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 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…
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. …
Another Case Addressing Managerial Discretion and the Implied Covenant of Good Faith and Fair Dealing
LLC managers often enjoy wide latitude and unrestricted “discretion” under the LLC’s operating agreement. At the same time, all contracts — including LLC operating agreements —…
LLC is Not an “Indispensable Party” to Direct Claims Between LLC Members
In litigation, the plaintiff must include as parties to the action all persons or entities whose interests are so directly involved that the court cannot render…
“Equitable Buyout” as a Remedy for LLC Wrongdoing?
In the world of LLCs, buyouts — where one member sells his/her membership interest to another member or the LLC itself — are commonplace. Buyouts generally…