§ 21-168 — Special litigation committee

Nebraska § 21-168

• Jurisdiction: Nebraska
• Ch. 21: Corporations and Other Companies

Text

(RULLCA 905) (a) If a
limited liability company is named as or made a party in a derivative proceeding,
the company may appoint a special litigation committee to investigate the
claims asserted in the proceeding and determine whether pursuing the action
is in the best interests of the company. If the company appoints a special
litigation committee, on motion by the committee made in the name of the company,
except for good cause shown, the court shall stay discovery for the time reasonably
necessary to permit the committee to make its investigation. This subsection
does not prevent the court from enforcing a person's right to information
under section 21-139 or, for good cause shown, granting extraordinary relief
in the form of a temporary restraining order or preliminary injunction.
(b) A special litigation
committee may be composed of one or more disinterested and independent individuals,
who may be members.
(c)
A special litigation committee may be appointed:
(1) in a member-managed limited
liability company:
(A)
by the consent of a majority of the members not named as defendants or plaintiffs
in the proceeding; and
(B)
if all members are named as defendants or plaintiffs in the proceeding, by
a majority of the members named as defendants; or
(2) in a manager-managed limited
liability company:
(A)
by a majority of the managers not named as defendants or plaintiffs in the
proceeding; and
(B)
if all managers are named as defendants or plaintiffs in the proceeding, by
a majority of the managers named as defendants.
(d) After appropriate investigation,
a special litigation committee may determine that it is in the best interests
of the limited liability company that the proceeding:
(1) continue under the control of
the plaintiff;
(2)
continue under the control of the committee;
(3) be settled on terms approved
by the committee; or
(4)
be dismissed.
(e)
After making a determination under subsection (d) of this section, a special
litigation committee shall file with the court a statement of its determination
and its report supporting its determination, giving notice to the plaintiff.
The court shall determine whether the members of the committee were disinterested
and independent and whether the committee conducted its investigation and
made its recommendation in good faith, independently, and with reasonable
care, with the committee having the burden of proof. If the court finds that
the members of the committee were disinterested and independent and that the
committee acted in good faith, independently, and with reasonable care, the
court shall enforce the determination of the committee. Otherwise, the court
shall dissolve the stay of discovery entered under subsection (a) of this
section and allow the action to proceed under the direction of the plaintiff.

Legislative History

Source: Laws 2010, LB888, § 68. Annotations: An appellate court reviews de novo on the record a district court's determination pursuant to subsection (e) of this section that a special litigation committee "conducted its investigation and made its recommendation in good faith, independently, and with reasonable care." Under such a review, an appellate court reaches a conclusion independent of the findings of the trial court, provided that where credible evidence is in conflict on a material issue of fact, the appellate court considers and may give weight to the fact that the trial judge heard and observed the witnesses and accepted one version of the facts rather than another. Tegra Corp. v. Boeshart, 317 Neb. 100, 8 N.W.3d 786 (2024). Derivative actions brought pursuant to the Nebraska Uniform Limited Liability Company Act are not special proceedings, and any proceedings under this section are merely a step in the underlying derivative action. Tegra Corp. v. Boeshart, 311 Neb. 783, 976 N.W.2d 165 (2022).