Opinion ID: 2180171
Heading Depth: 1
Heading Rank: 13

Heading: Any Forum Internal Affairs Same Law

Text: VantagePoint acknowledges that the courts of Delaware, as the forum state, may apply Delaware's own substantive choice of law rules. [40] VantagePoint argues, however, that Delaware's choice to apply the law of the state of incorporation to internal affairs issues  notwithstanding California's enactment of section 2115  will result in future forum shopping races to the courthouse. VantagePoint submits that, if the California action in these proceedings had been decided first, the California Superior Court would have enjoined the merger until it was factually determined whether section 2115 is applicable. If the statutory prerequisites were found to be factually satisfied, VantagePoint submits that the California Superior Court would have applied the internal affairs law reflected in section 2115, to the exclusion of the law of Delaware  the state where Examen is incorporated. In support of those assertions, VantagePoint relies primarily upon a 1982 decision by the California Court of Appeals in Wilson v. Louisiana-Pacific Resources, Inc. [41] In Wilson v. Louisiana-Pacific Resources, Inc., a panel of the California Court of Appeals held that section 2115 did not violate the federal constitution by applying the California Code's mandatory cumulative voting provision to a Utah corporation that had not provided for cumulative voting but instead had elected the straight voting structure set forth in the Utah corporation statute. [42] The court in Wilson did not address the implications of the differences between the Utah and California corporate statutes upon the expectations of parties who chose to incorporate in Utah rather than California. [43] As Professor DeMott points out, [a]lthough it is possible under the Utah statute for the corporation's charter to be amended by the shareholders and the directors, that mechanical fact does not establish California's right to coerce such an amendment whenever the factual prerequisites of section 2115 exist. [44] Wilson was decided before the United States Supreme Court's decision in CTS and before this Court's decision in McDermott. Ten years after Wilson, the California Supreme Court cited with approval this Court's analysis of the internal affairs doctrine in McDermott, in particular, our holding that corporate voting rights disputes are governed by the law of the state of incorporation. [45] Two years ago, in State Farm v. Superior Court , a different panel of the California Court of Appeals questioned the validity of the holding in Wilson following the broad acceptance of the internal affairs doctrine over the two decades after Wilson was decided. [46] In State Farm, the court cited with approval the United States Supreme Court decision in CTS Corp. v. Dynamics [47] and our decision in McDermott. [48] In State Farm, the court also quoted at length that portion of our decision in McDermott relating to the constitutional imperatives of the internal affairs doctrine. [49] Since Wilson was decided, the United States Supreme Court has recognized the constitutional imperatives of the internal affairs doctrine. [50] In Draper v. Gardner , this Court acknowledged the Wilson opinion in a footnote [51] and nevertheless permitted the dismissal of a Delaware action in favor of a California action in which a California court would be called upon to decide the internal affairs demand issue involving a Delaware corporation. As stated in Draper, we had no doubt that after the Kamen and CTS holdings by the United States Supreme Court, the California courts would apply Delaware [demand] law [to the internal affairs of a Delaware corporation], given the vitality and constitutional underpinnings of the internal affairs doctrine. [52] We adhere to that view in this case.