Gap Board Won’t Face Derivative Suit Filed in Wrong Court

The directors of clothing retailer Gap Inc. won’t face a shareholder derivative action alleging they made false statements to shareholders about the level of diversity the company achieved, after the Ninth Circuit affirmed Friday that the suit was filed in the wrong court.

Gap’s bylaws require that “any derivative action or proceeding on behalf of the corporation” be filed in Delaware Chancery Court. Plaintiff Noelle Lee filed the suit in the US District Court for the Northern District of California.

The trial court didn’t abuse its discretion by dismissing the complaint because Lee failed to meet her burden to show ...