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.
Thursday, December 19, 2013
Kentucky Supreme Court Addresses of Scope of Corporate Director’s Statutory Fiduciary Duties
Thursday, December 12, 2013
Delaware Chancery Court Addresses Status as a Member of LLC, “Corporate” Opportunity Doctrine and Breach of Fiduciary Duty
No Claim for Promissory Estoppel in Withdrawing Offer of At-Will Employment
Monday, December 9, 2013
Counsel for Partnership Disqualified Based Upon “Substantially Related” Work on Behalf of a Partner
Friday, December 6, 2013
Nevada Supreme Court Addresses Member Status Upon Failure to Make Contribution to LLC
Rules of Professional Conduct and Employment-at-Will
Tuesday, November 26, 2013
An LLC and Its Solitary Member Are Not Legally Interchangeable
My quibble with this decision is that it failed to cite the statute that most directly addresses the point in contention. The Court properly cited KRS § 275.010(2) for the rule that the LLC is a legal entity distinct from its members, a statute that does support the Court’s reasoning. Still, it could (and should) have as well cited KRS § 275.240(1), it providing that the assets of the LLC are not the assets of its members. In that it was the LLC that had lost the profits, and not the member thereof, this statute clearly supports the determination that the claim for lost profits belonged to the LLC and not it's member.
Monday, November 25, 2013
Kentucky Supreme Court Identifies the Beneficiary of a Board’s Fiduciary Obligations
Pillars of the Earth & the Sinking of the White Ship
Wednesday, November 20, 2013
North Carolina Supreme Court Addresses Nature of Piercing the Veil
When Does a Transaction Involve “Commerce” Implicating the Federal Arbitration Act
Tuesday, November 5, 2013
The Supreme Court and the Contraceptive Mandate
Posted: 04 Nov 2013 05:20 PM PST
With lawyers in different cases arguing that theirs is the best one for the Supreme Court to use in deciding the legality of the birth-control mandate in the new federal health care law, the Court on Monday indicated that it will examine all four pending cases together later this month. The Court’s electronic docket said the four will be considered on November 26. If any are granted then or soon afterward, the Court probably would hear and decide them in the current Term.
The federal government has one of the three petitions, and ordinarily it can expect to get its pleas heard. But the government’s case has been challenged by other lawyers as too narrow in scope, and that has led government lawyers in reply to promise to make theirs broader if it is the one chosen.
The Affordable Care Act’s contraceptive mandate requires employers with fifty or more employees to provide health care coverage that includes birth-control methods and devices, pregnancy screening, and other reproductive health services. At this point, three of the pending cases involve only challenges to that by profit-making business firms with owners who are religiously devout, and the fourth is a challenge by a religiously affiliated university.
At least one of the cases has a strong likelihood of being heard by the Justices, because the federal appeals courts have reached conflicting rulings on the mandate, and two of those courts have indicated that the mandate cannot survive the legal challenges by the business itself, or by its owners as individuals.
To illustrate the conflicts:
The Tenth Circuit Court, in the case that the Justice Department has appealed in the case of a retail crafts store chain, ruled that the mandate’s required coverage of birth-control drugs is likely to be struck down as it applied to the corporation itself; it did not rule on whether the owners themselves could pursue a similar religion-based challenge. The petition in that case is Sebelius v. Hobby Lobby (docket 13-354). (The D.C. Circuit Court, in a decision last week that has not yet been taken to the Supreme Court, ruled that the corporation was not protected from the mandate, but that the owners were as individuals.)
The Third Circuit Court, in a case appealed to the Court by a Pennsylvania cabinet-making company and its owners, disagreed directly with the Tenth Circuit, and ruled that a corporation has no religious rights of its own, and it also refused to allow the individual owners to object on their own. The petition in that case is Conestoga Wood Specialties Corp. v. Sebelius (docket 13-356).
The Sixth Circuit Court, in a case involving two related Michigan companies that make precision instruments for use in auto manufacturing and in medical practice, ruled that a corporation cannot exercise religion and thus cannot make a challenge for itself, and it also barred the religious owners from pursuing their own complaint, finding that the mandate only applies to the company. The petition in that case is Autocam Corp. v. Sebelius (docket 13-482).
The fourth case in the group now at the Court is Liberty University v. Lew (docket 13-306). That case involves challenges not only to the birth-control mandate, but also to the individual insurance mandate and the employer insurance mandate. The Fourth Circuit Court did not rule on the complaint about the birth-control provision, saying that the company was late in raising that issue; however, it rejected the other challenges. (In 2012, the Supreme Court upheld the tax penalty that is used to enforce the individual mandate, but did not rule on the employer mandate.)
The Justice Department rushed to the Court its responses to the Conestoga, Autocam, and Liberty University petitions to assist the Court in taking them up together, and it urged the Court either to deny review, or to hold the other cases until after it ruled on the government’s Hobby Lobby petition.
Lawyers in the other cases, however, have argued that the Hobby Lobby case only involves the question of a business firm’s right to pursue a challenge to the mandate, and does not address whether the individual owners could do so for themselves. Thus, the attorneys contend, that is not the best case for review.
The Justice Department, however, has countered that some members of the Tenth Circuit Court did address that separate question when their court ruled, that Hobby Lobby’s lawyers will be raising the issue in their defense of the Tenth Circuit ruling, and that, if the government petition is selected, it will confront that issue in the written briefs it would file in that case.
The government’s case asks the Court to rule only on whether the birth-control mandate violates a federal law, the Religious Freedom Restoration Act. However, the Conestoga petition also urged the Court to rule on whether it violates the First Amendment’s protection of the “free exercise” of religion, as well as violating RFRA.
The Justice Department argued that the constitutional issue has been ruled upon only by the Third Circuit in the Conestoga case, and the issue has thus not produced a conflict among the appeals courts. The Court, the Department contended, should not step in to decide that issue.
Proposed Charging Order Rejected for Including Right to Participate in LLC’s Management
Friday, October 25, 2013
Court of Appeals New Opinion in Ziegler v. Knock is a Confused Mix of Partnership and LLC Law, Fiduciary and Contract Law
Mix of Partnership and LLC Law, Fiduciary and Contract Law