Sullivan & Cromwell Secures Dismissal of Pre-Redomestication Derivative Suits Against Tesla

Sullivan & Cromwell represented Tesla in litigation that resulted in the dismissal of two derivative actions filed in Delaware on the eve of Tesla’s redomestication from Delaware to Texas. In April 2024 Tesla announced its plan to redomesticate to Texas and submitted for stockholder approval proposed Texas bylaws that included a Texas forum‑selection provision for derivative actions. In response, three sets of Tesla stockholders filed derivative actions in the Delaware Court of Chancery prior to the redomestication vote. Two of those actions were consolidated, and the third was coordinated with the consolidated action for purposes of any motions to dismiss. Tesla advanced multiple arguments seeking dismissal of the operative complaints. Vice Chancellor Bonnie W. David dismissed both actions, holding that the Texas forum‑selection bylaw adopted upon stockholder approval of the redomestication should be enforced as to both sets of plaintiffs. The Court concluded that it was not required to assess venue as of the date the actions were filed and that Tesla’s then‑existing Delaware forum‑selection bylaw could be amended when stockholders approved the move to Texas, rendering the Texas bylaw applicable. Sullivan & Cromwell represented Tesla with a team composed by: Brian T. Frawley (who argued the motions); Matthew A. Schwartz; Michael T. Lemanski; Will Weinberg. Practice areas involved: Corporate Governance Litigation; Litigation; Securities Litigation; Transportation.

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Sullivan & Cromwell Secures Dismissal of Pre-Redomestication Derivative Suits Against Tesla

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Sullivan & Cromwell Secures Dismissal of Pre-Redomestication Derivative Suits Against Tesla

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