The Delaware Court of Chancery recently upheld a non-exclusive forum selection clause and denied a motion to dismiss despite a prior-filed action pending in a different state based on largely the same claims. In 2013, Utilipath, LLC purchased certain of its own membership units pursuant to a Redemption Agreement. The Agreement provided for a price adjustment after the transaction closed, and Utilipath sought to enforce that clause. Because the defendants disputed the price adjustment, Utilipath filed an action in Delaware to compel arbitration. The defendants sought dismissal based on, among other things, the pendency of a prior filed action involving similar parties in United States District Court for the Eastern District of Pennsylvania. Defendants sought dismissal of the Delaware court action pursuant to the McWane doctrine, under which a court may dismiss or stay a later-filed action “when there is a prior action pending elsewhere . . . involving the same parties and the same issues.” The Delaware Court of Chancery found that dismissal or stay was precluded on McWane grounds because the Agreement expressly provided that the parties irrevocably agreed and waived any objection to venue in the courts of Delaware. Notably, the court rejected defendants’ argument that the Agreement’s forum selection clause was non-exclusive, and thus less compelling evidence of the parties’ intent to submit to Delaware courts. The court declined to decide whether the parties’ dispute was arbitrable or conclusively precluded the possibility of a stay at some point in the future.

Utilipath, LLC v. Hayes et al., C.A. No. 9922-VCP (Del. Ch. April 15, 2015).