Majority Owners of closely held businesses may face claims that they engaged in minority oppression of shareholders, limited liability company members or partners. Defending the minority oppression claim requires examination of written agreements and consideration of the reasonable expectations of the owners when the business was formed. Claims of... read more
A ‘passive’ member with no rights or responsibilities in the management of a limited liability company cannot be held liable for refusing to participate in a PPP loan application. Dissociated LLC members with no management rights can withhold their voluntary consent to proposed actions. The waiver of fiduciary duties... read more
Limited Liability Company laws in New Jersey and many states provide a cause of action for the oppression of minority members of company against those in control of the business. Oppression of a minority LLC member is measured by the reasonable expectations of the minority member in those states... read more
The Federal Trade Commission is considering an administrative rule that would enact a broad ban on non-compete agreements that would prohibit contracts that restrict the employee from working for a competitor or starting a competing business. The rule would also apply to ‘de facto’ non-competes, such as non-solicitation agreements,... read more
A business divorce is the process by which the owners of a business separate their business interests. The process involves negotiation and may also require litigation. These cases can be divided into four phases: the emergent phase, the examination phase, the valuation phase and the resolution phase. Most owner... read more
An email from the sole owner of a limited liability company announcing that employees had become partners with a profit interest was not sufficient to constitute admission as a member of the LLC. The fact that the party claiming an equity interest in an LLC had refused to execute... read more
Accounting firm is compelled to repurchase the equity of departing shareholder who moved practice to competitor firm. A shareholder agreement that is integrated and intended to be the parties’ complete agreement may preclude a claim for breach of corporate by-laws. A shareholder in an accounting firm organized as a... read more
Managers of a limited liability company owe to the company fiduciary duties of loyalty and care, must act in good faith, and refrain from reckless or unlawful conduct. A member who seeks information about a manager-managed limited liability company must state the purpose for the request under the Uniform... read more
An agreement to arbitrate that is contained in the governance documents of a business, e.g, an operating agreement or shareholder agreement, may result in multiple proceedings when the dispute ripens into litigation. A party may seek to stay a pending federal court action based on a collateral arbitration proceeding... read more
Law firms may not limit the ability of lawyers to resign, solicit clients and compete with the firm, but they may contract for a reasonable notice period necessary for the orderly transfer of client matters. Both the departing lawyer and the law firm share an ethical obligation to assure... read more
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