Juul Labs, Inc. v. Grove

238 A.3d 904 (2020)

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Nature of the Case

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Facts

P is a privately held Delaware corporation with its principal place of business in San Francisco, California. D is a former employee of P. During his employment, D received options to acquire 20,000 shares of common stock as part of his compensation. On August 4, 2017, Grove electronically signed a standard-form acceptance agreement in which he confirmed his acceptance of the options. D agreed that his options were governed by the terms of the Company's 2007 Stock Plan, that they had been granted under the terms of a standard-form Stock Option Agreement. and only could be exercised under the terms of a standard-form Stock Option Exercise Notice and Agreement. D became bound by the Grant Agreement. Both the Grant Agreement and the Exercise Agreement contain substantively identical provisions that purport to waive inspection rights under Section 220 of the DGCL. Both the Seventh and Ninth Investor Agreements (jointly, the 'Investor Agreements') contain waivers of inspection rights that purport to make the contractual information rights in those agreements the exclusive avenues for 'Holders'-a defined term-to seek information. D demanded to inspect books and records of the Company under Section 1601 of the California Corporations Code. That statute grants inspection rights to any stockholder in a corporation with its principal executive office in California, regardless of the corporation's state of incorporation. D stated that he might sue in California state court to enforce his inspection rights. P sued D in Delaware and one day later D sued P in California. P maintains that D waived his inspection rights under the four agreements. P maintains that D cannot seek inspection under California law because, as a stockholder, he only can possess inspection rights under Section 220 of the Delaware General Corporation Law (the DGCL). P maintains that this court has exclusive jurisdiction over any claim to enforce D's inspection rights under a forum-selection provision in the Company's certification of incorporation. P argued that the internal affairs doctrine applied.