Welcome to Part 2 of <\/span>The Jayson Law Group LLC\u2019s<\/a> discussion of the Revised Uniform Limited Liability Company Act\u2019s (\u201cRULLCA\u201d) derivative action laws.\u00a0 In <\/span>Part 1<\/a> of this series we gave a scenario of a member of Widget LLC having an issue with how management of Widget LLC was handling a particular situation with Doodad LLC.\u00a0 We discussed what a derivative action is, and the requirements for that member to bring a derivative action.<\/span><\/p>\n

In today\u2019s post we are going to discuss who the proper plaintiff is in order to bring a derivative action.\u00a0 We will also discuss what must be included in a pleading for a derivative action in New Jersey.\u00a0<\/span><\/p>\n

The Proper Plaintiff<\/strong><\/p>\n

Section 42:2C-69 of the RULLCA discusses the proper plaintiff.\u00a0 It states that the proper plaintiff must be a person that is a member at the time the derivative action is brought and must remain a plaintiff throughout the derivative action.\u00a0 There is exception to this requirement if the derivative action is brought by a sole plaintiff and that plaintiff dies during the course of the suit.\u00a0 If that occurs, then the court may permit another member of the LLC to be substituted as plaintiff.<\/p>\n

In the new rules regarding derivative suits for corporations the law requires that <\/span>the person bringing the suit was a shareholder at the time of the wrong doing or the shares were transferred to the person bringing the suit as an operation of law<\/a>.\u00a0 When describing the proper plaintiff for an LLC derivative action the language of Section 42:2C-69 of the RULLCA does not have such a requirement.<\/span><\/p>\n

What must be in the Pleading?<\/strong><\/p>\n

Once the proper plaintiff determines that a derivative action should be brought, what must the plaintiff include in the pleadings to the court?\u00a0 Section 42:2C-70 describes what should be pled in the complaint.\u00a0 It should be noted that Section 42:2C-70 requires that the information be pled with particularity. \u00a0First the plaintiff must include the date and content of the demand made to the LLC\u2019s management and the response of management, <\/span>whether it be managers or members<\/a>, to the plaintiff.\u00a0 If a demand was not made by the plaintiff before bringing the derivative action, the plaintiff must show that brining such a demand would have been futile.<\/span><\/p>\n

This concludes Part 2 of <\/span>The Jayson Law Group LLC\u2019s<\/a> examination of the derivative action law under the RULLCA.\u00a0 Stay tuned for Part 3 coming soon.\u00a0<\/span><\/p>","protected":false},"excerpt":{"rendered":"

Welcome to Part 2 of The Jayson Law Group LLC\u2019s discussion of the Revised Uniform Limited Liability Company Act\u2019s (\u201cRULLCA\u201d) derivative action laws.\u00a0 In Part 1 of this series we gave a scenario of a member of Widget LLC having …<\/p>\n","protected":false},"author":2,"featured_media":1964,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[6],"tags":[],"class_list":["post-1647","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business-law"],"yoast_head":"\n