Opinion ID: 1540447
Heading Depth: 1
Heading Rank: 17

Heading: Delaware's Exercise of Specific Jurisdiction is Proper

Text: In Papendick, this Court observed that Delaware was the only jurisdiction in which the foreign parent and the Delaware subsidiary could be sued in one action. Papendick v. Bosch, Del.Supr., 410 A.2d 148, 153 (1979), cert. denied, 446 U.S. 909, 100 S.Ct. 1837, 64 L.Ed.2d 262 (1980). Since in a double derivative action, both the parent and the subsidiary corporations are indispensable parties, the subsidiary's state of incorporation may be the only forum in which both corporations can be sued at all. A fortiori, the traditional notions of fair play and substantial justice can only be offended if Delaware does not exercise specific jurisdiction. Id. The Delaware courts and legislature have long recognized a need for consistency and certainty in the interpretation and application of Delaware corporation law and the desirability of providing a definite forum in which shareholders can challenge the actions of corporate management without having to overcome certain procedural barriers which can be particularly onerous in the context of derivative litigation. Armstrong v. Pomerance, 423 A.2d at 178. [42] We have evaluated Delaware's interest in adjudicating Sternberg's dispute, Sternberg's interest in obtaining convenient and effective relief, the interstate judicial system's interest in obtaining the most efficient resolution of the controversies, and the shared interests of Delaware and Ohio in furthering fundamental substantive social policies. See Burger King Corp. v. Rudzewicz, 471 U.S. at 477, 105 S.Ct. at 2185 (quoting World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 292, 100 S.Ct. 559, 564, 62 L.Ed.2d 490 (1980)). [43] The United States Supreme Court has observed that [t]hese considerations sometimes serve to establish the reasonableness of jurisdiction upon a lesser showing of minimum contacts than would otherwise be required. Burger King Corp. v. Rudzewicz, 471 U.S. at 477, 105 S.Ct. at 2185 (citing Keeton v. Hustler Magazine, Inc., 465 U.S. at 780, 104 S.Ct. at 1481; Calder v. Jones, 465 U.S. 783, 788-89, 104 S.Ct. 1482, 1486-87, 79 L.Ed.2d 804 (1984); Megee v. Int'l Life Ins. Co., 355 U.S. 220, 223-24, 78 S.Ct. 199, 201, 2 L.Ed. 2d 223 (1957)). However, we find that these considerations compel the conclusion that it is reasonable for Delaware to exercise jurisdiction in this double derivative law suit. Clearly, Delaware has constitutional authority to exercise jurisdiction in double derivative actions involving domestic corporations which owe their very existence and attributes to Delaware law. Cf. CTS Corp. v. Dynamics Corp. of America, 107 S.Ct. at 1652; Armstrong v. Pomerance, 423 A.2d at 178. The internal affairs doctrine requires nothing less. McDermott, Inc. v. Lewis, 531 A.2d at 216-17. Delaware has more than an interest in providing a sure forum for shareholder derivative litigation involving the internal affairs of its domestic corporations. Armstrong v. Pomerance, 423 A.2d at 178. [44] Delaware has an obligation to provide such a forum. All traditional notions of fair play and substantial justice would be offended if Delaware permitted GenCorp to use its laws to maintain a Delaware subsidiary and then declined to exercise jurisdiction over GenCorp in a double derivative suit, where GenCorp was an indispensable party. Papendick v. Bosch, 410 A.2d at 153. We conclude that fairness and justice permit jurisdiction to be asserted by Delaware under the totality of the circumstances of this case. We find that the exercise of specific jurisdiction in this case is consistent with the requirements of due process. We hold that GenCorp's ownership of RKO General is a minimum contact with Delaware which is sufficient to support an exercise of specific jurisdiction by the Delaware Courts over GenCorp to hear and decide Sternberg's double derivative complaint. [45] This holding is an independent and alternative basis for reversing the Court of Chancery's decision not to exercise specific jurisdiction over GenCorp.