Forum selection clauses just got sharper teeth: the Delaware Court of Chancery ruled that even core fiduciary-duty claims can be forced out of Delaware when tied to a contract designating another forum. In dismissing Masimo Corp.’s challenge to former CEO Joe Kiani’s $450 million severance package, the court held that all claims “arise out of or relate to” the employment agreement and must proceed in California under its forum clause. The decision signals that Delaware will enforce contractual venue provisions broadly—including in disputes touching corporate governance—making careful drafting of executive agreements and stockholder arrangements more critical than ever.

The dispute arose from Kiani’s employment agreement, which provided for substantial severance and “special payments” upon certain termination events and which Masimo alleged was designed to entrench his control. After a board overhaul led to Kiani’s removal, he filed suit in California to enforce the agreement, while Masimo brought claims in Delaware seeking to invalidate it on fiduciary-duty and corporate waste grounds. Vice Chancellor Nathan A. Cook concluded that, despite how the claims were styled, they were rooted in and dependent on the agreement itself.

Relying in part on recent amendments to Delaware law allowing corporations to select non-Delaware forums in agreements with stockholders, the court enforced the California forum selection clause and declined to reach the merits of Masimo’s claims. The ruling leaves the question of Kiani’s entitlement to the approximately $450 million payout to be decided in the ongoing California action, where litigation is already underway.

For companies and boards, the decision underscores the expanding power of forum selection clauses to dictate where even fiduciary-duty disputes will be litigated. Employers should carefully evaluate forum provisions in executive employment and governance-related agreements to ensure they align with broader litigation strategy, particularly where such agreements could later be used to channel high-stakes corporate disputes outside of Delaware.