Co-authored by Jason Jowers
This article examines the increasing role of equity in LLC litigation, particularly in cases involving breach of fiduciary duties and requests for dissolution. Both the case law and an amendment to the Delaware LLC Act in recent years demonstrate Delaware’s rejection of a solely contractarian view of LLCs. The recent Delaware Court of Chancery decision of In re Carlisle Etcetera LLC provides new lessons on the subject of equity’s reach. Although the length of equity’s powerful arm into the area of LLC litigation may surprise some practitioners, there is a consistent theme in the case law that may provide comfort: the Court of Chancery normally will only exercise its equitable powers when the parties have left gaps in their operating agreement.
First published in Business Law Today, October 2015. Link to article.
Reprinted with permission.