(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 Superior Court shall stay discovery for the time reasonably necessary to permit the committee to make its investigation. This subsection shall not prevent the court from enforcing a person’s right to information under § 29-804.10 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 Superior Court a statement of its determination and its report supporting its determination and shall serve each party with a copy of the determination and report. 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.
This section is referenced in § 29-801.07.
Effect of Amendments
The 2013 amendment by D.C. Law 19-210 substituted “and shall serve each party with a copy of the determination and report” for “giving notice to the plaintiff” in (e).
Uniform Law: This section is based on § 905 of the Uniform Limited Company Act (2006 Act).
Application of Law 19-210: Section 7 of D.C. Law 19-210 provided that the act shall apply as of January 1, 2012.