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77 The Business Lawyer 433 (Spring 2022)


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 of uniform acts and the case law origins of the direct-derivative distinction; (ii) asserts and relies on a policy with destructive practical consequences for closely held businesses; (iii) misunderstands the logical ramifications of an LLC being a legal person separate from its members; and (iv) relies heavily on a study based on inapposite data–i.e., a data set comprising mostly cases involving public corporations, with an additional focus on cases decided by Delaware courts. Thus, in this author’s opinion, The Unfortunate Role fails on every front the article seeks to attack.