The “Business Judgment Rule” Applies in LLCs Too
Corporate directors have long relied on the “business judgment rule,” under which their decisions are presumed to have been made “on an informed basis, in good…
Non-Compete Agreements in Connection with Partial Sale of LLC Interest
With certain narrow exceptions (including in connection with the sale of the “goodwill” of a business), agreements restraining competition face an uphill battle in California. As…
Claim for Breach of Fiduciary Duty Might be Subject to the “Internal Affairs Doctrine”
In a prior LLC Jungle post — Think Carefully Before Forming an “Out of State” LLC — we reviewed a published opinion (Boschetti v. Pacific Bay…
LLC Members May Ratify Prior Defective Actions
Actions taken within business entities are sometimes deemed invalid due to procedural defects. For corporations, section 119 of the Corporations Code establishes a clear procedure by…
To Moot a Statutory Buyout, LLC’s Dissolution Must be Valid Under its Operating Agreement
In 2022, The LLC Jungle covered the opinion Friend of Camden, Inc. v. Brandt in a post titled LLC Dissolution Vote Defeats Statutory Buyout. In the…
LLC Member Acting for LLC Without Authority Is Not “Protected Activity” Under California’s Anti-SLAPP Statute
California’s anti-SLAPP statute (Code of Civil Procedure section 425.16) aims to protect defendants from meritless lawsuits designed to chill “protected activity” — i.e., the exercise of…
The Perils of Buying Property from an LLC with Competing Claims to Managerial Authority
Prior LLC Jungle posts have addressed the tricky issue of LLC managerial authority in the context of the LLC’s dealings with third parties. See: LLC and…
LLC Manager’s Conduct Benefits Her Side Entity at the Expense of the LLC — Are the Claims Against Her Direct or Derivative?
The distinction between direct and derivative claims is a recurring theme on The LLC Jungle. In a nutshell, under California law, an LLC (just like a…
Operating Agreement Doesn’t Excuse Breach of Fiduciary Duty
Many posts on The LLC Jungle blog have focused on the fiduciary duties owed by LLC managers to both the LLC’s members and the LLC itself.…
Derivative Claim Upheld for Estate of Deceased LLC Member
Asserting claims derivatively on behalf of an LLC, as opposed to directly on behalf of an LLC member, can be tricky business for even experienced litigators. …