Sunday, November 24, 2013

Elf Atochem North America, Inc. v. Jaffari case brief

Elf Atochem North America, Inc. v. Jaffari case brief summary
727 A.2d 286 (Del. 1999)


CASE SYNOPSIS
Plaintiff appealed an order of the Court of Chancery of the State of Delaware in and for New Castle County, granting defendants' motion to dismiss based on lack of subject matter jurisdiction, plaintiff's complaint which was a purported derivative suit brought on behalf of a Delaware limited liability company in a case of first impression.

CASE FACTS
Plaintiff brought a purported derivative suit on behalf of a Delaware limited liability company (LLC) calling into question whether: (1) the LLC, which did not itself execute the LLC agreement in this case (Agreement) defining its governance and operation, was nevertheless bound by the Agreement; and (2) contractual provisions directing that all disputes be resolved exclusively by arbitration or court proceedings in California were valid under the Delaware Limited Liability Company Act (Act).

PROCEDURAL HISTORY
The lower court granted defendants' motion to dismiss based on lack of subject matter jurisdiction. The lower court held that plaintiff's claims arose under the Agreement, or the transactions contemplated by the agreement, and were directly related to actions as manager of defendant LLC.

DISCUSSION

  • On appeal, the court held that: 
  • (1) the Agreement was binding on defendant LLC as well as the members; and 
  • (2) since the Act did not prohibit the members of an LLC from vesting exclusive subject matter jurisdiction in arbitration proceedings (or court enforcement of arbitration) in California to resolve disputes, the contractual forum selection provisions must govern. 
  • The court affirmed.


CONCLUSION
The court affirmed the judgment below dismissing the action brought in that court on the ground that the limited liability company agreement validly predetermined the forum in which disputes would be resolved, thus stripping the lower court of subject matter jurisdiction.

Recommended Supplements for Corporations and Business Associations Law

No comments:

Post a Comment

Search Thousands of Case Briefs and Articles.