North v. McNamara

Chemed Corporation (Chemed) (defendant), a Delaware corporation with its principal place of business in Ohio, operated a subsidiary, VITAS Innovative Hospice Care (VITAS), which was the largest provider of hospice services nationally. Mildred North (plaintiff), a Chemed shareholder and Illinois resident, filed a shareholder derivative action against various officers and directors of Chemed (including named defendant Kevin McNamara) (the leadership team) (defendants), alleging the leadership team caused VITAS to file excessive and false claims with Medicare and Medicaid, engaged in insider trading and mismanagement, and received unjust enrichment. North’s action was the second shareholder derivative suit, with a prior lawsuit filed in Delaware. Chemed’s articles of incorporation allowed the board of directors (the board) to amend the bylaws without approval by the shareholders. After North filed her lawsuit, the board amended the bylaws to require the filing of all shareholder or derivative suits against the corporation or its directors in Delaware. Chemed and the leadership team then filed a motion to transfer the North suit’s venue from Ohio to Delaware. North argued that she had not agreed to the exclusive forum-selection clause added to the bylaws, the motive behind the clause was for an improper purpose (to discourage or defeat litigation against the company and its leaders), and a change of venue would create an inconvenient forum for North.