Under Section 702 of New York’s Limited Liability Company Law (“LLCL”), a court may dissolve a company “whenever it is not reasonably practicable to carry on the business in conformity with the articles of organization or operating agreement.” LLCL § 702. (This Blog addressed Section 702 here , here and here .) To successfully petition for the dissolution of a limited liability company (“LLC”) under LLCL § 702, the petitioning member must demonstrate the following: 1) the m

Earlier this month, a new report by the federal government’s auditing division raised concerns regarding how the Department of Veteran Affairs handles employees and managers found to be involved in apparent acts of retaliation. Alarming Findings The report shares some very serious findings. According to the U.S. Government Accountability Office’s (GAO) report, VA whistleblowers are much more likely to face discipline or removal after reporting misconduct than are their colle

The simplest misstep has the potential to derail years of litigation and result in a massive financial sanction, as happened here. It is in everyone’s best interest, both the litigants’ and the courts’, to verify that diversity jurisdiction exists before proceeding with the case. Everyone involved in this case trusted that diversity jurisdiction existed, but no one verified it. Purchasing Power v. Bluestem Brands , 851 F.3d 1218, 1220 (11th Cir. 2017). Recently, the foregoin

Restrictive covenants are frequently found in employment contracts. Typically, such covenants, among other things, are used to prevent employees (the “Employee”), after the termination of the employment relationship, from: competing with the former employer; soliciting the former employer’s customers; soliciting the former employer’s other employees; and, taking or using the former employer’s confidential business information. Generally, restrictive covenants contain tempora

Recently, the First Department issued a terse decision in which it reversed a lower court ruling requiring the production of documents claimed to be protected by the attorney-client privilege under a common interest agreement. In 21st Century Diamond, LLC v. Allfield Trading, LLC , 2018 N.Y. Slip Op. 05732 ( here ), the Court made clear that “the common interest doctrine applies to protect otherwise privileged communications between these parties from disclosure.” Given the

There are times when a party to a contract wants to be excused from the obligations set forth in their agreement. Under New York, the circumstances under which a court will excuse a party from performance are limited, namely, where there is an intervening event that was both unforeseeable and destroyed either the subject matter of the contract or the means by which the parties could perform thereunder. Since the circumstances in which a contract will be deemed impossible to p

Prosecuting a mortgage foreclosure action in New York can be an arduous and time-consuming process. This is particularly so for residential mortgage foreclosures since the promulgation of a host of rules by the New York State Legislature stemming from the mortgage crisis of the late 2000s. Some of the new rules have been addressed previously in this Blog (“ Appellate Division, Second Department Tells Foreclosing Residential Lender to ‘SHOW ME THE EVIDENCE,’” “ The Second D

Last month, the Commodity Futures Trading Commission (“CFTC” or the “Commission”) announced that it had paid whistleblowers more than $45 million in awards. In one case, the CFTC awarded approximately $30 million to a whistleblower ( here ), the largest amount ever awarded by the CFTC, and in the other, the CFTC awarded more than $70,000 to a whistleblower living in a foreign country, the first of its kind under the CFTC Whistleblower Program ( here ). The awards reflect th

Fraud Claim Dismissed on Statute of Limitations Grounds: Plaintiff Unable to Use The Discovery Rule to Save His Claims Under New York law, an action based upon fraud must be commenced within six years of the date the cause of action accrued, or within two years of the time the plaintiff discovered or could have discovered the fraud with reasonable diligence, whichever is greater. C.P.L.R. § 213(8). See also Sargiss v. Magarelli , 12 N.Y.3d 527, 532 (2009); Carbon Capital Mgm

Over the past year, the Centers for Disease Control and its parent agency, the Department of Health and Human Services (HHS), made several decisions that undermined the rights of whistleblowers . In December, for example, the CDC recommended that employees avoid using certain words (including “diversity” and “entitlement”) when preparing budget documents for Congress. Under Federal law, the government is prohibited from restricting the free speech of its employees without cla

In the first six months of 2018, securities class action lawsuits were filed at “near record levels,” according to Cornerstone Research (“Cornerstone”). In a July 25, 2018 report, entitled “Securities Class Action Filings – 2018 Midyear Assessment” (the “Report”), Cornerstone found that plaintiffs had “filed more than 750 federal securities class actions since midyear 2016,” the “most prolific 24-month period” since the passage of the Private Securities Litigation Reform Act

Former Tesla, Inc. ("Tesla") (NASDAQ: TSLA) employee, Martin Tripp ("Tripp"), has been sued in Nevada federal court by the car behemoth for allegedly hacking into the company’s manufacturing system and sharing trade secrets, claiming that he had tried to sabotage the company. Tripp denies wrongdoing, contending that he was trying to alert the public about alleged improper practices that the company was engaging in, including using punctured batteries in cars, making excess w

In March, the IRS and two whistleblowers reached a settlement to a long-pending dispute regarding the amount of money that an IRS whistleblower is entitled to receive for successfully reporting a tax fraud or other tax underpayment. Under the IRS Whistleblower Reward Program , the IRS rewards a whistleblower who provides information to the IRS concerning the underpayment of taxes by either an individual or business that leads to the recovery of money and meets certain other c

Last year, this Blog wrote about the basic principles of contract interpretation under New York law. ( Here .) Much of that legal discussion sets the table for today’s article. When parties enter into a contract, each assumes that the language in their agreement accurately memorializes their understandings and intentions. For this reason, when a dispute arises, the courts in New York look to the intent of the parties as expressed by the language they chose to put into their

Several recent residential mortgage foreclosure actions are a good reminder of the importance of promptly moving for default judgments against non-appearing defendants. Rule 3215(c) of the New York Civil Practice Law and Rules provides, in pertinent part, that: If the plaintiff fails to take proceedings for the entry of judgment within one year after the default, the court shall not enter judgment but shall dismiss the complaint as abandoned, without costs, upon its own initi

On May 30, 2018, Minnesota became the most recent state to join the list of states filing lawsuits in whistleblower litigation against Arizona-based Insys Therapeutics, Inc. ("Insys") ( INSY.O ): Arizona, New Jersey, New York, and North Carolina. Previous cases have been settled by Oregon, New Hampshire, Illinois, and New Hampshire for $9.45 million. The Minnesota action, which was filed in Hennepin County District Court in Minneapolis, comes as state attorneys general are

Investing in the market involves different degrees of risk. The reward for taking on risk is the potential for a greater investment return. The flip side, of course, is the potential to lose some or all of the money invested. Thus, when it comes to investing, there is no such thing as a sure thing. Nonetheless, there are people who promise no risk, no loss investing. They claim that they can place a person’s money into a “can’t miss” investment, where the risk of loss is min

In today’s post, this Blog looks at SEC enforcement actions and/or settlements of potential enforcement actions, the focus of which is the protection of the retail investor. New York-Based Investment Firm and Two of its Managers Charged for Failing to Supervise Brokers Who Defrauded Customers On June 29, 2018, the SEC announced (here) that it had charged New York-based broker-dealer Alexander Capital L.P. (“Alexander Capital”) and two of its managers for failing to supervis