Law Commons^™

An Llc By Any Other Name Is Still Not A Corporation, Samantha J. Prince, Joshua P. Fershee

Faculty Scholarly Works

Business entities have their own unique characteristics. Entrepreneurs and lawyers who represent them select an entity structure based on the business’s current and projected needs. The different needs of each business span myriad topics such as capital requirements, taxation, employee benefits, and personal liability protection. These choices present advantages and disadvantages, many of which are built into the type of entity chosen. It is critically important that people, especially lawyers, recognize the difference between entities such as corporations and limited liability companies (LLCs). It is an egregious, nearly unforgivable, error to call an LLC a “limited liability corporation.” This is …

Creditors Have Standing To Bring Derivative Actions Against Delaware Llcs In Bankruptcy, John D. Hayes Jr.

Bankruptcy Research Library

(Excerpt)

Delaware limited liability companies ("LLCs") are "creatures of contract" and their corporate structure may vary to resemble corporations, partnerships, or a mix of both. Managers of LLCs—like a director or officer of a corporation—owe fiduciary duties to the entity and its members. Generally, the entity has standing to pursue breach of fiduciary duty claims. It is well established that creditors of a corporate debtor may have standing to pursue breach of fiduciary duty claims against directors through derivative actions. Under Delaware law, the applicable statute does not confer standing for creditors of Delaware LLCs to bring derivative actions on …

Tennessee's Dao Act: Positive Innovation Or Fringe Legislation, Joan Macleod Heminway

Scholarly Works

This essay responds to a recent development in unincorporated business associations law in the State of Tennessee. That legislative development is a 2022 amendment to Tennessee’s Revised Limited Liability Company Act, ostensibly creating a legal form of entity for the operation of decentralized autonomous organizations (the "DAO Act"). Remarkably, the DAO Act did not pass through the traditional channels for the review of business legislation in Tennessee, which include a review by members of the business bar (prototypically at least the Executive Council of the TBA Business Law Section) and the Business Services Division of the Tennessee Secretary of State. …

New York's Requirements For Contractual Definiteness With Application To The Formation Of Investment Vehicles, Royce De R. Barondes

Faculty Publications

A review of 82 modern New York cases reveals an unexpected frequency of authority requiring contractual definiteness as to what may reasonably appear to be minor terms.
Illustrative are cases holding inadequately definite ordinary ways preliminary agreements may express compensation on a percentage of net basis. Other unexpected authority (i) is less willing than expected to allow subsequent actions to provide sufficient definiteness to initially indefinite agreements and (ii) denies the enforceability of confidentiality provisions and a right of first refusal.
The survey includes some unexpected support for contracts specifying a plausibly material portion of the consideration with inadequate definiteness …

The Direct-Derivative Distinction, The Special Litigation Committee, And The Uniform Act: A Response To Professor Weidner, Daniel S. Kleinberger

Faculty Scholarship

The Unfortunate Role of Special Litigation Committees in LLCs has a deeply pejorative view of the Uniform Law Commission “second generation” limited liability company act, and that view extends far deeper than the target suggested by the article’s title. The article’s fundamental attack is on the distinction between direct and derivative claims; the criticisms of ULLCA’s provisions on special litigation committees depend on that attack. In support of its wide-ranging attack, The Unfortunate Role seeks to marshal history, policy, logic, and a research study pertaining to the outcome of derivative claims. Unfortunately, however, the article (i) misapprehends the drafting history …

A 180 On Section 230: State Efforts To Erode Social Media Immunity, Leslie Y. Garfield Tenzer, Hayley Margulis

Elisabeth Haub School of Law Faculty Publications

The turmoil of the 2020 presidential election renewed controversy surrounding 47 U.S.C § 230. The law, adopted as part of the 1996 Communications Decency Act (CDA), shields Interactive Computer Services (ICS) from civil liability for third-party material posted on their Platforms--no matter how heinous and regardless of whether the material enjoys constitutional protection. Consequently, any ICS, which is broadly defined to include Internet service providers (ISPs) and social media platforms (Platforms), can police its own postings but remains free from government intervention or retribution.

In 2022, members of the Texas and Florida legislatures passed laws aiming to limit the scope …

"A Change Is Gonna Come:" Developing A Liability Framework For Social Media Algorithmic Amplification, Amy B. Cyphert, Jena Martin

Faculty Articles

From the moment social media companies like Facebook were created, they have been largely immune to suits for the actions they take with respect to user content. This is thanks to Section 230 of the Communications Decency Act, 47 U.S.C. § 230, which offers broad immunity to sites for content posted by users. But seemingly the only thing a deeply divided legislature can agree on is that Section 230 must be amended, and soon. Once that immunity is altered, either by Congress or the courts, these companies may be liable for the decisions and actions of their algorithmic recommendation systems, …

Heads Up! Arkansas Has A New Llc Act, Carol Goforth

Arkansas Law Notes

This past legislative session Senate Bill 601, sponsored by Senator Jonathan Dismang, was enacted into law, becoming Ark. Act 1041 on April 30, 2021. This act repeals the old LLC Act and adopts the Uniform Limited Liability Company Act (“ULLCA”), with minimal changes from the uniform language. This short piece points out some basic information about the Arkansas ULLCA and some of the major changes in Arkansas law applicable to LLCs. While lawyers will obviously need to consult the new statute when actual issues arise, this article should at least provide a “heads up” notice to practitioners with LLCs or …

The Power Of Public Concern And First Amendment Values: Insulating Speech In Sports And Entertainment From Tort Liability For Others' Actions, Clay Calvert

UF Law Faculty Publications

When should First Amendment interests in free expression shield speakers from civil liability for harm to others caused by third parties who allegedly followed or otherwise were inspired by the speakers' words? Two recent federal court opinions - Higgins v. Kentucky Sports Radio, LLC involving post-game coverage by sports commentators about a college basketball referee, and Stricklin v. Stefani pivoting on a singer's words to her concert audience - illustrate similar yet distinct methodologies for analyzing this important question. The speech of the commentators in Higgins allegedly "incited the harassment" by listeners and readers of referee John Higgins and his …

If You Don't Care, Who Will?, Chad J. Pomeroy

Faculty Articles

As a property law professor, I have lately found myself thinking a lot about privacy rights. Initially, the two topics (property and privacy) perhaps do not seem closely related, but I think they are—or, at least, I think the tie between the two is becoming much more pronounced and important, as modern life becomes ever more techno-centric. specifically, I think that privacy rights are, at this point, essentially an outgrowth of property rights. That is, one's right to privacy is dependent on what we traditionally view as one's property rights. At least, I think this is the current state of …

Warranty, Product Liability And Transaction Structure: The Problem Of Amazon, Edward J. Janger, Aaron D. Twerski

Brooklyn Journal of Corporate, Financial & Commercial Law

Amazon, and other internet sales platforms, have revolutionized the manner in which goods are purchased and sold. The obligations undertaken by Amazon in those sales are unclear, both as a matter of transparency, and as a matter of legal doctrine. Is Amazon a store? Is it a shipper? Is it a telephone? In various transactions Amazon can play some or all of these roles. Choosing the right metaphor has consequences. Amazon knows this and has done everything it can to deploy the metaphors selectively to its best legal and practical advantage, even when the chosen characterizations are inapt or even …

Asarco Llc V. Atlantic Richfield Co., Llc, Taylor A. Simpson

Public Land & Resources Law Review

In 2009, Asarco reached a settlement agreement with the Environmental Protection Agency for the arsenic-contaminated East Helena lead smelting facility. As part of the settlement, Asarco was responsible for $111.4 million in cleanup and remediation expenses. Following this payment, Asarco brought a contribution claim under the Comprehensive Environmental Response, Compensation, and Liability Act against Atlantic Richfield. Finally, in 2020, the Ninth Circuit Court of Appeals held that Asarco’s remediation expenses of $111.4 million were not eligible for contribution because the costs were not fully incurred. The Ninth Circuit stated that only incurred or concrete, non-speculative future costs can be eligible …

Pepperdine University School Of Law Legal Summaries, Matthew Rollin

Journal of the National Association of Administrative Law Judiciary

No abstract provided.

A Kafkaesque Process? Ferc Jurisdiction During Chapter 11 Bankruptcy, Richard E.B. Dornfeld, Cory J. Marsolek

Mitchell Hamline Law Review

No abstract provided.

Members Only: Can A Trustee Govern An Llc When Its Member Files For Bankruptcy?, Theresa J. Pulley Radwan

Loyola of Los Angeles Law Review

Limited-liability entities allow owners to limit their personal risk similar to shareholders of a corporation while enjoying the ability to operate the business more in the manner traditionally used for a partnership. These attributes have made these business forms increasingly popular business over the past few decades because they offer the best of partnership world—control and pass-through taxation—while also offering the best of corporate world—limited liability to all of its owners. But if financial problems arise for these businesses and their owners, bankruptcy may be the final option to remedy financial difficulties. The current bankruptcy code, adopted at the same …

Nevor V. Moneypenny Holdings, Llc: Availability Of Prejudgment Interest For Mixed Maritime Law And Jones Act Claims, Adam S. Bohanan

Ocean and Coastal Law Journal

In maritime personal injury cases, courts have traditionally seen prejudgment interest as part of the compensation due to a prevailing plaintiff. The goal of ensuring the fullest compensation possible has long been recognized as a basic principle of admiralty law. However, federal appellate courts are split over whether to award prejudgment interest on a mixed claim under general maritime law and the Jones Act. This Note explores this issue in Nevor v. Moneypenny Holdings, LLC, which was the first time the question had been raised in the First Circuit. The Fifth and Sixth Circuits have held that because prejudgment interest …

California Department Of Toxic Substances Control V. Westside Delivery, Llc, Mitch L. Werbell V

Public Land & Resources Law Review

The Ninth Circuit’s recent decision in California Department of Toxic Substances Control v. Westside Delivery, LLC reminds prospective purchasers of tax-defaulted property of their responsibility for due diligence.The case addressed the reach of the third-party defense to a CERCLA cost recovery action. The court determined that CERCLA’s third-party defense did not apply to a company which purchased a contaminated property at a tax auction because of its “contractual relationship” with the former owner-polluter and because the relevant contaminating acts occurred “in connection with” the prior polluter’s ownership of the site.

The (Dunkin') Donut Hole: Fixing The Llc Loophole In State Campaign Finance Laws—A New Hampshire Exemplar, Brendan O'Neill

Seattle University Law Review

The campaign finance laws of New Hampshire (and other states) permit direct contributions to gubernatorial candidates from individuals or corporations of up to $7,000 per campaign cycle. However, no state campaign finance statutes discuss, define, or even mention LLCs. Each LLC is its own individual donor for the purpose of direct campaign contributions, regardless of who controls it. Thus, a wealthy individual can max out the $7,000 direct contribution to his or her preferred candidate through every LLC under his or her control, limited only by imagination and the ability to set up as many LLCs as legally feasible. A …

Bureau For Private Postsecondary Education, Daniel Ballinger, R. C. Fellmeth, J. D. Fellmeth

California Regulatory Law Reporter

No abstract provided.

Polishing Up Wisconsin's Fiduciary Duties In Llc Law To Attract New Suitors, Collin D. Brunk

Marquette Law Review

None

More Ways To Protect Llc Owners And Preserve Llc Flexibility, Peter Molk

UF Law Faculty Publications

This online companion to Protecting LLC Owners While Preserving LLC Flexibility considers several alternative approaches that might unify LLCs’ twin goals of owner protection and governance flexibility. I examine self-regulation, private certification, investor-led market forces, lawyers in their gatekeeping capacity, and mandated disclosure systems. Ultimately, each of these alternatives proves less satisfying than a system that bifurcates LLC law based on the presumed sophistication of LLC owners.

Protecting Llc Owners While Preserving Llc Flexibility, Peter Molk

UF Law Faculty Publications

LLC statutes allow owners to restrict or completely waive standard governance protections required of other business forms. Corporate law mandatory stalwarts like fiduciary duties can be entirely eliminated in an LLC. This flexible approach has the potential to generate the most efficient governance relationships: tailored negotiation among LLC investors can produce an optimal set of governance terms that corporate law’s mandatory protections cannot. Yet when owners lack sophistication or bargaining power, contractual freedom allows for opportunistic terms that misprice capital, reduce investment, and inefficiently allocate capital across LLCs. A series of cases involving opportunistic conduct have brought this problem to …

Making The Case For The Uniform Limited Liability Company Act (2013) In Arkansas, Carol Goforth

University of Arkansas at Little Rock Law Review

No abstract provided.

Partnership Tax Allocations: The Basics, Walter D. Schwidetzky

All Faculty Scholarship

This article endeavors to help practitioners who are not partnership tax allocation experts identify when they should consult with those with that expertise. The partnership-allocation Treasury Regulations have been called "a creation of prodigious complexity ... essentially impenetrable to all but those with the time, talent, and determination to become thoroughly prepared experts on the subject." This article is written for those, to date at least, without that time and determination. At the same time, the article provides an introduction to the partnership tax allocation rules for those contemplating making the requisite investment of time and determination.

The term "partnership," …

How Many #Followers Do You Have?: Evaluating The Rise Of Social Media And Issues Concerning In Re Ctli’S Determination That Social Media Accounts Are Property Of The Estate, Patricia A. Leeson

Catholic University Law Review

With the rise of social media use, legal disputes have surfaced with litigants looking to the courts to determine issues of ownership and legal authority. As a matter of first impression, a U.S. Bankruptcy Court in Texas held that a Twitter and Facebook social media account were to be regarded as property of the estate pursuant to Section 541 of the Bankruptcy Code. The court analogized the social media accounts to subscriber lists because they provide valuable access to customers. Although the court addressed the question of whether social media applications are to be regarded as property in bankruptcy proceedings, …

Dussault V. Rre Coach Lantern Holdings, Llc: Does The Maine Human Rights Act Recognize Disparate Impact Liability For Claims Of Housing Discrimination Brought By Section 8 Recipients Under Maine Law?, Ari B. Solotoff

Maine Law Review

In Dussault v. RRE Coach Lantern Holdings, LLC, Nicole Dussault filed a complaint with the Maine Humane Rights commission (Commission) alleging a claim of unlawful housing discrimination. Dussault asserted that when RRE Coach Lantern Holdings, LLC and Resource Real Estate Management, Inc. (collectively, Coach Lantern) refused to include a federal Section 8 Housing Choice Voucher Program tenancy addendum in her apartment lease, Coach Lantern discriminated against her because her status as a public assistance recipient. Following an investigation and hearing, the Commission unanimously concluded that there were reasonable grounds for a belief of unlawful housing discrimination. Dussault then brought suit …

Don’T Dabble In Delaware, Daniel S. Kleinberger

Faculty Scholarship

When a litigator argues for a particular choice of law, the litigator seeks retrospectively the law most favorable to a particular claim or claims. When a business lawyer chooses a state of formation for a business entity, the lawyer seeks prospectively the governing law whose characteristics most favor the client’s interests.

Although in particular situations one characteristic may dominate, in general the business lawyer should look for governing law that is clear, comprehensive, coherent, accessible, and stable (or at least predictable). With these five metrics in mind, this column explains why lawyers forming limited liability companies should not dabble in …

Delineating The Implied Covenant And Providing For “Good Faith”, Daniel S. Kleinberger

Faculty Scholarship

This column considers whether an operating or partnership agreement can delineate the implied contractual obligation, comparing ULLCA and the Delaware Act, and then warns of the dangers of carelessly imposing by contract an express requirement of "good faith."

Pipe(Line) Dreams Post-Denbury Green., Nicholas Laurent, Christopher Oddo

St. Mary's Law Journal

In Denbury Green Pipeline-Texas, LLC v. Texas Rice Land Partners, the Beaumont Court of Appeals articulated the test that should be applied when considering whether the condemnation of private property, which would result favorably for pipeline companies, should be allowed. In Denbury, the Beaumont Court of Appeals balanced the protection of private property rights against the need for true common carrier pipeline companies to condemn private property. The court held that in order to condemn private property, a substantial public interest must exist to justify such condemnation. The Texas Supreme Court, however, reversed the decision of the Beaumont Court of …

Covenants Running With The Land., Michael P. Pearson

St. Mary's Law Journal

The analysis of real covenants in wellhead contracts (e.g., gas purchasing, gathering, processing, etc.) by Texas courts has not been consistent. As a result, some bankruptcy courts are holding that a debtor in bankruptcy is not liable for a prior contractual obligation, unless the covenant is held to be a real covenant running with the land. For instance, the holding in In re Sabine Oil & Gas Corp. (Sabine I) contradicts the holdings in Westland Oil Development Corp. v. Gulf Oil Corp. and in Inwood North Homeowners' Association, Inc. v. Harris. The Sabine I court held that because the Acreage …