Barnaby Grzaslewicz of Morris James. Courtesy photo Repurchase Option in LLC Agreement Tied to Nondisparagement Provision Does Not Violate the Absolute Litigation Privilege
In this recent decision from the Delaware Court of Chancery, Seva Holdings v. Octo Platform Equity Holdings, the court considered whether a membership interest repurchase right under an LLC agreement triggered by breach of a nondisparagement restriction was enforceable, or whether the repurchase scheme violated the absolute litigation privilege.
October 23, 2024 at 12:00 PM
5 minute read
Contributors
Delaware upholds parties' freedom of contract. This is also a guiding principle in Delaware's alternative entity statutes, including Delaware's Limited Liability Company Act. However, the "primacy" of freedom of contract will yield, in certain circumstances, to other countervailing public policy concerns. One area where this tension is playing out before Delaware courts is in the context of restrictive covenants written into alternative entity governing agreements, pitting contract law against other bodies of law.
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Michael G. Bongiorno, Andrew Scott Dulberg and Elizabeth E. Driscoll from Wilmer Cutler Pickering Hale and Dorr have stepped in to represent Symbotic Inc., an A.I.-enabled technology platform that focuses on increasing supply chain efficiency, and other defendants in a pending shareholder derivative lawsuit. The case, filed Oct. 2 in Massachusetts District Court by the Brown Law Firm on behalf of Stephen Austen, accuses certain officers and directors of misleading investors in regard to Symbotic's potential for margin growth by failing to disclose that the company was not equipped to timely deploy its systems or manage expenses through project delays. The case, assigned to U.S. District Judge Nathaniel M. Gorton, is 1:24-cv-12522, Austen v. Cohen et al.
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