Delaware Business Litigation Report

Delaware Supreme Court Upholds Fee Shifting Bylaw

ATP Tour, Inc. v. Deutscher Tennis Bund, No. 534, 2013 (May 8, 2014)

This decision upholds a bylaw that requires the payment of attorneys' fees by a plaintiff stockholder or member in a non-stock corporation who sues a corporation or its directors and loses. The decision is limited to just the bare legal question presented and is careful to note that a bylaw adopted for an inequitable purpose may still be declared invalid. Nonetheless, it is not hard to predict that a host of similar bylaws will now be adopted by Delaware corporations. This decision is another in the line of decisions upholding bylaws that affect litigation, such as the forum selection bylaw also just upheld. How far this will go remains to be seen.

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