UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT NOELLE LEE, derivatively on behalf No. 21-15923 of The Gap, Inc, Plaintiff-Appellant, D.C. No. 3:20-cv-06163-SK v. ROBERT J. FISHER; SONIA OPINION SYNGAL; ARTHUR PECK; AMY BOHUTINSKY; AMY MILES; ISABELLA D. GOREN; BOB L. MARTIN; CHRIS O'NEILL; ELIZABETH A. SMITH; JOHN J. FISHER; JORGE P. MONTOYA; MAYO A. SHATTUCK III; TRACY GARDNER; WILLIAM S. FISHER; DORIS F. FISHER; THE GAP, INC., Nominal Defendant, Defendants-Appellees.

Appeal from the United States District Court for the Northern District of California Sallie Kim, Magistrate Judge, Presiding

Argued and Submitted En Banc December 12, 2022 Pasadena, California

Filed June 1, 2023 2 LEE V. FISHER

Before: Mary H. Murguia, Chief Judge, and Sidney R. Thomas, Sandra S. Ikuta, Jacqueline H. Nguyen, Michelle T. Friedland, Ryan D. Nelson, Bridget S. Bade, Daniel A. Bress, Danielle J. Forrest, Patrick J. Bumatay and Salvador Mendoza, Jr., Circuit Judges.

Opinion by Judge Ikuta; Dissent by Judge S.R. Thomas

SUMMARY*

Securities Exchange Act of 1934

The en banc court affirmed the district court’s judgment dismissing, on forum non conveniens grounds, Noelle Lee’s putative derivative action alleging that The Gap, Inc. and Gap’s directors (collectively “Gap”) violated § 14(a) of the Securities Exchange Act of 1934 (the Exchange Act) and Securities and Exchange Commission (SEC) Rule 14a-9 by making false or misleading statements to shareholders about its commitment to diversity. Gap’s bylaws contain a forum-selection clause stating that the Delaware Court of Chancery “shall be the sole and exclusive forum for . . . any derivative action or proceeding brought on behalf of the Corporation.” Lee, a Gap shareholder, brought the putative derivative action in a California district court.

* This summary constitutes no part of the opinion of the court. It has been prepared by court staff for the convenience of the reader. LEE V. FISHER 3

Lee first argued that the forum-selection clause in Gap’s bylaws is void because it violates the Exchange Act’s antiwaiver provision, § 29(a), 15 U.S.C. § 78cc(a), which provides that “[a]ny condition, stipulation, or provision binding any person to waive compliance with any provision of this chapter or of any rule or regulation thereunder, . . . shall be void.” The en banc court disagreed, because Lee can enforce Gap’s compliance with the substantive obligations of § 14(a) by bringing a direct action in federal court. The en banc court rejected Lee’s argument that her right to bring a derivative § 14(a) action is stymied by Gap’s forum-selection clause, which alone amounts to Gap “waiv[ing] compliance with [a] provision of [the Exchange Act] or of any rule or regulation thereunder.” The en banc court explained that the Supreme Court made clear in Shearson/American Express, Inc. v. McMahon, 482 U.S. 220 (1987), that §29(a) forbids only the waiver of substantive obligations imposed by the Exchange Act, not the waiver of a particular procedure for enforcing such duties. McMahon also disposes of Lee’s argument that Gap’s forum-selection clause is void under § 29(a) because it waives compliance with § 27(a) of the Exchange Act, which gives federal courts exclusive jurisdiction over § 14(a) claims. Lee next argued that Gap’s forum-selection clause is unenforceable under M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1 (1972), because enforcement would violate the federal forum’s strong public policy of allowing a shareholder to bring a § 14(a) derivative action. The linchpin of Lee’s argument was the Supreme Court’s decision in J.I. Case Co.