February 16, 2008

Larry Ribstein is fairly appalled:

The New York Court of Appeals has decided that New York does allow LLC derivative suits despite the minor detail that the legislature quite deliberately omitted derivative suits from the LLC statute as part of a compromise to get the act passed....

The decision would be at least highly questionable even if the court had come up with cogent policy reasons for its result.... The skillful and outraged dissenting opinion, in addition to showing that the majority is "judicially legislating a cause of action that was rejected by the Legislature," demonstrates that permitting LLC derivative suits is very much a debatable issue.