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Omniglow, LLC, a Delaware limited liability company, was engaged in the manufacture of chemiluminescent novelty items such as glowsticks. The LLC was 50% owned by Leemon Family LLC, a New York limited liability company controlled by its managing member, Ira Leemon. Randye M. Holland and Stanley M. Holland Trust owned 30% of the LLC. Achaian, Inc., a Nevada corporation owned by William A. Heriot, owned the remaining 20%. For two years, the Holland trust and Leemon, together owning 80% of the LLC interests, managed Omniglow’s business with Achaian taking a passive role as an investor. In 2008, however, Leemon took sole control of Omniglow over the objection of both Achaian and the Holland trust, and in contravention of Omniglow’s LLC Agreement that the members held managerial authority in proportion to their respective interests. Fed up with controversy, Holland transferred its entire 30% interest to Achaian in January 2010. Achaian then sued Leemon in March 2011 claiming that it and Leemon were deadlocked 50/50 as to the management of Omniglow and, therefore, an order of dissolution was warranted under Delaware LLC law, because it was no longer reasonably practicable to carry on Omniglow’s business in conformity with Omniglow’s LLC Agreement. Leemon moved to dismiss the complaint, arguing that the Holland trust’s transfer of its LLC interest to Achaian was only effective to give Achaian an additional 30% economic interest in Omniglow, and therefore, Achaian did not acquire the 30% voting rights that the Holland trust possessed, absent consent by all the members of the LLC, including Leemon. What did the court conclude? What would a Course Brief look like?

Operation Management, Management Studies

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