A Manatt team that included Manatt Financial Services Partner Andrew Morrison, Litigation Partner Samantha Katze and Litigation Associate Tina Lapsia successfully represented Mullen Automotive Inc. (Mullen), a publicly traded development-stage electric vehicle manufacturer, winning a motion to dismiss and defeating a motion for preliminary injunction in a New York County Commercial Division action. The decision discussed an important issue called the internal affairs doctrine, which holds that courts must adjudicate corporate governance issues under the law of the state in which an entity is formed.
In this case, Mullen was sued for breach of contract and declaratory judgment and the alleged agreement at issue had a New York forum selection provision, which plaintiffs argued required the parties to litigate in New York. Manatt noted, among other things, that contrary to what plaintiffs contended, the relief sought by plaintiffs went beyond remedying a simple breach of contract for the sale of a note and would impact Mullen’s relationship with its stockholders by imposing a Series E preferred stock round prior to the culmination of the Series D round. As a result, Manatt argued that the claims impacted Mullen’s internal affairs and because Mullen is a Delaware company and its charter required these types of issues to be litigated in Delaware, the case was not properly in New York. The Court agreed.
To read the full decision, click here.