423 A.2d 174 (Del. 1980)
Two consolidated derivative actions were filed in the Delaware Court of Chancery on behalf of the Morrison-Knudsen Company, Inc.1 The suits named several individual defendants serving as directors of the Company and alleged breach of fiduciary duty arising from misconduct in transactions involving the repurchase of Company stock from the Crane Company.2
The Company is a Delaware corporation with its principal place of business in Boise, Idaho.3 The Company transacts no business in Delaware other than the minimum necessary to maintain its corporate status.4 None of the individual defendants are Delaware residents, no board of directors meeting has ever been held in Delaware, and the plaintiffs allege no connection between the defendant-directors and Delaware other than their status as directors of a Delaware corporation.5
Jurisdiction over the defendants and service of process were attempted under 10 Del.C. § 3114.6 After the defendants entered limited appearances to contest jurisdiction, the Court of Chancery found that personal jurisdiction was properly asserted.7 The defendants took an interlocutory appeal to the Delaware Supreme Court, raising only constitutional objections to the assertion of jurisdiction.8
The summonses in both actions were issued prior to June 30, 1978.9 Defendants Armstrong, McMurren, Stuart, Morrison, Scott, and Spencer had been elected to their current terms as directors prior to September 1, 1977.10 Defendants Lilly, McCabe, and Woodhead were elected as directors at the Company's annual meeting in early May 1978.11
Whether 10 Del.C. § 3114 authorizes service of process on nonresident directors of a Delaware corporation who were elected to their current terms prior to September 1, 1977?12
Section 3114 provides that accepting election or appointment to a directorship of a Delaware corporation after September 1, 1977, is a consent to jurisdiction in suits relating to the defendant’s capacity as director.13 The statute also contains a separate clause for service after June 30, 1978, but that clause does not apply when summonses were issued earlier.14
No. The summonses in both actions were issued prior to June 30, 1978.15 Defendants Armstrong, McMurren, Stuart, Morrison, Scott, and Spencer had been elected to their current terms as directors prior to September 1, 1977. Consequently, by its terms, § 3114 did not authorize jurisdiction over those defendants when service was attempted, and those defendants should have been dismissed.16
The Court of Chancery erred in asserting jurisdiction over defendants Armstrong, McMurren, Stuart, Morrison, Scott, and Spencer.17
Whether 10 Del.C. § 3114 authorizes service of process on nonresident directors of a Delaware corporation who were elected after September 1, 1977?18
Section 3114 provides that accepting election or appointment to a directorship of a Delaware corporation after September 1, 1977, is a consent to jurisdiction in suits relating to the defendant’s capacity as director.
Yes. Defendants Lilly, McCabe, and Woodhead were elected as directors at the Company's annual meeting in early May 1978. Thus, they fall within the scope of the clause applicable to nonresidents accepting election to directorships after September 1, 1977.19 Their acceptance of election at the May 1978 meeting acted as a consent to jurisdiction, and they were served properly under the statute.20
The rule requires only that the election occur after the statutory date, which is satisfied here by the May 1978 election of these three defendants.
Jurisdiction was properly asserted over defendants Lilly, McCabe, and Woodhead under 10 Del.C. § 3114.21
Whether the assertion of personal jurisdiction under 10 Del.C. § 3114 over nonresident directors of a Delaware corporation in consolidated shareholder derivative actions alleging breach of fiduciary duty satisfies the requirements of due process under the United States Constitution?22
Due process requires that the defendant have sufficient minimum contacts with the forum such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice.23 The inquiry must focus on the relationship among the defendant, the forum, and the litigation.24 Acceptance of a directorship in a Delaware corporation after the effective date of § 3114 constitutes purposeful availment of the benefits and protections of Delaware law.25 It implies consent to jurisdiction in actions alleging breach of fiduciary duty.26
Yes. The defendants accepted their directorships with explicit statutory notice via § 3114.27 They could be haled into the Delaware Courts to answer for alleged breaches of the duties imposed on them by the very laws which empowered them to act in their corporate capacities.28 Moreover, the defendants, by purposefully availing themselves of the privilege of becoming directors of a Delaware corporation, have thereby accepted significant benefits and protections under the laws of this State.29 Delaware has a significant and substantial interest in actively overseeing the conduct of those owing fiduciary duties to shareholders of Delaware corporations.30 That interest far outweighs any burden to defendants, who have voluntarily associated themselves with such corporations by accepting directorships, in being required to submit to the jurisdiction of our courts.31
The quality and nature of the contacts, rather than their number, support jurisdiction when the litigation arises directly from the defendants' roles as directors of a Delaware corporation.32
The assertion of personal jurisdiction under 10 Del.C. § 3114 satisfies due process as to the defendants properly served under the statute.33