Gap’s Win Sends Investors, Companies Seeking Friendlier Courts

Gap’s victory over an investor’s diversity lawsuit creates a divide that motivates companies and individual shareholders to pursue courts they view as most favorable until the US Supreme Court steps in.

Gap Inc. scored a significant victory Thursday when a divided US Court of Appeals for the Ninth Circuit bench upheld a corporate bylaw that effectively killed an investor’s lawsuit alleging misstatements in proxy materials by specifying that derivative claims must be filed in the Delaware Court of Chancery—which can’t hear securities laws claims that only can be brought in federal courts.

However, that’s at odds with a prior Seventh ...