This blog, written by Thomas E. Rutledge, focuses primarily on business entity law in Kentucky. Postings on contract law, contractual and statutory construction, and the entity law of other jurisdictions appear as well. There may as well be some random discussions of classical, medieval and renaissance history.
Tuesday, May 19, 2015
On Further Reflection, “No”
Further Reflection, “No”
At the UKCLE/KBA Section of Business
Law Business Associations Institute I mentioned that the General Assembly had
just passed an amendment to the Kentucky LLC Act providing by statute for
derivative actions in LLCs (2015 Ky. Acts, ch. 34, § 50).Jim Seiffert, also on the panel on fiduciary
duties, asked whether the operating agreement could limit or eliminate the
ability of a member to bring a derivative action?I think I told him I don’t think so, but I
can’t swear that was my response.
That said, on further reflection,
and after considering the decision of the Delaware Supreme Court in In re Carlisle Etcetera, LLC, C.A. No.
10280-VCL, 2015 WL 1947027 (April 30, 2015), I’ve come to the view that the
operating agreement cannot modify the capacity of a member to initiate
on the LLC’s behalf a derivative action.
Still, that leaves open the question
as to whether an “all disputes” arbitration clause would under the Federal or Kentucky
Arbitration Act require the court to refer the derivative action to