Category: Fiduciary Duties

LLC MEMBER SELF-DEALING

The following, in italics is a citation to a recent and significant article about LLC member self-dealing and about the non-exclusivity of the LLC statutory remedy for the self-dealing:

Volume 59, Issue 9
Nancy McKenna, Esq.
Corporation Forms Bulletin
Wisconsin Limited Liability Company Law Did Not Preempt Common Law Claims By One LLC Against Another Member Based on The Second Member’s Alleged Self-Dealing

Wisconsin Limited Liability Company (LLC) Act did not preempt common-law claims for breach of fiduciary duty, unjust enrichment, and breach of the covenant of good faith and fair dealing, brought by the LLC’s members against a manager based on the manager’s alleged self-dealing in connection with the LLC’s sale of valuable assets to a company owned by the manager; the LLC Act provided that it was supplemented by principles of law and equity, and while it provided a statutory cause of action for willful failure to deal fairly, it did not state or imply that such cause of action encompassed the entirety of a member’s or manager’s obligations to other members and to the LLC.

Fiduciary Duties

The Duty to Inform Shareholders
The post under the link below discusses a recent Delaware Court of Chancery case holding that shareholder votes are invalid if the board fails to provide the shareholders with adequate information.  The application of the decision to non-manager members of LLCs is obvious.

Here’s the link: https://www.klgatesdelawaredocket.com/2019/01/chancery-court-denies-dismissal-of-breach-of-fiduciary-duty-claims-after-concluding-that-stockholder-vote-was-not-informed/