Massachusetts Lawyers Weekly article, “LLC members didn’t renounce fiduciary duties in operating agreement,” quotes business litigation partner, Joseph L. Bierwirth, Jr.

November 15, 2017

In a recently reported summary judgment decision, a Superior Court judge ruled that language in a limited liability company’s operating agreement disclaiming any “partnership” or “joint venture” relationship between its members did not bar a breach of fiduciary duty action against a member and an employee who jumped to a competitor. The Court relied on two landmark decisions from the Supreme Judicial Court, Selmark Associates v. Ehrlich and Merriam v. Demoulas Super Mkts., Inc.

Hemenway & Barnes partner, Joseph Bierwirth, “who litigates fiduciary claims, noted that the LLC … was formed before the SJC issued either Selmark or Merriam, a 2013 decision stating that the presence of a contract permitting certain conduct will not always supplant a shareholder’s fiduciary duty.” Because the standard set forth in the cases that the contract "entirely govern" the disputed conduct and that the contract provision "clearly and expressly" exclude fiduciary claims was not met on the face of the operating agreement’s language, a trial was necessary.

“It could be that a trial would reveal oral testimony that fiduciary duties were, in fact, intended to be excluded,” Bierwirth said.

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