell its 

shares.101 This argument rests on a flawed reading of Delaware law. The ability of 

a board of directors of a Delaware corporation “to adopt binding bylaws” is “an 

essential part of the contract stockholders assent to when they buy stock.”102 

 

101 Sylebra also argues it could not consent because, at the time of Reincorporation, the 

Forum Selection Bylaw would have been unlawful under Section 115 of the DGCL. 

Pls.’ Answering Br. in Opp’n to Defs.’ Mot. to Dismiss Pls.’ Compl. (“PAB”) (D.I. 32) 

at 49–51; Tr. at 40. This argument is difficult to follow. While it is true Section 115 would 

have prevented Scientific Games from prohibiting its stockholders from bringing certain 

claims in Delaware while the Company was incorporated in Delaware, the Company was 

not incorporated in Delaware when it adopted the Forum Selection Bylaw. That clause 

exists in the Nevada Bylaws. Accordingly, Section 115 does not apply here. 

102 Chevron, 73 A.3d at 940; City of Providence v. First Citizens BancShares, Inc., 99 A.3d 

229, 240 (Del. Ch. 2014), superseded on other grounds by statute, 8 Del. C. § 115; see also 

Delaware Charter, at Art. Sixth (“In furtherance and not in limitation of the powers 

conferred by statute, the Board of Directors is expressly authorized to make, alter or repeal 

the Bylaws of the corporation.”).
29

According to Sylebra, even if it implicitly consented to the Board unilaterally 

enacting bylaws when it invested in the Company, it did so with the understanding 

that it could sell its shares at any time. If that, in fact, was Sylebra’s understanding, 

it was mistaken both as a matter of Scientific Games’ governance and as a matter of 

law. 

First, upon investing in the Company, Sylebra knew that it was subject to 

Article Tenth, which, among other things, required securities in the corporation to 

“be held subject to the suitability standards, qualifications, and requirements of the 

Gaming Authorities.”103 These standards expressly included suitability standards, 

which are subject to enforcement by gaming regulators in each of the jurisdictions 

where Scientific Games operates.

104

 And with enforcement comes restrictions, 

including restrictions on the sale of Company securities.105

Second, the link Sylebra attempts to draw between the ability of a stockholder 

to sell its shares and that stockholder’s consent to the corporation’s bylaws finds no 

support in our law. In Strougo v. Hollander, a case Sylebra relies upon, the court 

deemed a fee-shifting bylaw inapplicable to the plaintiff because “a former 

 

103 Compl. ¶ 71; Delaware Charter, at Art. Tenth.

104 32 V.I CODE R. § 444-1.10 (“It shall be the continuing duty of all applicants and 

licensees to provide full cooperation to the Commission in the conduct of such inquiry or 

investigation.”). 

105 Compl. ¶ 86.
30

stockholder is not subject to . . . any bylaw amendments adopted after one’s interest 

in the corporation has been eliminated.”106 There, the plaintiff was no longer a 

stockholder in the company when the company adopted the bylaw at issue and, 

therefore, was not subject to that bylaw. That, of course, is not this case; Sylebra 

was (and still is) a stockholder when the Forum Selection Bylaw was adopted.

107

 

Sylebra has not cited any authority, and I am aware of none, supporting the 

proposition that when a stockholder is temporarily unable to sell its stock, that 

stockholder’s consent to current or newly enacted bylaws, by operation of that 

circumstance, is somehow withdrawn. And I can see no reason why that should be 

our law.

108

 

The Forum Selection Bylaw Is Not Unreasonable or Unjust

Having determined that Sylebra consented to the Forum Selection Bylaw, 

I turn next to whether the bylaw is invalid because its enforcement would be 

 

106 111 A.3d 590, 598 (Del. Ch. 2015) (emphasis in original). 

107 See id. (“[T]he bylaw cannot apply to Plaintiff, who was no longer a stockholder of the 

Company when the Bylaw was adopted.”). 

108 This is especially so here, where the restriction was a feature of Scientific Games’ 

governance structure when Sylebra invested in the Company, and Sylebra knew, given 

MacAndrews & Forbes’ controlling stake, that no organic movement of stockholders was 

likely to alter the charter or bylaw provision that implemented the focus on investor 

suitability.
31

“unreasonable and unjust.”109 “Courts should assess the reasonableness of a forum 

selection clause on a case-by-case basis.”110 To escape the reach of the Forum 

Selection Bylaw on grounds that it is unreasonable or unjust, Sylebra “bears a heavy 

burden” to demonstrate that enforcement here would “place [it] at an unfair 

disadvantage” or “otherwise deny [it its] day in court.”111 Sylebra has not carried 

that burden.

Sylebra begins its “unreasonableness” argument by observing that the timing 

of the wrongdoing “can be relevant to enforcement of a forum-selection bylaw.”112

In support of this proposition, Sylebra points to non-Delaware authority, Galaviz v. 

Berg and In re Facebook, where the courts, purportedly applying Delaware law, held 

that a forum selection clause will be deemed unenforceable when it was “adopted by 

the directors who are defendants in this action, after the majority of the purported 

wrongdoing is alleged to have occurred.”113 If that, in fact, is the holding of these 

cases, then they have misstated our law.114 To reiterate, a stockholder in a Delaware 

 

109 Ingres, 8 A.3d at 1146.

110 Id.

111 Capital Gp. Cos., Inc. v. Amour, 2004 WL 2521295, at *6 (Del. Ch. Nov. 3, 2004). 

112 PAB at 44. 

113 Id.; Galaviz v. Berg, 763 F. Supp. 2d 1170, 1174 (N.D. Cal. 2011); In re Facebook, Inc. 

IPO Sec. & Deriv. Litig., 922 F. Supp. 2d 445, 459–63 (S.D.N.Y. 2013). 

114 See First Citizens, 99 A.3d at 242 n.54 (“[T]he Galaviz and Triquint decisions, to the 

extent they purport to apply Delaware law, are based on a misapprehension of Delaware 
32

corporation gives consent to be bound by current and future bylaws when it buys 

stock.115 Whether or not the alleged wrongdoing comes before or after the adoption 

of a forum selection bylaw is irrelevant in determining the reasonableness or overall 

enforceability of the bylaw.

116

Sylebra next argues that, “enforcement would be unreasonable where the 

Amended Complaint specifically alleges a years-long scheme aimed at the Sylebra 

Plaintiffs’ investment, an essential component of which was the forum-selection 

bylaw issue.”

117

 This argument attempts to answer the wrong question. As the 

 

law regarding the facial validity and as-applied analysis of forum selection bylaws.”); 

id. at 241 (“[The] contention that the Forum Selection Bylaw cannot be enforced because 

it seeks to regulate the forum for asserting claims that arose before it was adopted is 

unpersuasive.”); Chevron, 73 A.3d at 956 (“[T]he conclusion reached by the United States 

District Court for the Northern District of California in Galaviz v. Berg . . . that boardadopted bylaws are not like other contracts because they lack the stockholders’ assent—

rests on a failure to appreciate the contractual framework established by the DGCL for 

Delaware corporations and their stockholders.”).

115 Id.

116 Id.

117 PAB at 43–44; Compl. ¶¶ 81–170. As a branch of this argument, Sylebra claims that 

the Forum Selection Bylaw was adopted via a misleading Proxy and “in furtherance of the 

campaign targeting Sylebra and the Sylebra Plaintiffs’ investment,” making the Forum 

Selection Bylaw itself unjust and unreasonable. If ever this argument were to carry any 

persuasive force, that time would have been before the stockholder vote on the 

Reincorporation Merger. Scientific Games has been chartered as a Nevada corporation for 

almost three years now operating in accordance with the Nevada Charter and Nevada 

Bylaws. The argument that enforcement of one of the Nevada Bylaws is unreasonable 

because the stockholders, way back when, were not fully informed when they approved the 

transaction that created the bylaw is not persuasive. 
33

Defendants properly note, in determining whether a stockholder has met his burden 

to demonstrate unreasonableness in Delaware, the fundamental inquiry is whether

the stockholder has alleged “well-pled facts calling into question the integrity” of 

the court chosen in the forum selection bylaw, or “explain[ed] how the defendants 

have advanced their ‘self-interests’ by having the claims . . . adjudicated in those 

courts instead of a Delaware court.”118 Sylebra has not alleged, likely because it 

cannot allege, either fact. 

The best Sylebra can muster is an allegation that Nevada state courts are 

accustomed to “only holding fiduciaries accountable for ‘intentional misconduct, 

fraud or a knowing violation of the law.”119 That generalized (and unsupported) 

characterization of the Nevada courts’ orientation is a far cry from raising a 

legitimate question regarding the integrity or competency of the Nevada courts to 

provide Sylebra “its day in court.”120 

As noted, the determination of unreasonableness is contextual.121 The 

gravamen of Sylebra’s claim is that Company fiduciaries, including a controlling 

stockholder and a supine Board, intend to deem Sylebra unqualified to own stock in 

 

118 First Citizens, 99 A.3d at 241.

119 Compl. ¶ 166 (quoting Proxy at 5); PAB at 46. 

120 Capital Gp. Cos., Inc., 2004 WL 2521295, at *6.

121 Ingres, 8 A.3d at 1146.
34

Scientific Games and then force it to redeem its Scientific Games shares at an unfair 

price.122 That scheme, assuming it is in progress as alleged, has not come to fruition. 

When (or if) it does, the fiduciaries involved will owe duties to a Nevada corporation 

and its stockholders. And the claims will be subject to a Nevada Forum Selection 

Bylaw. Nevada courts are now, and will be, available to Sylebra to adjudicate its 

claims, even if those claims, in some measure, implicate Delaware law. Enforcing 

the Forum Selection Bylaw will not change that.123

Any attempt to find unreasonableness in the fact that the statute of limitations 

in Nevada may have run on some of Sylebra’s claims would also be unavailing.124 

Defendants filed the Nevada Action on June 19, 2019, providing Sylebra nearly an 

entire year to file counterclaims or a separate action in the jurisdiction prescribed by 

 

122 Compl. ¶ 6.

123 See First Citizens, 99 A.3d at 241 (“The conduct of the FC North Board in approving 

the proposed merger will not be absolved from judicial review; that review simply must 

occur in a North Carolina court.”); Chevron, 73 A.3d at 960 (“[T]he forum selection bylaws 

only regulate where a certain set of claims, relating to the internal affairs of the corporation 

and governed by the law of the state of incorporation, may be brought, not what claims.”

(emphasis in original)).

124 Tr. at 69. See Helen Hershkoff & Marcel Kahan, Forum-Selection Provisions in 

Corporate “Contracts”, 93 WASH. L. REV. 265, 300 (2018) (“Red flags ought to be raised 

if the selected forum has, relative to the state of incorporation, a statute of limitations for 

corporate disputes that may bar an asserted claim.”). I note that I make no finding here 

regarding whether vel non the statute of limitations bars any of Sylebra’s claims since that 

issue may be presented to a Nevada court. 
35

the Forum Selection Bylaw.

125

 Instead, Sylebra chose to double down on its 

disregard of the Forum Selection Bylaw, electing to file in Delaware, file nothing in 

Nevada (even prophylactically) and then wait for the ruling on Defendants’ motion 

to dismiss, where the showcase argument is that Sylebra has filed in the wrong 

forum. Under these circumstances, I cannot conclude that enforcement of the Forum 

Selection Bylaw would be unreasonable or unjust. 

The Forum Selection Bylaw Was Not Procured by Fraud

Sylebra next argues that the Forum Selection Bylaw was procured by fraud

because it “was enacted as part of the scheme to benefit Perelman and shield 

Defendants from liability for targeting and destroying the Sylebra Plaintiff’s 

investment.”126 The prima facie elements of fraud are well settled:

(1) the defendant falsely represented or omitted facts that the defendant 

had a duty to disclose; (2) the defendant knew or believed that the 

representation was false or made the representation with a reckless 

indifference to the truth; (3) the defendant intended to induce the 

plaintiff to act or refrain from acting; (4) the plaintiff acted in justifiable 

reliance on the representation; and (5) the plaintiff was injured by its 

reliance.127

 

125 Compl. ¶ 180; Tr. at 69 (explaining that the expiration of the statute of limitations for 

one of Sylebra’s earliest claims was June 9, 2020).

126 PAB at 45.

127 Abry P’rs V, L.P. v. F&W Acq. LLC, 891 A.2d 1032, 1050 (Del. Ch. 2006).
36

According to Court of Chancery Rule 9(b), all averments of fraud “shall be stated 

with particularity.”128 To meet the particularity requirement, Rule 9(b) often will 

require a plaintiff making a fraud claim to allege: “the time, place, and contents of 

the false representation, the identity of the person(s) making the representation, and 

what he intended to obtain thereby.”129 

As a preliminary matter, I note that Sylebra has not pled a fraud claim, either 

with respect to the Forum Selection Bylaw or otherwise. Moreover, even if Sylebra

had attempted to plead that the Reincorporation Merger was procured by fraud, that 

would be irrelevant in determining whether the Forum Selection Bylaw itself was 

procured by fraud. If the Forum Selection Bylaw is valid and enforceable in its own 

right, then whether there was fraud associated with the Reincorporation Merger 

(again, not pled here) is a matter for the Nevada court to decide. 

As for the Forum Selection Bylaw, the Proxy notes that “Delaware law does 

not afford the same substantive rights and protections under Nevada law” such that 

 

128 Ct. Ch. R. 9(b); see also Composite Hldgs. v. Westinghouse Elec. Corp., 992 F. Supp. 

367, 369 (S.D.N.Y. 1998) (“Rule 9(b) requires that allegations of fraud with respect to a 

forum selection clause—just as any other allegations of fraud—be made with 

particularity.”). 

129 H-M Wexford LLC v. Encorp, Inc., 832 A.2d 129, 145 (Del. Ch. 2003); see also

Trenwick Am. Litig. Tr. v. Ernst & Young LLP, 906 A.2d 168, 207–08 (Del. Ch.

2006) (Strine, V.C.), aff’d sub nom. Trenwick Am. Litig. Tr. v. Billett, 931 A.2d 438 

(Del. 2007) (noting that the relevant factors include “the time, place, and contents of the 

false representations; the facts misrepresented; the identity of the person(s) making the 

misrepresentation; and what that person(s) gained from making the misrepresentation”).
37

the “reincorporation will result in the elimination of any liability of an officer or 

director for a breach of the duty of loyalty unless arising under intentional 

misconduct, fraud or a knowing violation of the law.”130 The Proxy then makes clear 

that the Company intends to adopt the Forum Selection Bylaw once chartered in 

Nevada, which would dictate where stockholders could bring claims against 

Scientific Games fiduciaries.

131 Indeed, the proposed Nevada Bylaws were attached 

to the Proxy.132 Sylebra has not pled any basis to infer fraud in the adoption of the 

Forum Selection Bylaw from these disclosures or otherwise.

133

 

 

130 Compl. ¶ 165; Proxy, at 4–5; PAB at 46.

131 Compl. ¶ 167; Proxy, at 9. 

132 Proxy, at 6; Proxy, at Annex C. 

133 Abry, 891 A.2d at 1050 (holding that fraud requires proof of a “falsely represented or 

omitted fact[] that the defendant had a duty to disclose”). Sylebra further argues that the 

Forum Selection Bylaw might not apply to MacAndrews & Forbes or Bally. PAB at 51 

n.13. Here again, Sylebra misstates our law. A party “closely-related” to a signatory of a 

contract containing a forum selection clause can enforce the clause if that enforcement is 

foreseeable. Ashall Homes Ltd. v. ROK Entm’t Gp. Inc., 992 A.2d 1239, 1249 (Del. Ch. 

2010). As Defendants properly point out, the cases Sylebra cites to question the vitality of 

the closely-related test actually apply the test to decide the case. See, e.g., Neurvana Med., 

LLC v. Balt USA, LLC, 2019 WL 4464268, at *1 (Del. Ch. Sept. 18, 2019) (“In the end, 

the explication is largely academic, because the plaintiff fails to plead facts sufficient to 

satisfy the closely-related test even under its broad formulation of the foreseeability 

inquiry.”). Here, MacAndrews & Forbes is the Company’s largest stockholder and Bally 

is one of the Company’s wholly-owned subsidiaries; both are inextricably tied to the 

Company, making it entirely foreseeable that stockholder claims against both would be 

subject to the Forum Selection Bylaw. Compl. ¶¶ 16, 26, 29, 30–39, 95; see also Weygandt 

v. Weco, LLC, 2009 WL 1351808, at *5 (Del. Ch. May 14, 2009) (“Several cases suggest 

that when a control person agrees to a forum, it is foreseeable that the entities controlled 

by that person which are involved in the deal will also be bound to that forum.”). The fact 

that Sylebra relegates its “closely-related” argument to a footnote in its brief suggests that 
38

* * * * *

Sylebra has failed to carry its “heavy burden” to demonstrate that the Forum 

Selection Bylaw is unenforceable. That clause mandates that the parties litigate their 

disputes in Nevada. Because I am satisfied that the Forum Selection Bylaw is 

controlling, I need not, and elect not to, decide whether this action is subject to 

dismissal under the McWane doctrine or for failure to state a claim upon which relief 

may be granted.134

III. CONCLUSION

For the foregoing reasons, Defendants’ Motion to Dismiss is GRANTED. 

Plaintiffs’ claims are subject to Scientific Games’ Forum Selection Bylaw and must 

be brought in the Nevada court identified in that bylaw. 

IT IS SO ORDERED. 

 

it is not serious in its suggestion that the Court, on this record, should ignore or reject a 

well-established aspect of our forum selection jurisprudence. See In re Asbestos Litig., 

2015 WL 5016493, at *4 (Del. Super. Ct. Aug. 31, 2015) (noting that a party’s

“relega[tion]” of an argument to a footnote in its brief suggested more of “an attempt to 

preserve it” than to advance it for serious consideration). 

134 McWane Cast Iron Pipe Corp. v. McDowell-Wellman Eng’g Co., 263 A.2d 281, 283 

(Del. 1970); Ct. Ch. R. 12(b)(6).